Kung Fu Tea

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Executive Summary

Kung Fu Tea is a beverage chain store with its headquarters in New York City, the United States. The company specializes in a type of tea known as bubble tea that has its origin in Taichung, Taiwan, in the late 1980s. The company opened its first beverage store in New York in 2009. Currently, Kung Fu Tea has 120 stores spread out across the United States and recently began expanding internationally. The product which Kung Fu Tea offers is authentic bubble tea, a drink popular in eastern culture which has recently gained significant popularity in the United States as well. Currently, their menu features at least 62 items and they have branched out far beyond regular bubble tea. The menu now offers slush, yogurts, and espresso beverages, as well as certain items that are available at exclusive locations. In addition, Kung Fu Tea gives their customers the opportunity to customize their drinks with various toppings and the ability to select the amount of sugar and ice percentage. An internet marketing campaign would help Kung Fu Tea to raise awareness of the various offerings and what sets it apart from the competition. The firm would gain more popularity if it communicated with its customers. Two of Kung Fu Tea’s target markets include (1) students, ages 15-19, and (2) young adults, ages 20-24, in Vietnam, Canada, Australia, and the United States. As Kung Fu Tea heartily pursues its goal towards a global expansion, it is necessary to observe and keep an eye out for competitors on both a local and broader scale. Digital marketing will help Kung Fu Tea to improve the positive aspects of its SWOT analysis and eliminate the negative ones.

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MKT 4555 Proposal

Professor Kim

Group 5

Connie Zhang, Babar Shahzad, William Ng, Yilin Guo, Valeriya Drachuk, Pui I Chang

Kung Fu Tea

Introduction

Kung Fu Tea is a beverage chain store with its headquarters in New York City, the United States. The company specializes in a type of tea known as bubble tea that has its origin in Taichung, Taiwan, in the late 1980s. The company opened its first beverage store in New York in 2009. Currently, Kung Fu Tea has 120 stores spread out across the United States and recently began expanding internationally by opening a few stores in Canada, Australia, and Vietnam.

The product which Kung Fu Tea offers is authentic bubble tea, a drink popular in eastern culture which has recently gained significant popularity in the United States as well. Kung Fu Tea sets themselves apart by providing authentic bubble tea with high quality ingredients and customer service. Currently, their menu features at least 62 items and they have branched out far beyond regular bubble tea. The menu now offers slush, yogurts, and espresso beverages, as well as certain items that are available at exclusive locations. In addition, Kung Fu Tea gives their customers the opportunity to customize their drinks with various toppings and the ability to select the amount of sugar and ice percentage.

The value proposition in Kung Fu Tea is authentic and customizable bubble tea, while the revenue is collected based off of beverage sales. It is important to note that Kung Fu Tea offers domestic and international franchise opportunities. In this case, the franchisee can purchase the franchise and utilize the established procedures and marketing that the franchisor created, and also receiving continuous support from the Kung Fu Tea team before, during, and after store opening. They have also partnered with TKK Fried Chicken, where their beverages are also distributed.

An internet marketing campaign would help Kung Fu Tea to raise awareness of the various offerings and what sets it apart from the competition. Unfortunately, there are similar companies that have emerged so it is important for Kung Fu Tea to utilize internet media to communicate why it is unique and provide customers with incentives to patronize their stores as opposed to someone else’s. The firm would gain more popularity if it communicated with its customers. It should be noted that bubble tea is very popular among younger consumers, who are avid users of the internet and would have a high likeliness to see this company in an online media.

Situational Analysis

Target

Two of Kung Fu Tea’s target markets include (1) students, ages 15-19, and (2) young adults, ages 20-24, in Vietnam, Canada, Australia, and the United States.

           

Vietnam has an approximate population of 97.9 million as of 2017, approximately 7.6% of which are ages 15-19; Canada has an approximate population of 36.1 million as of 2017, approximately 5.4% of which are ages 15-19; Australia has an approximate population of 23.7 million as of 2017, approximately 5.9% of which are 15-19; the United States has an approximate population of 325.7 million as of 2017, approximately 6.48% are between the ages of 15-19. The total population of the first target market is 32.94 million people.

Students are an important market for Kung Fu Tea because they look for places to hang out at. Bubble tea has become an emerging beverage for many students as they are conveniently located near school campuses. For students who do not drink caffeinated beverages, bubble tea is a source of energy boost. For example, many high school students in New York City are often looking for places to chat with their friends outside of school. Students are able to visit Kung Fu Tea to purchase bubble tea as well as from their TKK Fried Chicken partner in the same store location.

