Anubhav Sharma.pdf

SUMMER INTERNSHIP PROJECT REPORTs ON “A STUDY OF PROMOTIONAL ACTIVITIES OF TABACCO PRODUCTS IN ITC FOR NEW LAUNCH PRODUCTS” FOR THE PARTIAL FULFILLMENT OF THE AWARD OF THE DEGREE “MASTER OF BUSINESS ADMINSTRATION” (Approved by AICTE, Govt. of India) ACADEMIC SESSION 2017-2019

SUBMITTED BY:

SUBMITTED TO:

ANUBHAV SHARMA

PROF.S.MOHANTY

ARMY INSTITUTE OF MANAGEMENT & TECHNOLOGY, GREATER NOIDA (UP) – 201306 i

CERTIFICATE

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SUPERVISOR CERTIFICATE

This is to certify that Mr. Anubhav sharma a student of Master of Business Administration, Batch 2017-19, Army Institute Management & Technology, Greater Noida, has successfully completed his/hers project under my supervision.

During this period, he/she worked on the project titled “A STUDY OF PROMOTIONAL ACTIVITIES OF TABACCO PRODUCTS IN ITC FOR NEW LAUNCH PRODUCTS” in partial fulfillment 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/her performance and conduct has been good.

(Signature) Prof. S. Mohanty AIMT-Gr. Noida

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Certificate of Originality

I, Mr. Anubhav sharma, Roll No. 02018403917

of MBA 2017-19 Batch of Army

Institute of Management & Technology has undergone a Summer Internship in ITC LI M I T E D for a duration of 7 weeks on a project title: “A STUDY OF PROMOTIONAL ACTIVITIES OF TABACCO PRODUCTS IN ITC FOR NEW LAUNCH PRODUCTS” hereby declare that this project is my original piece of work.

Signature of the student Student Name: Anubhav sharma

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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 S.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.

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TABLE OF CONTENT Certificate of Training – Industry Mentor.................................................................................. (i) Supervisor Certificate – Faculty Mentor................................................................................... (ii) Certificate of Originality ......................................................................................................... (iii) Acknowledgement .................................................................................................................. (iv) Executive Summary…………………………………………………………………………. (v)

Chapter 1

1-28

Chapter 2

Introduction 1.1 - Industry Introduction 1.2 - Company Introduction 1.3 - Topic Introduction Objective of the Research

Chapter 3

Literature review

30-33

Chapter 4

Research Methodology

34-39

Chapter 5

Data Analysis

40-41

Chapter 6

Result Discussion

42-43

Chapter 7

Conclusions and Recommendations

44-46

Questionnaire

47

Bibliography

48

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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.

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1.11.2- CHAPTER 1- INTRODUCTION 1.1- INDUSTRY INTRODUCTION In today’s fast running world, FMCG Products are becoming the basic needs of the human life. One can’t even think to lead a life without the use of them. These products make their life a little better, everyday. India has 113,000-crore FMCG market. This figure in itself shows the potential and size of the FMCG Market india have. Now question arises What is FMCG. WE regularly talk about things like butter, potato chips, toothpastes, razors, household care products, packaged food and beverages, etc. They are called FMCGs. FMCG is an acronym for “Fast Moving Consumer Goods” which refers to things that we buy from local markets on daily basis, the things that have high turnover and are relatively easy to purchase.

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

GROWTH PROSPECTS 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.

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1.2 - COMPANY INTRODUCTION: 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 & Scopes: 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.

Sources and Methods: Data collected is predominantly Primary data. In preparing this report, we have interviewed Shopkeepers, Paanwalas, Wholesellers, Distributors, Company persons & Customers at several places in Kolkata & Howrah which include Saltlake City, Garia, Patuli, Haatibagan, Shyambazar, Khanna, Ultatanga, Beleghata & Panchanantala (Howrah) , Bandhaghat (Howrah). Among the villages we had chosen Krishnanagar, Barrackpore, 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.

1. Cigarette ITC Ltd sells 80 percent of the cigarettes in India, where 275 million people use tobacco products and the total cigarette market is worth close to $6 billion (around Rs. 65,000 Crore) ITC's major

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2. cigarette brands include Wills Navy Cut, Gold Flake Kings, Gold Flake Premium lights, Gold Flake Super Star, Insignia, India Kings, Classic (Verve, Menthol, Menthol Rush, Regular, Citric Twist, Mild & Ultra Mild), 555, Silk Cut, Scissors, Capstan, Berkeley, Bristol, Lucky Strike, Players, Flake and Duke & Royal. 2. Other Businesses Foods: ITC's major food brands include Kitchens of India; Ashirwad, Mint-o, gum, B natural, Sun feast, Candy man, Bingo! And Yippee! ITC is India's largest seller of branded foods with sales of over Rs. 4,600 Crore in 2012-13. It is present across 5 categories in the Foods business namely Staples, Snack Foods, Ready-To-Eat Foods, Juices and Confectionery. Lifestyle apparel: ITC sells its products under the Wills Lifestyle and John Players brands. Wills Lifestyle was accorded the ‘Super brand’ status and John Players was included in the top 10 ‘Most Trusted Apparel Brands 2012’ by The Economic Times. Personal care products: Perfumes, hair care and skincare categories. Major brands are Fiama Di Wills, Vivel, Essenza Di Wills, Superia and Engage. Stationery: Brands include Classmate, Paper Kraft and Color Crew. Launched in 2003, Classmate went on to become India's largest notebook brand in 2007. Safety Matches and Agarbattis: Ship, i Kno and Aim brands of safety matches and the Mangaldeep brand of Agarbattis (Incense Sticks). Hotels: ITC's Hotels division (under brands including WelcomHotel) is India's second largest hotel chain with over 90 hotels throughout India. ITC is also the exclusive franchise in India of two brands owned by Sheraton International Inc. Brands in the hospitality sector owned and operated by its subsidiaries include Fortune Park Hotels and Welcome Heritage Hotels Paperboard: Products such as specialty paper, graphic and other paper are sold under the ITC brand by the ITC Paperboards and Specialty Papers Division like Classmate product of ITC well known for their quality. Packaging and Printing: ITC's Packaging and Printing division operates manufacturing facilities at Haridwar and Chennai and services domestic and export markets. Information Technology: ITC operates through its fully owned subsidiary ITC InfoTech India Limited, which is a SEI CMM Level 5 company.

