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Porters Analysis For ITC Cigarette Industry

The threat of new entrants into the cigarette industry in India is low due to the difficulty of differentiating products, accessing distribution channels, and the high capital requirements to launch nationally. The bargaining power of suppliers is also low since cigarette companies are large buyers of many small-scale inputs, and suppliers have little control over addicted smokers. Similarly, the bargaining power of buyers is low given that smokers are addicted with low switching costs based on quality or price.

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Rajesh Kumar
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253 views

Porters Analysis For ITC Cigarette Industry

The threat of new entrants into the cigarette industry in India is low due to the difficulty of differentiating products, accessing distribution channels, and the high capital requirements to launch nationally. The bargaining power of suppliers is also low since cigarette companies are large buyers of many small-scale inputs, and suppliers have little control over addicted smokers. Similarly, the bargaining power of buyers is low given that smokers are addicted with low switching costs based on quality or price.

Uploaded by

Rajesh Kumar
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Porters analysis for ITC Cigarette Industry

THREAT of new entrant=LOW


New product differentiation very tough Access to distribution channel is tough Capital requirement is very high for a pan India launching Local launch cannot catch up scale Government policies

BARGAINING power of suppliers=LOW

Many inputs are required but in small quantity There are many small scale, unorganized suppliers Cigarette companies are big and have and have direct access to distribution channel and addicted buyer. Suppliers dont have much control over smokers

Bargaining power of buyers = low


Addicted customer Smoking has lot of symbolic and emotional values attached with it Product quality not much important to smokers Low switching cost in term of price

Threat of substitute product = low

Herbal cigarettes (eg. Nirdosh) were launched Nicotine patch is another substitute

Competitive rivalry in industry = High


Many competing player Price competition continues Advertisement for cigarette is now probhited in India Replacement for ads All making new product launches

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