Group 3

Bharat Parulekar McEwen Pereira Nitesh Phadke Daman Pathak Satish Pillai

80118110075 80118110080 80118110082 80118110078 80118110084

Cigarettes - Market Share

GTC, VST, 8% 8% Godfrey Phillips, 12% ITC, 72% ITC Godfrey Phillips

VST
GTC

ITC Limited
1. One of India's biggest and best-known private sector companies 2. Incorporated on August 24, 1910 under the name of 'Imperial Tobacco Company of India Limited 3. Diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging 4. Gold Flake tobacco brand is the largest FMCG brand in India and holds 70% of the tobacco market. 5. Market capitalization of over US $ 33 billion and a turnover of US $ 7 billion.

SWOT Analysis
Strength
1.
2. 3.

Weakness
1. It still has to consolidate its foot in the cigar market largely dominated by Godfrey Philips. Government Taxes & regulation.

4.

Biggest and the largest player market share of about 80%. Gold Flake tobacco brand is the largest FMCG brand in India Single brand alone holds 70% of the tobacco market.

2.

SWOT Analysis
Opportunities
1. Entering into new and emerging markets like developing countries of Eastern Europe, Africa etc. Explore the niche market for Cigars. Brand launched ARMANTEROS

Threats
1. Obvious threat is from competition, both domestic and international. ITC's opportunities are likely to be opportunities for other companies as well

2.

2.

Product, Place, Price, Promotion

ITC Brands Gold Flake King Gold Flake Light Gold Flake Premier Gold Flake Premier - Light Classic Milds Classic Regular Navy Cut Classic Wave Classic Wave - Light Pack Size 10 10 10 10 20 20 10 20 20 Price in Rs 58 58 45 45 116 116 49 110 110 Market Urban Urban Urban Urban Metro Metro Rural Metro Metro

Bristol
Flake

10
10

34
30

Rural
Rural

4Ps : Product
BRAND NAME : Good Brand recall. Known for over 25 years QUALITY : Superior. Bleached Golden tobacco. SAFETY : Lowest content of tobacco-specific nitrosamines a carcinogen (1.0 TSNAs ) PACKAGING : Hard cardboard paper. 5-10 sticks per pack. Displays product contents, dangers & price ACCESSORIES : Cigarette holder and filter

4Ps : Place
DISTRIBUTION CHANNELS : Wholesalers > Distributors > Retailers > Customers MARKET COVERAGE : Wide. Premium outlets to small shops in rural areas. ORDER PROCESSING : Precise forecasting to avoid stock outs (Based on customer profiling within geography ) TRANSPORTATION: Truck, Containers and small vehicles

4Ps : Price
PRICING STRATEGY : Driven by demand RETAIL PRICE : Large pack : Rs. 34 Small pack : rs 28. Per stick : Rs 3.50 VOLUME PRICING : Discounts on bulk purchases by retailers. FLEXIBILITY : Limited. Influenced by tax rates and government rules and regulations

4Ps : Promotion
ADVERTISING : Pre-ban: TV, radio, posters. Post-Ban: magazine advertisements, event sponsorship. Word of mouth. Surrogate advertising (Gold Flake Expressions). Subliminal (Gold Flake Honey Dew [I need you] MARKETING COMMUNICATION BUDGET : 50 Cr prior to the ban. Much less now. LINE EXTENSION: Gold Flake Kings, Gold Flake Lights

5th P : Popular Culture

The influence of symbols associated with the product on its customers. MASCULINITY (Captain Haddock), CHARM (Humphrey Bogart), COOL (Clint Eastwood), REBELLIOUS (Che Guevara), REVOLUTIONARY (Fidel Castro), CREATIVITY (Vincent VanGough), IRREVERANCE (Sigmund Freud)

PORTERS 5 FORCES
NEW ENTRANTS LOW

New products differentiations very tough already cigarettes at different price points, flavors, brand images. Access to distribution channels is tough big and established players are present (e.g. ITC) Capital requirement is very high for Pan India launching Local launch cannot match up scale. Cant use Economies of Scale Brand Loyalty of the consumers Government Restrictions towards International Players entering indian market to Promote Exports & Domestic Product Consumption.

NEW ENTRANTS

PORTERS 5 FORCES
SUPPLIER LOW

Many inputs are required but in small amount paper tobacco filter There are many small scale unorganized suppliers Cigarette companies are big and have direct access to distribution channels Supplier do not have control on buyers

NEW ENTRANTS

PORTERS 5 FORCES
BUYER LOW

Addicted customers even after knowing that tobacco harms, people are addicted. Smoking has lot of symbolic and emotional values Low switching costs in terms of price Product quality not much important to smokers NEW ENTRANTS Research shows most people cannot differentiate among the brand in a blind taste. However, consumers are becoming increasingly concerned about the health issues

PORTERS 5 FORCES
SUBSTITUTE LOW

The biggest substitute for tobacco users is to just quit using any type of tobacco product Herbal cigarettes (Nirdosh) were launched but not popular Nicotine patch , Nicotine Gums, Nasal Sprays, Inhalers ,hookahs, Chewing Tobacco,etc are another substitutes but again cannot be compared with cigarettes in terms of popularity and use. NEW ENTRANTS Electric cigarettes which provide the same look and feel

Some Prescription Pills recommended by Doctors ,can help the patient to quit smoking, thus acting as a substitute

PORTERS 5 FORCES
COMPETITION
Many competitive players ITC, Godfrey Phillips, VST, GTC Price competition continues Advertisement banned New product launch

HIGH

NEW ENTRANTS

Segmentation, Targeting, Positioning, Differentiation

Segmentation

Demographic
-Youth , Elderly

Psychographic & Behavioral

-Tagline : - for the Gracious People , Premium Cigarette for Elite & Rich !

-Literate , Well-to-do illiterates.

-Rich, Middle income Groups Urban -Male Population Rarely Females

-As a Status Symbol / A Fashion Utility

-Peer Pressure / Trend for Aspiring Sophisticates -Addiction to Brand & Brand Loyalty

-Heavy Usage (chain smokers),Regular Consumption

Segmentation, Targeting, Positioning, Differentiation

P1 P2 P3 P4

Targeting
Goldflake Kings , Goldflake Kings Light
Goldflake , Goldflake Lights

S1
S2 S3

PRODUCT SPECIALIZATION
DIFFERENTIATED MARKETING

Targeting Strategy
Target Group : Premium class - Rich & Elite Adults ,who are supposed to be successful, elegant, and responsible, and had a sense of purpose Goldflake is now reaching out to the New Target Audience of Youth Smokers as Aspirant Sophisticates

Segmentation, Targeting, Positioning, Differentiation

Positioning
-User Based Positioning Strategy -Campaign Statement : - For the Gracious People -Premium Category Cigarette Meant for Elite & Rich -Comparison of Goldflake with Gold for Quality & Purity of Experience -New Campaign Statement Celebrate the Feeling -New Campaign targeted at larger audience of Adults , Conservatives, as well as Youth who would be potential adult customers in Future -Basically , Goldflake is trying to expand to the immediate lower Segment on the perceptual map ,whilst Goldflake kings is already targeting the higher segment.

Segmentation, Targeting, Positioning, Differentiation

Differentiation
-Premium Experience / Customer Delight -Seen as a status symbol

PEST
Political
Taxation (excess of 130% of net product) Regulations relating to communication and consumption

Sociocultural
Growing concern on Health related issues due to Tobacco consumptions Ban of advertisement, sale below 18 years

Economic
Largest producer of cigarettes in India Short term growth, long term decline due to Political and Sociocultural factors

Technology
State of the art plant Emphasis on superior quality product