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Marketing Plan
White Tea from China to Lithuania




























Examined by
Viktor Magnusson



Prepared by Group V
Marketing Programme (1FE105), School of Business and Economics
Darius Lazauskas (19920827-T206)
Emma Friberg (19920730-3703)
Shao Xingyue (19951019-T001)
Viktoria Petrovska (19940805-2562)

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Table of Contents

Internal analysis of the company and its resources
Company descriptionpg.3
Products description...pg.3
Products target group in the home market..pg.4
Company resources...pg.4
Market to enter analysis......pg.5
Analysis of the competition
Competitors on the marketpg.7
Emerging threatspg.7
Product substitutespg.9
Macroenvironment analysis...pg.9
Threats to the Companypg.10
Market trendspg.11
Market segments...pg.12
SWOT Analysis...pg.13
Plan of action

Goals.pg.1
4
Target Group and Positioning...pg.14
Price and Value Analysis..pg.15
Distribution..pg.16
Budget..pg.17
Marketing activities......pg.18
Time Plan......pg.20
Evaluation....pg.20

References...pg.21







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Internal analysis of the company and its resources

Company Description

Fujian Yu Rong Xiang Tea, is one of the most famous tea companies originating in China
that grows, processes and sells many different types of tea. Its located in Fujian province, which
is well-known for its unique and high quality teas.
The Fujian Province Environmental Protection Agency uses this companys facilities to
demonstrate sustainable organic tea production methods and its often also cited as being a good
model for modern agricultural product processing.
As such, their tea is grown in a high-quality environment using modern ecological and
organic planting, growing and processing methods. The company has been awarded multiple
times for its technology, environmental responsibility and its excellent tea products.

Product Description

White tea is one of the famous teas in China. As explained by the website WhiteTea.com
(WhiteTea, 2009), its mainly harvested in the Fujian province of China. The name comes from the
fact that the freshly harvested buds are covered with white hairs. White tea that has been
properly brewed has a pale white coloring and mild taste.
White tea can be divided into bud tea and leaf tea. Further explained by the same website
(WhiteTea,2009), the main varieties of white tea are White Peony, Silver Needle Pekoe, Tribute
Eyebrow and Shoumei.
Another factor that makes white tea rare and precious is the way its produced. Unlike
green tea and black tea, white tea does not undergo the process of rolling, which preserves the
flavour of the tea. The companys tea is produced using the most natural methods, which
differentiates the product.
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As reported by the Chinese tea website Ichami (Ichami, 2014), the China Tea Circulation
Association issued a statement in addition to its document - "The China tea industry situation
report" - which shows that contrary to expectations, the prices for premium Fuding white tea rose
sharply in 2013 and 2014, between 10% and 50% in some areas.
Customers choose this product for its unique aroma, taste and its healthy properties, some
of which are backed scientifically (Kingston University, 2009), - such as stress reduction, cancer
prevention, reduction of high blood pressure, as well as strengthening the bones and rejuvenating
the skin, to mention just a few.

Products target group on the home market

The target group for white tea in China is consumers who are health-conscious . With the
advent of new technology and the further development of the tea marketmore and more young
consumers are interested in white tea.
Target markets for white tea are expanding. Tea is a popular drink in China already and
its use has a history spanning thousands of years. With the development of society, the
continuous improvement of living standards, the change of peoples consumption patterns, and
with a growing and developing middle class, new target groups emerge - tea lovers, employees
of government institutions, intellectuals and others.