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Vision and Mission THE ITC VISION »  Sustain ITC's position as one of India's most valuable corporations through world class performance  Creating growing value for the Indian economy and the Company's stakeholders. THE ITC MISSION »  To enhance the wealth generating capability of the enterprise in a globalizing environment  Delivering superior and sustainable stakeholder value.

Tobacco business and early years ITC Limited was incorporated under the name 'Imperial Tobacco Company of India Limited', succeeding W.D. & H.O. Wills. on 24 August 1910 as a British owned company registered in Calcutta. Since the company was largely based on agricultural resource, it ventured into partnerships in 1911 with farmers of southern part of India for sourcing leaf tobacco. Under the company's umbrella, the 'Indian Leaf Tobacco Development Company Limited' was formed in Guntur district of Andhra Pradesh in 1912. The first cigarette factory of the company was set up in 1913 at Bangalore. In 1918, leaf buying points were created at identified centers along South India. ITC's cigarette factory at Munger was equipped with printing facility in 1925, paving way for its first non-tobacco business. Though the first six decades of the Company's existence were primarily devoted to the growth and consolidation of the cigarettes and leaf tobacco businesses, ITC's packaging & printing business was set up in 1925 as a strategic backward integration for ITC's cigarettes business. It is today India's most sophisticated packaging house. More factories were set up in the following years for cigarette manufacturing across India. In 1928, construction began for the company's headquarters, the 'Virginia House' at Calcutta. ITC acquired Carreras Tobacco Company's factory at Kidderpore in 1935 to strengthen its presence further. ITC helped to set up indigenous cigarette tissue paper making plant in 1946 to significantly reduce the import costs and a factory for printing and packaging was set up at Madras in 1949.

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1.3 – TOPIC INTRODUCTION: ITC Tobacco Industry ITC Limited which previously stood for Imperial Tobacco Company of India Limited is an Indian conglomerate with a turnover of US $ 4.75 billion. It ranks third in pre-tax profit among India's private sector corporations. The company has its registered office in Kolkata.

The company is currently headed by Yogesh Chander Deveshwar. It employs over 20,000 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). The tobacco industry is one of the most profitable industries in the world. Tobacco companies use their enormous wealth and influence both locally and globally to market their deadly products. Even as advocacy groups and policy makers work to combat the tobacco industry’s influence, new and manipulative tactics are used by tobacco companies and their allies to circumvent tobacco control efforts. It is important for tobacco control advocates to know which companies are present in their country, how and where they operate, the types and quantity of products sold, and marketing tactics used to sell tobacco products. By being informed about all aspects of the tobacco industry within a country, advocates are better equipped to fight for effective tobacco control policies. It is important to note that the tobacco companies typically report market data annually at least several months after the end of the fiscal year. By its nature, annual market data reported by analysts and tobacco companies are one or two years old. It is also important to note that information about the tobacco industry in India is not always readily available. This is particularly true for the loosely regulated bidi and smokeless sectors. Therefore, general trends, forecast data, and tobacco industry positioning within the market contained here are the most recent we are able to obtain from tobacco analysts, Euro monitor International, and other sources. In India, the tobacco industry is divided into three distinct and powerful sectors: bidis (smoking products hand-rolled in tendu leaves), smokeless tobacco (mainly chewing tobacco) and cigarettes. Bidis are the most popular tobacco products consumed in India- 48% of the market. Smokeless tobacco makes up 38% and cigarettes only 14% of the market. Some aspect of the tobacco industry, whether it is tobacco farming, manufacturing, or distribution, is present in every Indian state, making tobacco control a truly national effort. This report, like the tobacco industry in India, has sections on each of the tobacco sectors as well as examples of tobacco promotion, sponsorship and corporate social responsibility efforts designed to increase consumption and industry profits. There is a widely held perception that globally tobacco is a declining industry. This is not so. There has been a steady increase in production and consumption over the last decade and this trend is expected to continue. The Food and Agricultural Organization has forecast an annual growth rate in global tobacco production and consumption at around 1.9%. The world 5

market for tobacco products grew by 32% over the last five years - the latest period for which authentic data is available - and was valued at approximately US$ 235 billion in 1994. 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 in product design, innovation, manufacturing technology, quality, marketing and distribution. 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.

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DISTRIBUTION CHANNEL OF ITC Ltd.

In the distribution channel the price of cigarettes changes from distributors to wholesalers to retailers to hawkers. The several details regarding pricing are discussed in the next part.

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THE INDIAN TOBACCO MARKET India is the third largest producer of tobacco in the world. A total of 450 million Kgs of tobacco was produced in 1995. Only 80 million Kgs were used for domestic cigarette production and 55 million Kgs exported as cigarette tobaccos. Developments in the Indian tobacco industry have not been in line with international trends. The share of cigarettes in the total tobacco consumption in India is about 20%, compared with 85% globally. Internationally, there has been a shift from traditional forms of tobacco - chewing tobacco, snuff, pipe, cigar/cheroot - to cigarettes, which is recognized to be the modern and more acceptable form of tobacco usage. For example, the share of cigarettes in the US increased from 2% in 1880 to 84% currently. In the UK, cigarette share went up from 12% in 1890 to 79% in 1995. In Italy, cigarettes constitute 98% of consumption today compared to 5% in 1900. Even in neighboring Pakistan, the share of cigarettes has increased significantly - from 40% in 1971 to 58% today. Quite the opposite, however, has happened in India. The share of cigarettes has declined to 20% from 23% in 1971, while overall tobacco consumption has grown. In fact, industry volumes of cigarettes declined by 12.5% between 1984/85 and 1994/95 before staging a recovery in 1995/96. Whilst the annual per capita consumption of all tobacco products in India stands at 0.83 kg, about 45% of the world average of 1.85 kg, the per capita consumption in cigarette form is barely one-tenth of world levels i.e. 101 cigarettes per annum compared to a global average of 1,030. Per capita consumption in Japan is 26 times higher, over 18 times higher in the United States, and in China almost 15 times higher. There are approximately 200 million tobacco consumers in India, of which only 25 million smoke cigarettes, whereas 275 million in China smoke cigarettes out of 330 million tobacco consumers. Therefore, the Chinese tobacco industry contributes 7 times more revenue at US$ 7 billion, even though tax rates per 1,000 cigarettes in China are half those in India. The United States tobacco industry is perhaps the best example of how this industry should be structured to contribute significantly to the economy. The United States is the second largest producer and consumer of tobacco products in the world.

