1

Matz Bugshan

Marketing Plan: Instant Chai Tea

I. Executive Summary
“"This report presents a basic marketing plan of Instant Chai Tea packets. For the purpose of
coming up with a critical analysis, I have first studied the marketing plan of several competitors
and come up with a new idea. A starting point of my idea is describes in this report and also I
have define my Industry/Product Category, Competitive Analysis, Market and Segment Analysis
and firm’s Mission Statement in an abbreviated Situation Analysis. In the marketing mix set of
marketing tools that the firm uses to pursue its marketing objectives in the target market. Chai
tea, specifically chai tea lattes, have become very popular in America in recent years. America’s
version of chai includes processed ground spices, significant amount of sugar and a variety of
milks. Traditional chai is painstakingly made, and recipes vary among families and regions but
often includes the brewing of whole spices including cinnamon, star anise, fennel seeds,
peppercorn, nutmeg, cloves, cardamom seeds, ginger root, honey, vanilla. Originating in India
around eight thousand years ago, the ritual of Chai is very important in many cultures including
my own. My idea is to create a quality, instant version of this drink to be enjoyed by those that
are traveling away from home or are simply looking for convenience without sacrificing the
traditional chai taste. Through research I found one product similar to this, but it does not include
whole spices as I am proposing, nor a variety of recipes based on region which I would like to
include. The product is not widely marketed. The concept of chai goes dates back. Chai is a very
popular beverage particularly in Asia as the origin of flavors of chai comes from this region.
Initially Chai was considered as a beverage for cleansing body in early ages. Throughout times,
chai has been produced in many flavors. Indian Chai comes with mix of flavors and that’s the
beauty of it (Goodwin, 2020). Tea has become an essential part of our daily lives and as tea has
been part of our lifestyles for thousands of years; the trend of tea has evolved from tea to instant
tea. Since everything around us is instant and immediate, the concept of instant tea has also
created hype amongst all age brackets. In recent years, there has been hype of chai tea lattes. The
chai tea in America has ingredients of ground spices, excessive sugar and variety of milks.
However, most of the instant teas in America does not have the taste of indigenous spices and
flavors (Goodwin, 2020). Traditional teas in India are family oriented and has an origin of
culture and tradition aroma processed with it. The goal of Instant Chai is to deliver this origin of
culture and tradition in the form of instant tea. The statistics has revealed that the wholesale
value of tea sale in US from the period of 1990 to 2019 with an increase of 12.67 billion US
dollars in 2019 alone[ CITATION Sta201 \l 2057 ]. Seemingly, there is growing demand of Instant
tea in the market of USA as every other individual is looking for speedy conveniences whether it
is for food[ CITATION Dan20 \l 2057 ] , edibles or other purposes. Instant Chai is just not the Chai, it
is instant and that changes the whole phenomena of convenience, often the spiced teas are time
consuming as it requires painstaking effort for flavor to come about in a tea. The Instant Chai
over-comes this dilemma by providing traditional taste without the hassle of time consumption.”

1
 2

II. Abbreviated Situation Analysis

A. Industry/Product Category
Instant Chai would fall under the NAICS category Coffee and Tea Manufacturing, 311920.
The more specific SIC title is Tea Blending, 2099 which seems more precise and appropriate for
the product. The brand is targeted for consumers accustomed to traditional flavors in their chai,
but are away from the comforts of home or are looking for convenient yet customary options.
The Instant Chai market is a niche and is specific to tea-drinkers that appreciate the quality and
custom of chai beverages.

