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ITC - Report - Modified
ITC - Report - Modified
ITC - Report - Modified
In the challenging and competitive industry like cigarette there is a need for continuous monitoring of the happenings in the market. Ignoring or slowing down the pace will allow the competitor to take the advantage and grab the market. Various brands Godfrey Phillip, VST, Kothari product, Golden tobacco already exist in the market and are waiting for a chance to grab the market share ITC cigarettes which is leader as of now. There is need for every organization to be more responsive towards market and should be quickly adapt the changes in the environment. Measures should be taken to increase revenue. Schemes should be launched to attract customers and increase customer base. Relationship with distributors and outlets should be maintained for the smooth flow of products. Schemes which are to introduced should be tested by launching on a small scale and should be extended. Validation of sales and market should be exercised by conducting audit reports. Audit report should be re-checked by getting it done by various parties inside and outside of the organization which include employees, third parties.
Audit report will be done on a regular basis and if any of the factor is getting violated, then money corresponding to it will not be given and points will be reduced.
OTHER SCHEMES
In order to promote re-cycling and also to get the advantage of proof of sale ITC introduced a scheme on few brands. When empty packets of the brands on which the scheme is applicable are given to the salesman, petty items like match box are given as an exchange.
SECONDARY OBJECTIVES:
The secondary objectives are: To survey the availability of various cigarette brands of ITC in the new outlets. To survey the presence of competitors brands (if there are any) in the new outlets. To check implementation of various merchandising methods in the new outlet.
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 from cigarettes favored 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 favored the beedi in comparison to cigarettes. This further fostered a growth in beedi consumption. While tobacco chewing was practiced for many centuries, commercial production and 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 millions provided the rationale for encouraging tobacco, both as a crop and as an industry. While economics may have been the principal force propelling the seemingly inexorable advance 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, region, religious denomination and social class. It is this tapestry of international linkages, 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
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cultivation. Brazil, Turkey, Zimbabwe, Malawi, Italy and Greece are the other major tobacco producing countries. Tobacco contributes substantially to the economies of these countries. In 20002001, 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 Rs 9030 million, accounting for 4% of Indias total agricultural exports. Endowed with favorable agro-climatic attributes such as fertile soil, rainfall and ample sunshine, India has the potential of producing different varieties of tobacco with varied flavors. Recent Trends in Indian tobacco Market Continuing with a policy to control smoking, the tax measures became harsher in 2007, with an increase of 6% in excise and an additional 12.5% in VAT, bringing the total effective tax to about 20% (although the most populous state, Uttar Pradesh, imposed 32.5% VAT). As expected, volume sales declined due to the subsequent price rises. ITC Group, the leading company, is estimated to have taken price hikes as high as 20% on some brands. The industry expected a volume decline of 5%-10%, but the overall industry declines have been lower than expected, reflecting consumer resilience to price rises. Cigarettes so many challenges The government has put severe regulatory restrictions of all types on cigarettes to restrict sales and reduce smoking prevalence. Apart from consistent rises in taxes each year on cigarettes, there is also a total ban on advertising and promotion, a ban on smoking in public, and also in films, a ban on sale to minors, and there are impending graphic health warnings on packs in 2008. Moreover, the domestic industry also faces threats from imports and smuggled cigarettes. Although imports constitute only a negligible proportion of the domestic pie, their rising share poses a threat to players. Graphic pack warnings finally implemented by mid 2008 Under the provisions of the Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003, (COTPA) and rules 2006, companies will have to display pictures of the potential health dangers of smoking cigarettes, such as oral cancer and lung cancer. This is a powerful
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measure which will have a strong downward effect on volume sales. The rule was proposed in 2006, but was strongly resisted by the cigarette lobby, and is currently being reviewed by the government once again. Preliminary decisions to implement the pack warnings were finalized in February 2008, and only the final details on the pictures to be used are being discussed; final rules are expected to be announced soon. The industry is fearful that this may have a negative impact on volume sales. Despite regulatory controls, underlying factors for cigarette growth are strong Despite all the regulations, cigarettes in India continued to see small growth in the past five years (except in 2007 when it declined). While FY08 is expected to see declines due to the unusually high taxes in 2007, it is expected to rebound in FY09 due to strong long term core factors. India is demographically very attractive. 65% of the population is below the age of 35; potentially this is a big segment of younger consumers with rising disposable incomes and a lower aversion to smoking. Moreover, India has a low per capita cigarette consumption (141 sticks) compared with the global average. Players are optimistic about these favorable demographics and growing income trend. Cigar culture grows Cigars are still a nascent category in India, but rapidly growing. Cuban cigars have become the trendiest prop for politicians, businessmen and even young society men and women as the hottest object to flaunt. Within the premium segment Cohiba and Partags dominate, while Phillies is the most popular mid-priced brand. Cigar lounges have spread rapidly in all leading cities in five star hotels and up-market bars and pubs, and these offer select membership and provide elite personalized services to their members. Key names include Le Royal Meridien in Mumbai (Cigar Divan), Leela Hotel in Bangalore (Cigar Room) Taj Residencys Caf Mosaic and Cohiba Club.
