CH: 2 MARKETING AND SALES

2.1 ORGANISATION STRUCTURE OF MARKETING DEPARTMENT

ITC
Manufacturing firms

The module in the distribution network of ITC cigarettes are the manufacturing units located
at Bengaluru, Muner, Kolkata, and Saharanpur. These manufacturing units use the raw
materials and other available resources to manufacture the various brands of cigarettes.
Zonal Offices and Warehouses

The second level of distribution channel are the zonal offices .Each of the zonal office is
situated in different regions like North, South, West, East, North-west region etc. that are like
the branch of organization opened for the smooth functioning of the supply chain
management of the product in the market. Main task performed by these offices are acting as
an intermediate between the manufacturing firm and local distributors who are involved in
actual distribution of products to the different selling points in the market. They invigilate the
storage point for the company, i.e. warehouse where large amount of stock is stored
depending upon the sales in that particular region.

Wholesale Distributors

The next level of the channel constitute of distributors. It mainly refers to the agency holders
of the company who act as the company representative in the market and supplies the product
to the different selling points in the market. They are the most important module in the
distribution channel of Cigarettes as on the one hand they are representing company in the
market and on the other hand they are involved in promotional activities of the product (due
to restriction on advertising and promotion of the Cigarettes using media types). The
distributors are available in almost each city and other important areas of the market to
increase the availability of the brand in the market and compete against the competitors.

Wholesalers

The next level of the channel in the distribution is the wholesalers. They help in “bulk
breaking” from the local distributors and also supplies to the retailers in the in and around its
periphery. They also help in promoting the company and other promotional activities through
various visual merchandising.

Retailers

The last intermediate that is available before the Cigarette reaches to the customer are the
retail outlets. With reference to the Indian perspective, different retail outlets are present in
different forms in the market like:-

a) Pubs/ Bars: These are not basically the retail outlets of Cigarette but are included under
this category because few of the super premium brands are available in each Pub for the
facility of the customers coming to that particular place. Also, these places act as point of
promotion and launch of new brands. 9
b) Convenience stores (Kirana shops): Small and big shops present in every locality
providing the basic & necessary products to the nearby people or the locality in which it is
located.

c) Pan shops: Small corner shops that are known with the name of Pan Shops but
contributes large share in total sales of Cigarettes in the market.

d) Kiosks: Small outlets in big Malls like Forum, which only sells Cigarettes of different
brands of the same company like ITC. Kiosks are being used by the companies to increase
the visibility of the brands.

e) Large format stores (LFS): It refers to the big retail outlets that are available in the local
markets selling the daily need goods and other middle range of products that are required by
the customers for the fulfilment of basic needs like vegetables, grocery, kitchen appliances
etc. Ex. Spencer‟s, C3 etc.

f) Multi Branding Outlets (MBO’s): The outlets opened in the Malls and other shopping
areas, which are similar to the “Kiosks” but the only with a difference that products from
different companies are also available at one place with addition to different brands

2.2 TYPES AND CLASSIFICATION OF SERVICES AND ITS VOLUME

2.3 DETAILS OF COMPETITORS
An Indian company based out in Kolkata, ITC is a diversified multi-business conglomerate
industry. Its business operations are divided into five segments, Hotels, Fast Moving
Consumer Goods (FMCG), Paperboards and Packaging, Information and Technology, and
Agriculture.

It is India’s foremost multi-business enterprise and rated as the best big companies in the
world. The Boston Consulting Group has featured ITC as one of the world’s largest viable
value creator of the consumer goods industry.

Philip Morris International

With brands like Marlboro, L&M and others in its belt, without a doubt a top ITC competitor
in the cigarette industry is Philip Morris International. Philip Morris is an American origins
company which has worldwide distribution of its cigarette brands. Cigarettes are a major
revenue driver for ITC and Philip Morris hits ITC in the premium brands of cigarettes.
Philip morris acquired Godfrey phillips, a major Cigarette manufacturer and distributor in
India which is a majority playground for ITC. The combined power and deep pockets of
Philip Morris is a challenger to the market share of ITC.

2.4 CUSTOMER SEGMENTATION AND TARGET MARKET

2.5 DIFFERENTIATION STRATEGIES AND USP

2.6 DISTRIBUTION NETWORK

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

Product:
ITC is a leading FMCG company in India. ITC has a dynamic portfolio in its marketing mix
with businesses spanning FMCG, Agri-business, Hotels, Information technology, paperboards
and packaging. The product lines have great product length and depth.

