Marketing Nepalese Green Tea in Malaysia
BUS710 Marketing in an International Environment
This particular report aims at preparing the marketing mix strategy of green tea produced and grown in Nepal. The overall work is an attempt to justify the selection of target market, i.e. Malaysia in the context of international marketing of a particular product. Efforts are made mainly to prioritise on understanding benefits and drawbacks of the offering, as well as determining segmentation and positioning throughout the market. The paper not only contributes to developing justification of the selected market for the product but also intends to address problem of international marketing and raising solutions to such concerns. Findings of the overall study helps to indicate some of the major recommendations for marketing green tea of Nepal in Malaysian beverage market and achieving fundamental success as part of operating in an international business environment.
Despite the dominance of coffee in the international beverage sector, consuming tea is gaining rapid attention from different target markets mainly due to its available flavours. A similar picture can be observed in Malaysia despite its tradition of consuming coffee. Marketing tea in the international marketplaces is experiencing significant growth for not only the availability of a range of flavours but also the ability to provide a number of health benefits. The premium quality green tea of Nepal, grown in the foothills of the Himalayan Range Mountains, thus, has the substantial opportunity to expand the industry in the international markets by targeting the Malaysian beverage market in the Asian continent. The potential of the selected market will allow the industry to maximise profits and contribute significantly to the economic development of rural population of the country.
- The rich cultural history of Nepal along with the premium quality of its green tea is the main strength of the selected product supporting export in the international markets.
- The particular product is mainly grown in the foothills of Himalayan Mountain Range, suggesting a favourable natural condition for growing high-quality tea with maintaining a natural flavour and aroma.
- The strong growth of Nepalese tea industry, which supports international trading in various international markets, serves as one of the key factors helping in exploring extended marketing opportunities (Poudel 2010).
- Strength of private sector, as well as donor participation, have contributed to the rapid concentration of the selected industry.
- Low labour cost, together with a wide range of health benefits of consuming Nepalese green tea is one of the added benefits for expanding international market coverage.
- Despite the favourable growing environment of high-quality tea plants, lack of adequate numbers of labour with their technical skills and expertise remains one of the critical weakness of the identified product (Adhikari et al. 2017).
- Scarcity of resources, especially the financial resources is another major weakness of Nepalese green tea due to the lack of accessing undulating mountainous regions of the country.
- Remoteness of the areas also leads to the lack of accessibility of Nepalese tea in the auction markets, thereby causing a significant area of profitability left unexplored.
- As the current area under tea plantation is only a fraction of total potential areas, Nepal has the prospect to produce and grow more products, thereby supporting the rising demands of international marketplaces related to consumption of high-quality green tea (Sampson 2017).
- Development of the existing and new plantation areas with their optimum natural conditions will greatly contribute to the development of tea industry in the international marketing environment.
- The rising prospect of enhancing quality of the current green tea further can essentially open new avenues to facilitate industrial growth in the international marketplaces.
- Due to the significant shift in consumption habit led by the increased concern of modern population regarding health and fitness, individuals from different countries are preferring to consume premium-quality organic green tea over any other beverages to remain fit and healthy (Stoesser et al. 2015).
- The opportunity to support and enhance the possibilities of international marketing further can be possible by adopting intercropping approach, which is the process of cropping multiple plants of unique variants in proximity (Biggs et al. 2018).
- Due to the emergence of various types of beverages, positioning as the alternative to tea, the price of the selected product is consistently falling in the international markets to create an alarming impact on the overall industry.
- The presence of strict competition in the international market is another significant threat for Nepalese green tea, as competitive position of reputed providers like branded Darjeeling tea is dominating the international market through its unique taste and niche among consumers (Bhattarai, Adhikari and Thapa 2016).
- From the context of business environment, growth of the tea growing industry hampered significantly be multiple instances of regional conflicts and insurgencies, which aim at affecting peace and stability.
