ITC Cigarettes

History of the company ITC was incorporated on August 24, 1910 under the name of

'Imperial Tobacco Company of India Limited‘

A leased office on Radha Bazar Lane, Kolkata, was the centre of the Company's existence

The Company was changed to I.T.C. Limited in 1974.

Company profile ITC is one of India's foremost private sector companies

Its businesses are spread over a wide spectrum, ranging from cigarettes and tobacco to hotels, packaging, paper and paperboards and international commodities trading corporation.

It employs over 29,000 people at more than 60 locations and has a diversified presence

Has a market capitalisation of over US $ 33 billion and a turnover of US $ 7 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 and among India's Most Valuable Companies by Business Today

(http://www.itcportal.com/about-itc/itc-profile/itc-profile.aspx)

ITC Cigarettes - A case Study 4

Product Portfolio

ITC Cigarettes - A case Study 5

Product Portfolio

Ban on Tobacco advertisementREASON :-

Tobacco kills an estimated 5 million people around the world every year

Radioactive particles in cigarette smoke cause lung cancer

Teens may lose IQ points later in life if they smoke before age 18

ProductCautionary note and image.Manufacturing (Quality) in accordance with government.

PriceIncreasing price rates due to recent government budget policies.

PromotionNo direct marketing options available.No specific or trained sales force.

PlaceRestriction on selling of products.Licensing of dealers (distribution channels) is difficult.

Marketing Mix

Q1. What problems do you think ITC is going to face in the future due to ban in cigarette advertising?

•Cigarette advertisement is not influential to smokers as smokers are driven to retail shops due to addiction.

•More people smoke because of habit than advertising.

•Studies indicate that advertising does not increase tobacco and alcohol consumption.

•ITC have never relied much on advertising and so, such a law can never impact the business.

•With 80% market share and well composed mobile market strategy to drive its share price ITC is already in a well established state in the market.

•The bulk of these studies indicate that advertising does not increase tobacco and alcohol consumption

•Unlike ITC , smaller tobacco companies and new entrants would find it extremely difficult to establish themselves in this changed scenario.

•However vociferous anti-smoking ads may affect its sale due to reduction in numbers of smokers due fear of smoking linked to cancer.

Q2. . How uncontrollable is the legal environment in the case of ITC cigarette operations in India? Should they lobby to lift the ban on cigarette advertising? If no, how should they promote their brand?

•Cigarette and tobacco operations has a uncontrollable legal environment in India as, the cigarette and tobacco act (2004) imposes “total ban on tobacco ads including the surrogate ones, smoking in public places and selling cigarettes to children below 18.” (http://timesofindia.indiatimes.com/india/Tobacco-advertising-ban-from-May-1/articleshow/497418.cms?).

•No, ITC shouldn’t lobby to lift the ban on cigarette advertising because it will create social issue and misbranding of ITC, which has created over the years.

•Promoting cigarette products in India would always been a thought task for any tobacco company including ITC, however cigarette advertisement can be done in the point of sale and promotion of industry could be achieved through general sponsorship of social causes.

•Cigarette package design is an important feature of in-store advertising.

•Price Discounts

•Low Tar Product Category

Q3. What other environmental factors other than legal environment is likely to influence the

marketing mix of ITC cigarettes?

Increasing threat from cheaper illegal imports

Increasing awareness of health issues also influencing low

tar sector growth

Uncertainty over date and nature of ban has made forward planning difficult