analysis of cigarette industry
TRANSCRIPT
SEMINAR ON
BUSINESS POLICY
“ANALYSIS OF CIGRATE INDUSTRY"
Submitted For the Partial Fulfillment of the Degree of
2009-2010
UNDER THE GUIDANCE
SUBMITTED BY
Roll NO.
BABU BANARASI DAS NATIONAL INSTITUTE OF TECHNOLOGY & MANAGEMENT, LUCKNOW
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ACKNOWLEDGEMENT
No presentation is the work only of the author. I owe much to the
people who have played significant role in the development of the
project . I have immensely benefited from the comments,
observations made by several individuals including Dr. Vishal jain,
Head of Department
My special thanks to Mr. for the guidance in preparing this project
report.
2
TABLE OF CONTENT
1. Introduction of industry a. Scope – company external environment
2. Macro a. Govt. laws, rules b. macro economics indicators supporting industry (time element)
3. Political Environmenta. Social consideration (value, culture, and life style)b. Demographies c. Present status
4. Micro a. Competitors b. Suppliersc. Buyers d. Substitute / by producte. New entrants
5. Internal analysis 6. Structure 7. Culture
a. Resources, value chain, competencies8. Scanning
a. Swot analysisb. Mission, vision, objective (review)
9. Strategiesa. Businessb. Corporatec. Functional
10.Execution a. Reconstruction of facilities behavioural and functional issues
11.Evaluation and analysis a. Final data (3years)
12.Recommendations 13.Future of industry 14.Conclusions
3
INTRODUCTION OF INDUSTRY
CIGARETTE
Unlit filtered cigarettes
"Cig" redirects here. For other uses, see Cig (disambiguation).
A cigarette (French "small cigar", from cigar + -ette) is a product consumed
through smoking and manufactured out of cured and finely cut tobacco leaves and
reconstituted tobacco, often combined with other additives,[1] then rolled or stuffed
into a paper-wrapped cylinder (generally less than 120 mm in length and 10 mm in
diameter). The cigarette is ignited at one end and allowed to smoulder for the
purpose of inhalation of its smoke from the other (usually filtered) end, which is
4
inserted in the mouth. They are sometimes smoked with a cigarette holder. The
term cigarette, as commonly used, refers to a tobacco cigarette but can apply to
similar devices containing other herbs, such as cannabis.
Nicotine, the primary psychoactive chemical in tobacco, is addictive.[2] Cigarette
use by pregnant women use has also been shown cause birth defects (which
include mental and physical disability).[3] On average, each cigarette smoked
shortens lifespan by 11 minutes and smokers who die of tobacco-related disease
lose, on average, 14 years of life.
Rates of cigarette smoking vary widely. While rates of smoking have leveled off or
declined in the developed world, they continue to rise in the undeveloped world.
A cigarette is distinguished from a cigar by its smaller size, use of processed leaf,
and white paper wrapping. Cigars are typically composed entirely of whole-leaf
tobacco.
Cigarettes are the most frequent source of fires in private homes and the European
Union wishes to ban by 2011 cigarettes that are not fire-safe[7].
5
HISTORY
A reproduction of a carving from the temple at Palenque, Mexico, depicting a
Mayan priest smoking from a smoking tube.
The earliest forms of cigarettes have been attested in Central America around the
9th century in the form of reeds and smoking tubes. The Maya, and later the
Aztecs, smoked tobacco and various psychoactive drugs in religious rituals and
frequently depicted priests and deities smoking on pottery and temple engravings.
The cigarette, and the cigar, were the most common method of smoking in the
Caribbean, Mexico and Central and South America until recent times
6
Cigarettes were largely unknown in the English-speaking world before the
Crimean War, when British soldiers began emulating their Ottoman Turkish
comrades, who resorted to rolling their tobacco with newsprint
The cigarette was named some time in the 18th century: beggars in Seville began
to pick from the ground the cigar ends left by the señoritos ("rich, young men"),
wrapped the tobacco remains with paper and smoked them. The first attested use in
this habit can be seen in three 18th-century paintings by Francisco de Goya: La
cometa (The Kite), La merienda en el Manzanares (Picnic by the River
Manzanares) and El juego de la pelota a pala (The Ball and Paddle Game).
In the George Bizet opera Carmen, which was set in Spain in the 1830s, the title
character Carmen was at first a worker in a cigarette factory.
The use of tobacco in cigarette form became increasingly popular during and after
the Crimean War. This was helped by the development of tobaccos that are
suitable for cigarette use. During World War I and World War II, cigarettes were
rationed to soldiers. During the second half of the 20th century, the adverse health
effects of cigarettes started to become widely known and text-only health warnings
became commonplace on cigarette packets. The United States and The United
Kingdom have not yet implemented graphical cigarette warning labels, which is
considered a more effective method to communicate to the public the dangers of
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cigarette smoking.[10] Canada, Australia, and New Zealand, however, have both
textual warnings and graphic visual images displaying, among other things, the
damaging effects tobacco use has on the human body.
The cigarette has evolved much since its conception; for example, the thin bands
that travel transverse to the "axis of smoking" (thus forming circles along the
length of the cigarette) are alternate sections of thin and thick paper to facilitate
effective burning when being drawn, and retard burning when at rest. Synthetic
particulate filters remove some of the tar before it reaches the smoker.
