BATB Business Canvas

1. Customer

segments:

Being one of the conglomerate giants British American Tobacco company is magnificently
selling cigarettes in almost every corner in Bangladesh. Its a mass market. Essentially,
BATBs main customer segment is both adult males and females, over the age of 18, from
all occupation, class, religion and lifestyle as they offer a wide range of cigarettes to suit the

preference of its diversified customer segment also on the basic of socio-ecomonic classes.
They have a huge range of cigarettes because tobacco consumers all over the country have
different tastes and it differs from country to country. While the legal age to consume
tobacco in Bangladesh is above 18 years old, all over the country many under-aged
consumers are still buying their products. However in Bangladesh starting from age 14 to
90+ there is smokers but BATB mainly targets adults only above 18+ both males and
females all over the country.
2. Value

Proposition:

BATB invests in R&D and they are running this business worldwide so they precisely
understand the preferences of adult consumers and to design cigarettes to satisfy their
smoking needs. The preferences of adult consumers guides them toward making tobacco
blends- the mix of tobaccos that they use. They also work to ensure that these grades are
available long-term to keep the tastes of the products consistent to meet the demand and
satisfy BATBs broad customer segment, it offers 4 distinct classes of cigarettes.
I.

The

premium

cigarettes:

Its targeted for high income group of customers who prefer a premium brand. In this
category, there are 3 brands: Benson & Hedges Switch, Benson & Hedges Regular and
Benson & Hedges Lights.
A. Benson & Hedges Switch: Its being the most elite brand owned by BATB
contains a capsule filter at the tip which discharges menthol as it breaks once the
tip is pressed and this particular brand is sold for BDT 10 per cigarette.
B. Benson & Hedges Regular: Its the lighter version of the premium cigarette.
C. Benson & Hedges Lights: Its a slightly lighter version of a regular B&H, are
sold for BDT 9 per cigarette as they are also of premium quality. Its specially
created to target youths as its their most fav cigarette.
II. The

Aspirational

Premium

Cigarettes:

It consists of 3 brands, which are John Player Gold Leaf (JPGL), Pall Mall Blue and

Capstan. It must be noted that JPGL is the strongest brand owned by BATB and has the
highest percentage of market share. According to research, it has the strongest brand image
and highest acceptability among consumers. Moreover, it is priced at BDT 5 per cigarette.
On the other hand, Pall Mall Blue is offered primarily as a global drive brand in order to
maintain global alignment as it is a world renowned brand owned by British American
Tobacco and is priced at BDT 4.5 per cigarette. Capstan, on the other hand is a lighter brand
of cigarettes, which is sold for BDT 5 per cigarette.
III. The

value

for

money

cigarettes:

It consist of 2 brands, which are Star and Star Light, priced at BDT 3 per cigarette.
Moreover, the low segment cigarettes include Derby, Pilot and Hollywood, which are sold at
BDT 1.5 per cigarette. These particular brands are mostly sold and marketed based on
regional preferences.
IV. Satisfying smoking needs: One of the main key value proposition of BATB is that they are
satisfying the needs to smoking.
3. Channels:
BATB has a very strong channel distribution in Bangladesh. They sells almost in every conner of
Bangladesh. They channels their cigarettes through their broad network of distributors whom
they highly value. The name of their channel is HORECA which signifies hotels, restaurants and
cafs. Further more their products attractively displayed in various HORECAs. In addition to
typical HORECAs, several grocery stores also have a BATB stand/corner, promoting BATBs
brands In such places, various brands of BATB are sold to consumers. On the other hand, mass
HORECAs are used to channel cigarettes to the consumers.
These mass local HORECAs are referred to as Tong-er Dokan in the local term, and
essentially mean very small stores for light snacks. BATB cigarettes are sold heavily in these
shops.
On top of that channel, cigarettes are sold at structured outlets, which are basically the wellestablished and constructed general or departmental stores as well as semi-structured outlets,
which are not as well-constructed and highly maintained as structured outlets. Meaning, while

