Bargaining power of buyers -- low; individual consumers cannot influence the price, but large buyers can negotiate better contracts
Bargaining power of suppliers -- low, as they need the tea companies to buy their items
Barriers to entry -- relatively high due to the maturity of the market
Substitute products -- their threat is increased, including items such as sodas, bottled water, juices or coffee and coffee-based beverages
Competitive rivalry -- increased as all players strive to improve their competitive positions, increase their access to customers and increase their market share.
4. Solution Generation and Evaluation
Before generating a solution, it is necessary to look at the problem encountered by the Australian Easy Tea Company from three different angles -- the 5W questions, fishbone diagrams and the Pareto analysis.
The 5W questions:
Who? The Tea Easy Australia Company
What? Cannot improve its competitive position
When? Now and for the past nine years
Where? In Australia
Why? Because it does not understand the local culture
The fishbone diagram
The problem at the Australian Easy Tea Company is that it does not seem able to overcome its limitations and impose itself on the national market as a strong competitor. Despite its sustained business efforts, it remains unable to compete with the largest companies in the market and it does not seem able to attract more customers. There are four main causes leading to this outcome. The first one revolves around the inability of the company to cross the cultural boundaries and understand and adapt to the local culture. This translates into poor communications among the employees of different cultural backgrounds, as well as poor communication between the employees and the customers. Additionally, the company has imported its Asian product offering, which does not seem to be to the liking of the Australian customer base.
The next three causes are the poor communications with the public, the weakness of the Easy Tea brand in Australia and the fact that the company's employees are untrained to present tea consumption as tradition and a way of life. The Pareto chart below reveals the importance of each of these factors.
As it can easily be observed from the chart, the most severe problem is by far the inability of the tea company to comprehend the cultural differences and appeal to them. In terms of importance, it is followed by the weakness of the brand within the Australian market, the poor communications with the public and the poor skills of the staff members. Given this status quo, the solution is a complex one, focused primarily on strategies aimed to help the company better understand and address the needs of the culturally diverse Australian market. Yet, the strategies will also focus on other components of the greater problem, such as improving relations and communication within the company's internal environment, as well with the public, or increasing the qualifications of the staff members.
5. Finding and Recommendation
Based on the previously conducted analysis, the recommendation constructed is that of investing more in the placement of the products onto the market. In other words, the managerial team at Easy Way Tea Australia ought to consider the implementation of the following elements in the marketing mix:
Incremental emphasis on the health dimension of the beverages, such as their nutritional value, but also on their great taste
A most important thing to be done is that of selling the Easy Way teas in a wider variety of recipients. In this order of ideas, it would be best to sign a bottling contract with a national purveyor and offer the customers the possibility of enjoying the drink at home, in the office and so on. While this measure would increase customer acceptance of the teas, it would also constitute a strong competitive strategy.
One should not forget that the contemporaneous economy is currently facing the challenges of an internationalized financial crisis; in this instance, it is pivotal for the organization to implement smaller retail prices which make the beverages more accessible to wider customer palettes
In terms of the pricing strategy, when opening a new store or launching a new product, this ought to be a penetration pricing strategy throughout the first month, after which time the pricing strategy should be a variable one. With the penetration pricing strategy, the company would ensure large numbers of customers due to lower retail prices; the variable pricing strategy sees that the retail price of the tea would be established based on the costs incurred in its preparation and distribution (Moore, 2008)
It is imperative for the company to invest in marketing campaigns. It should as such allocate special marketing budgets that would fund various actions to improve the popularity and perception of the company, the products and the brand
The marketing campaigns, including components such as advertisements, could be constructed to promote the exotic features of the teas, but also the Australian tradition of tea drinking
The advertisements should promote the experience of drinking the Easy Way teas, rather than the product itself
As a way of improving customer relations and perceptions, but also as a means of attracting more customers, the company should promote the art of making, serving and consuming tea as a way of life. The endeavor would imply investments in the training of the employees. It would even be advisable for the management to offer cultural training to its Asian workers and to stimulate social interactions between the culturally diverse staff, with the end result of a better consolidated team
Tea consumption is Australia is influenced by age and ethnicity. While it would be difficult to construct marketing campaigns based on ethnicity, it would be useful to construct them based on age groups. The young target audience could be attracted through modern presentations and exotic recipes, while the older consumers could be attracted through the sense of high quality and tradition
The company should maintain its current system of combined wholly owned stores and franchises, but it should make one alternation in the way it interacts with the franchisees. These individuals are the very core of the Australian culture and they are the ones who not only understand it best, but can operate in a means that best addresses the needs of Australians. In other words, the executives at the Easy Tea Company should interact with the franchisees at a deeper level, gather insight and even allow the franchisees to implement their strategies in better appealing to the local customers.
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Moore, C.W., 2008, Managing small business: an entrepreneurial emphasis, 14th edition, Cengage Learning EMEA
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