Marketing Management

Project Report

Classic Cigarettes
Group - 06
Submitted by: Submitted to:
 PRANAY BHARTI PGP25253 Prof. Hitesh Manocha
 MAHI DESHWAL PGP25199
 ISHIKA GARG PGP25446
 ABHISHEK DOD PGP25017
 SHUBHAM PGP25347
 GUNGUN JAIN PGP25137
 ANUSUIYA TYAGI PGP25075
 SAKSHAM PAHUJA PGP25313
 SHAKIB PGP25430
 ACKNOWLEDGEMENT

We would like to express our sincere gratitude to everyone who

has supported us throughout this project. First and foremost,
we would like to thank our Marketing Management-II professor,
Mr. Hitesh Manocha for their invaluable guidance and
encouragement. Their insights and feedback have been
instrumental in shaping this project.
We would also like to extend my appreciation to FOSTIIMA
Business School for providing us with the resources and
facilities necessary to carry out this project. We are grateful to
our colleagues for their assistance and support throughout the
project.
Thank you all for your support and encouragement.

DATE: 04/03/2024
Imperial Tobacco Company’s Mission: -
“To enhance the wealth generating capability of the enterprise in a globalizing environment, delivering
superior and sustainable stakeholder value."

The mission at Classic Cigarettes, a product of ITC Limited, is to provide adult smokers with a
premium smoking experience through our carefully crafted blend of tobacco. We are committed
to maintaining the highest standards of quality and innovation while responsibly meeting the
preferences of our consumers. We strive to uphold our reputation as a trusted brand, promoting
informed choices and responsible enjoyment within the framework of legal and regulatory
guidelines.

Imperial Tobacco Company’s Mission: -

“Sustain ITC's position as one of India's most valuable corporations through world class performance,
creating growing value for the Indian economy and the Company's stakeholders.”

This mission statement emphasizes ITC Limited's commitment to maintaining its status as one of India's
most valuable corporations by focusing on world-class performance. Here's a brief elaboration:

1. Sustaining Position as a Valuable Corporation: ITC aims to uphold its reputation as a leading
corporation in India, known for its significant contribution to the economy and society.
2. World-Class Performance: The company prioritizes excellence in all aspects of its operations,
including product quality, innovation, operational efficiency, and customer satisfaction.
3. Creating Growing Value for the Indian Economy: ITC is dedicated to contributing to the
growth and development of the Indian economy through its business activities, investments,
and employment opportunities.
4. Value for Stakeholders: The mission underscores ITC's commitment to creating value not
only for its shareholders but also for its broader stakeholder community, including
employees, suppliers, customers, and society at large.

Overall, this mission statement reflects ITC's focus on sustainable growth, value creation, and responsible
corporate citizenship in the Indian context.

Imperial Tobacco Company’s Mission: -

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.
  Customer Focus:
We are always customer focused and will deliver what the customer needs in terms of value,
quality and satisfaction.
 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.
 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 management
practices.
 Nation 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.

HOW PRESENT STRATEGIES ARE WITHIN THE MISSION, VISION, AND CORE
VALUES
1. Maximizing cigarette potential: ITC's focus is to maximize the potential of cigarettes within the
tobacco basket.
2. Reinforcing market standing: ITC's strategy is to reinforce its market standing with its factory
made cigarettes (FMCG) and listed 'recent introductions' as well as existing brands.
3. Portfolio intervention: ITC's strategy is to counter illicit by intervening in differentiated formats.
4. Product-mix enrichment: ITC's strategy is to enrichment product-mix through strategic
interventions.
5. Back-end efficiencies: ITC's strategy is to bring in back-end efficiencies through strategic
interventions.
6. Value-added segments: ITC's strategy is to increase focus on value-added segments through
strategic interventions.
7. Digital leverage: ITC's strategy is to leverage digital through strategic interventions.

Other strategies include:

 Entering the premium pricing range in any segment it wants to tap

 Moving down the value chain to enter mass segments

 Incorporating cigarettes in entering new FMCG segments

  Launching two new variants of cigarettes in the 69 mm category under its 'Gold Flake' brand.

SEGMENTATION

Price Segmentation

Flavor Segmentation

Packaging Segmentation

Target Consumer Segmentation

Health and Wellness Segmentation

Regional Segmentation

Classic cigarettes typically segment its cigarette products based on various factors, including price, flavor,
packaging, and target consumer demographics. While specific details may vary, here's a general overview
of how Classic might segment its cigarette products:
 1. Price Segmentation: Classic likely offers a range of cigarette brands at different price points to
cater to consumers with varying budgets. This segmentation may include premium, mid-range,
and economy brands.

2. Flavor Segmentation: Some cigarette brands may be differentiated based on flavor profiles, such
as menthol, traditional, or flavored variants.

3. Packaging Segmentation: Packaging design can play a significant role in product differentiation.
Classic may offer cigarettes in different packaging formats, including box packs, soft packs, or
specialty packaging options.

4. Target Consumer Segmentation: Classic may target specific consumer segments based on
demographics, lifestyle preferences, or smoking habits. This could involve offering brands
tailored to different age groups, genders, or socio-economic backgrounds.

5. Health and Wellness Segmentation: With increasing awareness of health risks associated with
smoking, Classic may offer products targeted at health-conscious consumers. This could include
brands marketed as "low tar" or "light" cigarettes.

6. Regional Segmentation: Classic may also segment its cigarette products based on regional
preferences and cultural factors. Different regions within India may have distinct preferences for
cigarette types, flavors, or packaging styles.

By employing segmentation strategies, Classic can effectively address the diverse needs and preferences
of its target market while maximizing its market share and profitability across different segments.

