PROJECT REPORT

On

Understanding the promotional

activities & new product launch of ITC

product

MASTER OF BUSINESS ADMINISTRATION

(Approved by AICTE, Govt. of India)

ACADEMIC SESSION

2017-2019

SUBMITTED BY: SUBMITTED TO:

Mr. Rajat Singh Prof. S Mohanty

ARMY INSTITUTE OF MANAGEMENT AND

TECHNOLOGY GREATER NOIDA (UP)-201306

Certificate of Training

i
 CERTIFICATE

This is to certify that Mr. RAJAT SINGH, MBA student of AIMT. Greater
Noida Batch 2017-19 has successfully undergone his internship program in ITC
and completed a project on Understanding the Promotional Activities of ITC
New Product Launch under the guidance of Mr. NEERAJ MALHOTRA

Mr NEERAJ MALHOTRA

ii
 Supervisor Certificate

This is to certify that Rajat Singh a student of Master of Business Administration,

Batch –MBA-14, Army Institute Management & Technology, Greater Noida, has
successfully completed his project under my supervision.

During this period, he worked on the project titled Understanding The

Promotional Activities Of ITC New Launch Product in partial fulfilment for the
award of the degree of Master of Business Administration of GGSIP University,
Delhi.

To the best of my knowledge the project work done by the candidate has not been
submitted to any university for award of any degree. His performance and conduct
has been good.

(Signature)
Prof. S Mohanty

AIMT-Gr. Noida

iii
 Certificate of Originality

I, Mr. Rajat Singh, Roll No. 07818403917 of MBA 2017-19 Batch of Army Institute
of Management & Technology has undergone a Summer Internship in ITC Ltd. for
a duration of 45 days on a project title “Understanding The Promotional
Activities of ITC New Launch Product”, hereby declare that this project is my
original piece of work.

Signature of the student:

Student Name: Rajat Singh

Date

iv
 ACKNOWLEDGMENT

The project report study helped me to earn a different prospect of how the work is carried out
in the real market situation, completely different from what I read as a theory. The duration of
my training gave me a good practical experience and this could not have been possible without
the abled support and guidance of Mr. Mohammad Imran, who made me understand about the
Promotional activities of ITC ltd and how the product flows in it. I am thankful to him to give
me such a project of great magnitude and scope, which will be a great support to ITC in near
future. All the three objectives have already been implemented live by the area executives.

I would also like to express my sincere thanks to Mr. Neeraj Sharma and Mr. Neeraj Chopra,
for helping me out in solving any discrepancy which I faced during the span of my training,
whether related to field activity or desk activity.

I will fail in our duty if I don’t pay my regards to Mr. Mohd.Ibrahim HR ITC ltd – Saharanpur
Office, who has appointed me as a Summer Trainee for undertaking the project which will stand
in good stead for me in my future days to come.

I am extremely thankful to my internal supervisor of the project, Prof Mohanty, to support and
help us throughout the project.

Last but not the least, I am thankful to the retailers in different parts of the Agra, who have
provided me very useful information and also the customers who have helped me in
concluding a successful research in the market.

Rajat Singh

v
 Executive Summary

This project is undertaken to understand the sales and distribution strategies used by ITC in the
Agra market area. The project report revolves around objective, before that it contains the
history and the details of ITC LTD, following which is the scope and the bandwidth of the
FMCG sector available in the market. The first objective began with the study of all the
available distributors for the Agra branch of ITC. Meetings were held with them to understand
the supply chain pattern followed here. The details were collected from them about the major
stores where different brands of ITC cigarettes can be available. As the main focus was on to
find the market improvement of distribution of sales in Wave cigarettes (newly launched ITC
cigarettes).

We first started doing market survey with the Distributor Seller (DS) to check what is the market
scenario and what are the things required to improve it. The 2nd objective was to improve the
Wave cigarettes visibility in the market place. For this objective, we have found different
probable solutions regarding how to increase the availability, visibility and freshness. The 3rd
objective was to explore other channels of cigarettes. As for now, we got the information that
the various shops are being uncovered on route. Hence, we took the orders from these shops
and have enrolled those shops in the beat plan of DS.

vi
 TABLE OF CONTENTS

Company Certificate ......................................................................................... i

Supervisor Certificate ........................................................................................ ii

Certificate of Originality .................................................................................. iii

Acknowledgement ............................................................................................ iv

CHAPTER CHAPTER NAME PAGE NO.

NO.
1. Introduction 1-18
1.1 Industry Introduction
2.1 Company Introduction

2. Objective of Research 18-19

3. Literature Review 20-23

4. Research Methodology 24-25

5. Data Analysis and Interpretation 26-30

6. Findings &Recommendations 31-38

7. Result & Discussion 39-43

8. Questionnaire 43-46

References

vii
 CHAPTER:1.1

INDUSTRY
INTRODUCTION

Type Public (BSE: ITC)

Founded 24 August 1910 Radha Bazar Lane,

Kolkata, India

Headquarters Kolkata, India

Key people Chairman: Yogesh Chander Deveshwar

CEO & Executive Director: Sanjeev Puri

Executive Directors: Nakul Anand & Sanjeev

Tandon

Products Cigarettes, packaged food, hotels, apparel, Personal

care
Revenue Rs 60,493 Crore (US$ 9.4 billion) (2017)

Employees 30,000 (March 2018)

Website www.itcportal.com

ITC Limited which previously stood for Imperial Tobacco Company of India Limited,
is an Indian conglomerate with a turnover of US $ 8.31 billion. It ranks third in pre-tax profit
private sector among India's corporations. The company has its registered office in Kolkata.
The company is currently headed by Yogesh Chander Deveshwar. It employs over 25,000
people at more than 60 locations across India and is listed on Forbes 2000. The Training
Centre of the company is in Munger, Bihar. ITC is also known as "Chatkal" (especially in
Munger).

1
 ITC Limited or ITC is an Indian conglomerate headquartered in Kolkata, West Bengal. Its
diversified business includes five segments: Fast Moving Consumer Goods (FMCG),
Hotels, Paperboards & Packaging, and Agri Business & Information Technology.

Established in 1910 as the Imperial Tobacco Company of India Limited, the company was
rechristened as the Indian Tobacco Company Limited in 1970 and further to I.T.C. Limited
in 1974. Finally, the periods in the name were removed in September 2001 for the company
to be renamed as ITC Ltd. The company completed 100 years in 2010 and as of 2012-13,
had an annual turnover of US$ 9.31 billion and a market capitalization of US$ 55 billion. It
employs over 25,000 people at more than 60 locations across India and is part of Forbes
2000 list.

ITC claims to be the only company in the world of comparable dimensions to be Carbon
Positive, Water Positive and Solid Waste Recycling Positive.

Top 10 FMCG COMPANY

1. Hindustan Unilever ltd.

2. ITC India Ltd.

3. Nestlé India

4. GCMMF (AMUL)

5. Dabur India

6. Asian Paints (India)

7. Cadbury India

8. Britannia Industries

9. Procter & Gamble

10. Marico Industries

2
 GROWTH FACTOR

With the presence of 12.2% of the world population in the villages of India, the Indian rural
FMCG market is something no one can overlook. Increased focus on farm sector will boost
rural incomes, hence providing better growth prospects to the FMCG companies. Because of
the low per capita consumption for almost all the products in the country, FMCG companies
have immense possibilities for growth. And if the companies are able to change the mindset
of the consumers, i.e. if they are able to take the consumers to branded products and offer
new generation products, they would be able to generate higher growth in the near future.
However, the demand in urban areas would be the key growth driver over the long term.
Also, increase in the urban population, along with increase in income levels and the
availability of new categories, would help the urban areas maintain their position in terms of
consumption. At present, urban India accounts for 66% of total FMCG consumption, with
rural India accounting for the remaining 34%.