Source: http://en.wikipedia.org/wiki/ITC_Limited VISION STATEMENT 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 Companys stakeholders.
MISSION STATEMENT To enhance the wealth generating capability of the enterprise in a globalizing environment, delivering superior and sustainable stakeholder value
POSITIONING STATEMENT "Enduring Value. For the nation. For the Shareholder."
ITC Limited which previously stood for Imperial Tobacco Company of India Limited is an Indian conglomerate ITC is one of India's foremost private sector companies with a market capitalization of nearly US $ 14 billion and a turnover of over US $ 5 billion.* ITC is rated among the World's Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine, among India's Most Respected Companies by Business World and among India's Most Valuable Companies by Business Today. ITC ranks among India's `10 Most Valuable (Company) Brands', in a study conducted by Brand Finance and published by the Economic Times. ITC also ranks among Asia's 50 best performing companies compiled by Business Week. ITC is one of India's most valuable and respected corporations. ITC employs over 25,000 people at more than 60 locations across India. The Company continuously endeavors to enhance its wealth generating capabilities in a globalizing environment to consistently reward more than 3, 53,000 shareholders. Its businesses and brands are focused almost entirely on the Indian markets, and despite being most well-known for its tobacco brands such as Gold Flake, the business is now diversifying into new FMCG (Fast Moving Consumer Goods) brands in a number of market sectors - including cigarettes, hotels, paper, agriculture, packaged foods and confectionary, branded apparel, personal care, greetings cards, Information Technology, safety matches, incense sticks and stationery. 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). ITC enjoys the leadership position in the Indian cigarette market with a market share of ~80% in terms of value. Cigarettes contribute close to 65% of ITCs total gross revenues however owing to the high incidence of taxes, this segment amounts to ~50% of the revenue on a net basis. FMCG others segment has gradually increased its contribution over the years and is expected to be a major growth driver in the coming years.
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Create multiple drivers of growth by developing a portfolio of world class businesses that
best matches organizational capability with opportunities in domestic and export markets. Continue to focus on the chosen portfolio of FMCG, Hotels, Paper, Paperboards &
Packaging, Agri Business and Information Technology. Benchmark the health of each business comprehensively across the criteria of Market
Standing, Profitability and Internal Vitality. Ensure that each of its businesses is world class and internationally competitive. Enhance the competitive power of the portfolio through synergies derived by blending
the diverse skills and capabilities residing in ITCs various businesses. Create distributed leadership within the organization by nurturing talented and focused
top management teams for each of the businesses. Continuously strengthen and refine Corporate Governance processes and systems to
catalyze the entrepreneurial energies of management by striking the golden balance between executive freedom and the need for effective control and accountability. List of products & brands: ITC has a diversified presence in different sectors. They are mentioned belowTABLE-1
Sectors
Cigarettes
Wills, Gold Flake, Navy Cut, Insignia, India Kings, Classic Verve, Classic, Silk Cut, Scissors, Capstan, Berkeley, Bristol and Flake.
Hotels
Resorts is India's second largest hotel chain with over 80 hotels. Based out of Hotels Division Headquarters at the ITC Green Centre in Gurgaon, ITC Welcomgroup is also the exclusive franchisee of The Luxury Collection brand of Starwood Hotels and Resorts in India .
ITC Bhadrachalam Paperboards Limited & ITC Tribeni Tissues Division are now under one roof . Paper Boards and Specialty Papers Division. There are 4 Units under one umbrella Bhadrachalam, Tribeni, Bollarum and
Kovai.ITC PSPD
India's Largest Packaging Solution provider with In-house film manufacturing capability. Multi-location manufacturing facilities to cater to domestic and export requirements. Product Range includes Cartons (Folding & Fluted), Flexibles (Reels & Pouches), Shoulder Box, HL's & CBO, Printed Cork Tipping, Gay wraps. ITC PPB .
Agricultural Industry
Agri-Business, Leaf Tobacco, Gold Ribbon, Blue Ribbon, Aqua Kings, Aqua Bay, Aqua Feast and Peninsular.
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Branded Apparel
Toiletries
Expressions,Classmate, Paperkraft
Information Technology
Safety Matches
Mangaldeep, VaxLit, Delite(Discontinued) and Aim Brands acquired from Wimco India Match Company): Ship , Homelite (Swedish Matches)
Incense Sticks
Mangaldeep, Spriha,Yantra
While ITC continues in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is gaining market share in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel and Greeting Cards. ITC's wholly owned Information Technology subsidiary, ITC Infotech India Limited, is pursuing emerging opportunities in providing end-to-end IT solutions, including e-enabled services and business process outsourcing.
