GSBS6041
Global Marketing Plan
For T2
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Executive Summary
This global marketing plan is based on the company’s previous opportunity
analysis report in assessment 1. The Chinese market is seen as the next big
source of value for T2. After the SMART marketing objectives are clearly
identified in this report, the target market are analyzed to improve the efficiency
of marketing entry into China. The report considers the cultural differences
between China and Australia in the context of tea culture and the functions of
the tea product in China. A specific marketing mix plan is developed with clear
market positioning details provided to maximize brand value and successfully
realize T2’s global expansion.
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Table of Contents
1. Introduction…………………………………………………………………………………… 3
2. Statement of Marketing Objectives…………………………………………………… 3
3. Target Markets………………………………………………………………………………. 5
3.1 Target customer………………………………………………………………………. 5
3.2 Target geography ……………………………………………………………………. 7
4. Marketing Strategy – Marketing Mix Elements …………………………………… 8
4.1 Product ………………………………………………………………………………….. 8
4.2 Price………………………………………………………………………………………. 9
4.3 Promotion …………………………………………………………………………….. 10
4.3.1 Advertising…………………………………………………………………… 11
4.3.2 Sales promotion……………………………………………………………. 11
4.3.3 Personal selling ……………………………………………………………. 11
4.3.4 Internet marketing…………………………………………………………. 12
4.3.5 Social media marketing …………………………………………………. 12
4.3.6 Loyalty program……………………………………………………………. 13
4.4 Place……………………………………………………………………………………. 13
5. Market Positioning ……………………………………………………………………….. 14
6. Conclusion………………………………………………………………………………….. 15
7. References …………………………………………………………………………………. 16
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1. Introduction
At present, T2’s global expansion has exceeded 100 retail stores. With the
acquisition of T2 by Unilever in 2013, T2 ’s annual net income is considerable
(Mitchell, 2020). This provides a huge opportunity for global expansion of the
business. Based on the analysis of the previous Opportunity Analysis report in
assessment 1, the strategy that can provide future benefits to T2’s global
expansion is to enter the Chinese market. This report will detail a global
marketing plan to maximise the success of the T2 brand with consumers in
China. The structure of this report is as follows. First, marketing objectives
based on the SMART framework will be formulated according to situational
analysis to set boundaries and define the steps to be taken, the resources
required to achieve the objectives, and the milestones of progress of the entire
process. Second, in the face of different cultural backgrounds and consumers,
a clear definition and analysis of the target market is provided (Ko, Taylor, Sung,
Lee, Wagner, Navarro & Wang, 2012). This will be presented in this plan to
inform the development of the marketing mix elements in order to achieve the
prescribed marketing objectives. Finally, this plan will define the precise
positioning strategy of the brand in the Chinese market and clarify the brand
value proposition to meet the needs of each type of target customer.
2. Statement of Marketing Objectives
Before formulating marketing objectives, situational analysis can help
determine the business status of T2 in the Chinese market in order to making
the overall marketing plan more feasible. According to the SWOT analysis
illustrated in Figure 1, the following conclusions can be drawn. In terms of
product conditions, T2 has a relatively innovative product line compared with
many competitors in the traditional tea industry in the Chinese market. This
combination of unique flavours and artistic packaging will be an advantage for
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T2 to enter new markets. However, from the perspective of the overall industry,
the history of Chinese tea culture has been established for many years. For
new tea entrants, market power is relatively weak, which is a challenge to
establish a stable, long-term position in the marketplace. In addition, in terms
of competition, there are many direct competitors and numerous substitute and
complimentary products available in the broader Chinese beverage market.
This requires a brand’s unique value proposition to clearly differentiate it from
in country competitors in order to succeed. However, market infrastructure in
China is evolving to enable new channels to market for consumers. For
instance, China’s e-commerce infrastructure is becoming more robust and
efficient enabling new entrants such as T2 opportunities to implement digital
marketing strategies in order to reach Chinese consumers. Further, with the
increasing trend of healthy living, and the impending threat of Coronavirus to
people across the country and the world, consumer demand for health products
is growing, which can also be regarded as a huge potential opportunity for T2
health tea.
