Marketing Mix (7 Ps)
Marketing promotes the purchasing of products; it's one of the core business functions. On its most fundamental level, marketing addresses the product's pricing, placement, and promotion. It also considers the people to whom the product is marketed, the physical evidence required, and processes that need to be in place.
Marketing tea, on the most fundamental level, addresses the 7Ps of the marketing mix:
- Physical Evidence
Knowing what product your tea business brings to the market helps you successfully serve the segments. There are several segments to the tea market, three of which are tea drinkers who use teabags, those who drink loose leaf tea, and the ready-to-drink (RTD) segment.
Each segment can be further classified. One way of doing so is premiumization (a trend in the tea and coffee market).
Establishing Relative Market Position Through Premiumization
Tea sachets (tea pyramids)
Single-origin luxury tea
Loose leaf or micro-ground RTD products
Standard ice tea
Whatever segment of the market your tea brand targets, it's important to recognize the full extent of what your product encompasses. There are four layers to every product, including tea.
The Four Layers of Product
The bundle of core benefits your brand provides to consumers
Great tea that makes you feel good about yourself and your place in the world
The product or service being provided
A premium organic single-origin loose leaf tea
The physical aspects surrounding the product or service being provided
Delivered in sustainable and reusable packaging
Other aspects of the product that enrich the product for the consumer
Organic certification, Fair Trade Certified
A pricing strategy is a method for establishing the best price for a product. It helps you choose prices to maximize profits while considering consumer and market demand.
There are many pricing strategies. The five most relevant to marketing tea are:
- competitive pricing
- cost-plus pricing
- high-low pricing
- penetration pricing
- premium pricing
Competitive pricing is also known as competition-based pricing. This pricing strategy references the existing market rate for a company's product. It doesn't consider the cost of the product (i.e., cost of goods sold (COGS)) or consumer demand.
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Instead, competitive pricing treats the competitors' prices as a benchmark. Businesses who compete in saturated or commodity markets (e.g., tea, coffee) may choose this strategy.
Competitive pricing is appropriate when the consumer has strong price expectations; if brand A sets its prices too high, the customer would choose brand B. Yet, it's important to distinguish between price and value. Customers often look for the best value, which isn't always the same as the lowest price.
The teabag segment of the tea market most commonly uses competitive pricing.
A cost-plus pricing strategy focuses on the cost of goods sold (COGS). Such costs include the actual product, as well as freight and packaging.
“The freight cost of importing tea accounts for often 1/3 of the total product cost.”
Cost-plus pricing is also called markup pricing; businesses applying this pricing strategy "markup" their products based on their desired profitability. To apply the cost-plus pricing method, add a fixed percentage to your product cost.
Cost-plus pricing is most often used by sole proprietors of tea companies or brand new businesses in the tea industry. Markup pricing allows new businesses to see their profit margins and recoup some startup costs (e.g., product, website) quickly.
Cost-plus pricing can leave you vulnerable to competitors; should a competitor focus on acquiring customers rather than the profitability of their margins, your business may be vulnerable to customers switching.
A high-low pricing strategy is when a company begins by selling a product at a high price but reduces the price later, often when the product is less relevant or novel.
The high-low pricing strategy often uses discounts and clearance sales (e.g., retiring teas), which is why this pricing strategy is also called the discount pricing strategy. High-low pricing is commonly used by tea retailers selling seasonal (e.g., Valentine's Day tea blends) or novelty tea blends (e.g., butterfly pea petal tea blends).
The high-low pricing strategy appeals to tea retailers because it captures consumers' willingness to pay for new blends. And it also allows consumers to purchase products at reduced prices, helping companies clear inventory. Judicious tea retailers can use carefully timed sales to even out lower revenue months during the year (e.g., summer)
Penetration pricing is a strategy in which companies enter a market with an extremely low price. This draws attention and revenue away from higher-priced competitors and directs attention and revenue to the new entrant.
This pricing method works best for new businesses looking for customers, or businesses breaking into an existing, competitive market. Penetration pricing often isn't sustainable in the long run; it's typically applied for a short time. This strategy often enables large retail brands (e.g., Costco) to compete with established tea brands (e.g., Kirkland green tea).
Premium pricing, also known as prestige pricing, is a strategy by which companies price products high. Setting a high price point presents products as high-value and luxury. Premium pricing emphasizes the products' perceived value rather than the actual cost.
The success of premium pricing hinges on brand awareness and perception. Brands applying this pricing strategy price their products higher than competitors; they provide value and status through their products. Specialty teas (e.g., yellow tea, Darjeeling, wild or old-growth pu-erh tea) often use this strategy because it allows consumers to infer luxurious and exclusive products.
Tea brands can use various tactics to premiumize their product. Such tactics include influencer marketing, controlling supply, and building demand.
The goal of your business is to get products in front of consumers most likely to buy. As such, where your products and services are seen or sold is an important consideration.