(Bolton, 2020)
B. Competitive Analysis
All existing competitors for Instant Chai are part of the global flavored and bagged tea market.
The major competitors Instant Chai faces are Teavana (franchise of Starbucks), Bigelow and
Lipton. Starbucks, offering Teavana products, is a global chain that advertises a variety of coffee-
based products as well as several aromatic teas. Although Starbucks is a direct competitor due to
their chai-based products and increasing popularity, their beverages are notoriously expensive,
and diversified marketing segments are difficult to manage due to size. Alternatively, Instant Chai
is a niche brand that only targets populations looking for traditional chai flavors. Also, the pricing
strategy of Instant Chai will be comparatively cheaper setting the brand apart from this major
competitor.
Bigelow, a Connecticut-based brand, maintains the only tea-plantation in the United States
and sells fifty types of bagged tea (Morris, 2017). Lipton provides both bagged and bottled tea
products and has experienced the largest sale increase this year with its bottled tea increasing in
popularity (Harfman, 2020). Instant Chai upholds a competitive edge against these indirect
competitors because it positions itself as traditional, and not for all tea-drinkers, but for an
exclusive group. India based companies such as Typhoo Tea and Tetley are direct competitors
offering traditional flavors but not in a quality, instant form. I infer that in response to the
introduction of this novel good, competitors will develop a “traditional chai” blend as part of their
product line.

2
 3

Instant Chai has great potential for success with many tea-drinkers looking for customary,
flavorful, region-based products that are convenient to make and maintain quality blends. There
has been increased demand for herbal teas and fruit infused teas according to a report in The
Wall Street Journal which provides a unique opportunity for this product[ CITATION Saa20
\l 2057 ]. As many tea-drinkers profess, tea serves the purpose of calming and relaxing one’s
nerves, therefore, the aromatic ingredients of Instant Chai have a potential to reach large market.
Instant Chai, like all products, is not without identifiable weakness as indicated by the
decline of tea sales from 2018-2019 (Bolton, 2020). Although this product is new to the market
the decline in overall tea value in previous years will serve as a challenge for Instant Chai. The
food and beverage market always fluctuates and the unsteady market value for tea serves as a
threat for market positioning of the brand.
C. Market and Segment Analysis
Most of the revenue from tea sales in the United States is gained by Chinese tea, leading
sales in comparison to Japanese and Indian teas. The American tea market is positioned as a
healthy alternative to soda and other beverages. Many Americans choose flavored tea for the
purpose of health and fitness. The obesity crisis in U.S simulates the need for this market
segment. Although, Instant Chai does not serve the purpose of weight loss, it still belongs in the
health-tea market because it is rich in antioxidants and includes natural ingredients with many
health benefits[ CITATION Dan20 \l 2057 ] . Additionally, a large number of Americans have a habit
drinking caffeinated drinks daily. Chai is not caffeinated, but its main ingredients: cardamom,
ginger and cinnamon have stimulants that wake up the body while also boosting mood.
Chai originated from India but is popular across South Asia with different varieties across
varied regions. The goal of Instant Chai is to make this delicacy accessible for those away from
home and individuals that may have access to ingredients but are on the go and demand
convenience. The original target market for Instant Chai will be those away from home and
residing in the United States. This segment is most accessible because they understand the value
of the product and the quality. They are also likely unable to access their usual ingredients from
home but are accustomed to drinking Chai on a regular basis. Once revenue stabilizes within this
market, the brand will expand its positioning to those in locations with access to ingredients but
who are looking for the convenience of a fast-made beverage.
D. Mission Statement
The mission statement of Instant Chai is ‘’Brining instant tradition and quality away from
home and on the go’’.
III. Target Market Overview
The target market for Instant Chai is niche market. The demographics include both men and
women (ages 16 to 60). The target population is South Asians living away from their homeland
or living a hectic life within their country. The tea is specifically manufactured for the people
who want the taste of quality spices and the ease of instant availability. The brand will remain in
the USA for first five years of production with a long-term goal of Instant Chai serving as the
international choice of comfortable and quality chai. Instant Chai drinkers that are away from
home ideally will serve as the finest brand ambassadors brining their new favorite drink home
and offering it as an alternative to overwhelmed relatives.
IV. Marketing Mix