The second target market is  young adults, ages 20-24. Of Vietnam’s population, 7.9% are of ages 20-24; Canada holds 6.0%; Australia 6.6%; and the United States holds 6.78%. The total population of the second target market is 33.55 million people.

This market may or may not be entering the workforce and are more likely to visit cafes or stores that offer seating. For example, many young adults visit these shops to dine in and catch up with their friends and acquaintances. Within the last couple of years, there has been an increase in social media participation from people in this age range. Many of their posts are of their lifestyle, including pictures of their choices of meals from day to day. Of this target market, there is often pictures of beverages. Many young adults are posting their beverage of choice along with the name of the franchise. In addition, more and more young adults are jumping into the trend by searching through tags and posting their own pictures.

            People in this target market are more likely to pay attention to trends. When more and more of their peers are sharing options, they would naturally develop the desire to try it on their own. For example, young adults in New York City are often looking for cheap and quick meals to get through their busy day. As a plus, some Kung Fu Tea locations offer free Wi-Fi. By using the Kung Fu Tea app, they are able to pre-order and pick up to save time.

Competitors

            As Kung Fu Tea heartily pursues its goal towards a global expansion, it is necessary to observe and keep an eye out for competitors on both a local and broader scale. Thus, seven direct competitors of Kung Fu Tea were identified and their respective websites were presented to an avid sample of bubble tea enthusiasts who either frequent each location, or are familiar with the lot as a basis for the survey. Upon informing the participants of the set criteria (as seen in Figure C-1), the consumers were then instructed to rate each store on a scale of 1-10 (1 being the lowest, 10 being the highest) per criterion with the added option of reasoning per score. As such, the scores depicted in Figure C-1 were the combined averages (rounded up) of the resulting data given.

            Before diving straight into the competitors, Kung Fu Tea itself faired extraordinarily well on the audit itself as it was actually the highest ranked bubble tea store amongst all its competitors by the group of surveyed consumers. With tens straight across the board of criteria, Kung Fu Tea was only hindered by a score of an eight in its use of social media. The main cause of this situation is not that Kung Fu Tea has no social media presence, but rather the common critique was that, specifically for Instagram, Kung Fu Tea overindulges in the use of “memes” or attempts at cracking jokes that fall within common teen culture nowadays. While not necessarily a bad thing, as this digital marketing definitely gears towards bringing in the younger crowd which may be a substantial part of the their demographic, it may drive off the more mature consumers who may appreciate more pictures of the actual products themselves instead of a feed of text messages pertaining to Kung Fu Tea. Thus, it may be worth the effort for the digital marketing team to discuss the happy medium or an alternate way to go about the situation to bring the eight back up to a ten in the wake of fellow competitors right on their heels.

            Speaking of fellow competitors, arguably one of Kung Fu Tea’s fiercest competitors in the market, Coco’s is similar to Kung Fu Tea in that it is also aimed at and geared towards global franchising with various locations around the globe. And while Coco’s scored relatively high in comparison to other competitors amongst the surveyed participants, ‘ease of use,’ ‘navigation,’ and ‘use of social media’ were the categories in which consumers docked off points. Particularly speaking, Coco’s social media presence (both on the actual social media platforms and their website) were noticeably lacking. As opposed to other competitors who listed links on their website to social media platforms like Twitter, Instagram, Facebook, etc., Coco’s only links Facebook and YouTube—a point which ignited a confused remark from one participant: “For a FOOD & DRINK company, why would you choose to link an outdated form of social media & a video-based site when popular and image-convenient platforms like Instagram and Twitter exist?”. Otherwise, apart from the fact that users must know to click on the menu button in the top-right hand of the site in order for the navigation to show up, Coco’s was commended for their great use of high quality graphics and a consistent color palette with their brand.   

            In contrast to the international presence of the likes of Kung Fu Tea and Coco’s, Yaya Tea is a much more local café with only six locations—five of which spread across New York City. Despite its much smaller scale, Yaya Tea stands out from other bubble tea shops in that they also specialize in various handmade Japanese snacks (i.e. onigiri, rice balls). As expected of a smaller tea shop, Yaya Tea capitalizes on its petite aesthetic and warming atmosphere which directly corresponds to the website’s simple layout, color, graphics, and branding. With that said, while the store’s decision to keep their relevant information within just one page benefitted their functionality, ease of use, and navigation scores, it did create limits on readability as surveyed consumers remarked the inconvenience of having to add an additional click to the menu for an enlarged version of an otherwise illegible, yet significantly important section.