a) Adding Value to the Rural Economy Tobacco is grown in India by small and marginal farmers, mainly in non-irrigated soils, on land holdings of less than 2.5 hectares. About 400,000 small and marginal farmers grow cigarette tobaccos and over 600, 000 grow non-cigarette tobaccos. No crop other than cigarette tobacco gives the farmer as attractive a return consistently in similar agro-climatic conditions. Cigarette tobaccos offer returns more than two times those of non-cigarette tobaccos and comprise mostly the flue 8

cured variety, which are sold through government-conducted auction platforms with a minimum guaranteed price (MGP) to the farmers. As a result, the better the quality of tobacco the farmer produces, the higher his return, with a minimum return guaranteed by the MGP system. Farmers aim to produce tobaccos of such quality and in such quantities so as to ensure timely sale of the entire production at the highest possible margin. Fluctuations in supply due to unforeseeable factors can cause intense volatility in international tobacco prices. Tobacco farmers in India therefore tend to use the more stable domestic market as the base and target commensurate production for exports. Even globally, exports average only 25% of the tobacco produced. The Indian tobacco market is oriented heavily towards traditional forms of consumption. Our tobacco farmers produce larger quantities of non-cigarette tobaccos (which are not exportable), and cigarette tobaccos of low grades, since the bulk of Indian cigarette consumption is not in the upper and premium segments. Measures therefore need to be adapted to: 1) facilitate transition from non-cigarette forms of consumption to cigarettes in line with consumer aspirations and international trends, so that farmers increase their incomes by producing more cigarette tobaccos. 2) Upgrade consumption to the higher end, to enable farmers to produce premium quality tobaccos, which can also be exported. Severe taxation of cigarettes is an indirect tax on tobacco farmers. In 1951/52 farmers growing cigarette tobaccos contributed Rs. 4.03 per kg towards excise duty and farmer growing other tobaccos Rs. 1.42 per kg, while the burden on other tobacco farmers increased marginally to approximately Rs. 385 per kg During the same period the huge tax increase on cigarettes has inhibited cigarettes form of consumption, thereby artificially restricting potential earnings of tobacco farmers and thus sub-optimizing tobacco's contribution to the rural economy.

b) Enhancing Foreign Exchange Earnings Global demand is restricted to cigarette type tobaccos of specified quality. India's tobacco exports at Rs. 421 Crores are miniscule, given the size of our tobacco market. Less than 20% of India's entire tobacco production is exported. In comparison, Brazil, with a tobacco market smaller than ours, exports 60% of its production, and is the world's No.1 tobacco exporter with annual exports averaging more than 3 times that of India's. As stated earlier, the principal reason for our export potential remaining largely untapped is the low quality of tobacco produced. Firstly, cigarettes constitute about 20% of tobacco consumption, as a result of which the majority of leaf tobacco produced is unsuitable for cigarette production and hence not exportable. Secondly, cigarette tobaccos grown in line with domestic market requirements are of the "filler" type, which are exportable but not of premium quality. Price is thus a major factor influencing their export, impacting farm sand rural income. India is capable of producing the premium grades of Burley, semi-flavorful and flavorful tobaccos. While current annual production of Burley, for instance, is in the region of 8 million Kgs, a production level of 50 million Kgs is achievable by the turn of the century, with the right inputs. The huge potential for India's tobacco exports can be fully realized by 9

upgrading tobacco consumption in line with consumer aspirations and by adopting measures to increase cigarette consumption at the premium end.

C) Government Regulation: In the West, tobacco and cigarettes have become synonymous, unlike in India, where nearly 88% of consumers do no smoke cigarettes. Any effort to regulate the tobacco industry therefore must take into account the industry's ability to comply. To regulate just the 12% cigarette segment would defeat the very purpose of such regulation. Statutory health warnings have been mandated by law on cigarette packets and all cigarettes advertising material since 1975. The law was extended to chewing tobacco in 1986 and gutka in 1990. Other tobacco products are still not required to carry any statutory warning. Obviously, the statutory health warning requirements on tobacco consumption need to be uniformly applicable to all tobacco products. Regulation of cigarette advertising is a hotly debated subject the world over.

Advertising is a legitimate commercial activity employed for products that are legally grown, processed and marketed. The absence of advertising for tobacco would be a form of unintended social engineering, almost implying that 200 million adults are unable to take decisions related to personal choice. The US, Japan, Germany and the UK together contribute the bulk of the budget of the World Health Organization, but do not ban tobacco advertising. A proposal to ban advertising of tobacco products in the European Union was vetoed by the Governments of UK, Germany, Netherlands, Denmark and Greece. In as many as twenty-nine countries, Governments permit tobacco companies to advertise their products on the basis of a voluntary code. Cigarette manufacturers in India have already agreed to evolve and adopt a voluntary code. In the interests of consumers, given the fact that many adults do make personal choices, in favour or otherwise of tobacco use and only about 12% of tobacco users smoke cigarettes, there is a strong case to adopt a voluntary industry code towards advertising rather than resort to legislation. India is a large market. Continued reform of the tax structure and moderation of excise rates for cigarettes would:

1) Provide the basis for up gradation of consumption. 2) Meet consumer aspirations in line with international trends. 3) Enlarge foreign exchange earnings. 4) Increase Government revenues. 10

5) Bring the multiplier impact of increased farmer incomes to the rural economy. 6) Provide Indian manufacturers a growing base to invest in brands and technology to compete effectively. 7) Your Company is well positioned to take the leadership role in the process of realizing this potential and thereby contributing to the well being of all stakeholders. I look to your continued support in our endeavors.