THE MICRO-ENVIRONMENT
This environment influences the organization directly. It includes suppliers that deal directly or indirectly, consumers and customers, and other local stakeholders. Micro tends to suggest small, but this can be misleading. In this context, micro describes the relationship between firms and the driving forces that control this relationship. It is a more local relationship, and the firm may exercise a degree of influence.
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Stakeholders: As organization requires greater inward investment for growth they face increasing pressure to move from private ownership to public. However this movement unleashes the forces of shareholder pressure on the strategy of organizations. Satisfying shareholder needs may result in a change in tactics employed by an organization. The Company sees no conflict between the twin goals of shareholder value enhancement and societal value creation. The challenge lies in fashioning a corporate strategy that enables realization of these goals in a mutually reinforcing and synergistic manner. 244,65,39,845 Ordinary Shares of the Company, representing 64.79% of the Company's paid up capital, as on 11th September, 2009 are in dematerialized form. The paid-up share capital of the Company is Rs. 377, 62, 86,590 (Rs.377.63 corers) divided into 377, 62, 86,590 Ordinary Shares of the face value of Re 1/- each.
Supplier: Raw materials, intermediates and the final product sourcing/distribution in widespread across the country. Few items have more than 1 supplier for the raw material e.g. filter rods can be sourced from Mumbai, Bangalore or Devas in MP. Huge supply-demand network for cigarette business, which must operate in the cost optimal way to maximize the profits. Few segments are particular to factories e.g. King size.
Consumer: Organizations survive on the basis of meeting the needs, wants and providing benefits for their customers. Failure to do so will result in a failed business strategy. Its businesses and brands are focused almost entirely on the Indian markets, and despite being most well-known for its tobacco brands such as Gold Flake, the business is now diversifying into new FMCG (Fast Moving Consumer Goods) brands in a number of market sectors.
THE MACRO-ENVIRONMENT This includes all factors that can influence and organization, but that are out of their direct control. A company does not generally influence any laws (although it is accepted that they could lobby or be part of a trade organization). It is continuously changing, and the company needs to be flexible to adapt. There may be aggressive competition and rivalry in a market. Globalization means that there is always the threat of substitute products and new entrants. The wider environment is also ever changing, and the marketer needs to compensate for changes in culture, politics, economics and technology.
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Economic Factors: Marketers need to consider the state of a trading economy in the short and long-terms. This is especially true when planning for international marketing. India has been one of the best performers in the world economy in recent years, but rapidly rising inflation and the complexities of running the worlds biggest democracy are proving challenging. Indias economy has been one of the stars of global economics in recent years, growing 9.2% in 2007 and 9.6% in 2006. Growth had been supported by markets reforms, huge inflows of FDI, rising foreign exchange reserves, both an IT and real estate boom, and a flourishing capital market.
Socio-Cultural Factors: The social and cultural influences on business vary from country to country. It is very important that such factors are considered Envisioning a larger societal purpose has always been a hallmark of ITC. Following are the factor which should be kept in mind while doing business in India: 1. India, being a multi-cultural and multi-religious society, celebrates holidays and festivals of various religions 2. India is one of the most religiously diverse nations in the world, with some of the most deeply religious societies and cultures. Religion still plays a central and definitive role in the life of most of its people. 3. The demographics of India is remarkably diverse. India's population of approximately 1.17 billion people (estimate for July, 2009) consists of approximately one-sixth of the world's population 4. India is a young country with an average age between 23-24 years. As a corporate citizen with enduring relationships in rural India, ITC has a history of collaboration with communities and government institutions to enhance farm productivity and the rural resource base. ITCs commitments in agricultural R&D and knowledge sharing have spanned vital aspects of competitiveness efficient farm practices, soil and water management.
Technology factor: Technology is vital for competitive advantage, and is a major driver of globalization. Technology in India accounts for a substantial part of the country's GDP and export earnings while providing employment to a significant number of its tertiary sector workforce. Technically proficient immigrants from India sought jobs in the western world from
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the 1950s onwards as India's education system produced more engineers than its industry could absorb. Indias growing stature in the information age enabled it to form close ties with both the United States of America and the European Union IT plays a very critical role in driving the ITC business strategies. IT is an enabler of the business process to ensure business growth through efficient Management of operations in the value chain. IT creates new business process or restructure the current business process to enhance customer service availability ,efficient manufacturing / supply chain operations etc
Political factors: The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. The Indian polity is increasingly seen by political observers as the problem. When populist political appeals stir the passions of the masses, government institutions appear less capable than ever before of accommodating conflicts in a society mobilized along competing ethnic and religious lines Budget impact: Among the FMCG stocks Marico and ITC are the biggest gainers. Marico has added 7.3% to Rs 77. ITC has surged 7% to Rs 212, after no change in excise cuts on cigarettes Due to Govt. new conditions ITC Maurya winning the 'Best eco-friendly hotel Special Prize' award by the Ministry of Tourism, Government of India.