Figure 1: SWOT analysis of T2
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Based on the aforementioned situation analysis, marketing objectives will be
based on the SMART model to achieve the overall business strategic objectives.
These include:
Objective 1: Realize sales growth of 20% through physical sales within 6 months.
Objective 2: Realize sales growth of 30% through e-commerce within 6 months.
Objective 3: Each quarter, increase T2 brand awareness and recognition with the
target market by 20%.
Objective 4: To achieve a base of 100,000 T2 Chinese members within 1 year.
Objective 5: Achieve 50% market coverage in China’s first-tier cities within 1 year.
3. Target Markets
Product demand is often referred to as customer demand (Kittaneh, 2014). But
in the process of global marketing, customers of different backgrounds still
often have wide cross-cultural differences. Therefore, the analysis of the target
market is extremely important. Its role is to analyze the basic characteristics,
behavior and lifestyle of potential customers to help company’s direct resources
to high potential growth sales and customers who are interest in products
(Pradiptarini, 2011). In addition, target geography is also an important division
to accurately identify the target market because of the extremely large
population and area of the Chinese market.
3.1 Target customer
In the Chinese market, the main use of tea is often not just a tasty drink, but
also as an important gift. Therefore, the target customer group will be analyzed
from two aspects. The first is analyzed as a leisure drink to be tasted and
enjoyed. According to the analysis of China’s tea industry (2019), the main
consumption of the age cohort born in the 1970s is declining, with consumers
born in the 1980s and 1990s having replaced them as the main segment of tea
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consumers in Chinese society. These consumers pay more attention to the
consumption experience of tea and emphasize individuality. The main
population of tea consumption is primarily consumers between the age of 25-
35, across both genders. These consumers enjoy fashion, expression of
personality, and emphasize preferences for culture, socialisation and flavour in
the consumption experience of tea. The secondary segment of tea consumers
are concentrated in the 40-45 age group. These consumers place greater
emphasis on the pursuit of a healthy lifestyle and pay attention to the sense of
ritual in daily routines of life, and the quality in one’s life. Both of these target
segments reflect a high level of education and middle- and high-level family
income. In addition, these segments are strong users of the Internet, smart city
transportation, and e-commerce shopping within large urban city centres. In
order to more systematically divide the market and understand each market
segment, Keller’s (2013) segmentation model provides four features to analyse
the characteristics of each segment including behavioral, demographic,
psychographic and geographic bases as presented in Figure 2 below.
Figure 2 – T2 Segmentation Bases
In addition to the above-mentioned target segments, tea can be considered as
an important gift such as business gifts to promote relationships and activities
with a business’s clientele. This is particularly the case for small businesses
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where their CBD office locations in China may involve a large number of
customer visits and business negotiations taking place. Business customers of
T2 may perceive the brand to signal a sincere and quality image in their
dealings with their customers by offering a high quality tea during these
interactions.
3.2 Target Geography
China divides all 337 cities into 5 grades, which are mainly divided according
to the five-dimensional indexes of 1) business resource aggregation, 2) urban
hub, 3) urban population activity, 4) lifestyle diversity and 5) future plasticity. In
the first year of T2 entering the Chinese market, it is suggested to focus on 4
first-tier cities and 6 second-tier cities in the southeast and northwest regions,
including Chengdu, Tianjin, Hangzhou, Chongqing, Qingdao and Kunming.
Firstly, the commercial development of these cities is more high-end and
exclusive, so the cities with overseas brand reputation have more advantages
for T2 to enter the market. Secondly, consumers’ lifestyle preferences
associated brand preferences in these cities are more sophisticated. As these
consumers generally seek out the lifestyle of fashion consumption and possess
strong economic capacity, the artistic and creative positioning surrounding the
T2 brand image will be attractive to this segment. Thirdly, the government has
introduced policies and benefits for international brands to more effectively
compete in the tea industry structure. According to Ghemawat’s “AAA” Global
Strategy Framework (2019), if adaptation strategy is to be effectively used, it is
necessary to reduce the impact of cross-regional differences in the target
market, so as to focus on the success of product, design, innovation, value
chain and so on (Jha, Dhanaraj & Krishnan, 2014).
