Page 1 of 152

A Group report On Taste and

preferences of

The tobacco industry

SUBMITTED BY:-

1). CHOKSI HEMAL 3006

2). DIYORA DIPAK S. 3007

3). DOBARIYA TUSHAR A. 3008

4). GAJJAR DHAVAL 3011

5). GAJJAR JAINISH 3012

6). JANI TEJAS 3016

7). JOSHI ARJUN U. 3017

8). MANGUKIYA NIKUNJ M. 3022

9). SHIYANI KAMLESH 3075

10). SATASIYA DILIP A. 3187

SUBMITED TO:-

Page 2 of 152

CERTIFICATE

Page 3 of 152

"You can tell whether a man is clever by his answers. You can tell whether a man is wise

by his questions." Naguib Mahfouz

One of the recurrent themes in our report has been the importance of tobacco as a

beverage in the mind of customer. Apart from tobacco how different firms of tobacco are

attracting the consumers is also a focus area of our report. During the past few decades we

have lived in a culture that is the evidence of changing consumption pattern of tobacco and

growing verities of tobacco in Indian market.

We have chosen to prepare a report on Indian tobacco industry because of its importance

for a customer and for the Indian economy; we can never underscore how tobacco is a

important medium of foreign revenue for our nation. At first when we were putting down

our efforts we have no idea what we would have to say though our report but however we

put aside all doubts and began to examine the past of tobacco industry that how with the

passage of the time tobacco industry has grown and became a strength for our economy as

well the present scenario, and where the future lies of Indian tobacco industry.

Every industry has struggled to achieve its goals. Generation have given their best to make

life better for their off spring. There is nothing mysterious or hidden about it no

alternative to effort. And yet we failed to follow the winning trace. More than the

problems outside globalization recession, inflation, instability and so on- we are concerned

about the inertia that has gripped the tobacco industry psyche, the mindset of defeat. We

believe that when we believes in our goals that what we dream of can became reality

results will began to follow.

In the chapters of our report we have introduced with our work and extent of our

knowledge regarding different concept of marketing and business environment and how

we have linked the report with the practical issue of tobacco industry.

PREFACE

Page 4 of 152

As per laid down curriculum the Third Year of B.B.A. we are

assigned to make a report on teast and preferences of the people on tobacco industry. We are thank you to each & every person for providing us and

supplying an adequate and defused information and their best support and

guidance for completion of our report.

We really appreciate the work and systematic efforts of our

professor Mr. Bhaumik Nayak and shilpa trivedi who are helped guided and

support us positively and enthusiastically in getting our work done.

SUBMITTED BY:-

1). CHOKSI HEMAL 3006

2). DIYORA DIPAK S. 3007

3). DOBARIYA TUSHAR A. 3008

4). GAJJAR DHAVAL 3011

5). GAJJAR JAINISH 3012

6). JANI TEJAS 3016

7). JOSHI ARJUN U. 3017

8). MANGUKIYA NIKUNJ M. 3022

9). SHIYANI KAMLESH 3075

10). SATASIYA DILIP A. 3187

ACKNOWLEDGEMENT

Page 5 of 152

INDEX

CH-NO:- NAME OF CHEPTER PAGE

NO.

CERTIFICATE

PREFACE

AKNOWLEDGEMENT

********* TABLE OF CONTENT ********

1 RESEARCH METHODOLOGY 8

1.1 RESEARCH OBJECTIVE 9

1.2 RESEARCH DESIGN 10

1.3 RESEARCH APPROACH 11

1.4 RESEARCH SOURCES 12

1.5 CONTACT METHOD 12

1.6 RESEARCH INSTRUMENT 13

1.7 SAMPLING PLAN 14

1.8 ANALYSIS OF RESEARCH 16

1.9 LIMITATIONS 19

2 LITRETURE REVIEW 20

3 INTRODUCTION TO TOBACCO

3.1 HISTORY 23

3.2 HARMS OF TOBACCO 27

3.3 FORM OF TOBACCO 29

3.4 TOBACCO FARMING IN INDIA 33

3.5 PROCESS OF TOBACCO 34

3.6 IMPORT&EXPORT SENERIO 38

4 ANALYSIS OF TOBACCO INDUSTRY

4.1 SIZE AND STRUCTURE OF INDUSRY 43

4.2 MAJOR PLAYER AND MARKET SHARE 59

4.3 SWOT ANALYSIS 60

Page 6 of 152

4.4 PEST ANALYSIS 64

4.5 VALUE CHAIN OF TABACCO INDUSTRY

72

4.6 FIVE FORCE ANALYSIS 76

5 ANALYSIS OF MARKETING MIX

5.1 PRODUCT 82

5.2 PRICE 90

5.3 PROMOTION 97

5.4 PLACE 101

6 ANALYSIS OF STP

6.1 SEGMENTATION 104

6.2 TARGETING 109

6.3 POSITIONING 110

7 ANALYSIS OF CONSUMER PRICE AND

SENSITIVITY AND BRAND PREFERANCES

WITH SPECIAL FOCUS ON VARIOUS FORM

OF TOBACCO.

111

8 Conclusion and findings 151

9 BIBLIOGRAPHY 153

************************************

Page 7 of 152

PART-1

RESEARCH

METHODOLOGY

Page 8 of 152

WHAT IS RESEARCH METHODOLOGY?

Methodology is defined as

1. "the analysis of the principles of methods, rules, and postulates employed

by a discipline"; 2. "the systematic study of methods that are, can be, or have been applied

within a discipline"; or

3. "a particular procedure or set of procedures."

1.1)RESARCH OBJECTIVE:-

Research objective can be define as the purpose or motive behind the research though which the researcher tries to conclude some of the major and minor

findings.

There are two types of objectives in research.

Primary and secondary objective.

(1) Primary objective:-

Our researcher‟s primary objective is to identify the consumers preferances and

consumption habit of tobacco.

(2) Secondary objective:-

To analyze the situation of tobacco market in india.

To understand competitive framework of Indian tobacco industry.

To analyze the marketing mix strategy adopted by various big tobacco

marketers.

To understand the various internal and external factors affecting Indian

tobacco industry.

Page 9 of 152

(1.2) Research Design:-

Research design is also known as framework or blue print of the research.

There are three types of research design:-

(1) Exploratory Research Design:-

Exploratory Research Design means to find something new that help us to collect

preliminary information and research hypothesis consumption.

(2) Descriptive Research Design:-

Descriptive Research Design means to describe any situation or information in detail.

(3) Causal Research Design:-

Causal Research Design means to study the cause and effect relationship of the situation.

Here in the market research we have use Exploratory Research Design and Descriptive

Research Design.

We started with Exploratory Research for the following reason and ended with Descriptive

Research by explaining each topic in detail.

To know the position of major players in the field of note book and long book.

To know the consumer preferences on long book and note book .

To know the brand preferences for notebook and long book.

Page 10 of 152

1.3) DATA SOURCES: -

The source from which we get the information or data for research is known as Data

source.

(1) Primary Data: -

“Primary data consists of the information which is freshly collected for the

specific purpose at hand.”

Newly / Freshly gathered information is known as primary data. For our

project sources for primary data are personal interview with the holder of

pan shop and parsons who consume the tobacco.

For getting the primary data we have visited the different pan shops like

Lalit pan shop

Pandit pan shop

New way pan shop

Jai ambe pan shop

And many more…..

(2) Secondary Data: -

“Secondary data consist of information that already exist somewhere and

having been collected for another purpose.”

The data which are already exist & which was gathered earlier for,

magazines any other purpose is known as secondary data, sources of

secondary data are websites, etc.

WWW. docstok. Com

WWW.tobaccocontrol. Com

www.tobaccofreekids.org

www.tobaccofreekids.org

www.notobacco.org

www.imperial-tobacco.com

Page 11 of 152

1.4) Research Approach:-

After deciding the data source we will get the information from our respondent

i.e. Consumers. Primary data can be collected in following five ways:

(1) Observational Research:-

Fresh data can be collected by observing the consumers when they shop or consume

the products. Important point can be noted down while analyzing the behavior of

consumer.

(2) Survey Approach:-

It refers to face to face or direct communication with the respondents. In this pre-

decided questions are asked to respondents. It is the suited for descriptive research.

(3) Focused Group Approach:-

In this researcher select people who are potential to afford their products. The trained

moderator will ask the questions to the respondents and he will note the important

points regarding his preferences.

(4) Experimental Approach:-

In this approach two mutually exclusive groups are selected having similar

characteristics, keeping the same controllable factor and same variable in both groups

but providing them different treatment to observe the differences in their opinion.

Here we have used Survey Research Approach to know about consumer‟s beliefs,

preferences and satisfaction regarding the consumption with the help of survey

instrument known as Questionnaire.

Page 12 of 152

1.5) CONTACT METHODS:-

In this we decide the method through which we can contact the respondent to

get the information. Some of them are as follows:

(1) Personal Interview:-

It is a face to face communication with respondents. By this types of interview we can

get the reliable information and researcher is able to complete all the questions.

Explanation is given for the questions which are not understood by the respondents.

(2) Telephonic Interview:-

In this researcher ask questions to respondent on telephone. It is the best method for

gathering information quickly and is less costly also. But in this type of method

researcher can not get reliable, accurate and correct information.

(3) Mail Questionnaire:-

A structure questionnaire is prepared and sends to the respondents. The respondent is

supposed to fill up the questionnaire and send it back to the researcher. This is very

time consuming.

(4) Online Interview:-

In this type of research we ask the questions to respondents online through chat or E-

mail. Large number of respondents can be covered and it is less costly.

For our research we have used PERSONAL INTERVIWE for getting reliable

information. We met consumer of various age group and income group to know

their consumption habit and preferences related to tobacco industry.

Page 13 of 152

(1.6). RESEARCH INSTRUMENTS:-

Basically there are mainly 3 types of Research Instruments. They are:

1) Questionnaire;

2) Qualitative measures,

3) Mechanical Devices.

In our research we have used questionnaire as a Research Instrument.

Types of Questionnaire:

(1) Structured Questionnaire:-

In these types of Questionnaire all the questions are pre decided formal and it is asked in a

logical sequences.

(2) Unstructured Questionnaire:-

In this types of Questionnaire questions are ready but not asked in logical sequence.