3
 4

A. Product
Traditional chai originated from India and includes various combinations of a variety of
whole spices such as cinnamon, star anise, fennel seeds, peppercorn, nutmeg, cloves, cardamom
seeds, ginger root, honey and vanilla. Eventually, as the beverage developed each region of
South Asia perfected its own recipe with a particular blend of curated spices. The Instant Chai
brand will begin with
The instant convenience of these ground spices along with quality of originality serve as a
convenience for traditional taste. Instant chai is the tea for both foreigners and locals. Often
people who are traveling are unable to get their hands on the instant gratification of aromatic tea,
instant chai will fill their needs in a comparatively reasonable price. The tangible aspect of the
product is its traditional ingredients in form of tea whereas the augmented aspect of the product
is the instant soothing impact of the tea on the senses of consumers. The branding of instant chai
will focus on instant sensual gratification through aromatic traditional tea. The packaging and
design will emphasize on colors of spices. The logo will be set as simple, not too colorful and
funky but with a design that represents calm tones of shades (light brown with green font label),
the logo and packaging will represent that traditional aspect of the brand.
Perceptual Map:

In perceptual map the two most salient product characteristics related to my concept are Tea flavors
and price.

Instant
Chai

“The map illustrates

the fact that Twinings
and Lipton are inspiring brands thanks to their advertising campaigns and customer experience.
Dilmah and Mariage Frères are rather seen as tasteless in both senses of the term that is to say
experience wise and product wise. According to the consumers I believe that Instant Chai will

4
 5

perceived as the richest brand among the others when it comes to taste, flavor and prices. Because
on the basis of my research 39.29% of the people interrogated think that Instant Chai is very rich
flavor wise. 32.14% described the products as being rich in taste. Very few people thought Instant
Chai had poor taste or was tasteless.”

Type of branding:

“Instant Chai would use Attitude Branding which means that this branding strategy brings the
business to life by marketing a larger feeling to create an emotional connection between the brand
and its customers. I would prefer the first step to building a brand is engaging the customer on their
level. The second step is to establish a relationship. The third step is what separates experiences
from brands, and that’s the ability to replicate the experience. Most tea shops are their own brand,
and the only way to replicate the experience is to return to the shop.”

Product Logo:

Mock-up package design:

B. Pricing
The pricing strategy for instant chai will be penetration pricing so that it influences a large
market and it is perceived as affordable for the original market segment that will tend to be less
financially stable. There will be discounts for channel members as a positive reinforcement and
motivation factor. They will get 50 free packets of instant chai upon every monthly target

5
 6

revenue generated. There will also be discount for the consumer if the initial first 6 month of the
product did not generate enough profits. The costing of Instant Chai is $4.38 dollar/fl oz. Pricing
elasticity will be essential in ensuring success of this innovative product. Continuing to be
cognizant of ever-changing market trends and the perception of the brand will aid Instant Chai in
reaching success.

C. Place (Distribution)
The distribution of Instant Chai will be geographically based. The segments of distribution
will be in phases of regional distribution during the initial growth period of Instant Chai because
it is a new and innovative product that may be regarded as odd if distributed to the incorrect
location. The brand will be most popular in larger cities that are known to have larger
populations of immigrants. California and New York currently have the largest concentration of
South-Asian immigrants so the products will be tested in these states. After the success of
market positioning, the products will be gradually launched in other regions of the United States
and also internationally. Before the brand is launched internationally, the product line will
expand to include additional regional blends of Chai. As the nature of the product is specialty
and convenience, the distribution will be a store-based retailer. The benefits for store-based
distribution is the potential of reach to a larger market as store shopping is relatively high,
however the downside of using store-based distribution is the threat of other branded teas in the
store. Since the tea is originated from India, the retail channel of India will be the origin of direct
distribution to the foreign market. The well-known chains will be used as intermediaries such as
Walmart and Target as there is growing trend of retail shopping and the launch of Instant Chai
will reach larger market of retail shoppers[ CITATION Jon20 \l 2057 ].