            While Kung Fu Tea’s website seemed to be leveling fairly evenly against other competitors who were not that far behind in the audit report, Kung Fu Tea faired exceptionally well in comparison to Gong Cha which had the second lowest score amongst the surveyed group. The most common critique against this competitor was definitely how unappealing and unattractive the website’s colors, graphics, and layout seemed to be. Opting for extremely minimal and dull shades of gray, white, and red—it is unsurprising how the result panned out when compared to the vibrant pops of color amongst other competitor sites which proved to be much more inviting, appealing, and enticing. Another common critique was the fact that customers would have to download the menu from the site as it was fully displayed on the actual website which numerous bubble tea enthusiasts credited the notion as a bad functional decision from the eye’s of a consumer. Despite all this, Gong Cha was commended for utilizing Pinterest as one of their social media platforms, as well as how “official” all the information seemed to be as it donned a more factual-based, strictly business-type of theme on their website.

            Second only to Kung Fu Tea, Chatime ranked incredibly well against the list of top competitors in the bubble tea market. Many of the surveyed consumers largely credited Chatime’s high scores due to how bright, bold, colorful, and fun their graphics and gradients turned out to be. Due to the well-received positive energy as transmitted through the site’s layout and overall look, many participants felt themselves enjoying browsing the content of the site much more, as say compared to Gong Cha, and took their time scrolling through the information. In addition, Chatime’s decision to add a short, yet animated video detailing various upcoming rewards programs seemed to have paid off as it was quite a refreshing change of pace from all the blocks of texts that were to be reviewed overall. A critique that stood out was actually out of personal experience where one customer entailed how a drink they observed on the site was not actually sold in his particular location. Nonetheless, Chatime received an overwhelmingly positive review which was aided in part by its accessibility in three languages.

Beyond classic bubble tea brand like Kung Fu tea, one of the local rising star Boba Guys a San Francisco-based bubble tea shop have a huge success in the market because of their incredible branding and social media marketing skill, makes them the position of the most well-known new brand among all competitors. Their website has offered high-quality graphics and use a relevantly simple layout and color, just coordinate to their company’s mission like a telling of story, catching visitors to learn more about the brand. Visitors can comfortably find what they are looking for and read the least news from the company.

ViVi Bubble Tea has been one of the oldest specialty bubble tea chains in New York since 2007, having more than 60 branches in the city. Unexpectedly, ViVi has lowest score amongst the surveyed group, their score on functionality, correct contact of information, graphics and color are all on average, the bright pink color used on the website is what make them stand out. However, because of lack of social media usage, the brand does not provide any link to its social media platform at all, visitors also not getting the most least product information from the brand since the last update was in July of 2018, eight months ago, which definitely are areas of improvements.

Lastly, Bar Pa Tea has the smallest scale in business among all top competitors of Kung Fu tea, it scores wasn’t low at all. Their fame contributes to their flagship favorites and make them differentiate from the other brands. Many participants from survey said their simply and clean layout are enjoyable to look at and they can easily get all information they want like the prices and what beverage do they offer. The website also has well connection to their social media like Instagram and Facebook, giving visitors an extra channel to share their experience.

Figure C-1: Kung Fu Tea’s Top Competitor Website Audit

SWOT Analysis

Strengths

●       Unique knowledge – Kung Fu Tea has more than ten years of experience on handcrafting unique blends of tea.

●       Kung Fu Tea uses only authentic ingredients from Taiwan to make its beverage offerings. This approach allows the company to maintain an authentic taste that customers find unique in the market.

●       Economies of scale – Kung Fu Tea has close to 130 stores, the vast majority of them located in the United States. This large-scale focus has allowed the company to attain economies of scale that have made it possible for the company to reduce costs per unit of output.

●       Consistency – Kung Fu Tea has managed to create customer loyalty by ensuring that flavor, quality of beverages, and reliability of services are consistent in all its stores.

Weaknesses

●       Highly specialized product portfolio – Currently, Kung Fu Tea focuses only on tea-based beverages, which limits the company’s potential for market expansion.

●       High costs – brewing the drinks frequently and sourcing the most important ingredients from Taiwan is expensive. It increases operational costs, meaning that Kung Fu Tea’s prices are higher than most competitors in the market.

Opportunities

●       The fusion trend in the United States means more people than ever before are willing to try new cuisines from different cultures. Kung Fu Tea has the opportunity to exploit this trend to gain market share.

