A Brief History of the Tobacco Industry

It is now over four hundred years that tobacco took root in India. Since then it has
permeated into all strata of Indian society. As in the West, cigarettes became popular
during World Wars I and II in India. Even before the organized sector of cigarettes
became established, traditional forms of tobacco consumption were popular. Today,
tobacco giants are shifting their focus from industrialized countries to developing
countries and India is a prime target due to its one billion population, with about 250
million tobacco users and many more potential smokers. This section discusses an array
of strategies
employed by the tobacco industry for promoting tobacco products in India over time.

The British American Tobacco (BAT) has an Indian subsidiary by the name of Indian
Tobacco Company (ITC) Ltd. The company controls about 76% of the entire cigarette
market in India. It manufactures many of India’s most popular cigarette brands, including
Bristol, Scissors, Wills, Gold Flake and Capstan. The second largest manufacturer of
cigarettes is Godfrey Philips India (GPI) Ltd. affiliated to the international player Philip
Morris, which produces the brands Red & White, Jaisalmer and Cavenders. Vazir Sultan
Tobacco (VST) Company, whose brands include Charminar, Charms and Vijay, is the
third largest player in the Indian market. The fourth player is Golden Tobacco Company
(GTC), owned by the Dalmia group which manufactures Indian as well as foreign brands
of cigarettes. Among the foreign brands, Rothmans is one brand of cigarettes that has
been manufactured by GTC. Indian brands such as Panama are under the flag of GTC.
The top three companies account for over
90% of all cigarettes sold in India. Beedi and smokeless tobacco products form another
huge segment of tobacco trade in India, which was earlier an unorganized sector but is
now fast shaping up as an organized, corporate sector. Big producers of chewing tobacco
products are Kothari Products and Dhariwal Industries. They hold a market share of
34.5% and 33.5%, respectively.

Understanding Rural Marketing in India

There has been a vast difference between the rural markets and urban markets, within the
rural areas also-- between regions, states and districts. There is a difference in the media
reach due to the education levels, their culture and the type. This divide is expected to
increase. The marketing strategies are entirely different, that is the reason many
multinational companies failed to reach in villages. The Indian villages are highly
heterogeneous in nature. That is why many marketing bigwigs sitting in metros are
unable to understand the mindset of different villagers across Indian land.
The difference is in celebration of festivals, birthdays, occasions like marriage etc.. There
is a vast difference in the lifestyles of the people in the two regions. The kind of choices
of brands that a urban customer enjoys is different from the choices available to the rural
counterparts. The difference is also in the way of their thinking. Their purchasing power
and purchasing time are mainly agriculture related and get affected due to rain and
seasons. The strategy revolves around what attracts the rural customer to a product.
For example - Packaging. The rural customers are usually daily wage earners and they
don't have monthly incomes. So the packaging is in smaller units and lesser-priced packs
that they can afford. The unit pack size has to be small. The shampoos in sachet pack
became hit due to price to be paid whenever the rural females wash their hair. Then a
thing like the colour choice that attracts is entirely different. Another important factor is
convenience of use. Colgate came out with tooth powder packaging. First sachets were
introduced to match their income level. Second- to cap this sachet for convenience of
storage while use. There is also a difference in the kind of media mix that is used to
convey the messages to the rural customers. Product availability again has different
strategies. There the concept of weekly Haats is more prevalent.

There is lack of any research into the consumer behaviour of the rural areas. The research
required regarding : who is the influencer, who is the buyer, how do they go and buy,
how much money do they spend on their purchases, etc.. Some people have spent time in
the rural markets, carried out studies and have understood the rural behaviour, but their
works is not utilised by the industry as it is expensive.

One of the grey areas that needs attention is the retailer, who plays a very big role in rural
sales. The rural customer goes to the same shop always to buy the things. And there is a
very strong bonding in terms of trust between the two. The buying behaviour is also such
that the customer doesn't ask for the things by brand. The retailer pushes whatever brand
he wants to push as they can influence the buyer very easily and very strongly on the
preferences. The retailer is a chief influencer in the buying decision. In the rural markets
there are three sources of water - wells, handpumps and ponds. These becomes mass
awareness points of purchase. Special stickers can be put on the handpumps, the walls of
the wells. The idea is to advertise not only at the point of purchase but also at the time of
consumption. The customer can also see the brand message when he was bathing or
washing. The customers who purchase the brands get a sense of satisfaction by seeing
their choice being advertised in the places while a question was put in the minds of the
customers who had bought other brands. So this is one of the innovative strategy that may
work quite well.

Therefore to understand the way the rural markets work -- we need to go to these markets
and spend time there in understanding them. We live in surroundings where the things are
completely different from what the rural customer experiences. And we can't understand,
unless we go and spend time there. Things like what time does he get up, etc need to be
studied and customer needs to be understood. Also these studies need to be sold so others
can also benefit. We need in depth studies of the market, the medium, the message and
the rural customer in center of all these to understand the rural markets completely.
The target audience for any product or service marketing is made up of several groups. In
order to adapt the approaches to each group, it is necessary to differentiate between these
groups.

Vulnerable Groups and Target Groups : It is important to differentiate between the

vulnerable and target groups for intervention. The vulnerable group may in fact be the
same as a target group of a communication, but this may not be always true. For example
a vulnerable group at risk for personal hygiene consists of adolescents between 11 to 15
years. The personal hygiene care, reducing this risk will not be directed at the
adolescents, but rather at all those involved in the care of them. An effective
communication strategy takes into account; activities at all these levels. Each target
group, especially the primary one must then be divided into its "segments" a term often
used in marketing. Within the target audience there are primary, secondary and tertiary
target groups.