Company Resources

As described on their website (FJYRX, 2014), the Fujian Yu Rong Xiang Tea Company was
founded in 2001, and is an enterprise compromising cultivation, processing, sales and promotion
of tea technology. The company also performs many demonstrations and is held up as an
example of sustainable, high-quality tea manufacturing, making the brand famous in its home
province.
. The company production base is located in the foothills of Taimushan mountain, at an
altitude of 600 meters. Currently, the company possesses 1.000.005 square meters of tea
plantations suitable for white tea, green tea, black tea and other tea varieties.
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The location has plentiful amounts of rich soil and is surrounded by forests, allowing the
tea to be produced in a pollution-free zone. The company refers to itself as the base of its
operations, though it also works with farmers from surrounding plantations, leading to greater
amounts of production.
The company possesses six productions lines for making many different types of tea and
has a full staff of 78 people, including 15 people acting as senior management and 6 people are a
part of the companys Research and Development department. During the tea season, the
company employs up to an additional 200 workers, including 50 to hand-make the tea.
In 2008, the company gained the rights to export their production to nations all around
the world, including the United States of America and some European countries.
They also opened a new plantation devoted specifically to white tea, which has led to an
improvement in productivity and quality. The company has since received numerous awards and
certifications for its high quality products and business practices.
70% of the products are exported to Europe, America and Japan and 30% are domestic
sales in Shanghai, Beijing, Zhejiang, Fuzhou and etc.
According to the 2012 Chinese tea enterprise evaluation, the brand value of "Yu Rong
Xiang" is estimated to be around 23 million euros.


Market to enter analysis

The country that this product will be brought to is Lithuania, which has been a member of
the EU since 2004. Since then, the country has become part of the largest market in the world
and has been connected closely with international markets.
As explained by the macroeconomic forecast published by the Bank of Lithuania (LB,
2014), the general tendency for the Lithuanian market at the moment is slow growth.
When it comes to the hot drinks market, however, tea is a growing market in Lithuania,
as in most Eastern Europe, despite the region already being a predominantly tea-consuming one
according to the Tea & Coffee Trade Journal (2014). In contrast to its two largest tea-drinking
neighbors, Russia and Poland, which prefer black tea, according to experts and consumer polls,
Lithuanians prefer to buy green tea instead.
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According to Andrius ilinskas (ilinskas, 2011), the head of marketing for a nation-wide
specialty tea store chain known as Taste and Aroma, the reason for this is not entirely known -
though many suspect that the widely available information on the health benefits of green tea
could be a contributing factor, some have also cited Lithuanian culture as a possible influence, as
herb-based drinks have been consumed throughout the nations history.
Until recently, the largest segment of the market has been pre-packaged teas and tea
mixes, however, people are beginning to discover and purchase more exotic and expensive teas
and more healthy, ecological choices.



Analysis of the competition


Competitors on the market

Fuijan Yu Rong Xiang will be the first company that launches white tea locally in
Lithuania. A country report of Lithuania (EuroMonitor, March 2014) explains that consumers in the
current market are demanding and reacts strongly to aggressive pricing but that they are willing
to pay more for premium brands.
There are a number of competitors on the Lithuanian market, but the biggest considered
threats are Lipton and Dilmah. According to the country report, Gelsva, which is the distributor
of the brand Dilmah, have the leading position in the category and seized 14% of the total value
sales in 2013.
There are some major differences between the Fuijan Yu Rong Xiang tea and the
competitors on the market. Lipton tea is black and produced in Africa and India. (Lipton, 2014).
There arent any premium teas in their collection and their target group is the mass market.
Dilmah on the other hand has a great variety in their collection, including premium tea, designer
gourmet tea, organic tea etc. They have a specific section in their website promoting tea and
health that states the health benefits of drinking tea. Dilmah should therefore be considered a
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bigger threat, though its image amongst the population is still somewhat of a cheaper brand.
(Dilmah, 2014).
What differentiates Fuijan Yu Rong Xiang teas from Dilmah teas is the type of tea, as
Dilmah does not sell any forms of White Tea within Lithuania.