FMCG CIGARETTES - RECENT TRENDS  Legal cigarette industry volumes remain under pressure o Continued growth in Illegal industry  85% Graphic Health Warning Current manufacture & sale based on 85% GHW in compliance with interim requirements pending completion of hearing at the Karnataka High Court  Hearings expected to re-commence in December 2016 o All stocks seized (in Maharashtra, Goa, Rajasthan) have been released Rapid scale up of FMCG businesses Indian Leaf Tobacco industry  India – the second largest producer of tobacco (World excl. China)  India’s share is only at 9% of world tobacco trade o Leaf exports dropped to a four-year low of ~210 million Kgs.  ITC – India’s largest buyer, processor, consumer & exporter of cigarette tobaccos. o 5th largest leaf tobacco exporter in the world  Pioneering cultivation of flavorful Flue-cured and superior Burley tobaccos in India  Growth in exports in recent years driven by improvement in farm realizations Evolution of Tobacco Industry the Indian government implemented the Cigarettes and Other Tobacco Products Act (COTPA) in 2003 and ratified the WHO’s Framework Convention on Tobacco Control in 2004, as well as the Cable Television Networks (Amendment) Act 2000 prohibiting tobacco advertising in all state-controlled electronic media and publications, including cable television. Further, the Government has also included tobacco control in the priorities of the ongoing National Rural Health Mission. Despite these programs, the major challenge to success is effective implementation of the provisions of COTPA, especially in enforcement of bans on smoking in public places (which are known to raise cessation rates). Most importantly, these trends in smoking reflect the lack of substantial increases in tobacco excise taxes, which have not kept up with the increased affordability of cigarettes and bidis. 11

 Hence, tobacco control in India urgently requires effective implementation of national policies. This study of nationally representative Indian surveys over more than a decade finds substantial increases in the number of male smokers aged 15–69 years, rising over one-third since 1998 to nearly 108 million in 2015.  The increase is mostly due to population growth offsetting the modest declines in prevalence over this time, like the pattern observed in other countries.  There is a clear shift in consumption away from bidis towards manufactured cigarettes. The sharpest relative and absolute increase was for cigarette smoking, particularly in young adult men aged 15–29 years.  The increases in cigarette use among younger adult men were seen in rural areas and were greatest among illiterate men. Rapid income growth over the last decade has most likely contributed to the shift in smoking—from the less expensive bidis to cigarettes. Price is the most important determinant of consumption.  Relative to income, cigarettes and bidis have become less costly in the last decade. Moreover, and most relevant for policy, India’s complicated tax structure has kept overall taxes on cigarettes low relative to other countries, with particularly low taxes on the inexpensive, short cigarettes that compete with the bidi market.  The increase in cigarette smoking is consistent also with market reports showing that the absolute volume of cigarettes sold in India has risen from about 98 billion sticks in 2000 to 114 billion in 2012. Unfortunately, bidi sales data are unavailable, as most bidis are sold by small cottage industries with little monitoring or regulation and attract low or no taxes.  The observed increase in female smoking is likely to be an artifact of reporting. A true increase in smoking would be expected among younger women, who have seen more rapid income growth, and are the subject of tobacco industry promotion.  among younger adult women, there was little increase in smoking and indeed smoking prevalence was less than half of that seen in older generations. Among female respondents in the ongoing Million Death Study (conducted in the same areas as the SRSBS), there has been no major shift in smoking patterns among younger women from 2004 to 2013. Characteristics of Tobacco industry: The tobacco industry comprises those persons and companies engaged in the growth, preparation for sale, shipment, advertisement, and distribution of tobacco and tobacco-related products. It is a global industry; tobacco can grow in any warm, moist environment, which means it can be farmed on all continents except Antarctica. The Business Model The cigarettes-to-hotels-to-paper-to-FMCG major is also present in this segment, through its Choupal Fresh initiative, and, unlike Reliance and Bharti-Wal-Mart, is on the side of the angels. The company, which has a long history of sourcing agriproducts (its tobacco, paper, and even the new FMCG businesses source primary farm produce directly from farmers), has not faced any 12

protests. Reason: it has created a large rural constituency by working with small and marginal farmers and tribals by investing in afforestation, watershed management, livestock development and rural health and education programmes. And it has done all this not as part of a corporate social responsibility programmed, but as an integral part of its business plan. Then, its e-choupal initiative, instead of cutting the middlemen out, has integrated them into the system. Yes, they do get a lower commission on ITC’s purchase of farm produce, but the business model ensures that they continue to earn money round the year—as opposed to the earlier model where they did so only during the harvesting season—from other goods and services that ITC and its partners sell through this channel. By co-opting at least some of the powerful elements of the rural value chain in its business model, ITC has ensured that it faces little opposition to its business, even while others flounder. India Inc. will do well to emulate the ITC model. Tobacco Industry in India: Smoking kills more than 1 million people a year in India, BMJ Global Health estimates. The WHO says tobacco-related diseases cost the country $16 billion annually. The industry in India, the world's third-biggest tobacco producer, wants Prime Minister Narendra Modi's government to soften its stance on what it says are tough FCTC measures that threaten livelihoods among the estimated 46 million people linked to the sector. increasingly well-known as well as respected commodity in global tobacco markets and has found its way into cigarettes manufactured in several countries.

India has an impressive and progressive profile in the global tobacco industry. India is the third largest tobacco producer in the world, with annual production of about 800 million kgs. Tobacco and tobacco products generate around US$ 2.9 billion in revenues to the national exchequer by way of excise duty, and around US$ 728.9 million by way of foreign exchange every year. Export and key market: Export of tobacco products from India stood at 20,280 tons, valued at US$ 15.6 million, in July 2016. During the period, export of Flue Cured Virginia (FCV) tobacco stood at 7,997 tons valued at US$ 26.4 million, while unmanufactured tobacco exports stood at 12,541 tons valued at US$ 36.8 million. Indian tobacco is exported to about 100 countries. India exports unmanufactured tobacco primarily to Western Europe, South and Southeast Asia, East Europe and Africa. Western Europe is the key market for Indian tobacco exports. Tobacco Board: The Tobacco Board of India is a facilitator for tobacco growers, traders and exporters. By creating synergies between these stakeholders, the Board fosters a vibrant enterprise, with a deep social conscience and strong national commitment. The Board estimates demand and regulates the production of FCV tobacco to match demand to ensure a fair price for the produce. The Tobacco Board assists tobacco farmers in securing crop loans, quality seeds, fertilizers and other critical inputs; it also counsels farmers on GAP to produce quality tobaccos to meet the evolving international demand. In addition, the Board conducts auctions for the sale of tobacco in a competitive and transparent environment. On the export front, the Board

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strives to improve the existing markets and develop new markets for Indian tobacco and tobacco products by undertaking brand building exercises and participation in international tobacco exhibitions.