All factors that are internal to the organization are known as the 'internal environment'. They are generally audited by applying the 'Five Ms' which are Men, Money, Machinery, Materials and
Markets: The internal environment is as important for managing change as the external. As marketers we call the process of managing internal change 'internal marketing.'
Men: ITC employs over 25,000 people at more than 60 locations across India. The Company continuously endeavors to enhance its wealth generating capabilities in a globalizing
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environment to consistently reward more than 3, 53,000 shareholders, fulfill the aspirations of its stakeholders and meet societal expectations.
Money: ITC is one of India's foremost private sector companies with a market capitalization of nearly US $ 14 billion and a turnover of over US $ 5 billion. ITC is one of the country's biggest foreign exchange earners (US $ 3.2 billion in the last decade).
Machinery: ITC is using world class machinery so that they can match with demand of the market. Their most of the facilities are fully automated.
Materials: ITC is using quality raw material so that they can give world class quality product to their customers. They are very selective while selecting supplier for them.
Markets: Its businesses and brands are focused almost entirely on the Indian markets, and despite being most well-known for its tobacco brands such as Gold Flake, the business is now diversifying into new FMCG (Fast Moving Consumer Goods) brands in a number of market sectors - including cigarettes, hotels, paper, agriculture, packaged foods and confectionary, branded apparel, personal care, greetings cards, Information Technology, safety matches, incense sticks and stationery.
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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.
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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. All initiatives are therefore worked upon with the intent to fortify market standing in the long term. This in turns aids in designing products which are contemporary and relevant to the changing attitudes and evolving socio economic profile of the country. This strategic focus on the consumer has paid ITC handsome dividends. ITC's pursuit of international competitiveness is reflected in its initiatives in the overseas markets. In the extremely competitive US market, ITC offers high-quality, value-priced cigarettes and Roll-your-own solutions. In West Asia, ITC has become a key player in the GCC markets through growing volumes of its brands. ITC's cigarettes are produced in its state-of-the-art factories at Bengaluru, Munger, Saharanpur and Kolkata. These factories are known for their high levels of quality, contemporary technology and work environment. ITC started an earnest exercise by creating a new brand image and corporate philosophy by investing in new business categories like personal care, premium apparel, rural business (eChoupal) and foods. All along using its famed distribution strengths built through its successful past businesses like cigarettes, paperboards and packaging, hotels and agri business, to create synergies across its verticals and help prop up its new businesses, like personal care and foods. ITC has a well thought-out strategic approach. Rather than acquiring weaker brands to get into these new segments inorganically, it created a range of new personal care and branded apparel brands. The first step in this well-planned strategy was the launch of Wills Lifestyle, the premium branded apparel business in 2002.ITC then moved on to take the competition head on in the FMCG domain, through ITC Foods in August 2001, and personal care business, which is the focal point of this story, in 2005. It has created good impact with its well etched-out Personal Care Brands. Under this category, brands like Essenza Di Wills, Fiama Di Wills, Vivel Di Wills, Vivel and the Superia were designed to take care of various sets of consumer segments. But behind this launch was five years of intensive on ground research of market conditions and consumer expectations. Over one lakh consumers were surveyed across the country to test various prototypes. Acceptance benchmark was kept as high as 90 percent for the
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final products. ITC called this exercise as '3E approach explore, establish and execute. As an adage goes 'if you have to win a race, you have to clearly target the No 1', ITC too aimed the No 1 which happened to be the formidable HUL (which still reigns over 50 percent of the FMCG market). And ITC's target was HUL and P&G only. ITC roped in its tobacco business veteran Sandeep Kaul to spearhead the personal care launch; it also sought help from product formulation and branding experts in Europe and America to formulate the fragrance, aesthetics and packaging. Many of the brands have also been developed at its R&D centre. The results are there for everyone to see. In less than four years, ITC has been able to create brand awareness and consumer acceptance for its five product lines Essenza Di Wills, Fiama Di Wills, Vivel Di Wills, Vivel and the Superiaeach targeted at the needs, aspirations and usage behavior of different consumer segments. Kaul informs that the strategy for designing personal care is that everyone is a potential consumer
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ITC follows: CHANNEL WISE DISTRIBUTION Here the total product is divided into different channels like, Healthcare product, Personal care products, Home products & etc.
Here total market is divided into different areas where the products are served to all the outlets exist in that area.
OPERATIONS AT DISTRIBUTOR POINT There are 22 distributor points for ITC in Hyderabad and Secunderabad. They manage all the products of ITC including personal care, paper boards, and food products.
Management structure at distributor point will be as follows (with reference to Balaji Agencies, Mehidipatnam, Hyderabad)
Depot Incharge
BDM (cigarettes)
Supervisor(s )
Supervisor(s)
Salesmen
Salesmen
Depot in charge manages all the operations in the distributor point. Under him business development managers exists for various segments. And BDMs guide the supervisors who work under their assistance. They set the targets to supervisors and who in turn sets the targets to salesmen under them. Supervisors convey the messages about the stock availability to the salesman and about sales volume to the BDMs. All the products are distributed to various distributor points from the hub located in Secunderabad. The management at hub will assign target to the distributor point which is delegated till salesmen. Sales status is updated by the distributors in MIS and the equivalent sold material is replenished by the hub in 2 days.
