LAUNCHING A CIGARETTE UNDER BANNED PROMOTIONAL ENVIRONMENT UNDER GUIDANCE OF M r. A N O O P R O H R I
tobacco consumption in India 19% bidis chewing 54% cigarette27%
BAN ON TOBACCO ADEVERTISEMENT- THE DARKENVIRONMENTOn 1st may 2004, the Indian government imposed a ban on cigarette and tobacco Advertisingand smoking in public palaces. As a results the tobacco industry, which Contributes Rs 70billion to the government by way of excise, had to cut down Rs 2500 million Of their advertisingbudgets with the ban. As a results of this ban, companies had to heavily depend On localmicro marketing , POS marketing and subtle promotional activities focusing on in-shopadvertising.
INDIAN TOBACCO INDUSTRYThe tobacco industry holds tremendous potential for India .For the government, it means exciseduties and export revenues , and for the country in general, it translates into huge employmentOpportunities with 35 million people being directly or indirectly engaged In producing and selling oftobacco and tobacco products .India the second largest producer of tobacco in the world after china.Tobacco production is integral to the economies of Andhra Pradesh, Karnataka, Gujarat, UttarPradesh, Andhra Pradesh and Karnataka, where it is grown. Tobacco cultivation is a lucrativeagribusiness proposition owing to its short growing season and the Profitability in relation to othercash crops.
INDIAN CIGARETTE INDUSTRYThe cigarette industry in India is one of the oldest and an important agro-based Industry. It ishighly labour intensive and provides livelihood to about five million people Directly andindirectly. At present, there are 19 units in the organized sector engaged in Manufacturingcigarettes with a total installed capacity of about 147.377 billion per annum.
MARKET SIZEThe market of cigarettes in India is estimated at 100 Billion sticks per annum and valued atRs 90billion.The cigarette market in India is characterized by low penetration and highexcise duty. Regular filter cigarettes account for 47 % of the market followed by micros andplains regular cigarettes are entry – point cigarettes for smokers upgrading from plaincigarettes.
EXCISE DUTYCentral excise duty (CED) on tobacco was introduced in 1943-44. until1986-87, the rates of theexcise charged by the government varied with the various cost slabs declared by the cigarettemanufacturers.On 28th February 1987 the government decided to charge duty on the basis of the length ofcigarette. The tax collection from cigarettes is the highest with duty per kg for cigarettes is thehighest with duty per kg for cigarettes being as high as Rs 722 per kg, while combined duty per kgfor other tobacco products like Bidis and chewing tobacco is only 21 per kg .
MARKET SHARE Major players Value market share (%) ITC 74% GPIL 11.40% VST 7.40%
GPILA leading tobacco company in India Godfrey Phillips India limited is an affiliate ofPhilip Morris International, the largest privately owned cigarette producer in the world.In 1979, Philip Morris joined hands with the K.K Modi Group in India. Presently, GPI isjoint venture between K.K Modi and Philip Morris of US. Godfrey Phillips is today thesecond largest player in India cigarette industry with an annual turnover of over US $265 million . Today , Philip Morris is the largest US based International cigarettecompany having a strong presence in three GPI has a strong presence in the mediumsegment while GPI is relatively stronger in the north and west, ITC and VST have astronghold of the south .
Cont…Godfrey Phillips India ltd is primarily into manufacturing cigarette .GPIL is the secondlargest player in Indian cigarette market. It is comfortable market position in cigarette brandswhich enjoy strong loyalty from its customers .the company was originally established godfreyPhillips ltd london.it distribute its product through a network of 5000 distributers &8000,000retail outlets. The company sells its cigarette under the four square, red and white tipper etc.
CIGARETTE BRANDS OF GPILInternational IndianMarlboro, Philips Morris, JaisalmerBond street, Four square FTKRothmans , Chesterfield, Four square specialVirginia Slims , Red & white filterParliament, merit Cavanders Commando, originals, Tipper and prince
LAUNCH OF TIPPER BY GPILGPIL launched its new non-filter cigarette named TIPPER –GOLD TIPPED’ in January 2002 inOrissa and then later in Jammu, Saharanpur, Cuttack and Telengana and in Kanpur. The impliedmission to launch Tipper was to continuously upgrade lifestyle of those consumers who are notcigarette smokers but bidi smokers or gutka consumers. As such, it was important to know theperception of the smokers about the newly launched Tipper cigarette. Retailers study wasconducted in order to know the retailer’s satisfaction and to maintain good relationship with them.