3
 PROJECT TITLE INTRODUCTION

This project is undertaken to understand the sales and distribution strategies used by ITC
in the Agra market area. The report has been prepared to understand the consumption
pattern & sales distribution of ITC cigarettes in urban market and rural market. This
study also detailed information about the Availability, Affordability, Affordability
& Awareness (4 A’s of Marketing) of the ITC cigarettes in rural as well as in urban
markets.

PURPOSE OF THE REPORT

The Purpose of this report is to list out the different brands of ITC cigarettes which
are consumed in the urban market & that in the rural market. Although the sampling
has been carried out only in few selective cities, the general Stock Keeping Units
(SKU’s) are more or less the same all over cities. The same applies for the villages
also where we have conducted the surveys.

DIFFERENT SOURCES & METHODS

Data collected is predominantly Primary data. In preparing this report, we have

interviewed Shopkeepers, Paanwalas, Wholesalers, Distributors, Company persons
& Customers at several places in Kolkata & Howrah which include Salt lake City,
Garia, Patuli, Haatibagan, Shyambazar, Khanna, Ultatanga, Beleghata &
Panchanantala (Howrah) , Bandhaghat (Howrah). Among the villages we had
chosen Krishnanagar, Barrack pore, Ranaghat & Shantipur for conducting our
surveys.

Report Organization:
The report reviews the different kinds of brands consumed in urban and rural market,
analyses the different trends in their consumption pattern, and summarizes them at the
end.

Limitations:

There was time constraint as the research had to be done in a short time & we had
to cover cities as well as villages. Cost constraints were faced. Scarcity of resources
was a problem. Only a limited number of shop-keepers & Customers could be
interacted with.

4
 ITC PROFILE

THE ITC VISION:

ITC’S VISION Statement:

To enhance the wealth generating capability of the enterprise in a globalizing

environment, delivering superior and sustainable stakeholder value

ITC’S VISION
• Make a significant and growing contribution towards:
• Mitigating Societal Challenges
• Enhancing shareholder rewards

By

• Creating multiple driver of growth while sustaining leadership

in tobacco, and
• Focusing on ‘Triple Bottom Line’ performance
Enlarge contribution on the Nation’s
 Financial capital
 Environmental capital
 Social capital

CORE VALUES
ITC's Core Values are aimed at developing a customer-focused, high-performance
organization which creates value for all its stakeholders.

CORPORATE methods

ITC may be a board-managed skilled company, committed to making enduring price for the

5
nation and also the investor. it's an upscale structure culture non-moving in its core values
of respect for folks and belief in management. Its philosophy of well-rounded price creation
is backed by strong company governance policies and systems.

ITC’s company methods are:

• Create multiple drivers of growth by developing a portfolio of world category

businesses that best matches structure capability with opportunities in domestic and

export markets

• Continue to specialize in the chosen portfolio of FMCG, Hotels, Paper, Paperboards

& Packaging, Agri Business and knowledge Technology.

• Benchmark the health of every business comprehensively across the factors of

Market

Standing, profit and Internal Vitality.

• Ensure that every of its businesses is world category and internationally competitive.
• Enhance the competitive power of the portfolio through synergies derived by mixing
the {various the varied} skills and capabilities residing in ITC area unit various
businesses.

• Create distributed leadership among the organization by nurturing gifted and

targeted high management groups for every of the companies.

• Continuously strengthen and refine company Governance processes and systems to

change state the entrepreneurial energies of management by hanging the golden
balance between govt freedom and also the want for effective management and
answerableness.

6
PRODUCT MIX OF ITC LTD.

7
DISTRIBUTION CHANNELS OF ITC LTD.

8
 EMPLOYEES
As per the Annual report of the company, it had 25,960 employees as on 31 March 2017,
out of which 4,043 were women. It spent Rs. 2,545 crores on Employee benefits during the
FY 2015-16. Its Chairman Y C Deveshwar has won renowned awards and recognitions
including Padma Bhushan from Govt. of India and 7th best performing CEO in the world
by Harvard Business Review. Meera Shankar, Indian ambassador to USA between 2009
and 2011, joined the board of ITC Limited as the first woman director in its history. She is
an additional nonexecutive director of the company.

AWARDS AND RECOGNITIONS

• In 1994 and 1995, the ILTD Division in Chirala and Anaparti won the "Best of all"
Rajiv
Gandhi National Quality Award
• ITC features on the Forbes Global 2000 rankings for 2012 at position 841. In the same
rankings, the company's market value placed it as the 184th largest company in the
world. Forbes has also included the company in Asia's Fab 50 Companies list.
• In 2013, ITC was ranked the third most admired company in India by Fortune.
• In 2011, all of ITC’s super premium luxury hotels were accorded LEED Platinum
certification, making ITC Hotels the ‘Greenest Luxury Hotel Chain in the World’.
• In 2010, ITC was ranked 6th amongst global consumer goods companies in sustainable
value creation during 2005-09, by Boston Consulting Group.
• It received the National Award for Excellence in Corporate Governance from the
Institute of Company Secretaries of India in 2007.
• In 2006, ITC's e-Choupal program won the Stockholm Challenge Award 2006 in the
Economic Development category. This program enables over 3.5 million farmers to
access crop-specific and customized information in their native village habitat and
language.

Focus on the chosen business portfolio

 FMCG; Hotels; Paperboards, Paper & Packaging; Agri Business: Information
Technology

9
 Blend diverse core competencies residing in various Business to enhance the
competitive power of the portfolio
 Position each business to attain leadership on the strength of World- Class standards in
quality and costs
 Craft appropriate strategy of organization and governance process to:
 Enable focus on each business &
 Harness diversity of portfolio to create unique source of competitive power of
the portfolio

3- Tier Governess Structure

Boards of directors

Strategic supervision
• Enabling Focus on
Corporate management each business
• Harnessing
committe
Diversity of
Strategic Management

Divisonal Management
committe

Executive management

Cigarette Industry in India

• Legal cigarettes account for only 10% of tobacco consumed in India due to a
punitive and discriminatory taxation and regulatory regime.

• India is the 4th largest illegal cigarettes market in the world; resulting in Revenue
loss of over 13000 Cr p.a to the exchequer.

• 42% of the adult Indian males consume Tabaco. Only 7% of adult Indian males
smoke as compared to 14% who smoke bidis and 30% who use smokeless tobacco
(source: Global Adult Tabaco survey India 2016-17)

10
 • Annual per capita adult cigarette consumption in India is approx. One- ninth of
world average.

Legal cigarettes contribution 87% of the tax revenue, Despite constituting

Only 10% of tobacco consumption

other tobacco product legal cigarette

10%

90%

legal cigarettes other tabacco product

Consumption share Tax Revenue Share

11
 12

10

0
Series 1 Column1 Column2

Tax on cigarettes as a % of per capita GDP(100 Packets of 20

cigarettes of the most sold brand covering both central and
state taxes

india

thailand

uk

pakisthan

malaysia

austrilia

germany

china

japan

usa

0 1 2 3 4 5 6 7

Series 3 Column1 Series 1

12
 • Cigarette taxes in India are 14 times higher than USA, 9 times than japan, 7 times
higher than china, 5 times higher Australia and 3 times higher than Malaysia and
Pakistan.

