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Masters degree/Bachelors

Nayomi Ekanayake | Marketing


Executive summary
Dilmah Tea aims on delivering new products for the consumers and tend to implement new
strategies accordingly in order to be competitive with the current market. In this booklet the
internal and the external environment of Dilmah Tea are taken into consideration.
Competitive advantages are been updated with the latest technology. Additionally the SWOT of
Dilmah Tea has been analyzed and has been suggested the most appropriate method to use
and how to get the maximum of the strategy and to see how far the strategy will benefit the
company.
Future goals, suggestions and recommendations in order to succeed more has been stated at
the end of the assignment.
















Table of Contents
Executive Summary ........................................................................................ Error! Bookmark not defined.
INTRODUCTION ABOUT MJF GROUP Dilmah Tea ...................................................................................... 4
1.1 The role of strategic marketing in the company in creating a global tea brand............................... 5
1.2 The processes involved in strategic marketing of Dilmah Tea.......................................................... 6
1.3 The importance of linking the strategic marketing to the overall corporate strategy ..................... 7
2.1 The models which can be used in strategic marketing planning and critically discuss the
appropriateness of the selected models to the above context of Dilmah going global ............................... 8
2.2 The links between strategic market positioning and the marketing tactics ................................... 10
2.3 Critically analyze the usability of Relationship Marketing as a strategic marketing approach for
Dilmah ...................................................................................................................................................... 12
4.1 Critically discuss the impact of the recent global changes on the MJF Groups attempt to create a
global tea brand .......................................................................................................................................... 13
4.2 Internal analysis to identify current strengths and weaknesses in the current marketing strategy
15
4.3 Propose strategic marketing responses to key emerging themes in a marketing strategy ........... 16
Conclusion ................................................................................................................................................... 19
Reference .................................................................................................................................................... 20











INTRODUCTION ABOUT MJF GROUP Dilmah Tea

Dilmah Tea (PVT) Ltd Was started 1988 introduced lovers of fine tea to the concept of tea
Picked, perfected and packed at origin. Being owned and managed by a tea producer, Dilmah is
also a role model for producing countries. Dilmah presents an unmatched collection of teas, each
tasted and selected with the benefit of decades of experience in tea, and most importantly with a
passion for quality.

Merrill J. Fernando, the founder of MJF Group - Dilmah tea, is an icon in the global tea industry.
He is a man who revolutionized the industry which was dominated by multinationals, by
bringing in quality and integrity into tea. An ordinary man of humble beginnings, his passion and
vision for tea remains unchanged to date. He is a visionary who wanted to market his own brand
of tea nearly four decades ago, when branding and marketing were dominated by the
multinationals. Today, Dilmah has put Sri Lanka back on the global map as a destination, which
grows the finest tea on earth, Pure Ceylon Tea.

Dilmah is one of the eight global brands in the Medinge Group's top brands with a conscience.
Merrill Fernando pioneered the concept of single origin tea and incidentally is the world's first
genuinely Ethical Tea. The company remains Sri Lanka's number one manufacturer and exporter
of tea bags, accounting for over 21 % of the country's total export of tea in bags. Dilmah is also
the world's first producer - owned tea brand.

The Founder had his initial training in tea tasting in London where most of the world's tea was
consumed. It was England that tea was bought and sold in a country that cultivated it overseas,
then imported and consumed most of the world's tea. It was England that he learned tea; a
finished product carefully handpicked and produced in a traditional and time- honored manner in
Ceylon, which was benefitting the middleman in Europe much more than Ceylon. He also learnt
that this was a dysfunctional trade which was benefiting others and not the local farmers. This
made him think of developing his own brand someday, with the intention of creating value for
Ceylon tea and to the million or so workers, who made Ceylon tea possible. This was a
triggering event in his life, which made him look at the tea industry from a different angle which,
changed his outlook and eventually brought in new dimensions to Ceylon tea.