TARGETING
Classic cigarette brand typically targets adult smokers in India. The specific target market for Classic
cigarette brand may vary depending on factors such as brand positioning, pricing, flavor profiles, and
packaging design. However, in general, the target market for Classic's cigarette brands can be described
as follows:

1. Adult Smokers: Classic's primary target market comprises adult smokers who consume tobacco
products. This demographic includes individuals of legal smoking age who have the purchasing
power and willingness to buy cigarettes.

2. Diverse Socio-Economic Backgrounds: Classic cigarette brand may target consumers from
various socio-economic backgrounds. The company offers a range of brands at different price
points to cater to consumers with varying levels of affordability.

3. Urban and Rural Consumers: Classic likely targets both urban and rural consumers in India.
While urban consumers may have different preferences and purchasing patterns compared to
rural consumers, Classic aims to capture market share across both segments.

4. Brand-Specific Segments: Within its portfolio of cigarette brands, Classic may target specific
segments based on brand positioning and attributes. For example, premium brands may target
 affluent consumers seeking luxury or status, while economy brands may target budget-conscious
consumers.

5. Legal Smoking Age: Classic adheres to legal regulations regarding the sale and marketing of
tobacco products. Therefore, its target market excludes individuals below the legal smoking age
in India.

Overall, Classic's cigarette brands are aimed at adult smokers across different demographics, regions, and
socio-economic backgrounds in India. The company's marketing strategies and product offerings are
designed to resonate with the preferences and lifestyle choices of its target audience while complying
with regulatory requirements.

NEEDS BEING MET

Certainly, here are the needs being met by CLASSIC's cigarette brands in brief:

1. Nicotine Addiction: Fulfilling the addictive need for nicotine.

2. Social and Psychological: Addressing social, stress-relief, and mood-enhancement needs.
3. Taste and Flavor Preferences: Catering to diverse taste preferences.
4. Brand Image and Identity: Reflecting lifestyle choices and personal identity.
5. Ritual and Habitual Behavior: Providing comfort and routine.
6. Perceived Benefits: Meeting perceived benefits like concentration or relaxation.
7. Accessibility: Being readily available for consumption.

PESTEL ANALYSIS OF CLASSIC CIGERATTES

1. Political Factors:

 Government Regulations: The Indian government heavily regulates the tobacco industry
through laws governing advertising, packaging, and sales. Any changes in these
regulations can significantly impact Classic's operations and marketing strategies. For
example, stricter regulations on tobacco advertising may limit Classic's ability to
promote its variety of Cigarettes.

 Tax Policies: Increases in tobacco taxes can raise the prices of cigarettes, affecting
consumer demand and profitability for Classic. Conversely, tax cuts or incentives may
stimulate sales.

 International Trade Agreements: Trade policies and tariffs imposed on tobacco products
can influence ITC's ability to export and import Classic cigarettes, affecting its global
market presence.

2. Economic Factors:
  Economic Growth: India's economic performance directly affects consumer purchasing
power and demand for cigarettes. During periods of economic growth, consumers may
have higher disposable incomes, leading to increased consumption of tobacco products
like Classic cigarettes.

 Exchange Rates: Fluctuations in currency exchange rates can impact the cost of
imported materials used in cigarette manufacturing or affect export revenues if ITC
exports Classic cigarettes to other countries.

 Inflation: Inflationary pressures can affect production costs, including raw materials,
labor, and transportation, potentially influencing pricing strategies for Classic cigarettes.

3. Social Factors:

 Changing Demographics: Shifts in population demographics, such as age distribution

and urbanization trends, can influence smoking prevalence and consumer preferences
for cigarette brands like Classic.

 Health Consciousness: Increasing awareness of the health risks associated with smoking
may lead to a decline in demand for cigarettes. CLASSIC may need to address health
concerns by diversifying its product portfolio or investing in smoking cessation programs.

 Cultural Attitudes: Social norms and cultural perceptions of smoking vary across regions
and demographics. CLASSIC must consider cultural attitudes towards smoking when
marketing Classic cigarettes and developing promotional strategies.

4. Technological Factors:

 Manufacturing Technology: Advances in manufacturing technology can enhance

efficiency, reduce production costs, and improve product quality for Classic cigarettes.
CLASSIC must continually invest in modern manufacturing processes to remain
competitive in the tobacco industry.

 E-cigarettes and Alternatives: Technological innovations in smoking cessation products

or alternative tobacco products, such as e-cigarettes, may disrupt the traditional
cigarette market. CLASSIC should monitor these developments and assess their potential
impact on Classic cigarette sales.

5. Environmental Factors:

 Environmental Regulations: Compliance with environmental regulations is essential for

CLASSIC's tobacco cultivation, manufacturing, and waste disposal practices. Failure to
adhere to environmental standards can result in fines, reputational damage, and legal
liabilities.

 Sustainability Initiatives: Consumer demand for sustainable products and ethical

business practices is growing. Classic may need to adopt environmentally friendly
policies, such as sustainable farming practices or eco-friendly packaging, to meet
consumer expectations for Classic cigarettes.
 6. Legal Factors:

 Tobacco Control Laws: Classic must comply with stringent tobacco control laws imposed
by the Indian government, including restrictions on advertising, packaging, and smoking
in public places. Non-compliance can result in penalties and regulatory sanctions.

 Litigation Risks: Legal challenges and lawsuits related to the health effects of smoking
pose significant risks to Classic's reputation and financial stability. The company must
address these risks by implementing responsible marketing practices and investing in
research on tobacco-related health issues.

By analyzing these factors, Classic can better understand the external environment in which it operates
and make informed decisions regarding the marketing, production, and distribution of its Classic
cigarettes.

TOBACCO INDUSTRY
India is also a major net exporter of cigarettes. According to UN Comtrade, it exported over US$100
million in cigarettes in 2022, compared to nearly $26 million in imports. According to IBEF, the tobacco
industry in India employs about 36 million people in farming, processing, manufacturing and export
activities.