PROMOTIONAL ACTIVITIES India is the second largest producer and third largest consumer of tobacco worldwide. Of the 1.1 billion smokers worldwide, 182 million (16.6%) live in Indiaaccounting for consumption of 102 billion cigarettes per year. Cigarettes consumed primarily by middle and upper socioeconomic status (SES) segments, account for only one third of tobacco consumption. Alternative forms of tobacco, consumed by lower SES segments, such as bidis, hookah, chewing, or powdered tobacco, account for the remaining use. Previous studies have estimated that 47–65% of all men and 14–33% of all women consume some form of tobacco and 35% of men and 3% of women smoke. The 2000 Global Youth Tobacco Survey (GYTS) of youth aged 13–15 years in 12 Indian states, estimated that tobacco use in any form was greater than 40% in nine north eastern states. The World Health Organization projects that tobacco use may account for more than 1.5 million deaths in India by 2020. In 1999, of the 200 million female smokers worldwide, 9% lived in the developing countries. Given the declining markets in the developed nations, women in the developing countries present a growing opportunity to the cigarette companies. A recent editorial about the Asian market in the industry trade journal Tobacco Reporter stated: “Rising per-capita consumption, a growing population and an increasing acceptance of women smoking continue to generate new demand.” Tobacco use among women is expected to rise to 20% by 2025 in the developed and the developing countries. During the 1990s, there has been a steady and substantial increase in tobacco use in India. The Tobacco Institute of India reports that cigarette sales have increased by 26.5% between 1993–94 and 1997–98, and estimates that cigarette consumption will continue to increase by 5% per year. The increase in tobacco consumption has paralleled the increase in spending on tobacco marketing. In 1998, tobacco advertising spending amounted to $48.8 million, a substantial increase over recent years. The Indian Tobacco Company Ltd (ITC), manufacturer of Gold Flake and Wills cigarettes, doubled its advertising budget from 1995 to 1999, becoming the second largest advertiser in the nation. ITC, a British American Tobacco (BAT) affiliate, is the largest cigarette manufacturer with 66% of the market share. Godfrey Phillips India (GPI), a 14

Phillip Morris affiliate, and Vazir Sultan Tobacco (VST), a BAT affiliate, each have 13% of the total market share. Golden Tobacco Company (GTC) has 8% of the market share. Although tobacco has a longstanding history in India, tobacco regulation and legislation is a recent phenomenon. It began in 1975 with the Cigarettes Act stipulating a statutory warning “cigarette smoking is injurious to health” on cigarette packets. In 1998, the Advertising Standards Council of India voluntary code prohibited advertising to underage consumers, suggestions that using tobacco products is safe, healthy or popular; enhancing courage, or featuring the young. However, this voluntary code by a self regulating body of the advertising industry does not include a means of enforcement. In 2000, The Cable Television Networks (Amendment) Act abolished direct and indirect tobacco advertising on cable channels. More recently, the Indian government passed the Cigarette and other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003.

THE BUSINESS MODEL The cigarettes-to-hotels-to-paper-to-FMCG major is also present in this segment, through its Choupal Fresh initiative, and, unlike Reliance and Bharti-Wal-Mart, is on the side of the angels. The company, which has a long history of sourcing agriproducts (its tobacco, paper, and even the new FMCG businesses source primary farm produce directly from farmers), has not faced any protests. Reason: it has created a large rural constituency by working with small and marginal farmers and tribals by investing in afforestation, watershed management, livestock development and rural health and education programmes. And it has done all this not as part of a corporate social responsibility programmed, but as an integral part of its business plan. Then, its e-choupal initiative, instead of cutting the middlemen out, has integrated them into the system. Yes, they do get a lower commission on ITC’s purchase of farm produce, but the business model ensures that they continue to earn money round the year—as opposed to the earlier model where they did so only during the harvesting season—from other goods and services that ITC and its partners sell through this channel. By co-opting at least some of the powerful elements of the rural value chain in its business model, ITC has ensured that it faces little opposition to its business, even while others flounder. India Inc. will do well to emulate the ITC model. The tobacco industry is one of the most profitable industries in the world. Tobacco companies use their enormous wealth and influence both locally and globally to market their deadly products. Even as advocacy groups and policy makers work to combat the tobacco industry’s influence, new and manipulative tactics are used by tobacco companies and their allies to circumvent tobacco control efforts. It is important for 15

tobacco control advocates to know which companies are present in their country, how and where they operate, the types and quantity of products sold, and marketing tactics used to sell tobacco products. By being informed about all aspects of the tobacco industry within a country, advocates are better equipped to fight for effective tobacco control policies. It is important to note that the tobacco companies typically report market data annually at least several months after the end of the fiscal year. By its nature, annual market data reported by analysts and tobacco companies are one or two years old. It is also important to note that information about the tobacco industry in India is not always readily available. This is particularly true for the loosely regulated bidi and smokeless sectors. Therefore, general trends, forecast data, and tobacco industry positioning within the market contained here are the most recent we are able to obtain from tobacco analysts, Euro monitor International, and other sources. In India, the tobacco industry is divided into three distinct and powerful sectors: bidis (smoking products hand-rolled in tendu leaves), smokeless tobacco (mainly chewing tobacco) and cigarettes. Bidis are the most popular tobacco products consumed in India- 48% of the market. Smokeless tobacco makes up 38% and cigarettes only 14% of the market. Some aspect of the tobacco industry, whether it is tobacco farming, manufacturing, or distribution, is present in every Indian state, making tobacco control a truly national effort. This report, like the tobacco industry in India, has sections on each of the tobacco sectors as well as examples of tobacco promotion, sponsorship and corporate social responsibility efforts designed to increase consumption and industry profits. There is a widely held perception that globally tobacco is a declining industry. This is not so. There has been a steady increase in production and consumption over the last decade and this trend is expected to continue.

16

Sales Pattern:

Sales of ITC cigarettes in Urban area:Brand name

Monthly sales (as a percentage Of total monthly sales)

Gold Flake

36.66%

Navy Cut

24.71%

Flake

27.11%

India kings

3.23%

Classic

2.33%

Silk Cut

4.77%

Insignia

1.19%

Observations: Gold flake is occupying the highest market share in the cigarette sector. The reason behind this may be cited as its high affordability as per urban people’s income & its high availability in every shop.

17

Sales of ITC cigarettes in rural area:

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.

18

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).

