Lipton is one of the best known and bestselling brands of tea and has made a big splash in global market with its tea-based drinks including leaf tea, infusions, ready to drink tea and other alternatives to soft drinks. It has a wide product range which includes, Yellow Label Tea, Lipton Ice Tea and Lipton Green Tea (Unilever, 2011)
SWOT analysis is a strategic plan that is used by businesses and companies to evaluate the strengths and weaknesses that can make or break their organization. It also highlights the opportunities that a company can consider and threats that can cause problems for a company. Strengths and weaknesses are internal organizational factors where as opportunities and threats are external factors for an organization (Kotler, 2009)
Strengths
Lipton is a brand of Unilever, which is a multinational company with huge funds and profits and business spread all over the world. Hence, Lipton through Unilever has access to vast markets and large customer data base. Consumers too, trust Lipton as a brand since it is a product of a great company like Unilever.
The biggest strength of Lipton as a company is that it has existed for years in the market and has operations worldwide in over hundred and ten countries. (Unilever, 2011) Hence, it has strong brand recall and brand awareness. People all over the world are aware of the brand and have strong recall of it. Moreover, the company has a large number of loyal customers that have stayed loyal to the brand since years.
Lipton uses internet based marketing techniques extensively to promote offers, discounts and introduction of new products and services (Boyer and Hult, 2005) It also has competent management team which is able to perform outstandingly even in existing fierce competition and high inflation rates. Through its management team Lipton Tea has retained its position as the market leader with the sales of nearly over three billion today. (Unilever, 2011) Lipton as a brand has strong ethical values and its slogan for Lipton Tea “Lipton Tea Can Do That” has been successful worldwide (Lipton, 2011)
Another prominent strength of Lipton is that it comes up with new innovative products quickly to satisfy changing consumer demands. It has come up with different tea flavors like as Lipton Vanilla and Lipton White Tea Pomegranate for its consumer’s. Moreover, Lipton realized the growing need and demand of market for green tea and instantly came up with its Lipton Green Tea product to satisfy its consumers (Lipton, 2011) Weaknesses . One of the biggest weaknesses of Lipton is its high price. Due to this a lot of consumers are unable to buy the product.
Tea is a habitual need of many people around the world. Hence, the competitors in market are immense. These include Indian and Chinese tea production companies that have generally lower prices than Lipton. Moreover, since Lipton has operations in more than hundred countries, the local tea producing houses are also potential competitors. iii. There are also potential substitutes in the market available for tea. These range from coffee to juices and soft drinks. iv. The positioning of Lipton as a brand is such that it has given an image of a premium product. Such positioning has resulted in low emotional attachment on the part of consumers for Lipton.
Opportunities
One of the biggest opportunities for Lipton is the increasing population growth globally and the increasing growth of tea market all over the world. Lipton can, hence, increase its customer database. People all over the world have become health conscious even when it comes to drinking tea. Green tea has become a favorite for all people regarding losing weight. Hence, Lipton can exploit this particular consumer need and increase its market shares.
Lipton has exploited markets all over the world but there are markets remaining to be exploited. It can exploit those markets and make its presence more dominant in the world. Lipton can even take over small local tea production houses to reduce competition in the countries that it is operating in. The threats that exist for Lipton are immense. These include price wars that Lipton continuously has with other competitors both locally and internationally. Moreover, cheaper technology has given the option to small companies in investing in producing tea.
Low barriers to entry are also increasing competition. ii. Rising inflation is also a threat for Lipton since it is decreasing the disposable income for consumers and may result in decrease in buying of Lipton products. Lipton imports its raw materials to different countries worldwide. These include importing materials from its plantations from Kenya, Tanzania and East Africa. Hence, the rising taxes and import duties will further add the cost of producing Lipton’s products (Lipton, 2011) Competitive Advantage Lipton’s main competitive advantage is their admirable portfolio of references.
Since they have been in this business for years, their experience and dominance cannot be easily ignored. Throughout the time that they have been in the business, they have gathered a large number of loyal customers all over the world. Hence, the long list of loyal customers promotes an image of Lipton to potential customers as the one of trustworthiness and quality. Also, Lipton’s net sales were generated to up to 3 billion currently which proves that customers prefer Lipton Tea admirably (Unilever, 2011) Lipton has also proven that it can work extremely well in multi-sectored partnerships.
It also has a good global logistics network that has proven its worth with time. Moreover, they have scientific knowledge regarding food and nutrition with an excellent research and development department (Lipton, 2011) Another core competency of Lipton is its strategic business planning. They set directions through strategic planning for the organization overall where everybody from executives to employees are committed (Grant and Wilson, 2003). This ensures that every part of the organization is in harmony and the work done then carries a meaning.
This also leads to making fundamental changes in customer service when necessary, making important investment decisions or doing research and development when required (Grant, 2010) Last but not the least, another major core competency of Lipton is the way that it has been able to manage the diverse consumer portfolio worldwide keeping in view the cultural differences and cultural preferences of consumers. Moreover, they have also identified the changing needs of consumers before their competitors since they came up with products like Lipton Green Tea and Lipton White Tea (Lipton, 2011) Target Strategy
Tea drinking has become a habit for people all around the world. It is no longer considered a fashion, neither it is drunk at occasions, rather, people now drink tea at least twice a day or more considering their needs. In such a situation, where tea drinking is high, Lipton has targeted the market as follows:
- People who are addicted to tea or drink tea at least twice a day due to their cultural background or any other reason. Lipton has targeted such people with its Lipton Yellow Label Tea, Red label and Black Label Tea.