Research can ask any question at any question at any time according to his wish as the

format is not pre decided.

Types of Questions:

Open ended questions :

It means where respondents is allowed to answer in his own way by using own words

and sentences. Here freedom is provided to respondents to answers.

Close ended questions :

It means where respondents are provided the options and is supposed to answer from those

alternatives only. Here freedom is not provided to respondent to answer.

For our report we have used STRUCTURED QUESTIONNAIRE that includes both of

open ended questions and close ended questions.

In close ended type of questions we have used Dichotomous Questions and multiple

choice questions.

Page 14 of 152

1.7).SAMPLING PLAN:-

a. Sample Unit

b. Sample Size

c. Sample Procedure

Sample: -

“Sample is a segment of the population selected for research to represent the population as a whole.” In our report the sample is consumers who are

consuming the tobacco in Ahmadabad.

Sample Unit: -

“Sample Unit means who is to be surveyed?

We have done the survey on Pan-parlor and the customers of tobacco

product& we met the consumer personally and we had find the reason behind the consumption of tobacco.

Sample Size: -

“Sample Size means how many people should be surveyed?”

We have surveyed 200 people who are consuming tobacco in Ahmadabad. And pan-parlor given below.

Lalit pan shop

Pandit pan shop

New way pan shop

Jai ambe pan shop

And many more…..

Page 15 of 152

Sampling Procedure: - “Sampling procedure means how should the respondent be chosen.”

There are two types of sampling procedure.

Probability

Non probability

On the Probability bases sample, where each element of population has

given equal chance of getting selected. In our report we are not going survey according to the probability methods.

On the Non-Probability bases sample, where each element of population

has not given equal chance of getting selected. In our report we have done survey according to the non-probability methods.

In Non Probability we have done the survey according to the

convenience. We surveyed the different kind of pan shop and we collect the information which we can collect with the responds of the consumers.

In our research we used non probability sampling procedure by

convenience sampling as all the units of population do not get known and equal chance to be selected as a samples.

Page 16 of 152

1.8) ANALYSIS OF RESEARCH:-

Analysis of our research is divided into 5 parts:

They are:

(1) Screening

(2) Coding

(3) Decoding

(4) Tabulation

General Tabulation

Cross Tabulation

(5) Pie charts

A detail introduction of Stationery‟s aspects is as follows:

(1) Screening:

Screening involves collections of all necessary information through questionnaire and then

identifies the eligible questionnaires data useful for research. In this process we have

discriminated the correct questionnaire and conducted our analysis. On the basis of these

error free questionnaires we have conducted the further analysis.

(2) Coding:

In the second stage of our analysis we have marked 1 to 300 numbers on the

questionnaires. That means our sample size was 300 respondents. Each and every question

of questionnaire and the option of given in each question was also assigned a code

(3) Decoding:

In this steps of our analysis the same method which we have applied at the time of coding

in the actual questionnaire. In the computer first of all we have entered 300 respondents as

R1, R2, R3, R4, R5….R300 and the questions 1 to 27 We use a single sheet for all the

single answers questions and for each multiple choice question we have used different

sheet.

Page 17 of 152

(4)Tabulation:

In the tabulation stage we as researcher have used 2 types of tabulation:

(a) General Tabulation

(b) Cross Tabulation

(a) General Tabulation:

In general tabulation we have arranged the data in forms of table for every

question likewise type of numbers of respondent & income.

Income People Percentage

Less then 10000 75 37.5

10000-20000 65 32.5

20000-40000 47 23.5

Above 40000 13 6.5

(b) Cross Tabulation:

We have also tried to articulate the relation between entities.

Example:-age of the respondent and income group

AGE & INCOME GROUP

Spending Age

Less than 100 100-300 300-500 Above 500 Total

1-18 11 08 03 01 23

19-25 15 30 18 18 85

26-35 04 12 17 07 40

36-45 05 04 07 10 26

46-55 08 05 03 01 17

Above 55 01 04 02 02 09

Total 48 63 50 39 200

Page 18 of 152

(5)Pie charts:

We have also presented the information collected from our side in the form of pie

chart also so that a clear idea about the responses given by them can be obtained.

Example:-

75

65

47

13

MONTHLY INCOME OF PEOPLE WHO CONSUME TOBACCO

LESS THAN 10000

10001-20000

20001-40000

40001 ABOVE

Page 19 of 152

1.9) LIMITATION:-

There are certain limitations to be faced while doing this researches.

(1) Time:

It is the time consuming as it took nearly 6-7 months for data collection, primary

survey and analysis of it of 200 sample size.

(2) Cost:

It becomes more expensive due to primary survey done to know the preference

of consumers towards tobacco.

(3) Area:

The Geographical area was limited to Ahmedabad only. There for result may be

restricted or limited.

(4) Professional Approach:

For the purpose of analysis we have not used any high technical software. So

problems and loopholes may be found.

Page 20 of 152

Part-2

LITRETURE REVIEW

Page 21 of 152

1) This article analyses consumption patterns, socio-economic distribution and

household choice of a variety of tobacco products across rural and urban India.

Using a multinomial logit model, we examine the choice behaviour of a household

in deciding whether and which tobacco products to consume. Household-level

data covering 120,309 households have been used for this. We find that most

forms of tobacco consumption are higher among socially disadvantaged and low-

income groups in the country. Variables such as education, sex ratio, alcohol and

pan consumption were found to be significant factors determining tobacco

consumption habits of Indian households. The effect of some of the factors on the

probability of consumption differs for certain types of tobacco products, increasing

some and decreasing others. Addictive goods such as alcohol and pan were found

to be complementary to tobacco consumption

2) The main objective of this paper is to analyze the pattern of tobacco consumption and its health implications in India. We use various rounds of National Sample Survey for this purpose. The paper finds that, though there is a reduction in tobacco consumption in the form of bidi and cigarette in India as a whole, this decrease is compensated for by an increase of pan consumption in rural India. It has also been observed that the consumption of tobacco is more among the poor in India and we argue that the consequent higher health care spending arising out of tobacco related diseases leaves them economically worse off. Thus the paper concludes that, apart from the economic gains that tobacco industry is generating, tobacco use also imposes burden, especially on users, in the form of numerous tobacco related diseases and high health care spending. This, coupled with the fact that the investment on health by government is declining over the years, has the potential to trap the poor in a vicious circle of poverty and ill health. Hence government policy needs to be targeted towards an effective control of tobacco use.

Page 22 of 152

Part-3

Introduction Of

Tobacco

Page 23 of 152

3. INTRODUCTION TO TOBACCO:-

3.1). HISTORY OF TOBACCO:-

Tobacco is deeply rooted in our history. Because the export of tobacco financed shipment of

essential goods from England, it became the lifeblood of the early settlers. Tobacco sales

continue to play a major role in the U.S. economy.

Approximately one-third of the total annual production is exported. Leaf and manufactured

product exports have grown since 1988 and now appear to be leveling off. Generally,

imported tobacco is a lower grade than domestic leaf. It is used in the manufacture of generic

cigarettes, which in 1992 were 30 percent of the market. American leaf is used in the brand

name production. Tobacco is the seventh largest cash crop of the 50 states. One acre

produces an average yield of $3,862. In comparison, corn, cotton, and peanuts yield $262,

$380, and $691 per acre, respectively. The five largest producing states of flue-cured tobacco

for 1992 are:

The tax on tobacco products is now the second largest revenue generated for the U.S.

Treasury, exceeded only by the excise tax collections from gasoline. Tobacco is the most

heavily taxed of any consumer product by percent of retail price. The taxes generated are not

only from excise, but from income, employment, property, and sales taxes.

Page 24 of 152

ECONOMIC HISTORY OF TOBACCO PRODUCTION:-

Tobacco occupies a prime place in the Indian economy on account of its considerable

contribution to the agricultural, industrial and export sectors. India is the second largest

producer of tobacco in the world. China and the USA rank first and third, respectively, in

terms of tobacco cultivation. Brazil, Turkey, Zimbabwe, Malawi, Italy and Greece are the

other major tobacco producing countries. Tobacco contributes substantially to the

economies of these countries. In 2000.2001, the contribution of tobacco to the Indian

economy was to the

Extent of Rs 81,820 million, which accounted for about 12% of the total excise collections.

Foreign exchange earnings during the same period were Rs 9030 million, accounting for 4%

of India‟s total agricultural exports. Endowed with

Favorable agro-climatic attributes such as fertile soil, rainfall and ample sunshine, India has

the potential of producing different varieties of tobacco with varied flavors.

KEY MESSAGES:-

. Tobacco cultivation has a history of about 8000 years.

. Europeans were introduced to tobacco when Columbus landed in America in 1492.

. Portuguese traders introduced tobacco in India during 1600. Tobacco became a valuable

Commodity in barter trade and its use spread rapidly.

. Tobacco‟s easy assimilation into the cultural rituals of many societies was facilitated by

The medicinal (and perhaps intoxicating) properties attributed to it.

. Tobacco smoking became a popular leisure activity in Europe during the early

seventeenth Century.

. Introduced initially in India as a product to be smoked, tobacco gradually began to be

used in several other forms. Paan (betel quid) chewing became a widely prevalent form of

smokeless tobacco use.

. Although some Chinese and European systems of medicine supported the use of tobacco,

Ayurveda. the Indian system of medicine. never supported the use of tobacco as

medication.

. The ill effects of tobacco use on human health were recognized even in the sixteenth

century, which led to restrictions on its use even in earlier centuries.

. Tobacco thrived everywhere in the world despite social (and some religious) disapproval

The immediate and tangible benefits that accrue from tobacco cultivation, manufacture

and marketing act as incentives for farmers to grow tobacco and for the government to

encourage tobacco cultivation and manufacture. Tobacco has developed from a

commodity to which great importance and value were attached (because of its presumed

medicinal and evident intoxicant properties), and hence used for barter trade during the

sixteenth and seventeenth centuries, to a cash crop in subsequent periods.

Page 25 of 152

The following aspects of tobacco can help in understanding why it has developed as a

cash crop:

1. Tobacco has been contributing substantially to the total agricultural income.

2. It yields high net returns per unit of cultivation as compared to other crops.

3. It provides employment opportunities, both in agriculture and activities involved in

the manufacture of tobacco products.