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2 LITERATURE REVIEW The concept of validity related to response processes was included in the 1999 Standards for Educational and Psychological Testing. The standards, however, provide only some very basic guidelines on how this information may be helpful and on how to collect this type of data. The standards define evidence based on response process as the fit between the construct and the detailed nature of 16 performance or response actually engaged in by examinees (p. 12). The Standards state that for example, if a test is intended to assess mathematical reasoning, it becomes important to determine whether examinees are, in fact, reasoning about the material given instead of following a standard algorithm. For another instance, scores on a scale intended to assess the degree of an individuals extroversion or introversion should not be strongly influenced by social conformity In other words, evidence based on response process needs to support that the test measures the intended construct in that students responses are eliciting the intended reasoning. In addition, evidence based on response process needs to show that the responses are not being influenced by construct-irrelevant factors. Standard 1.8, the specific standard that relates to the collection of response process follows: If the rationale for a test use or score interpretation depends on premises about the psychological processes or cognitive operations used by examinees, then theoretical or empirical evidence in support of those premises should be provided. When statements about the processes employed by observers or scorers are part of the argument for validity, similar information should be provided The standards do not discuss in great detail how response process information should be collected. They do provide a few examples of gathering evidence such as questioning test-takers, documenting performance through tracking eye movements, analyzing relationships among parts of a test, and examining the ratings of judges. Other than the brief statements quoted above, the Standards do not provide much information on why response process information is important in test development nor do 17 they provide practical guidance to the test developer as to methods collecting this type of evidence. The remainder of this section will review the literature regarding 1) arguments on why response process validity is a necessity in test development and 2) how response process data can be collected. The primary focus of the latter section will be on the use of verbal protocols, including suggested methodology and associated problems or concerns.
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While the concept of response process validation is relatively new, research throughout the past several decades has begun to shift in the direction of linking psychometric theory and practices to research in cognitive development (i.e. Frederiksen, Mislevy, & Bejar, 1993; Pellegrino, Baxter, & Glaser, 1999; Snow & Lohman, 1993). Several researchers have emphasized the importance of collecting this type of information in test development in order to support the validity argument and to learn more about the construct of interest. One of the primary arguments for the collection of response process data concerns the issue of alignment of the test developers intentions and the nature of the cognitive activity actually elicited during test administration. In their examination of alignment between test developers intent and elicited
information from students taking a middle school science state assessment, Ferrara, Duncan, Freed, Velez-Paschke, McGivern, Mushlin, Mattessich, Rogers, & Westphalen (2004) provide an informative definition of this concept of alignment: We define alignment as the degree of correspondence between content area knowledge, content area skills, broader cognitive processes, and response 18 strategies (i.e., Knowledge, Skills, Processes, and Strategies: KSPS) that (a) test developers intended to assess, and (b) examinees bring to bear when they respond to test items The authors further discuss that when the intended and observed KSPS align, construct validity for this item is supported. When the intended and observed are misaligned, this may indicate that an item is not construct-valid and thus inferences made from test scores could potentially be suspect. Misalignment is not necessarily uncovered through the use of test specifications, expert judgment, or statistical analyses. Gorin (2006) recognized the limitations of the traditional methods of test development and encouraged more extensive examination of items in order to explore the cognitive processes employed. As she states. Test developers must consider even more rigorous methods of item examination before operational use that provides explicit evidence regarding the skills, knowledge, and processes measured by the items. Item design should proceed from sources of cognitive complexity related to the construct of interest, rather than unrelated surface features (p. 33). A 1997 study by Gierl supported that test developers are often not able to predict the type of cognitive processes that are elicited by items. In his study, Gierl used think-aloud protocols to examine the putative cognitive processes elicited on a test of mathematics and compared these to the anticipated cognitive
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processes as described in the test specifications. The intended and observed cognitive processes were only found to coincide 54% of the time. As he noted, Cognitive features such as strategy selection and higher order thinking are often poorly evaluated because item writers are not trained to 19 identify the cognitive processes required to solve items (p. 26). Additionally, he noted, If test developers hope to assess students cognitive processes successfully, researchers should use think-aloud protocols to evaluate directly the problem-solving strategies that students use to solve achievement test items. Thus, when response process information is included in test specifications, test developers should still examine the actual process elicited as misalignment can often occur.
PREVIOUS RESEARCH
At an empirical research level, Strandholm & Kumar (2003) asserted the existence of a positive relationship between external environmental analysis style and overall organizational performance and the ability to gain a competitive advantage. Flatt and Kowalczyk (2008) also concluded that organizational culture is one intangible asset that can help organizations create a competitive strategic advantage and enhance financial performance. Vorhies and Morgan (2005) suggested that the use of proper marketing benchmark tools to benchmark marketing capabilities has become a key learning mechanism to deliver sustainable advantage.