Emerging Threats

There is no other company in the tea industry that is trying to launch white tea to
Lithuania, but there might threats from some environmental organizations, such as GreenPeace,
that act as pressure groups or industry-wide watchdogs that may want to encourage stricter
environmental regulations and also impact the business through press and coverage of industry
scandals.
One organization that could be a threat is the organization ETP (Ethical Tea Partnership),
a non-profit organization that has been in the tea industry since 1997. ETP is searching for
partnerships to work together and to improve the social conditions in the tea supply chain. This is
an industry-wide initiative; they are working with tea companies and tea producers to improve
the sustainability of their companies.
This organization is not competition, but it still influences the business. Organizations
that are members of ETP receive benefits that Fuijian Yu Rong Xiang cannot. The ETP
organizations might in the future overcome the company technologically and they can also put
distinctive labels on their products that might attract certain customers.

Product Substitutes

As mentioned earlier, the Lithuanian people are already consuming tea on a large scale,
but one substitute for tea could be coffee - at least, for those looking for a warm drink, rather
than a healthy one, or any kind of hot or cold beverage that people drink in situations when they
could have been drinking tea instead, e.g. cocoa, herbal teas and etc.
Focusing on the target group of Fuijan Yu Rong Xiang white tea, people who are
developing, or already have, a healthy lifestyle, there are less alternatives.
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Juices would be the first major substitute group, as they are widely-spread, healthy and
cheap, however, they have shortcomings as well - they are cold beverages, they possess fewer
healthy qualities and do not have the same relaxant properties as teas do.
Herbal teas and fruit teas make up the other significant part of the market and are
distinctly different from conventional tea, as they are not made from tea plants. They have a
much more dangerous position as they have many of the same benefits as teas, but have fewer
healthy qualities and a different taste and aroma. Herbal and fruit teas also come in a vast variety
and are typically cheaper than conventional tea.

Macroenvironment analysis

According to Kotler and Armstrong (2013), the macroenvironment is all larger societal
forces that affect the companys microenvironment, which can be subdivided demographic,
cultural, political, technological and natural. These external forces are often beyond the control
of the company.
One of the biggest problems for the food and beverage industry companies that do not
originate in the EU, including China, is to overcome the many barriers it faces - not only
working through extensive EU framework, but also matching the requirements stated in the
Lithuanian Food Law (LRS, 2004) and passing through extensive checks by the Lithuanian State
Food and Veterinary Service and the National Food and Veterinary Risk Assessment Institute, in
addition to Lithuanian Customs. However, business law is favourable in Lithuania - so much so
that a business can be started within two days.
Another problem facing those wishing to enter the Lithuanian market is corruption.
According to the Business Anti-Corruption portal (GAN, 2013), corruption is
prevalent in certain areas of state, the most important of which, for businesses, is obtaining
licenses and permits, and the judicial system. However, to curb the problem, the Lithuanian
government has established institutions to deal with corruption and is adopting EU methods to
increase transparency.
According to a report published by the Bank of Lithuania (LB, 2014), the current trend in
the Lithuanian economy is slow growth. Though the recent issues with Russia have had an
impact on the Lithuanian economy, which has caused a slight dip in projected growth statistics,
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market development is still stable. Domestic demand and private consumption has also risen
significantly compared to previous years and the demand for many goods and services is
increasing. Labour cost per hour remain one of the lowest in Europe and a high VAT of 21% is
problematic, as it impacts consumer wealth and hinders import.
The most important topic in terms of Lithuanias society is lifestyle change. Old lifestyles
are being phased out in favour of a more healthy lifestyle, with the rise of organic farming as
explained by G. Mikinas (Mikinas, 2010), and helped by Lithuanias government and healthy
lifestyle advocate organizations, in addition to European Union efforts. 2013 was declared to be
the year of healthy lifestyles, kicking off a decade of government policy changes and healthy
lifestyle-promoting events for Lithuania focused on creating a healthy society. 2014 was
declared to be the year of encouraging healthy lifestyles in children and the government has
prepared plans to improve health in children by altering national health policy, as explained by
an article by D. Kalesnikien (2014) on the strategic direction of these initiatives.
However, there are negative social aspects as well - Lithuanias population is declining,
both due to a negative birth rate and high emigration, and has a high unemployment rate, both
facts confirmed by official statistics (LSD, 2014). Young people in particular are leaving the
country to study and work abroad.
Lithuanias extensive network of research facilities and large pool of research
professionals means it has a good environment to develop and improve technologies. According
to InvestLithuania (InvestLithuania, 2014), a thriving communication and information technology
sector offers many opportunities for companies and businesses to improve their sales and
marketing with one of the most extensive fiber optic networks and a well-connected population.