Manufacturing
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Commercially manufactured cigarettes are seemingly simple objects consisting
mainly of a tobacco blend, paper, PVA glue to bond the outer layer of paper
together, and often also a cellulose acetate–based filter.[11] While the assembly of
cigarettes is straightforward, much focus is given to the creation of each of the
components, in particular the tobacco blend, which may contain over 100
ingredients,[12] many of them flavourants for the tobacco. A key ingredient that
makes cigarettes more addictive is the inclusion of reconstituted tobacco, which
has additives to make nicotine more volatile as the cigarette burns.[1]
Paper
The paper for holding the tobacco blend may vary in porosity to allow ventilation
of the burning ember or contain materials that control the burning rate of the
cigarette and stability of the produced ash. The papers used in tipping the cigarette
(forming the mouthpiece) and surrounding the filter stabilise the mouthpiece from
saliva and moderate the burning of the cigarette as well as the delivery of smoke
with the presence of one or two rows of small laser-drilled air holes.[13]
According to Simon Chapman, a professor of public health at the University of
Sydney, burning agents in cigarette paper are responsible of fires and reducing
them would be a simple and effective means of dramatically reducing the ignition
propensity of cigarettes[14]. Since 1980s Philipp Morris and RJ Reynolds
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developped fire-safe cigarettes but they didn't market them. Self-extinguising
cigarettes are better value for smokers because a cigarette that burns down to the
filter has to be replaced -- whereas one that goes out on its own can always be relit
The burn rate of cigarette paper is regulated through the application of different
forms of microcrystalline cellulose to the paper.[15] Cigarette paper has been
specially engineered by creating bands of different porosity to create "fire-safe"
cigarettes. These cigarettes have a reduced idle burning speed which allows them
to self-extinguish.[16] This fire-safe paper is manufactured by mechanically altering
the setting of the paper slurry.
New York was the first U.S. state to mandate that all cigarettes manufactured or
sold within the state comply with a fire-safe standard. Canada has passed a similar
nation-wide mandate based on the same standard. Many other U.S. states have
passed or are considering fire-safe mandates.
European union wishes to ban in 2011 cigarettes that are not fire-safe. According
to a study made by European Union in 16 European countries, 11000 fires were
due to cigarettes between 2005 and 2007. They caused 520 deaths and 1600 people
injured [18]
10
Tobacco blend
The tobacco end of a cigarette
The process of blending, like the blending of scotch and cognac, gives the end
product a consistent taste from batches of tobacco grown in different areas of a
country that may change in flavour profile from year to year due to different
environmental conditions.[19]
Modern cigarettes produced after the 1950s, although composed mainly of
shredded tobacco leaf, use a significant quantity of tobacco processing by-products
in the blend. Each cigarette's tobacco blend is made mainly from the leaves of flue-
cured brightleaf, burley tobacco, and oriental tobacco. These leaves are selected,
processed, and aged prior to blending and filling. The processing of brightleaf and
burley tobaccos for tobacco leaf "strips" produces several by-products such as leaf
stems, tobacco dust, and tobacco leaf pieces ("small laminate").[19] To improve the
economics of producing cigarettes, these by-products are processed separately into
11
forms where they can then be possibly added back into the cigarette blend without
an apparent or marked change in the cigarette's quality. The most common tobacco
by-products include:
Blended leaf (BL) sheet: a thin, dry sheet cast from a paste made with
tobacco dust collected from tobacco stemming, finely milled burley-leaf
stem, and pectin.[20]
Reconstituted leaf (RL) sheet: a paper-like material made from recycled
tobacco fines, tobacco stems and "class tobacco", which consists of tobacco
particles less than 30 mesh in size (~0.599 mm) that are collected at any
stage of tobacco processing.[21] RL is made by extracting the soluble
chemicals in the tobacco by-products, processing the leftover tobacco fibres
from the extraction into a paper, and then reapplying the extracted materials
in concentrated form onto the paper in a fashion similar to what is done in
paper sizing. At this stage ammonium additives are applied to make
reconstituted tobacco an effective nicotine delivery system.[1]
Expanded (ES) or improved stems (IS): ES are rolled, flattened, and
shredded leaf stems that are expanded by being soaked in water and rapidly
heated. Improved stems follow the same process but are simply steamed
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after shredding. Both products are then dried. These two products look
similar in appearance but are different in taste.[19]
Whole tobacco can also be processed into a product called expanded tobacco. The
tobacco is "puffed", or expanded, by saturating it with supercritical carbon dioxide
and heating the CO2 saturated tobacco to quickly evaporate the CO2. This quick
change of physical state by the CO2 causes the tobacco to expand in a similar
fashion as polystyrene foam. This is used to produce light cigarettes ("Lights") by
reducing the density of the tobacco and thus maintain the size of a cigarette while
reducing the amount of tobacco used in each cigarette.[19]
A recipe-specified combination of brightleaf, burley-leaf and oriental-leaf tobacco
will be mixed with humectants such as propylene glycol or glycerol, as well as
flavouring products and enhancers such as cocoa, licorice, tobacco extracts, and
various sugars, which are known collectively as "casings". The leaf tobacco will
then be shredded, along with a specified amount of small laminate, expanded
tobacco, BL, RL, ES and IS. A perfume-like flavour/fragrance, called the
"topping" or "toppings", which is most often formulated by flavor companies, will
then be blended into the tobacco mixture to improve the consistency in flavour and
taste of the cigarettes associated with a certain brand name.[19] As well, they replace
13
lost flavours due to the repeated wetting and drying used in processing the tobacco.
Finally the tobacco mixture will be filled into cigarettes tubes and packaged.
In recent years, the manufacturers' pursuit of maximum profits has led to the
practice of using not just the leaves, but also recycled tobacco offal[1] and the plant
stem.[22] The stem is first crushed and cut to resemble the leaf before being merged
or blended into the cut leaf.[23]
Taxation
See Cigarette taxes in the United States for a state-by-state comparison.
