Segmentation Segmentation refers to the division of market based on similar preferences and taste of the people.

Talking about the Cigarettes industry in India, the demand is based upon homogeneous preferences among the people stating the urge of consuming tobacco by the way of smoking. Keeping these factors in mind, the marketers have segmented the market on the DEMOGRAPHIC bases with three main factors i.e. gender, income and age of the consumers. 1)To target different Income groups in the market, the companys uses three different segment markets which are: a)Super premium: It covers the upper segment of the market that have high income level and more brand conscious while selecting the product from the market and who are not concern about the price of the product. The consumers targeted at this level are entrepreneurs, IT professionals, Doctors, Lawyers, top level executives and other people at high post in government jobs. b) Premium: The next level of segmentation done by the marketer is premium levels, where Middle level people are targeted who are concern about both the factors i.e. Brand as well as Price of the cigarette. In early stage of time, this segmentation was given more attention in terms of Promotion and Brand awareness due to high consumption of cigarettes at this level as compare to other but with changing period of time, the concern for super premium has also drawn equal attention. c)Bingo: The lowest level for segmentation defined by the marketers in Cigarette industry, where people with low income level are targeted. As people here are more concern about the price of the product rather than the quality or the brand, the companies are rarely concern about their brand awareness and promotional activities. 2) Second bases of segmentation is done on the Geographical factors mainly targeting three areas i.e. a)Urban areas like Delhi, Bangalore, Mumbai, Kolkata etc b)Sub-urban areas like Nagpur ,Indore, Allahabad c) Rural areas consists of all villages and other backward areas. 3)Finally the segmentation is done on the basis of age, where the light cigarettes (that contain low level of Nicotine & Tar is less in the cigarette) are targeted to the low age group of people and who are at their initial stages of smoking like school going children, teenagers etc. where as strong cigarettes (with high level of Nicotine & Tar) are targeted to the people of medium & higher age group and people who are at later stages of their smoking like adults, professionals etc. :

PRICING OF CIGARETTES: Price is said to the most important factor that is related to a particular product and is directly responsible for the success or failure of the product in the market. In case of cigarettes the importance of pricing becomes more important because in India, advertisements and other promotional activities are banned for the particular product, so to compete in the market with other players for the same market share; the company needs to analyze various factors before setting the final price of a cigarette pack. In India, the companies set the price mainly dependent upon the following factors: 1. 1. Target market: It refers to the type of segment market company is targeting with a particular brand of the product like Gold flake Cigarette manufactured by ITC is targeted to the premium segment (explained above) of the market, so the price should also be with respect to that only. 1. 2. Brand value: The next parameter that is considered in the setting of price is the brand value of the company who is manufacturing the product. Like Insignia wills (Rs 120/pack) produced by ITC and Jaisalmer (Rs 90/pack) produced by Godfrey Phillips, both are part of the same segment market i.e. super premium and with same quality and other features but still there is price difference of Rs 30 per pack (20 pieces), showing the importance of brand value of ITC as a well known company in front of Phillips which is not a famous brand in the Indian market. 1. 3. Competition: As explained above, there are only few players in the market who are competing against each other for the market share showing low level of competition as compared to other industries in the country but with the entry of more and more foreign players in the market, the level of competition is increasing. So before finalizing the price of the Cigarette pack, the company needs to analyze the competitors price within the same segment. Here is price distribution of Cigarette products based upon the segmented markets made by the researchers of the same industry. Segment Bingo Premium Super premium Price/peice(Rs) >3 3-5 <5 Pieces/pack 10 20 20 Examples Scissors, flakes Classic, Gold flake Insignia, Jaisalmer

Promotional Strategies Promotional strategies refer to the various activities carried out by the companies to increase the brand awareness in the market and to differentiate from the competetitors product by the way of advertising, promotional activities, organizing shows, free samples etc. so that more of market share can be earned by the firm. Now talking about the cigarettes in India, advertising and promotional activities are banned by the government but it is said that distribution network is so strong throughout the country that this category itself has become the biggest FMCG in terms of sales. So, marketing efforts really become inconsequential at this stage. But we know that the industry where competition is increasing at high pace, with large number of foreign players entering in to the market, the companies can not merely depend upon the distribution network to compete in the market. According to the researchers, advertisements are not only the way out for marketing managers in these big firms to sell their products. Marketers will always keep on innovating the new marketing campaign to increase the sales level and market share in the market. Here are few new techniques used by the marketers from the Cigarette industry:
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Convenience Displays:

This type of display is used to increase the visibility of the product to the consumer when he enters in to the shop or small Panvadis purchase the particular brand of cigarette. Now it plays an important especially in case of cigarettes as in India, people have trend of purchasing in loose instead of a packet. Now suppose a person smokes 10 cigarettes per day on an average and purchases only 1 or 2 at once, he will visit the shop for approx.6-7 times. Considering the situation, if a particular brand is not available with the shopkeeper, the consumer may shift to some other brand.
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Promotional Schemes:

The new technique used by the firms in the recent period is by attaching special schemes with the products like latest scheme run by Godfrey Philips for their brand Four Square. The promotion was Get 1 pack for 10 empty Four Square Packs. Which resulted in positive response, as people started buying more packs to get the extra pack. That finally resulted in increase in the sales volume of particular brand in market.
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Surrogate Advertising:

This is new concept started by the Cigarette companies in India, where the companies are trying to sell other products with same brand name that is used to sell cigarettes in the market. This way they are able to make their presence in the market by using promotional advertisements without breaking the law made by government. Few examples under this type of marketing are ITCGTDs (greeting cards division) Expression Greeting Cards, Red & White Bravery Awards and Wills sportswear 42 Wills Lifestyle retail outlets in India or Wills fashion week, indirectly reinforcing brands like Wills Classic, Wills Milds etc. Social Marketing: This concept was basically launched in the market to get the customer attention by providing knowledge to them regarding the disadvantages of using Tobacco and smoking cigarettes which are bad for health and human body . By this way they are positioning themselves as the well wishers of the society but there main aim is to make their presence in the market.