FMCG Cigarettes

• Legal cigarette industry volume remains under pressure

 While the legitimate cigarette industry has declined Steadily since 2010-11
at a compound annual rate of 4.8% P.a, illegal cigarettes volume in contrast
have grown at annual about 5% pa during the same period, making India one
of the fastest growing illegal cigarette markets in the world.

• Hon’ble Karnataka High court struck down the COTPA rules that mandated
printing of 85% GHW on Cigarette packs in Dec’17; since stayed by Hon’ble
supreme court.
 Pending the final hearing of this matter, the regime of the extremely
repugnant 85% pictorial waring continuous.

CIGARETTE INDUSTRY
Historical Overview of Tobacco in India
The history of global trade is integrally linked with the history of India. It was discovering
a sea route to this fable land, reputed for its spices, silk &gems, that Christopher Columbus
set sail in1492. His wayward journey took him instead to America. This Discovery of the
new world was accompanied by the discovery of tobacco by Portuguese sailor. This plant,
treasured by the American ‘Indians’ for its presumed medicinal & obvious stimulant
properties, was eagerly embraced by the Portuguese who then moved it to the old world of
Europe. Even though their quest for easy access to Indian species was delayed by some
years, the Europeans did not fail to recognize the commercial value of this new botanical
acquisition. When the Portuguese eventually did land on Indian shores, they brought in
tobacco. They introduce it initially in the royal courts where it soon found favours. It became
a valuable commodity of barter trade, being used by the Portuguese for purchasing Indian
textile. this taste for tobacco, first acquired by the Indian royal, soon spread to the
commoners &, in the seventeenth century, tobacco began to take firm roots in India. Thus,
tobacco travelled to the real Indians from their curiously named American cushion, through
the medium of European mariner & merchant who sailed the seas & spanned the continent
in the search of the new market & colonies. It was the establishment of the British colonies
13
rule, however that the commercial dimensions of Indian’s tobacco production and
consumption grew to be greatly magnified. Initially, the British traders imported American
colonies declared independence in 1776, the British east India company began to grow
tobacco in Indian as a cash crop. Attempts were made, under the colonial rule, both to
increase the land under tobacco as a cultivation & to enhance the quality of the leaves
produced. The British east India company & successor, the British raj, used tobacco as an
important cash crop both for domestic consumption & foreign trade. The manufacturing
industry was, industry was, however, not established till much later, as the British believed
in exporting the leaf to Britain and re-importing cigarettes to India, with considerable value
addition in the process. As domestic consumption of cigarettes rose, the Imperial Tobacco
Company commenced production within India, retaining control and repatriating the
profits. In the late nineteenth century, the beedi industry began to grow in India. The oldest
beedi manufacturing firm was established around 1887 and by
1930 the beedi industry had spread across the country. The price differential
fromcigarettes favoured the use of beedis by the working classes and this domestic
product soon supplanted cigarettes as the major form of tobacco consumption. The tax
policies adopted by the Indian Government after Independence also favored the beedi in
comparison to cigarettes. This further fostered a growth in beedi consumption. While
tobacco chewing was practiced for many centuries , commercial production and marketing
have been markedly up scaled recently, with the introduction of the gutka. The rate of
growth of consumption of gutka has overtaken that of smoking forms of tobacco. As a
result, oral tobacco consumption has opened a new and broader front in the battle between
commercial tobacco and public health in India. The economics of tobacco, which
introduced it into India and entrenched it during the colonial rule, also provided a
compelling reason for continued state patronage to the tobacco trade, even in free India.
The ready revenues that bolster the annual budgets, the ability to export to a tobacco
hungry world market and the employment opportunities offered to millionsprovided the
rationale for encouraging tobacco, both as a crop and as an industry.
Whileeconomics may have been the principal force propelling the seemingly
inexorableadva nce of tobacco in India, there are also a multitude of social and cultural
factors which need to be recognized, so that the variations in its use across social, religious
and ethnic subgroups can be comprehended. Such factors have operated since the time
tobacco entered India, though the nature of the socio-cultural determinants that influence
individual and community responses to tobacco may have varied over time,
region, religious denomination and social class. It is this tapestry of internationallinkages,
14
powerful economic factors and distinctive cultural influences which make the history of
tobacco in India a fascinating study.

Tobacco Industry Today

Tobacco occupies a prime place in the Indian economy on account of its considerable
contribution to the agricultural, industrial and export sectors. India is the second largest
producer of tobacco in the world. China and the USA rank first and third, respectively, in
terms of tobacco cultivation. Brazil, Turkey, Zimbabwe, Malawi, Italy and Greece are the
other major tobacco producing countries. Tobacco contributes substanti ally to
theeconomies of these countries. In 2000–2001, the contribution of tobacco to the Indian
economy was to the extent of rs 81,820 million, which accounted for about 12% of the total
excise collections. Foreign exchange earnings during the same period were

Rs9030 million, accounting for 4% of India’s total agricultural exports. Endowed with
favorable agro-climatic attributes such as fertile soil, rainfall and ample sunshine, India has
the potential of producing different varieties of tobacco with varied flavors.

IMPACT OF GST ON TOBACCO COMPANY

The tobacco industry is booming as evident by the balance sheet of ITC. Many reports have
been released by WHO claiming that India is harboring the world’s highest incidence of
mouth cancer. We are the second largest consumers of tobacco, having an astonishing 275
million users! But how will GST affect this multi-million-dollar industry? Let us see the
impact of GST rates on the tobacco industry in India.

In the past decade, excise duty rates have been revised for cigarettes and other tobacco
products, but locally manufactured bidi was exempted. GST tax rate on tobacco and
tobacco-related products was declared on 18th May by the GST council.

Excise duty is charged on the manufacturing of cigarettes, bidi, and other chewing tobacco
products at different rates.

Cigarette – 64%

Bidi – 22%

Chewing products – 81%

15
A lot of revenue is generated from the sale of tobacco for the Indian government. Although the
tax burden levied on the Indian tobacco industry is not enough as per the recommendation of
the WHO for a tax burden of 75% on all tobacco-related products. There has been an increasing
demand for a higher tax burden on the tobacco manufacturers.

Particulars Cigarettes Cigarettes Cigarettes Cigarettes Pan Pan

under between between above masala masala
65mm 65mm to 70mm 75mm with
70mm and gutkha
75mm (tobacco)

Value per Rs 5 Rs 10 Rs 15 Rs 15 Rs 5 Rs 10
unit (A)

Probable Rs 0.25 Rs 0.50 (5%) Rs 0.75 Rs 0.75 Rs 3 Rs 20.40

maximum (5%) (5%) (5%) (60%)
cess

of the value
of goods or
transactions.
(B)

Probable Rs 1.591 Rs 2.876 Rs 2.876 Rs 4.170 Not Not

cess per (non-filter) (both filter (both filter applicable applicable
1000 sticks and and non- and non-
(C) filter) filter)
Rs
2.126(filter)

GST rate Rs 1.40 Rs 2.80 Rs 4.20 Rs 4.20 Rs 1.40 Rs 2.80

@28% (D)

16
 Probable Rs 8.016 Rs 16.176 Rs 21.502 Rs 24.12 Rs 9.40 Rs 33.20
price that (non-filter) (both filter
can be Rs and non-
charged on 15.426(filter) filter)
products (A
+ B+C+D)

Under GST, there will be an additional cess charged on the tobacco-related products, over and
above the GST charged at the rate of 28%.

