Lipton's international differentiation strategy in China

1992, Lipton entered China, the country with the longest history of tea drinking and the largest number of tea drinkers in the world. Just five years later, Lipton achieved the number one market share in sales of tea bags in a series of surveys of 100 shopping centres in China. This phenomenon, brought about by Lipton's unique international strategy of "price leadership" at the business level and "globalisation" at the company level, is known as the "Lipton phenomenon "The Lipton phenomenon. According to Rumelt's growth strategy model, the growth strategy of the company can be explored in terms of products and markets, and is characterised by the following.

Uniformity of tea specifications and quality: Lipton aspires to make the smallest number of products with the greatest depth of penetration. Although the product descriptions on Lipton's website seem to imply a wide range of products, retail and wholesale sales, including online and offline sales, are still dominated by the "Lipton Yellow Label", the most classic "Lipton Yellow Select Black Tea". Like Nescafe in the coffee world, Daisy's in the department store world and instant noodles in the fast food world, Lipton is looking for a cheap, convenient and fast-moving product. This runs counter to the aristocratic nature of tea in British culture - the simplification and homogenization of a specific cultural product that is a luxury product, accompanied by a complex tasting process.

But in reality low cost does not mean an abbreviated production process - on the contrary, it often requires a higher technical threshold. Lipton has not focused entirely on mechanised production, but has also researched the market to match its technology, such as tea drinking trends, consumers' tea drinking habits, preferences for colour, flavour and packaging, tea making methods, and the various factors that influence consumers' choice of tea.

Anti-differentiation in the positioning of consumer groups: Due to its low-priced and specific product positioning, Lipton's corresponding target consumer group is keyworded as "mass". Lipton's success in terms of awareness is inseparable from its precise target audience and market positioning, as brand awareness is not only built by national awareness, but also by communicating consumer needs and forming pre-determined brand perceptions in people's minds during the communication process.

Figure 1 shows the age attributes of the population of Lipton compared to the three mainstream

national tea brands in the Baidu browser search index[1] from 1 November 2020 to 30 November 2020. From the age perspective of the demographic profile it reflects, it is clear that Lipton clearly prefers to position its consumer base as the younger generation. In contrast to the middle-aged consumers of Chinese tea companies, Lipton's main demographic of choice is between the ages of 18 - 35 years old, living a fast-paced lifestyle, while at the same time desiring to relax and be health-conscious. For example, university students and white-collar workers, for example, are the pioneering force in fashion and are therefore receptive to new things. When using them as opinion leaders and taking advantage of opportunities for word-of-mouth marketing, it is not difficult to reach a broader group of consumers.

Global expansion of product sales areas: Lipton has not stopped after "liberating" tea from the British aristocracy. From the initial development of the US market, to the opening of branches in India, to the development of the Far East market. Lipton has always sought to internationalise its products and its product philosophy.

Its cleverness lies in the foresight to quickly take possession of the markets where production takes place - according to iiMedia Research (Ai Media Consulting), the total global tea production in 2018 was 5.905 million tonnes, of which China and India have reached 67.1%, with the two countries contributing respectively 2.616 million tonnes (44.7%) and 1.312 million tonnes (22.4%). This is a country-specific advantage in international competitive advantage. Once the internationalisation process has reached a certain stage, the characteristics of the country in which the target market is located, such as the advantages of production and transport costs, are particularly important for this pioneering international company. In addition to the basic products, Lipton has also made innovations in product flavours according to the positioning of different market audiences.

Yibin ZHANG

[1]baidu indicator. (n.d.). Baidu. http://index.baidu.com/v2/index.html#/

[2]aimei marketing All Rights Reserved. https://www.iimedia.cn/

[3]Bhasin, H. (2019, May 29). Marketing strategy of Lipton Tea. Marketing91. https://www.marketing91.com/marketing-strategy-of-lipton-tea/

[4]Rumelt, R. (2022). Good Strategy Bad Strategy: The Difference and Why It Matters. Crown Business.

[5]Daxue Consulting. (2021, November 18). Market Analysis on: Lipton in China. Daxue Consulting - Market Research China. https://daxueconsulting.com/market-analysis-on-lipton-in-china/

[6]P. (2020, October 27). Lipton sells 2 billion cups of tea every year in China! It’s still growing at a high speed. China Food Press. https://chinafoodpress.com/2020/10/27/lipton-sells-2-billion-cups-of-tea-every-year-in-china-its-still-growing-at-a-high-speed/