Cigarettes are a significant source of tax revenue in many localities. This fact has
historically been an impediment for health groups seeking to discourage cigarette
smoking, since governments seek to maximize tax revenues. Furthermore, some
countries have made cigarettes a state monopoly, which has the same effect on the
attitude of government officials outside the health field.[24] In the United States, the
states partially determine the rate of cigarette taxes, and states where tobacco is a
significant farm product tend to tax cigarettes least.[25] It has been shown that
higher prices for cigarettes discourage smoking. Every 10 percent increase in the
price of cigarettes reduced youth smoking by about seven percent and overall
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cigarette consumption by about four percent.[26] Thus increased cigarette taxes are
proposed as a means to reduce smoking.
Many people in the UK now illegally import cigarettes due to the increasing tax. A
packet is less than half the price in some other countries, making illegal importers a
large profit, while still providing very cheap cigarettes. The average price for 20
legal cigarettes is £5.20, while imported packs are sold for less than £3; this is due
to the high taxation.
Sale
A smoking symbol, usually signifying that smoking is allowed.
A Woolworths supermarket cigarette counter in NSW, Australia. Other Australian
states currently prohibit such large displays.
Before the Second World War many manufacturers gave away collectible cards,
one in each packet of cigarettes. This practice was discontinued to save paper
15
during the war and was never generally reintroduced, though for a number of years
Natural American Spirit cigarettes included "vignette" cards depicting endangered
animals and American historical events; this series was discontinued in 2003. On
April 1, 1970 President Richard Nixon signed the Public Health Cigarette Smoking
Act into law, banning cigarette advertisements on television in the United States
starting on January 2, 1971. However, some tobacco companies attempted to
circumvent the ban by marketing new brands of cigarettes as "little cigars";
examples included Tijuana Smalls, which came out almost immediately after the
ban took effect, and Backwoods Smokes, which reached the market in the winter
of 1973–1974 and whose ads used the slogan, "How can anything that looks so
wild taste so mild."
Beginning on April 1, 1998, the sale of cigarettes and other tobacco products to
people under 18 has been prohibited by law in all fifty states of the United States.
The legal age of purchase has been additionally raised to 19 in Alabama, Alaska,
New Jersey, Utah, and Nassau, Suffolk, and Onondaga Counties in New York.[27]
The intended effect of this is to prevent upper class high school students from
purchasing cigarettes for their younger peers. Legislation was pending as of 2004
in some other states. In Massachusettsand Virginia, parents and guardians are
allowed to give cigarettes to minors, but sales to minors are prohibited.
16
Similar laws exist in many other countries. In Canada, most of the provinces
require smokers to be 19 years of age to purchase cigarettes (except for Quebec,
Saskatchewan, Manitoba and Alberta, where the age is 18). However, the
minimum age only concerns the purchase of tobacco, not use. Alberta, however,
does have a law which prohibits the possession or use of tobacco products by all
persons under 18, punishable by a $100 fine. Australia, New Zealand and Pakistan
have a nationwide ban on the selling of all tobacco products to people under the
age of 18.
Since 1 October 2007, it has been illegal for retailers to sell tobacco in all forms to
people under the age of 18 in three of the UK's four constituent countries (England,
Wales and Scotland) (rising from 16). It is also illegal to sell lighters, rolling
papers and all other tobacco-associated items to people under 18. It is not illegal
for people under 18 to buy or smoke tobacco, just as it was not previously for
people under 16; it is only illegal for the said retailer to sell the item. The age
increase from 16 to 18 will be in force in Northern Ireland starting 1 September
2008. In the Republic of Ireland, bans on the sale of the smaller ten-packs and
confectionery that resembles tobacco products came into force on May 31, 2007 in
a bid to cut underaged smoking. The UK Department of Health plans to follow suit
with the ten-pack ban.
17
Tabak-Trafik in Vienna. Since January 1, 2007, all cigarette machines in Austria
must attempt to verify a customer's age by requiring the insertion of a debit card or
mobile phone verification.
Most countries in the world have a legal smoking age of 18. Five exceptions are
Austria, Belgium, Denmark, Portugal, and the Netherlands, where the age is 16.
Since January 1, 2007, all cigarette machines in public places in Germany must
attempt to verify a customer's age by requiring the insertion of a debit card.
Turkey, which has one of the highest percentage of smokers in its population,[29]
has a legal age of 18. Another curiosity is Japan, one of the highest tobacco-
consuming nations, which requires purchasers to be 20 years of age (suffrage in
Japan is 20 years old).[30]. Beginning in July 2008, Japan will enforce this age limit
at cigarette vending machines through use of the taspo smart card. In other
countries, such as Egypt, it is legal to use and purchase tobacco products regardless
of age. Germany raised the purchase age from 16 to 18 on the 1 September 2007.
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Some police departments in the United States occasionally send an underaged
teenager into a store where cigarettes are sold, and have the teen attempt to
purchase cigarettes, with their own or no ID. If the vendor then completes the sale,
the store is issued a fine.[31] Similar enforcement practices are regularly performed
by Trading Standards Officers in the UK and the Gardaí Siochana, the police force
of the Republic of Ireland.[32]
Consumption
Approximately 5.5 trillion cigarettes are produced globally each year and are
smoked by over 1.1 billion people or greater than one-sixth of the world
population. While smoking rates have leveled off or declined in developed nations,
they continue to rise in developing parts of the world. Smoking rates in the United
States have dropped by half from 1965 to 2006 falling from 42% to 20.8% of
adults.[5] In the developing world, tobacco consumption is rising by 3.4% per year.