ITC occupies 81% of market share in terms of selling Cigarettes in India and some of its
main brands are Gold Flake Kings, Wills Navy Cut, Golds Flake Super Star and India Kings

ITC has a range of popular brands like Navy cut, Insignia, India Kings, Silk cut, Gold flake,
Classic, Lucky Strike, Players, capstan, Bristol, Duke & Royal, which has won many awards.
Wills Lifestyle and John Players are ITC’s lifestyle retailing businesses. They provide a
tempting collection of apparels and a delightful shopping experience to their consumers.
Classmate and Paperkraft offer a variety of products in the education and stationery business.
Classmate is the largest notebook brand in the country. Carton board packaging, flexible
packaging are the different product lines of ITC’s packaging business.
Price:
ITC has different price points as it has a diversified product portfolio. ITC have products in
all price brackets but more and more new products are on the premium side as they provide
higher margins. Pricing of the product depends on several things like pricing objective, the
market one is operating in, the purchasing power of the consumers, the market condition,
product’s market position etc. For instance, as Bingo was entering the market, it adopted a
very clever aggressive pricing strategy to capture the market share. They maintained their
prices as per the market leader but offered more quantity and more margin to the retailers
which gave them a competitive edge.
ITC follows different marketing mix pricing strategy for different products. Their economy
brands follow economy pricing. Marketing and manufacturing cost is kept at a minimum.
ITC had to hike the price its premium products in the industry due to hike in excise duty.
Classmate is priced over 5% over its competitors.

Place:
ITC has an unmatched distribution network. Its products are available in 4.3
million retail stores in India. A strong distribution shows its marketing mix
place strategy. ITC is constantly trying to reduce the lead time and to make
the products reach to the retailers as quickly as possible. Being an
environment friendly organization, ITC is carbon positive, solid waste positive
and water positive. Out of the total energy it consumes over 47% comes from
renewable sources. E-choupals ensure timely supply of high quality raw
materials. ITC has well integrated manufacturing and Logistics facilities with a
wide and deep distribution network. All manufacturing units owned by ITC are
hazard Analysis and critical control point certified. ITC has distinctive agri-
sourcing capabilities with farm linkages in over 17 states which provide it with
high quality wheat, soya, potato, coffee etc. It has an efficient CRM program
for commodity customers. ITC's Paperboards and Specialty Papers Division
has four manufacturing units, eight regional sales offices and over 60 dealers
in India. ITC has over 100 hotels are present in 70 destinations. ITC’s food
products are exported to North America, Middle east, Africa and Australia. It is
also one of the largest exporter of Agri-products and coated boards in India.

Promotion:
ITC designs its promotion strategy keeping in mind its brand proposition and its target
audience. It promotes its product through Print, television and radio as a part of its marketing
mix. ITC’s different brands have different brand ambassadors. For example, classmate has
been endorsed by Yuvraj Singh and Soha Ali Khan; Saina Nehwal has endorsed Salvon;
Shahruk Khan has been endorsing the entire range of snacks under the umbrella brand of
Sunfeast. ITC roped in Ranbir Kapoor for John players.
As part of ITC’s centenary initiative, Classmate launched the largest student contact program-
Ideas for India challenge. It provided a platform for Indian youth to brainstorm and address
the issues and challenges which our nation faces and help in developing the nation. ITC also
launches a lot of digital campaigns to ensure maximum participation. The Fiama De Wills
Men campaign is one such example. Fiama DE Wills has had an association with the talented
designer, Masaba Gupta for Wills Lifestyle Fashion Week. ITC also engage in cross
marketing promotions. YiPPee! Launched a campaign with Paytm offering recharge coupons
equivalent to the price of YiPPee noodles. The company launched an advertisement to back
the campaign. Hence this concludes the ITC marketing mix.

2.8 COMPETITIVE ANALYSIS

ITC is a major tobacco firm in India. The firm's principal activity is the manufacturing and
sale of cigarettes and tobacco products.

1. Product Styling:

In tobacco industry, the product styling plays a very important role, as the image of the brand
is a crucial factor in the overall success of the brand.The company’s try to compete with each
other through giving a distinct image to the product through various marketing activities. This
image helps in the differentiating the brand from its competitors in the same price range.

2. Advertising:

Advertising or “above the line promotion” activities help the brand to achieve its desired
image among the consumers. However the competing companies try to consolidate their own
image through advertising rather than try to undo the competitor’s brand. For example, Red
& White and Wills Kings are two competing brands in the same category but their advertising
campaigns are completely independent from each other. The reason being that their desired
brand image and brand styling is different.

3. Product Branding:

There are very strong brand names in this industry. In fact the brand name and image is of
greater importance than the quality of the product.

4. Dealer’s Discount:

The dealers play a major role in the industry as they can easily ‘make or break’ a brand in the
market. But still the dealers’ discount in the business is very low and like the companies they
earn their profits on sales volume rather than profit margin.