4. It is a major foreign exchange earner.

5. It is an important source of revenue, which can be tapped relatively more easily than

many other commodities. In view of its special qualities, a levy on it does not cause

marked substitution effects and what the noted fiscal expert, Richard Musgrave

terms .the spite effects. Therefore, in practically every fiscal budget in India, the

finance minister proposes raising a levy on tobacco products and justifies it on the

ground that tobacco consumption is injurious to health.

6. There is considerable domestic and international demand for tobacco and its

products. The historical developments relating to the economic aspects of tobacco in

India can be studied in two periods: the colonial era before India became

independent in 1947 and the post- Independence period of national governance and

policy-making.

Page 26 of 152

Pre-Independence period

Tobacco was initially grown in the Deccan region (South Central India), during 1605, and

later spread to other parts. The Virginia variety of tobacco was introduced in India in

Andhra Pradesh in 1920 by the British officers of the

Indian Leaf Tobacco Development Industry Sir Forbes Watson‟s Cultivation and

preparation of tobacco in India (1871), said to be one of the earliest publications on

tobacco, tells us more about Indian tobacco.

The earliest forms of cigarettes have been attested in Central America around the 9th

century in the form of reeds and smoking tubes. The Maya, and later the Aztecs, smoked

tobacco and various psychoactive drugs in religious rituals and frequently depicted priests

and deities smoking on pottery and temple engravings. The cigarette, and the cigar, was

the most common method of smoking in the Caribbean, Mexico and Central and South

America until recent times.

The South and Central American cigarette used various plant wrappers; when it was

brought back to Spain, maize wrappers were introduced, and by the seventeenth century,

fine paper. By 1830, the cigarette had crossed into France, where it received the name

cigarette; and in 1845, the French state tobacco monopoly began manufacturing them.

In the English-speaking world, the use of tobacco in cigarette form became increasingly

popular during and after the Crimean War, when British soldiers began emulating their

Ottoman Turkish comrades and Russian enemies. This was helped by the development of

tobaccos that are suitable for cigarette use, and by the development of the Egyptian

cigarette export industry.

Page 27 of 152

3.2).HARMS OF TOBACOO:-

I. MAGNITUDE OF THE PROBLEM

Each year in India an estimated total of 700,000-900,000 new cancers are diagnosed,

2001; Murthy et al., 1990; Yeller and Jussawalla, 1992). Nearly half of allcancers in men

occur at sites associated with tobacco use. These sites include: mouth (oral cavity),lip and

tongue,oropharynx, hypo pharynx, pharynx, esophagus, larynx, lung and urinary bladder.

In women, less than one fifth of cancers occur at these sites, ,predominantly in oesophagus

and oral cavity, but cancers of the cervix and breast constitutes over 40%of all cancers.

The lower proportion of tobacco related cancers (TRCs) among women is mostly

explained bythe fact that, tobacco use, especially smoking, is more common among men

than among women.The number of newly diagnosed TRCs each year in India has been

estimated at approximately 250,000(NCRP, 2001). In men, lung cancer is numerically

thehighest among all registered cancers in the sixpopulation-based registries (Bangalore,

Barshi,Bhopal, Chennai, Delhi and Mumbai), but when cancers at all oral sites are

combined - oral cavity,tongue and lip - oral cancer vies for first place withlung cancer.

Registry-wise, lung cancer and oral cancerjockey for first place in four registries, with

theexceptions of Bangalore, where oesophageal cancer ishighest, and the rural registry at

Barshi, whereoropharyngeal cancer is highest. In the otherregistries, oropharyngeal cancer

vies for third placealong with oesophageal cancers, followed by laryngealcancer, except in

Delhi, where laryngeal cancer takesthird place and cancers of the pharynx and of

theoesophagus follow in nearly equal proportions. Inwomen, oral cancer takes first place

among TRCs inall the Registries; it is closely followed by oesophagealcancer and then the

other TRCs follow in much smallerproportions. Cancers of the urinary bladder are

alsoconsidered among the tobacco related cancers by theNCRP (IARC, 1986) and they

form a small fraction ofthem in both men and women (NCRP, 2001).

II. EVIDENCE FOR CAUSATION BY TOBACCO

Epidemiological studies from around the worldhave provided sufficient evidence that the

smoking oftobacco as cigarettes and bidis causes cancer of the

respiratory tract and the upper digestive tract(International Agency for Research on Cancer

(IARC),1986). Similarly, smokeless tobacco including theforms most commonly used in

South Asia, has beendemonstrated to cause oral cancer and other head andneck cancers

(IARC, 1985). The risks of these cancersare substantially increased in tobacco users who

havea high-level consumption of alcohol (IARC 1986). Sinceevidence up to 1985 has been

extensively reviewed bythe IARC, in this paper largely post-1985 studies areincluded.

Page 28 of 152

III. ORAL CANCER

Since 1985, eight case-control studies on oralcancers conducted in India from places as

diverse asBangalore, Bhopal, Chennai, Mumbai and Trivandrum, have given fresh

evidence of the role oftobacco smoking and chewing in cancer causation. Fiveof these

studies reported significant estimated relative risks to current chewers of pan with tobacco

compared to non-chewers: in men, the relative risks varied from 1.8 to 5.8 and, the values

for women ranged from 30.4 for currentchewers to 42.4 ever chewers in the two studies

that included women. In three studies conducted in Trivandrum, male cases and controls

were stratified by habit for having ever been a regular pan-tobacco chewer compared

tothose who never had chewed or smoked, relative risks for oral cancer at different sub-

sites were reported at8.75, 6.1 and 14.3. All eight studies reported significant doseresponse

trends for frequency of pan-tobacco chewing per day, and six out of the eight studies

reported significant trends for duration as well. Retention of the quid overnight, analyzed

in one study, showed a36-fold risk. Use of tobacco with lime was identified as a risk factor

for oral and oropharyngeal cancers in a largehospital-based case-control study in Pakistan,

yieldingrelative risks of 10.4 for women and 13.7 for men, compared to those who neither

chewed nor smoked.

VII. LUNG CANCER

Studies on lung cancer from around the world have led to the conclusion that the

proportion of lung cancer attributable to smoking is of the order of 90%. In two case-

control studies of lung cancer in India, Bidi smokers had a relative risk of 5.8 and 11.6,

while cigarette smokers had values of 5.6 and 7.7. Smokers of more than 20 Bidi per day

had relative risks of 12.25 and 33.2 and smokers of more than 20 cigarettes daily, 5.8

and 26.8.

Page 29 of 152

3.3). FORMS OF TOBACCO:-

Tobacco is consumed in two ways, either by smoking or chewing. While smoking the

following tobacco products are consumed: Cigarette, Cigar, Bidi (Hand rolled, leaf wrapped

country cigarettes) and to chew the products are: Raw tobacco, Supari (Arecanut), Gutkha,

Pan Parag etc.. Due to diverse climatic conditions every type of tobacco is grown in India.

Almost 90% of area is accounted for by Nicotine tobacem. And 10% by Nicotina Restica.

Only one third of the tobacco output in the country is Flue cured Virginia (FCV) variety,

suitable for cigarette manufacturing. There are seven major categories of tobacco, Viz. Flue

cured Virginia tobacco (FCV), Burley, Oriental, Bark flue cured, Sun cured, Light flue cured

cigar and Dark flue cured. Flue cured Virginia tobacco is mainly used for manufacture of

cigarettes. Light air cured tobacco is used in the manufacture of bidis. Unmanufactured

tobacco is also consumed in India, for chewing purpose

1). FLUE-CURED:-

Also known as bright leaf is carefully force dried in barns using a clean heat source and

produces a golden colored leaf. It is the principle ingredient in cigarettes. North Carolina is

the leading grower of flue-cured tobacco, which is also grown in Virginia, South Carolina,

Georgia, Florida, and Alabama.

2). FIRE-CURED:-

It is used in snuff, chewing tobacco, and strong cigars.

3). MARYLAND AIR-CURED :-

It is used in cigarettes and as cigar filler.

4). DARK AIR-CURED:-

It is used in chewing and smoking tobaccos, snuff, and as cigar filler.

5). CIGAR TYPES: FILLER, BINDER, AND WRAPPER:-

There are grown in the Northeast, Wisconsin, and Puerto Rico.

Page 30 of 152

6). PERIQUE:-

It is noted for its pleasing aroma, is used sparingly in fancy smoking tobacco blends and is

grown in Louisiana in very limited quantities.

Cigarettes:-

Gutkha

Page 31 of 152

Beedi

Raw tobacco

Page 32 of 152

TYPES OF TOBACCO:-

BEEDI TOBACCO:

This occupies 30%.35% of the total area under tobacco cultivation and

Is grown in Gujarat, Karnataka and Maharashtra. Nearly 85% of the world‟s beedi tobacco

is grown in India. The average yield varies between 1000 and 1700 kg/hectare in

Karnataka and Gujarat, respectively.

FCV TOBACCO:

It is grown in Andhra Pradesh and Karnataka. A small quantity of this tobacco is also

grown in Orissa (Rayagada) and Maharashtra (Gadchiroli). It is the most

remunerative crop due to the demand from domestic cigarette manufacturers and

importers. In 2000.2001, the average yield of FCV tobacco was 1710 kg/hectare. Fifty per

cent of the FCV grown in India is used by the domestic cigarette industry while the

remaining is exported.

BURLEY TOBACCO:

This air-cured form of tobacco is used for cigarette blends and is grown in Andhra

Pradesh.

HOOKAH TOBACCO:

(Nicotiana rustica variety) It is used for smoking and is grown in Uttar Pradesh, Bihar,

West Bengal and Orissa.

CHEWING TOBACCO:

This is used for gutka, snuff and pipe tobacco. It is grown in Tamil Nadu, Uttar Pradesh,

Bihar, West Bengal and Orissa.

NATU TOBACCO:

It is sun-cured and grown in Andhra Pradesh.

CIGAR TOBACCO:

This type of tobacco is grown in West Bengal and Tamil Nadu.

