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International Marketing “Tobacco groups challenge Australia’s new law” Ophélie Toulet Margaux Mesurat Emmanuelle Friedlander Tamara Khismatulina Christopher Tang

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Page 1: International marketing   group 5 class3

International Marketing

“Tobacco groups challenge Australia’s new law”

Ophélie TouletMargaux MesuratEmmanuelle FriedlanderTamara KhismatulinaChristopher Tang

Page 2: International marketing   group 5 class3

Legislation• Requires cigarettes to be sold in plain,

unbranded packages

• Aims at reducing brand visibility and discouraging people from smoking

• For the law to be effective, legislators assume that packaging have an effect on sales of cigarettes

• For the law to be implemented, legislators assume that tobacco groups do not block passage of the law

Page 3: International marketing   group 5 class3

Reactions from tobacco groups• Outrage and backlash; legal

challenges and compensation seeking

• Big companies: Worry that the law would reduce their market share and competitive advantage

• Small companies: Worry that fewer people take up smoking

• Other concerns: Counterfeiting, loss of glamour

Page 4: International marketing   group 5 class3

Implementation: One year onPsychological Impact

• Plain pack smokers were more likely to think their cigarettes poorer in quality, less satisfying and to rate quitting as a higher priority

• 30.6 per cent of smokers using plain packaging said that their cigarettes were of lower quality than a year earlier, compared with 18.1 per cent of those using branded packs.

• Plain pack smokers were 26.2 per cent less satisfied by their cigarettes than they were a year earlier, compared with 14.9 per cent of brand pack smokers.

"Smokers have been telling us that our new plain packaging and larger graphic health warnings are putting them off"

Australian Health Minister Tanya Plibersek

Sydney Morning Herald, July 22 2013

Page 5: International marketing   group 5 class3

Implementation: One year onSales Impact

• A British American Tobacco spokesman, Scott McIntyre, said there had been no initial impact on tobacco sales after the move to unbranded packs.

• Effects may manifest in the long term as fewer youths pick up smoking

''The tobacco market has remained stable. Consumers have not changed their purchasing behaviour”

Sydney Morning Herald, July 22 2013

Page 6: International marketing   group 5 class3

Marketing conclusions

• Companies always have to adapt to changing legal environments and be conscious of the changing regulatory landscape in different countries of operation

• A product’s value proposition is enhanced by the brand image and the lifestyle/qualities associated with it. Therefore removing any of these results in decrease in perception of value

Page 7: International marketing   group 5 class3

National laws affect marketing strategies: Media laws against alcohol

and tobacco• Alcohol abuse is a longtime problem in Russia, where more than half of all

deaths of people aged 15 to 54 are caused by alcohol

• Led to tightening on advertising laws from 2006 - present

• It is forbidden to show TV commercials (advertising alcohol and tobacco) before 10 pm

• It is not allowed to include people in advertisements of alcohol

• Prohibited from advertising tobacco and alcohol on radio, newspaper front pages, magazines front pages

• Prohibited from advertising alcoholic products with above 5% alcohol content

Page 8: International marketing   group 5 class3

National laws affect marketing strategies: Media laws against alcohol

and tobacco

• Short term reaction: Ad boom to build brand awareness

• Long term reaction: Move to digital advertising which is less strictly regulated

Page 9: International marketing   group 5 class3

National laws affect marketing strategies: Anti-Gay Laws

• On June 30th 2013, Russia signed into law a bill banning the propaganda of non-traditional sexual relations to minors – in effect an Anti-Gay Law

• Individuals, public officials and organizations found to be engaging in the “act of distributing information among minors that 1) is aimed at the creating nontraditional sexual attitudes, 2) makes nontraditional sexual relations attractive, 3) equates the social value of traditional and nontraditional sexual relations, or 4) creates an interest in nontraditional sexual relationscan be found liable and fined

Page 10: International marketing   group 5 class3

National laws affect marketing strategies: Anti-Gay Laws

• Reaction: growing boycott of Russian brands in US

• Brand affected: Stolichnaya (Vodka), founded by a Russian but headquartered in Luxembourg

• Stoli controls 2.6% share of the U.S. vodka market by volume

Page 11: International marketing   group 5 class3

National laws affect marketing strategies: Russia’s Anti-Gay Laws

Facebook media campaign

CEO’s open letter to LGBT community

Page 12: International marketing   group 5 class3

National laws affect marketing strategies:

Patent medicines and generics• After 10 years, the laboratory looses the patent, which

becomes public.

• Laboratories need to adapt their strategy

• Lower their prices on patent medicines

• Start to sell generics

• Change their advertising strategy

• Create new formulas