CLASSIFICATION OF OUTLETSCLASS OF OUTLET DAILY PURCHASE OF ALL CIGARETTE BRANDSA Rs 1000 or more per dayB Between Rs 500 to Rs 999 per dayC Between Rs 200 to Rs 499 per dayD Below Rs 200 per day
MARKETING RESEARCH REPORT• Market researches on cigarette smoking in India conducted by GPIL revealed that people were dissatisfied with their current brand due to the following reasons:• Non filter smoker’s dissatisfaction• Dual smoker’s dissatisfaction• Bidi smoker’s dissatisfaction with Bidis
CONCEPT DEVELOPMENT,DESIGN AND TESTING Concept development: Based on the above findings of the research study, GPIL developed the concepts of a new cigarette to provide the following benefits:• Compact tip• It looks like a filter cigarette and has similar benefits• Good clean smoke
MARKETING STRATEGYConscious, meticulous efforts were made by GPIL in identifying the right marketing mix so thatmarketing objectives could be realized.• Product• Compact tobacco tip• Superior packaging• Insert• Pricing
• Distribution Strategy: The distribution channel used by Godfrey Phillips India Limited is as follows: A and B class outlets were given 10 packets of cigarette whereas C & D class outlets were handed over 5 packets or less of cigarettes.• Promotional Strategy: GPIL used a combination of in-shop and on-shop merchandising displays to stand out in a cluttered Sops. Post ad-ban, GPI had to cover or remove all the posters from the market. Surrender to the Ad-ban on Tobacco.
LAUNCH OF TIPPER IN KANPUR• Invitation to retailers• Retailer Meet
INITIAL PLACEMENT• The launch started with a puja, which was performed at Wholesale Distributor’s office to generate a sense of belongingness and pride. The following methodology was used for promoting Tipper. IN-SHOP PROMOTION• Thematic posters/art-cards• Backing sheet• Lit racks• Lit buntings
SWOT ANALYSISSTRENGHTS • Compact tip due to Double Density technology • Enhanced taste due to hardened tobacco filter • Unspoilt tip of the cigrette,not soggy • Strong sales and distribution network of GPIL WEAKNESS • Low margins as compared to its competitors like Capstan Star, Capstan Standard,etc. • Low brand awareness,luanched just 117 days before the ad-ban
OPPORTUNITIES• Kanpur a high potential micro-cigarette market with high growth rates• ITC’s brand Capstan Star is slowly phasing out of the market due to low quality THREATS• Major competitor ITC aggressive and proactive in responding to the market changes• Launch of Tipper may cause cannibalization of Cavanders Magna,cigarette of the same segment, which is strong in Kanpur territory.• Effect of ad-ban esp. on a new brand
Later tipper was launched in rural parts of Kanpur in the companyaccompanied by the same above –mentioned activities.IN SHOP PERMOTION• Dispensers with clock• Gravity• Lit rack• Lighter with pop
PROMOTIONAL SCHEMES• Redemption offer• Plus minus scheme
COMPETITOR’S REACTION TO TIPPER GOLD LAUNCH Swift reaction from the major competitor ITC ITC increase the number of its displays in the market VST introduced a plus minus scheme
SALES ANALYSIS POST LAUNCH• Affecting the sale own brand.• Retailers were not happy with the margined offered before the redemption.• Two months old tipper is not far behind and is quickly catching up.• Highest brand switching was found to take place from capstan filter cigarette.• Most smoker felt that the pricing of tipper is right .• Most smokers liked the taste of tipper.
FACTORS TAKE CARE OF DURING THE LAUNCH OF FMCGS • First & foremost the product must deliver what it promises (quality & price). • Sell the idea internally by making sure are all convinced & excited about the new product. • Convince the trade members why they have to support your product. • The complete distribution plan and execute it. • Create awareness, interest, desire & product purchase. • Product availability & visibility. •The brand essence. •The complete media communication plan •The trade marketing communication plan
WHAT ELSE… • Merger with Ballantimes Scotch. • Promote with Pirated VCD/DVD. • Change the Segmentation. • Sell free for two months. • Change the colour. • Lemon flavor. • Promote with Bollywood.
Thank you….. Presented by Sukhjit Rajat Tarun Mohit Gourav