Threats to the company

The biggest factor that could damage the product is the weather. Tealeaves cannot be
picked if the weather conditions are not favourable and can only be picked in the Spring harvest
season. The company cannot affect the tea harvest and has to be aware that production is going
to vary every year.
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The cooperation between China and Lithuania is only going to grow in the future. In the
article Lithuania looks for more cooperation with China written by K.M Rehan Salahuddin
(October 14, 2011) it is explained that the cooperation with China and Lithuania has been growing
very quickly from the year 2000 to 2008. There has also been a stable growth of nearly 20-25%
in recent years according to the article.
The biggest threat to the company is the lithuanian publics opinion towards chinese
goods, which is generally negative.- a sample article from Alfa.lt (Klijauskien, 2013) is just one of
many that question the quality of chinese goods, and a small public poll (Apklausa.lt, 2013) shows
some of the general attitudes of Lithuanian consumers.

Market Trends

Lithuania was among the few who were hardly affected by the economic crisis in 2008-
2009. Lithuania recovered quickly and is now one of the fastest growing economies in the EU.
Despite the growing economy, Lithuania has a high number of unemployed inhabitants and in
2013, 12,4% were unemployed, though the number has been falling (LSD, 2014).
According to several sources, the sector for wellness products is one of the most rapidly
developing - amongst these sources is the theoretical plan to form a wellness industry cluster in
Lithuania (Hopenien, Bagdonien, n.d.) and an address by the Finnish embassy (Klijunen, 2012) at the
declaration of 2013 being the year of wellness.
In Lithuania, family is very important and grown-ups and their own families are still
close to their parents and grandparents and listen to their opinions. Since older people remember
the era of Soviet occupation, they are more critical towards Chinese products (EveryCulture, 2007) ,
but as time goes by, Chinese products are becoming more common and the relations between
China and Lithuania are improving (Lithuania tribune, 2013).







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Market Segments

The webpage everyculture.com (EveryCulture, 2007), give a clear picture that drinking tea is a
part of the Lithuanian lifestyle. Tea is also used as medication and hot tea is considered the most
effective home remedy.
However, the main goal is achieving market share in the wellness market. The healthy
lifestyle segment suits the companys product because it is a high-quality health product and
people interested in a healthy lifestyle are not only a growing market, but also likely the largest
market segment that can be approached, and due to the lack of other premium brands, there is a
potential niche the product can occupy.
There is a chance that competitors will try to reach out to these segments, but they are not
to be considered a significant threat at this time, considering the high quality and uniqueness of
the product. Currently, there are few premium brands on the market and none that involve white
tea, and considering the difficulty obtaining white tea, it is hard to imagine the competition
shifting their priorities.





















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SWOT Analysis

Strengths

Organic and sustainable production
Advanced technology
Unique, rare, high-quality product
Large amount of capital
Established manufacturer
Famous brand in home country
First product of this type on the market
Product has a good reputation
Weaknesses

Seasonal production
Brand and product are practically
unknown in target market
Little skill in dealing closely with the
European market
Opportunities

Very good information technology
infrastructure opens new ways to market
and sell product
Possibility of cooperating with a local
business may offset inexperience
Favourably changing consumer lifestyles
Geographic location could lead to easy
access of Russian and European markets
Threats

Many substitutes
Extensive EU legal requirements in
addition to national requirements
Negative public opinion towards nation of
origin
Strong competition
Shrinking population in target market
Not a member of international
organizations





















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Plan of Action

Goals

The goals for the company in the short term is simple - establish a local presence on the
market and overcome our inexperience by creating and working within a network of independent
retailers that carry our products, as is standard for many companies that do business in Lithuania.
Our second objective will be to establish positive brand recognition and overcome initial
market prejudices through advertisement and providing a quality product, as well as achieve a
market share of at least 4% in the first year. With the current per capita consumption of
857,240kg that amounts to a total of 342,896 packets of 100 grammes each sold per year.
The third objective is to expand from in-store sales to an Internet webstore by October
and increase sales with this method to 6% of total tea sales, bringing up the number to 513,344
packets total sold per year.

