In 1992, Gujarat tea Processors and Packers Limited (GTPPL), manufacturer-cum-marketer of WAGH BAKRI brand of tea, introduced a new product into the market – tea Quik tea bags. GTPPL, a leading player in the Gujarat tea market has been in this business since 1893. Wagh Bakri range of products enjoyed 50-55 % of Ahmedabad dust tea market in 1994-95. But the market response to Tea Quik, as far as sales are concerned, had not been upto the mark. In 1994-95, GTPPL managed to sell 300 kg of Tea Quik in Ahmedabad market whereas Taj Mahal, its nearest and only rival, sold 1000 kg.
The size of tea market in Ahmedabad was approximately 40,000 Kg. Of this about 1300 kg (3.25% on volume terms) was that of tea bags and the remaining consisted of leaf tea and CTC. Tea was sold both in the loose form and packaged form. (The corresponding figures were 70% and 30% respectively – in volume terms). GTPPL procured tea from Calcutta auctions and blended it to suit the local (Gujarati) taste.
GTPPL executives had no plans to enter the national market in the near future and wished to strengthen their leadership in the local market. Product superiority (the “Gujarati” blend) and consumer loyalty seemed to be the corner stone of the business for GTPPL. According to GTPPL sources, their long standing in the business had made WAGH BAKRI a household name. Moreover, Wagh Bakri had been able to enjoy continued acceptance from generation to generation in Gujarat.
The reasons for launching Tea Quik tea bags in 1992 were twofold:
1. The Merger of Lipton India Ltd.
with Brooke Bond Ltd. to form BBLIL had further strengthened the position of these already strong corporate players. As fallout of this, the Red Label brand was revitalized and its share increased from 12.4% to 14.5% (by volume) at all India level and from 13% to 14.8% in the West.
Also because of the sheer size of their operations and the financial strength, the corporate players could afford a greater push for their product as compared to regional players like GTPPL. According to trade sources, Brooke Bond offered 13 to 14% margin to the distributors who passed on 5% to the retailer. Further, Gujarat being one of the better Industrialized and prosperous states, they found it lucrative as well as convenient to concentrate their efforts in Gujarat.
It should be noted, at this stage that the core segments of these rivals are different. 90-95% of GTPPL’s revenue came from the dust tea and leaf tea (which is primarily aimed at lower income strata). But GTPPL thought it to be the prudent to launch one or two brand at the premium end (namely Good morning and Tea-Quik) to restrict the onslaught of the big players into the Gujarat market.
2. Being the market leader, GTPPL thought it natural for them to be present in every segment in Ahmedabad market and with the increase in offices in Ahmedabad, tea bags was a growing segment.
Moreover, the margins were higher in tea bags segment. CTC tea was selling at around Rs. 100 /kg, whereas tea bags fetched Rs. 200 /kg.
Thus, there were two players in the tea bag segment as far as Ahmedabad is concerned. The other brand TAJ MAHAL was available in packs of 100 tea bags at a retail price of Rs. 42 and also in packs of 25 tea bags for a price of Rs.11.
The most visible pack of Tea Quik contained 25 tea bags and was priced are Rs.10. Tea Quik also had a pack of 100 bags for Rs. 40. Hence, on price both the brands were equivalent.
According to GTPPL, Tea Quik had a few plus points. It boasted of the typical Kadak and Mithi Gujarati taste, it was made available through the tried and tested WB distributors’ network and was being advertised on TV in an umbrella campaign for the WB brand.
With the entry of brands like Taaza, Brahmaputra, Assam-Gold, etc; the Marketing Manager at GTPPL was concerned about the sales revenues of GTPPL and especially that of Tea Quik. Although he had a few hypotheses to explain its dismal performance, he decided to seek expert assistance to ascertain the reasons for low sales of Tea Quik and to make appropriate changes in the marketing mix based on the suggestions thereof.
1. Identify the decision problem faced by GTPPL and define the research problem. 2. Identify appropriate hypotheses and information needs.