Marketing & Promotional Strategies Of Fmcgs Newly Launched Products.docx

PROJECT REPORT On “MARKETING & PROMOTIONAL STRATEGIES OF ITC’s NEWLY LAUNCHED PRODUCTS”

FOR THE PARTIAL FULFILLMENT OF THE AWARD OF THE DEGREE OF “MASTER OF BUSINESS ADMINSTRATION” FROM GGS IP UNIVERSITY DELHI

BATCH: 2017-2019

SUBMITTED BY: RAHUL JASROTIA

SUBMITTED TO: Dr. SHRUTI GUPTA

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

i

Supervisor Certificate This is to certify that Mr. Rahul Jasrotia a student of Master of Business Administration, Batch 2017-19, Army Institute Management & Technology, Greater Noida, has successfully completed hi/hers project under my supervision. During this period, he/she worked on the project titled “MARKETING & PROMOTIONAL STRATEGIES OF ITC NEWLY LAUNCHED 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)

Dr. Shruti Gupta AIMT-Gr. Noida

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Certificate of Originality

I, Mr. Rahul Jasrotia, Roll No. 07718403917 of MBA 2017-19 Batch of Army Institute of Management & Technology has undergone a Summer Internship in ITC (organization) for a duration of 45 days on a project title “MARKETING & PROMOTIONAL STRATEGIES OF ITC NEWLY LAUNCHED PRODUCTS”, hereby declare that this project is my original piece of work.

Signature of the student Student Name: Rahul Jasrotia

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ACKNOWLEDGEMENT 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.Ibramium 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, Dr. Shruti Gupta , 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------------------------------------------------------------------(1)

CHAPTER

PAGE

NO

TOPICS

NO

1

Introduction

02-31

2

Objective

32

3

Research methodology

33-36

4

Data Analysis

37-41

5

Literature review

42-47

6

Result and Discussion

48-49

7

Conclusion and Recommendation

50-52

Bibliography

52-53

Appendix

54-57

Questionnaire

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 ciggrates can be available. As the main focus was on to find the market improvement of distribution of sales in Wave ciggrates (newly launched ITC ciggrates).

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 ciggrates 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 Ciggrates. 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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CHAPTER – 1 INDUSTRY INTRODUCTION

An introduction to ITC Ltd. Kolkata, India Type ; Public (BSE:ITC) Founded ; 24 August 1910Radha Bazar Lane, Kolkata, India Headquarters ; Kolkata, India Key people ; Yogesh Chander Deveshwar, Chairman,K. Vaidyanath, Director, Partho Chatterjee, CFO Industry ; Tobacco, foods, hotels, stationery, greeting cards Products ; Cigarettes, packaged food, hotels, apparel Revenue ; $4.75 billion USD (2006) Employees ; 21,000 (2007) Website ; www.itcportal.com

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

ITC Limited or ITC is an Indian conglomerate headquartered in Kolkata, West Bengal. Its diversified business includes five segments: Fast Moving Consumer Goods (FMCG), Hotels, Paperboards & Packaging, and Agri Business & Information Technology. Established in 1910 as the Imperial Tobacco Company of India Limited, the company was rechristened as the Indian Tobacco Company Limited in 1970 and further to I.T.C. Limited in 1974. Finally, the periods in the name were removed in September 2001 for the company to be renamed as ITC Ltd. The company completed 100 years in 2010 and as of 2012-13, had an annual turnover of US$ 9.31 billion and a market capitalization of US$ 55 billion. It employs over 25,000 people at more than 60 locations across India and is part of Forbes 2000 list. ITC claims to be the only company in the world of comparable dimensions to be Carbon Positive, Water Positive and Solid Waste Recycling Positive. A Modest Beginning The Company's beginnings were humble. A leased office on Radha Bazar Lane, Kolkata, was the centre of the Company's existence. The Company celebrated its 16th birthday on August 24, 1926, by purchasing the plot of land situated at 37, Chowringhee, (now renamed J.L. Nehru Road) Kolkata, for the sum of Rs 310,000. This decision of the Company was historic in more ways than one. It was to mark the beginning of a long and eventful journey into India's future. The Company's headquarter building, 'Virginia House', which came up on that plot of land two years later, would go on to become one of Kolkata's most venerated landmarks.

1925: Packaging and Printing: Backward Integration 3

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. 1975: Entry into the Hospitality Sector - A 'Welcome' Move The Seventies witnessed the beginnings of a corporate transformation that would usher in momentous changes in the life of the Company. In 1975, the Company launched its hotel business with the acquisition of a hotel in Chennai which was rechristened 'ITCWelcome group Hotel Chola' (now renamed My Fortune, Chennai). The objective of ITC's entry into the hotels business was rooted in the concept of creating value for the nation. ITC chose the Hotels business for its potential to earn high levels of foreign exchange, create tourism infrastructure and generate large scale direct and indirect employment. Since then ITC's Hotels business has grown to occupy a position of leadership, with over 100 owned and managed properties spread across India under four brands namely, ITC Hotels - Luxury Collection, Welcome Hotels, Fortune Hotels and Welcome Heritage. ITC Hotels recently took its first step toward international expansion with an upcoming super premium luxury hotel in Colombo, Sri Lanka. In addition, ITC Hotels also recently tied up with RP Group Hotels & Resorts to manage 5 hotels in Dubai and India under ITC Hotels' 5-star 'Welcome Hotel' brand and the mid-market to upscale 'Fortune' brand. 1979: Paperboards & Specialty Papers - Development of a Backward Area In November 2002, this In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards Limited. Bhadrachalam Paperboards amalgamated with the Company effective March 13, 2002 and became a Division of the Company, Bhadrachalam Paperboards Division merged with the Company's Tribeni Tissues Division to form the protection and community development. In 2004, ITC acquired the paperboard manufacturing facility of BILT Industrial Packaging Co. Ltd (BIPCO). Paperboards & Specialty Papers Division. ITC's paperboards' technology, productivity, quality and manufacturing processes are comparable to the best in the world. It has also made an immense contribution to the development of Sarapaka, an economically backward area in the state of Andhra Pradesh. It is directly involved in education, environmental 4