Leading tobacco companies in India 2024, based on market capitalization. The leading Indian tobacco
company across India in January 2024 was ITC Limited, with a market capitalization of about 6 trillion
Indian rupees. This was followed by Godfrey Philips with a market capitalization worth over 114 billion
rupees.

Labelled as a notorious industry, the tobacco market in India is anticipated to keep growing steadily over
the coming years. The Indian economy is home to diverse tobacco producers, major players, and a large
consumer base, owing to its popularity as a stimulant and relaxation agency. The Association of
Constructors of Proprietary Fittings (ACP) supplies fittings and lubricants with the assistance of the trade
to the tobacco industry, classifying as it is a major contributor to the mechanical and thermal product
requirements for the industry.
The tobacco industry in India is a complex and controversial one. Here's a breakdown of its key aspects:

Production and Exports:

 India is the world's second largest producer of tobacco, after China, accounting for roughly 9% of
global production.

 It's also the world's second largest exporter of tobacco leaf, behind Brazil.

Economic Impact:

 The industry employs millions of people in farming, processing, manufacturing, and export
activities. Estimates suggest around 36 million jobs are linked to tobacco in India.

 It generates significant revenue for the government through taxes.

Health Concerns:

 Despite its economic contributions, tobacco use is a major public health concern in India. It's a
leading cause of preventable deaths, linked to cancers, heart disease, and lung diseases.

 There are growing efforts to discourage tobacco use through anti-smoking campaigns, graphic
health warnings on packaging, and bans on smoking in public places.

Regulations:

 The Indian government has implemented various regulations to control tobacco use. These
include restrictions on advertising, promotion of pictorial warnings, and bans on smoking in
public spaces.

Future of the Industry:

 The future of the tobacco industry in India is likely to be challenging due to increasing awareness
of health risks and stricter regulations.

 The industry might need to adapt by exploring alternative products or diversification into other
sectors.

Here are some additional points to consider:

 Social Impact: Tobacco cultivation can have negative impacts on farmers' health and the
environment.

 Gender Issues: While smoking rates are traditionally lower among women in India, there are
concerns about rising female tobacco use.

Overall, the tobacco industry in India plays a significant economic role, but it comes at a high cost to
public health. The future of the industry is likely to involve navigating stricter regulations and finding
ways to balance economic considerations with public health concerns.
Cigarette Market Analysis
The global cigarette market is expected to register a CAGR of 6.60% during the forecast period of [2024-
2029].

 Nowadays, giant manufacturers find it profitable to market flavored tobacco products, such as
cigars, fruit-flavored cigarettes, smokeless tobacco, and related products, which gives them an
edge over their competitors. Moreover, changing lifestyles, continuous product innovation in
terms of packaging size, organic ingredients, and balanced nicotine levels gain consumer
acceptance and belief that smoking reduces stress and anxiety, propelling the market's growth
globally.
 In a study conducted by the Center for Disease Control and Prevention (CDC), companies such as
Marlboro, Newport, and Camel, who designed marketing campaigns specifically aimed at
attracting the attention of young people, were found to be the most heavily involved in
marketing campaigns. As a result of this, they were regarded as the most preferred brand by
youths. Tobacco has become a significant part of people's lives over the last decade and is
consumed on a daily basis. During the next few years, this factor will likely play a significant role
in driving the overall demand for cigarettes in the market.
 Furthermore, several factors, such as consumer knowledge and an increase in awareness of
products and services, through digital media and other sources, coupled with the advent of
social media, are educating consumers about the benefits of organics cigarette products which,
in turn, is driving the demand for organic and herbal cigarettes. Moreover, company offering
these products are increasing their investments in R&D, and marketing and expanding their
distribution channels, to maintain their position in the market.
 Market share of organized and unorganized for last year and
projection for next three years
In 2024, the revenue in the Cigarettes market in India amounts to INR US$13.4bn. In India, the cigarette
market is unregulated, leading to widespread counterfeit and adulterated cigarettes. The unorganized
market dominates at least 60% of the market, with few players controlling more than 50% of it. This has
led to a rise in smuggling and black marketing. The government has taken several measures to regulate
the market, such as implementing Good Manufacturing Practices and imposing taxes, but these efforts
have been slow to yield results.

The unorganized sector of India's tobacco market is made up of many small-scale, unregulated
producers, like small households, that produce bidis and other products. Cigarettes are primarily
produced in large-scale industries.

Players like British American Tobacco PLC, ITC Limited, Philip Morris Products SA, Altria Group Inc., and
Japan Tobacco International SA dominate the market. The leading players in the market studied enjoy a
dominant presence worldwide. These players focus on leveraging opportunities posed by emerging
markets to expand their product portfolio to cater to the requirements of various product segments,
especially e-cigarettes. Owing to this factor, the key players are embarking on mergers and acquisitions
as one of their key strategies to achieve consolidation and optimize their offerings. Advanced distribution
networks and manufacturing expertise give an upper edge to the manufacturers to expand their range of
products across the region.

Organized Market leader of Cigarettes in India: -

 ITC India limited
 - Holds 73% share in the Market
 Godfrey Phillips India Limited (GPI)
- Holds 10% share in the Market
 VST Industries limited
- Holds 9% share in the Market
 Philip Morris International(PMI)
- Holds 5.4% share in the Market

Unorganized Market of Cigarette in India: -

The unorganized market of cigarettes in India is a significant contributor to the country's tobacco sector.
It is estimated that the unorganized market accounts for around 60% to 70% of the total market share in
terms of volume. This includes street vendors selling loose cigarettes and smokeless tobacco products,
which are not subject to the same regulatory scrutiny and quality standards as organized retail channels.
The unorganized market is associated with various health and economic issues, including issues related
to smoking and tobacco use.