1.1 The role of strategic marketing in the company in
creating a global tea brand
The strategy of providing fresh, ethically produced, high quality tea has made Dilmah one of the
most popular tea brands in the world. As of 2011 the brand is sold in over 100 countries, is the
second most popular tea brand in Australia, and is one of the most recognized international tea
brands. Dilmah is Sri Lankas most recognized international brand and is also the countrys
predominant tea exporter. On one of its largest estates, the company enjoys a production of
approximately 10,000 kilograms per hectare. In 2009, Data monitor estimated that Dilmah was
the sixth largest tea brand in the world. The company has also expanded into tourism by turning
four tea estate bungalows dating from the late 1800s in central Sri Lanka into luxury guest
houses known as Ceylon Tea Trails. This innovative concept absorbs the traveler into life on a
working tea estate and teaches them everything they need to know about making the perfect
brew. In 2011, Ceylon Tea Trails won the Travelers Choice award from Trip Advisor, the
worlds largest travel website
Dilmah uses several methods of marketing strategy for distribution in several countries. It
operates in 93 global markets and it has its own distribution mode through its regional channels
in certain countries and where as in other several countries it uses a native prominent goods
distributor for their tea. In countries like Australia, USA, and European countries it uses its own
distribution channels where the customers believe in manufacturer own brand and distribution. In
certain countries like Jordan, UAE, etc. it uses a native goods distributor to distribute their tea
since these customers buy the products which comes from their own distributors.
To what extent culture of a particular market place has influenced the marketing practices of
business corporate can be understood by analyzing each element of the marketing mix (4 Ps i.e.
product, price, promotion and place).

Product: Dilmah Tea with value added tea
Price: Premium
Promotion: Sri Lanka Cricket, On Board Flights, etc.
Place: Global


Given the popularity and global appeal of tea, the importance of the hospitality sector's
investment in the correct presentation of the tea and the appropriate selections to appeal to
foreign patrons, cannot be stressed enough. The Dilmah range of Specialty and Boutique Teas,
along with a wide range of tools to enhance the tea experience including timber t-trolleys and the
tiers, are bound to demonstrate an intelligent commitment to excellence of service and enhance
an establishment's reputation.



















1.2 The processes involved in strategic marketing of Dilmah
Tea

In this itll talk about the companys mission and marketing objectives and strategies that can be
taken to achieve the companys goals.

Mission
The mission statement of Dilmah is to provide luxurious taste to every citizen of the country at
an affordable price. The mission statement is the overall goal of the company that direct the
company decisions, employees and other associates need some smaller goals which can be
worked on for a short time span.