19
Graphics on cigarette packets
Tobacco packaging warning messages
Some countries require cigarette packs to contain warnings about health. The
United States was one of the first. Other countries include most of Europe,
Australia and in Asia (e.g. Hong Kong)
20
Smoking bans
Many governments impose restrictions on smoking tobacco, especially in public
areas. The primary justification has been the negative health effects of secondhand
smoke.[35] Laws vary by country and locality. See:
Smoking bans
Smoking bans by country
Cigarette butt
Cigarette butts thrown on the ground of the Dipsea Trail.
The common name the remains of a cigarette after smoking is a "cigarette butt" or
simply "butt." It comprises about 30% of the cigarette's original length. The butt
consists of a tissue tube which holds a filter and some remains of tobacco mixed
with ash. In extreme cases the filter is slightly burned. Cigarette butts are one
21
source of tobacco for minors and low income people. The shape of a butt hinges on
the manner of stubbing out. The intensely pressed butt possesses irregular shape at
the end and wrinkled tissue. Cigarette butts may be a subject of studies over
popularity of brands producing cigarettes.
Cigarette litter
A cigarette disposal canister, encouraging the public to dispose of their cigarettes
properly.
Cigarette filters are made from cellulose acetate and is biodegradable, however
depending on environmental conditions it can be resistant to degradation.
Accordingly, the duration of the degradation process is cited as taking as little as 1
month to 3 years[36] to as long as 10-15 years[37].
This variance in rate and resistance to biodegradation in many conditions is a
factor in littering[38] and environmental damage[39]. It is estimated that 4.5 trillion
22
cigarette butts become litter every year.[37] In the 2006 International Coastal
Cleanup, cigarettes and cigarette butts constituted 24.7% of the total collected
pieces of garbage, over twice as many as any other category.[40]
Cigarette butts contain the chemicals filtered from cigarettes and can leach into
waterways and water supplies.[41]
Cellulose acetate and carbon particles breathed in from cigarette filters is suspected
of causing lung damage[42][43].
Cigarette advertising
In many parts of the world tobacco advertising and even sponsorship of sporting
events has been outlawed. The ban on tobacco advertising and sponsorship in the
EU in 2005 has prompted Formula One Management to look for races in areas that
allow the tobacco sponsored teams to display their livery. As of 2007, only the
Scuderia Ferrari retains tobacco sponsorship, continuing their relationship with
Marlboro until 2011.
In some jurisdictions, such as Saskatchewan, Canada and Alberta, Canada, the
retail store display of cigarettes is completely prohibited if persons under the legal
age of consumption have access to the premises
23
SCOPE – COMPANY EXTERNAL ENVIRONMENT
The Cigrate industry is witnessing a spate of new channels being launched every
year. CIGRATE is also penetrating into the rural areas and is a promising
segment. Homes with CIGRATE s are expected to grow from 112 million to 200 million in a
few years.
Current size: Rs 45,400 crore
Projected size by 2010: Rs 74,600 crore
CAGR: 26%
India boasts of being the third largest Cigrate market in the world today. And
pay CIGRATE market is expected to grow from the present 70 million to all
CIGRATE market.
The fact that 40 per cent households of India are still without Cigrate
connectivity highlights the scope of growth in the segment. The majority of the
revenue generated in the Cigrate industry is through advertisements, followed by
subscriptions. The Indian Cigrate advertisements market is currently valued at
about US$ 1,067 million and is expected to grow at a rapid rate with the increase
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in the number of channels and the Cigrate viewers. Over the next five years, the
subscription revenues are poised to be the growth driver of the Indian Cigrate
industry. The number of pay CIGRATE homes and the increased subscription
rates will increase the subscription revenues. The spread among the lower-
income groups is very low and offers a wide scope for growth. The Indian Cigrate
industry is currently being dominated by Star India, which is the top player in the
sector at present.
25
Macro a. Govt. laws, rules
INITIAL JURISDICTION AND RULES
The Federal Communications Commission first established rules in 1965 for
cable systems which received signals by microwave antennas. In March
1966, the Commission established rules for all cable systems (whether or not
served by microwave). The Supreme Court affirmed the Commission's
jurisdiction over cable in United States v. Southwestern Cable Co., 392 U.S.
157 (1968). The Court ruled that "the Commission has reasonably concluded
that regulatory authority over CACIGRATE is imperative if it is to perform
with appropriate effectiveness certain of its responsibilities." The Court
found the Commission needed authority over cable systems to assure the
preservation of local broadcast service and to effect an equitable distribution
of broadcast services among the various regions of the country.
In March 1972, new rules regarding cable Cigrate became effective. These
rules required cable Cigrate operators to obtain a certificate of compliance
from the Commission prior to operating a cable Cigrate system or adding a
Cigrate broadcast signal. The rules applicable to cable operators fell into
several broad subject areas -- franchise standards, signal carriage, network
26
program nonduplication and syndicated program exclusivity, nonbroadcast
or cablecasting services, cross-ownership, equal employment opportunity,
and technical standards. Cigrate who originated programming were subject
to equal time, Fairness Doctrine, sponsorship identification and other
provisions similar to rules applicable to broadcasters. Cable operators were
also required to maintain certain records and to file annual reports with the
Commission concerning general statistics, employment and finances.
In succeeding years, the Commission modified or eliminated many of the
rules. Among the more significant actions, the Commission deleted most of
the franchise standards in 1977, substituted a registration process for the
certificate of compliance application process in 1978, and eliminated the
distant signal carriage restrictions and syndicated program exclusivity rules
in 1980. In 1983, the Commission deleted its requirement that cable
operators file financial information. In addition, court actions led to the
deletion of the pay cable programming rules in 1977.