Page 33 of 152

3.4). TOBACCO FARMING IN INDIA:-

Andhra Pradesh, Gujarat, Karnataka, Maharashtra, Bihar and Tamil Nadu are the major

tobacco producing states in India. Around 65% of India‟s production comes from Andhra

Pradesh (34%), Gujarat (22%) and Karnataka (11%). Tobacco is also grown in Orissa,

Uttar Pradesh and West Bengal, Andhra Pradesh, Gujarat, Karnataka and Uttar Pradesh

together account for over 90% of the total tobacco production in the country. Currently,

Indian tobacco is exported to more than 80 countries spread over all the continents.

Farmers who grow tobacco are different from other farmers in several ways. It is those

differences that make this audit guide useful. Due to the high value of tobacco, both per

acre and per pound and the level of Government regulation of the industry, special

problems and opportunities exist. A detailed paper trail is generated for legal sales of

tobacco, and complex schemes have developed to facilitate illegal sales. If you have not

read Chapter 1, you should consider going back and reading the parts on market structure,

Government regulation, and illegal schemes before you proceed. They would give you a

basic understanding of the market environment and how the farmer, dealer, warehouse,

and Government agencies interact.

Page 34 of 152

3.5) PROCESS OF TOBACCO:-

THE HARVEST:-

The harvest begins in January and extends for some weeks. The tobacco is picked by hand

in six passages, each of which takes about seven days. The harvest begins at ground level

and moves upward, removing only two or three leaves per passage. About 120 days pass

between the transplantation of the seedlings to the end of the harvest; during this time each

plant has be examined 170 times on average – an extremely labor-intensive affair.

The Corojo Harvest:-

The uppermost leaves of the plant, the “Semi Corona” and

“Corona” deliver the exceptionally aromatic and full-

bodied parts for cigar production. In “Centro” one finds the

most beautiful and finest of leaves with a balanced flavor.

The best leaf quality is found in the “Centro Fino”. The

aromatically less distinctive, lower leaves on the plant are

called the “Libre de Pie” and “Uno y Medio”; they display

especially fine burn characteristics.

The Criollo Harvest:-

The Criollo plant carries six or seven pairs of leaves, which are

divided into the classifications Ligero, Seco, Volado und

Capote. The younger leaves at the top which are exposed to sun,

have a stronger flavor and a higher nicotine content. The Seco

leaves from the center of the plant are somewhat milder. The

bottom leaves, exhibit the least flavor, as they are the oldest and

have had the most shade. They are primarily used as filler.

Page 35 of 152

AIR-DRYING:-

The bundled leaves are brought into the drying sheds (Casas del Tabaco) to dry. These are

aligned on an East/ West so that the sun warms one end of the shed in the morning and the

other in the afternoon. Temperature and air humidity are carefully regulated by opening

and closing doors located at both ends. The tobacco leaves are attached in pairs by way of

needle and cord to wooden poles (Cujes or Poles), which are hung just above the ground.

During the drying process which takes about 50 days, they are gradually hung higher and

higher in the shed. The leaves first turn yellow and then through the oxidation process,

take on their famed golden brown colour.

THE FIRST FERMENTATION:-

The tobacco leaves are packed together into bundles (Gavillas) and then moved into the

fermentation house. Here they are stacked in piles (Pilones), reaching over three feet high.

If the temperature of the tobacco rises above 35°C, the piles are dismantled and allowed to

cool until they can again be heaped up. The first fermentation lasts about 30 days, within

which the leaves take on an even colour, resins are reduced, and ammonia and other

unwanted components are dissipated.

Page 36 of 152

DE-RIBBING AND SORTING:-

The tobacco leaves are moistened with water in order to avoid discoloration. Subsequently

the main ribs are removed. The leaves are then sorted, depending upon intended purpose,

colour, size and quality. The complete de-ribbing and final sorting in up to 50 different

categories takes place much later in the factory.

THE SECOND FERMENTATION:-

The leaves are again bundled together and stacked into meter-high piles (Burros). The

tobacco goes through a chemical change which positively influences its taste and flavour,

and allows any remaining foreign components to diminish. The second fermentation is

stronger than the first and lasts up to 60 days. The wrappers undergo the shortest

fermentation.

STORAGE:-

After resting for some days on ventilation racks, the tobacco is pressed into bundles called

“Tercios”, which are wrapped in palm bark or banana leaves. These bundles are delivered

to local collection points, which are under the control of the state monopoly habanos.

From this moment on, the Republic of Cuba assumes responsibility over the further

treatment of the tobacco. The Tercios are kept up to three years in depots – for some

formats even longer – until they are needed by the cigar factories. The taste and flavour of

the tobacco continues to improve during this storage period.

THE PREPARATION OF THE TOBACCO:-

The wrapper leaves are moistened so that they are supple and smooth; afterwards they are

hung up over night so that the humidity can distribute itself evenly along the leaf. The next

day “Despallidores” remove the central ribs by halving the tobacco leaf. Next the leaves

are sorted by the “Rezagadoras” into piles by size, colour and structure. The binder and

filler do not require humidifying. The various types of leaves have different ripening

intervals; the blending master attentively supervises the development of each sort.

Subsequently, the leaves go to the blending station, where under strict safety precautions

the blending process takes place. It is here that the carefully guarded secret recipes for

each Habanos are kept. The mixtures are handed out to the cigar rollers (Torcedores), the

amount of which is just enough for the production of 50 cigars.

Page 37 of 152

THE PRODUCTION OF CIGARS:-

At the heart of each factory is the “Galera”. It is here that the Torcedores create the

various sorts and formats. The only tools employed are a wooden table, a sharp blade

(Chaveta), a guillotine, a small pot of vegetable adhesive and – above all –skillful fingers.

Each Torcedor is able to daily roll about 120 cigars which perfectly keep to the prescribed

lengths and diameters. Samples of their work are regularly examined by quality testers,

and should the cigars not be found good, this is very serious affair for the Torcedor as they

are paid by the piece.

THE ESCAPARATE:-

Directly from the work bench, the cigars are delivered to a climate-controlled room, the

“Escaparate”, which is equipped with high cedar wood shelves. For at least three weeks

and sometimes for several months, the finished cigars are stored here under ideal

conditions: The temperature lies between 16°C and 18°C and the relative humidity

between 65% to 70%.

COLOR DETERMINATION AND ATTACHMENT OF CIGAR BANDS

In order for a perfect presentation of the cigars, the Escogedor (color sorter) sorts them

into 65 different shades of color. A second Escogedor arranges the cigars into boxes so

that the color tones from dark to light are presented from left to right. He also chooses

which side of the cigar will be displayed when the box is opened at a later date. The

Escogedores belong to the best paid workers in the factory. The Anilladora (bander)

removes the cigars from the box in order to attach the bands. Under no circumstances may

she change the arrangement selected by the Escogedor nor the side of the cigar to be

displayed. The packed boxes are now secured with the guarantee seal of the Cuban

government. The crates are made of cedar so that the cigars can breathe and mature

further.

Page 38 of 152

3.6). IMPORT AND EXPORT SENERIO:-

India‟s Tobacco exports are likely to touch Rs. 16,050 million towards the end of current

fiscal from Rs. about Rs. 15060.20 million in last fiscal as its growers are set to export

more than 60% of their produce in view of domestic tobacco‟s rising demand in countries

like Russia, Vietnam, U.K., Germany and Belgium.

The aforesaid estimates are made by the Associated Chambers of Commerce and Industry

of India (ASSOCHAM) on Prospects of Tobacco to Exports for Current Fiscal,

emphasising that domestic tobacco sector in the past few years has come out of ressession,

the impact of which would be favourable and amount to higher tobacco exports.

ASSOCHAM President, Mr. Venugopal N. Dhoot said,” export potential of India tobacco

could be much more provided Indian farmers are paid reasonably well for growing

tobacco crops proportionally as happens in leading tobacco growing countries such as

Brazil & Zimbabwe. Tobacco farmers, in country like Brazil are paid $ 1.8 per kg as

against $2 per kg in Zimbabwe. In India, the tobacco growing farmer‟s condition is poorer

as they are paid only 80-90 cent per kg. On top of it, Indian tobacco industry is highly

taxed particularly its cigarettes segment, in which the tax component is around 350% as

against 70% in Brazil & Zimbabwe, pointed out Mr. Dhoot.

Productivity is high in Zimbabwe at 3200Kg per hectare, whereas it is 1900 kg in Brazil

and around 2000Kg in India. However, tobacco leaves of Brazil and Zimbabwe contain

high nicotine and a sizeable unwanted external content. Indian tobacco, on the other hand,

contains negligible nicotine and other toxic matter and is famous for fascinating flavours.

The Chamber assessment also reveals that in 2005-06 tobacco exports in quantity were

1,65,882 tonnes and value terms the export realization was to the tune of Rs. 14047.20

Million. According to the figure available with ASSOCHAM during 2006-07, tobacco

exports in value terms comprised Rs. 15060.20 million. In volume their quantity was

estimated around 1,70,005 tonnes. This is despite that the tobacco industry had been

facing some recession on account of export pricing in the past, trends for which now

appear to be favourable. It is because of this that chamber has projected higher exports

value for tobacco products as well as their quantity.

Russia was the largest importer of Indian tobacco in 2005-06. It imported 27,513 tonnes of

tobacco (leaf and products) from India. It was followed by Belgium (15,411 tonnes),

Vietnam (7749 tonnes), the UK (7721 tonnes) and Germany (6354 tonnes). During 2006-

07, their imports respectively were Russia (27,950 tonnes), Belgium(15,800 tonnes),

Vietnam (7949 tonnes), the UK (7921 tonnes) and Germany (6524 tonnes)

Page 39 of 152

Among group the nations, West Europe, by importing 30 % (43,213 tonnes) of Indian

tobacco, was the largest importer. East Europe, which imported 40,167 tonnes (20%),

came in second. South Asia & South –East Asia bought 31,656 tonnes (22%),Africa

12,618 tonnes(9%), West Asia 7917 tonnes (6%), North and South Americas 4192 tonnes

(3%) and Australia 2244 tonnes (2%) in 2005-06.

In India, about 6 million farmers are engaged in cultivation of tobacco and about 36

million people are dependent on the tobacco industry, either directly or indirectly. Hookah

tobacco paste 879 Kg led the exports of tobacco products followed by cigarettes 1011 Kg.