Classic Cigarette’s five competitive forces: -

1. Threat of New Entrants:

 Regulatory Barriers: The tobacco industry is heavily regulated, making it challenging for
new entrants to comply with stringent regulations related to manufacturing, advertising,
and distribution. This creates a barrier to entry as new players must navigate complex
legal requirements.
  Economies of Scale: Established companies like ITC have significant economies of scale
in production, distribution, and marketing. New entrants may struggle to compete with
these efficiencies, leading to higher production costs and lower profit margins.

 Brand Loyalty: Classic Cigarettes benefits from strong brand recognition and customer
loyalty built over years of marketing and advertising. New entrants would need to invest
heavily in brand-building efforts to compete effectively.

 Capital Requirements: Setting up a tobacco manufacturing facility requires substantial

capital investment. Additionally, new entrants may face challenges in securing financing
due to the controversial nature of the tobacco industry

.Bargaining Power of Suppliers:

 Tobacco Growers: Suppliers of tobacco leaves may have moderate bargaining power,
especially in regions where tobacco cultivation is concentrated. Factors such as crop
yields, weather conditions, and government policies can influence supply and pricing.

 Packaging Suppliers: Suppliers of packaging materials, such as paper and cartons, may
have moderate bargaining power, particularly if there are limited alternatives or if the
materials require specialized manufacturing processes.

 Regulatory Compliance: Suppliers must comply with regulatory requirements related to

tobacco packaging and labeling, which can affect their ability to meet Classic Cigarettes'
specifications and timelines.

2. Bargaining Power of Buyers:

 Retailers: Retailers selling Classic Cigarettes may have moderate bargaining power,
especially if they carry a variety of competing brands. However, brand loyalty among
consumers and the addictive nature of nicotine can reduce retailers' ability to negotiate
lower prices.

 Consumer Preferences: Consumers ultimately drive demand for Classic Cigarettes. While
they have some bargaining power in terms of choosing between brands and products,
factors such as addiction, habit, and brand loyalty can limit their influence over pricing
and product offerings.

3. Threat of Substitute Products:

 Healthier Alternatives: The availability of substitutes such as smokeless tobacco, e-

cigarettes, nicotine patches, and other smoking cessation aids poses a significant threat
to Classic Cigarettes. Changing consumer preferences towards healthier lifestyles and
increasing awareness of the health risks associated with smoking contribute to the
popularity of these alternatives.

 Regulatory Landscape: Regulations governing alternative tobacco products may

influence their availability, pricing, and marketing strategies. Changes in regulations
could either enhance or diminish the threat posed by substitutes.
 4. Intensity of Competitive Rivalry:

 Industry Competitors: Classic Cigarettes faces intense competition from both domestic
and international tobacco companies offering similar products. Competitors may engage
in aggressive marketing campaigns, pricing strategies, and product innovations to gain
market share.

 Brand Differentiation: Differentiation through branding, packaging, and product features

is crucial for Classic Cigarettes to stand out in a crowded market. Building brand loyalty
and maintaining a strong market presence are essential for sustaining competitive
advantage.

 Price Competition: Price competition is common in the tobacco industry, with

companies frequently adjusting prices to attract price-sensitive consumers. However,
excessive price competition can erode profit margins and harm brand image.

By carefully analyzing and responding to these competitive forces, Classic Cigarettes can develop
effective strategies to maintain its market position and profitability amidst industry challenges.

Indirect competitors of Classic Cigarette: -

1. E-Cigarettes
2. Hookah
3. Cigar
4. Bidi

The competitive advantage of Classic cigarette’s top three

competitors: -
Identifying the competitive advantages of the top three competitors of ITC Cigarettes requires
understanding their respective strengths in the tobacco industry. While specific advantages may vary,
here are hypothetical competitive advantages for three prominent competitors:

1. ITC's Competitor 1: Godfrey Phillips India Ltd. (GPI):

 Strong Distribution Network: GPI may have an extensive distribution network across
India, enabling widespread availability of its cigarette brands in urban and rural areas.

 Focus on Premium Segments: GPI may specialize in premium and niche cigarette brands,
catering to upscale consumers with unique flavor profiles and packaging designs.

 International Presence: GPI may have a significant presence in international markets,

exporting its cigarette brands to countries with favorable regulatory environments and
consumer demand.

2. ITC's Competitor 2: VST Industries Ltd. (VST):

  Cost Efficiency: VST may have a competitive advantage in cost efficiency, leveraging
economies of scale and efficient production processes to maintain lower manufacturing
costs.

 Brand Loyalty: VST's cigarette brands may enjoy strong brand loyalty among consumers,
built over years of consistent quality and marketing efforts.

 Diversification: VST may have diversified its product portfolio beyond cigarettes, offering
tobacco-related products such as cigars, bidis, and tobacco leaf exports, providing
revenue stability and resilience against market fluctuations.

3. ITC's Competitor 3: Philip Morris International(PMI):

 Brand Power and Global Reach: PMI boasts iconic cigarette brands like Marlboro and a
strong presence in numerous countries, providing significant economies of scale.

 Innovation in Reduced-Risk Products (RRPs): PMI's investment in alternative tobacco

products like heated tobacco and e-cigarettes addresses evolving consumer preferences
and regulatory trends.

 Regulatory Expertise and Legal Resources: PMI's experience in navigating complex

regulations and its legal capabilities enable it to adapt to changing regulatory
environments and manage legal challenges effectively.

 Effective Marketing and Branding: PMI employs sophisticated marketing strategies to

differentiate its products and connect with consumers, while also implementing youth
prevention initiatives to address regulatory concerns.

 Sustainability and Corporate Responsibility: PMI's commitments to sustainability and

corporate responsibility enhance its reputation and appeal to socially conscious
consumers, contributing to its competitive advantage.