1984 CONGRESSIONAL POLICY AND RULES
In October 1984, the U.S. Congress amended the Communications Act of
1934 by adopting the Policy Act of 1984. The 1984 Cable Act established
policies in the areas of ownership, channel usage, franchise provisions and
27
renewals, subscriber rates and privacy, obscenity and lockboxes,
unauthorized reception of services, equal employment opportunity, and pole
attachments. The new law also defined jurisdictional boundaries among
federal, state and local authorities for regulating Cigrate Industry.
1992 CONGRESSIONAL POLICY AND RULES
Following the 1984 Cable Act, the number of households subscribing to
Cigrate industry increased, as did the channel capacity of many cable
systems. However, competition among distributors of cable services did not
increase, and, in many communities, the rates for cable services far outpaced
inflation. Responding to these problems, Congress enacted the Cigrate
Consumer Protection and Competition Act of 1992. The 1992 Cable Act
mandated a number of changes in the manner in which cable Cigrate is
regulated.
In adopting the 1992 Cable Act, Congress stated that it wanted to promote
the availability of diverse views and information, to rely on the marketplace
to the maximum extent possible to achieve that availability, to ensure cable
operators continue to expand their capacity and program offerings, to ensure
cable operators do not have undue market power, and to ensure consumer
28
interests are protected in the receipt of cable service. The Commission has
adopted regulations to implement these goals.
1996 CONGRESSIONAL POLICY AND RULES
In adopting the Telecommunications Act of 1996, Congress noted that it
wanted to provide a pro-competitive, de-regulatory national policy
framework designed to accelerate rapidly private sector deployment of
advanced telecommunications and information technologies and services to
all Americans by opening all telecommunications markets to competition.
The Commission has adopted regulations to implement the requirements of
the 1996 Act and the intent of Congress.
29
Social Consideration and Social Clauses in Public
Procurement – Workability Europe´s Declaration
Public Procurement covers 16 % of EU’s Gross domestic product. In
connection with Public Procurement total economic advantages should
always be considered, not only a certain unit price. Best value for tax payers
money does not mean the cheapest offer – value for money may also include
social clauses. Social considerations should be included in Public
Procurement as one criterion like quality and environmental criteria.
If possible Public Procurement should be reserved for supported
employment, i.e. to sheltered workshops and sheltered employment
programmes.
30
Micro Competitors, Suppliers, Buyers , Substitute / by product, New entrants
31
COMPANY PROFILE
Marlboro (cigarette)
Marlboro logo
Marlboro is a brand of cigarette made by Philip Morris USA (a branch of Altria)
within the US, and by Philip Morris International (now separate from Altria)
outside the US. It is famous for its billboard advertisements and magazine ads of
the Marlboro Man.
Philip Morris, a London-based cigarette manufacturer, created a New York
subsidiary in 1902 to sell several of its cigarette brands, including Marlboro. By
1924 they were advertising Marlboro as a woman's cigarette based on the slogan
"Mild As May".
32
The brand was sold in this capacity until World War II when the brand faltered and
was temporarily removed from the market. At the end of the war, three brands
emerged that would establish a firm hold on the cigarette market: Camel, Lucky
Strike, and Chesterfield. These brands were supplied to US soldiers during the war,
creating an instant market upon their return.
During the 1950s Reader's Digest magazine published a series of articles that
linked smoking with lung cancer. Phillip Morris, and the other cigarette companies
took notice and each began to market filtered cigarettes. The new Marlboro with a
filtered end was launched in 1955. In the early 1960s Philip Morris invented
"Marlboro Country" and distilled their manly imagery into the rugged cowboys
known as the "Marlboro Men."
The brand is named after Great Marlborough Street, the location of its original
London Factory. Richmond, Virginia is now the location of the largest Marlboro
cigarette manufacturing plant.
33
Varieties
Marlboro Reds
Reds (Red) (original)
Medium (Dark Red)
Menthol (Dark Green)
Menthol Lights (Light Green)
Menthol Ultra Lights (Light Green)
Lights (Gold)
Ultra Lights (Silver)
Milds (Dark Blue)
Flavor Plus (white with red lines): features a sliding lid pack and tobacco in
the filter for extra flavor
34
No. 27 Blend (Bronze)
No. 29 Blend (Bronze)
MX4 Flavor (Medium)
Virginia Blend (Metallic-silver) This is known as their highest grade normal
production cigarette
Black Menthol (Japan Only)
Ice Mint
Smooth
Menthol Smooth (Teal-Grey)
72s: Red, Light, and Ultra Light
72s Menthol: Green, Blue
Marlboro Snus: Rich, Mild, Mint, Spice: In Dallas and Indianapolis.
Marlboro MST(moist smokeless tobacco): Original, Long Cut and Fine Cut,
Wintergreen, Long Cut and Fine Cut: In Atlanta, GA
All cigarettes are available in the standard 85mm (Kings) or 100mm (100's) size
with the exception of the 72s varieties, which measure 72mm.
35
The type of Marlboro cigarette, No. 27 blend gets its name from the number of
attempts that the company Marlboro spent trying to get the right blend they wanted
for this cigarette. At the time of creation, there was no name specified for the
cigarette. But after Marlboro was satisfied on the 27th attempt, leads to the name
now. This nomenclature follows the pattern used by WD-40. The No. 27 blend
cigarette was originally released as Marlboro's "Christmas blend", and following
brisk sales, was brought to market in its current packaging. Original cartons and
packs for the blend were black with red, and normally available only during the
holiday season.
