A

Research Report

On

Gold flake Cigarettes

Under

Marketing Management

Submitted to: Prof.Bhavesh Vanparia

Tolani Institute of Management Studies

Submitted by: Group No.1

Group Members: Ruchita Mehta (09063)

Mayur Patadia (09065)

Mudra Patel (09077)

Hardik Paun (09081)

Krupa Shah (09095)

Unnati Sharma (09099)

PRODUCT

Our Main product is cigarette. Under that we have chosen

GOLD FLAKE BRAND.

Gold Flake is a widely-sold cigarette brand in India and Pakistan. It is sold in various varieties, including Gold Flake Kings (84 mm), Gold Flake Lights, Gold Flake Filter (filter tipped) and Gold Flake (plain). It is a well-positioned brand in India. This brand is owned, manufactured and marketed by ITC limited the leading cigarette maker in India. Gold Flake is ITC's middle level brand in terms of price. The single largest brand in the country in value terms.

Gold flake is widely sold brand in India and is marketed in three varieties. Gold flake Filter King Size (84 mm) Gold flake kings is the largest selling brand of cigarettes in India in above 80 mm category, but lags behind wills navy cut across categories. It has a mild flavor. A pack of 10 costs about Rs. 48. Gold flake Filter King Size Lights (84 mm) Gold flake lights are milder than Gold flake and contains comparatively less nicotine. Gold flake Filter (small) Gold flake Filter (small) has the strongest flavor amongst the three brands. It also contains considerably larger amounts of tar and nicotine. A pack of 10 costs 45 Rs. Gold flake Plain (filter less) the very original Gold flake is simply known as Gold Plain or Plain in southern markets. It is the strongest of all. Gold Flake Cool Mist was a brand launched by the ITC Co. Which was encouraged much in the market and has later gone out of production? It was a milder cigarette with a mild mint flavor

Origin of the GOLD FLAKE

Gold flake was neither a brand nor a process of manufacturing cigarettes. The word "gold flake" refers to cigarettes made using 'bright rich golden tobacco'. Brands other than wills gold flake are Bacons' Gold Flake, Hignett's Golden Flaked Honey Dew, Salmon and Gulckstein's Gold Flake. One pack of 10 cigarettes cost accordingly: Gold Flake (plain, filter, regular size) Rs.25, Gold Flake Kings, Lights MRP is Rs.44. Packs of 20 can cost up to Rs.88.

Here are some details about the product and cigarette industry.

CIGARETTE INDUSTRY

The cigarette industry is one of the oldest industries in India we can say almost 100 years old. It is an important agro-based industry.

It is highly labor intensive and provides livelihood to about thirty million people directly and indirectly.

India's tobacco industry is one of the largest in the world, with India having the second largest area planted to tobacco leaf after China.

Furthermore, India's production of leaf is only exceeded only by China and the USA. The tobacco industry in India is quite complex when compared to the nature of the industry in many other countries.

The particular features that distinguish the Indian industry are Consumer market in organized sector, Consumer market in unorganized sector and other users of tobacco in organized as well as unorganized sectors.

SOME DETAIL ABOUT CIGARETTE

Top ten cigarette brands

1) Marlboro 2) Camel 3) Lucky Strike

4) New Port. 5) Parliament. 6) Pall Mall

7) Winston 8) Prime Time 9) Kool

10) West

CIGARETTE INDUSTRY IN INDIA

ITC is the market leader in cigarettes in India. ITC has a leadership position in every segment of the market. It's highly popular portfolio of brands includes

Insignia. India Kings. Classic. Gold Flake. Silk Cut. Navy Cut. Scissors. Capstan. Berkeley. Bristol and Flake.

The Company has been able to build on its leadership position because of its single minded focus on value creation for the consumer through significant investments in product design, innovation, manufacturing technology, quality, marketing and distribution.

All initiatives are therefore worked upon with the intent to fortify market standing in the long term. This in turns aids in designing products which are contemporary and relevant to the changing attitudes and evolving socio economic profile of the country. This strategic focus on the consumer has paid ITC handsome dividends.