Availability: Brands Gold Flake

Variance (if any) Honey Dew King Light

Flake

N/A

Navy Cut

King Regular Small

India Kings

N/A

Silk Cut

N/A

Insignia

N/A

Berkeley

N/A

Units/pack In Urban Market 10 20 10 20 10 20 10 20 10 20 10 20 10 20 10 20 10 20 10 20 10 20

High High High High High High High High High High High High High High Low Moderate* Moderate Low** Low Low Low Low

19

Availability In Rural market Moderate Moderate Moderate Low Moderate Low High High Moderate Low moderate Low High Moderate Low Low Low Low Low Low Low Low

*India kings is generally consumed by people of high income group who generally prefer to buy the big pack instead of buying the small pack. **Silk Cut is consumed by the people of lower income group who generally purchase the smaller pack instead of larger one.

Affordability: Affordability in rural area-

In rural market, the poverty-level is quite high. Therefore, the number of people in the low income group cannot afford cigarettes, they only consume beedis. As the income level increase the amount of consumption of beedi also decreases. Same applies for Flake also which is consumed by the people of lower middle & upper-middle income group.

20

But same does not hold good for Gold flake which is generally consumed by people of higher-middle & High income-group. It has been observed that with the increase in income the no. of sticks of cigarettes consumed per day increases, thereby total consumption also increases. Navy Cut is only consumed by higher income group.

Affordability in urban area-

Beedi is only consumed by people of lower income group. In the case of urban market, consumption of Gold flake at first increases due to positive correlation between income & cigarette consumption. But after a certain point, that decrease due to shifting of the customers from Gold Flake to other luxury brands like Navy Cut, Classic etc. Navy Cut, insignia, Classic are consumed by people of very higher income group only.

21

AcceptabilityRural market

Urban Market

 Beedi is more acceptable by the people of lower income group as it is available at lower prices & in greater quantities – which gives value for money.

 Beedi is preferred by those people whose incomes are lesser than Rs. 5,000. In urban area, Flake & Silk Cut are two substitutes for beedi as the price of those is very low (Rs. 2 only).  Urban people are more health- conscious than rural people. For this reason the acceptability of beedi is less in cities compared to villages & demand for filtered cigarettes are more.

 Majority of rural customers do not think about their health while buying a packet of cigarette/ beedi. For this reason, they generally purchase beedi or less costly cigarettes without filters.  Small packs are more acceptable

 Small & large both packs are acceptable depending on the income group

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, 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. 22

ADVERTISEMENT CHANNELS We observed cigarette advertisements along the two thoroughfares on large billboards, smaller posters on street lampposts, and on the front of bus stop shelters. Mobile billboards on the back of trucks were placed at major traffic crossings, usually next to the competitor’s advertisement, during rush hour traffic. In addition, a large number of storefront signs were actually cigarette advertisements- Posters advertising cigarettes were also displayed by street side vendors and on the carts of mobile vendors. Cigarette advertisements were seen in newsmagazines and in Bollywood industry magazines. We did not observe any advertising in newspapers or women’s magazines. However, we did obtain a copy of an insert titled “Understanding Women” in Mid- Day from April 2003 launching Platinum Cigarettes, a premium brand of Golden Tobacco Company.

Major segments, brands, and advertising campaigns in Mumbai, India

Advertised in higher/lower SES Segment/brand

ITC Insignia. Cost: Rs 165 for 20

Advertisement description

area

Present in print

“Where quality touches infinity”,

Higher

India

“redefine perfection”

Today, Business Today

Premium

ITC Wills Classic/Mild Filter: King

“Discover a passion”

Higher

None

“Made for each other”

Higher

None

70–74 mm. Cost: Rs 300 for 20

ITC Wills Navy Cut Filter: <70 mm. Cost: Rs 300 for 20

23

Advertised in higher/lower SES Segment/brand

Advertisement description

area

Present in print

“A blend so right a filter so fine”

Higher

None

ITC Gold Flake/Lights Filter:

“It’s Honeydew Smooth”, Smooth,

Higher and lower

The Week, Business

Regular 68 mm. Cost: Rs 300 for

exquisite, timeless. But then, all art is”

ITC Wills Silk Cut Filter: Actech. Cost: Rs 300 for 20

India, India

20

GPI Four Square Filter: Regular.

Today, Filmfare

“Man with the smooth edge”

Higher and Lower

Outlook, Filmfare

ITC Bristol

“Rise to the taste”

Higher and Lower

None

GPI Red and White. Cost: Rs 50

Text in Hindi “Hum red and white

Higher and Lower

Stardust film

for 10

peene walon ki baat hi kuch aur hai”

VST Charms

“The taste that sets you free”

Lower

GTC Platinum. Cost: Rs 50 for 10

“Smoother than gold” Launched in

None

68 mm Cost: Rs 300 for 20

Bingo*

4/03

magazine

Mumbai Mid Dayinsert

24

Premium brands It covers the middle-class people who are concern about both the factors i.e. brand as well as the price Of the cigarettes in the early stage of life, this segmentation was given more important in term of brand Promotion & brand awareness due to high consumption of cigarette.

25

Bingo segment brands It is the lowest level of segment defined by the marketers in the cigarette industry Where the people with low level of income is being targeted. Here the people are More concern about the price of the product rather than the quality or the brand The companies are rarely concern about their brand awareness & the promotional activities.

26

Women in cigarette advertising

Women play a key role in Godfrey Phillips’ Four Square advertising campaign. Although the “man with the smooth edge” is the central character in the Four Square advertising campaign, an attractive woman always accompanies him. The female model is an attractive, elegant Indian woman dressed in either westernized Indian clothing or western clothing. The woman’s face is visible while a newspaper either hides the man’s face or he has his back to the viewer.

Appeals to minors Tobacco companies have adopted various strategies to target children and adolescents indirectly since sale of tobacco products to minors became illegal in May 2003. Marketing to minors occurs at many levels. Point of sale marketing is probably the most prominent strategy in India, where retail outlets for tobacco range from the street side peddler to convenience stores to specialty stores. The street side peddlers abound in India; they usually sell all forms of tobacco products, in addition to confectionary goods, fast food, drinks, etc. Thus their customers are of all ages and both sexes. Frequently, the tobacco 27

products are placed next to candies. Posters advertising cigarettes are displayed prominently at low heights. Both tobacco product and promotion placement at these retail outlets are easily accessible to minors.

28

CHAPTER 2 – OBJECTIVE OF THE RESEARCH:

The primary objective of this study is to systematically explore the determinants responsible for the competitive advantage of ITC Limited and how ITC developed new product lines in its foods business drawing on its competencies in brand-building, R&D, packaging, and distribution. However, market analysts were not sure whether ITC would achieve success in all the food categories that it had entered.