Marketing objectives and strategies
According (Macmillan & Tampoe, 2000), Strategic implementation requires a firm to establish
annual objectives, devise policies, motivate employees, and allocate resources so that the
formulated strategies can be executed effectively.
Strategic implementation includes developing a strategy-supportive culture, creating an effective
organizational structure, redirecting marketing efforts, preparing budgets, developing and
utilizing information systems and linking employee compensation to organizational performance.
According to Macmillan & Tampoe ( 2000), One of the potential benefits of strategic
management is it make sure that the organization only follows one direction or path towards the
achievement of its business mission, objectives and success. (Marketing - Thinking Made Easy)
Objectives
1. Dilmah and the companies of the MJF Group maintain honesty and integrity in every
contact, with customers, with retailers, partners and everyone we have the pleasure of
working with.
2. Dilmah is a brand with a conscience; a business established with the objective of going
beyond business alone In seeking to make his Dilmah a matter of human service, Merrill
became a pioneer in seeking justice in the world of tea.
3. Dilmah values our customer, maintaining consistency in quality and taste to be as loyal
to our customer as we hope our customer will be to our brand.
4. Dilmah owes its success to the quality of Ceylon Tea. Our business was founded
therefore on an enduring connection to the land and the communities in which we
operate.
1.3 The importance of linking the strategic marketing to the
overall corporate strategy
A company is diversified when it is in two or more lines of business. Strategy-making in a
diversified company is a bigger picture exercise than crafting a strategy for a single line-of-
business. A diversified company needs a multi-industry, multi-business strategy. A strategic
action plan must be developed for several different businesses competing in diverse industry
environments. (Strategies for Managing a Group)
PESTLE Analyses, contributes to the Dilmahs co-operative strategy. Setting corporate strategy
objectives means setting those measures of actions and methods which will help the company to
achieve its overall mission in a certain timeframe. Corporate strategies are the most basic
planning tools underlying all planning and strategic activities. Through sharing its value Dilmah
establishes strong relationships with its stakeholders that have led them to have an encouraging
feedback on the latest annual report about the audit conducted on ethical trade.
The corporate mission of Dilmah is as follows:
Sourcing products efficiently.
Making packages to attract customers.
Using local employees.
Focusing on the most popular trends
Buying in volume
Not spending heavily on advertising. (Introduction - Providing consumers with
ethically sourced)
In order to facilitate such corporate strategy with strategic marketing plans, Dilmah has
devised such marketing schemes that are:
1. Low in budget and effective
As it doesnt want to spend high amount of money for advertising its products, minimal
money will be spend in this department.
2. Merchandising
Properly combining colours, styles and visually displaying new season products to catch
passers - by attention.
3. Bulk purchasing
Buying product in large quantity will be cost effective as the cost of producing one Tea
packet will be low. Also, the supplier will be happy to work with Dilmah in future and
maintain a strong relationship bond of work with them.
2.1 The models which can be used in strategic marketing
planning and critically discuss the appropriateness of the
selected models to the above context of Dilmah going
global
Every company operates differently and would have to adopt the tool that best suit their company
marketing strategies.
Dilmah more favors the PESTLE (Political, Economical, Social-Cultural, Technological, Legal and
Environmental and the SWOT Analyses (Strengths, Weakness, Opportunity and Threats.
The identification of these tools has helped Dilmah to adapt to the changing environment and the
continuous changes in human needs and behavior.
According to (Hawes & Crittenden, 1984), states that as a brand, loyalty bond get stronger and they are
able to expand more and create more demand of their products in the market.
Dilmah strategy is to keep their customers by keeping their prices premium with so much of different
varieties for each customers needs. The major role of strategic marketing starts from planning, analyze,
interpreting, implementing and evaluating.
PESTLE
Political, Economical, Social-Cultural, Technological, Legal and Environmental
7Ps Marketing mix
Product, Price, Place, Promotion, People, Process, Physical evidence
SWOT
Strength, Weakness, opportunity, Threats
Porter 5 forces theory
Supplier Power, Buyer Power, Competitive Rivalry, Threat of Substitution, Threat of New Entry





Dilmah has been using these two tools for more than 10 long years in the
market.
Above the - line
There are a number of approaches to promotion that are open to organisations. Above-the-line
promotions use mass media methods. This type of promotion focuses on advertising to a large
audience. It includes print, online media, television and cinema advertising.

Below the - line
Below-the-line methods are very specific, memorable activities focused on targeted groups of
consumers. They are under the control of the organization. These techniques can be used to
target clearly defined consumer groups rather than a mass audience like its above-the-line
activity. The purpose of these activities has been to develop the brand by creating awareness and
building a brand profile. Below-the-line methods include:

sponsorship
sales promotions
public relations
personal selling
Direct marketing.


In Marketing, many below-the-line (BTL) activities are carried out, such as sales
promotions, seminars, workshops, brand activations to name a few. There is a perception that
BTL activities are more cost effective than ATL activities. This may not be the case! All BTL
activities must be carefully evaluated in terms of effectiveness. Cost reductions should be carried
out based on effectiveness, such as elimination of unproductive sales promotions and other
activities.

Certain BTL activities should not be conducted, because competitors are doing so! All BTL
activities must be justified based on costs and benefits. (Cost benefits analysis). I have also
observed that many marketers develop point-of-sale-material (POSM) without considering the
appropriateness, effectiveness and cost of same. If marketers and sales personnel think
creatively, more effective and cost efficient POSM can be developed. Dont simply think of
standard POSM such as posters, danglers and streamers.




2.2 The links between strategic market positioning and the
marketing tactics
According to (Wise geek, 2012) Market positioning is the manipulation of a brand or family of
brands to create a positive perception in the eyes of the public. If a product is well positioned, it
will have strong sales, and it may become the go-to brand for people who need that particular
product. Poor positioning, on the other hand, can lead to bad sales and a dubious reputation.