Let’s Understand the Pricing of 1 Cigarette Under GST with an Example

ITC manufactures cigarette, chewing tobacco, and pan masala.

Observations:
High demand of Flake in rural sector makes it the market leader. Consumers in rural area can
easily afford Flake because of its low price and availability at every common store. Other
product which is highly consumed in rural area is beedi.

4 A’s of marketing: -

The rural market may be appealing but it is not without its problems: Low per
capita disposable incomes that is half the urban disposable income; large number
of daily wage earners, acute dependence on the vagaries of the monsoon; seasonal
consumption linked to harvests and festivals and special occasions; poor roads;
power problems; and inaccessibility to conventional advertising media.
However, the rural consumer is not unlike his urban counterpart in many ways.
The more daring MNC’s are meeting the consequent challenges of
availability, affordability, acceptability and awareness (the so-called 4
A’s).

Awareness:
Creating awareness among target customers about the product is one of the most
challenging jobs. Basically company does awareness programmers when the target
customers are unaware of the product.

While tobacco advertising was banned in India in 2004, the year the study began,
17
cigarette companies are coming up with new ways to reach a relatively untapped audience.
They do Event sponsorship and lifestyle stores centered on tobacco products are slipping
through the cracks of the law. Research has shown that most of the youngsters are addicted
to smoking. Keeping in mind ITC has launched Wills Life Style garments brand which has
basically targeted the youngsters. They actually promote their cigarettes through this brand.
Such Tobacco use rose with measures of receptivity, including having use of tobacco
promotional item (such as wearing a T-shirt that advertises tobacco).

Awareness of cigarettes spread through “social networking channels”, which is a part of

personal communication channels. Research has proved that most of the youngsters who
are addicted to using tobacco are influenced by either by their family members, neighbors
or friend circles.
Example (Launching of Wills Navy Cut by ITC): -

Tobacco major ITC Ltd had launched Wills Navy Cut Regular size filer cigarettes, priced
at Rs 24 a pack of 10 sticks in select markets in north and west India.

"The brand has been launched keeping in mind ITC's objective of delivering superior quality
and value to, all its consumers," the company said in an e-mailed response to NewsWire18.

18
CHAPTER-2

Objective

We first started doing market with the DS to check what is the market scenario and what are the things
required to improve it.
The 2nd objective was to improve the Wave cigarettes visibility in the market place. For this objective,
we have found different probable solutions regarding how to increase the availability, visibility and
freshness.
The 3rd objective was to explore other channels of different brands of ciggrates. As for now, we got
the information that the shops are being uncovered on route.

 Segmentation, targeting, positioning in the Marketing strategy of ITC-

 Competitive advantage in the Marketing strategy of ITC–

 BCG Matrix in the Marketing strategy of ITC –

 Distribution strategy in the Marketing strategy of ITC –

 Brand equity in the Marketing strategy of ITC

19
 CHAPTER-3
Literature review:

ITC is India’s 3 top fast-moving consumer goods company. Its main competitors are Hindustan

Unilever Limited, Nestle, Colgate-Palmolive etc. It was founded on 24 august 1910 Radha

Bazar Lane, Kolkata, India. Its headquarters is in Kolkata. Currently its chairman is Yogesh

Chander Deveshwar. CEO and executive director are Sanjiv Puri and executive directors are

Nakul Anand and Sanjeev Tandon (CFO). Its business is diversified in fast moving consumer

goods, foods, personal care products, hotels, paperboards and specialty papers, packaging, Agri-

business and information technology, cigarettes and cigars. Company 80% of the capital is

invested in non-tobacco businesses but still 80% of the company profit comes from tobacco.

Its revenue is around $9.4 billion USD (2017). It employs around 25000 peoples at more than

60 locations in India. The training center of the company is in Munger, Bihar. It is also known

as “CHATKAL” (especially in Munger).

It was established in 1910 under the name of Imperial Tobacco Company of India, later its name

was changed to Imperial Tobacco Company Limited in 1970 and further to I.T.C Limited in

1974. And finally its name was changed to ITC Ltd. in September 2001. The company

completed 100 years in 2010 and annual turnover 9.31 US$ in 2012-2013 and have a market
capitalization of around 55 US$ billion. ITC claims to be the individual company in the world of

comparable dimension to be Carbon Positive, Water Positive and Solid Waste Recycling

Positive. The company starting was humble, its first office was on lease in Radha Bazar Lane,

Kolkata. The company celebrated its 16 birthday on 24 august 1926, by purchasing a plot on

37 Chowringhee, (now renamed J.L. Nehru Road) Kolkata, for the amount of Rs 310,000.

This decision was historic in ITC career which eventually lead to its long and eventful

journey in India market. The company headquarter building, “VIRGINIA HOUSE” which

20
came eventually on two plots after 2 years and becomes Kolkata most vulnerated landmark.

1925: Packaging and Printing: though first six decades was dedicated to tobacco but later

it started is business in ITC packaging and printing set up in 1925 as a strategic backward

integration to ITC tobacco business. Now it is India most sophisticated packaging house.

1975: Enter in Hospitality Sector: The company launched its hotel business by
acquisition of a hotel in Chennai, named 'ITC-Welcome group Hotel Chola' later named was

changed to My Fortune, Chennai. ITC objective to enter in hotel industry was to create value for

the nation.

ITC chose this industry to earn high profit, earn high foreign exchange and create tourism

infrastructure. Now it has more than 100 owned properties in India under four brand names

ITC hotels-Luxury Collection, Welcome Hotels, Fortune Hotels and Welcome Heritage.

ITC enter in international market by an upcoming super premium luxury hotel in Colombia,

Sri-Lanka. ITC hotels tied up with RP Group hotels &resorts to manage 5 hotels in Dubai and

India underneath ITC Hotels 5 star “Welcome Hotel” brand.

1979: Paperboards and Specialty Papers: ITC entered this paperboard business by

promoting ITC Bhadrachalam Paperboards Limited. Bhadrachalam Paperboards amalgamated

with the Company effective March 13, 2002 and converted a Division of the Company,

Bhadrachalam Paperboards Division. ITC paperboard technology, quality, productivity and

manufacturing processes are comparable to the best in world. It also makes an immense

contribution in the development of Sarapaka, an economically backward area in the state of in

Andhra Pradesh.

21
1985: Nepal Subsidiary - First Steps beyond National Border: In 1985, ITC set up

SUrya Tobacco Co. in Nepal by means of an Indo-Nepal and British joint venture. In August 2002,

Surya Tobacco became a subsidiary of ITC Limited and its title was changed to Surya Nepal

Private Limited (Surya Nepal).

1990: Paperboards & Specialty Papers – Expansion: In 1990, ITC acquired Tribeni

Tissues Limited, a Specialty paper manufacturing company and a main supplier of tissue paper to
the cigarette industry. The merged entity was called the Tribeni Tissues Division (TTD). To harness
strategic and operational synergies, TTD was combined with the Bhadrachalam Paperboards
Division in the formation of the Paperboards & Specialty Papers Division in November 2002.

1990: Agri-Business: ITC set up the Agri Business Division for the export of Agri-
commodities. The division is now India largest exporter. ITC e-Choupal initiative started in 2000
with soya farmers in Madhya Pradesh which helps the farmers in guiding them the ways in which
they can increase their profit by using the best and suitable agriculture methods. Now this
programme runs in more than 10 states in India and helping more than 4 million farmers
nationwide.