Of the total exports of tobacco items form the country, unmanufactured tobacco accounts

for 80% to 85% and the manufactured tobacco products account for 20% to 25%. Of the

unmanufactured tobacco exports Flue Cured Virginia (FCV) tobacco is the single largest

item accounting for 75% to 80% of the tobacco exports. The other varieties exported are

Burley, HDBRG, Natu, DWFC, Top leaf and Jutty – all are cigarette tobaccos. Non-

cigarette tobaccos exported are Lalchopadia, Judi, Rustica for chewing purposes and bidi

tobacco in small quantities. The export of non-cigarette tobaccos is at levels of 8-10%.

Contrary to international trend, India‟s tobacco production is dominated by non-cigarette

tobaccos.

FCV tobacco is the major export variety, as it constitutes about 70% of the total

unmanufactured tobacco exports. The FCV tobacco is grown principally in Andhra

Pradesh (70 per cent), Karnataka (29 per cent) and Maharashtra and Orissa (below one per

cent). Andhra Pradesh and Karnataka are the two main FCV tobacco-growing regions.

Currently the situation in the global tobacco market is transforming into a favourable

market environment for tobacco exports due to several reasons. Brazilian export prices

have almost leveled the most expensive American tobacco prices. Zimbabwean farm

prices have also seen higher the Brazilian prices. Increasing cost of production and the

significant amount of export cesses imposed on tobacco exports by the Governments of

Zimbabwe and Malawi recently made their tobaccos further expensive.

The newly opened East European and CIS markets are not in a position either to absorb

high cost tobaccos or cigarettes made with high conversion cost. Phasing out of farm

subsidies by European Union will further enhance price competitiveness of Indian

tobacco. Under these circumstances, India can become a major player in the Indian

tobacco market if it can harness the emerging opportunities and enhances its exports to the

major import markets.

Page 40 of 152

The advantages for Indian tobacco are a low unit production cost; average export prices of

Indian FCV tobacco are more competitive than that of Brazil, USA, Zimbabwe; low

conversion costs of tobacco into cigarettes in Indian compared to in UK and in USA; low

to medium nicotines to suit the current requirement of world markets; anticipated decline

in production in China, USA, Zimbabwe, EU in the next five years due to declining

consumption in USA & EU, government controls to restrict production in China, phasing

out of Agri subsidies by EU and Land invasions & Land acquisition in Zimbabwe i.e.

change of tobacco farms from White farmers to Native farmer; and phasing out of

Agricultural subsidies in European Union and Argentina; etc.

ASSOCHAM has suggested several measures needs to improve the quality and yield of

tobacco through improved package of practices at the farm level, improved curing and

grading facilities, transfer of technology to the farmers and image promotion abroad. Rich

and varied Indian geographic and agro-climatic conditions foster consistent availability of

wide range of tobaccos for export all through the year. Indian tobacco, by virtue of its

qualities, sheer volumes and diversity, is progressing gracefully to occupy its rightful

place in the world tobacco market.

Page 41 of 152

CHAPTER:-4

ANALYSIS OF

TOBACCO

INDUSTRIES

Page 42 of 152

4.1). Tobacco industry in India

India is the second largest producer of tobacco in the world after China. It produced 572 m

kgs of tobacco in FY03. However, India holds a meager 0.7% share of the US$ 30 bn

global trade in tobacco, with cigarettes accounting for 85% of the country's total tobacco

exports.

Despite being the second largest producer, India is only the ninth largest exporter of

tobacco and tobacco products in the world. Out of the total tobacco produced in India,

only one-third is flue-cured tobacco suitable for cigarette manufacturing. Most of the

tobacco produce is suitable for the manufacture of chewing tobacco, bidis and other cheap

tobacco products, which have no demand outside the country. In India, three major

cigarette players dominate the market, primarily ITC with 72% market share, Godfrey

Phillips with 12% and VST with 8% share of the market.

Chewing tobacco has been a tradition in India for centuries. Of the total amount of tobacco

produced in the country, around 48% is in the form of chewing tobacco, 38% as bidis, and

only 14% as cigarettes. Thus, bidis, snuff and chewing tobacco (such as gutka, khaini and

zarda) form the bulk (86%) of India's total tobacco production. In the rest of the world,

production of cigarettes is 90% of total production of tobacco related products.

The per capita consumption of cigarettes in India is merely a tenth of the world average.

This unique tobacco consumption pattern is a combination of tradition and more

importantly the tax imposed on cigarettes over the last 2 decades. Cigarette smokers pay

almost 85% of the total tax revenues generated from tobacco. The tobacco industry is one

of the most profitable industries in the world. Tobacco companies use their enormous

wealth and influence both locally and globally to market their deadly products. Even as

advocacy groups and policy makers work to combat the tobacco industry‟s influence, new

and manipulative tactics are used by tobacco companies and their allies to circumvent

tobacco control efforts. It is important for tobacco control advocates to know which

companies are present in their country, how and where they operate, the types and

quantity of products sold, and marketing tactics used to sell tobacco products.

It is important to note that the tobacco companies typically report market data annually at

least several months after the end of the fiscal year. By its nature, annual market data

reported by analysts and tobacco companies are one or two years old. It is also important

to note that information about the tobacco industry in India is not always readily available.

This is particularly true for the loosely regulated bidi and smokeless sectors.

Page 43 of 152

In India, the tobacco industry is divided into three distinct and powerful sectors: bidis

(smoking products hand-rolled in tendu leaves), smokeless tobacco (mainly chewing

tobacco) and cigarettes. Bidis are the most popular tobacco products consumed in India-

48% of the market. Smokeless tobacco makes up 38% and cigarettes only 14% of the

market.4 Some aspect of the tobacco industry,whether it be tobacco farming,

manufacturing, or distribution, is present in every Indian state, making tobacco control a

truly national effort. This report, like the tobacco industry in India, has sections on each of

the tobacco sectors as well as examples of tobacco promotion, sponsorship and corporate

social responsibility efforts designed to increase consumption and industry profits.

2. The Bidi Industry

Bidis are slim hand-rolled, unfiltered cigarettes that are rolled in brown tendu or temburni

leaves and held together by a string. The product is often flavoured, and in general bidis

are stronger tasting than regular cigarettes. Bidis are cheaper than cigarettes which makes

them very popular in rural areas and among the poor.5-6 While bidis are the number one

tobacco product used in India, very little is actually known about the organization of the

bidi industry. Bidi production is fragmented and because most brands are hand-rolled in

individual homes on a small scale, the bidi industry is considered to be a cottage industry.5

• In 1995 the Ministry of Statistics and Programme Implementation estimated there were

over 6,600 bidi manufacturers in India, compared to 40 cigarette factories and 55

smokeless tobacco factories.4 While recent numbers are not available, it is still clear that

bidi manufacturers greatly outnumber other types of product manufacturers.

Page 44 of 152

industry is divided into two different sectors: organized and unorganized. The organized

sector is factory based and production is increasingly mechanized; and the unorganized

sector is made up of home-based production and small cooperatives.5 Most production

and hand-rolling is done at home by women and children.5

• Tobacco industry analyst, Euromonitor International, estimates that 20% of bidis are

produced in the organized sector and 80% in the unorganized sector.7

• Even organized factories tend to outsource production to individual homes.5

Because the bidi industry is fragmented there are no specific figures on how many bidis

are sold or produced. It is estimated that 750 billion to 1.2 trillion sticks are produced

annually.4

• According to Euromonitor International, the bidi industry in India is worth Rs200 billion

($4.1 billion USD).8

• Bidis are much cheaper than cigarettes and smokeless tobacco products due mainly to

unequal levels of taxation on the different products. Bidis cost between Rs2.50-5.00 for 25

sticks (less than one Rs per stick)9 whereas the leading brand of gukta costs Rs3-4 per

unit.10 The leading brand of cigarettes costs Rs 80-88 for 20 sticks (Rs4-4.4 per stick).11

• In 2009, Euromonitor reported that bidi volume sales were down 5% from the previous

year because of a ban on smoking in public places.9

Despite being fragmented, the bidi industry still has a powerful voice in Indian politics

which keeps taxes on bidi products low and regulations lax. The major lobbying

organization for bidis is the All India Bidi Federation which represents the entire bidi

industry.12 Other organizations that lobby nationally and regionally for the bidi industry

include:

All India Beedi, Cigar & Tobacco Workers Federation (New Delhi)

Karnataka State Beedi Workers‟ Federation

S.K.Beedi Workers Federation

Karnataka Beedi Industry Association

Mumbai Beedi Workers Union (Maharashtra)

All Bengali Beedi Workers‟ and Employees Federation (Calcutta)

According to Euromonitor International, no single bidi company or brand has more than a

5% market claim.8

• Large bidi producers have their own territory (state or district) where they dominate the

market with little competition from other bidi companies.6

• There are a few regional players that sell their bidi brands in more than one state or

district, including Ganesh Beedi Works, Kajah Beedi Co and Bharat Bidi Works.9

• There is no national bidi brand and at one time it was estimated that there were over 300

different brands across India. Some notable brands include:

o 502 Pataka produced by Pataka Biri Manufacturing

Page 45 of 152

o 501 Ganesh produced by Magalore Ganesh Beedi Works

o Top regional brands such as Dinesh in South India, Taj in North India, and Howrah in

East and Northeast India.

• While bidi production is concentrated in the west and south of India,9 it has also been

estimated that each state has around 200 bidi manufactures.

The Smokeless Industry

Popular among rural and urban consumer, smokeless tobacco is also much more popular

among woman than smoking.16 The smokeless industry in India is highly fragmented -

some products are commercially

manufactured but many are made in the home and sold locally.17 Smokeless tobacco

products in India include khaini, gutka, mawa, gudhaku, and zarda.

Type of Smokeless Tobacco Description

Khaini/ Kharra Mixture of sun-dried tobacco and

lime.1

Gutka (Gutkha) A dry mixture of crushed areca

nut, tobacco, catechu (spices),

lime, aromas and flavourings as

well as other additives.

Pan Masala General term for areca nut

product. Does not usually contain

tobacco and is often confused

with Gutka.

Mawa Uses shavings of areca nut,

tobacco and lime.

Gudhaku A paste made of tobacco and

molasses.

Zarda Raw tobacco that is scented using

spices such as saffron.