A number of things are involved in market positioning, with entire firms specializing in this
activity and working with clients to position their products effectively. When a product is
released, the company needs to think beyond what the product is for when it comes to
positioning. It also should think about the kind of people that would wants to buy the product.
Dilmah Targets
Dilmah marketing targets are health conscious customers in any age. They mostly target middle
income earners, health conscious people and also customers from all over the country.
Demographic Targets
60% of Dilmah sales revenue comes from outside Sri Lanka. Most of Dilmahs customers are
from Asia Europe and the Arab Nation.
Dilmah has positioned itself very well in the mind of the customers and the consumers; over the
years Dilmah has been converting more and more consumers into customers.

In order for any business to survive they first need to understand their competitors and the
market they are competing in. A number of tools can be used to access the market and
understanding the competition better the company has to use the tool that best fit them.

Tools
SWOT,
PESTLE,
7PS,
PORTER 5 FORCES
PEST
The above mentioned tools are vital and will help Dilmah maintain a very strong position in the
near and for future. A successful company like Dilmah must use effective marketing strategies to
deliver what the customers want; the strategic positioning enables Dilmah to analyze all the
factors of the market and continue to be the market leader for Tea products.
Dilmah has a lot of big competition competing with them; these big players would like to gain
better market position. Dilmah is trying to control the market by flooding it with their large
variety of products; their competitors are unable to keep up with Dilmah pricing method. The
Dilmah team has to be on top of the new market trend and stay focus on the strategies they have
set.
Dilmah tea positions them mostly by promoting their brands in various ways.
Such as,
Dilmah Tea on Board





Tea on board has a whole new meaning with the Dilmah Travel Tea Experience. Uniquely selected for
their appeal to the sophisticated commuter, the travel tea experience will have a choice of traditional,
eclectic or luxury teas covering a range of infusions from robust to zesty to contemporary. Offered in a
variety of presentation options and on a route or regional basis, this is unquestionably the most elegant
in flight tea service.





Dilmah Tea sponsoring the cricket team





In Sri Lanka, the relevance of tea to the game of cricket extends further than that of a twenty-minute
break that separates lunch and the end of a days play. And, while tea to the Western world is but a tiny
item in a crowded shopping trolley of groceries, in Sri Lanka, it is the trolley itself.






2.3 Critically analyze the usability of Relationship
Marketing as a strategic marketing approach for
Dilmah

Relationship Marketing

According to Zeithaml and Bitner (2000) Relationship marketing is a philosophy of doing
business, it's a strategic device that focuses on keeping and improving current customers
whole acquiring new customers. According to Coviello's (1997) states, Relationship
Management is an integrative activity involving functions across the organization, with
emphasis on facilitating, building and maintaining relationships over the time.

Relationship marketing is a new phenomenon which is a step ahead of traditional marketing.
The emphasis here lies on Relationship' between a customer and a product, a customer and
an organization (b2c), an organization with other organization (b2b). The overall purpose of
Relationship Marketing is to facilitate and maintain customer relationships, which leads to
changed focal points and modification of marketing management process. RM tends to
provide a superior relationship between a customer and an organization which in return gives
an organization competitive advantage.

Dilmah is a Major tea industry and is a part of an even bigger organization MJF
GROUP(MJF) there are a lot of products listed under the MJF group of companies and
Dilmah is the most successful and the major company listed with MJF. Dilmah has to have a
good relationship with their suppliers to ensure consistent quality, service, deliveries on
time, and other inward and outward logistics.










4.1 Critically discuss the impact of the recent global changes
on the MJF Groups attempt to create a global tea brand

Although the global tea industry suffered from a weakened international economy and adverse
weather during 2008 2010, Dilmah has been able to leverage itself with its strong brand name
and remain profitable. In 2010, the company reported a post tax profit of 537 million Sri Lankan
Rupees (Rs, approximately US$ 4.9 million), up from Rs 487 million (approximately US$ 4.5
million) in the previous year. Sales have also remained healthy, as turnover improved in 2010 by
an increase of 11.6% over the previous year. Dilmahs strong brand name and innovative and
successful promotion efforts have developed it into one of the worlds most popular tea brands
and ensured its continued success.