●       The trend towards caffeine-free products may allow Kung Fu Tea to attract coffee consumers seeking to transition to beverages with less caffeine content than coffee.

●       The focus on healthy foods in the United States means more people are opting for foods that are prepared from natural products. This trend avails Kung Fu Tea with the opportunity to gain greater market share from its natural products-based product offerings such as its green tea brands.

Threats

●       Stiff competition from coffee – Coffee is the most popular beverage in the markets that the company operates, especially the United States. Bubble tea brands have gained a significant presence in the US, but they are still far off from reaching the level of coffee brands such as Starbucks. Trying to get potential clienteles to switch to tea is an arduous task.

●       Kung Fu Tea’s products are relatively new in Western markers. Getting people to try new products that they are not familiar with is not an easy task, especially when those products originate from a foreign culture.

Digital marketing will help Kung Fu Tea to improve the positive aspects of its SWOT analysis and eliminate the negative ones. Firstly, social media marketing will allow Kung Fu Tea to use its loyal customers as brand ambassadors, making it possible for the company to reach greater audiences. Bubble tea is a relatively new product in Western countries, which means that Kung Fu Tea is bound to experience slow growth in brand awareness as people tend to avoid products with which they are not familiar. However, they would become more receptive to the new product if they found out that a friend has already tried it and found it satisfactory. Kung Fu Tea’s brand will seem more trustworthy to potential customers if they view their friends “liking” and “sharing” the company’s social media content. Ultimately, increased brand awareness will convert into greater sales, allowing the company to overcome its two main threats, namely stiff competition from beverage companies that are already established in the market and lack of brand awareness. Digital marketing will also allow the company to exploit its strengths to build trust in its products by making customers aware of the company’s exclusive use of authentic ingredients from Taiwan as well as the company’s extensive experience on creating unique blends of tea.

Secondly, digital marketing will allow the company to improve customer experience by personalizing outreach. It will enable Kung Fu Tea to gain better insights into market segmentation through customer behavior tracking and, consequently, customize the experience for each market segment to meet specific customer needs. In this way, digital marketing will allow the company to exploit some of the opportunities in the market such as the healthy diet trend and the fusion trend by identifying customers with these tastes and making them aware of Kung Fu Tea products that meet their tastes such as the Passion Fruit Green Tea.

Additionally, the company will be able to get feedback from both existing and potential customers about some of their needs and tastes that the company’s products do not meet, allowing Kung Fu Tea to develop new products that can meet these needs. Consequently, the company will eliminate one of its weaknesses by diversifying its product portfolio.

1. Title Page*

2. A Copy of the Thank You letter you sent the client*   (Yilin)

3. Table of Contents*

4. Executive Summary*  (babar)

This is an overview of the entire report. It should summarize each of the main parts of your Internet marketing plan, including a description of the product, its differential advantage, your digital marketing strategies and tactics, the required investment, anticipated sales and profits, etc. REMEMBER, THIS IS A SUMMARY. It should include not only an analysis of the situation but also your recommendations. As such, it should be 1 page long and should summarize your contributions. It may be useful to wait to write the summary after the report is finalized.

7. Marketing Objectives and Goals (10 points)   (Yilin)

The following list is the marketing objectives and goals that we’ve came up with for Kung Fu Tea which will develop its online performance.

1. Increase Social Media Marketing Strategies

●        Increase brand awareness and sales through Facebook, Instagram, Twitter, YouTube, and Google search, which can ultimately translate into increased market share. Facebook is Kung Fu Tea’s most popular social media page and the company posts content on its Facebook page at least once every two days. These posts mainly consist of offers, competitions, memes, and news articles giving Kung Fu Tea positive coverage. The most effective means of increasing brand awareness through Facebook is to increase the number of posts relating to offers and competitions. The target is to increase the average number of comments, likes, and shares on these posts from 250 to at least 500 within a year. This strategy should increase the number of followers considerably within 6 months. The target is to double the number of followers on the company’s Facebook page from 28, 200 to 56,000 within six months.

●        Kung Fu Tea also has a significant presence on Instagram. The company plans to use the same strategies that it has adopted on Facebook to increase the average number of likes and comments per post on its Instagram page from 25 and three respectively to 100 and 10 respectively.