ITC's pursuit of international competitiveness is reflected in its initiatives in the overseas markets. In the extremely competitive US market, ITC offers high-quality, value-priced cigarettes and Roll-your-own solutions. In West Asia, ITC has become a key player in the GCC markets through growing volumes of its brands.

ITC's cigarettes are produced in its state-of-the-art factories at Bangalore, Munger, Saharanpur and Kolkata. These factories are known for their high levels of quality, contemporary technology and work environment.

Company Orientation towards Market Place

Product Concept

ITC launched the brand Gold Flake in India in the seventies. The source of the positioning of Gold Flake can be traced back to its early days. In the seventies, India was a country of the genteel rich. People aspired to be honorable and genteel. The lifestyle of the upper class was what the customers aspired for.

ITC launched the brand Gold Flake in India in the seventies. The source of the positioning of Gold Flake can be traced back to its early days. In the seventies, India was a country of the genteel rich. People aspired to be honorable and genteel. The lifestyle of the upper class was what the customers aspired for.

The initial ads said, “Wherever you go they are peanut butter”,” Having fun wish you were there” “Worth its length in gold”, Then came

Gracious People Campaigns – “for the gracious people” as the headline followed by, “A touch of Gold”, with the headline "A tribute to the gracious people".

Gold Flake had been traditionally positioned as a premium cigarette. It targeted adult, male. A category smoker. It was meant to be a cigarette for the elite and the rich – the gracious people of India. It did not differentiate itself specifically from other brands. The brand was compared with Gold for the quality and purity of experience. Advertising emphasized this comparison to gold. The statement – “For the gracious people” – summed the core of the brand.

The gracious people as defined by the brand were the premium class they were successful, elegant, and responsible, and had a sense of purpose. The consumer was bounded in the Indian ethos and roots. He was perceived to be unapproachable and sociable only in his high class.

The Company has been able to build on its leadership position because of its single minded focus on value creation for the consumer through

significant investments in product design, innovation, manufacturing technology, quality, marketing and distribution.

DEVELOPING MARKETING STRATEGIES & PLAN AND

CREATING CUSTOMER VALUE, SATISFATCTION & LOYALTY.

CUSTOMER PERCIEVED VALUE: (CPV)

CPV is the difference between the customer’s evaluation of all the benefits and all the cost of an offering and the perceived alternatives. If further clarify then

TOTAL CUSTOMER BENEFIT is perceived monetary value of the bundle of economic, functional and psychological benefits customers expect from given market offering because of the products, services, personnel and image involved.

TOTAL CUSTOMER COST is the perceived bundle of cost, customer’s expect to incur evaluating, obtaining, using and disposing of the given market offering, including monetary, time, energy and psychological costs.

Total Customer Benefit

Product Benefit

Services Benefit

Personnel Benefit

Image Benefit

Total Customer Cost

Monetary Cost

Time Cost

Energy cost

Psychological Cost

CUSTOMER PERCEIVED

VALUE

Value delivery process:

We all know that now a day traditional view of business process will not work in economies where people face abundant choices. So the smart competitor must design and offer for well design target markets.

Here gold Flake Company has also created a different value chain to fulfill customer satisfaction and more marketing of their product.

Image benefit:

Gold Flake is ITC’s brand and ITC is India’s biggest and best known private sector company.ITC is incorporated on 1910 under the name of ‘Imperial Tobacco Company of India Ltd’ so it is a more than 100 year old company which is producing this gold flake cigar so they have created a well known image toward customer and can get trust of customer for this brand. They have also achieved so many awards like Occupational Health and Safety Gold Award from the ROSPA, UK.etc

Product Benefit:

Gold flake is designed differently with a great filter without a compromise in taste and flavor. They are also providing the cigarette in a stylish pack so youngsters are attracted by it. Businessman, politicians are smoking this cigar for style.

Personal Benefit:

According to customer interest they are giving different type of flavor.