2002: Education and Stationery Products: ITC launched its premium range of notebooks
under the brand Paper Kraft in 2002. To reach a large population of students they launch classmate
range of notebooks in 2003. Over the year’s classmate becomes India’s largest notebook brand and
expanding its business in school bags also. In 2008, ITC positioned the business as the Education
and Stationery Products Business and launched India's foremost environment friendly premium
business paper under the 'Paper Kraft' Brand. 'Paper Kraft' offers a diverse portfolio in the premium
executive stationery and office consumables segment.

2000: Information Technology: In 2000, ITC spun off its information technology business
into a wholly owned subsidiary, ITC InfoTech India Limited, to more aggressively hunt emerging
opportunities in this area. Currently ITC InfoTech is one of India's fastest growing global IT and IT-
enabled services companies and has recognized itself as a key player in offshore outsourcing,
providing outsourced IT solutions and services to top global customers across key attention
verticals - Banking Financial Services & Insurance (BFSI), Consumer Packaged Goods (CPG), Retail,

22
Manufacturing, Engineering Services, Media & Entertainment, Travel, Hospitality, Life Sciences
and Transportation & Logistics.

2001: Branded Packaged Foods: It began in August 2001 with the introduction of

‘Kitchens of India' ready-to-eat Indian gourmet dishes. In 2002, ITC entered the confectionery and
staples segments with the introduction of the brands mint-o and Candy man confectionery and
Ashirwad Atta (wheat flour). 2003 observed the introduction of Sunfeast as the Company entered
the biscuits segment. ITC arrived the fast-growing branded snacks category with Bingo! in 2007.
In 2010, ITC launched Sunfeast Yippee! To enter the Indian instant noodles market.

2002: Agarbattis & Safety Matches: In 2002, ITC's philosophy of contributing to

enhancing the competitiveness of the entire value chain found yet extra expression in the Safety
Matches initiative. ITC nowadays markets popular safety matches brands like iKno, Mangaldeep
and Aim.ITC's foray interested in the marketing of Agarbattis (incense sticks) in 2003 marked the
manifestation of its partnership with the cottage sector. Mangaldeep is a highly established
national brand and is available across a variety of fragrances like Rose, Jasmine, Bouquet,
Sandalwood and 'Fragrance of Temple'.

2005: Personal Care Products: ITC entered the Personal Care Business in 2005. In eight
years, the Personal Care portfolio has grown up under' Essenza Di Wills', 'Fiama Di
Wills', 'Vivel' and 'Superia' brands which have received encouraging buyer response and have
been progressively extended nationally. In May 2013, the business extended its product portfolio
with the launch of Engage - one of India's initial range of 'couple deodorants'.

2010: Expanding the Tobacco Portfolio: In 2010, ITC launched his hand rolled cigar,
Armenteros, in the Indian market. Armenteros cigars are available exclusively at tobacco selling
outlets in select hotels, fine dining restaurants and high-class clubs.

23
CHAPTER-4
METHODOLOGY

The project was carried under the guidance of Area executive Mr. Mohammad Imran and team
leader Devender sharma who introduce with all the activities carried out at the distributor
centre.

The primary data collection method survey was carries out in which consumers & retailer were
asked to give their response in the questionnaire.

To find out the performance of two newly launched brand, survey was carried out. Separate were
prepared for the retailer & the consumers.

Based on their response the reason for low sale were found out & recommendation were made.

Since it is impossible to interview each and every person, a sample size of 33 was chosen i.e.
33 consumers were interviewed. The consumer interviewed were basically middle class or low
class people.

Margin Table:

24
Margin of salesman : 0 .80%

Margin of distribution : 1.45%

Classification of brands as luxury, middle & economic segment brands

Brand name Price Per Stick
Insignia 7
India kings 6
B & H (Lts/spl) 5.50
Classic ( Regular,mild,menthol) 5
Glodflake (Ksft) 5
Navy cut (Lstf) 3.50
Gold Flake Premium 3
Navy Cut (RSFT) 2.50
Flake Excel 2
Capstan 2

Target segment of capstan mint blast & wave ice mint and fruit mint

The target consumer for capstan mint blast and wave ice & fruit mint is the people lying in the
lower group roughly around 1 to 3 lakh per annum. Agra city has got a good number of smoker
and majority of population comes under lower income level.

1. The city is surrounded by a large number of villages & rural Areas.

2. There is an ample number of worker engage in the small scale business
3. The city enjoys a large crowd coming from village (be it, for shopping for theirs small
business at their homes or be it selling their crops) & getting back at night
4. Even small shopkeepers & businessmen likes to stick to the price range of 5- 18 Rs per stick
5. Majority of student in a degree college are from the rural areas in & around the city. They
prefer to stick to the low-cost cigarette segment.
6. People are less health conscious & hence don’t prefer the cigarettes having large filter &
more refined Tobacco cigarettes i.e. cigarettes from KSFT segment.

25
CHAPTER-5
Data Analysis and Interpretation

Profile
• One of India’s most Admired and Valuable companies - Market Capitalization: ~Rs.

3.6 lakh crores

• A US$ 10 billion enterprise by Gross Sales Value^ - ~59% of Net Revenue from
nonCigarette segments
• Leading Fast Moving Consumer Goods (FMCG) marketer in India - Established 25 world-
class mother brands within a short span of time
• 10-year Value Addition ~ Rs. 3.1 lakh crores (US$ 55 billion). - Among the top tax payers
in the country
• ITC & its Group Companies employ over 32,000 people directly; Sustainable development
models and value chains have supported creation of ~6 million sustainable livelihoods
• A global exemplar in sustainable business practices - Only enterprise in the world of
comparable dimensions to have achieved and sustained the 3 key global indices of
environmental sustainability of being 'water positive' (for 16 years), 'carbon positive' (for
13 years), and 'solid waste recycling positive' (for 11 years)

26
ITC PERFORMANCE TRACK RECORD

22-yr
Cagr 95-
1995-96 2017-18
96 to
17-18

Net Revenue 2,536 39,255 13.3%

16,439
PBT 452 17.7%
10,953
PAT 261 18.5%
53,336

Capital Employed 1,886 16.4%

Segment ROCE% 36.3 69.0

Market Capitalisation 5,571 3,12,308 20.1%

Total Shareholder Returns % 22.4%

• Sensex (CAGR 95-96 to 17-18): 10.9%

ITC’s Economic Contribution to the Nation

 10-year Value addition ~ Rs. 3.1 lakh crore (US$ 55 billion)

– Among the top tax payers in the country

– Over the last five years, the Value-Added by your Company, i.e. the value
created by the economic activities of your Company and its employees,

27
 aggregated over ` 200000 crores of which nearly ` 150000 crores accrued to the
Exchequer.

 Foreign exchange earnings in the last 10 years: US$ 7.1 bln

– Of which agri exports constituted ~56%

Social Performance

 Supported creation of around 6 million sustainable livelihoods

 e-Choupal: world’s largest rural digital infrastructure serving more than 4 million
farmers

 Social and Farm forestry initiative has greened nearly 683,000 acres and generated
nearly 125 million person days of employment for rural households, including poor tribal
and marginal farmers.