Similar to the characteristics of coffee, tea is also regarded as a cash crop, which is experiencing a steady growth in terms of international demand. Supported by its hilly terrains and favourable climate, the premium-quality green tea of Nepal has the capacity to create its niche in the international market, thereby supporting the rural population based on economic contributions. The liberalisation policies adopted during the 1990s with the intention of ending state monopoly, producing and growing tea have experienced a stable growth by attracting various industrialists and businessperson to set up numerous tea estates. As orthodox tea with specific health benefits is experiencing a favourable shift in demand in the world market, the product development strategy should include attracting small farmers across the tea estates to grow premium-quality tea, which has the capacity to yield higher returns (Tiwari, Adhikari and Dhungana 2017). Tea, which mainly comes in two variants, such as orthodox or green leaf tea for export and black or CTC tea for domestic consumption, must consist important health benefits to ensure rapid expansion throughout the modern, competitive international marketplaces. Hence, product development should also involves the growth of tealeaves in higher altitudes of Nepal, as it is believed as the healthiest option available to the producer. It is worth to mention that calorie can be avoided from the product by removing the sweetening process, thereby reducing the level of caffeine significantly, compared to coffee. Furthermore, green tea comprises flavonoids, which are naturally occurring compounds with their considerable antioxidant properties to contribute to the reduction of different ailments, as well as chronic diseases upon consumption (Mohan 2016). Hence, the producer must satisfy these properties during the product development phase for exploiting most of the opportunity available in the international market.
Segmentation and Positioning Strategy
Segmentation, in the context of marketing, can be defined as the process of separating the identified marketplace into different segments or proportions in highly definitive, accessible, actionable and profitable manner. Due to various restrictions from the perspectives of cost, time and effort, it is impossible for marketers to target the entire market, suggesting them to identify a number of suitable segments with their growth potentials (Craft and Hassan 2015). Considering the target market of Malaysia, the population of the country is demonstrating growing inclination towards consuming tea, mainly due to its traditional essence, difference in taste and flavour, as well as multiple health benefits. The tea estates of Nepal, as a result, must adopt demographic, behavioural and psychographic segmentation strategies for setting up the international business successfully. While the demographic segmentation will help the producers differentiate offerings based on age, gender and income levels of the Malaysian population, behavioural segmentation is essential for categorise the target market based on their knowledge, attitudes and responses to the particular product (Kimiagari et al. 2015). Lastly, psychographic segmentation is essential for separating the market based on different personality traits, interests and lifestyle of consumers. Consumers with their increased concern towards health and fitness are highly likely to adopt a different consumption habit while responding to adequate products available in the market. Both male and female population from middle to higher income ranges in the country, with their specific focus on rich health and lifestyle choices, must be targeted by the green tea producers of Nepal for achieving desired results.
The Nepalese producers of premium-quality green tea should develop its niche especially in the city and urban areas of the country for the high concentration of working crowds in the particular areas. With a special emphasis on improving health and wellbeing of the population, especially the working men and women, as well as older diabetic individuals across the country, the green tea providers of Nepal must position as the premium-quality provider of products serving as an effective alternative of coffee with substantially lower levels of calorie and caffeine. Additionally, positioning strategy must also specifically highlight the rich antioxidant property of the product to prevent and reduce prevalence of different diseases and ailments. Hence, value proposition of the product should comprise the message of refreshing the lifestyle with the help of offering highest quality natural ingredients at a relatively suitable price.
While price is the value provided by consumers or users in exchange for the consumption or use of a product or service, pricing strategy can be referred to as the tactic adopted by an organisation or provider for enhancing sales and maximising profits by charging appropriate prices to the target consumers. Hence, pricing strategy must significant take into account market segments, conditions, input costs, trade margins and paying capacity of consumers among others (Nagle and Müller 2017). As rich cultural history of Nepal along with the use of traditional approach to crop and grow tea in its hilly terrains has long been received significant attention from consumers of international markets, marketing the product in the Malaysian market is expected to exploit most of the opportunities for maximising profits and contribute to the economic wellbeing rural population of Nepal. Initially, the producers can adopt absorption-pricing technique, which intends to recover all the costs associated with production and distribution, including fixed and variable costs, while allowing the firm to set a specific contribution margin (Ray and Gramlich 2015). It is important for the business to target population from middle to upper-income ranges for their affordability and increased concern towards suitable lifestyle choices, suggesting the producers to shift towards using premium-pricing strategy once the competitive foothold in the particular market becomes steady. Furthermore, a gradual increase in price of the product is expected subjected to fluctuations in prices of ingredients along with changing requirements related to international shipments.