Ex. if customer want mild and smooth flavor they will prefer Gold Flake without worry about price

Time Cost

Time cost means how much time customer is spending in choice, use & disposal of product of that product if we took the case of GOLD FLAKE person do smoke so its time consuming though person is doing it just for sake of entertain or time pass but it costs.

Energy Cost:

When person do smoke its wastage of energy when person took out fog. So its also one type of energy cost.

Psychological Cost:

Smoking is not good for health so directly or indirectly it costs to person’s health.

GATHERING INFORMATION AND SCANNING THE ENVIRONMENT

Marketers always have to observe external environmental changes, competitor’s strategies and need extensive information about how consumption pattern of customers changing across.

Here, our product is GOLD FLAKE CIGARETTE and from the cigarette marketer point of view he must have to keep himself up to date with all below information:

1) Which are the decisions he has to make regular basis?2) Which information does he need on regular basis?3) Which kind of special studies he has to do regularly or periodically?4) What are the magazines and newspapers he has to see on

daily/weekly/monthly basis?5) What data analysis program he want?

If one wants answer of all above questions then one must have rich source of internal records and marketing intelligence.

Internal Records and Marketing Intelligence

For taking any kind of information about internal things then a marketer must require data regarding orders, sales, prices of competitors, inventory levels, receivables and payables and so on. So for that he must have-

1) The order-to-payment cycle: Many seller of cigarette like small pan-shops normally purchases cigarette packets on wholesale basis. So, the payment is on credit basis and the payment will be made after decided time by both parties which may be of 15 days and may be of 1 month also. Generally as per the order to pay concept if

the payment cycle is not properly maintained then a seller or a marketer need to take care of it and make it on time so that the order to payment cycle and move smoothly. Also purchasers of such wholesale products get some benefit on bulk purchase. Sometimes they get some quantity free of cost and sometimes the get other things free, like jar, wall-clock, key-chains etc.

2) Sales Information System: Whenever any retailer purchases and cigarette cartoons/packets from any retail pan-shop then the marketer will be able to have information regarding how much total number of sales is happened and according to this information he get idea about how much to produce and how much inventory should be maintained.

3) Data base, Data warehousing, Data mining: the data which is collected and stored in sales information system is here utilized and implemented. Like for an example of available stock- if he had 240 cartoons of Gold Flake cigarette then he has to categories that data accordingly like he had 140 cartoons of Gold Flake and 100 of Bristol.

Analyzing the Micro-environment

1) The Demographic Environment: The demographic environment includes worldwide population and population age mix. Population is directly affecting factor on the demand of cigarette, the more the number of people the more the smokers and thus the demand of the cigarette will increase. We can also say that the population age mix also affecting the demand of cigarette because children below age of 14 generally are not smokers. The age group between 15 and above we can say our target customer.

2) Economic Environment:

As the per-capita income of citizen increase their living standard will go up and relatively their lifestyle changes. The stressful working hour will increase and it will directly lead people to search for stress-relief thing which will increase the purchase of cigarette. So, as the country get its growth the demand of cigarette will increase as the stress level will increase.

3) Social-cultural Environment:

The social-cultural environment largely includes people will different religion and of different culture. As we all are aware about western culture, the people living over there smoke as a status symbol. People in India now a day blindly follows culture of western nation and try to be like them. So, they also smoke like them. In many movies also film-stars influences people at large to smoke like them.

4) Natural Environment:

As cigarette is made of tobacco leaves, which have nicotine in it, when a person smokes he will indirectly leaves that smoke in environment and so environment get polluted. Many other people and animals get affected by indirect smoke, which harm their lungs badly.

5) Political-Legal environment:

As we all know smoking in public area in Gujarat is not legally allowed. So, governments can take such steps to stop smoker smoking in public. In many places cigarette is totally banned as it is injuries to health.