SWOT analysis of Classis Cigarettes: -

Strengths:

1. Strong Brand Recognition: Classic cigarettes benefit from strong brand recognition and loyalty
among consumers, established through extensive marketing efforts and consistent product
quality.

2. Wide Distribution Network: Classic cigarettes have a wide distribution network across India,
ensuring availability in both urban and rural areas, which contributes to their market penetration
and sales.

3. Product Portfolio: Classic offers a diverse product portfolio catering to different consumer
preferences, including variants like regular, menthol, and lights, allowing it to capture a broader
market segment.

Weaknesses:
 1. Health Concerns: Classic cigarettes face increasing scrutiny and criticism due to health concerns
associated with smoking, which can lead to declining demand, regulatory restrictions, and
negative publicity.

2. Regulatory Restrictions: The tobacco industry is heavily regulated, with restrictions on

advertising, packaging, and smoking in public places. Compliance with these regulations can limit
Classic's marketing strategies and brand visibility.

3. Dependency on Tobacco: Classic cigarettes rely on tobacco as the primary raw material, making
the brand susceptible to fluctuations in tobacco prices, supply chain disruptions, and regulatory
changes affecting the tobacco industry.

Opportunities:

1. Diversification into Reduced-Risk Products: Classic cigarettes can explore opportunities in the
emerging market for reduced-risk tobacco products, such as e-cigarettes, nicotine pouches, and
heat-not-burn devices, to adapt to changing consumer preferences and regulatory trends.

2. Expansion into International Markets: Classic cigarettes can explore expansion opportunities in
international markets, leveraging the strength of the brand and tapping into growing demand for
Indian tobacco products globally.

3. Health and Wellness Trends: Classic cigarettes can capitalize on growing health and wellness
trends by introducing innovative product variants, such as low-tar or organic cigarettes, targeting
health-conscious consumers seeking alternatives to traditional cigarettes.

Threats:

1. Regulatory Challenges: Stringent regulations governing tobacco advertising, packaging, and

taxation pose a significant threat to Classic cigarettes, potentially leading to increased
compliance costs, reduced market access, and restrictions on product sales.

2. Competitive Pressure: Classic cigarettes face intense competition from both domestic and
international tobacco companies, competing for market share through aggressive marketing,
pricing strategies, and product innovation.

3. Declining Smoking Rates: Increasing awareness of the health risks associated with smoking,
along with anti-smoking campaigns and smoking cessation efforts, contribute to declining
smoking rates, posing a long-term threat to Classic cigarettes' market demand and profitability.

Small Business Units of Classic Cigarettes: -

Classic Cigarettes, as a product line under ITC Limited, may not be specifically organized into Strategic
Business Units (SBUs) in the traditional sense. However, we can conceptualize SBUs within ITC Limited's
tobacco division, which includes Classic Cigarettes along with other cigarette brands and tobacco-related
products. Here's a hypothetical breakdown:

1. Cigarettes SBU:
  This SBU encompasses all cigarette brands produced and marketed by ITC Limited,
including Classic Cigarettes, Gold Flake, Navy Cut, Bristol, and others.

 It focuses on developing and managing the company's cigarette portfolio, including

brand positioning, product innovation, pricing strategies, and distribution channels.

 The Cigarettes SBU operates in a highly competitive market and is subject to regulatory
challenges and changing consumer preferences.

2. Alternative Tobacco Products SBU:

 This SBU focuses on developing and commercializing alternative tobacco products, such
as cigars, bidis, smokeless tobacco, and electronic cigarettes.

 It includes brands like ITC's Gold Flake and KwikNic, which offer alternatives to
traditional cigarettes and cater to different consumer segments.

 The Alternative Tobacco Products SBU aims to capitalize on changing consumer

preferences, regulatory trends, and emerging market opportunities in the tobacco
industry.

3. International SBU:

 This SBU manages ITC Limited's international operations and expansion efforts, including
the export of cigarette brands like Classic to foreign markets.

 It focuses on identifying and entering new international markets, establishing

distribution networks, complying with regulatory requirements, and building brand
presence and market share overseas.

 The International SBU plays a crucial role in diversifying ITC's revenue sources and
reducing dependence on the domestic market.

4. Innovation and Research SBU:

 This SBU is dedicated to research and development initiatives related to tobacco

products, including traditional cigarettes and alternative tobacco products.

 It focuses on innovation in product formulations, manufacturing processes, packaging

designs, and harm reduction technologies.

 The Innovation and Research SBU collaborates with internal teams, external partners,
and regulatory authorities to drive product innovation and address health and
regulatory challenges.

These hypothetical SBUs within ITC Limited's tobacco division help organize and streamline the
management of different product lines and business activities, facilitating strategic planning, resource
allocation, and performance evaluation.
Elements of Marketing mix of Classis cigarettes: -
1. Product:

 Product Variants: Classic cigarettes offer a range of variants to cater to diverse consumer
preferences. These variants may include different tobacco blends, filter types, and flavor
options such as regular, menthol, or lights.

 Packaging: The packaging of Classic cigarettes is designed to attract attention and convey
brand identity. It typically includes branding elements, health warnings, and regulatory
information to comply with legal requirements.

 Product Quality: ITC prioritizes maintaining consistent product quality for Classic
cigarettes to meet consumer expectations and regulatory standards. Quality control
measures are implemented throughout the manufacturing process to ensure product
integrity.

2. Price:

 Pricing Strategy: ITC employs a pricing strategy that balances perceived value with
market competitiveness. Prices for Classic cigarettes may vary based on factors such as
brand positioning, variant, packaging size, and regional pricing dynamics.