1985: Nepal Subsidiary - First Steps beyond National Border In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint venture. In August 2002, Surya Tobacco became a subsidiary of ITC Limited and its name was changed to Surya Nepal Private Limited (Surya Nepal). In 2004, the company diversified into manufacturing and exports of garments. 1990: Paperboards & Specialty Papers - Consolidation and Expansion In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing company and a major supplier of tissue paper to the cigarette industry. The merged entity was named the Tribeni Tissues Division (TTD). To harness strategic and operational synergies, TTD was merged with the Bhadrachalam Paperboards Division to form the Paperboards & Specialty Papers Division in November 2002. 1990: Agri Business - Strengthening Farmer Linkages Also in 1990, leveraging its Agri-sourcing competency, ITC set up the Agri Business Division for export of Agri-commodities. The Division is today one of India's largest exporters. ITC's unique and now widely acknowledged e-Choupal initiative began in 2000 with soya farmers in Madhya Pradesh. Now it extends to 10 states covering over 4 million farmers. Also, through the 'Choupal Pradarshan Khet' initiative, the Agri services vertical has been focusing on improving productivity of crops while deepening the relationship with the farming community. 2002: Education & Stationery Products - Offering the Greenest products ITC launched line of premium range of notebooks under brand Paper Kraft in 2002. To augment its offering and to reach a wider student population, the Classmate range of notebooks was launched in 2003. Classmate over the years has grown to become India's largest notebook brand and has also increased its portfolio to occupy a greater share of the school bag. Years 2007- 2009 saw the launch of Practical Books, Drawing Books, Geometry Boxes, Pens and Pencils under the 'Classmate' brand. In 2008, ITC positioned the business as the Education and Stationery Products Business and launched India's first environment friendly premium business paper 5

under the 'Paper Kraft' Brand. 'Paper Kraft' offers a diverse portfolio in the premium executive stationery and office consumables segment. In 2010, Colour Crew was launched as a new brand of art stationery. 2000: Lifestyle Retailing - Premium Offerings ITC also entered the Lifestyle Retailing business with the Wills Sport range of international quality relaxed wear for men and women in 2000. The Wills Lifestyle chain of exclusive stores later expanded its range to include Wills Classic formal wear (2002) and Wills Club life evening wear (2003). ITC also initiated a foray into the popular segment with its men's wear brand, John Players, in 2002. In 2006, Wills Lifestyle became title partner of the country's most premier fashion event - Wills Lifestyle India Fashion Week - that has gained recognition from buyers and retailers as the single largest B-2-B platform for the Fashion Design industry. To mark the occasion, ITC launched a special 'Wills Signature', taking the event forward to consumers. 2000: Information Technology - Business Friendly Solutions In 2000, ITC spun off its information technology business into a wholly owned subsidiary, ITC InfoTech India Limited, to more aggressively pursue emerging opportunities in this area. Today ITC InfoTech is one of India's fastest growing global IT and IT-enabled services companies and has established itself as a key player in offshore outsourcing, providing outsourced IT solutions and services to leading global customers across key focus verticals Banking Financial Services & Insurance (BFSI), Consumer Packaged Goods (CPG), Retail, Manufacturing, Engineering Services, Media & Entertainment, Travel, Hospitality, Life Sciences and Transportation & Logistics. 2001: Branded Packaged Foods - Delighting Millions of Households ITC's foray into the Foods business is an outstanding example of successfully blending multiple internal competencies to create a new driver of business growth. It began in August 2001 with the introduction of ‘Kitchens of India' ready-to-eat Indian gourmet dishes. In 2002, ITC entered the confectionery and staples segments with the launch of the brands mint-o and Candy man confectionery and Ashirvad Atta (wheat flour). 2003 witnessed the introduction of Sunfeast as the Company entered the biscuits segment. ITC entered the fast growing branded 6

snacks category with Bingo! in 2007. In 2010, ITC launched Sunfeast Yippee! To enter the Indian instant noodles market. In just over a decade, the Foods business has grown to a significant size under seven distinctive brands, with an enviable distribution reach, a rapidly growing market share and a solid market standing. 2002: Agarbattis & Safety Matches - Supporting the Small and Cottage Sector In 2002, ITC's philosophy of contributing to enhancing the competitiveness of the entire value chain found yet another expression in the Safety Matches initiative. ITC now markets popular safety matches brands like iKno, Mangaldeep and Aim. ITC's foray into the marketing of Agarbattis (incense sticks) in 2003 marked the manifestation of its partnership with the cottage sector. Mangaldeep is a highly established national brand and is available across a range of fragrances like Rose, Jasmine, Bouquet, Sandalwood and 'Fragrance of Temple'. 2005: Personal Care Products - Expert Solutions for Discerning Consumers ITC entered the Personal Care Business in 2005. In eight years, the Personal Care portfolio has grown under Essenza Di Wills, Fiama Di Wills, Vivel and Superia brands which have received encouraging consumer response and have been progressively extended nationally. In May 2013, the business expanded its product portfolio with the launch of Engage - one of India's first range of 'couple deodorants' 2010: Expanding the Tobacco Portfolio In 2010, ITC launched its hand rolled cigar, Armenteros, in the Indian market. Armenteros cigars are available exclusively at tobacco selling outlets in select hotels, fine dining restaurants and exclusive clubs.

Leaf Tobacco ITC is the largest buyer, processor and exporter of leaf tobaccos in India - creating global benchmark as the single largest integrated source of quality tobaccos. Serving customers in 50 7

countries across more than 70 destinations, ITC co-creates and delivers value at every stage of the leaf tobacco value chain.

Analysis on Diversification ITC has been a leader in the tobacco business, but it realizes from the upcoming trends that remaining with a single business is not a noble thought, moreover the company was threatened of the anti-tobacco campaign. Therefore, the company decided to venture into InfoTech with ITC InfoTech, foods via Kitchens of India, greeting cards through Expressions and lifestyle retailing through Wills Sport. Each of these is intended to draw revenues of at least Rs. 650 crores by 2018.ITC was a cash rich company with a liquidity of Rs.9816 million in the cigarette business, even though the company understood the need and usefulness of diversification. The writer in the article is mainly concerned with the way ITC spreads its wings in the lifestyle segments, he writes:” forty-five stores in 34 cities in just under a year, selling inexpensive fashion brand of relaxedwear. If retail swamp-out and brand salience were the goals, ITC’s Wills Sport would be on a victory lap already. “The company has started its retail stores not only in Indian metros but also in the small towns like Ranchi, Jabalpur, Gwalior, Belgaum, Ernakulum etc. the article also talks about the strong market campaign done by the company, it also describes how the company has used its brand image to attract the Indian youth. It also tells about the strategy adopted by the company to differentiate itself in this segment, like the company is outsourcing its designs form the American Design Intelligence Group (ADIG), a SanFrancisco, US-based garment and retail consultancy. Now it has its own six-member team, even as it continues a tie-up with Science & Designs, an Italian fashion design house – through which it keeps a watch on hot western labels such as Banana Republic and Armani Exchange.

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COMPANY INTRODUCTION A Valuable Indian Company ITC is one of India's leading private sector companies with a strong presence across all three sectors of the Indian economy – Agriculture, Manufacturing and Services – which has enhanced its capacity to make a meaningful contribution to the national economy. The Company’s businesses span Fast Moving Consumer Goods [Branded Packaged Foods, Cigarettes, Personal Care Products, Education & Stationery Products, Lifestyle Apparel, Incense Sticks (Agarbattis) and Safety Matches], Agri-business, Paperboards, Paper and Packaging and Hotels. With a Gross Sales Value (net of rebates/discounts)1 of over ₹ 67,000 crore (~ US $ 10 Billion) and a market capitalisation of ₹ 3,30,000 crore (~ US $ 50 Billion), the Company is acknowledged as one of India’s most valuable business corporations. ITC continues to be among the top 3 in India in terms of contribution to the Exchequer. Almost 80% of the incremental Value-Added of the Company accrues to the Central & State Government, including the share of dividends paid and retained earnings attributable to

Government owned institutions. Please refer to Report and Accounts 2018 for further details. ITC: Contributing to Agriculture, Manufacturing & Services In Agriculture, ITC's engagements with farmers, across the country, driven by its celebrated eChoupal programme, aims to provide critical market linkages, enhance crop productivity, quality and price realisation, enable sustainable agriculture besides creating common rural assets. These interventions, which have empowered over 4 million farmers, have helped raise

1

Gross Sales Value includes GST, GST Compensation Cess, Service Tax, VAT, Luxury Tax etc., as applicable.