BCG MATRIX The BCG matrix (aka B-Box, B.C.G. analysis, BCG-matrix, Boston Box, Boston Matrix, Boston Consulting Group analysis, portfolio diagram) is a chart that had been created by Bruce Henderson for the Boston Consulting Group in 1970 to help corporations with analyzing their business units or product lines. This helps the company allocate resources and is used as an analytical tool in brand marketing, product management, strategic management, and portfolio analysis. Analysis of market performance by firms using its principles has called its usefulness into question, and it has been removed from some major marketing textbooks
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cows are units with high market share in a slow-growing industry. These units typically generate cash in excess of the amount of cash needed to maintain the business. They are regarded as staid and boring, in a "mature" market, and every corporation would be thrilled to own as many as possible. They are to be "milked" continuously with as little investment as possible, since such investment would be wasted in an industry with low growth. pets, are units with low market share in a mature, slowgrowing industry. These units typically "break even", generating barely enough cash to maintain the business's market share. Though owning a break-even unit provides the social benefit of providing jobs and possible synergies that assist other business units, from an accounting point of view such a unit is worthless, not generating cash for the company. They depress a profitable company's return on assets ratio, used by many investors to judge how well a company is being managed. Dogs, it is thought, should be sold off. marks (also known as problem children) are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is a large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. If the question mark does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share. -growing industry. The hope is that stars become the next cash cows. Sustaining the business unit's market leadership may require extra cash, but this is worthwhile if that's what it takes for the unit to remain a leader. When growth slows, stars become cash cows if they have been able to maintain their category leadership, or they move from brief stardom to dogdom. Practical use of the BCG Matrix For each product or service, the 'area' of the circle represents the value of its sales. The BCG Matrix thus offers a very useful 'map' of the organization's product (or service) strengths and weaknesses, at least in terms of current profitability, as well as the likely cash flows.
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The need which prompted this idea was, indeed, that of managing cash-flow. It was reasoned that one of the main indicators of cash generation was relative market share, and one which pointed to cash usage was that of market growth rate. Derivatives can also be used to create a 'product portfolio' analysis of services. So Information System services can be treated accordingly.
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3 RESEARCH METHODOLOGY Research methodology is the systematic way to solve the research problem. It gives an idea about various steps adopted by the researcher in a systematic manner with an objective to determine various manners.
Meaning of Research
Research is defined as a scientific & systematic search for pertinent information on a specific topic. Research is an art of scientific investigation. Research is a systemized effort to gain new knowledge. It is a careful inquiry especially through search for new facts in any branch of knowledge. The search for knowledge through objective and systematic method of finding solution to a problem is a research.
DATA COLLECTION PROCEDURE: For the present study, primary as well as secondary data is necessary. PRIMARY DATA: A format for data gathering was prepared which will fit to check with format of the 3 rd party(AC NIELSEN) .Data was collected through observation and interviewing.
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SECONDARY DATA: Data was also collected from ITCs official website and some other websites.
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WEAKNESSES The main weakness of the company is that after the ban on advertisement it is not able to promote the product on higher basis as it was promoted before the ban. Mostly depending on tobacco products. Government regulations on tobacco products. Due to high price of cigarette, consumers are switching to other cheaper forms of tobacco. Negative opinion on cigarettes in some parts of society. It becomes difficult for the company to differentiate and decide the quality, price and other factors of the cigarettes while manufacturing and distributing.
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OPPORTUNITIES Increasing income level of the middle class. Can have tie up with other businesses where the customer base is high. Promote the brands whose availability is less. As ITC is being recognized as Worlds Best Big Companies and the Worlds Most Reputable Companies by Forbes magazine, the company can launch its brands at international level through collaboration with sports events held at international level and also with other brands. The packaging of the product should be changed and each and every attribute should be mentioned on the packet and also the level of harmless should be mentioned. This will help in Word of Mouth marketing.
THREATS The threats of the company are competition from international companies. The main competitors are Marlboro, Marlboro Lights, and 555 cigarettes. These companies are famous at international level and also as an imported cigarette brand with affordable price; the consumers prefer to buy them. Ban on smoking in public places. Competition from unbranded products. The next threat may also be the changing habits of the consumer; they may quit smoking due to its ill effects and hazards. This may affect the sales as well as the brand image of the product In future the government may completely put ban on advertisement of cigarettes or also put a ban on sponsorship under the consideration that cigarette is harmful for health. This will be the biggest threat for the product as well as the company. Excise duty on unfiltered cigarettes less than 60mm in length was increased 387% last year; Hike was 142% for those between 61mm and 70mm long.