 Promotions and Discounts: Occasionally, ITC may offer promotions or discounts on

Classic cigarettes to stimulate sales or attract price-sensitive consumers. These
promotions may include discounts, buy-one-get-one offers, or loyalty programs.

3. Place (Distribution):

 Distribution Channels: Classic cigarettes are distributed through an extensive network of

wholesalers, retailers, and convenience stores across India. ITC ensures broad coverage
to reach consumers in both urban and rural areas.

 Retail Presence: Classic cigarettes are strategically placed and promoted at point-of-sale
locations within retail outlets. Eye-catching displays, signage, and promotional materials
help attract attention and drive purchase decisions.

 Geographic Coverage: ITC ensures that Classic cigarettes are available in key markets
and regions across India, targeting areas with high consumer demand and consumption
rates.

4. Promotion:

 Advertising: ITC utilizes various advertising channels to promote Classic cigarettes,

including television, print media, outdoor advertising, and digital platforms. Advertising
messages emphasize brand attributes, flavor profiles, and lifestyle associations to
resonate with target consumers.

 Sponsorships and Events: ITC may sponsor events or engage in promotional activities to
increase brand visibility and engagement. These activities often target specific
 demographics or occasions, such as music festivals, sporting events, or cultural
gatherings.

 Point-of-Sale Promotion: In-store promotions, displays, and signage are used to enhance
the visibility of Classic cigarettes and influence purchase decisions at the point of sale.

 Public Relations: ITC manages its corporate image and addresses any negative
perceptions or controversies related to Classic cigarettes through public relations efforts.
These efforts may include media relations, community engagement, and corporate social
responsibility initiatives.

Past performance review: -

Challenges:

 Volume Decline: Between 2013 and 2019-20, cigarette volumes in India declined by 20% due to
a sharp rise in taxes on tobacco products.

 Illicit Trade: This decline also fueled the growth of the illicit cigarette market, posing a challenge
to legal tobacco companies like ITC.

Recovery and Growth:

 Stable Taxation: Since 2022, taxation on cigarettes has remained relatively stable, providing
some stability to the industry.

 Market Share: Despite the challenges, ITC continues to dominate the legal cigarette market in
India, controlling nearly 80% of the market share.

 Volume Rebound: Recent reports indicate that ITC's cigarette volumes have rebounded to peak
levels seen in fiscal 2013. This is attributed to factors like:

o Stable taxation

o Portfolio interventions (introducing new variants and product categories)

o Recovering sales from the illicit market

Financial Performance:

 Revenue Growth: Despite the volume fluctuations, ITC's overall revenue has grown steadily over
the past decade.

 Profitability: The company maintains a high level of profitability, with a return on equity
exceeding 29%.

Objectives of Classic Cigarettes: -

The objectives of Classic Cigarettes, as a product line under ITC Limited include: -
 1. Market Leadership: To maintain or achieve a leading position in the Indian cigarette market by
capturing a significant share of consumer demand and outperforming competitors.

2. Brand Growth and Equity: To strengthen the brand equity of Classic Cigarettes by enhancing
brand awareness, loyalty, and perceived value among consumers through effective marketing
and product strategies.

3. Revenue and Profitability: To drive revenue growth and profitability for ITC Limited by
maximizing sales and margins from the Classic Cigarettes product line while optimizing cost
efficiencies.

4. Market Expansion: To explore opportunities for market expansion and penetration by targeting
new consumer segments, geographic regions, or distribution channels within India or
internationally.

5. Product Innovation and Differentiation: To innovate and differentiate Classic Cigarettes through
product enhancements, packaging innovations, and new variants that cater to evolving
consumer preferences and regulatory trends.

6. Regulatory Compliance: To ensure compliance with all relevant regulations and legal
requirements governing the manufacturing, marketing, and sale of tobacco products, including
health warnings, packaging standards, and advertising restrictions.

7. Consumer Health and Safety: To promote responsible consumption and minimize potential
health risks associated with smoking by providing accurate information, supporting smoking
cessation initiatives, and adhering to ethical marketing practices.

8. Corporate Social Responsibility (CSR): To fulfill corporate social responsibility commitments by

actively engaging in initiatives that benefit society, promote public health, and contribute to
environmental sustainability within the context of tobacco production and consumption.

These objectives align with ITC Limited's overall corporate goals and strategic priorities while reflecting
the specific challenges and opportunities associated with the tobacco industry and Classic Cigarettes'
role within it.

Positioning Statements
Due to the sensitive nature of the tobacco industry and the potential for misinterpretation as promoting
smoking, ITC Limited does not publicly disclose a specific positioning statement for Classic cigarettes.

ITC India Ltd. Positioning Statement: - "Enduring Value. For the nation. For the Shareholder"

Marketing Strategy of Classic Cigarettes: -

The marketing strategy of Classic cigarettes, as a product line under ITC Limited, likely encompasses
various elements aimed at promoting brand awareness, driving sales, and maintaining market share.
Here's an outline of a hypothetical marketing strategy for Classic cigarettes:
1. Target Market Segmentation:

 Identify and segment the target market based on demographics, psychographics, and
behavioral characteristics. Classic cigarettes may target adult smokers aged 18 and
above, with specific focus on urban and rural consumers across different income levels.

2. Positioning and Brand Identity:

 Position Classic cigarettes as a premium-quality, trusted brand with a rich heritage and
strong brand equity. Emphasize key brand attributes such as taste, flavor, and packaging
aesthetics to differentiate from competitors.

3. Product Portfolio Management:

 Continuously assess and optimize the Classic cigarettes product portfolio to meet
evolving consumer preferences and regulatory requirements. Introduce new variants,
flavors, or packaging formats to cater to diverse consumer segments.

4. Point-of-Sale Promotion:

 Implement point-of-sale promotions and merchandising strategies to enhance visibility

and drive impulse purchases at retail outlets. This may include attractive displays,
signage, and promotional offers to capture consumer attention.