 Why people are buying the products.

 What all the things which influences them to buy.

 To understand how ITC has diversified themselves to a multi-product corporation from a single product company

 To find out the awareness of the sales promotion of ITC LTD.

 To show, how the sales promotion in creating demands of the product.

 To know the acceptance of the ITC LTD. product by the different categories of people of the different age group and the classes of the people in the society.

 To find the effect of the sales promotion in the term of the value addition to the consumer and retailer.

 To recommend the suggestion to improve the effectiveness of the sales promotion.

29

CHAPTER 3 – LITERATURE REVIEW:

Marketing Communication: Modern marketing is the management of the four ‘P’s – product, price, promotion and place or distribution channel. In a sense the entire marketing process has a large content of communication. For instance, the product communicates a distinctive image such as youthfulness, glamour or prestige. The brand name communicates physical and psychological attributes of the product. The package communicates to the manufacturer thinks of his convenience and the sense of beauty. The price communicates the quality of the product. There are communication between buyer and seller i.e. the distribution channel. Thus each element of the marketing mix either helps or hinders communication and ultimately the sales effort the marketing communication

1. Advertising. 2. Sales Promotion. 3. Publicity. 4. Personal Selling. 5. Public Relation.

SALES PROMOTION: Sales Promotion make the consumer take the favourable purchase decision by providing one or the other kind of the direct inducement, e.g., discount, price off, gift coupon etc. Sales promotion is a short term approach, a direct approach and expects an immediate response in term of sales. Displays and contest are effective methods of sales promotion.

Sales Promotion Strategy: Sales are the lifeblood of a business, without sales there would be no business in the first place; therefore it is very important that if a business wants to succeed, it should have a sales promotion strategy in mind. The primary objective of a sales promotion is to improve a company's sales by predicting and modifying your target customers purchasing behaviour and patterns. Sales promotion is very important as it not only helps to boost sales but it also helps a business to draw new customers while at the same time retaining 30

older ones. There are a variety of sales promotional strategies that a business can use to increase their sales. The importance of a sales promotion strategy cannot be underestimated. This is because a sales promotion strategy is important to a business boosting its sales. When developing a sales promotion strategy for business, it is important that you keep the following points in mind. Consumer

attitudes and buying patterns

Your

brand strategy

Your

competitive strategy

SELECTING PROMOTIONAL TOOLS: A marketer must do the following while planning and sending communications to a target audience: 1. Identify the Audience, individuals, groups, special publics or the general public. i.e. Intermediaries vs consumer 2. Identify the Stage of Product Life Cycle: Introductory inform publicity/advertising/sales force (intern.)/sales promotion (free samples) Growth Persuade differentiate from competitors offering Maturity Remind Reminder advertising, sales promotion (coupons) Decline Cut budget 3. Product Characteristics Complexity Risk 4. Stages of Buying Decision Adoption Process Not Aware--Advertising/Publicity Aware--no knowledge Advertising/Publicity Interest--how do they feel? Personal Selling/Sales promotion/Advertising Evaluation--should they try? sales promotion/personal selling Trial--test drive/sales promotion Adoption--do they purchase? Reminder/reinforce-- advertising 31

Communication programs goal must lead consumers to take the final step. 5. Channel Strategies Push-promotes product only to the next institutions down the marketing channel. Pull-promotes directly to consumers, intention is to create a strong consumer demand, primarily advertising and sales promotion. DISTRIBUTION CHANNEL: As sales promotion is designed on the basis of distribution channel and their customer, so it is necessary to know about the distribution channel. Introduction of intermediaries between the consumer and the manufacturer, when each element is passing the product down the chain to the next level, before it finally reaches the consumer or end-user. This process is known as the “distribution chain” or “the channel”.

Each of the elements in these chains will have their own specific needs, which the producer must take into account, along with those of the all-important end-user.

CHANNEL MOTIVATION: The most usual “incentive”: the supplier offers a better margin, to tempt the owners in the channel to push the product rather than its competitors; or a competition is offered to the distributors’ sales personnel, so that they are tempted to push the product.

The truth about big tobacco in its own words The recent completion of the “first draft” of the human genome was big news because it promised understanding of the causes, treatment, and prevention of human disease. There is, however, another map that holds as much promise for curbing disease: depositories containing millions of pages of previously secret tobacco industry documents. Unlike bacteria, fungi, and viruses that spread disease, however, the tobacco industry employs sophisticated lawyers and public relations experts—and even scientists—to distort the scientific and political process.1,2 These documents give us our first clear understanding of how the tobacco contagion works. The industry has for decades denied the obvious—that nicotine is addictive, that smoking and second hand smoke cause a wide variety of diseases, and that cigarette advertising recruits children and keeps adults smoking. It has used this wall of rhetoric to provide cover for the actions of politicians designed to protect the tobacco industry at the expense of public health. 32

Tobacco industry tactics The tobacco industry's strong-arm tactics have been used consistently over many years. These tactics include: using the industry's size, wealth, and legal resources to intimidate individuals and local governmental bodies; setting up 'front groups' to make it appear that it has more allies than it really does; spending large sums of money to frame the public debate about smoking regulations around 'rights and liberty' rather than health and portraying its tobacco company adversaries as extremists; 'investing' thousands of dollars in campaign contributions to politicians; and using financial resources to influence science. These tactics are designed to produce delay, giving the nicotine cartel more time to collect even more profits at the direct expense of millions of lives around the world.

33

CHAPTER 4 – RESEARCH METHODOLOGY: 

The researcher has used secondary data, magazines, internet, books, some market survey using marketing tools like asking question through phone, personal interview etc.



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.



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 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 34

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.