Dilmah Tea was hit by weak dollar
We were affected pretty badly, in that there was massive devaluation in all of the key
markets that we were operating. That impacted us very badly. Tea is not an expensive
product, not that people will stop drinking tea but the biggest issue we faced in markets like
Russia, Ukraine, then in Australia was the substantial currency devaluation. Dilmah as an
imported product competing against brands packed in that country makes us very
expensive.
Some questions and answers
Q: It appears that your main challenge is external and not one in Sri Lanka. But if you look
at challenges here which of these is most important? The first is the macro economic
situation which is interest rates, inflation etc or else is you more concerned about the tea
industry in general about plantation wage negotiations, about productivity. Which occupies
most of your time?
A: They both have a bad impact. Obviously having a strong rupee has had an impact on
exporters. So that has been a disadvantage for us because other competing countries
Kenya and India have had significant devaluations which to a certain extent have countered
the devaluations in the importing countries. In our case the rupee has strengthened.
But fundamentally if you look at it in the long term its the industry which is of serious
concern to us, because being an exporter of value added Sri Lankan brand you cant ignore
whats happening to your upstream production side.
Weve had a drought for five or six months, tea prices are at an all time high, yet the
plantation companies are not making money because your volumes are down 30 to 40
percent, so its a very difficult situation.
So fundamentally exporters and brand owners will ride through the situation but plantation
companies have been struggling for the last 15 or 20 years. I think thats an area which
policymakers are not focusing on, possibly because the industry does not speak in one
voice.
The support and concern has been for the smallholders because they are considered the
voters; largely the Southern Province. But there has been ill treatment and total ignorance
of issues that face the plantation companies, because the plantation companies were
bought from the government.
The industry was vibrant in the early 70s. After nationalization it was in a fairly week
condition after that. State control also led to unionization because you were looking at one
single large employer. Earlier unionization was not so rampant.
As a result you are now have a situation where workers are living in not ideal conditions,
whose housing needs improvement. They (workers) do a very arduous job.
Productivity is low. Our wages are double those of our competitors. The companies dont
have funding to invest, to upgrade the HR standards of the workers and basically look to the
future. This is a real tragedy, because the government - quite correctly - wants to be self
sufficient in food.
Q: The industry has been slow towards branding. Dilmah stands out as an exception for the
scale it has achieved and the global presence. Why do you think the rest of the industry
hasnt followed in the same scale?
A: Its not easy for a start. It depends on what motivates you. Youve got to have a very long
term view. In the case of Dilmah my father (Merrill J Fernando) had a vision thirty years ago
that he wanted to do this because he was a large exporter of bulk tea. He felt the pulse of
this market. He realized that unless he creates his own brand his business would be at risk.
Youve got to have a vision.
Different people want different things. I mean persistency is really the key. And if you have a
20 to 30 year time frame then it can be done. Of course its much harder now than when we
started out. Retailers have consolidated. And its so much harder for new brands to enter
the market than before and the focus now is not necessarily on premium products but on
price, on economy products and so on where Ceylon tea maybe at a disadvantage but
theres room for many others.
Q: You are talking about margins for niche products diminishing and retailers consolidating
in your major markets. Has that changed your marketing strategy?
A: No. What is happening now is a temporary phenomenon. Twelve months from now itll
go back, because ultimately, as I said, tea is inexpensive and people appreciate good tea.
One of the highlights of my day is when I go to work to see four or five letters or e-mails
from consumers who say weve just tried Dilmah and we love it. Its the taste we used to
know 20 to 30 years ago. Ultimately its a high quality product which is nicely packaged.
4.2 Internal analysis to identify current strengths and
weaknesses in the current marketing strategy


Strength

Specialist marketing expertise
Financial strengths
Location of business
Healthy
Organic.
Rich taste and flavor.
Unique aroma.
Good packaging.
Good advertising.
100% Pure Ceylon Tea
Strong Brand Heritage
Imported Brand
Premium Quality (Two Leaves & a Bud)
ISO 900 & HAACCP Certified













Weaknesses

High Price.
Rural areas are under used.
Advertises for a certain class of people.
Climate changes



4.3 Propose strategic marketing responses to key emerging
themes in a marketing strategy

Businesses operate in an ever-dynamic environment. They adjust and adapt to environmental
dynamism through a variety of strategic orientations. Strategy, therefore, is instrumental to the
survival of the firm.