structured outlets are usually categorized as stores with concrete roofs, semi structured outlets
often have mere tin-sheds. Thus, these are the key channels that are used by BATB. However
other brands also uses these channels but BATB products are more highlighted than other
products due to BATBs investment on them.
4. Customer relationship:
BATB arranges various events in order to establish and maintain that good customer
relationship. It hosts many

events such as Battle of Minds, Aurum, Nxtation, Rhythm &

Stringsetc. At concerts such as Nxtation and Rhythm & Strings and at DJ parties such as Aurum
held at 5 star hotels in the country, invited guests have a fun night with the best music so they
have become extremely popular among the youth. Moreover, business case competitions such as
Battle of Minds also enable the students from various universities to come up with innovative
ideas and to face exciting challenges. All these events have become extremely popular among
the youth, which is why BATB is being able to grasp the lions share of the market consisting of
young adults Moreover, they have various promotional activities which are indoor brand
experiences. For example, JPGL is changing its pack and for that special occasion, BATB will
invite special consumers to play a game of augmented reality based on adventure (as JPGL brand
is associated with adventure) so players can have a brand experience.
Moreover, BATB also maintains a good relationship with all its distributors and retailers through
Year Long Promotions, by offering them rewards on target volume sales. These rewards are
based on the change in base sales volume and target sales volume. For example, if a retailer sold
1000 packs of B&H in January, he will be rewarded if he can increase the sales volume up to
1500 packs. Oftentimes, these rewards include brand new televisions, motorbikes, and so on.
5. Revenue Stream:
Value For Which Customers Are Willing to Pay:
The revenue streams of British American Tobacco comes from sale of its assets since it
is a company that sells consumer goods. According to their revenue recognition policy,
the revenue from sale of goods is recognized when the significant risk and rewards of
ownership have been transferred to the buyer. (British American Tobacco Bangladesh,

2012).
There are no significant after sales service or involvement with the customers who buy
cigarettes for which the associated costs and possible return of goods can be estimated
reliably

and

amount

of

revenue

can

be

measured

reliably.

The second source of revenue for BATBC is the interest income which is derived from
short-term

investments

and

is

recognized

on

an

accrual

basis.

Another medium of the revenue streams is the export of leaves. Tobacco is grown
under contract farming and processed at the companys Kushtia center (Chowdhury, P.
M. (2011). A major source of foreign exchange earnings is from leaf exports. This was a
major challenge given that Bangladesh leaf had to compete strongly against neighboring
countries, despite the 10% export duty imposed on exported leaf from Bangladesh which
is not present in any other country. (British American Tobacco Bangladesh, 2013)

Pricing Mechanism:
The pricing mechanism followed is list price, which is essentially the fixed prices for
individual products, services, or other value propositions. This is because the cigarette prices
for each segment of cigarettes remains the same unless a tax-hike causes the company to raise
prices like in July 2012.

6. Key Resources:

Effective and efficient Human Resources: The tobacco industry is a saturated market.
However, BATBC has managed to hold its share as the market leader despite challenges from
the external environment and competitors. A significant contribution of this growth was
achieved through a focused marketing strategy that was supported and implemented by the
employees across all business functions. It is the human resources that mainly contribute to this
segment since under the Consolidated Smoking and Tobacco Products Usage (Control) Act,
2005 cigarette companies are restricted from promoting their products through conventional
means. Thus this marketing strategy is achieved via the extensive use of trade marketing via
the territory officers and managers whose main job responsibility is to push sales via
distribution.
Advanced Machinery: As BATB is a manufacturing company, its highly dependent on the
machineries to blend and process the tobacco for the perfect blend for each cigarette. The
number of cigarettes produced is huge for which these machineries vital for fast, accurate and
efficient production. The production process usually consists of two manufacturing
departments: the Primary Manufacturing Department and the Secondary Manufacturing
Department, both of which are heavily dependent on machines with capacity up to 50 tons.
Intellectual: Since cigarette is a consumer good which is a small portion of a consumer s
budget, it doesnt require any significant intellectual resource like patents, copyrights etc.
However, the intellectual property that matters in the business is the brand. It is for the
branding and the many different brands under each segment which are more or less similar in
content that the company has been able to hold its position as the market leader. Its intellectual
property is the contribution of strategic marketing to differentiate itself from its competitors.
Financial: According to the annual report, the Company provides 5% of its profit before
charging such expense as Workers' profit participation fund (WPPF) in accordance with the
Bangladesh Labour Act 2006. The company is also a heavy tax payer making it one of the
largest tax payers in the country. This helps BATBC in getting an edge and portraying
themselves as responsible citizens.