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farm incomes, improving the quality of life of the rural population, transforming village ecosystems. Pilot programmes are now underway to contribute to the Hon’ble Prime Minister’s vision of doubling farmer incomes, and an intervention in the State of Uttar Pradesh has already witnessed 28,000 plus farmers reaching this achievement. Please refer to the ‘Report of the Board of Directors & Management Discussion and Analysis’ section of the Report and Accounts 2018 for further details. In Manufacturing, supported by substantial investments in state-of-the-art technology, ITC has created excellent manufacturing facilities across the length and breadth of the country for its FMCG, Paperboards, Packaging and Printing Businesses. Further contributing to the Make in India vision, ITC is investing in 20 Integrated Consumer Manufacturing & Logistics facilities for its FMCG Businesses, which promise to lend significant competitive edge to the businesses in the future. In the Services sector, ITC Hotels is a trailblazer in green hoteliering. It is acknowledged worldwide for its iconic properties, its fine art of hospitality, its signature cuisine and its service excellence. World-class Indian Brands ITC believes that it is of paramount importance to build and nurture world-class Indian brands, which help create, capture and retain larger value for the Indian economy, in addition generating livelihoods.

to sustainable A successful

brand is a badge of honour for the country and a sustained source of wealth creation. Within a relatively short span of time, ITC has established 25 mother brands in the new FMCG space, many of which are market leaders today in their respective segments. This vibrant portfolio of brands accounts for an annual consumer spend of nearly ₹ 16000 crores and have been built organically by the Company over a relatively short period of time - a feat unparalleled in the Indian FMCG industry. In terms of annual consumer spend, ‘Aashirvaad’ is today over ₹ 4000 crores; ‘Sunfeast’ over ₹ 3500 crores; ‘Bingo!’ over ₹ 2000 crores; 10

‘Classmate’ & ‘YiPPee!’ are over

₹ 1000 crores each and ‘Vivel’, ‘Mangaldeep’ &

‘Candyman’ are over ₹ 500 crores each. These world-class Indian brands support the competitiveness of domestic value chains of which they are a part, ensuring creation and retention of value within the country, besides preventing flow of royalty payments to firms overseas. With world-class quality, innovation in processes, investments in cutting-edge technology, ITC has maintained its leadership position in its traditional business of cigarettes. ITC’s new FMCG brands have achieved impressive market standing in a relatively short span of time. Today, Aashirvaad is No. 1 in Branded Atta, Bingo! is No. 1 in Bridges segment of Snack Foods (No.2 overall), Sunfeast is No. 1 in the Premium Cream Biscuits segment, Classmate is No. 1 in Notebooks, Fiama is No. 1 in Shower Gels, YiPPee! is No. 2 in Noodles, Engage is No. 2 in Deodorants and Mangaldeep is No. 2 in Agarbattis (No. 1 in Dhoop segment).

Enterprise Strengths creating Enduring Value The competitiveness of ITC’s diverse businesses relies on the strong foundations of institutional capacities — deep consumer insights, differentiated product development, extensive rural linkages and agri-sourcing network, globally benchmarked manufacturing infrastructure, cutting-edge Research & Development, effective brand-building capability, efficient trade marketing and distribution network and human resources with diverse skills and capabilities. ITC’s ability to leverage internal synergies residing across its diverse businesses lends a unique source of competitive advantage to its products and services. Global Exemplar in Sustainability ITC is a global exemplar in ‘Triple Bottom Line’ performance and is the only enterprise in the world to be ‘water positive’ (for 16 years), ‘carbon positive’ (for 13 years), and ‘solid waste recycling positive’ (for 11 years). The focus on

creating

unique

business

models that generate substantial livelihoods across value chains has led to the Company’s Businesses supporting six million sustainable

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livelihoods, many of whom belong to the weakest in society. ITC: Vision, Mission and Core Values Despite the diversity of ITC’s businesses, the common thread that binds and inspires is its deep commitment to serve national priorities. The Company’s values are premised on the philosophy of Trusteeship that define every thought and action. It is ITC’s belief that sustainable and enduring value can be created by making societal value creation an integral part of business strategy. Each sinew of the organisation has been developed and nurtured towards achieving the goal of inclusive growth and sustainable wealth creation.

ITC Limited is an Indian company headquartered in Kolkata, West Bengal. Its diversified business includes five segments: Fast-Moving Consumer Goods (comprising Foods, Personal Care (comprising Foods,Personal Care, Cigarettes and Cigars, Apparel, Education and Stationery Products, Incense Sticks and Safety Matches), Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business and Information Technology. Though, cigarette business contributes more than 80% of the profits of the company, 80% of the capital is invested in the non-tobacco businesses. Established in 1910 as the 'Imperial Tobacco Company of India Limited', the company was renamed as the 'India Tobacco Company Limited' in 1970 and later to 'I.T.C. Limited' in 1974. The dots in the name were removed in September 2001 for the company to be renamed as 'ITC Limited' where 'ITC' would no longer be an acronym. The company completed 100 years in 2010 and as of 2012-13, had an annual turnover of US$8.31 billion and a market capitalization of US$50 billion. It employs over 30,000 people at more than 60 locations across India and is part of Forbes 2000 list .

Production process of cigarettes: The production of cigarettes in ILTD two major process. One is primary process which includes So many sub processes, which we discussed later, and other is secondary process which includes final packing of cigarettes and lots etc. Primary process of cigarettes: Under this process ILTD start from the leaf cutting, which he received from his GLT unit chirala. Chirala supply leaf all the production units of ILTD in 200kg size pack. 12

Production unit start from there point, First of all production unit cuts 200kg.pack in to 5-6 piece and put in to machine which give moisture 10-11% to 21%of leaf and up to 38% of stamc. After that he cut it into 30 cut and per inch length 140 cuts per inch length respectively through cottoned rolled squire (CRS). After the processing of cutting leaf he possesses through drying process and these times tobaccos have up to 15% moisturizer. When tobacco is cooled then he is passed into secondary proem. Before passes secondary proem both type of cutting result [Leaf and stems] is mixed up. The tobacco carmines and stems are then cooled and stacked in bins-ready to be rolled into cigarettes.

Production division of ILTD India leaf tobacco development (ILTD) is a major department of ITC which have four major production division across the country such as Bang lore, (Karnataka) Munger (Bihar), Saharanpur (U.P.)& Kolkata (W.B). These all four-production division is producing billion cigarettes per year. One thing is cam man all production division is that all units producing will’s brand and other brand of IRC is depended upon the regional requirement of cigarettes. Wills is most valuable brand of ITC Ltd. And his share of total sales is % approx. Brand, name and his length are as follows: -. Brand, name and his length are as follows: -. S .No.