 Significant thrust on social sector investments under ‘Mission Sunehra Kal’ initiatives
– Natural resource management

– Sustainable livelihoods

– Community development programmes in the economic vicinity of operating

locations

28
 Environmental Performance
 Water positive - 16 years in a row

 Carbon positive enterprise – 13 years in a row

Sequestering over twice the amount of CO2 that the Company emits

 Solid waste recycling positive – 11 years in a row

 Over 43% of total energy consumed is from renewable sources

Only enterprise in the world of comparable dimensions to have achieved and sustained the
3 key global indices of environmental sustainability of being
Carbon positive, Water positive and Solid waste recycling positive

Analysis on Diversification

ITC has been a leader in the tobacco business, but it realizes from the upcoming trends that
remaining with a single business is not a noble thought, moreover the company was
threatened of the anti-tobacco campaign. Therefore, the company decided to venture into
InfoTech with ITC InfoTech, foods via Kitchens of India, greeting cards through Expressions
and lifestyle retailing through Wills Sport. Each of these is intended to draw revenues of at
least Rs. 650 crores by 2018.ITC was a cash rich company with a liquidity of Rs.9816 million
in the cigarette business, even though the company understood the need and usefulness of
diversification. The writer in the article is mainly concerned with the way ITC spreads its
wings in the lifestyle segments, he writes:” forty-five stores in 34 cities in just under a year,
selling inexpensive fashion brand of relaxedwear. If retail swamp-out and brand salience
were the goals, ITC’s Wills Sport would be on a victory lap already. “The company has

29
started its retail stores not only in Indian metros but also in the small towns like Ranchi,
Jabalpur, Gwalior, Belgaum, Ernakulum etc. the article also talks about the strong market
campaign done by the company, it also describes how the company has used its brand image
to attract the Indian youth. It also tells about the strategy adopted by the company to
differentiate itself in this segment, like the company is outsourcing its designs form the
American Design Intelligence Group (ADIG), a SanFrancisco, US-based garment and retail
consultancy. Now it has its own six-member team, even as it continues a tie-up with Science
& Designs, an Italian fashion design house – through which it keeps a watch on hot western
labels such as Banana Republic and Armani Exchange.

30
 CHAPTER-6
Findings &Recommendations

Product mix of ITC

ITC had launched nearly all the products range off Non tobacco Products; they are very
aggressive in their distribution of such products. The existing network of ITC’sCigarettes
distribution is being used extensively for the sales all products of ITC Food division. They are
trying to capitalized the market by associating the products with the ITC brand.

ITC Pricing strategy

The pricing of the ITC food division depends upon the Customers’ demand schedule, the cost
function and the competitors’ price. The pricing of the company is such that it caters to the
need of all income groups of people but special provision has been kept for Low and middle
income group, and their pricing are competitive with respect to other players like Britannia,
Parle and Briskfarm.The company follows the Going rate pricing that is the price of the
product depends upon the competitor’s price. The firm chooses pricing more or less the same
as Market leader.

ITC Promotional activities

A particular budget is allocated for the promotion of the products, the local promotion scheme
is decided by the Area Sales Manager, it give its suggestion to the District office and that is

31
forwarded to the Head Quarter in Kolkata. In another promotional scheme for Biscuits a
particular number of cases is given freely to the distributors according to the amount of sale
they make, this was a

Drop Down Promotion

i.e. of the number of free cases that some particular distributors get, off them a certain part is
reserved for the retailers and customer if they buy a certain level of biscuit quantity.

ITC Distribution
Buoyed by a strong distribution network ITC is likely to retain its market share in the
cigarettes business; the ban on advertisements is likely to work in favour of ITC thanks to the
recall factor. The company's reliable distribution network also ensures superior inventory
turnover than its peers.

Consumer Buying Decision

The main driver in attracting the consumers is Quality of the product itself with nearly65% of

Reason for purchasing

70

60
50

40

30

20

10

PRICE QUALITY PROMOTIO NPAST EXPERIENCE

PERCENTAGE

the people surveyed citing it as the main criterion for choosing the product, followed by past

experience of the consumer with the brand (17.6%). Price was third criterion with a

percentage of 11.7% of the people surveyed gave importance during buying.

32
 Effectiveness of advertisement
30 28

25
22

20
16
15

10

HIGHLY AFFECTIVE AFFECTIVE SOMEWHAT AFFECTIVE NOT AFFECTIVE

Series 1

An effective advertisement will attract more and more customer to buy, helps in the brand and
image formation, and informative in telling the USP of the product.

Customer satisfaction
60

50

40

30

20

10

0
EXTREMELY SATISFIED SATISFIED SOMEWHAT SATISFIED NOT SATISFIED
Axis Title

Customer satisfaction

33
The above graph shows the experience of the customer after using the product i.e. Whether

they were satisfied with the product as a whole. The higher the satisfaction level higher will

be the chances that the customer will buy the same brand again and again that leads to the

building of the Brand loyalty.

S.W.O.T Analysis of Tobacco and Cigarette Industry

Strength
Biggest and the largest player in the Indian tobacco market with a market share of 80%. Its
Gold Flake tobacco brand is the largest FMCG brand in India - and this single brand alone
holds 70% of the tobacco market.

Weaknesses

The company's original business was traded in tobacco. ITC stands for Imperial Tobacco
Company of India Limited. It is interesting that a business that is now so involved in branding
continues to use its original name, despite the negative connection of tobacco with poor health
and premature death. To fund its cash guzzling FMCG start-up, the company is still dependent
upon its tobacco revenues.

External Analysis Opportunities

ITC is moving into new and emerging markets like developing countries of Eastern Europe, Africa
etc.

Threats
The obvious threat is from competition, both domestic and international. The laws of
economics dictate that if competitors see that there is a solid profit to be made in an merging
consumer society that ultimately new products and services will be made available. Western
companies will see India as an exciting opportunity for themselves to find new market segments
for their own offerings. ITC's opportunities are likely to be opportunities for other companies
as well. Therefore, the dynamic of competition will alter in the medium-term. Then

34
ITC will need to decide whether being a diversified conglomerate is the most competitive
strategic formation for a secure future. Various bans on smoking in public places.

Environmental Analysis

Natural Environment
-The main source of raw materials for cigarettes is raw tobacco which is mainly found in the
state of Andhra Pradesh. There is no scarcity in supply of raw tobacco since the net income
earned by the farmers from cultivating tobacco has been found to be much higher than the net
income earned from other crops.

Region Environment
The gap between urban and rural households in cigarette consumption
on is the highest in low and lower-middle income households. Urban low and lower-middle
income households consume more cigarettes compared to the similar income groups in rural
areas.

Legal Analysis
The Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of
Trade and Commerce, Production, Supply and Distribution) Act, 2003, (COTPA) is being
implemented in a phased manner with effect from 1st May 2004 along with the Ban on
Smoking in Public Places with effect from last quarter of 2008 resulting in a dip in sales and
profit.

Competitor Analysis
With a market share of a whopping 72%, ITC cigarettes does not have to worry much about
the competition at the present moment. Its nearest competitor Godfrey Philips louis market
share of 12% which is not really a competition at present.

35
 Performance of ITC products

People living in the Agra city have poor standard of living which is surround by large number of
villages.

KSFT: The sale figure of luxury brands like Insignia & Indian king is very low.

LSFT: Medium level cigarettes Classic, gold flake(LSFT) & Navy performing really better.