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4. Marketing Strategy – Marketing Mix Elements
With the rapid development of globalization, the distinction between marketing
within the company’s home country and marketing within the external market is
disappearing. However, if a company chooses to depend on complete
standardization strategies, it may increase risk. Therefore, in the process of
marketing adaptation strategy, it is crucial to accurately target the right market
and consider cultural norms, and local consumer behavior preferences into
account when T2 expands into the Chinese market. McCarthy’s marketing mix
framework will be used to analyse the four important elements of product, price,
promotion and place to develop the marketing strategy that is suitable for the
T2 brand and realize the prescribed marketing objectives in section 2.
4.1 Product
T2’s positioning of the product focuses on high quality and unique flavour’s in
their tea varieties. There are now more than 250 varieties of tea blends which
are all made by new and experimental blends, including scented tea, fruit tea,
functional tea and classic black and green tea (About T2, 2020). It is worth
noting that T2’s product strategy is that all tea ingredients originate from all over
the world to ensure the uniqueness of the product. It is recommended that this
focus on product uniqueness and innovation be maintained after entering the
Chinese market to meet the needs of the target market. Considering the long
history of tea in the Chinese market and the deep-rooted knowledge of tea, T2
should be developing localized product lines to account for local taste
preferences such as China’s top teas, including Biluochun, Longjing, Iron
Guanyin, Silver Needle, Puer Tea and many more. In addition, with the growing
focus on health consciousness globally, it is recommended that T2 develop a
variety of health-care teas to appeal to Chinese consumers to further penetrate
the market.
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In terms of product design, T2 mainly uses paper packaging with kaleidoscope
patterns of various colors and sizes, all with exquisite golden embellishments,
complex die cutting and embossing (About T2, 2020). This model can be fully
replicated into the entire in-store experience within China. In addition, according
to the diversified needs of the target segment of customer for tea, it is
suggested to increase the packaging of aluminum cans to optimize the gift
design to meet the preferences of the ‘gift-giver’ Chinese market segment,
especially small-sized small cans of tea, can also achieve the portability of tea
to meet social needs. Furthermore, the sealing film with aluminum cans is able
to keep the tea fresh to increase the taste and ensure quality (The Aluminum
Association, 2020).
4.2 Price
According to Goi (2009), price and perceived value are closely related. When
T2 enters a new market as a premium fashion tea, establishing T2’s high-end
market image is recommended to be the primary goal. In terms of market
environment, the GDP of the target geography is more than $200 billion, which
generally has strong purchasing power and weak price sensitivity (Hernández,
2018), so this is very beneficial for T2 pricing strategy. In addition to taking into
account factors such as tea production costs, marketing expenses and tariffs,
T2’s premium positioning also needs to consider finding an appropriate balance
between exclusivity and availability. Its sales price in China can reflect the
quality, tradition and uniqueness of tea. From the perspective of pricing strategy,
T2 can apply the price skimming strategy to enter the market at the beginning,
instead of using the price synchronization strategy with Australia. Because T2
has a more innovative product positioning in the entire tea market in China, and
it is strongly differentiated from other traditional retail bulk teas and tea
experience in tea houses, it is likely to become a pioneer in the field of premium
fashion tea and consequently set a higher price. Because this can meet the
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marketing objective 1 & 2, to achieve maximum profits in a short period of 6
months rather than rely on volume of sales. It can help T2 quickly recover sunk
costs before China’s fierce tea market increases competition and force price
pressures (Shavandi & Zare, 2013).