FORECASTING AND DEMAND MEASUREMENT

Main reason for undertaking research is to identify market opportunities. Finance department use sales forecast to raise the funds, manufacturing department use it to know the capacity and output level, purchasing department use it to know the right amount of supplies. It can be said that for different department there is different purpose of forecasting.

MEASUREMENT OF MARKET DEMAND

POTENTIAL MARKET:-

The potential market is the set of consumers who profess a sufficient level of interest market offer. However, consumer interest is not enough to define a market unless they also have sufficient income and access to the product.

For instance, if a marketer introduce new cigarette brand with chocolate flavor considering that chocolate is the favorite flavor of girls, chocolate but sometimes it may happen that some of them may not like the chocolate flavor because the marketer is not going to make survey of all girls in the world. So, all time it may not happen that only identification of interest is enough to introduce new product in the market a marketer have to consider all other aspects also.

AVAILABLE MARKET:-

The available market is the set of consumer who have interest, income, and access to a particular offer. For some market offers, the company or government may restrict sales to certain groups, as smoking cigarette in certain public in India is not allowed. So, the customers who have interest, enough income and access to purchase of cigarette also cannot have it because government has ban it to smoke it in public.

TARGET MARKET:-

The target market is the part of the qualified available market the company decides to pursue. As our product is cigarette, so generally all people are smoking and there is no specific target market. One can purchase it from small pan-shops and from the big casinos also.

PANETRATED MARKET:-

The penetrated market is the set of consumers who are buying the company’s product. Here, the product is Gold-flake cigarette so our penetrated market is not local villagers because they prefer bidis rather than cigarette for satisfying their smoking need. Our penetrated market is people of urban and semi-urban area who like to smoke cigarette not bidis because they don’t have filter in it.

DEMAND MEASUREMENT

Companies can prepare as many as 6*5*3 = 90 types of demand estimates. Demand can be measured using different criteria.

1)SPACE LEVEL:

Space Level

Product Level

Time Level

Space level demand of product decides where to set up the product. It means whether product needs to be set up world wide, United States, region wise, territory wise, or customer wise.

GOLDFLAKES will be world wide because in consumer market in each and every territory in any region people do smoking. So we can estimate demand of GOLD FLAKES world wide.

2)PRODUCT LEVEL:

It includes following category

All sales: Each and every aspect of sales.Industry sales: For industry of particular product.Company sales: Only companies of particular products includes here.Product line: Only that product.Product form: Category of product.Product item: Particular item from product category.

GOLD FLAKE includes product form because CIGARETTE is one particular category of product. This particular product will not followed and used by each and every one so we can estimate product level demand of GOLD FLAKE by product form.

3)TIME LEVEL:

This includes time period for which marketer need to measure the demand like SHORT RUN, MEDIUM RUN, LONG RUN. If we take example of GOLD FLAKES then it need long run measurement of demand because of raw material and labor intensive work.

Main objective of measurement of market demand is that if company is not satisfied with its current sales then it can take a number of actions.

FACTORS AFFECTING BUYING BEHAVIOUR OF PRODUCT

Buying behavior means to analyze the behavior of consumer towards particular product. To further clarify it can be said that before launching any product marketer need to know behavior of consumer. How consumer buy, use and dispose the product. Buying behavior influenced by 3 ways:

Cultural Factors Sub – cultures. Social classes.

Social Factors Reference groups. Roles & status.

Personal Factors Age and stage in life cycle. Occupation. Personality and self concept.

In case of GOLD FLAKES all 3 factors influence buyer to purchase the product. As in western culture its trend to smoke means children even at the age of 13 or 14 they will smoke.

Social factors also influence in our product as in Reference group there is membership group where by its directly influence on behavior of customer suppose friend of mine is smoking then it will also influence me to just try that how is the taste of cigarette. Primary group also influence, suppose any worker observe his/her boss smoking while they are tensed so it will influence that individual to repeat that same step. Dissociative factors also plays an important part such as if some group of people are chain smoker so no body will like to join that group means every body will keep distance from that group.

Roles and status: Many a times it happen that people take help of CIGARETTES to show their status so it affects behavior of customer.