Page 46 of 152

In a recent Global Adult Tobacco Survey, it was reported that khaini is the most

commonly used tobacco product in India, followed by gutka. However, according to

Euromonitor International, Gutka is the most popular form of chewing tobacco sold in

India and is estimated to account for approximately 80% of chewing tobacco total volume

sales. This discrepancy is mainly a difference between actual prevalence of use and what

Euromonitor International is able to measure in terms of volume. More people in India

report using khaini, but gutka companies such as Dharwal Industries are larger and more

organized and therefore more likely to report product sales.22 In general, smokeless

tobacco products are very cheap and are sold in single use packets for Rs1-3 (less than one

cent US). Unbranded smokeless products, including unbranded khaini,, are common,

keeping the products cheap and unregulated.

Smokeless Tobacco Company Shares ‐ Retail Volume (%)

Company

Name

2001 2002 2003 2004 2005 2006 2007 2008 2009

Dhariwal

Industries

Ltd

(Manikchand

Group)

11.5 11.8 11.8 12 12 12.3 12.3 12.5 12.5

Dharampal

Satyapal Ltd

(DS Group)

7.8 8.2 8.8 9.3 9.5 8.8 7.8 7 7.2

Som

Sugandh

Industries

Ltd

3.7 3.8 4.3 4.2 4 4.7 5 5.5 6

Shree

Meenakshi

Food

Products Pvt

Ltd

2.3 2.5 2.5 2.8 2.8 3 3 3.2 3.5

Kothari

Products Ltd

4.5 4.5 4.2 4.3 4.3 4 3.5 2.8 2

Others 70.2 69.2 68.4 67.4 67.4 67.2 68.4 69 68.8

Page 47 of 152

In India, retail volume sales of smokeless tobacco products increased by 82% between

1999 and 2009. After a 2008 smoking ban and tax increase on unfiltered cigarettes,

chewing tobacco sales increased by 6.5% as low-income smokers switched to cheaper

smokeless products.

The smokeless tobacco industry in India is controlled by a few large national companies

and many different regional players. The top five companies account for 31% of sales, the

rest is controlled by regional players that often only operate in one district in a state. In

general, Indian smokeless tobacco users prefer to buy locally.

companies and Popular Brands The smokeless tobacco industry in India is

controlled by a few large national companies and many different regional players.22 The

top five comp account for 31% of sales, the rest is controlled by regional players that often

only operate in one district in a state. In general, Indian smokeless tobacco users prefer to

buy locally.

Market Share of Top India Smokeless Brands ‐ Retail

Volume (%)

Brand Company

name

2009

RMD Gutkha Dhariwal

Industries

12.5

Dilbagh Som Sugandh

Industries

6

Tulsi Dharampal

Satyapal

3.7

Baba Dharampal

Satyapal

3.5

Goa Shree

Meenakshi

Food Products

3.5

Pan Parag Kothari

Products

2

Page 48 of 152

Most smokeless tobacco companies in India just produce one brand. Different flavour

varieties and packaging sizes are sold under the one brand name. The brand name is also

often used to sell a non-tobacco pan masala product. Uniting a tobacco product and non-

tobacco product under one name is a clever marketing technique, as India has an

advertising ban in place that prevents the direct advertising of tobacco products. Tobacco

products that are packaged identically to pan masala benefit from the association made

between the two products.

Market leading brand RMD

Hot Pan Masala and Khaini with the same packaging

Dhariwal Industries- As one of the oldest smokeless tobacco companies in India, it is

also currently the market leader.22 The company is part of the Manikchand Group which

also has interests in packaging, bottled water, power and real estate among other things.24

Dhariwal Industries manufactures its products in Vadodara, Pune and Bangalore.

• Dhariwal Industries produces gutka under the brand name RMD which is the number one

seller in India. The company also uses the RMD name for pan masala.

Dharampal Satyapal The second largest smokeless tobacco company in India.22

Dharampal Satyapal is part of the DS Group which also has interests in food and

beverages, packaging, hospitality and hospitality industries, among others. The DS Group

manufactures tobacco products in Agartala, Tripura.

• Produces two smokeless tobacco brands- Tulsi (gutka) and Baba (zarda). Also produces

pan masala under the Baba name.26

December 2010 Campaign for Tobacco-Free Kids

Page 49 of 152

Som Sugandh Industries- Also known as the Dilbagh group, the company is the third

largest smokeless tobacco company in India.

• The Dilbagh Group is based in New Delhi.

• The company produces three smokeless tobacco products- the second most popular

Dilbagh brand (gutka), Talab (gutka) and Hot (khaini). All three brands are also used to

sell pan masala.

o Talab Gutkha in particular is packaged “in attractive sachets” making it a “hot favourite

among youth across all income groups.”

Kothari Products- Also known as Pan Parag India, and was established in 1973.

• Most visible product is the Pan Parag brand which is used to sell gutka bu whose main

product is pan masala.

4. The Cigarette Industry

Cigarette consumption makes up a small portion of the tobacco market in India, only 14%

of tobacco products sold are cigarettes.4 Retail volume sales have decreased by 9% in the

last ten years from 99.6 billion sticks in 1999 to 90.3 billion sticks in 2009.11 Recent

declines in cigarette volumes are mainly due to a 2008 increase in the tax on unfiltered

cigarettes. The tax increase has also led to many unfiltered brands being removed from the

market.30-31 ITC Ltd stopped unfiltered cigarette production entirely and some

companies have launched filter versions of their most popular unfiltered brands to

maintain their customers.

Page 50 of 152

Historic India Cigarette Market Size- Retail Volume (billion sticks)

Despite recent declines in sales, it is expected that cigarette use will increase

overtime as disposable incomes increase in India.33 Euromonitor International

predicted in 2008 that if the smokers who currently smoke bidis switched to

factory made cigarettes, then India‟s cigarette consumption would increase to

around 640 billion sticks. This increase would make India the second largest

volume cigarette consumer in the world behind China.

Cigarette Company Shares ‐ Retail Volume (%)

2001 2002 2003 2004 2005 2006 2007 2008 2009

ITC Group 63.9 65.3 66 66.1 67.5 67.8 67.9 71.8 72.9

Godfrey Phillips

India Ltd

9.8 10.7 10.9 11.9 11.1 11.5 11.9 12.9 13.8

VST Industries

Ltd

12.2 10 9.4 8.9 8.7 8.4 8.5 8.5 8.7

Golden Tobacco

Ltd* ‐ ‐ ‐ ‐ ‐ ‐ ‐ 3.6 1.5

GTC Industries

Ltd

9.9 9.7 9.4 9.4 9.2 9 8.6 ‐ ‐

Japan Tobacco

Inc ‐ ‐ ‐ ‐ ‐ ‐ 1.3 1.4 1.3

Gallaher Group

Plc**

2 2 2 1.5 1.4 1.3 ‐ ‐ ‐

Others 2.3 2.4 2.2 2.2 2.2 1.9 1.8 1.9 1.7

Total 100 100 100 100 100 100 100 100 100

ITC Group- ITC was established in 1910 under the name Imperial Tobacco

Company of India. The company changed its name to ITC in 2001 to reflect its

diverse interest in products outside of tobacco.36

• ITC is the leading cigarette manufacturer in India with 73% of the market in

2009. Since 2001, ITC has steadily increased its market share in India and has

increased cigarette production by 15% from 57.1 billion sticks in 2001 to 65.8

billion sticks in 2009.

1999 2000 2001 2002 2003 200

4

2005 2006 200

7

200

8

200

9

99.6 98.7 89.3 91.9 94.5 96.5 100 101.1 99.8 91.2 90.3

Page 51 of 152

• Reportedly, the Indian government has a stake in ITC.37-39 While ITC claims

that the state does not have any direct shares, the company does report that a

large number of ITC shares are held by financial institutions which are majority

state owned such as the Life Assurance Corporation of India and Unit Trust of

India.

• The TTC British American Tobacco (BAT) has also has a 32% share.41

• ITC generated RS 262.6 billion ($US 28.9 million) in revenue in 2009 through

its interest in cigarettes, hotels, cosmetics and toiletries, packaged food, apparel,

paperboards and packaging, and agriculture.

o ITC‟s cigarette industry contributed to 66% of the company‟s total revenue

for the fiscal year ending March 2010.

• ITC has five cigarette factories in Bangalore, Kolkata, Munger, Ranjangaon,

and Saharanpur.

• In addition to its operations in India, ITC also has cigarette subsidiary Surya

Nepal, which is a joint venture with British American Tobacco.

Godfrey Phillips India- Established in India in 1936 as an import company for

Godfrey Phillips, UK. The company has since established itself as a major local

manufacture of cigarettes in India.

• Godfrey Phillips is the second largest cigarette company in India with 14% of

the market. Since 2001, the company has seen continuous growth in market

share and has increased its cigarette production by 43% from 8.7 billion sticks

in 2001 to 12.5 billion sticks in 2009.

• Godfrey Phillips India has two major stake holders - the KK Modi Group, an

industrial conglomerate based in Mumbai, and the international tobacco

company Philip Morris International (PMI) which together hold a total of 71%

of the company.43 In May 2009, KK Modi acquired an additional 10.8% stake

in Godfrey Phillips from PMI, bringing its total share to 47% and PMI‟s to

25%.

• Godfrey Phillips India has a leaf division that provided tobacco leaf for

production in- country and for export. The company also sells tea.

o The cigarette segment accounted for 92% of Godfrey Phillips India revenue

for the financial year ending March 2010.

Ghaziabad (near Delhi) and Andheri (near Mumbai). Currently, a new factory is

being built in Rabale.

o The company has a strong presence in North and West India, and in an

attempt to increase the company‟s reach in India, Godfrey Phillips is

aggressively expanding distribution into the states of Tamil Nadu and Orissa.

Page 52 of 152

VST Industries- Established in 1930. Before the company changed its name to

VST Industries in 1984, it was known as the Vazir Sultan Tobacco Co.46

• VST Industries is the third largest cigarette company in India with 9% of the

market. Between 2001 and 2009 the company lost market positioning and saw a

28% decrease in volume sales.

o Since 2008, declines in growth have reversed. VST Industries reported a 4.5%

increase in volume production for the fiscal year ending in March 2010, as well

as record profits.

• VST Industries is an affiliate of BAT, which holds a 32% stake in the

company.