According to Goi (2009), price and demand are also closely related. As T2’s
position in the market becomes stable and the overall customer demand
increases, the price can be flexibly adjusted to achieve a balance to attract
more customers. However, it is worth noting that this strategy is not suitable for
the long-term development of T2 in the Chinese market, because too many
price adjustments may affect the high quality that consumers have established
for products, and competitors will also choose to enter the market to achieve
market share (Shavandi & Zare, 2013). After fully understanding demand and
supply, optimal price setting is recommended as a long-term strategy. As such,
T2 needs to set a floor price and ceiling price for products in the Chinese market
and then determine the final price of the product through the sales probabilities
at different price points to achieve demand balance and long-term sustainable
profits (Shipley & Jobber, 2001). Such combination of long-term and short-term
pricing strategies can help to achieve T2’s financial goals and generate profits,
matching market reality and consumer buying trends and supporting product
positioning.
4.3 Promotion
Before a company decides to extend globally, it must consider multiple factors
in the international marketing environment, including politics, legal, society,
culture, economy, and even technology (Yüksel, 2012). Ultimately, at the level
of global marketing, there are many challenges when formulating a promotion
plan with only one voice to communicate with global customers. As such, T2
must be flexible enough to adapt to the changing Chinese market trends and
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preferences. Integrated marketing communication (IMC) will be recommended
to be implemented in the Chinese market to enable the target markets to obtain
consistent and persuasive brand information across a multitude of channels to
influence the target customer’s purchase decision, and finally achieve
marketing objective 3 & 4. The following discussion elaborates on this issue.
4.3.1 Advertising
Advertising, as a form of paid media, can attract a large audience in a short
time. T2 is recommended to choose outdoor billboards in subway, airport and
city center locations for simultaneous placement to stand out amongst
competitors and increase brand awareness. The outdoor advertising is chosen
because it is accurately delivered mainly by covering the lifestyles of the target
market segments. The bright brand colors of T2 are mainly used to highlight
the premium and fashion of the product, and to promote the brand value to
ensure that the right information is communicated to the right person.
4.3.2 Sales promotion
Sales promotions are short-term tactics that accelerate sales with customers.
T2 can utilize holiday periods to offer discount coupons and promote sales on
selected products to stimulate sales. In terms of specific implementation, it is
suggested that T2 implement bundled gift packages to emphasize value for
money and fixed discounts for loyalty program members to stimulate sales.
However, the discount should not be large, as this may diminish the positioning
of the T2 brand reputation and image that will result in the reliance of heavy
price discounting.
4.3.3 Personal selling
Personal sales refer mainly to face-to-face interactions with end customers. As
such, interactive customer service within retail stores is vital to improve
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consumer satisfaction and retention of customers. Because the service is
intangible, in order to build a premium T2 brand image and build relationships
with customers more effectively, efficient service processes are necessary to
ensure staff are supported to delivery high service quality to customers. This
will help T2 better manage the customer relationship between each touch point
in the customer journey. Such high service quality further supports the
positioning and embodiment of T2’s brand image of quality in the market.
4.3.4 Internet marketing
With the development of the Internet, the China market has increased the
sophistication of its e-commerce infrastructure in the marketplace over the past
deacde. According to statistics of ‘Analysis of Development Scale and User
Behavior of China’s Online Shopping Market’ (2019), the Internet is considered
the most important channel in marketing activities, accounting for 70% of
overall advertising. With the substantial growth of Chinese online consumers,
T2 can increase the number of e-commerce page views of its web presence
through the search engine optimisation, and implementing advertisements into
mobile apps such as video websites and live broadcast platforms to increase
traffic to its website in China. In addition to paid traffic, China ’s self-media
platforms and online celebrity shopping channels are stimulating structural
changes in the retail industry. It provides an opportunity for T2 to work with
these platforms and key celebrity influencers to increase web visitors. However,
T2 will also need to deliver a compelling, differentiated online experience via its
own website for its customers to improve the conversion rate of traffic.