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MATCHING STRENGTHS AND OPPURTUNITIES Matching is used to find competitive advantages by matching the strengths to opportunities. ITC can experiment on various strategies for its further growth in cigarette sector as the unexpected failures of those experiments may not affect much. ITCs brand image in the minds of consumers will support its future projects. ITC can now focus super premium brands considering the raise in income level of individuals. Maintaining good relationship with outlet owners and having toe ups with other business where the probability of cigarette consumption is high will be an hidden advantage. CONVERTING WEAKNESSES AND THREATS Converting is to apply conversion strategies to convert weaknesses or threats into strengths or opportunities In order to retain the customers switching towards unbranded or cheap products, make low end products for them maintaining the quality. As the changing habits of consumers cannot be avoided, ITC should focus more on high filtered cigarettes. Surrogate advertising method should be implemented to promote premium brands.
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Under FMCG, cigarettes are in cash cow stage where the market share is high and growth
rate is low.
ITC with its large number of variants available under cigarette section grabbed major
share in India.
Sales are stagnated and the growth rate is increasing in less margin because of the
presence of me too like products.
Product differentiation is difficult but can be achieved. Launching of new schemes and acquiring more outlets will enhance the sales. 4.3 VALIDATION OF OUTLETS Interpretation:
It is observed form the data that all the super premium outlets visited have a minimum of five brands (each MRP RS.110) available in the outlet with sale more than 700 sticks per day.
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It is observed that all the modern variant outlets visited are having more than 3 king size filter brand packs available in the outlet with the sale being more than 120 sticks per day. All the outlets which categorized under super premium and modern variant outlets are satisfying the respective conditions and no re-check required to verify taking the sales potential and loyalty into account.
Interpretation: From the data it is found that out of 43 outlets visited Insignia brand is available in 21
outlets with the availability of 48 packets on the whole.
India Kings (IK) brand is available in 29 outlets with the availability of 60 packets on the
whole.
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SLK 21 53
Interpretation:
From the data it is found that out of 43 outlets visited Gold flake red brand is available in 39 outlets with the availability of 528 packets on the whole. Gold flake blue brand is available in 39 outlets with the availability of 403 packets on the whole. Gold flake gold brand is available in 23 outlets with the availability of 92 packets on the whole. Gold flake arctic menthol brand is available in 16 outlets with the availability of 44 packets on the whole. Gold flake sleek brand is available in 21 outlets with the availability of 53 packets on the whole.
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BALANC ED 35 167
REFINE D 31 82
VERVE 25 140
Interpretation:
From the data it is found that out of 43 outlets visited Classic rich brand is available in 33 outlets with the availability of 110 packets on the whole. Classic balanced brand is available in 35 outlets with the availability of 167 packets on the whole. Classic refined brand is available in 31 outlets with the availability of 82 packets on the whole. Classic refreshing brand is available in 35 outlets with the availability of 112 packets on the whole. Classic verve brand is available in 25 outlets with the availability of 140 packets on the whole.
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Players availability
Players BLUE
Players RED
10
20
30
40
50
60
Players RED 51 18
Players BLUE 44 19
Interpretation:
From the data it is found that out of 43 outlets visited Players red brand is available in 18 outlets with the availability of 51 packets on the whole.
Players blue brand is available in 19 outlets with the availability of 44 packets on the
whole.
It is observed that Players brand is having the least availability among all the ITC brands. Also 11 outlets have the outdated stock of Players brand.
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B&H gold, gold blue and 555 are the other premium brands of ITC.
Interpretation:
From the data it is found that out of 43 outlets visited 555 brand is available in 11 outlets with the availability of 11 packets on the whole. B&H gold brand is available in 15 outlets with the availability of 24 packets on the whole. B&H gold blue brand is available in 27 outlets with the availability of 67 packets on the whole.
shelving 40 3
Modular display 41 2
Interpretation:
It is observed that out of 43 outlets visited 41 outlets have modular display and in the remaining 2 outlets order for the display is taken but not yet installed. It is observed 40 outlets have shelving and in the remaining 3 outlets order for the shelving is taken but not yet installed.
ON SHOP AD BOARD
After signing in to the club royale scheme retail architecture, modular display and onshop, in-shop ad boards are given by the ITC on certain conditions. On-shop board displays any of the ITCs cigarette brand names and the same brand name will be reflected in the in-shop ad board. Depending upon the location and view of the outlets there may be more than one ad board on the outlet.
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On shop ad board
25 20 15 10 5 0 On shop ad board
Classic 20
GFKL 6
GFKR 4
No ad board 13
Interpretation:
It is observed that out of 43 outlets visited 20 outlets have Classic, 6 outlets have Gold flake king lights, 4 outlets have gold flake red brand advertisement on their ad board. There is no ad board for 13 outlets due to the reasons like damage, maintenance and others.
ISSUES FOUND
During the visit to the outlets many problems were identified and told by the outlet owners. Most of the problems were solved within a couple of days time by informing directly to the authority. Major issue for many outlets is regarding the strength of the retail architecture built. And the next major issue is in availability of the stock at the salesman.