• The company sells economy priced cigarettes, and has a strong presence in

South India.

o Besides cigarettes, VST Industries also sells unmanufactured and cut tobacco

leaf.

VST Industries has a manufacturing facility located in Andhar Pradesh.

Golden Tobacco- Established in India in 1930 as the first wholly-owned Indian

tobacco company in the country.49 Formally known as GTC Industries,

renamed Golden Tobacco after demerging from its retail business in 2008.50

• Golden Tobacco is the fourth largest cigarette company in India with 1% of

the market. In 2001, the company controlled 10% of the cigarette market but

saw a dramatic decline in market share and production in 2008 after the tax

increase on unfiltered cigarettes.11

• In 1979, the company was acquired by Dalmia Group which also has interests

in telecommunications, chemicals, and textiles. The Dalmia group holds a 36%

share of the company.49

• The company has two major production facilities in Mumbai and Baroda.

Market Share of Top Ten India Cigarette Brands ‐ Retail Volume (%)

Brand Company name 2009 Gold Flake ITC Group 31.2

Wills ITC Group 18.2

Scissors ITC Group 8.4

Four Square Godfrey Phillips India Ltd

7.9

Capstan ITC Group 7.4

Bristol ITC Group 6.9

Charminar VST Industries Ltd 4

Red & White Godfrey Phillips India Ltd

3

Charms VST Industries Ltd 3

Cavenders Godfrey Phillips India Ltd

2.5

Page 53 of 152

Transnational Tobacco Companies (TTC) Presence in India

The expansion of TTC in India has been limited by restrictions on FDI by

cigarette companies in the country.35 However, as described previously, three

of the top international tobacco companies currently have stakes in local

manufactures. Despite restrictions, TTC‟s continue to focus on India because of

the potential growth of the cigarette market.51

British American Tobacco (BAT) - BAT is a British company headquartered

in London, England. BAT is ranked third in the global tobacco market.52

• BAT is a stakeholder in ITC and VST Industries and owns approximately 32%

of each tobacco company.41, 47

• BAT attempted to increase its stake in ITC from 32% to 51% but the company

has been prevented from doing so by the Indian government and restrictions on

FDI.

Page 54 of 152

Philip Morris International (PMI) - PMI is a U.S. company with

headquarters in Lausanne, Switzerland. PMI is ranked second in the global

tobacco market behind China National Tobacco Company. 52

• PMI currently owns a 25% stake in Godfrey Phillips India after selling part of

its shares to KK Modi in 2009.44

• In 2009, after years of trying to get approval to independently manufacture

Marlboro cigarettes in India, PMI allowed production of its most popular brand

to start under the supervision of Godfrey Phillips

Leading Cigarette Brands Promoted in India

Cigarette companies aggressively advertise their brands in order to attract new

smokers and to encourage current smokers to switch brands.58-60 From March

2009 to March 2010, cigarette leader ITC spent 5.1 billion Rs ($114.7 million

USD) on advertising and promotion.40 According to Euromonitor International,

cigarette companies are focusing on targeting young urban consumers and

middle-upper income consumers.61 Companies are also shifting brands away

from unfiltered variants to filtered variants. 61 In 2009, local brand Gold Flake

had the largest cigarette market share in India (31%), followed by Wills (18%)

and Scissors (8%) - all of which are owned by ITC Group.

Slim cigarettes targeting women

Although the female smoking population is currently very small (about 3%),21

cigarette companies in India see the potential for growth by attracting women.

Since 2007, slim cigarette brands have been launched to appeal to women

smokers.32

• The first slim cigarette to hit the Indian market was the Stellar Slims brand by

Godfrey Phillips in 2007.62 The brand is marketed as having lower levels of

nicotine with the satisfaction of a regular cigarette.62

• In 2008, ITC Group launched Wills Classic Verve slim cigarettes targeted at

women and first time smokers. ITC describes the brand packaged in a shiny red

as “India‟s trend setting cigarette…[that] defines ubercool urban style.”

• Golden Tobacco also has a slim cigarette called.

Page 55 of 152

Targeting health conscious consumers with misleading claims

As Indian customers become more aware of the health risks associated with

tobacco use, cigarette companies have created new products and tactics to

counteract consumer knowledge. One such tactic is to use misleading terms (ex

“low-tar”) on cigarette packaging or in advertisements that encourage health-

concerned smokers to switch to cigarettes brands that they perceive as safer.

This also offers consumers that are concerned about health risks from tobacco

an alternative to quiting.64 As of 2006, India prohibits tobacco product

packaging and labeling from containing information that is “false, misleading or

deceptive,” or that is likely to create misperceptions about the characteristics or

heath effects of tobacco products. This includes prohibiting the use of terms

such as “light”, “mild” and “low-tar”.65 Despite these restrictions, cigarette

brands are still misleadingly marketed as being healthier.

• Loe Tobac cigarettes launched by Golden Tobacco in 2006 claim to contain

50% less tobacco than regular cigarettes.66-67 Golden Tobacco also claimed

that „LoeTobac has been found to have “safer delivery levels” of tar, carbon

monoxide and tobacco-specific nitrosamines than other brands.‟68

Stellar Slims Cigarette ad “Low nicotine, King sized satisfaction”

Page 56 of 152

Brands that appeal to young tech-savvy smokers.

India has a very large technology industry and a growing information

technology culture. Cigarette companies are capitalizing on the technology

trend by introducing premium brands that appeal to younger consumers.

• Godfrey Phillips launched I-gen in 2006. I-gen cigarettes have a black filter

and the black, red and silver packaging is “aimed at making the product look

trendy and contemporary.”70 The brand is descried on the company‟s website

as a cigarette that “holds the promise cigarette quality and immense style.”62

• In 2005, Golden Tobacco launched Chancellor XP. XP refers to the Windows

operating system and the brand is designed to appeal to India‟s information

technology workers.9

Page 57 of 152

6. Corporate Social Responsibility (CSR)

Tobacco companies maintain CSR programs in an effort to counter negative

attention regarding their deadly business. This practice is particularly prevalent

in India. By donating funds to noble causes, the perception of cigarette

companies by the public and policy makers improves. The true goals of

industry-sponsored programs have been revealed through internal tobacco

industry memos released to the public by U.S. legal settlements. CSR programs:

Serve the industry‟s political interests by preventing effective tobacco

control legislation.

Marginalize public health advocates.

Preserve the industry‟s access to youth.

Create allies and preserve influence among policymaking and regulatory

bodies.

Defuse opposition from parents and educators.

Bolster industry credibility.

In India, cigarette companies integrate themselves into local communities that

they operate in through CSR activities. They also work nationally to create

goodwill with the public and policy makers in an attempt to protect their profits.

• Since 1990 Godfrey Phillips India has sponsored the Bravery Awards (first

under the brand name Red and White and now under the company name). The

Bravery Awards annually honors citizens that perform physical and social acts

of bravery. Indian film actress Preity Zinta acted as an ambassador of the

awards from 2006-08. The awards have also launched blood drives and the

Amodini-Women's Empowerment initiative.

• In 2000, the ITC launched e-Choupal, an IT training program for Indian

framers. The program claims to reach over 4 million farming families,

connecting them to a digital infrastructure that enables them to link to a more

formal market. ITC also supports primary education, women empowerment and

environmental initiatives.

Smokeless tobacco companies are also known to use CSR tactics in the

communities that they operate in.

• The DS Group, which includes Dharampal Satyapal, contributes to a wide

range of social issues in Assam and Tripura. Activities include the renovation of

Pallimangal H.S. School and contributions to economic development projects of

ethnic and tribal groups in North Eastern States.

The tobacco industry in India is complex and powerful. Knowing where and

how the industry operates is essential to creating and advocating for strong

tobacco control policies. Unless strong tobacco control regulations are put in

place and enforced in India, the tobacco industry will continue to expand and

profit from addicting consumers to its deadly products.

Page 58 of 152

4.2). MAJOR PLAYERS AND MARKET SHARE:-

THE MAJOR PLAYERS :-

Godfrey Phillips (India) Ltd.

V.S.T. Industries Ltd

ITC Limited

G.T.C. Industries Ltd

MARKET SHARE OF MAJOR PLAYER IN INDIAN MARKET:-

ITC , 72

Godfrey Phillips, 12

VST, 8

GTC, 8

INDIAN cigarette player mkt share

ITC

Godfrey Phillips

VST

GTC

Page 59 of 152

4.3) SWOT ANALYSIS:-

A SWOT Analysis is requiring checking the industry‟s Strength, Weakness,

Opportunities and Threats. It will give the overall idea about competitor and

current situation of the industry. Strength and Weakness are the industry

internal characteristic that can be improved by the industry while Opportunity

and Threats are the external factors which will predict the current condition of

the industry to make decision.

SWOT

STRENGTH

WEAKNESES

OPPORTUNITY

THREATS

Page 60 of 152

STRENGTH:-

Biggest and the largest player in the Indian tobacco market with a market share

of 80%.

Its Gold Flake tobacco brand is the largest FMCG brand in India - and this

single brand alone holds 70% of the tobacco market.

A industry‟s strength is its resources and capabilities that can

be used as a basis for developing and competitive advantage.

The increase in living standards of people, now they spend more

on tobacco. As we are offering good quality at reasonable price

so it will definitely attract customers so our venture is less risky.

Our industry has different types of tobacco. Each of them offers

the high quality.

Our target market is Gujarat which is one of the most

developing states of India.

Gujarat is immerging as an industrial hub to many growing

industries.

More and more investment means more industries, more

housing and more construction.

All this is positive sign for the tobacco industry to prosper.

When we talk about tobacco it has been found that following

are its strengths.

There are many players it is like a perfect competition.

The labor does not require much specific qualification and skill.

WEAKNESSES:-

It still has to consolidate its foot in the cigar market largely dominated by

Godfrey Philips.

In the tobacco industry, the labour work on the part of workers

is very tedious and laborious. Workers often complaint about

the work load.

Huge capital investment is requiring on the machineries.

Page 61 of 152

OPPORTUNITIES:-

ITC is moving into new and emerging markets like developing countries of

Eastern Europe, Africa etc.

Gujarat which is one of the most developing states of India is

emerging as an industrial hub with many growing industries

like, fast malls, big buildings, residential expansion and more

housing so future requirement of the tobacco and bricks very

high.

