The purpose of this paper is to describe the attributes of the Starbucks Chai Tea and energy drinks in detail. The pace at which this product will move through the product life cycle will be described as well as the factors that will impact its movement. Also, details on how the product life cycle will impact the marketing of the Chai Tea and energy drinks will be identified. The positioning and differentiation strategies for this product will be identified. The appropriate price strategy to be used will be described. Stages of the Product Life Cycles
Product Life Cycle
What is a product life cycle? A product life cycle "describes the stages a really new product idea goes through from beginning to end. The product life cycle is divided into four major stages: (1) market introduction, (2) market growth, (3) market maturity, and (4) sales decline. The product life cycle is concerned with new types (or categories) of products in the market, not just what happens to an individual brand." (Perreault, McCarthy, 2004). Market Introduction
The 4 P's are used in the introduction stage. The product, Chai tea, is introduced. During this time branding and quality is established. There will be low sales do to lack of recognition of Chai tea. The price may fluctuate during this period. Profits are expected to be low during the introduction. High cost towards distributing Chai tea is also expected. The promotion cost will be high in comparison to the sales and profits during this time period. Growth Stage
During this stage there is an increase in the demand of Chai tea. The demand increases in parallel with the profits and sales. New methods of a quicker distribution may be accomplished during this stage. "The innovator begins to make big profits as more and more customers buy." (Perreault, McCarthy, 2004). The growth of Chai tea is now projected towards a bigger collection of buyers. Maturity Stage
In this stage the strong growth of sales lessen. A competitor may have come out with a similar tea. A new beverage may have hit the market. This new beverage "may have skipped the early life cycle stages." (Perreault, McCarthy, 2004). The promotion cost could have risen during this time. The competitors may have cut cost of their products. At this point the primary objective is to defend Chai tea. The focus will be on maximizing the profit of Chai tea products. Decline Stage
This is the time of new products coming into the market at a rapid pace. Profits become marginal at best. Competitors are flooding the market with similar products. There are a few options. One is to maintain the product and reduce the cost of promotion. This is a cautious time. If the promotion of Chai tea is dropped too much sales will never recover. Keeping a steady, but less aggressive, promotion plan may help in the rise of profits. Another option is to analyze the preceding sales. This would help determine to liquidate the remaining inventory and possibly selling the product to a competitor for their own distribution.
Starbucks and Tazo will introduce flavored iced teas and will compete with Lipton and Snapple brands. A second variation of the beverage including vitamin B-12, Ginseng, Taurine, and other amino acids to the beverage will compete with other energy drinks on the market. Brands such as Red Bull, Monster, Sobe, and Rock star are enjoying high volume sales and are very popular among the young generation. Starbucks and Tazo intend to provide two high quality products that can compete at many levels. Product Features
Starbucks Tazo Flavored Tea
Tazo Chai Tea is an imported, organic, spiced black tea originating in India. Starbucks markets the tea in dry filterbags and as a custom blended beverage at their many retail locations. The tea is brewed, flavored, and bottled fresh daily. The tea will have a three to four month shelf life to assist distributors. Once marketed, Starbucks will limit...
References: http://www.nd.edu yahoo search engine retrieved on November 9, 2005
http://www.wikipedia.com yahoo search engine retrieved on November 9, 2005
http://tazotea.com. Retrieved November 10, 2005.
Perreault, William D., McCarthy, Jr E. Jerome. (2004) Basic Marketing: A Global-Managerial
Approach. The McGraw-Hill Companies.
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