Brand Name

Filter/with out Filter

Length

1

Classic

Filter

82 mm

2

Gold Flake (King)

Filter

82 mm

3

Gold Flake (Premiums)

Filter

69 mm

4

Wills Navy Cut

Filter

74 mm

5

Capstan Fl

Filter

69 mm

6

Bristol

Filter

69 mm

7

Wills Flake

Filter

69 mm

8

Scissors

Filter

69 mm

9

Scissors

Filter

69 mm

10

Capstan Standard

With out

58 mm

11

Bristol Standard

With out

58 mm

12

India King

Filter

82 mm

13

Marketing Division ILTD have four marketing office for maintaining advertising and promoted activities. It maintains supply of cigarette all over India. There office is situated are as follows : 1.

Jalandhar (Punjab)

2.

Saharanpur (U.P)

3.

Delhi (Capital Marking office)

4.

Kanpur (U.P)

Secondary process of cigarette production After making tobacco by primary process. Then begins the one rouse task of giving shape to the cut tobacco and dressing it up in cigarette paper. The processed tobacco is spread every on cigarette paper from roll that is anywhere from 4000 to 6000 meters in length. Then some thing like a long pencil is formed. This pencil of tobacco column rolled into cigarette paper is then cut into predetermined sections depending on the length of the cigarette. After that, double length filters are inserted between every two cigarette and cut in half with a strong blade. The cigarettes get collected in aluminum trays which are then stored under controlled conditions of temperature and humidity. After storage for a few hours these are taken to the packers machine, which pack the cigarettes sticks into pack of 10’s and 20’s.

ITC PROFILE

ITC's cigarette business stands testimony to the company's unwavering and unrivalled commitment to quality, innovation and consumer focus.

With more than one hundred years of expertise in developing products to match the evolving taste of the consumers, ITC's cigarette business continues to be relentless in its pursuit of strengthening its leadership position in every segment of the market in India. ITC's wide range 14

of brands, includes Wave,Insignia, India Kings, Classic, Gold Flake, American Club, Navy Cut, Players, Scissors, Capstan, Berkeley, Bristol, Flake, Silk Cut, Duke & Royal. The Company has been able to consolidate its leadership position with single minded focus on continuous value creation for consumers through significant investments in creating & bringing to market innovative product designs, maintaining consistent & superior quality, state-of-theart manufacturing technology, & superior marketing and distribution. With consumers & consumer insights driving strategy, ITC has been able to fortify market standing in the longterm, by developing & delivering contemporary offers relevant to the changing attitudes & aspirations of the constantly evolving consumer. ITC's cigarettes are manufactured in state-of-the-art factories at Bengaluru, Munger, Saharanpur, Kolkata and Pune, with cutting-edge technology & excellent work practices benchmarked to the best globally. An efficient supply chain & distribution network reaches India's popular brands across the length & breadth of the country. In overseas markets, ITC's cigarette business continues to maintain high standards of international quality and competitiveness. West Asia is a key export region for ITC and we offer a wide portfolio of high quality cigarettes in this region. With a Portfolio of brands under the Classic, Wills and Scissors Umbrella, ITC has cemented its international standing being the 3rd largest player in the countries of Bahrain & Qatar. ITC was also the first company to introduce a flavor on demand (capsule) product in the economy industry segment in West Asia region.

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THE ITC VISION:

ITC’S VISION Statement: To enhance the wealth generating capability of the enterprise in a globalizing environment, delivering superior and sustainable stakeholder value

ITC’S Vision 

Make a significant and growing contribution towards:

•

Mitigating Societal Challenges

•

Enchancing shareholder rewards By

•

Creating multiple driver of growth while sustaining leadership in tobacco, and

•

Focusing on ‘Triple Bottom Line’ performance

 Enlarge contribution on the Nation’s 

Financial capital



Environmental capital



Socialcapital

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

Trusteeship As professional managers, we are conscious that ITC has been given to us in "trust" by all our stakeholders. We will actualize stakeholder value and interest on a long term sustainable basis.

Respect for people We are result oriented, setting high performance standards for ourselves as individuals and teams. We will simultaneously respect and value people and uphold humanness and human dignity. We acknowledge that every individual brings different perspectives and capabilities to the team and that a strong team is founded on a variety of perspectives. We want individuals to dream, value differences, create and experiment in pursuit of opportunities and achieve leadership through teamwork. 17

Excellence We do what is right, do it well and win. We will strive for excellence in whatever we do.

Innovation : We will constantly pursue newer and better processes, products, services and 0management practices

.National Orientation : We are aware of our responsibility to generate economic value for the Nation. In pursuit of our goals, we will make no compromise in complying with applicable laws and regulations at all levels.

KEY CORPORATE STRATEGIES Focus on the chosen business portfolio 

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



Blend diverse core competencies residing in various Business to enhance the competitive power of the portfolio



Position each business to attain leadership on the strength of World- Class standards in quality and costs



Craft appropriate strategy of organization and governance process to: 

Enable focus on each business &



Harness diversity of portfolio to create unique source of competitive power of the portfolio

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3- Tier Goverence Structure Boards of directors Strategic supervision •

Corporate management committe c Strategic Management c c Divisonal Management c committe EMPLOYEES Executive management

•

Enabling Focus on each business Harnessing Diversity of portfolio

As per the Annual report of the company, ITC & its Group Companies employees over 32,000 on 31 March 2018, out of which 4,043 were women. It spent Rs. 2,545 crores on Employee benefits during the FY 2015-16. Its Chairman Y C Deveshwar has won renowned awards and recognitions including Padma Bhushan from Govt. of India and 7th best performing CEO in the world by Harvard Business Review. Meera Shankar, Indian ambassador to USA between 2009 and 2011, in 2012 joined the board of ITC Limited as the first woman director in its history. She is an additional non-executive director of the company.

ITC ‘s Cigarettes Business • Market Leadership  Leadership across all segment- geographical &price • State of the art technology and world-class product

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Cigarette Industry in India

•

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

•

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

•

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

•

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

Legal cigarettes contribution 87% of the tax revenue, Despite constituting Only 10% of tobacco consumption

other tabacoo product

legal cigarette

10%

90%

20

legal cigarettes

other tabacco product

Consumption share

Tax Revenue Share

12

10

8

6

4

2

0 Series 1

Column1

21

Column2

Tax on cigarettes as a % of per capita GDP(100 Packets of 20 cigarettes of the most sold brand covering both central and state taxes india thailand uk pakisthan

malaysia austrilia germany china japan usa 0

1

2

3 Series 3

4

Column1

5

6

7

Series 1

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

22

FMCG Cigarettes 

Legal cigarette industry volume remains under pressure



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



Hon’ble Karnataka High court struck down the COTPA rules that mandated printing of 85% GHW on Cigarette packs in Dec’17; since stayed by Hon’ble supreme court.



Pending the final hearing of this matter, the regime of the extremely repugnant 85% pictorial waring continuous.