The primary target group is composed of persons whose behaviour/habits/attitude is to be

modified. These persons could be the parents of adolescents. In that case the aim would
be to modify the manner in which they communicate or care for them.

The secondary target group is comprised of people who will be used as intermediaries to
get the message across to the first target group. They could be health workers or teachers.
It all depends on what the communication networks are existing in the society.

The tertiary target group is made up of people who can facilitate the communication
process and behaviour change. They include administrators or celebrities, but also those
persons close to the parents or adolescents and the extended family.

This implies that the approach will vary for segments differing in terms of educational
level, socio-economic status, etc. We need to differentiate between the mothers who
constitute the target group and between the various segments of the target group mothers,
which will each benefit from a specific strategy. The media and support materials used to
reach mothers who are functionally illiterate and living in rural areas will differ from
those directed at more educated mothers living in urban areas.

Example: The communication on personal hygiene, the target groups may be defined as
follows:
VULNERABLE GROUP: Adolescents
TARGET POPULATION: persons caring for these children.
Primary target group: mothers of the adolescents.
Segment A: illiterate mothers living in rural areas.
Segment B: illiterate mothers living in urban areas.
Segment C: literate mothers. Etc.
Secondary target group: social workers and teachers in school, journalists from the local
radio station / print media /TV media.
Tertiary target group: administrative officers from the education department, fathers of
the adolescents, celebrities.

We must not forget that target groups should be participants in the process of social
communication and not mere receivers of information. A one-way communication
system for personal hygiene education would defeat our aim for an effective approach.
Also, the target groups must themselves play a role in transmission of messages to other
groups and to the "promoters" of the intervention. Influential people in the community
should also play an important part within the secondary and tertiary target groups. This
group is a catalyst in social communication.

A Brief Introduction to Tea

India is the largest producer and the largest consumer of tea in the world. Tea constitutes
an important part of Indian life. Basically it serves the following purpose,
• As a stimulating hot drink,
• A trade commodity,
• A major export item, and
• As daily income for more than one million workers.

Today tea is grown in more than 25 countries around the world. It is cultivated as a
plantation crop, grows well in acidic soil, and a warm climate with at least 50 inches of
rain per annum. Tea’s flavors, quality and character are completely dependent on the
region, the altitude, the type of soil and the climate in which it is grown.

Besides factors such as geography and climate, the fate of tea is also dependent on human
touch. Since all tea comes from one plant, the way it is processed is the artistry we taste
in the final cup.

The production of tea requires great care and craftsmanship. The freshly plucked leaves
are carefully and gently processed every step of the way. This is labor intensive, time
consuming and, as a result, expensive, but this is the only way that all the delicacy of the
aroma and the typical character of the tea plant can be passed on to the finished tea.

Industry growth
The annual tea production has been around 800mn kg for the last 2 years. The tea
production grew at an average annual rate of 2.3% during last four decades and at 1.4%
pa in the last decade. For the first 10 months of 2000 the production has increased by 6%
on yearly basis. The consumption is currently around 600mn kg.

Regional variations
Consumers in different parts of the country have heterogeneous taste. Dust tea is very
popular in the south. In the western states, good quality loose tea is preferred in Gujarat,
whereas in Maharashtra, consumers provide a large market to packet as well as
unbranded tea.. The eastern states of West Bengal and Orissa consume CTC broken.
Among the northern states, CTC fannings is liked in Rajasthan and CTC broken in others
states of the North. The Central India is predominantly a dust market.

Innovative Marketing Strategy:

The Tea sector is beset with many chronic problems. A large number of people are
dependent on it and there is need for a significant proportion of them to shift into
manufacturing and services, this is the area of focus for us. There is a need of putting
stress in promoting a healthy business climate globally, and contributing positively in
every community, both personally and organizationally. The company can make an effort
to find out what our customers desire from us. Then, to help realize a comfortable and
secure society. The idea is to value most is to take action based on an understanding of
the views of the customers. Value addition to tea is dependent on the following factors:

Quality Control: Quality is an indispensable principle of our Group. 502 Pataka will have
to complete quality assurance system so that it is reflected in the values, processes, and a
quality assurance evaluation has to be conducted at every phase of operations. The
company should focus towards providing quality products to its customers which can
only be achieved if we maintain quality at every level of production.

Aggressive Marketing: The Company should adapt an aggressive marketing policy to sell
its products. In aggressive marketing the company should sell more products to its
existing customers and find out new customers and win the confidence of its consumers
by providing quality products at reasonable prices.

Customer’s Relation: The Company should maintain a cordial customer relation.

Customers are best critics. A time bound system should be in place to interact with
valued Customers and it also encourages regular feedback on quality deliveries. All
customer complaints should be studied, analyzed, complaints Docketed; a detailed root
cause analysis should be done after which the complaint can be closed. This ensures that
the customers remain loyal and all their complaints are addressed and acted upon. The
company should value to take action based on an understanding of the views of the
customers.

Long Term Image Building: The Company should focus on long term goal of permanent
image building. It should aim at confidence build up with its customers and serve them
better. The Company should strive to share corporate social responsibility policies with
suppliers, including environmentally - beneficial activities throughout the supply chain.

Innovative outlook: The management of the company should be in the responsible hands
so that the company can boost of having an innovative management that always strives
for better performance and results. The philosophy is to provide customers with the
highest possible standard of service and all our people share the same dedication to
customer service. Patience and persistence is the hallmarks of growth.