The customer's easy access to products is a necessity of successful placement; tea retailers must ensure customers can find their products. When tea businesses determine their placement strategy, they are selecting their business model (e.g., brick-and-mortar store, e-commerce store). Such a selection has major implications on the business's distribution strategy.
Bricks and Mortar
Your tea company can set itself apart from the competition through the design of your retail space. Using visual merchandising techniques is essential; consider allowing customers to see and smell tea blends sold.
When selling tea online, your e-commerce website is critically important to marketing and selling tea. You should consider how prospective customers find your store (e.g., search engine optimization (SEO), pay per click (PPC) advertising), how customers can interact with your product (e.g., images, videos), and how products can be purchased (e.g., checkout experience).
Promotion involves activities you undertake to make your customers aware of your products. Such actions are referred to as marketing tactics, and are designed to deliver on your marketing strategy.
Your website is the most significant asset you have. It is characteristically the most effective tool you will use to sell products and influence consumer behavior. Your online tea store should have strong product pages (e.g., product photos, sales copy, social proof), and you should enhance your content with search engine optimization (SEO).
One key component of selling tea online is setting yourself up to sell most effectively for the longest period. For this reason, your website should be tightly integrated with your email marketing. Email marketing can have a strong return on investment (ROI) and is an excellent way to encourage prospects to become consumers and influence customers to spend more.
Search marketing promotes websites and web pages on search engines by using paid and unpaid tactics. Search marketing is classified into two categories:
- search engine optimization (SEO)
- search engine marketing (SEM), also frequently called pay-per-click (PPC) advertising
Search engine optimization (SEO) focuses on gaining prominence in the search engine results pages (SERPs) using unpaid tactics. In contrast, search engine marketing (SEM) focused on using paid tactics.
Tea businesses need to selectively use paid (i.e., SEM) and unpaid (i.e., SEO) search marketing tactics.
Paid tactics generate quicker results, but costs may make this option less accessible to small tea companies with lower marketing budgets. The tea industry has many small players and a few large brands (e.g., DAVIDsTEA, T2, Tetley). These large brands can outbid small competitors on PPC ads and lure prospects away from smaller competitors using competitor campaigns.
Search engine optimization (SEO), which is an unpaid tactic, takes longer to generate results. It requires specialized expertise and time to pay dividends, which is why some tea brands tend to deemphasize this tactic. However, the extra effort required for blogging and SEO must be weighed against the business value it creates. Blogs and SEO can be a stable traffic source to your website and a meaningful contributor to product sales and brand awareness.
Social Media Marketing SMM
Social media marketing (SMM) is often considered by many tea brands, and for a good reason. Tea is a visual product, and it's easy to show the item within the context of consumption (e.g., infused tea, wet leaves, lifestyle photos). E-commerce retailers benefit from some social media platforms that emphasize shopping (e.g., Instagram, Pinterest ).
The role of social media differs based on each specific tea business. In some instances, social media plays a top of funnel role, driving brand awareness. In fewer cases, it fills the bottom of the sales funnel, driving sales. Other brands treat social media as a post-purchase marketing opportunity, remaining top of mind within their audience and inserting new products into the customer's consideration set.
People can refer to your target audience or your internal team responsible for selling your products.
Your target audience is the segment of the tea market you focus on. Narrowing your target marketing to a precise segment allows you to focus your messaging and marketing budget more effectively. Your target market represents your actual and ideal customer. Consider leveraging your most satisfied customers in your post-purchase marketing efforts (e.g., user-generated content) and digital PR (e.g., affiliate marketing).
Your internal team may reflect a range of key functions (e.g., accounting, HR), but those related to selling your tea are particularly important (e.g., marketing, customer support).
To market your tea effectively, you need to hire in-house talent, or work with an external marketing service provider, such as Steeped Content.
Selling tea requires dedicated staff in a physical location (e.g., tea room), or team members that can provide support digitally (e.g., offshore customer service support).
Employing and retaining the right people is critical to the long and short-term success of your business.
Process refers to internal systems (e.g., standard operating procedures) or initiatives (e.g., product launches) to support a business goal.
Your organization's process can affect the performance of the service you provide, involving the delivery of your product to consumers. Ensuring your business has a good process saves time and money, improving efficiency and profitability.
Physical evidence includes everything your customers see when interacting with your business (e.g., retail store, website, Google reviews). Physical evidence includes aspects such as product packaging, branding, and how your staff dresses and acts. Your store's layout, fixtures, and signage can act as branding opportunities and work to increase sales.
The marketing mix 7 Ps (i.e., product, price, place, promotion, people, process, and physical evidence) are examples of marketing fundamentals. The marketing mix is captured in a marketing plan, along with other valuable content.
A marketing plan should combine with a strong strategy and branding foundations. By focusing on branding (e.g., brand strategy, brand communication guidelines, brand identity guidelines) and strategy (e.g., marketing strategy, digital marketing strategy, content marketing strategy), you can distinguish your tea in the market.