Target group and Positioning

The primary target group for this product is health conscious individuals. The high
number of health benefits that our product offers and the situation of shifting lifestyles within the
market has formed a need for more healthy products and since a tea culture already exists in
Lithuania, white tea would be a perfect fit.
The brands value proposition is based around a more-for-more proposition,
differentiating the brand by offering a unique luxury product of superior quality compared to
what is on the market currently. As our product is manufactured using particular methods and
can only be found in limited quantity, it is also distinctive and hard for our competitors to imitate
or compete with.





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Price and Value analysis

The prices for premium teas vary between 13.90 and 26.99 Lithuanian Litas, or between 5 and 7
Euros per 100g, the most typical distribution value. Due to the presence of many cheaper teas and in order
to maintain an image of rarity and exclusivity, a price must be chosen very carefully to position the
product as a superior and new alternative in the tea market, but still be low enough to penetrate the current
market.
As per the chosen market penetration strategy, the initial price should be set at an average for
comparable high-end premium teas ranging from 16.99 Litas (~5 Euro) for the lowest quality variation
of the tea to 26.99 Litas (~8 Euro) for the highest quality variation, which will help maintain the
expensive, exclusive image and an initial discount of 15% will help ensure initial sales.
When it comes to the needs of our target market the health conscious individual we
have to identify their distinct key factors and any needs particular to the Lithuanian market.
The main expectations that the Lithuanian people have in regards to healthy beverages
are several no harmful chemicals or additives; superior taste and aroma; proven medical
benefits; organic production; and low calorie content.
In Lithuania, the presence of chemicals or additives is often the first factor to be
considered by the customer, and one that is difficult to satisfy due to high standards.
Proven medical benefits is also important, as the health-focused Lithuanian customers
often validate their food choices by considering the product's certifications and opinions of
doctors and medical personnel.
Organic production is an important factor as well, as green technology and
environmentally-friendly practices are of great concern to Lithuanians who have recently begun
to evaluate products very carefully based on their production methods due to press and media
influence.
The price of the product is reasonable, as it satisfies all expected criteria to a good extent,
particularly medical benefits. In addition, it's relative rarity and unique methods of production
allow us to consider this a premium product and charge an appropriately reasonably high price.




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Distribution

Considering the methods of distribution defined by Armstrong and Kotler (2013), selective
distribution is the most logical method of approaching and bringing an uncommon, exotic, and
expensive product to the Lithuanian market.
The initial distribution strategy will be to distribute the tea through our partners
distribution channels: a network of independent exotic goods retailers, such as Taste and
Aroma and Delona - the largest retailers of premium teas and goods within Lithuania. No
other brand of white tea is currently being distributed locally through these retailers and
providing them with in-store products would ensure easy access for target consumers and expose
the brand through physical presence.
After an initial period of in-store sales, as with other premium brands of tea and coffee,
and exotic goods, the brand will expand to take advantage of the Lithuanian population's
connectivity to the internet and their excellent information technology infrastructure by offering
the product through the retailers webstores, allowing customers who cannot or do not wish to
visit the stores to purchase the product whether this is because they are not available in the area
or other reasons.
This distribution method will allow the product to maintain an appearance of relative
exclusivity as only a few specialized retailers would carry it but allow the brand to be seen
and reach the target consumers.












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Budget









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Marketing activities

Sales pitch
The slogan for the product will be Every cup makes you healthier and an investment
will be made into our partners to train their salesmen in explaining the benefits of the product
and answering customer questions during the initial in-store sales period.