5. Retailer and Distributor Partnerships:

 Build strong relationships with retailers and distributors to ensure widespread

availability and consistent distribution of Classic cigarettes across key markets. Provide
incentives, training, and support to encourage retailer loyalty and compliance with
brand guidelines.

6. Consumer Engagement and Loyalty:

 Implement consumer engagement initiatives such as loyalty programs, contests, or

experiential marketing events to foster brand loyalty and advocacy among existing
consumers.

 Leverage digital platforms and social media channels to facilitate two-way

communication with consumers, gather feedback, and address concerns in real-time.

7. Performance Measurement and Optimization:

 Continuously monitor key performance indicators (KPIs) such as sales volume, market share,
brand awareness, and consumer sentiment to evaluate the effectiveness of the marketing
strategy.

 Use insights from market research, consumer feedback, and competitive analysis to refine and
optimize the marketing approach over time.
Sales Volume
Classic, has been present in the market for more than 40 years. Over the last five years, Classic has
launched four new variants, which contribute 25% of the classic portfolio. ITC, which owns the cigarette
brands Gold Flake and Classic, reported a gross revenue of over 234 billion Indian rupees from the
cigarette segment and the Classic holds 18% approx. share of it.

Market Share
Classic is a flagship brand of ITC Limited, India's leading tobacco company. In 2022, ITC had a market
share of over 73% in the Indian tobacco market, with Godfrey Phillips India Limited (GPI) having a market
share of almost 10%. Classic Cigarette holds 17% of the 73% share of ITC Cigarette market.

Profit
ITC Ltd (ITC.NS), an Indian cigarette maker, reported a 20.8% increase in profit in the second quarter of
2022. ITC's profit was 44.66 billion Indian rupees ($541.18) in 2022, with a 26.6% increase in revenue
from operations. Cigarette market of ITC holds 23.3% of the profit share in its Gross profit.

Product Strategy:

 Ongoing market analysis informs decision-making.

 Continuous identification and monitoring of target audience.
 Quarterly or annual review of product portfolio.
 Consistent brand positioning across marketing channels.
 Periodic product development to meet changing preferences.
 Seasonal or campaign-based marketing and promotions.
 Ongoing compliance with regulatory requirements.
 Continuous collection and utilization of customer feedback.
 Integration of sustainability and CSR initiatives.
 Regular monitoring and evaluation of performance.

Pricing Strategy:

 Utilization of cost-plus, competitive, and value-based pricing.

 Implementation of price skimming for new products.
 Application of psychological pricing techniques.
 Seasonal or campaign-based promotional pricing.
 Dynamic pricing in response to market conditions.
 Bundling pricing strategies for value offerings.

Distribution Strategy:

 Ongoing assessment of distribution channels.

 Regular review and adjustment of wholesale agreements.
 Continuous management of retailer relationships.
 Periodic updates of merchandising and point-of-sale materials.
 Active maintenance of direct sales channels.
  Daily or weekly logistics and transportation operations.
 Quarterly or annual review of market coverage.
 Regular channel management to ensure brand consistency.

Promotional Strategy:

 Ongoing advertising campaigns across multiple channels.

 Regular implementation of point-of-sale promotions.
 Periodic sponsorship of events and cultural activities.
 Continuous engagement in digital marketing efforts.
 Seasonal or campaign-based promotional pricing.
 Consistent production of branded merchandise.
 Ongoing public relations activities.
 Implementation of customer loyalty programs.
 Strategic product placement in entertainment media.
 Seasonal or campaign-based experiential marketing activations.

Sales Force Strategy:

 Establishment of sales team structure.

 Quarterly or annual territory allocation.
 Weekly or biweekly retailer relationship management.
 Annual or as-needed product training and education.
 Seasonal or campaign-based promotional support.
 Daily or weekly order management.
 Continuous gathering of market intelligence and feedback.
 Quarterly or annual performance monitoring and incentives.
 Annual or as-needed training and development initiatives.
 Ongoing integration of technology tools for sales optimization.

Cost analysis of Classic Mild

1. Cost of Making (Manufacturing):

 Manufacturing costs typically include expenses related to raw materials (tobacco leaves,
filters, papers), labor, equipment, utilities, and overhead costs.

 The manufacturing cost per cigarette is Rs. 6.

2. Packaging Cost:

 Packaging costs include expenses for cigarette packaging materials (boxes, cellophane
wrappers, foil liners, printing), labor, and equipment.

 The packaging cost per cigarette of Rs. 1.

3. Transportation Cost:

 Transportation costs involve expenses for transporting the cigarettes from the
manufacturing facility to the retailer.
  The transportation cost per pack of Rs. 5.

4. Processing Cost:

 Processing costs include expenses related to quality control, sorting, grading, blending,
and other processing activities.

 The processing cost per cigarette of Rs. 1.

5. Total Cost:

 Total cost per cigarette = Manufacturing cost + Packaging cost + Transportation cost +
Processing cost

 Total cost per cigarette = Rs. 6 + Rs. 1 + Rs. 5 + Rs. 1 = Rs. 13

6. Cost to Manufacturer:

 Cost to manufacturer per pack (20 cigarettes) = Total cost per cigarette × Number of
cigarettes per pack

 Cost to manufacturer per pack = Rs. 13 × 20 = Rs. 260

Now, let's compare the costs at different stages of the distribution chain:

 Cost to Wholesaler: Rs. 246 per pack

 Cost to Retailer: Rs. 300 per pack

 Cost to Customer: Rs. 340 per pack

Finally, the consumers consume the cigarette and pays for it. The amount of per piece of cigarette
depends on the area and the retailer on how much amount he/she is selling minimum it is being sold in
Rs. 17 and maximum for Rs. 21.