4.3.5 Social media marketing
In a study by McKinsey Research, Chinese consumers accounted for 44% of
the total time spent online. This means that social media apps such as WeChat,
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Weibo, Tiktok, small red book and other popular social media apps have great
potential to realize the exposure of the new brand T2 and eventually transform
into actual sales. T2 can increase user acquisition through in-site advertising,
interact with opinion leaders, view product recommendation and built-in applets,
and communicate directly with users on the new lifestyle and value proposition
offered by the T2 tea brand. Positioning of the T2 brand needs to communicate
the concept of T2 as a premium product as well as a status symbol.
4.3.6 Loyalty program
Apart from the above IMC tools, T2 is recommended to launch a loyalty
program in China to build a brand community and customer database for
customer relationship management. This includes the offering benefits for
members including communicating brand-related information such as new
products, inspire tasting new flavours, invitations to tea parties and special
events, exclusive members ’discounts, and free samples to promote the growth
of the number of new members. As a new entrant into the Chinese market,
brand community customers can increase customer participation to better
understand T2’s tea culture and brand value. Similarly, such relationship
building will also help T2 to listen to customers’ feedback that can be used for
innovation, and improvements to the brand experience that enhance customer
loyalty, and ultimately market share.
4.4 Place
Unlike T2’s extensive distribution channel strategy in Australia, the channel
strategy in the Chinese market will be combined with the brand’s premium
brand positioning and target markets to launch precisely. First, it will only
choose major commercial districts and large shopping malls in first-tier cities to
open franchise stores. Such an approach will replicate Australia’s unique
fashion experience-style store atmosphere to increase consumer interest and
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brand differentiation. Moreover, T2 will also provide services for luxury venues
including hotels, clubs, restaurants and so forth to establish brand image while
improving market coverage, and achieve Marketing Objective 5. Further, with
the rapid development of China’s online technology, online shopping has
become one of the essential communication channels for Chinese consumers.
According to the analysis report of Chinese consumers, the number of online
shoppers in China has risen to 638.82 million in 2019 (Analysis of Development
Scale, 2019). It is recommended that T2 establish a web presence on Taobao,
China’s largest e-commerce website, to expand distribution channels to cater
to the specific needs of the target markets. In terms of the physical retail stores,
T2’s stores will provide storage functions to fulfill order from its online stores
and provide 48 hours or even the same day delivery services for these
customers in these highly urbanized areas. From a strategic omnichannel retail
perspective, the high quality experience in the physical store will also drive
online sales owing to the positive brand experience as perceived by consumers
(Williams, 2016).
5. Market Positioning
T2’s market expansion in China requires a clear market positioning to
differentiate the brand’s position in the minds of customers for competitor
offerings. This requires the market positioning communicated across all
channels to be consistent and unified to support the high end brand image. As
such, T2’s global positioning strategy is the same, “tea done different”.
In the identified target markets in China, T2 fundamentally satisfies two needs
for drinking flavorsome tea and gift giving. Therefore, besides emphasizing
uniqueness, health, fashion, and luxury are more important to satisfy
consumers’ personal pursuits and pride when gifts are sent to friends owing to
the very important “dignity” culture in China. T2 will also need to emphasize
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product quality, premium tea brand and status symbol in its positioning strategy
to change the old fashion and stereotypical impression brought by tea. While
the brand will need to not let people feel that T2 is unattainable, but rather
create an image of love of life brought by a cup of tea.
6. Conclusion
T2’s global expansion has extended to North America, Europe, and Singapore.
China will become the next market offering significant potential. This marketing
plan is based on the T2 global marketing strategy with various elements
implementing an adaptation strategy to account for China’s national conditions
and culture to maximize success. After clarifying the objectives of the marketing
plan, a detailed marketing strategy was designed according to the definition
and analysis of the target markets, and a specific plan was carried out from the
four dimensions of product, price, promotion and place to meet the need, want
and demands of the target market. The report further discussed the market
positioning of T2 around associations of premium, fashion-oriented, and
uniqueness. Relying on T2’s existing expansion capabilities and potential
opportunities in the Chinese market, effective marketing plan execution should
expect to achieve its marketing objectives.
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7. References
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https://www.t2tea.com/en/au/about-us.html
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