Sponsorships and Endorsement
The product will be further advertised by sponsoring and obtaining endorsements from
opinions leaders (defined by Kotler and Armstrong (2013) as a person or reference group who,
because of special skills, knowledge or other characteristics, exerts social influence) - famous
bloggers and personalities who have a health and wellness focus, such as Viktorija Staauskait,
through sample dispersion (along with informative pamphlets) and getting paid endorsements
from doctors and qualified celebrities, such as the famous dietician Edita Gavelien.

Advertising
The company will use social media sites such as Facebook and Instagram to advertise
through both the pages of our partners and Lithuania-specific pages created for the company, not
only to advertise through images and posts, but also by communicating with customers.
The second advertising method will be fitness magazines and newspapers health and
lifestyle sections, which are not only still commonly read in Lithuania - their readership is
actually increasing, according to Starcom. (Starcom, 2013) Advertising space would ensure that the
brand would be exposed not only to the target demographic, but also the general public.
A part of our advertising budget will also be dedicated to our local partners to ensure they
purchase poster and sticker space to advertise the product in other locations by stickers, radio
ads, posters and other means.
Finally, six city buses, the second most popular form of transportation in Lithuania
(InYourPocket, 2014), will be hired in the capital to carry outside advertisements on the most popular
routes, so it could be even further exposed.


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Event
Finally, a week before the first in-store sales begin, special events will be held in the
three largest shopping malls in Vilnius that contain the companys partner stores - Akropolis,
Europa and Panorama.
A number of attendants will receive goodie bags from partner stores that contain samples
of the product and a selection of their goods, have an opportunity to experience the tea and learn
from our partners sales team about the products benefits. We will send out invitations to
opinion leaders, encouraging them to come and share information about the events through social
media and other sources.
This will create a greater brand recognition and allow the public to sample the product
before actual sales begin, kickstarting consumer-generated marketing (defined by Armstrong and
Kotler (2013) as brand exchanges created by consumers themselves to shape their and other
consumers brand experiences), such as social media posts, images and word-of mouth, for the
product.

Through these activities the companys message will be delivered clearly to both the
target consumers and the general public - that this tea is not only an ordinary tea, it is a rare and
exotic good that offers many benefits for anyone who wishes to have a healthy lifestyle.

Time plan:
March, 2015: Negotiate contracts with local retailers by offering initial retailer discounts
until a market is established, informing them of the nature and benefits of the product.
April, 2015: Begin the initial advertising for the product by presenting teaser
information on white tea on our partners webpages and social media sites. Samples will
be sent to opinion leaders and endorsements obtained.
May, 2015: Advertise through magazines and opinion leader endorsements.
June, 2015: Host pre-sale events and begin the full marketing campaign several weeks
prior to St. Jonas day, to capitalize on the holiday and offer the product at a discount to
establish a market.
July - September, 2015: Continue advertising through magazines and ensure our
partners advertise the product in their stores.
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October, 2015: Begin selling the tea through our partners webstores.




Evaluation of your marketing plan

When it comes to evaluating the marketing activities, the first tool the company will use
is questionnaires and surveys through social media and sales teams to identify what convinced
the customer to purchase the product, which methods of marketing they preferred and what
details they recall about a product, including its pitch.
In addition, the company will compare the sales statistics between periods when the
company uses many and few advertisements to see if certain methods of advertising are not
worth their cost.
Market share will be monitored by comparing our sales results with our competitors and
total tea sales within Lithuania, particularly within the premium tea market to see if our
competitors have created a response.






References:

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[Accessed on 18th September 2014)

WHITE TEA, (2009) Types of White Tea. [Online] Available from:
http://www.whitetea.com/types-of-white-tea.php [Accessed on 18th September 2014]
ICHAMI, (2014) [Online] Available from: http://www.ichami.com/?p=17285.
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FUJIAN YU RONG XIANG TEA, (2014) About [Online] Available from:
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LIETUVOS BANKAS (2014) Makroekonomins prognozs. [Online] Available from:
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