CIGARETTE INDUSTRY Historical Overview of Tobacco in India The history of global trade is integrally linked with the history of India. It was discovering a sea route to this fable land, reputed for its spices, silk &gems, that Christopher Columbus set sail in1492. His wayward journey took him instead to America. This Discovery of the new world was accompanied by the discovery of tobacco by Portuguese sailor. This plant, treasured by the American ‘Indians’ for its presumed medicinal & obvious stimulant properties, was eagerly embraced by the Portuguese who then moved it to the old world of Europe. Even though their quest for easy access to Indian species was delayed by some years, the Europeans did not fail to recognize the commercial value of this new botanical acquisition. When the Portuguese eventually did land on Indian shores, they brought in tobacco. They introduce it initially in the royal courts where it soon found favours. It became a valuable commodity of barter trade, being used by the Portuguese for purchasing Indian textile. this taste for tobacco, first acquired by the Indian royal, soon spread to the commoners &, in the seventeenth century, tobacco began to take firm roots in India. Thus, tobacco travelled to the real Indians from their curiously named American cushion, through the medium of European mariner & merchant who sailed the seas & spanned the continent in the search of the new market & colonies. It was the establishment of the British colonies rule, however that the commercial dimensions of Indian’s tobacco production and consumption grew to be greatly magnified. Initially, the British traders imported American colonies declared independence in 1776, the British east India company began to grow tobacco in Indian as a cash crop. Attempts were made, under the colonial rule, 23

both to increase the land under tobacco as a cultivation & to enhance the quality of the leaves produced. The British east India company & successor, the British raj, used tobacco as an important cash crop both for domestic consumption & foreign trade. The manufacturing industry was, industry was, however, not established till much later, as the British believed in exporting the leaf to Britain and re-importing cigarettes to India, with considerable value addition in the process. As domestic consumption of cigarettes rose, the Imperial Tobacco Company commenced production within India, retaining control and repatriating the profits. In the late nineteenth century, the beedi industry began to grow in India. The oldest beedi

manufacturing

firm

was

established

around

1887

and

by

1930 the beedi industry had spread across the country. The price differential fromcigarettes favoured the use of beedis by the working classes and this domestic product soon supplanted cigarettes as the major form of tobacco consumption. The tax policies adopted by the Indian Government after Independence also favoured the beedi in comparison to cigarettes. This further fostered a growth in beedi consumption. While tobacco chewing was practised for many centuries, commercial p r o d u c t i o n a n d marketing

have

been markedly

up

scaled

recently,

with

the

introduction of the gutka. The rate of growth of consumption of gutka has overtaken that of smoking forms of tobacco. As a result, oral tobacco consumption has opened a new and broader front in the battle between commercial tobacco and public health in India. The economics of tobacco, which introduced it into India and entrenched it during the colonial rule, also provided a compelling reason for continued state patronage to the tobacco trade, even in free India. The ready revenues that bolster the annual budgets, the ability to export to a tobacco hungry world market and the employment opportunities offered to millionsprovided

the

rationale for encouraging tobacco, both as a crop and as an industry. Whileeconomics may have been the principal force propelling the seemingly inexorableadva nce of tobacco in India, there are also a multitude of social and cultural factors which need to be recognized, so that the variations in its use across social, religious and ethnic subgroups can be comprehended. Such factors have operated since the time tobacco entered India, though the nature of the socio-cultural determinants that influence individual and community responses to tobacco may have varied over time, 24

region, religious denomination and social class. It is this tapestry of internationallinkages, powerful economic factors and distinctive cultural influences which make the history of tobacco in India a fascinating study. Tobacco Industry Today Tobacco occupies a prime place in the Indian economy on account of its considerable contribution to the agricultural, industrial and export sectors. India is the second largest producer of tobacco in the world. China and the USA rank first and third, respectively, in terms of tobacco cultivation. Brazil, Turkey, Zimbabwe, Malawi, Italy and Greece are the other major tobacco producing countries. Tobacco contributes substanti a l l y t o t h e economies of these countries. In 2000–2001, the contribution of tobacco to the Indian economy was to the extent of rs 81,820 million, which accounted for about 12% of the total excise collections. Foreign exchange earnings during the same period were Rs9 0 3 0 m i l l i o n , a c c o u n t i n g f o r 4 % o f I n d i a ’ s t o t a l a g r i c u l t u r a l e x p o r t s . E n d o w e d w i t h favorable agro-climatic attributes such as fertile soil, rainfall and ample sunshine, India has the potential of producing different varieties of tobacco with varied flavours.

Impact of GST Rate on the Tobacco Industry The tobacco industry is booming as evident by the balance sheet of ITC. Many reports have been released by WHO claiming that India is harbouring the world’s highest incidence of mouth cancer. We are the second largest consumers of tobacco, having an astonishing 275 million users! But how will GST affect this multi-million-dollar industry? Let us see the impact of GST rates on the tobacco industry in India. In the past decade, excise duty rates have been revised for cigarettes and other tobacco products, but locally manufactured bidi was exempted. GST tax rate on tobacco and tobacco-related products was declared on 18th May by the GST council.

Excise duty is charged on the manufacturing of cigarettes, bidi, and other chewing tobacco products at different rates. 25

Cigarette – 64% Bidi – 22% Chewing products – 81% A lot of revenue is generated from the sale of tobacco for the Indian government. Although the tax burden levied on the Indian tobacco industry is not enough as per the recommendation of the WHO for a tax burden of 75% on all tobacco-related products. There has been an increasing demand for a higher tax burden on the tobacco manufacturers. Under GST, there will be an additional cess charged on the tobacco-related products, over and above the GST charged at the rate of 28%. Let’s Understand the Pricing of 1 Cigarette Under GST With an Example ITC manufactures cigarette, chewing tobacco, and pan masala. Particulars

Cigarettes

Cigarettes

Cigarettes

Cigarettes

Pan

Pan

under

between

between

above

masala

masala

65mm

65mm

70mm and

75mm

to

70mm

with

75mm

gutkha (tobacco)

Value per unit

Rs 5

Rs 10

Rs 15

Rs 15

Rs 5

Rs 10

(A)

Probable

Rs

maximum cess

(5%)

0.25 Rs 0.50 (5%)

Rs (5%)

of the value of goods

or

transactions. (B)

26

0.75

Rs (5%)

0.75 Rs (60%)

3 Rs 20.40

Probable cess

Rs 1.591

Rs 2.876

Rs 2.876

Rs 4.170

per 1000 sticks

(non-filter)

(both filter

(both filter applicable

(C)

and

and

and

Rs 2.126

non-

Not

Not applicable

non-

filter)

filter)

Rs 4.20

Rs 4.20

Rs 1.40

Rs 2.80

Rs

Rs 24.12

Rs 9.40

Rs 33.20

(filter)

GST

rate

Rs 1.40

Rs 2.80

Rs 8.016

Rs

@28% (D) Probable price that

can

charged

16.176

21.502

be

(non-filter)

(both filter

on

Rs

and

15.426(filter)

filter)

products (A +

non-

B+C+D)

Cigars and cigarillos will be charged at the rate of 28% and an additional cess up to 21% or Rs 4.170 per stick would be levied. Chewing tobacco has also been kept under the 28% category and an additional cess of 142% would be levied upon chewing tobacco (with lime tube) and 160% on chewing tobacco (without lime tube).

and women as the hottest object to flaunt. Within the premium segment Cohiba and Portages dominate, while Phillies is the most popular mid-priced brand. Cigar lounge shave spread rapidly in all leading cities in five star hotels and up-market bars and pubs, a n d t h e s e o f f e r s e l e c t m e m b e r s h i p a n d p r o v i d e e l i t e p e r s o n a l i s e d s e r v i c e s t o t h e i r members. Key names include Le Royal Meridian in Mumbai (‘Cigar Divan’), Leela Hoteli n B a n g a l o r e ( ‘ C i g a r R o o m ’ ) T a j R e s i d e n c y’ s C a f é M o s a i c a n d C o h i b a C l u b . T h e signature store chain for Cuban cigars, ‘Casa del Habana’s’ is to be launched in 2008.

