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Marketing Management

Review of the Article

Presented to: Aamir Iftkhar Presented by: Muhammad Afzal Hanif Umair Tariq Rabia Riasat

Brief Introduction of the Company

Honest Tea, Inc. produces and distributes organic bottled tea in the United States. Its products include ready-to-drink tea in glass, plastic bottles, and drink pouches, as well as healthy organic beverages. The company also offers tea in various flavors. It was founded in 1998 by Seth Goldman and Barry Nalebuff in Maryland, USA.

The Marketing Phenomena

1: Differentiation Strategy 2: Societal Marketing 3: Related Diversification 4: Distribution Strategy

Differentiation strategy
The process of distinguishing a product or offering from others, to make it more attractive to a particular target market. This involves differentiating it from competitors' products as well as a firm's own product offerings. This strategy involves selecting one or more criteria used by buyers in a market - and then positioning the business uniquely to meet those criteria. This strategy is usually associated with charging a premium price for the product - often to reflect the higher production costs and extra value-added features provided for the consumer. Differentiation is about charging a premium price that more than covers the additional production costs, and about giving customers clear reasons to prefer the product over other, less differentiated products. Products sold by two different firms may be exactly the same, but if customers believe the first is more valuable than the second, then the first product has a differentiation advantage. The existence of product differentiation, in the end, is always a matter of customer perception but firms can take a variety of actions to influence these perceptions.

Concept with reference to the article:

Statement as quoted in the Article: The key is to be different. You know, we never came out with just another "me too" product. From the start, our product was less sweet than what everyone else was offering. And that was why we felt it was relevant, because everything out there was much more like soda than it was like tea. And it's grown. Our differentiation has grown. So now everything we offer is organic. Seth Goldman used differentiation strategy. When Goldman started to produce Honest Tea in 1998, there was very less variety of organic food items in the market and even now, the organics are only 3 to 4 percent of the whole food market. Some categories like bottles tea is less than 1 percent. Therefore, Goldman foresaw a great opportunity and competed the beverage industry by bringing special characteristics to its tea like high quality leave teas, and most importantly, less sweet and low calories drink unlike other beverages which had high sugar levels.

Example from Local environment:

In Pakistan, Dawlance company has used differentitation strategy by introducing H-Zone technology in its washing machines. Dawlance the no. 1 home appliances brand of Pakistan recently launched another product to enhance their category range. The latest addition to H-Zone range is the Dawlance Automatic Washing Machine This machine, apart from functioning as a regular automatic washing machine, has a revolutionary Air Wash feature that turns air into Ozone (O3) to sterilize, kill bacteria and remove odour

Societal Marketing:
Societal marketing concept is evident when an organization determines consumer needs and wants and then integrates all activities in the firm to serve these needs while simultaneously enhancing societal well being. Societal marketing is the business driven, profit orientated way of changing the world as a means of developing revenue based product. Societal is about the direct benefits for the organization (profit) and secondary benefit for the community. Social marketing is about changing behaviors for the benefit of the broader society.

Social marketing is about the social gain, target markets gain and the flow of benefits where profit may not actual exist, or if it does, then its just an incidental secondary benefit for the campaign. Societal marketing is any form of marketing that takes into consideration the needs and wants of the consumer and the well-being of society. Basically, societal marketing is marketing combined with social responsibility The societal marketing concept is an enlightened marketing concept that holds that a company should make good marketing decisions by considering consumers' wants, the company's requirements, and society's long-term interests. It is closely linked with the principles of corporate social responsibility and of sustainable development.

Concept with reference to the article:

Statement as quoted in the Article: We have a marketing partnership with Jamis Bikes. We give away 1,000 bikes a year to encourage more sustainable transportation. So even the way we communicate and connect with our consumers, we feel, is part of our whole mission-based business approach. Honest Tea Company intelligently sought the consumer needs and wants and used their potential to serve the society by giving away 1000 bike every year to encourage more sustainable transportation.

Examples from local environment:

In Pakistan, societal marketing is being done by Pepsi. They have constructed bus stop stands at various locations in major cities of Pakistan. These bus stands serve as advertising place for Pepsi and provide genaral public a place with shadow in hot summers. Another example is of World Call Pakistan. They donate 100 rupee to Shoukat Khanum Hospital from every USB wireless device they sell.

Related Diversification:
Related Diversification is the most popular distinction between the different types of diversification. Related diversification in one of the two variants of diversification strategy. When making related diversification, companies expand their operations beyond current markets and products but are still operating within existing capabilities or within the existing value network. When expanding into different products or markets using existing capabilities, companies can create related diversification by using its capabilities and resources in other settings. A car manufacturer might expand its operation in manufacturing of motorcycle or trucks and use its capabilities and resources to become successful in these markets. Related Diversification occurs when the company adds to or expands its existing line of production or markets. In these cases, the company starts manufacturing a new product or penetrates a new market related to its business activity. Under related diversification the company makes easier the consumption of its products by producing complementing goods or offering complementing services. This type of diversification is used mostly by small businesses because it is less risky. In the majority of cases it does not require big investments and owners feel more secure because they know the opportunities and threats in the field of their main business activities. However, sometimes this diversification does not bring the expected results and profits. Most often the reason for this is the underestimation of accompanying problems and the need of knowledge and skills in the field of change management, cultural differences, human resource management (layoffs, quitting, promoting, hiring) and so on. However, the reason for not meeting the results and expectations of the diversification may be the overestimation of the expected benefits and profits from the synergy, during the preliminary analysis.

Concept with reference to the article:

Statement from the Article: And just last year, we launched a line called Honest Kids, which isn't a tea line, it's a line of lightly sweetened pouch drinks for kids. And it's been so exciting to see how that line has taken off. And I believe that that will actually fuel, eventually, the growth of Honest-Ade and Honest Tea. Honest Tea Company added products which lay in the category of drinks with the name of Honest Kids. In this drink also, Honest Tea maintained high quality ingredients and low sugar level. This is called related diversification because the both Honest tea and Honest Kids are included in the category of drinkables.

Example from local environment:

Gourmet Pakistan was originally bakery and sweets products but the relatedly deverified to sell milk, ice cream.