Strategy regarding distribution indicates the process of involving a chain of businesses or intermediaries for delivering a particular good or service to its end users, i.e. consumers. Apart from involving retailers, wholesalers and other distributors, the emerging advancements in digital technologies have paved the way to using internet for communicating directly with target markets and satisfying their needs and expectations (McGee 2015). Distribution strategy, which can be categorised into direct and indirect basis depending on the type of involvement with end users, plays a major role in delivering Nepalese green tea in the international market of Malaysia. With its specific focus on cost-effectiveness in marketing and selling the product, the tea estates in Nepal can contemplate selling the product in the Malaysian market through a dealer network or value-added reseller (VARs) as part of the indirect distribution channel. Using reputed dealers throughout the geographical network is one of the viable options for marketing and selling green tea in the Malaysian international market. These dealers may use their customised service in line with needs and expectations of the target market to sell products effectively and contribute to the business success. Additionally, green tea can be sold to VARs, which will eventually bundle those with other products and services and resell to the customers of target market (Erevelles, Fukawa and Swayne 2016). Selection of the right distribution channel depends significantly on the type of needs of end-users, as well as the requirement of customisation in the offerings.
In the context of identifying and targeting a suitable international market, as part of the international marketing, a promotional strategy is used to form most viable promotion mix for influencing customers. Preparing the promotion mix rests heavily on the marketing objectives of increasing awareness among the target groups of consumers about the usefulness of green tea, generating most traffic and building a loyal consumer base in the selected market (Athanasopoulou, Giovanis and Avlonitis 2015). Amongst the five key elements of a promotional mix, the use of advertising and sales promotion are two of the most suitable options available for the Nepalese producers of green tea and enhancing sales in the target market. Considering advertisement, the attractive online campaigns can be developed using relevant contents disclosing key benefits and usefulness of green tea consumption while adopting popular social media platforms to reach the mass audience. As part of sales promotion, free samples, coupons and referral discounts can be used through the dealer networks for developing a highly engaged customer base in the Malaysian beverage market (Mohanraj and Kalaivani 2016). In this case, the promotional strategy should be designed by focusing on attitudes, behaviours and preferences of target market consumers so that they end up purchasing the product right away or become interesting in determining much detail about the product for further awareness.
Problem Identification and Solutions
One of the most common problems faced by the international marketers is related to tariff barriers involving taxes and duties imposed on importing goods from other countries. It is observed by Grönroos (2016), the increased burden regarding tariff barriers often causes host countries to earn inadequate profit margins while selling products in the international environment of host countries. Apart from frequent changes in tariff rates that cause a huge uncertainty among international traders, diversities in terms of culture and civilisation often pose as a special problem for the international marketers. In terms of variations in needs, preferences, buying behaviours, expectations and consumption habits, customers of international markets often exhibit a considerable level of social and cultural issues for the international marketers (Jean et al. 2016).
While the Greenfield operations can adopted by a manufacturing business to overcome tariff problems, the particular strategy is not suitable for the identified product due to the requirement of favourable climate and geographic terrains for producing green tea. In this case, the Nepalese producers may opt to buy an entire distribution network in Malaysia to wholly own the operation in host country and enable it to sell products produced in the home country (Grönroos 2016). Developing a solution to manage diversity in the international market, on the other hand, require the producer assessing needs, preferences, buying patterns and lifestyle choices among others to develop increased understanding and design effective marketing campaigns.
Lastly, success of the international business can be measured by developing smart criteria to the intended goals and objectives and comparing between expected and actual performance of the international trade. With an expectation of strong consumer loyalty concerning the rising awareness about health and wellbeing, the traders and dealers require measuring brand impression on a time-to-time basis while controlling outcomes using a valuable key performance indicator (KPI).
Conclusions and Recommendations
Considering the type of product and nature of competition in the international market, it is important for Nepal green tea to concentrate on providing exceptional quality to consumers while strengthening product attractiveness. Strong experience in international marketing environment over the years, together with growing use of innovation and technologies are consistently strengthening the commitment of producers and growers in tea industry of Nepal. Because of the rising demands for consuming tea among other beverages for its health-related outcomes, Nepal green tea has the viable opportunity to expand into the Malaysian beverage market.
However, exploring a significantly new market apart from its regular international markets of Europe and North America will require adopting a highly focused marketing campaign in line with sociocultural trends in the chosen country. It is recommended to use tailored advertising and promotional campaigns for different groups of customers in the Malaysian markets. On the other hand, proposed strategies should be adopted as soon as possible for overcoming the challenges associated with international marketing.