27

Finding & Analysis Analysis of marketing activities The Product mix of ITC

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

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

28

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 distributors get, off them a certain part is reserved for the retailers and customer if they buy a certain level of biscuit quantity.

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

Consumer Buying Decision The main drijver in attracting the consumers is Quality of the product itself with nearly65% of

Reason for purchasing

70 60 50 40 30 20 10 0 PRICE

QUALITY

PROMOTION

PAST EXPERIENCE

PERCENTAGE

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

29

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.

Affectiveness of advertisement 30

28

No.of customers

25

22

20 16 15 10 5 1 0 HIGHLY AFFECTIVE

AFFECTIVE

SOMEWHAT AFFECTIVE

NOT AFFECTIVE

Series 1

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

30

Customer satisfaction 60

No.of customers

50 40 30 20 10 0 EXTREMELY SATISFIED

SATISFIED

SOMEWHAT SATISFIED

NOT SATISFIED

Axis Title Customer satisfaction

The above graph shows the experience of the customer after using the product i.e. Whether they were satisfied with the product as a whole. The higher the satisfaction level higher will be the chances that the customer will buy the same brand again and again that leads to the building of the Brand loyalty.

31

CHAPTER- 2

OBJECTIVE The primary objective of this study to systematically explore the determinant responsible for the competitive advantageof 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 analysis 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 influence 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 the acceptance of the ITC ltd product by the different categories of people of the different ages , group and the classes of the people of the society.  To find the effect of the sales promotion in the terms of the value addition to the consumer and retailer.  To recommend the suggestion to improve the effectiveness of the sales promotion.

32

CHAPTER- 3 RESEARCH METHODOLOGY

ITC - a leading FMCG player in India with market leadership in the cigarettes business ITC has a diversified presence with business interests in cigarettes & tobacco, packaging, agribusiness, food, hotels, lifestyle retailing, personal care, paper & stationery and branded apparels. ITC is India's leading FMCG marketer, the clear market leader in the Indian Paperboard and Packaging industry and the country’s foremost Agri business player.

In the cigarette segment, the company enjoys more than ~80% market share by value in India. Despite the presence across various business segments, cigarette still draws a major part of profitability as the company’s Cigarettes Business has an extensive FMCG distribution network with direct servicing of 1,00,000 markets and 2 mn retail outlets, managing one of the largest distribution networks in the country. ITC's Agri-Business is one of India's largest exporters of agricultural products and globally the 5th largest leaf tobacco exporter.

The company continues to rapidly scale up its new FMCG businesses leveraging. The new FMCG businesses comprising Branded Packaged Foods, Personal Care Products, Education and Stationery Products, Lifestyle Retailing, Incense Sticks (Agarbattis) and Safety Matches have grown at an impressive pace over the past several years. Within a relatively short span of time, ITC has established vital brands with significant salience among consumers like Aashirvaad, Sunfeast, Bingo!, Yippee!, Candyman, mint-o and Kitchens of India in the Branded Foods space and Essenza Di Wills, Fiama Di Wills, Vivel and Superia in the Personal Care products segment. In FY14, ITC entered into Deodorants category with the launch of its brand Engage.

ITC's hotels have evolved into being India's second largest hotel chain with over 95 properties across 66 locations in the country. Apart from the market leader in FMCG space, the company enjoys the dominant position in the Indian Paperboard and packaging business Revenue-mix as in Q3FY15 (%)

33

Paperboards, Paper & hotel

13.6

8.9 47.1

18.2 3.8 26.3

Packaging Intersegment revenue Target segment of capstan mint blast & wave ice mint and fruit mint The target consumer for capstan mint blast and wave ice & fruit mint is the people lying in the lower group roughly around 1 to 3 lakh per annum. Agra city has got a good number of smoker and majority of population comes under lower income level. 1. The city is surrounded by a large number of villages & rural Areas. 2. There is an ample number of worker engage in the small scale business 3. The city enjoys a large crowd coming from village (be it, for shopping for theirs small business at their homes or be it selling their crops) & getting back at night 4. Even small shopkeepers & businessmen likes to stick to the price range of 5- 18 Rs per stick 5. Majority of student in a degree colleges are from the rural areas in & around the city. They prefer to stick to the low cost cigarette segment. 6. People are less health conscious & hence don’t prefer the cigarettes having large filter & more refined Tobacco cigarettes i.e. cigarettes from KSFT segment.

34

Performance of ITC products People living in the Agra city have poor standard of living which is surround by large number of villages. KSFT: The sale figure of luxury brands like Insignia & Indian king is very low. LSFT: Medium level cigarettes Classic, gold flake(LSFT) & Navy performing really better. RSFT: In the lower segment Gold flake (RSFT) and capstan are performing excellent but on the flipside the performance of flake & navy cut RSFT is quite poor.

Competitors in RSFT segment  Four square  Red & white  Moments  Cavenders  Some local player like number 10, dolphin, golden elephant etc. providing the retailer a heavy margin of around Rs 7 on cigarettes packet Cigarettes: Growth potential

Cigarettes account for only 15% of tobacco consumed in India unlike world pattern of 85% due to prolonged punitive taxation Cigarettes (15% of tobacco consumption) contribute nearly 85% of Revenue to the Exchequer from tobacco sector Of the 58% of adult Indian males who consume tobacco, barely 15% can afford cigarettes Biri : Cigarettes ratio = 10 : 1 Annual per capita adult cigarette consumption in India is appx. one tenth world average: 141 Future growth depends on relative rates of growth of per capita income and moderation in taxes

35

METHODOLOGY 

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



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



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



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



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

36

CHAPTER- 4 DATA ANALYSIS Profile 

One of India’smost Admired and Valuable companies - Market Capitalisation: ~Rs. 3.6 lakh crores



A US$ 10 billion enterprise by Gross Sales Value^ - ~59% of Net Revenue from nonCigarette segments



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



10 year Value Addition ~ Rs. 3.1 lakh crores (US$ 55 billion). - Among the top tax payers in the country



ITC & its Group Companies employ over 32,000 people directly; Sustainable development models and value chains have supported creation of ~6 million sustainable livelihoods



A global exemplar in sustainable business practices - Only enterprise in the world of comparable dimensions to have achieved and sustained the 3 key global indices of environmental sustainability of being 'water positive' (for 16 years), 'carbon positive' (for 13 years), and 'solid waste recycling positive' (for 11 years)

37

ITC PERFORMANCE TRACK RECORD

1995-96

2017-18

22-yr Cagr 95-96 to 17-18

2,536

39,255

13.3%

PBT

452

16,439

17.7%

PAT

261

10,953

18.5%

Capital Employed

1,886

53,336

16.4%

Segment ROCE%

36.3

69.0

Market Capitalisation

5,571

Net Revenue

3,12,308

22.4%

Total Shareholder Returns % 

20.1%

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

ITC’s Economic Contribution to the Nation



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

–

Among the top tax payers in the country

–

Over the last five years, the Value-Added by your Company, i.e. the value created by the economic activities of your Company and its employees, aggregated over ` 200000 crores of which nearly ` 150000 crores accrued to the Exchequer.