Instant Chai

Indian Supplier
Directory
Ultimate
consumers
Distributer

Retailer

D. Promotion (Market Communications)

As the world move towards digitalization, every other person adhere to social media and
internet before they make a purchasing decision. Therefore, the strategy for Instant chai
promotion will be social media marketing. Since the brand also targets travelers, most of the
travelers often search about the places where they will shop before the plan to visit. Similarly,
the locals and others who prefer taste of flavors over just mere caffeine also tend to explore
internet to find out about specific products. The target audience for promotional strategies will be
consumers who look for specialty in products.

6
 7

Promotional strategies for the brand will begin before the launch of the brand, initial timeline
for advertising would include teaser advertising on social media platforms (Instagram and
Facebook only), the teaser would only stimulate the curiosity of potential consumers towards the
brand. After the one-month period of teaser, the launch of the brand content and influencer
marketing on Instagram for the period of three months will begin. There are several reasons for
influencer marketing; it reaches most of the Instagram user as the market in Instagram is
booming with influencer and their fan followers, influencer marketing is also budget friendly
compare to other mediums, the bloggers on Instagram can stress upon the informative details of
originality, flavors and convenience of Instant Chai. In addition to this, content marketing on
Facebook for the period of six-months will be implemented. However, the advantage of using
social media for promotion is that the strategy can be re-strategized based on the analytics and
response from the targeted audience. Similarly, hybrid approach of both push and pull strategy
will be implemented as it will be in accordance with the flexible promotional strategy of the
brand. There is no loyalty program strategy in the promotions of the brand (at least in the initial
growth and positioning phase of the brand).
The influential marketing post and content ad on Facebook will be more informative, the
conceptualization for photography of the product will focus on spices from all angles, the content
ad on Facebook will feature no model just the ingredients and the copy describing the Instant
Chai characteristics.
Commercial Concept: Young people walking around various large cities (business man,
university student studying, doctor, young person in small apartment) They all get a call from
Mom in various regions of the world (denoted by different outfits) asking if they have had some
Chai?

7
 8

Print add: (busy Mom with stuff all around her and kids looking tired) “Could you use
a Chai?”
Promotion Mix (Integrated Marketing Communications):

“In order to deliver a clear, consistent, and compelling message about Instant Chai and its product
we will use; Advertising as it will allow us to reach many buyers and repeat message many times;
Sales Promotion since it provides wide variety of tools and rewards quick response; Public
Relations because it is very believable and will dramatize Instant Chai and its product. Also in
marketing communications mix; Product-Instant Chai Tea will be a high quality product. It also
includes green teas, black flavored teas and herbal teas. The Instant Chai Tea will be placed
according to the content of tea bags. Color, image and slogan of Instant Chai Tea must all combine
to facilitate customer allegiance. Prices for the tea will be reasonable.”

Timeline:

Month Advertisement type

8
 9

January Newspaper: print Ads

February Magazine: print Ads

March Radio Advertisements

April Television: Video Ads

May Banners Ads

June Billboards

July Direct mail, catalogues and leaflets

August Social Media Ads

September Facebook Advertisements

October Instagram Ads

November YouTube Ads

December Google Ads

V. References
Bolton, D., 2020. Tracking Tea Trends with 2020 Foresight. [Online]

Available at: https://worldteanews.com/market-trends-data-and-insights/tracking-tea-trends-with-2020-

foresight

Available at: https://www.wsj.com/articles/tea-giant-weighs-giving-up-on-tea-11580380902

Goodwin, L., 2020. The History of Masala Chai. [Online]

Available at: https://www.thespruceeats.com/the-history-of-masala-chai-tea-765836

Harfmann, B., 2020. 2020 State of the Beverage Industry: Tea market sales relatively flat. [Online]

Available at: https://www.bevindustry.com/articles/93236-state-of-the-beverage-industry-tea-market-

sales-relatively-flat

9
 10

Morris, R., 2017. 10 BIGGEST TEA COMPANIES IN THE US. [Online]

Springer, J., 2020. How Changing Shopping Trends Are Playing to Walmart’s Strengths. [Online]

10