- For people who have become health and weight conscious, Lipton has targeted them with Lipton Green Tea and Lipton White Tea. It has even come up with different flavors to satisfy changing consumer demands for taste.
- Its third target audiences are the youth. These are those youngsters who want substitutes from soft drinks and juices and a beverage that is ready to drink and can be consumed out of house easily. Lipton has come up with Lipton Ice Tea that is packaged in disposable cans and is available readily.
Positioning Strategy
Lipton has positioned itself worldwide as a brand that is healthy and of high quality along with a high price. It has developed a feeling of high class and great aroma to its name. Its positioning is the same globally no matter whether it is operating in developed nation like as United Kingdom or in developing nations. Product Development Strategy Lipton always comes up with new tastes and flavors to satisfy consumers changing demands. It has come up with different tea flavors like as Vanilla and even flavors in Lipton Green and White Tea brands ranging from Raspberry to Pomegranate in White Tea and Orange to Natural Green for Green Tea.
It has even formed collaboration with the leading soft drinks company Pepsi Co. for its iced tea product range. The collaboration was done for two main reasons that are to move Lipton to new distribution channels and into new markets Product Life Cycle A product life cycle can give a business an essential advantage (Grant and Wilson, 2003). This is because it helps the businesses to observe when to launch a product and assess the current position of a product on the life cycle graph.
Product life cycle consists of five stages namely; introduction, growth, maturity, decline and extension (Stimpson, 2002) Lipton has reached the stage of maturity where its sales have remained constant and its consumers are buying its products continuously. However, the brand has applied many extensive strategies recently, with introduction of new products and flavors and extending its markets. If we take any one product of Lipton and study it, we will come to know that almost all of Lipton’s products have extended their product life. An example is that of Lipton Yellow Label.
The product had reached maturity stage and to extend its life various promotional campaigns globally took place along with introduction of new flavors like as Yellow Label French Vanilla, Orange & Spice and Raspberry. Promotional Strategy Lipton has used a large number of promotional strategies for promoting its brands.
- Its uses below the line promotion tactics like as kiosks at markets and point of sales in super markets. It has even appointed sales people whose target was to ensure that people can get a free sample of any new flavor that Lipton launches.
- It has participated in discounts and various sales promotions.
- The company has been a part of informative advertising where it has informed its consumers about health benefits of its products. Moreover, it has also involved itself into various exhibitions (Hill and Jones, 2009)
- Moreover, it has even initiated carom championship events throughout UAE in tea shops Lipton also used a promotional strategy where consumers were given an offer to buy three family size boxes of Iced Tea Brew or cold Brew to get a NASCAR licensed pitcher for free during 2008 (Lipton, 2011).
- The brand also uses celebrities to endorse it where recently it has used pop singer. It has produced a global advertisement using Lalo Schifirin, an internationally acclaimed music composer, which was aired in more than twenty countries.
Recommendations
The first and foremost recommendation for Lipton is that it should lower its price and aim for people with lower incomes. In this manner, it will be able to generate more sales and increase its profits. Moreover, it will also be able to increase its customer’s database too. Tea market is such a market that is growing and has there is no possibility of it to reach saturation.
Hence, Lipton should apply extension strategies like as increasing promotions and finding new markets. Youth today like as college and university going students have been noticed to increase their consumption of tea. Lipton should target the youth extensively with new packaging and flavors to target them. Local competitors are a big threat for the company. Hence, Lipton should either form collaborations with them or take over the local competitors to decrease the number of competitors. Products like Coffee and soft drinks are easy substitutes for tea.
A large number of people consume them and those who do not, there is a potential that they might substitute from tea drinking to these products for a change in taste. Lipton should exploit the healthy side of drinking tea and promote it extensively. This will generate good results since people are becoming more health conscious.
The market for Green Tea is on rise. A large number of people have increased their consumption of green tea for various health and weight reasons. Lipton has high shares in Green Tea market, but there is still potential for more. Lipton should aim for strong relationship with its customers since customers are the ones whom Lipton is aiming to satisfy. Hence, their complaints and suggestions will help the brand to cater to their needs and become stronger.
Lipton has operation worldwide in more than hundred countries. It should aim o understand the different tea habits and the cultural differences. Even though Lipton has been a market leader for a long time, it should not consider this as an everlasting thing. It should continuously invest in technological innovations and develop strategic management. Lipton should opt for Human Capital Management rather than Human Resource Management that is their aim should be to consider their human part of raw materials as a capital only and they should invest in this capital to produce greater results (Hill et al, 1998).
Lipton should be more involved in Corporate Social Responsibility as a brand. It should even opt for “Go Green” campaign where it adopts environmentally friendly business tactics. This will leave a good imprint on people’s minds that are becoming more aware of preserving the environment. The brand should start promotional strategies that are below the line activities. These can be held at universities and college campuses aiming the youth.