38



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

39

Environmental Performance

 

Water positive - 16 years in a row Carbon positive enterprise – 13 years in a row Sequestering over twice the amount of CO2 that the Company emits

  

Solid waste recycling positive – 11 years in a row Over 43% of total energy consumed is from renewable sources Sustainability Report2018

can

be

accessed

on

https://www.itcportal.com/sustainability/sustainabilityreport-2018/sustainabilityreport-2018.pdf Only enterprise in the world of comparable dimensions to have achieved and sustained the 3 key global indices of environmental sustainability of being

40

Margin Table:

Margin of salesman

: 0 .80%

Margin of distribution

: 1.45%

Classification of brands as luxury, middle & economic segment brands Brand name

Price Per Stick

Insignia

7

India kings

6

B & H (Lts/spl)

5.50

Classic ( Regular,mild,menthol)

5

Glodflake (Ksft)

5

Navy cut (Lstf)

3.50

Gold Flake Premium

3

Navy Cut (RSFT)

2.50

Flake Excel

2

Capstan

2

41

CHAPTER- 5 LITERATURE REVIEW Swot Analysis The following point shows the internal and external factors affecting the market opportunities for ITC. This SWOT analysis also shows ITC internal strengths such as their experienced management team, a competitive product line, a global marketing realm, and the continuous efforts by their research and development to research trends in the industry and to be creative in exploiting those trends. Some possible opportunities noted in the SWOT analysis are the growing markets for specialized ethnic foods and healthier food products. Another opportunity is that the income of consumers is high enabling them to be less price sensitive, and convenience is becoming evermore important not only to the United States but to many countries around the world. Although ITC has many strengths, a few weaknesses lie in the fact that the company is so large and could possibly lose focus or have internal conflict problems. A few of the threats ITC must stay aware of are the ease of replicability of its product line, the almost pure competition in pricing for its products, and the quickness of technological advances causing existing products to be no longer the most advanced.

STRENGTHS 

Management Experienced, broad base of interests and knowledge



Product Line Unique, tastes good, competitive price, and convenient



Marketing Diverse and global awareness



Personnel International, diverse positions

42



International, diverse positions High sales revenue, high sale growth, large capital base



Manufacturing Low costs and liabilities due to outsourcing of bottling



Research & Development Continuous efforts to research trends an reinforce creativity



Consumer/Social Huge market in the healthy products and growing market for specialized foods for ethnic groups



Competitive Distinctive name, product and packaging in with regards to its markets



Technological Internet promotion such as banner ads and keywords can increase their sales, and more computerized manufacturing and ordering processes can increase their efficiency



Economic Consumer income is high, more tend to eat out, convenience is important to U.S.

Weaknesses 

Management Large size may lead to conflicting interests



Product Line New one calorie products have no existing customer base, generic brands can make similar product – cheaper



Marketing May lose focus, may not be segmented enough



Personnel Possible conflicts due to so many people, possible trouble staying focused



Finance High expenses may have trouble balancing cash-flows of such a large operation.



Research & Development May concentrate too much on existing products, entrepreneurship may not be welcomed

43



Consumer/Social More expensive products than Hul. Such a high price may limit lower income families from buying an ITC product



Competitive Not entirely patentable, constant replicability by competitors



Technological Computer breakdowns, viruses and hackers can reduce efficiency, and must constantly update products or other competitors will be more advanced



Economic Very elastic demand, almost pure competition

Opportunities 

Expected 30% CAGR in organized market to result in better footfall and conversion rates.



Entry into Tier 2 and Tier 3 cities.



Collaboration with foreign players because of a national brand.



An opportunity to diversify its operations in e-retailing.



As big company of India can go globally.

Threats 

Employee shortage and attrition due to rapid growth in the hull market .



Impact of slowdown in consumer spends to be felt in FMCG market.



Opening up of economy for free entry of foreign players.

44

ITC CIGARETTES BUSINESS :



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



India is the 4th largest illegal cigarette market in the World; resulting in Revenue loss of over 13,000 cr. p.a. to the Exchequer



42% of adult Indian males consume tobacco. Only 7% of adult Indian males smoke cigarettes as compared to 14% who smoke bidis and 30% who use smokeless tobacco (Source: Global Adult Tobacco Survey India 2016-17)



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



Legal Cigarettes contribute 87% of Tax Revenue, despite constituting only 10% of Tobacco consumption

1% 9%

Consumption

Tax Revenue

Cigarette taxes remain, effectively, about 50 times higher than on other tobacco products (on a per Kg basis of tobacco consumption) 45

Cigarettes are least affordable in India

Cigarette taxes in India are 14 times higher than USA, 9 times higher than Japan, 7 times higher than China, 5 times higher than Australia and 3 times higher than Malaysia and Pakistan.

46

Per Capita Consumption of Tobacco in India (gms per year)

Per Capita consumption is ~60% of World Average

FMCG Cigarettes • Legal cigarette industry volumes remain under pressure − While the legitimate cigarette industry has declined steadily since 2010-11 at a compound annual rate of 4.8% p.a., illegal cigarette volumes in contrast have grown at about 5% p.a. during the same period, making India one of the fastest growing illegal cigarette markets in the world. • Hon’ble Karnataka High Court struck down the COTPA rules that mandated printing of 85% GHW on Cigarette packs in Dec’17; since stayed by Hon’ble Supreme Court. − Pending the final hearing of this matter, the regime of the extremely repugnant 85% pictorial warning continues.

47

CHAPTER- 6 RESULT & DISCUSSION

Discussion The results from this study reveal that adult smoker cigarette brand preferences have shifted over the past decade with an increase in the use of discount cigarette brands, especially after increase in the FET on cigarettes in 2009. This finding is consistent with that found in the decade prior to this study. However, our finding regarding the growth of discount brands after the 2009 FET increase on cigarettes was unexpected since we had anticipated a drop in the sales of discount brand cigarettes since the relative price of discount brands were affected to a larger degree compared with that of higher-priced premium brands. It is possible that the aggressive price marketing of premium brands coupled with stricter marketing restrictions have lowered the perceived value of some premium brands. From this perspective, when consumers are confronted with paying higher prices for their cigarettes because of a tax increase, they are more willing to switch to a discount (price marketed only) brand. Our data also suggest that demographic and smoking trends favour the continued growth of low-priced cigarette brands since there are fewer young people taking up smoking compared to previous generations, and the resulting pool of smokers is increasingly made up of older, middle-income and lower-income individuals who are less influenced by brand image and more prone to switch to discount brands. Once a smoker switches to a discount brand, our data suggest that they typically stay within the discount brand category, although they may switch between different discounted brands. Perhaps in recognition of this trend, cigarette manufacturers have invested in price discounting of some popular premium brands, and in some cases have repositioned older premium brands as discounted brands..

