Zen Tea Marketing Strategy

Executive summary

“ZenTea” is a tea brand that offers traditional Chinese tea in New Zealand, especially for non-Chinese customers to have access to intrinsic Chinese tea experience outside China. Although compared with coffee, tea consumption is not massive, but people in New Zealand still consumed 3,600 tonnes of tea in 2019. “ZenTea” only provides great Chinese tea with top customer service and targeting the niche market of tea products.

 

“ZenTea” will sell its products via the company website and a brick and mortar showroom in Parnell, Auckland where customers can have tea tasting with the tea master. Apart from premium tea products, exclusive customer service is one of the critical elements that provide a value proposition to its customers.

 

A 3-year implementation plan is determined for “Zentea” to achieve 1,500kg in year 3 with an EBIT of 180,800 NZD.

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Package design of Big Red Rob

Step 1: Market Research & Context

According to Euromonitor International (2019), the consumption of tea was 3,600 tonnes and generated 131 million NZD revenue in 2019, with a growth of 1% in retail volume compared with the previous year. However, the proportion of loose tea has maintained a decreasing trend in retail channels as more consumers consider loose tea as a niche product for traditionalists and genuine tea enthusiasts. Teabags, primarily black tea has dominated the tea market in New Zealand, and the traditional status remains under threat from the rise of coffee culture.

 

“ZenTea” is created to offer intrinsic Chinese tea to New Zealand customers, especially for tea enthusiasts. The craftsmanship and culture of Chinese tea are very traditional and somehow complicated. Even the younger generation in China started to have less knowledge about tea because of the globalization and the influence of western culture. This factor has made Chinese tea even harder for people outside China to get access to the tea culture and knowledge. Merchants in the tea industry in China rarely speak English, and they mainly focus on the domestic market. The language barrier has become one of the most significant obstacles to the development of Chinese tea outside the Chinese market.

Step 2: Competitor Analysis

There are some tea distributors in New Zealand that selling traditional Chinese teas through online website and Alibaba platform. Nevertheless, the description of tea products given on the online platform does not provide sufficient information, and the design of the website does not convince customers that they were offering good quality tea products. Most Chinese tearooms sell loose tea they source from all over China, but they have not promoted these products as a private brand.

 

This kind of tearooms is more like an offline dealer merchandise store. Therefore, the offering from “ZenTea” of tea products and services are distinguished from commodity tea products such as T2 and Twinning’s by providing traditional Chinese speciality teas, and from traditional tearoom services through offering branded products.

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Step 3: Segmentation, targeting & Positioning

“ZenTea” targets the niche tea market in New Zealand. Since traditional Chinese tea has never been cheap to consume, the target customers of “Zentea” are people with income more than NZD 200,000 annually and aged 45 to 55 (Susan & Debrin, 2019). They were experienced people with more leisure time in their daily life and enjoy life since they were already very successful in their careers.

 

Although they were mature people, they still willing to try new things and see the world in different angles such as practising yoga and travelling around to overseas regularly. They could also favour other product with sophisticated features such as caviar, foie gras and truffles. In their mood, they tend to be in a peaceful way of life and being world-minded and tolerant. 

“ZenTea” positions itself as an expert and supplier in traditional Chinese teas, offering both the most delicate tea products from China and also tea-tasting, storytelling and training experience to its customers.

 

Two brands have similar positioning in the same segment in the international market: TWG and Jing. However, both of them only provide commodity loose teas to its end customers. Although the quality of their loose tea and teabag products are adequate, still less significant features compared to speciality teas, and they present less customer engagement and communication in tea training and tasting. Moreover, the two brands are not presented in the New Zealand market and stronger at B2B channels such as hotels and high-end restaurants.

Step 3:  Product/Price/Place/Promotion

The essential products in "ZenTea" are Chinese traditional loose teas which are purely harvested and processed in China. "ZenTea" provides two different product ranges of loose teas. One category includes various common teas in China, such as silver needle (white tea), Maojian (green tea), Keemun Gong Fu (black tea), Iron Buddha (oolong tea) and Pu'er tea. These common teas are produced in China and have high price acceptance, making them entry-level consumer products for tea lovers.

 

Additionally, the annual output of common teas is abundant, and there will be no shortage of supply. Another product category is Chinese speciality teas, such as Dragon well (green tea), Jin Jun Mei (back tea), Anji White Tea (white tea), Big Red Robe (oolong tea) and 10 – years Yunnan Pu'er (Pu'er tea). Typically, these teas have limited annual production and have more prosperous and more sophisticated taste and aroma. Due to the limited supply of this kind of teas, the price will be higher than common teas of the same family in the market.

 

Some speciality teas might not be as famous as Big Red Robe, but they have limited harvest each year, and most importantly, they have fairy stories and anecdote behind them. These rare teas can bring a curious experience to tea enthusiasts, and the stories behind them can also bring additional added value to consumers.

Package design
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Commodity tea package design

Speciality tea package design

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Package material

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Information layout design

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Scan the QR code to find out the life - curve of your tea

Based on the high-end positioning of “ZenTea” in the loose tea market, and the offering of Chinese speciality tea is scarce in the New Zealand market. The typical tea ranges of “ZenTea” refer to a similar brand “JING” (2020) in England, selling its Chinese tea products at an average price of 20 NZD for every 100 grams. The Chinese speciality tea, however, can be 50% or 100% higher than the ordinary tea products, fluctuating with its scarcity and sourcing costs.

Pricing & Positioning
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Brand positioning and customer proposition

Step 4: Budgeting

The company forecast an annual increase of 25% in volume for the future three years, with the growth of EBIT from 92,280 NZD in year 1 to 180,800 NZD in year 3. The breakeven point is an annual sale of 400kg (250kg commodity tea & 150kg speciality tea). Besides, because of the scarcity of Chinese speciality teas, it offers higher gross margin at 80% compared to commodity teas at 68% gross margin.

 

At the first year of the business, the rental fee of the showroom in Parnell would be the highest expense. However, in the year two and year three, the staff cost is projected to represent the highest proportion of business expenses due to the demand for more customer service representatives and tea masters for tea training and tasting.

3 -  year budgeting
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Brand Budgeting

Step 5:  Implementation

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Project milestone

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Risk Assessment