In case of Personal factors many a times person do smoking just because he thinks that it suits his personality. Occupation also influence very much because there are many occupation where by life becomes useful and person start smoking to remove that stress.

BUYING BEHAVIOUR PROCESS

The buying behavior process: The five-stage model

1) Problem recognition:

Following are reasons that why individual do smoke?

To reduce stress To show status To follow trend Because of hobby For entertainment

2) Information search: It includes from where individual gets information about cigarettes and smoking.

Personal:

Family (Heredity) Friends Neighbor

Commercial:

Advertising Display

Public:

Media (Referring books, newspapers)

Experience:

From the experience of some friends, like some friends, try smoking once or told by someone who is already smoking.

3) Evaluation of Alternatives:

Brand/Criteria Filter Brand Price Flavor Total

Gold Flake 9 8 6 10 33

Navy Cut 8 7 7 8 30

Four Square 8 6 8 6 28

91

Total Set

Navy cut

Gold Flake

Bristol

More

Cool

Marlboro

Four square

Awareness Set

Gold Flake

Classic

Marlboro

Four square

Navy cut

ConsiderationSet

Gold Flake

Four square

Navy cut

Choice Set

Gold Flake

Four square

Decision

Gold Flake

According to our survey we have given weight to each brand according to criteria its 40% to filter, 30% to Brand, 10% Price and 20% to flavor.

Gold Flake = 9*(.40) +8*(.30) + 6*(.10) + 10 *(.20) = 33/91 = 8.3 Highest Marks

Navy Cut = 8*(.40) + 7*(.30) + 7*(.10) + 8* (.20) = 30/91 = 7.7

Four Square = 8*(.40) + 6*(.30) + 8*(.10) + 6*(.20) = 28/91 = 7

4) Purchase decision

According to evaluation we will choose GOLD FLAKE as it contains 8.3 marks. In evaluation of alternative also decision its GOLD FLAKE. So decision is GOLD FLAKE.

5) Post Purchase Behavior

POST PURCHASE SATISFACTION

Post purchase behavior is behavior of person after use of the product. In case of GOLD FLAKE person may get addicted toward that product. Person

may also give result according to problem. For ex: if person is using GOLD FLAKE to reduce the stress and after using the product person will give result that is his stress reduced or not? If person is not satisfied then marketer need to take post purchase action.

POST PURCHASE ACTION:

If consumer is not satisfied then they may return the product. Consumer may also take legal action and can also complain other groups.

For Ex: Consumer is using GOLD FLAKE and suddenly consumer realize that quality is different then regularity then first he will complain to that shop from where he used to buy and if he still not satisfied then he may wrote letter to COMPANY.

POST PURCHASE USE AND DISPOSAL:

How buyer use and dispose that product. If disposal is not appropriate and affecting the environment then marketer needs to work upon that.

EX. Consumer is using GOLD FLAKE and packing of product is in such a way that consumer is not able to dispose it off easily so marketer needs to come out with different packaging.

MENTAL ACCOUNTING

While handling the money or finance customers use concept to MENTAL ACCOUNTING. Mental accounting is nothing but the way consumer code, categorize and evaluate financial outcomes of choices. Formal definition of MENTAL ACCOUNTING is “the tendency to categorize FUNDS or items of value even though there is no logical basis for the categorization”

In laymen’s language it means that calculation of investment of funds. Person will do as follows:-

Whether to invest or not? If yes

Where to invest?

Which product should give priority first?

Is that product worth to invest in?

To get the answer of above questions person do MENTAL ACCOUNTING. Let us understand the concept with the use of example of GOLD FLAKE.

EX: Person who is addicted to CIGARETTE will need to calculate budget for CIGARETTE every month. Person compulsorily needs to put aside some part of finance for CIGARETTE.

If we think from opposite side then person for whom CIGARETTE is not important then person can easily allocates that cost into other products which are very necessary for that time. Consumer may save that amount or may invest in BANK or in other securities.

THE END