7. Key Activities:
Production: The primary manufacturing department (PMD) is responsible for further
conditioning the important tobacco to make it ready for production while the secondary
manufacturing department (SMD) uses the tobacco that is blended and conditioned by the
PMD along with wrapping materials to manufacture cigarettes. In the first department the
tobacco passes through a set of integrated and regulated machinery whose purpose is to blend
the different packing grades in specified proportions and bring tobacco to a uniform
temperature and moisture for which the tobacco is highly dependent on the machine. The
second department then does further refinement. Currently there are 16 cigarette-making
machines at Dhaka factory, which are operated in three daily shifts. Shift engineers and
officer's monitor shift activities to ensure
Quality production Exporting: With revenues of about 35.18 million US Dollar British
American Tobacco Bangladesh has been exporting high amount of tobacco made and
processed in Bangladesh to other countries, mainly China. It exported its first batch of
cigarettes to China 30 years since the nationalization of its operations in the country. Since
then BATBC has been trying to maintain international standards in its processing unit to
spread Bangladeshi Tobacco in the international arena.

8. Key Partnerships
Farmers:
The farmers working in the companies farming and processing region of Kushtia are one of the
main partners since they product the one of most vital raw materials, the tobacco leaf, which is
not only used to produce cigarettes in Bangladesh but also exported to various countries in
exchange of foreign currency. There are around 34,000 tobacco farmers in Bangladesh to whom
agronomy support is provided.

The support includes providing quality guidance on crop management, soil health, water
management and environmental best practices. It also helps them address various economic and
social issues associated with their lives and livelihood. They are not only taught these in regard
of tobacco farming but also to be used for other crops as well.
Distributors & Retailers:
Due to the stict policies restricting the promotion of tobacco products on the mainstream media,
the only way to increase sales in the industry is through trade promotion. It is for this reason that
BATBC highly depends on its distributors to distribute its products to even the most remote
areas of Bangladesh with a demand for its products and its retailers to push sales. This is done by
aligning their rewards or incentives with meeting certain predetermined targets.
Suppliers:
BATB has a very strong supply chain.
They imports tipping paper, paper,
filtration

zone,

plug

wrap,

tobacco+flavorings - for each of their

BATB has its own suppliers. They
have

their

own

tobacco

firm

in

Bangladesh. Enjoying business in perfect incubator. All these are the strong building blocks of
BATB business.

9. Cost Structures:
The cost structure, as observed by the studied business model accordingly, is very simple in
nature for a company with such high liquidity that compliments its sales volume. Looking at the
financial statements in the recent years, it can be concluded that the leveraged at all and have
enough liquidity to finance any internal expansionary projects. As per the core cost structure, the

distribution channel is used to collect the money along with giving the products at a substantial
credit basis for its agents who later disburse the projects in a wider range.
The companys liability is as much as its asset, however the liability is mainly to the government
taken in the form of tax provision while most of the rest is the owing to the workers in form of
benefits which is unlikely to be causing problem for the company to recoup its costs for any ongoing fiscal.
Alongside the tax and salary expense, the company incurs cost at production but the production
cost is not significant if the cost of direct material is deducted due to such high volume of
products made by the company.
In terms of dealing with cost, the company showed the best cost minimizing techniques as long
as the numbers are trusted of the industry report of BRAC EPL which says BATBC has to lowest
tobacco price in terms of production. In addition, most of the cost of the company is put on
salaries of its employees and for the training given to them, which are to shape future cost
structure for the company better, or so the management believes, according to its latest annual
report.