People are less health conscious & hence don’t prefer the cigarettes having large filter & more refined Tobacco cigarettes i.e. cigarettes from KSFT segment

Margin Table:

•

Margin of salesman

: 0 .80%

Margin of distribution

: 1.45%

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 non-Cigarette segments

•

Leading Fast Moving Consumer Goods (FMCG) marketer in India - Established 25 world-class mother brands within a short span of time 35

•

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

consumption share 11% other tobacco product

legal cigarette

89%

tax revenue share

legal cigarettes 13%

legal cigarettes

other cigarettes 87%

other cigarettes

36

Tax on cigarettes as a % of per capita GDP(100 Packets of 20 cigarettes of the most sold brand covering both… 6.54

2.362.68 2.36 2.26 1.88 1.44 1.33 USA 0.480.95 0 1 2

MALAYSIA

Series 3

3

4

Column1

5

6

7

Series 1

ITC PERFORMANCE TRACK RECORD

1995-96

2,536

Net Revenue

452

PBT

2017-18

39,255 16,439

Percentage

13.3%

17.7%

10,953 261

PAT

18.5% 53,336

Capital Employed

1,886

Segment ROCE%

36.3

5,571

Market Capitalisation

16.4% 69.0

3,12,308

20.1% 22.4%

Total Shareholder Returns %

Sensex (CAGR 95-96 to 17-18): 10.9%

37

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, 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

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 38

 Solid waste recycling positive – 11 years in a row  Over 43% of total energy consumed is from renewable sources

DATA ANALYSIS TOOL

As no study could be successfully completed without proper tools & technique, same Was with my project. For the better presentation & explanation I used tools of statistics & computer very frequently. And I am very thankful to all for helping a lot, basic tools Which I used for project from statistics-

Bar charts Pie-chart Tables

Bar charts & pie charts proved really useful tools to show the result in a well clear, Ease & simple way. Because I used charts for showing data in a systematic way, so It is need not necessary for any observer to read all the theoretical detail, simple on Seeing the charts anybody could know that what is being said.

SAMPLE SIZE Since it is impossible to interview each and every person, a sample size of 100 was chosen i.e. 100 consumers were interviewed. The consumer interviewed were basically middle class or low-class people.

39

CHAPTER 5 & 6 – DATA ANALYSIS & RESULT DISCUSSION / INTERPRETION: 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 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 in distributor get, off them a certain part is reserved for the retailer 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. 40

Consumer Buying Decision The main driver in attracting the consumers is Quality of the product itself with nearly 65% of 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.

Reason for purchasing 70 60 50 40 30 20 10 0 PRICE

QUALITY

PROMOTIONPAST EXPERIENCE

PERCENTAGE

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.

41

Effectiveness of advertisement 30

28

25

No .of cus20 to me 15 rs

22

16

10 5 1

0 HIGHLY AFFECTIVE

AFFECTIVE

SOMEWHAT AFFECTIVE NOT AFFECTIVE

Series 1

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

42

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.

SWOT Analysis Strength

Weakness: Brand is spoiling the youth of our country. Government tax policies and excise duty is very harsh as far as tobacco is concerned. Ban on advertisements and promotional activities.

Very strong and wide spread distribution network. Well established brand name. Computerized operations at distributor’s point.

Opportunity:

Threats:

Smokers are addictive hence the demand is stable most of the time.

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Improving infrastructure and distribution system of the competitors. Increasing health awareness among the people. Hoarding of distributors, wholesellers and retailers at the time of budget declaration. Harsh Government rules like creation of no smoking zones.

CHAPTER 7 – CONCLUSIONS & RECOMMENDATIONS: Conclusions: ITC’s vision to sustain its position as one of India's most valuable corporations through worldclass performance, creating value for the Indian economy and the Company's stakeholders has been standing proof of its enduring commitment to delivering superior and sustainable stakeholder value, over the last twenty-two years of its operations. The Company's existence was at the initial phase primarily devoted to the growth and consolidation of the Cigarettes and Leaf Tobacco businesses; its Packaging and Printing business contributed to strategic backward integration for the cigarettes business. The business diversification strategy it has adopted at different times of its long journey has invariably targeted at creating value for the nation. It also has remained for long among the top three contributors to the Exchequer. Over the last five years, contribution to the Exchequer has increased to nearly 1.50 Lakh Crores. Over the last twenty two years, the net revenue and post-tax profit have recorded compound annual growth rate of 13.3% and 18.6% respectively. ITC has leveraged its enterprise strengths to create the businesses of tomorrow which have a growing presence across all three sectors of the economy – agriculture, manufacturing and services. The aspiration is to be India’s no 1 FMCG company and achieve a turnover of Rs 1,00,000 crores from the new Consumer Goods Businesses by 2030. Along-with key decisions taken on business diversification and portfolio expansion, ITC has lived by its credo of “Putting India First” through a super-ordinate vision articulated nearly two decades ago to make societal value creation the bedrock of its business strategy. The focus has been on spurring innovative strategies that would enable ITC make a growing contribution to building economic, environmental and social capital of the nation. While ITC has achieved significant milestones in its sustainability journey and the scale achieved is immensely encouraging, we recognise that there are miles to go. ITC will continue to strive to create larger societal value through superior Triple Bottom Line performance. The Company is committed to make a meaningful contribution to create a secure and sustainable future for all its stakeholders. 44

Recommendations:

The schemes offered should benefit consumer as well as retailer. Till now the scheme are 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 favourite as the taste is one of the most important factor. ITC should use the established brands like gold flake in the scheme to launch the wave in the market 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.

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. 45

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.

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QUESTIONNAIRES: Name: Age: Monthly income: A. Below Rs.2000

B. Rs. 2000- 5000

C. Rs. 5000-10000

Occupation:

D. Rs.10000-20000

E. Above Rs. 20000

Number of family members:

Have you ever heard the name of the following brands? Gold flake India kings Classic Silk cut Scissor

Gold flake king Navy cut Navy cut small Navy cut king Capstan

Gold flake light Flake Insignia Bristol Berkeley

What are the brands that you have tasted? Gold flake India kings Classic Silk cut Scissor

Gold flake king Navy cut Navy cut small Navy cut king Capstan

Gold flake light Flake Insignia Bristol Berkeley

Which of the following statements is true? I smoke occasionally I smoke 1-5 times in a day I smoke 5-10 times in a day I smoke 10-15 times in a day I smoke more than 15 times in a day I used to smoke the same brand all the time. a. Strongly agree

b. Agree

c. Neither agree nor disagree

Do u smoke ‘Beedi’? Ans. Which brand of ‘beedi’ you smoke? Ans.

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d. disagree

e. Strongly disagree

BIBLIOGRAPHY :

1. Websites: http://www.itcportal.com http://www.google.co.in/ http://www.blonnet.com/ http://www.thehindubusinessline.com http://www.indiainfoline.com/

2. Books & Journals: a. b. c. d.

Philip kotler, Marketing management Marketing Management – Philip Kotler CMIE database Prowess Database

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THANKS

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