Marketing strategy of ITC

1. Marketing Strategy of ITC
in
Tobacco Industry

2. Scope
 Study the consumer behaviour in Tobacco
Industry
 SWOT and PEST analysis of ITC cigarettes
 Porter’s Five forces Model
 Analysis of cigarette consumption
 Positioning Strategies
 Future Research

3. ITC Cigarettes
 Marketed under 14 different brands
 70% market share in the Indian cigarette market
 Contribute 80% to the total profits
 Serves 100,000+ markets and 2 million retail
outlets

4. SWOT analysis
World class Research
Efficient Supply chain
mechanism
Highest Market share
Losing out on smokers
because of increase in prices
Declining sales growth
Ethical dilemma
Opportunity for Less
hazardous low nicotine/ light
cigarettes
Innovative packing designs
Increasing high income group
Low entry barrier, low entry
cost
Increase in excise duty
Rising health concerns
Strengths Weakness
Opportunities Threats

5. PEST analysis
 Smoking in public places is strictly prohibited
 Advertising of tobacco products is not allowed
 Health warning labels need to be put up on the
packaging
 Hike of excise duty from 11% to 72% for
cigarettes
Political

6.  India is the second largest producer of tobacco
 Highly labour intensive, employing 5 million+
people
 In 2008 recession, sales increased by 11%
 Lower income groups use bidis as alternatives
Economic

7.  Health conscious population
 Awareness through advertisement
 Primary education
 More rehabilitation centres
Social

8.  Automated production process
 Smoke-free cigarettes and e-cigarettes
 New flavours
 Different packaging
Technological

9. Porter’s Five Forces Model

10.  Highest market share of 70% in India
 No major threat from the existing players in the
market
 Availability at local stores helps beat the
competition
Competitive Rivalry

11.  Shopkeepers, friends are major drivers of
consumer choices
 Suppliers who can influence shopkeeper have
great power
 Brand loyalty is comparatively lower, so
availability important
Bargaining Power of
suppliers

12.  Greater preference to taste than price
 Easily switch to another brand, low loyalty
 Shift in consumption from bidis to cigarettes due
to higher income
Bargaining Power of
buyers

13.  Cigarette industry is very stable
 New entrant cannot match distribution of existing
players
 Government policy against tobacco acts as a
virtual entry barrier
Threat of new entrants

14.  Other forms of tobacco such as bidis, chewing
tobacco
 More health conscious and may switch to less
harmful forms of tobacco such as nicotine gums,
patches and electronic cigarettes
 Rehabilitation centres
Threat of substitutes

15. Data Analysis of consumer
preference
32%
34%
18%
5%
11%
Consumer preference of cigarettes
Goldflake Classic Marlboro India Kings Others

16. 4
10
15
7
6
16
11
3
5
8
10
13
9
6
4
3
9 9
11
9
11
10
5
8
7
0
2
4
6
8
10
12
14
16
18
1 2 3 4 5
#ofconsumers
Ratings
Consumer Priorities
Price Taste Brand Packaging Preference Availability Preference

17. 0
10
20
30
40
50
60
70
80
90
Friends Advertisements Recommendation by
shopkeepers
Recommendation by unknown
co-smokers
Modes of awareness

18. Recommendation Count Percentage
Promoters 13 29.55
Detractors 20 45.45
NPS -7 -15.91
 30% of the consumers will actively promote
the brand to others as they are loyal
enthusiasts and fuel growth
 Around 45% of the consumers fall into the
category of detractors who may impede
growth with negative word-of-mouth

19. Positioning Strategies
Position itself as the largest
producer of cigarettes across
India
Position its cigarette brands as
the most easily available
brands in the retail stores
Positioned itself as the
producer of consistent and
superior quality products with
the state of the art
manufacturing technology
Position itself as the producer
of all flavours and tastes of
cigarettes
Functional Symbolic
Experiential

20. Future Scope/ Foresight
 Increasing the number of cigarette flavours
offered
 Improving the brand value
 Penetration to every nook and corner
 Reduction of focus on packaging
 Encouraging consumers to actively promote the
brand as they are the best source of fuelling
growth
 Cannibalization with respect to ITC

21. Thanks
!