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Issues
6 5 4 3 2 1 0 strengt h of RA no. of outlets 5 no. of outlets
Stock Presenc Poor Less availabi Maintai e of Shortlity nance compet mainte confect circuit nace ionery with money itors hawker brands 1 4 2 3 2 4
Presence of competitor brands products is existing in 3 outlets. Issues related to strength of the retail architecture built is faced by 5 outlets Unavailability of stock with the salesman is face by 4 outlets Problem with irregular supply of maintenance money is faced by 2 outlets. Two are outlets are showing poor maintenance of outlet. OTHER PRODUCTS OF ITC Other than cigarettes ITC is trying to push its products belonging to other segments like personal care, incense sticks, confectionery in these outlets.
AGARBATTI, 2
SHAMPOO, 3 SOAPS, 3
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Interpretation Confectionery like chocolates is available in 37 outlets, biscuits in 6 outlets, bingo in 4 outlets, soaps in 3 outlets, shampoo in 3 outlets, agarbatti in 2 outlets.
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5.1 FINDINGS
It is found that all the outlets categorized under super premium and modern variant categories satisfy the respective conditions. ITCs aim to make all its cigarette brands available in all these outlets is partially achieved. Many outlets violated the condition of making competitor brand products unavailable. Merchandising methods were properly implemented by almost all outlets. Few outlets have the issue of strength of the retail architecture expressing the threat to theft. Few outlets have water leakage issue. Few outlets have the problem of electric shock because of improper wiring done. It is found that most of the customers are not aware that the cigarette belongs to ITC. Supervisor-outlet owner do influence the business to major extent.
5.2 SUGGESTIONS Brands like Gold flake arctic menthol, Classic menthol which are of mint flavored should
be promoted at the outlets near the corporate offices.
Super premium brands like Insignia and India kings can be promoted widely through
surrogate advertisements.
Advertisement about the product portfolio can be done at the smoking zones at theatres,
corporate offices with proper permission.
Exclusive outlets can be opened near to the food stations, bars, theatres and other high
consumption areas.
Wide counter area on the retail architecture which is plain can be used for advertisement. Good relationship should be maintained between supervisor and outlet owner for
successful implementation of this plan.
Make the outlet owner realize the benefits of being a virtual ITC outlet.
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5.3 LIMITATIONS Practically it may not be possible to stop the retailers form selling competitor brand cigarettes. Continuous monitoring about the implementation of the scheme rules may not be possible. The time period for the study was not enough to validate all the super premium and modern variant outlets in Hyderabad. It was difficult for the storekeepers to pinpoint the sales of a particular competitor brand in the outlet. Location tracking of the outlet was time consuming. As the nature of research was exploratory and descriptive so it was difficult to cover each and every outlet. Collection of data was difficult at some outlets located at prime areas because of the customer flood at the outlet. Accuracy of data was disturbed at some outlets as the data was collected before the salesman visit to the outlet. 12 outlets were closed during the visit.
5.4 CONCLUSION
Thus it can be concluded that the newly categorized outlets satisfy the conditions of being super premium and modern variant. ITC is partially successful in implementing the scheme Club Royale in these outlets. It can attain complete success with proper monitoring, maintaining good relationship with outlet owner and creating awareness of being virtual ITC outlet.
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BIBLIOGRAPHY Philip Kotler, Abraham Koshy, Kevin Lane, Marketing Management: A South Asian Perspective,13th edition. Naresh K. Malhotra, Satyabhushan Dash, Marketing Research: An Applied Orientation , Person Publications, 6th edition, 2010. Retrieved from , Analyzing the tobacco industry in India, http://www.researchandmarkets.com/reports/2089802/analyzing_the_tobacco_industry_i n_india,10:25 hrs,20-08-2012 Retrieved from, Cigarette market and forecast, http://www.reportlinker.com/report/search/theme/cigarette, 10:20 hrs, 8-08-2012 Retrieved from , Cigarettes India ITC ltd, http://www.itcportal.com/itcbusiness/fmcg/cigarettes.aspx, 10:50 hrs, 8-08-2012 Retrieved from , Growth-share matrix, http://en.wikipedia.org/wiki/Growthshare_matrix,13:55 hrs,19-08-2012. Retrieved from, Fundamental analysis of ITC, http://stockshastra.moneyworks4me.com/apply/company-shastra-apply/fundamentalanalysis-itc-ltd-report/, 9:50 hrs, 8-08-2012. Retrieved from, ITC Limited, http://en.wikipedia.org/wiki/ITC_Limited, 11:05 hrs, 808-2012 Retrieved from , ITC Limited India, http://business.mapsofindia.com/indiacompany/itc.html,13:25hrs,20-09-2012 Retrieved from , Research methodology, http://www.newagepublishers.com/samplechapter/000896.pdf, 13:42 hrs,19-08-2012. Retrieved from , SWOT analysis, http://en.wikipedia.org/wiki/SWOT_analysis, 13:28 hrs,19-08-2012
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