RSFT: In the lower segment Gold flake (RSFT) and capstan are performing excellent but on the
flipside the performance of flake & navy cut RSFT is quite poor.
Competitors in RSFT segment

 Four square
 Red & white
 Moments
 Cavenders
 Some local player like number 10, dolphin, golden elephant etc. providing the retailer a
heavy margin of around Rs 7 on cigarettes packet

Cigarettes: Growth potential

Cigarettes account for only 15% of tobacco consumed in India unlike world pattern of
85% due to prolonged punitive taxation

Cigarettes (15% of tobacco consumption) contribute nearly 85% of Revenue to the

Exchequer from tobacco sector

Of the 58% of adult Indian males who consume tobacco, barely 15% can afford
cigarettes

Biri : Cigarettes ratio = 10 : 1

Annual per capita adult cigarette consumption in India is appx. one tenth world average:
141

Future growth depends on relative rates of growth of per capita income and moderation
in taxes

36
 RECOMMENDATIONS

According to the survey conducted and after analyzing the Price, Promotion, Place and Product

of the ITC and the consumer behavior in the market the company can implement the following

measure for increasing the sales and volume of their products

1. the schemes offered should benefit consumer as well as retailer. Till now the scheme is

offered to the retailer only, where ITC face the tough competition by more profitable

scheme moments & advance. Since cigarette take some time to become one’s favorite as

the taste is one of the most important factor.

2. ITC should use the established brands like gold flake in the scheme to launch the wave in

the market

DS Work Practice Regimentation:

1) DS market gets over at 2 P.M.

(a) A track must be there to ensure the coverage of all the shops in the beat.

(b)It should be checked that billing must be done on every general and medical category handler
shop at least once in every three months. If not done, that means DS is not covering.

2) To maintain a good relation with the trade.

(a) The DS must have good relations with the Retailers that they should call the DS by his name.

3) To educate the DS about the product benefits.

Product contents, benefits and product against the competition

4) Lack of co-operation among the DS.

Absence of one category of DS must be covered by the other.

37
5) DS are not aware about the competitor’s price and the schemes.

DS must have basic knowledge about the competitor’s price and the schemes.

6) DS must carry Scheme Card.

Pocket scheme enablers should be provided to every DS.

7) DS should be penalised for not carrying the Product catalogue and the Loyalty Card Benefits Programme.

The TL of every WD point must ensure that no DS goes to the market without them.

Motivation for DS
 The salary of the DS must be given at first week of the month including entire details.

 Monetary Benefits: Target for every segment of PCP should be fixed and if a DS achieve 20000 more
than his target a gift or reward should be given.

 Non-monetary Benefits: A Programme like “BEST PLAYER” can be run for six months and the
winner would be awarded. For e.g. Gifts like Fan, Grinder etc.

 An official lunch for half an hour should be given to the DS.

 Regular interaction must be there by AE with DS at least twice in a week to boost up his morale.

38
CHAPTER-7

RESULT & DISCUSSION

The tobacco industry is pursuing many sophisticated marketing practices in India that have
been documented in other parts of the world. However, our observations draw attention to
some unique strategies cigarette manufacturers are using to reach different SES groups in
India. For example, while aspiration is a common theme in both the higher SES premium
(Four Square and Gold Flake) and the lower SES bingo segment (Red and White, and Bristol)
brand advertising, we found cigarette advertisers use concrete and more western images of
success to market the premium segments and more abstract images of success to advertise the
bingo segment products. Indirect advertising is also being used to promote the association
between smoking and success amongst the lower SES population. Since 1990, Red and White
has sponsored the national bravery awards to recognize members of the community for acts
of courage and bravery. Today, the Red and White bravery awards are given in nine Indian
states and have been expanded to include a social service award and a lifetime achievement
award. Prominent members of the community or political leaders usually present these
awards. Although there are millions of consumers in the lower SES market, the average
consumer consumes very little on an individual basis and his purchasing capacity is low. Both
the manufacturers and retailers have developed tactics to circumvent this barrier. In addition
to creating the bingo segment priced to compete with the bidis, cigarette manufacturers also
produce smaller packs of 10 cigarettes, which increase sales among their adult consumers and
cater to groups with low incomes such as children and women. Furthermore, retailers sell
individual cigarettes, especially for the premium segment brands.

Current advertising strategies targeting women in India appear to be indirect. The Indian
female target segment is composed of two major groups. One group comprised rural women
or women of lower SES segment in urban centres who chew tobacco or smoke bidis—for
example, in Mumbai 56% of women chew tobacco. These women are addicted to tobacco
and although tobacco use is socially acceptable, cigarette smoking is not. If smoking becomes
more socially acceptable for women, as it has in other countries, this is a prime target
segment for cigarettes. The other female target group comprises women of a higher SES
status who aspire towards a western lifestyle, such as those who work for the multinationals,
media, or those who are studying in schools of mass communication and international

39
organizations. Accordingly, women featured in the premium segment Four Square campaign
and are portrayed in a stylish western image. The Gold Flake advertising campaign uses
images of art, and a light version of the brand has been developed. Use of images depicting
sophistication, sexual allure, light brands, and an association with the arts are strategies used
to target women when depiction of women smoking cigarettes is not culturally acceptable.
The lack of success of the Platinum campaign, evidenced by a lack of current advertising or
product availability in Mumbai, launched in a newspaper insert entitled “Understanding
Women” suggests that the Indian female target market is not ready for direct marketing to
women. Similarly, there were no cigarette advertisements in women’s magazines. Per a 2003
WHO study on portrayal of tobacco in Indian Cinema, tobacco consumption by females in
contemporary films is 2.5% compared to 8% in earlier films. However, whereas earlier films
portrayed either village women or vamps smoking, contemporary films portray middle class
women. Interestingly, women who are either socially conscious or politically active in real
life are portrayed smoking. For example, Shabana Azmi, the veteran actress and Member of
Parliament, was shown smoking in the movie God Mother, with State Express 555 cigarette
brand prominently displayed in several scenes.

Furthermore, as seen in other nations, point of sale advertising is being used to target children
and adolescents, a population segment that provides a lucrative and long-term market. In
2001, cigarette sales to minors and tobacco sponsorship of sporting events was banned. Since
then point of sale marketing has become the major mode of marketing to children. With 1.2
million retailers, India has an extensive network of tobacco sellers across the nation. Point of
sale advertising is already a prominent feature at these outlets. The tobacco industry also
provides retailers with attractive, modern storefront signs (that they could otherwise not
afford) that bear cigarette advertisements. These strategies will likely increase in importance
as the 2003 advertising ban excludes point of sale. Currently, there are no regulations
regarding point of sale advertising. Tobacco products and advertisements are commonly
placed next to candies and snacks easily accessible to minors. Similar to women, portrayal of
smoking by Indian actors also encourages smoking for children and adolescents.

Circumventing the advertising ban

Cigarette manufacturers are employing various strategies that may work to ensure continued
successful marketing of their products after the advertising ban. After the passage of Tobacco
Bill 2003 but before its implementation in May 2004, new mobile billboards (billboards on a
truck) appeared in different parts of the city in high traffic areas usually in close proximity to

40
the advertisements for competing brands. In addition to strengthening their existing brands
through increased advertising, the tobacco companies are also launching new brands that are
extensions of the previously marketed products. For example, ITC launched Wills Silk Cut,
an extension of its Wills Navy Cut brand, with a new flavour and filter. Establishing a strong
brand image before the enforcement of the ban is crucial to ensure continued successful
marketing of these products.

