Celestial Seasonings Case Study

Celestial Seasonings Case Study

Celestial Seasonings

Celestial Seasonings: Case study

According to the essay on "Marketing Myopia," the U.S. railroad companies lost their power because the railroads failed to understand that they were in the transportation business, not the railroad business. They focused upon trying to make the product and the need for the product survive by protecting the industry by engaging in anticompetitive practices. This gradually became impossible, given changes in technology. The railroads became more and more obsolete for long-term travel. Thus, when technology changed, they were unable to change with the times because all the companies could do was transport people slowly by rail.

Celestial Seasons must understand that it is in the customer service business, not the tea business. Many companies make tea. Celestial Seasons is selling a particular kind of 'tea experience' to a customer who wants certain things from her tea: relaxation, comfort, the promotion of health, etcetera. Fads may come and go regarding tea and other hot beverages, but the company must rally behind this core concept of service to remain solvent. Someone who wants to curl up with a cup of Celestial Seasonings tea is fundamentally different in terms of her wants and needs than someone who curls up with a cup of coffee or goes to Starbucks.

Celestial Seasonings' mission statement, unlike the mission statement of many companies, was designed for short-term, rather than long-term use. The intention was to encourage flexibility of vision, given changes in the marketplace, although the company's positioning remained fairly consistent in the hot, specialty flavor tea market. Customer service, rather than a focus on a singular product is the stress of the company, although it does remain committed to offering tea rather than expanding its ambitions to encompass other products. Celestial Seasonings could be characterized as the 'anti-Lipton,' with little interest in the iced beverage market, or offering a generic form of tea. Customization was important for Celestial Seasonings' success and this is a strategy that demands an intense consumer focus.

Q2. Celestial Seasonings has remained very consistent in its positioning across the eras, with an unwavering focus upon the hot tea market. It is not priced at a premium, but focuses on offering specialty teas, rather than a single, generic offering of tea. On one hand, this assures consistent brand associations. On the other hand, it can be problematic if customer demand for hot tea beverages begins to decline, thanks to competition from other beverages. Finally, it ensures that demand will be very seasonal in nature, given that hot tea consumption is likely to go down during the summer and spring months.

However, having a unique brand identity that sets a tea apart from the rest of the competition is a critical component of brand survival. This is particularly true since Celestial Seasonings is not a budget-priced tea or a premium tea, but rather straddles the dangerous middle ground between the two extremes. Celestial Seasonings has made this work by focusing on a large, yet very specific niche market of consumers who drink tea but want value above and beyond the standard tea flavoring, either for simple taste reasons, because they want a decaffeinated product, or have other health concerns (like enjoying the alleged detoxifying properties of green tea).

One way for Celestial Seasonings to refine its core strategy is to offer more diverse types of teas to refine its different customer segments. As well as herbal, decaffeinated calming teas like Sleepytime Tea, it can also offer more stimulating morning teas that are targeted to a younger user profile. Health-based teas that contain herbs with detoxifying properties such as green tea, ginger, and ginseng can also be positioned at a different demographic profile. Finally, stressing the ability of herbal teas to be served chilled as well as hot by offering recipe suggestions will enable the company to gain more year-round traction and potentially compete with brewed and mixed iced tea companies.

Q3. Celestial Seasoning's focus on a 'Tracy Jones' type (middle-aged, educated, and with a fairly conservative lifestyle) is exemplified in its focus upon hot, brewed beverages. The core aspect of the 'marketing mix' is always the product. In contrast to younger people, middle-aged Tracy Jones commonly consumes her beverage at home or possibly at work, rather than at a cafe. That is why Celestial Seasonings sells its teas in supermarkets, in bags, rather than primarily through restaurants. Also, unlike teens who commonly consume prepared teas in glass containers Tracy Jones is very rarely 'out and about' outside of the home.

In terms of pricing, although Celestial Seasoning is not priced at bargain basement rates, it is a relatively inexpensive luxury. Tracy Jones does not frequently drink four-dollar coffee beverages. She is college-educated and may be somewhat concerned about her pocketbook (perhaps she is a teacher or librarian). She sees tea as an inexpensive and healthy hot beverage. She is also likely not a gourmet. She does not buy loose tea and have a complicated system for at-home brewing. Instead, she wants the convenience of being able to stick a bag in boiling water, seep and drink.

In terms of promotions, Celestial Seasonings does not advertise using fancy YouTube videos, endorsements of major sporting events, or even use flashy advertisements on the Food Network. Its main promotions involve offering reasonably-priced teas and promoting the various health properties of its products and their healing, cozy nature on the front cover.

In terms of placement, Celestial Seasonings is one of the primary herbal teas sold in supermarkets, and is often the middle or low-cost default selection for a consumer who wants something outside of the ordinary besides Lipton for her 'affordable luxury' of tea, versus more expensive, fancy teas. It does not have a strong placement outside of food-based retailers, given that the target consumer seldom buys tea at coffee shops, 7-11s, restaurants, and other such venues. Tea shops and specialty tea and food companies stock more expensive, high-end teas.

Q4. As the food business grows more specialized and segmented, Celestial Seasons may have to fight for its brand life. Given that there are cheaper teas at the low end of the marketing spectrum, and also higher-priced and more exotic brands of tea at the high end of the spectrum of products, the brand may find it 'squeezed out.' Hain may decide to focus on other, more clearly defined brands. The Tracy Jones segment may not be large enough to justify its investment in Celestial Seasonings. Also, Tracy Jones as a typical consumer may be changing. She may be becoming more educated about tea, and desire higher-end beverages.