LAUNCHING A CIGARETTE UNDER

BANNED PROMOTIONAL

ENVIRONMENT

UNDER GUIDANCE OFMr. ANOOP R OHRI

54%

27%

19%

tobacco consumption in India

bidischewingcigarette

BAN ON TOBACCO ADEVERTISEMENT- THE DARK ENVIRONMENT

On 1st may 2004, the Indian government imposed a ban on cigarette and tobacco Advertising

and smoking in public palaces. As a results the tobacco industry, which Contributes Rs 70

billion to the government by way of excise, had to cut down Rs 2500 million Of their

advertising budgets with the ban. As a results of this ban, companies had to heavily depend

On local micro marketing , POS marketing and subtle promotional activities focusing on in-

shop advertising.

INDIAN TOBACCO INDUSTRY

The tobacco industry holds tremendous potential for India .For the government, it means excise

duties and export revenues , and for the country in general, it translates into huge employment

Opportunities with 35 million people being directly or indirectly engaged In producing and selling of

tobacco 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, Uttar

Pradesh, Andhra Pradesh and Karnataka, where it is grown. Tobacco cultivation is a lucrative

agribusiness proposition owing to its short growing season and the Profitability in relation to other

cash crops.

INDIAN CIGARETTE INDUSTRY

The cigarette industry in India is one of the oldest and an important agro-based Industry. It

is highly labour intensive and provides livelihood to about five million people Directly and

indirectly. At present, there are 19 units in the organized sector engaged in Manufacturing

cigarettes with a total installed capacity of about 147.377 billion per annum.

MARKET SIZE

The market of cigarettes in India is estimated at 100 Billion sticks per annum and valued at

Rs 90billion.The cigarette market in India is characterized by low penetration and high

excise duty. Regular filter cigarettes account for 47 % of the market followed by micros and

plains regular cigarettes are entry – point cigarettes for smokers upgrading from plain

cigarettes.

EXCISE DUTY

Central excise duty (CED) on tobacco was introduced in 1943-44. until1986-87, the rates of the

excise charged by the government varied with the various cost slabs declared by the cigarette

manufacturers.

On 28th February 1987 the government decided to charge duty on the basis of the length of

cigarette. The tax collection from cigarettes is the highest with duty per kg for cigarettes is the

highest with duty per kg for cigarettes being as high as Rs 722 per kg, while combined duty per kg

for 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%

GPIL

A leading tobacco company in India Godfrey Phillips India limited is an affiliate of

Philip 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 is

joint venture between K.K Modi and Philip Morris of US. Godfrey Phillips is today the

second largest player in India cigarette industry with an annual turnover of over US $

265 million . Today , Philip Morris is the largest US based International cigarette

company having a strong presence in three GPI has a strong presence in the medium

segment while GPI is relatively stronger in the north and west, ITC and VST have a

stronghold of the south .

Cont… Godfrey Phillips India ltd is primarily into manufacturing cigarette .GPIL is the second

largest player in Indian cigarette market. It is comfortable market position in cigarette brands

which enjoy strong loyalty from its customers .the company was originally established

godfrey Phillips ltd london.it distribute its product through a network of 5000 distributers

&8000,000 retail outlets. The company sells its cigarette under the four square, red and

white tipper etc.

CIGARETTE BRANDS OF GPIL

International Indian

Marlboro, Philips Morris,

Jaisalmer

Bond street, Four square FTK

Rothmans , Chesterfield,

Four square special

Virginia Slims , Red & white filter

Parliament, merit Cavanders

Commando, originals,

Tipper and prince

LAUNCH OF TIPPER BY GPIL

GPIL launched its new non-filter cigarette named TIPPER –GOLD TIPPED’ in January 2002 in

Orissa and then later in Jammu, Saharanpur, Cuttack and Telengana and in Kanpur. The implied

mission to launch Tipper was to continuously upgrade lifestyle of those consumers who are not

cigarette smokers but bidi smokers or gutka consumers. As such, it was important to know the

perception of the smokers about the newly launched Tipper cigarette. Retailers study was

conducted in order to know the retailer’s satisfaction and to maintain good relationship with them.

CLASSIFICATION OF OUTLETS

CLASS OF OUTLET DAILY PURCHASE OF ALL CIGARETTE BRANDS

A Rs 1000 or more per day

B Between Rs 500 to Rs 999 per day

C Between Rs 200 to Rs 499 per day

D 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 STRATEGY

Conscious, meticulous efforts were made by GPIL in identifying the right marketing mix so that

marketing 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.

• Market Testing

• Target-market prospects

• Introductory market strategy

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 ANALYSIS

• 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

• Low margins as compared to its competitors like Capstan Star, Capstan Standard,etc.

• Low brand awareness,luanched just 117 days before the ad-ban

WEAKNESS

STRENGHTS

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

IN SHOP PERMOTION

Later tipper was launched in rural parts of Kanpur in the company accompanied by the same above –mentioned activities.

• 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.

• 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

FACTORS TAKE CARE OF DURING THE LAUNCH OF FMCGS

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