In addition, brand imagery can be communicated without reference to cigarettes. This is

evident in the evolution of the current Four-Square campaign. Some of the Four-Square
campaign storefront and bus stop advertisements contain the black and white photograph with
a man holding a red square on one end and an open pack of cigarettes on the other; others just
contain the photograph with the text, “four square the man with the smooth edge” and three
red squares. The Four-Square billboards, posters, and magazine advertisements are composed
solely of the photograph, the logo, and the slogan; the only mention of cigarettes is in the
statutory warning. Furthermore, it is not uncommon to see the black and white photograph
without any text mentioning Four Square or statutory warning. The image and its association
with Four Square cigarettes is clearly recognizable. When the advertising ban is in effect,
these images could be used to continue to promote Four Square cigarettes. The campaign
depicts “the man with the smooth edge” holding a red square in his hand and the color red is
said to aid recall of a product.

Furthermore, to ensure “constant reinforcement of brand positioning” tobacco companies

promote trade diversification. In July 2000, ITC launched its first Wills Lifestyle clothing
retail store in New Delhi, and today there are 48 stores across India. The initial offering of
Wills Sport was with Wills sponsorship of cricket tournaments. Since then it has launched
Wills Classic formal and social evening wear, Wills Club life, evening wear, and most
recently John Players men’s clothing. Wills Lifestyle clothing promotes a sophisticated and
western image similar to ITC tobacco products and targets the same consumer as the
superpremium and premium cigarette brands. The advertisements are similar in their layout,
colour scheme, and themes; both the Wills Lifestyle and Wills Silk Cut billboards use the
same sky blue background and one of the Lifestyle advertisements depict a couple similar to
the Wills
“made for each other” campaign. Lastly, names that have been associated with cigarette trade
in the past are being used for the Lifestyle clothing line—for example, John Players, a mid

41
price clothing segment for men, was the name of a prominent British tobacco company (John
Player and sons).

What this paper adds

The World Health Organization projects that tobacco use may account for more than 1.5
million deaths in India by 2020, and the Tobacco Institute of India estimates that cigarette
consumption will continue to increase by 5% per year. Despite this steady and substantial
increase in tobacco use in India, there are few studies describing current cigarette marketing
strategies in India, and no studies detailing the market segmentation.

We conducted a pilot study to describe cigarette market segmentation by socioeconomic

status in Mumbai, India in September 2003. We found that cigarette advertising was
ubiquitous in the outdoor environment, and present in news and film magazines but not in
women’s magazines or the newspapers in Mumbai, India. We describe new sophisticated
campaigns that appear to target men, women, and children in different socioeconomic groups
in Mumbai. Many of these strategies circumvent the Indian advertising ban. Understanding
these marketing strategies is critical to minimize the exploitation of loopholes in tobacco
control legislation.

Strategies similar to those previously employed in other nations are being used in India. In
Australia, “new brands were launched in the dying days of above the line” marketing “in an
attempt to create brand awareness before the market became darker”. Similarly, ITC launched
both Insignia and Wills Silk Cut at a time when Tobacco Bill 2003 had been passed by both
houses of the parliament and was awaiting the President’s signature. Although tobacco
manufacturers deny use of trademark diversification to promote tobacco products, brand
stretching is another strategy commonly used “to extend the reach of their trademarks well
outside the tobacco category…for constant reinforcement of brand positioning.” In addition
to its Wills Lifestyle clothing, ITC has diversified its portfolio to include hotels, paperboard,
and specialty paper production, and products in branded packaged foods (Aashirwaad
Readymeals), greeting cards (Expressions Paper Kraft), and school stationery (Classmates)

Another successful strategy used by the tobacco companies is product placement. The WHO
“study on the portrayal of tobacco in Indian Cinema” reported that there was some form of
tobacco portrayal in 76% of the films reviewed from 1991–2002 with cigarette use
accounting for 72% of all smoking incidents. Given that India produces more than 900
movies per year that attract 15 million viewers a day, in addition to the indirect exposure

42
across the world via satellite television and pirate copies, this will likely be an effective
strategy to popularise tobacco use and circumvent the advertising ban.

Although passage of Cigarettes and Other Tobacco Act 2003 is a significant event in tobacco
control, it will be effective only if it is strictly enforced. “Enforcement has been difficult and
complex because of existing practices. Adults usually send their children to buy the tobacco
products and very often the sales-person is underage too.” It is likely that cigarette companies
will be further able to overcome advertising restrictions by finding loopholes in tobacco
legislation. In other countries, tobacco companies have advertised in international
publications or sponsored international events in nations where tobacco advertising or
sponsorship is banned. Similar tactics may be employed in India if the Indian government is
not vigilant.

This study is an important contribution in that there are few studies assessing cigarette
marketing in India. However, it was limited in that it was an observational study, conducted
over a short period of time, and there was lack of census data that allowed a clear distinction
of the SES populations. Lastly, conclusions of this study are only relevant to Mumbai as India
is a diverse nation and cigarette brands and marketing strategies tend to be region specific.

Tobacco related morbidity and mortality is on the rise in India as is tobacco marketing. In this
study, we conclude that cigarette manufacturers are targeting all SES segments, women and
youth. Furthermore, although India has made tremendous progress in tobacco legislation,
cigarette manufacturers are working to ensure continued brand and market presence. It is
imperative that anti-tobacco public health education campaigns are implemented especially
targeting lower SES segments, women, and youth and exposing the tobacco industry’s subtle
strategies enticing them. The Indian government will need to be stringent in its
implementation of the Cigarettes and Other Tobacco Products Act, 2003, mindful of the
loopholes and passing new legislation to combat these and vigilant in ensuring that cigarette
manufacturers are not targeting minors.

43
 Questionnaire

1. Do u know under which company brand you smoke?

Yes 17
No 13

2. Which is your favorite brand?

Chart Title

Column3

3. How long they are smoking this brand?

0-3 month
3-7 month
1-2 year
2-5 year

4. Do you give importance to filter?

Consider 10
Never thought about 23

5. How do they select the brand ?

By trail 10
By advertisement 5
By word of mouth 18
6. Brand loyalty vs brand visibility Give a
chance to new brand 8

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 Don’t bother 25 7.
Effect of price hike on buying behavior
Change 23
Don’t change 10 8.
Would the prefer a packet or open
Open 19
Packet 14
9. What is basis for selecting the particular brands
Ans. Taste & preference

Questionnaire for pan and vendor & tea stall

o Observation visibility
How much cigarettes packs of each brands do they sell

Chart Title

0.5

1-4 1 packet
cigarettes

Column1 Column2

Chart Title

Category 1 Category 2 Category 3 Category 4

Series 1 Series 2 Series 3

Their option regarding low sale of capstan mint blast & wave ice mint & fruit mint

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 Are customer aware of the two new launch brand
Effect of scheme (retailer know it better) on brand loyal customer
Observe which brands are sold in open & which brands in packet (especially gold
flake & navy cut)
Types of people visiting students, professional, middle class

Causes of failure

Cannibalization: capstan is already being well established player at the price of 6 RS

per stick. Launching the product under same segment was unable to drag more crowd
in its basket.
Competition offered by the different brands that provide a good amount of the margin
to the retailer. In the crowd areas like railway station & bus stand, where the target
crowd are plenty, the stalls prefer to push the local brands as they are getting the
handsome amount of profit per stick

Eg : they sell the pack of the cigarettes at Rs 50 which cost them

30 Rs.

Acceptance of new brands: majority of people in this segment are youth 90% of the
people refuse the new brands until force by the retailer

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References taken:

http://www.itcportal.com

http://www.google.co.in/

http://www.blonnet.com http://www.just-

food.com

http://www.thehindubusinessline.com

http://www.imcri.org http://www.scribd.com

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