ITC
36
ITC is the market leader in cigarettes in India. With its wide range of invaluable
brands, it has a leadership position in every segment of the market. It's highly
popular portfolio of brands includes Insignia, India Kings, Classic, Gold
Flake, Silk Cut, Navy Cut, Scissors, Capstan, Berkeley, Bristol and Flake.
The Company has been able to build on its leadership position because of its single
minded focus on value creation for the consumer through significant investments
37
in product design, innovation, manufacturing technology, quality, marketing and
distribution.
All initiatives are therefore worked upon with the intent to fortify market standing
in the long term. This in turns aids in designing products which are contemporary
and relevant to the changing attitudes and evolving socio economic profile of the
country. This strategic focus on the consumer has paid ITC handsome dividends.
ITC's pursuit of international competitiveness is reflected in its initiatives in the
overseas markets. In the extremely competitive US market, ITC offers high-
quality, value-priced cigarettes and Roll-your-own solutions. In West Asia, ITC
has become a key player in the GCC markets through growing volumes of its
brands.
ITC's cigarettes are produced in its state-of-the-art factories at Bengaluru, Munger,
Saharanpur and Kolkata. These factories are known for their high levels of quality,
contemporary technology and work environment.
38
ITC's Cigarettes business has been winning numerous awards for its quality,
environmental management systems and product excellence:
'Best Manufacturer of Cigarettes for the year 2007' by the Tobacco Board
based on previous three years' performance.
Occupational Health and Safety Award 2007 for Excellence in Safety
Management to the Bengaluru, Saharanpur and Kolkata factories from the Royal
Society for Prevention of Accidents (ROSPA), U.K.
5 Star Health and Safety Rating in 2007 from the British Safety Council to the
Bengaluru, Munger, Kolkata and Saharanpur factories and the "Sword of
Honour" for Bengaluru & Saharanpur factories in 2006.
Greentech Gold Award for excellence in Safety Management for the year
2007 to the Bengaluru, Kolkata and Saharanpur cigarette factories for the high
level of performance that the units have achieved in Environment Health and
Safety (EHS). Saharanpur along with Kolkata and Munger factories were honoured
with the Gold award and the Bengaluru Factory with the Platinum Award in
2006.
Greentech Gold Award for Excellence in Environment Management 2007 to
the Bengaluru, Kolkata and Munger factories.
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Safety Innovation Award for 2007 and 2006 for Innovative Safety
Management System to the Bengaluru Factory from the Institution of Engineers
and also the Unnatha Suraksha Puraskara Award 2006 from NSC Karnataka
Chapter.
Golden Peacock Award for Occupational Health and Safety from the Institute
of Directors, New Delhi; Award for Outstanding Performance in Environment
Health and Safety from the CII and the Suraksha Puraskar Award from the
National Safety Council, Mumbai to the Kolkata factory in 2007 and the "1st
National Security Today Award " in the category of Best Maintained Fire
Safety System in 2005.
Occupational Health and Safety Gold Award from the ROSPA, UK; the
Winners Trophy – Safety Health and Environment Award from the CII Eastern
region; National Award for Excellence in Water Management and Innovative
Project Award Initiatives for Energy Conservation from the CII to the Munger
factory in 2007 and also the Excellence in Water Management Award from
CII-GBC for 2006.
All the four factories are certified by Det Norske Veritas (DNV) for ISO 14001,
for their Environment Management Systems, OHSAS 18001 for their Occupational
Health and Safety Management Systems (OHSMS) and the ISO 9000-2000 for
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Quality Management Systems. The Kolkata factory is the first cigarette factory in
India to be awarded the SA 8000 Certificate for Social Accountability by Det
Norske Veritas (DNV) in June 2004.
ITC's R&D Centre at Peenya, Bengaluru has the distinction of being the first
independent R&D centre in India to get ISO 9001 accreditation and certified
with ISO 14001 for Environment Management Systems by DNV. The R&D
Centre is also certified for the standard ISO/IEC17025:2005, by National
Accreditation Board for Testing and Calibration Laboratories (NABL). This
certification is awarded for "General requirement for the competence of Testing &
Callibration Laboratories"
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BALANCE SHEET ITC
Fiscal Year 2007 2006 2005 2004 2003
Fiscal Year End Date 3/31/07 3/31/06 3/31/05 3/31/04 3/31/03
Assets
Total Assets 32,476,736.0 28,624,880.0 24,335,011.0 22,040,228.0 20,296,263.0
Cash & Short Term Investments
7.3% 7.9% 8.6% 10.2% 11.2%
Cash 5.9% 5.5% 6.1% 7.8% 3.1%
Short Term Investments 1.4% 2.4% 2.5% 2.3% 8.2%
Receivables (Net) 20.2% 20.6% 20.8% 20.7% 31.7%
Inventories -Total 5.6% 5.7% 5.4% 4.9% 5.3%
Raw Materials 1.1% 1.0% 1.0% 0.9%
Work in Process 0.7% 0.8% 0.7% 0.8%
Finished Goods 3.7% 3.8% 3.7% 3.3%
Progress Payments & Other
0.0% 0.0% 0.0% 0.0%
Prepaid Expenses 1.6%
Other Current Assets 1.7% 3.4% 4.0% 4.4% 6.1%
Current Assets - Total 36.3% 37.5% 38.8% 40.1% 54.3%
Long Term Receivables 17.8% 17.1% 16.5% 14.8% 3.6%
Investment in Associated Companies
6.3% 6.4% 6.5% 6.2% 5.3%
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Fiscal Year 2007 2006 2005 2004 2003