Executive Summary
Classic Cigarette employs a comprehensive approach to maintain its position in the tobacco market. They
continuously analyze customer preferences, competitor activity, and market trends, allowing them to
create and update various strategies throughout the product lifecycle.

In terms of product strategy, Classic Cigarette focuses on continuous development and improvement.
They regularly assess their product portfolio based on sales performance, customer feedback, and
market trends. This enables them to introduce new products, enhance existing ones, or discontinue
underperforming offerings. Additionally, they maintain consistent brand messaging across marketing
channels to ensure brand recognition and loyalty.

Classic Cigarette utilizes various pricing strategies tailored to market conditions. This includes cost-plus
pricing, competitive pricing, price skimming for new products, and psychological pricing to influence
customer perception. They strategically implement these pricing approaches throughout the product
lifecycle to maximize revenue and market share.
Their distribution strategy is well-defined, with a focus on choosing the most effective channels such as
wholesalers, retailers, and online stores. They prioritize maintaining strong relationships with retailers to
ensure product availability and visibility. Logistics and transportation are managed efficiently to
guarantee timely delivery of products. Regular reviews of the distribution network help identify
opportunities for improvement and optimize product delivery.

In terms of promotions, Classic Cigarette employs a diverse range of strategies to reach consumers and
boost sales. This includes advertising campaigns across various platforms, point-of-sale promotions,
event sponsorships, digital marketing activities, promotional pricing, branded merchandise, and
customer loyalty programs. They also engage in public relations activities and product placement
opportunities to manage brand image and generate positive media coverage.

Classic Cigarette's sales force strategy is focused on effective distribution and customer relationship
management. They establish a structured sales team, allocate territories, and provide regular training
and support for representatives. Sales performance is monitored closely, with incentives offered to
reward high performers. Technology tools like CRM systems are integrated to optimize sales processes
and support decision-making.

While specific budget allocations are confidential, Classic Cigarette likely allocates significant resources to
maintain these strategies. This includes budgets for sales force management, distribution, marketing,
technology integration, training and development, and market research. Overall, Classic Cigarette's
multi-faceted approach aims to sustain brand recognition, drive sales, and achieve business objectives.

Marketing Plan for Classic Cigarettes

Objective: -
Create multiple drivers of growth by developing a portfolio of world class businesses that best matches
organisational capability with opportunities in domestic and export markets.

Marketing Objective
1. Increase Market Share: Increase Classic's market share by 5% within the next fiscal year.

2. Enhance Brand Loyalty: Increase customer retention by implementing loyalty programs and marketing
initiatives, aiming for a 10% improvement in customer loyalty metrics.
3. Promote Responsible Enjoyment: Implement educational campaigns to promote responsible smoking
habits and adherence to legal and regulatory guidelines, aiming for a 15% increase in consumer
awareness.

Financial Objective
1. Revenue Growth: Achieve a 7% growth in revenue through a combination of increased sales volume
and strategic pricing.

2. Cost Efficiency: Improve cost efficiency by 3% through streamlined production processes and supply
chain optimization.

3. Profit Margin Improvement: Increase profit margin by 2% through premium product positioning and
value-added offerings.

Strategies
1. Brand Positioning and Innovation:

- Develop innovative cigarette variants that cater to evolving consumer preferences, such as
reduced-harm or flavored options.
- Position Classic as a premium brand, focusing on quality, craftsmanship, and a superior smoking
experience.
- Launch limited-edition packs to create excitement and exclusivity.

2. Customer Engagement and Loyalty Programs:

- Introduce loyalty programs rewarding repeat customers with exclusive discounts, merchandise, or
experiences.
- Leverage digital platforms for personalized communication, promotions, and feedback collection.
- Conduct customer surveys to understand preferences and tailor marketing efforts accordingly.
3. Responsible Marketing and Awareness Campaigns:

- Implement responsible marketing practices, avoiding appeals to youth and emphasizing adult,
informed choices.
- Launch educational campaigns on the health risks of smoking, encouraging responsible
consumption.
- Collaborate with health organizations for impactful anti-smoking initiatives.

4. Product Segmentation and Portfolio Diversification:

- Explore segmentation strategies based on price, flavor, and packaging to cater to diverse consumer
preferences.
- Introduce new products in the non-cigarette tobacco category to diversify the product portfolio.
- Collaborate with influencers and lifestyle brands to reach new consumer segments.

5. Digital Presence and E-commerce

- Strengthen the digital presence through engaging social media content and targeted online
advertising.
- Enhance the e-commerce platform for direct-to-consumer sales, providing convenience to
customers.
- Implement digital age verification processes to ensure compliance with legal age restrictions.

6. Sustainability Initiatives

- Introduce eco-friendly packaging options to align with growing consumer preferences for
sustainable products.
- Communicate corporate social responsibility efforts, such as responsible sourcing and
environmental sustainability.
- Actively participate in community-based initiatives to improve the brand's social impact.

7. Regulatory Compliance and Government Relations

- Stay informed about changes in tobacco regulations and ensure strict compliance.
- Proactively engage with government bodies to contribute to policy discussions and demonstrate
commitment to responsible practices.

Measurement and Evaluation

- Monitor monthly sales data and market share trends.

- Conduct regular customer satisfaction surveys and track loyalty program engagement.

- Evaluate the success of awareness campaigns through brand perception studies.

- Analyze financial reports for revenue growth, cost efficiency, and profit margin improvements.
Profit & Loss Statement

Conclusion
This marketing plan aims to drive growth, enhance customer loyalty, and promote responsible
consumption for Classic Cigarettes. By focusing on innovation, customer engagement, responsible
practices, and sustainability, the brand can adapt to industry trends while meeting financial objectives.
Regular evaluations will guide adjustments and ensure the plan's effectiveness.