Health concious

Nowadays consumers are more health-conscious when they buy, taking more
care to read nutrition labels and seeking out products with health benefits,
according to a new survey. They also want the food/drink labeling to be
much clearer with details.

Tea has the ability to relieve stress, improve heart health and potentially prevent cancer and
Alzheimers disease, it can be prepared in many ways, and taste is up to the brewer. Tea, the
worlds second most popular beverage behind water, has soared in popularity during the past 10
years.

Dilmah tea already has a selection of natural Green Teas including Green Tea with Jasmine
Flowers, Moroccan Mint Green Tea, specialty Ceylon Green Tea and Sencha. Produced
respecting a 5,000 year old tradition Dilmah Green Tea is 100% pure and natural.

They can also innovate a variety of healthy tea for different people such as diabetic patients,
cholesterol patience, heart patients or a selection of teas for everyone to consume.

As for Sri Lankans Dilmah can come up with these kind of flavors as the majority of the people
now are more towards their healthy side. Such as,

1. Kohomba Tea
2. Kottamalli Tea (Coriander)
Etc.






Going Green




The demand for ethically produced, ecofriendly products has been gaining steam for years and is
expected to grow at a faster pace. Values drive the behaviour of today's socially and
environmentally conscious consumer, who increasingly believes that the fastest way to make an
impact on the environment is to buy green. Ecofriendly purchases are a great way to make a
change for the better a healthier you and a healthier environment.

Dilmah Tea will have to look beyond adapted or customised products, short runs and premium
pricing. Now is the time to get closer to consumers, embed sustainability early in the innovation
and design process and put in place the operational capabilities to meet market demand at scale
and profitably.

With eco products there has to be a quality of confidence verging on aloofness about the product.
Very simple packaging, very simple aesthetics to the whole product. I would be tempted not to
focus on the environmental values of the product but include a website address on the packaging
where consumers can obtain information about the environmental impact of the product. It
therefore becomes a given that the product is environmentally conscious.

In summary, let consumers form their own opinion that it is a superior product (pricing,
simplicity), allow consumers to decide for themselves why it is superior and finally appeal to
intelligence by offering supporting information about the environmental aspects of the product
and again let consumers reach their own conclusions.

Marketing is an affair that involves a skillful analysis of how the perception builds-up with the
consumers about what they are offered as a "product".

So if our product is eco-friendly, which should make-sure the consumer notices it at the very first
sight of the product.

1. Eco-packaging should be seriously considered.Biodegradable packaging or Virgin plastics.

2.Importance of eco-friendly products and their effects on the environments should be
highlighted on the packaging.

3.Marketing strategy could also involve creating some special
offers. Say, like giving away "Green ambassador" badges as a
token of appreciation.


Conclusion

Todays global market has seen immense competition from companies on a global scale,
companies are fully aware of competition and technological advancement. With the help of
marketing strategy, Dilmah tea has strategically positioned themselves as the Ceylons market
leader for Tea products.
Abiding corporate objectives, Dilmah tea has strategically utilized these as their internal
strengths. As the Ceylons leading supplier of Tea, Dilmah tea was able to corner the market
through various companies, these companies are offering their products under the Dilmah tea
umbrella.
Dilmah Tea success is due to strategically positioning themselves as the market leader for Tea
manufacturing and their ability to convert more customers into consumers by offering them on
unbeatable price for their products without compromising the quality of the products

























Reference

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Cream of the crop, (2008. October) Foodies, p.47-50

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http://sundaytimes.lkl071014/FinanciaITimes/ft309.html

Fernando D.C. (2008). Passion, Talking tea, The Journal of Dilmah tea

Gunawardena, N. (2006. June) The Dilmah Story. The Chartered Marketer, p.34-41

Giving it all away just his cup of tea. (200s.5eptember) Australian Financial Review, p.61

HighTea (2003, January). Australian Gourmet Traveler, p. 125

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Master of the cup of life, (2007. September) UK Lanka Times, p.24-28

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www.dilmah.com www.integritea.org www.dilmah.pl www.historyofceylontea.com
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