●       Kung Fu Tea will aim to increase feedback-related engagement on Facebook and Twitter from 2.3% to at least 5% within six months. The company will accomplish this objective by making posts inviting customers to share their experiences on these platforms. Kung Fu Tea’s Twitter account has only 4,984 followers and tends to average 60 likes per posts. The company aims to increase the number of followers and likes per post to at least 10,000 followers and 200 likes respectively within six months by generating more hashtags about the customer experience.

2. Create a YouTube account to bolster its digital marketing efforts and increase brand  awareness. Kung Fu Tea does not have a YouTube account although it occasionally uses third parties to post promotional videos on YouTube. The company stands to exploit YouTube’s popularity to gain brand recognition more effectively by creating its own YouTube account. The company’s YouTube strategy is to post at least two YouTube videos per week and grow its subscriber base to at least 3,000 within the first year.

3. Improve Current Search Engine Presence. Kung Fu Tea intends to capitalize on its mobile application to increase sales among its existing customers through offers and promotions. Only 3 percent of the company’s customers use the app. The company plans to increase this proportion to at least 10 percent through search engine optimization within six months. Information about Kung Fu Tea’s mobile application does not appear within the first two pages of results when one conducts a search of Kung Fu Tea on Google. The goal is to use search engine optimization to ensure information about the application appears within the first two pages of a Google search and, subsequently, increase the number of customers downloading the application from Google Play Store and Apple Store.

In order to develop Kung Fu Tea’s digital performance, we have implemented three different  marketing strategies and tactics including Search Engine Optimization, Search Advertising, and Social Media Marketing. 


8. Marketing Strategies and Tactics (60 points)

-         State how you will implement the marketing strategies. Restate each goal and then list your strategies and tactics for reaching each goal. You are not required to develop strategies for all 5 topics (SEO, Search Ad, Display Ad, Social Media, E-mail). You should do “SEO” and “Search Ad”. Then, you can choose one topic among the others (Display Ad, Social Media, E-mail, and others). You don’t have to address all the questions and instructions within each topic. Once you select your topics, you can freely design your own strategies.

a. Search Engine Optimization (mandatory) (20 points) (William)

-Evaluation of the current website’s SEO

1.       Is the current website optimized for SEO search strategies?

2.      Run a check of the website for adherence to Google guidelines

3.      Summarize the positive and negative assessment for the current website’s SEO

-Link Analysis

1.       Complete an analysis of the backlinks and outbound links for the website and present a summary of your findings

2.      Highlight stats to be relevant to the website and also provide suggestions for improvement 

-Keyword Analysis

1.       List 20 keyword phrases to be used for search engines optimization in organic searches

2.      List in order of importance, beginning with the most important keyword

3.      Evaluate your competition for these keywords by running searches on Google, Yahoo! and Bing search engines

-Meta-tags

1.       Include a 25-40 word description of your website to be used in the meta-tags

b. Search Advertising (mandatory) (20 points)  (pui)

-Keyword Analysis

1.       List at least 20 keyword phrases to be used for paid search advertising

2.      List in order of importance, beginning with the most important keyword

3.      Evaluate your competition and cost for these keywords by using Google AdWords Keyword Tool 

-Develop Search Ads

1.       Develop search ads and present them in the format of Google ads.

2.      Develop at least one ad for each of the personas that you develop in Section 6

3.      For each ad, select relevant keywords (you can select among the 20 keywords that you have developed in the previous section, if you do keyword analysis as well)

4.      For each ad, illustrate how the landing pages should look like

-KPI and Cost Analysis

1.       Provide metrics on how to measure the success and or failure for your strategies

2.      Determine a monthly budget of your plan and conduct cost/benefit analysis

3.      For example, you can estimate sales based on the traffic of each keyword and can compare the sales with the costs, by using the Google keyword planner

d. Social Media Strategy (20 points, if selected) (Connie)

-Develop Social Media Content

1.       Develop Social Media content to improve new customer visits to the webpages

2.      Develop at least one content for each of the personas that you develop in Section 6

3.      Provide details on how the content is going to work in favor of the business

4.      Explain how will you encourage discussion of the firm on social media? 

-KPI and Cost Analysis

1.       Provide metrics on how to measure the success and or failure for your strategies

2.      Determine a monthly budget of your plan and conduct cost/benefit analysis

3.      How will you monitor social media?

9. Discussion and Conclusion* 

10. References*

If you use references from the Internet, make sure you cite your Internet sources correctly. Make sure and include all references that support your plan, even if you do not quote from them directly. References provide support and credibility to your plan so err on the side of referencing material to support your propositions.

11. Appendices*

Include all supporting information that you consider relevant