Other Investments 11.8% 11.9% 11.1% 10.2% 8.0%
Property Plant and Equipment - Gross
54.0% 55.4% 57.8% 60.6% 66.2%
Accumulated Depreciation 29.1% 30.7% 34.0% 36.3% 39.1%
Property Plant and Equipment � Net
24.8% 24.7% 23.8% 24.3% 27.1%
Other Assets 2.9% 2.4% 3.3% 4.4% 1.7%
Deferred Charges 0.0% 0.0% 0.0% 0.0%
Tangible Other Assets 2.9% 2.4% 3.3% 1.7%
Intangible Other Assets 0.0%
Total Assets 100.0% 100.0% 100.0% 100.0% 100.0%
Liabilities & Shareholders' Equity
Total Liabilities & Shareholders' Equity
32,476,736.0 28,624,880.0 24,335,011.0 22,040,228.0 20,296,263.0
Accounts Payable 6.8% 7.3% 7.6% 7.8% 7.8%
Short Term Debt & Current Portion of Long Term Debt
18.1% 16.6% 14.5% 15.0% 15.6%
Accrued Payroll 0.2%
Income Taxes Payable 1.3% 1.2% 1.2% 1.1% 1.6%
Dividends Payable
Other Current Liabilities 10.0% 9.9% 10.5% 10.5% 12.1%
Current Liabilities - Total 36.2% 35.0% 33.8% 34.5% 37.2%
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Fiscal Year 2007 2006 2005 2004 2003
Long Term Debt 19.3% 19.7% 20.6% 19.3% 20.2%
Long Term Debt Excluding Capitalized Leases
19.2% 19.6% 20.4% 19.0% 20.2%
Capitalized Lease Obligations
0.1% 0.2% 0.2% 0.3% 0.0%
Provision for Risks and Charges
2.0% 2.4% 2.7% 3.3% 3.2%
Deferred Income
Deferred Taxes 3.7% 3.4% 3.3% 3.5% -0.2%
Deferred Taxes - Credit 4.0% 3.8% 2.0%
Deferred Taxes - Debit 0.3% 0.4% 2.2%
Deferred Tax Liability in Untaxed Reserves
Other Liabilities 0.4% 0.5% 0.3% 0.3% 0.4%
Total Liabilities 61.6% 61.0% 60.8% 60.9% 60.8%
Non-Equity Reserves 0.0% 0.0% 0.0% 0.0% 0.0%
Minority Interest 1.9% 2.1% 2.1% 2.0% 2.4%
Preferred Stock 0.0% 0.0% 0.0% 0.0% 0.0%
Preferred Stock Issued for ESOP
ESOP Guarantees - Preferred Issued
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Fiscal Year 2007 2006 2005 2004 2003
Common Equity 36.4% 36.9% 37.2% 37.1% 36.8%
Total Liabilities & Shareholders' Equity
100.0% 100.0% 100.0% 100.0% 100.0%
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INTRODUCTION
What is Consumer Buying Behavior?
Definition of Buying Behavior,
Buying Behavior is the decision processes and acts of people involved in buying
and using products.
Need to understand:
Why consumers make the purchases that they make?
What factors influence consumer purchases?
The changing factors in our society.
Consumer Buying Behavior refers to the buying behavior of the ultimate
consumer. A firm needs to analyze buying behavior for:
Buyers' reactions to a firms marketing strategy has a great impact on the
firm's success.
The marketing concept stresses that a firm should create a marketing
mix(MM) that satisfies (gives utility to) customers, therefore need to analyze
the what, where, when and how consumers buy.
Marketers can better predict how consumers will respond to marketing
46
strategies.
Stages of the Consumer Buying Process
Six Stages to the Consumer Buying Decision Process (For complex decisions).
Actual purchasing is only one stage of the process. Not all decision processes lead
to a purchase. All consumer decisions do not always include all 6 stages,
determined by the de2ree of complexity...discussed next.
The 6 stages are :
1. Problem Recognition (awareness of need)--difference between the desired state
and the actual condition. Deficit in assortment of products. Can be stimulated by
the marketer through product information— i.e, see a commercial for a new pair
of shoes, stimulates your recognition that you need a new pair of shoes.
2. Information search-
Internal search, memory.
External search if you need more information. Friends and relatives (word of
mouth). Marketer dominated sources; comparison shopping; public sources
etc.
A successful information search leaves a buyer with possible alternatives.
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3. Evaluation of Alternatives you need to establish criteria for evaluation
features the buyer wants or does not want. Rank/weight alternatives or resume
search. May decide that you want to eat something spicy. If not satisfied with
your choices then return to the search phase. Can you think of another
alternative? Look in the yellow pages etc. Information from different sources
may be treated differently. Marketers try to influence by "framing" alternatives.
4. Purchase decision-Choose buying alternative, includes product, package,
store, method of purchase etc. Purchase May differs from decision, time lapse
between 4 & 5, product availability.
5.Post-PurchaseEvaluation--Outcome Satisfaction or Dissatisfaction.
Cognitive Dissonance, have you made the right decision. This can be reduced by
warranties, after sales communication etc.
Types of Consumer Buying Behavior
Types of consumer buying behavior are determined by:
Level of Involvement in purchase decision. Importance and intensity of
interest in a product in a particular situation.
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Buyer's level of involvement determines why he/she is motivated to seek
information about a certain products and brands but virtually ignores others.
High involvement purchases--Honda Motorbike, high priced goods, products
visible to others, and the higher the risk the higher the involvement. Types of risk:
Personal risk
Social risk
Economic risk
The four type of consumer buying behavior are:
Routine Response Programmed Behavior -- buying low involvement
frequently purchased low cost items; need very little search and decision
effort; purchased almost automatically. Examples include soft drinks, snack
foods, milk etc.