Consistent with previous studies, premium brands such as Marlboro, Newport and Camel continue to dominate the market due to their greater popularity with younger smokers who are less likely to switch to discount cigarette brands. However, even though smokers in our sample between the ages of 18 and 24 years were more likely to report smoking a premium brand cigarette compared with older smokers, loyalty to a given brand was not that strong since we observed frequent switching between different premium brands. It is likely that the traditional 48

pricing tiers of a decade ago (ie, premium, discount and deep discount), may no longer apply, as cigarette manufacturers have increasingly used price promotions to keep popular premium brands, such as Marlboro, priced to be competitive with the discount brands. This study undoubtedly underestimates the true level of brand switching that is happening for two reasons. First, we only counted a brand switch if the person reported smoking a different cigarette brand at the time of the next survey wave. This method fails to take into account brand switching that undoubtedly occurs between survey waves (eg, switching from one brand to another, but then switching back by the time of the next survey wave). Second, and more importantly, we only counted switching between different brand families rather than switching brand varieties within the same brand family (eg, Marlboro Red to Marlboro Gold). Another limitation of our data is that our estimates of the use of different brands (eg, Marlboro, Pall Mall, etc.) and brand categories (ie, premium and discount) likely over-represent brands that are popular among older adult smokers (ie, discount brands) and under-represent brands (ie, Marlboro, Newport, and Camel) that are popular with younger (ie, under age 18 years) smokers who were not part of. In summary, with fewer people taking up smoking today, price marketing within and between the premium and discount brand categories is likely to play an increasingly important role in defining which cigarette brands remain popular in the future popular premium brands, such as Marlboro, priced to be competitive with the pricing of many discount brands. Previous studies have shown that the presence of discount brands can undermine efforts to discourage tobacco use. This study shows that those who can least afford to keep smoking because of their economic standing (ie, low-income individuals) and health risks (ie, older smokers and those who smoke more heavily), were also the group of smokers most prone to use and switch to discount brand cigarettes. From a tobacco control perspective, the findings from this study suggest that governments should consider enacting stronger minimum pricing laws in order to keep the base price of cigarettes high, since it seems clear that aggressive price marketing will continue to be used by manufacturers to compete for the shrinking pool of smokers in the population.

49

CHAPTER- 7 Conclusion & Recommendation 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

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RECOMMENDATIONS According to the survey conducted and after analyzing the Price, Promotion, Place and Product of the ITC and the consumer behavior in the market the company can implement the following measure for increasing the sales and volume of their products 1. the schemes offered should benefit consumer as well as retailer. Till now the scheme is offered to the retailer only, where ITC face the tough competition by more profitable scheme moments & advance. Since cigarette take some time to become one’s favorite As the taste is one of the most important factor. 2. ITC should use the established brands like gold flake in the scheme to launch the wave in the market DS ( Distributor Seller ) Work Practice Regimentation:

1) DS( Distributor Seller ) 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 (Distributor Seller ) is not covering. 2) To maintain a good relation with the trade. (a)The DS ( Distributor Seller) must have good relations with the Retailers that they should call the DS ( Distributor Seller ) 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. 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. 51

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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BIBLIOGRAPHY Website: http://www.itcportal.com http://www.blonnet.com/ http://indiainfoline.com/

Books & Journals :

a. Philip Kotler, Marketing management b. CMIE Database c. Prowess Database Arora M. The tobacco journey: seeds of a menace. Health for the millions June– September 2003:4–6. 1. Shimkhada R, Peabody JW. Tobacco control in India, Policy and Practice. Bulletin of World Health Organization2003; 81:48–52. 2. World Health Organization. Tobacco or health: a global status report. Geneva: WHO, 1997. 3. Rani M, Bonu S, Jha P, et al. Tobacco use in India: prevalence and predictors of smoking and chewing in a cross sectional household survey. Tobacco Control2003;12: e4. 4. Sinha DN. Exposure versus targeting youth in the north and east of India. Health for the millions June–September 2003:4–6. 5.

Murray CJ, Lopez AD, eds. The global burden of disease: a comprehensive assessment of mortality and disability from diseases, injuries and risk factors in 1990 and projected to 2020. Cambridge, Massachusetts: Harvard School of Public Health, 1996.

6.

The World Bank. Curbing the epidemic. Governments and economics of tobacco control. Washington DC: The World Bank, 1999.

7. Srivastava A. The role and responsibility of media in global tobacco control. The WHO international conference on global tobacco control law: towards a WHO framework convention on tobacco control, January 7–9, 2000, New Delhi, India.

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APPENDICE – TO INCLUDE QUESTIONNAIRE

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

17

No

13

2. Which is your favorite brand?

Chart Title

classiccapstanmoments cavender flake excel nc Column3

3. How long they are smoking this brand? 0-3 month 3-7 month 1-2 year 2-5 year

4. Do you give importance to filter? Consider

10

Never thought about

23

5. How do they select the brand ? By trail

10

By advertisement By word of mouth

5 18 54

6. Brand loyalty vs brand visibility Give a chance to new brand

8

Don’t bother

25

7. Effect of price hike on buying behavior Change

23

Don’t change

10

8. Would the prefer a packet or open Open

19

Packet

14

9. What is basis for selecting the particular brands Ans. Taste & preference

55

Questionnaire for pan and vendor & tea stall o Observation visibility How much cigarettes packs of each brands do they sell

Chart Title 1 0.8 0.6 0.4 0.2 0 1-4 cigarettes

1 packet

Column1

Column2

Chart Title 6 5 4 3 2

1 0 Category 1

Category 2 Series 1

Category 3

Series 2

Category 4

Series 3

Their option regarding low sale of capstan mint blast & wave ice mint & fruit mint Are customer aware of the two new launch brand Effect of scheme (retailer know it better) on brand loyal customer Observe which brands are sold in open & which brands in packet (especially gold flake & navy cut) Types of people visiting students, professional, middle class

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Causes of failure

Cannibalization: capstan is already being well established player at the price of 6 RS per stick. Launching the product under same segment was unable to drag more crowd in its basket. Competition offered by the different brands that provide a good amount of the margin to the retailer. In the crowd areas like railway station & bus stand, where the target crowd are plenty, the stalls prefer to push the local brands as they are getting the handsome amount of profit per stick Eg : they sell the pack of the cigarettes at Rs 50 which cost them 30 Rs. Acceptance of new brands: majority of people in this segment are youth 90% of the people refuse the new brands until force by the retailer

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