Limited Decision Making buying product occasionally. When you need to
obtain information about unfamiliar brand in a familiar product category,
perhaps. Requires a moderate amount of time for information gathering.
Examples include Clothes know product class but not the brand.
Extensive Decision Making/Complex high involvement, unfamiliar,
expensive and/or infrequently bought products. High degree of
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economic/performance/psychological risk. Examples include cars, homes,
computers, education. Spend a lot of time seeking information and deciding.
Information from the companies MM; friends and relatives, store personnel
etc. Go through all six stages of the buying process.
Impulse buying, no conscious planning.
In order to produce successful ads, you must give people exactly what they want.
This article will teach you why people buy the things they do so you can design
your ads to fulfill these needs.
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SWOT
The diagnosis of a firm’s strengths and weakness can be fruitful only if the
environment factors and market conditions are considered along with the internal
capabilities. This approach essentially involves matching of the internal
capabilities with the environmental opportunities and threat and is known as
SWOT (Strength and Weakness, Opportunities and Threats) analysis.
STRENGTHS :
Strength is a resources, skill or other advantage relative to competition and
the needs of markets a firm serves of anticipates serving. Strength is a distinctive
competence that gives the firm a comparative advantages in the market place.
The key strengths are :
Well trained and highly qualified manpower (both technical & non-technical).
Hi-Fi and world class technology is available.
Hi class facility, reflecting leadership of top-management.
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Financial status of the company is very strong and sound.
WEAKNESS :
A weakness is a limitation or deficiency in resources, skills and capabilities that
seriously impedes effective performance .
OPPORTUNITIES:
An opportunity is a major favorable situation in the firm’s environment.
Identification of a previously overlooked market segment, changes in competitive of
regulatory circumstances, technological changes etc. are examples.
Since, company’s financial profile is quite sound & strong, hence there is lot of scope
to develop.
THREATS :
A threat is a major unfavorable situation in the firm’s environment. It is key
impediment to the firm’s current or desired future positions. The entrance of a new
competitor, slow market growth, major technological change, appearance if a substitute
product are examples.
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The danger of being priced out.
The danger of substitution.
The danger of new competition coming.
Inadequate measures viewed against product, market scope.
High level quality and low price should be maintained.
Time commitment and Business ethics should be adopted and maintained.
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OBJECTIVES OF THE PROJECT
The objectives are.
1. To find the mode of pollution by the Cigrate .
2. To find the find which type of Cigrate less pollute.
3. To find the various sources of information about cars from primary data
through customers.
4. To find and analyses the various parameters of increasing Cigrate .
5. To find the what is effect in city life.
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STRATEGIES
Business
In 1998, after a shake-up in the Korean auto industry caused by
overambitious expansion and the Asian financial crisis, ITC acquired rival
Kia Motors. In 2000, the company established a strategic alliance with
DaimlerChrysler and severed its partnership with the ITC. In 1956, the ITC
was formed. In 2004, however, DaimlerChrysler divested its interest in the
company by selling its 10.5% stake for $900 million.
ITC has invested in manufacturing plants in the North America India as well
as research and development centers in Europe, Asia, North America, and
the Pacific Rim. In 2004, ITC had $57.2 billion in sales in India making it the
country’s second largest corporation. Worldwide sales in 2005 reached
2,533,695 units, an 11 percent increase over the previous year. ITC has set
as its 2006 target worldwide sales of 2.7 million units (excluding exports of
CKD kits). In 2007 it reached 3,961,629 worldwide cigrate sales—
surpassing.
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ITC are sold in 193 countries through some 5,000 dealerships and
showrooms. After a recent survey of cigrate industry, ITC is now the fifth
largest automaker in the world as of 2008.
ITC Company’s brand power continues to rise as it was ranked 72nd in the
2007 Best Global Brands by Interbrand and BusinessWeek survey. brand
value estimated at $4.5 billion. Public perception of the ITC brand has been
transformed as a result of dramatic improvements in the quality of ITC
Cigrate.
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CONCLUSION
The cigarette is taking many initiatives to take advantage of the opportunities as
well as to meet the challenges. The cigarette initiatives in the area of FMCG.
Further, cigarette has drawn an ambitious branch expansion programme to increase
its clientele base and business volumes. The cigarette has also recently appointed a
consultant to guide it in implementation of an enterprise-wide integrated risk
management system. All these efforts will help the cigarette to improve upon the
performance level in the coming years.
In the above research I found that the maximum respondent are smoker.
Mainly in there family only one elder person smoking.
Respondent are smoking more than three cigrate in a day
No effect on smoker caution statement on cigrate packet
In the above research I found that the respondent are giving any important
caution statement on cigrate packet
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SUGGESTIONS AND RECOMMENDATIONS
Caution statement should come out that are attractive and appeals to the
masses.
The companies have to concentration on the factors like ‘prevention of loss.
The Companies can increase its potential through more advertising.
The company should give more training programs.
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L IMITATIONS :
Lack of knowledge of area has also affected the research
Lack of respondents interest to answer the question
It is very difficult to make people understand the significance of conducting
survey.
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BIBLIOGRAPHY
MAGAZINES:
BUSINESS TODAY
BUSINESS INDIA
BUSINESS WORLD
NEWS PAPERS:
ECONOMIC TIMES
THE TIMES OF INDIA
THE HINDUST AN TIMES
THE HINDU
WEBSITE:
www.google.com
www.itc.com
www.marlboro.com
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