Our research and survey so that people are interested in buying

of the tobacco which is qualitative and at the same time

something which is offered at a reasonable time. This thinking

matches which our Industry policy to produce the best at the

least.

By using eco-friendly technology the unit may get an edge over

the other players in the market

THREATS:-

- The obvious threat is from competition, both domestic and international.

- Health hazard

- Increasing tax in Cigarettes

Competition, this is one of the biggest threats faced by all the

business.

Existence of big tobacco industry such as I.t.c tobacco, etc

poses tough competition for us.

Page 62 of 152

SWOT MATRIX:-

S

Its resource and capabilities

High demand

W

Huge investment

already big players

O

Eco friendly technology

Scope for expansion

T

Competition

Supply position

Unpredictable

Page 63 of 152

4.4). PEST ANALYSIS:-

Page 64 of 152

(1) Political factor:-

Govt. Policy affects the business in very deep.

The low cost local brand can affect the leader of tobacco industries.

Government focus on no promotion of the tobacco product directly on t.v

or other media.

More over the government decision to substantially upgrade 28 Regional

airports in smaller tour and privatization and expansion of Delhi and

Mumbai airport industry in India.

The upgrading of national highways connecting various parts of India has

affect the tobacco retail management.

In the govt of India‟s the promotion of tobacco product is less so there is a

very hard to be in the local market.

There is a rule in india that a person is less than 18 can‟t be buy a tobacco

product from the anywhere.

The govt of India have restrict the consumption of tobacco on the roads

and public place.

For past few years the market of the tobacco industries is increasing in

rapidly so the relevant steps taken by government of India.

In union budget there is a duty and tax on tobacco product increasing

rapidly by government.

Page 65 of 152

(2).Economical:-

In economical effect industry has to check out that there is a huge part of

tobacco industries in Indian economy in increment of GDP.

The tobacco industry‟s can also help to give a chance to get a more valued

country in all over the world by exporting tobacco products.

Now slowdown fear is now hovering on the sector because of the

government restriction on tobacco industries.

In India form medium to long term the fundamental are very perishing.

The continued economic or with increased in test in the India market and

improved international access.

By the rules and regulation of Indian government the consumption is

decreasing in India so, it‟s not helpful term for industrial overview.

With a view to restriction on tobacco product‟s in india but the larger

amount of the public can use the product of tobacco and tobacco is there

habit so, market is in mood of increasing.

There is a rules and regulation are very strict but there is a large player

like itc who are the dominant player in the market.

Page 66 of 152

(3) Socio-cultural factor:

Socio cultural factor includes two parts

(a) Socio

(b)Culture

If any industry are show towards the society than you can understand that

society are developing the culture. If you understand the socio factor than

you can understand the cultural factor.

(a) Socio factor: -

It include the demographical factor like

Population:-

India is the second largest population country of the world more than 125

corer. population is there. So because of high population it is the positive

effect towards the tobacco industry because as population are more the

habit for tobacco get more traffic & also occupancy rate is increase at the

time of marriage season.

Male-female ratio: -

In India male ratio is more than the female ratio so there is a great

demand of the tobacco product from the both of the side from the market

of the tobacco. In the research of the news paper there is a consumption

of tobacco product is more by male so great market for male in india.

Page 67 of 152

Literacy level: -

Literacy level in india is very less so people don‟t know about the harms

of tobacco product when they use it for first time after the use they

knowsthe harms but that became their habits.

Income level: -

In India the income level of the Indian people is very less than others

country so they live the tenseful life so for reduce the tension they use the

tobacco products.

Average age of society: -

In India there are teenagers are more than the old people so they are the

fond of the enjoyment so the student who has the habit of the

consumption they give the habit to the other people.

(b) Cultural factor: -

Culture means it is the set of Norms, Value of ritual, Philosophy of

country is the highest important to any industry. If you are not know the

culture of any country than you cannot do the business in that country

For example: -

So when the itc introduce the new product they first research about

the Indian culture and their habits.

Like they introduced the wills insigna which is the royal cigarette

Page 68 of 152

(c) Language: -

Language is also play an important role in any country. Because whatever

you communicate in your language it may be some different meaning in

other country.

For example:-

In India there is a great value of the product of the itc like Bristol ,wills

,gold flake and others the most of the people known the brand as a

company this is the great strength of the itc in India.

Page 69 of 152

(4) Technological factor: -

Technological factors include following factor.

(a) Status of technology: -

Status of technology includes

Advance technology

Moderated technology

Suitable infrastructure for technology

Hear hotel industry have to check out that what technology they are using

right now whether it is advance, moderated, or outdated technology. In

tobacco they are using the dual filter for save the lips of the people who

smoking.

For example: -

In india the itc useing the duel refind tobacco techniques that will help the

person for reduce the chance of the cancer or many others.

Or the mant tobacco company tells that “accha khaiye nischint rahiye “

But the tobacco is always harmful to any one.

(b) Pace of technology: -

Pace of technology means how fast technology is changing in the country. In

the country like America, china, Japan, India the technology is taking change

at very fast rate as compare to china, Japan, & American technology the

Indian is not fast growing as in that country so it is the backward point to

tobacco industry in India.

Page 70 of 152

(c) Cost of technology: -

Cost of technology means what is the cost of adopting technology.

For example:-

In india our country is the developing country the price of the technology is

very high for the developing country so the developing country can‟t be

adopt the new technology easily.

Page 71 of 152

4.5). VALUE CHAIN OF TOBACCO INDUSTRY:-

VALUE CHAIN analysis was suggested by Michel porter. The VALUE

CHAIN analysis is under taken by tobacco industry to understand that how an

industry can deliver a VALUE to its final consumers. The activity in VALUE

CHAIN is divided into two parts.

Page 72 of 152

Primary activity :-

Primary activities are those activities which are essential to be perform

for any manufacturing .these activity include that ,entire process ranging

for buying raw material to providing satisfactory services,to the

customer.

There are five main activities as following .

(1) In bound logistic;

This activity reflect managing the raw tobacco &parts equipment coming

inside the industry it suggest that all material coming from the supplier Of

raw tobacco(farmer) inside the industry should be treated carefully started

properly.

HARVESTING. This first step is a labour-intensive activity involving

high amounts of child labour. Using only their hands, tobacco household

members remove leaves from plant stalks.

DRYING. Once harvested, leaves are transferred to drying sheds, sewn

together, placed on drying sticks, and air-cured. Tobacco quality and

storage time are dependent on weather conditions.

BALING. A manual operated “jack” is used to make tobacco bales

weighing up to 120 kgs. Workers load leaf of the same grade and

compress it into bales wrapped in hessian, or burlap, cloth.

(2) Operation;-

It‟s related with the process of converting raw tobacco

into the final tobacco product .here the porter suggests that entire process

should be carefully handle ,so that it does not relation into deterioration

of the quality of the final products(cigarette, cigar .gutkha).

(3) Out bound logistic:-

it‟s related with the activities includes in managing the final product

whether it should be stored in the warehouses or going out in the market

for selling purpose during this stage here industry shoud give proper

attention for managing warehouses &proper transportation systems.

Page 73 of 152

(4) Marketing &sales;-

This activity related with the marketing and sales activities of industry

here industry should develop proper marketing& distribution .the

marketing of tobacco product is very much difficult because of rule and

regulation of government .so here industry should develop proper&

perfect advertising system.

SELLING. During the selling season farmers sell tobacco to U.S. buyers

at the Lilongwe auction floors. Farmers are told the date of sale so they

can observe the auctioning of their tobacco bales.

BUYING. 3 U.S. subsidiary companies buy over 95% of Malawi‟s

tobacco and sell to cigarette makers like Philip Morris. Limbe Leaf, a

subsidiary of Universal Corporation (Virginia) purchases 50% of the

crop.

(5) Services;-

Once the product is to be sold final consumers there should be take care

Of final consumer even after the sales .there should be continuously

Get the feedback and provide the needed services to the consumers

To keep them satisfy,

2) Secondary activities:-

This activities are desirable for any industry such activity add value to the

primary activities so that each primary activities can be performed

accurately.

To deliver satisfaction .

The following are the secondary activities.

(1) Firm‟s infrastructure;-

It‟s include basic activities available in industry.such as road .proper

lighting, water facility continuous power facility .this will help the

Industry to undertake production activity properly.

Page 74 of 152

(2) Human resource

Skilled &loyal human resource is an valuable asset for any industry

such kind of people add value to the final product while production

Is taken place or they can satisfy the consumer during the sales activities.

(3) Technology development;-

It reflect usages of technology by the organization industry must use

Altramodern.state of the art technology for rapid &qualitative production.

(4) Procurement:-

It reflect the activity include purchasing the raw material(raw tobacco)

From farmers &other supplier ,here porters has suggested that

There should be purchase good quality of raw material from the repated

suppliers.

Page 75 of 152

4.6). FIVE FORCE ANALYSIS:-

Five force Analysis:-

Potential

Entrance

Rivalry

amongst

exiting firm

Suppliers Buyers

Substitute

Page 76 of 152

1. Threat of new entrance

2. Bargaining power of buyers

3. Bargaining power of suppliers

4. Rivalry amongst existing firms

5. Threat of substitute

If marketers want to know factors affecting any industry or tobacco industry,

these 5 elements will helpful. Whether competition level is high, moderate, low

can know with these elements. Five force analyses were given by father of

strategies, Michel polter. Here, we can use 5 elements for the purpose of study

of tobacco industry.

[1] THREAT OF NEW ENTRANCE:-

It refers to how easily one industry can enter into tobacco industry. There are

various rules that any industry should have to follow for entering into this

segment. Any industry cannot enter into tobacco industry because it is required

to have very huge capital investment. Following barriers will decide position

of new entrance in organization.

I. Government policy: - however, this is the most affecting factor for

entrance of new industry. Whichever companies want to enter into

tobacco industry must require following various conditions. Not

injurious for health, not create air pollution, safe for smoking etc are

rules of primary basis which all tobacco companies require to follow. In

many cases government policy and regulation are important entry

barriers like prior to the economic liberalization in India.

II. Monopoly: - monopoly means industry having no competition. This is

very rare situation. In tobacco industry monopoly is not there. If we

analysis the whole Indian tobacco industry than we can say that market

structure industry is non monopolistic.

III. Capital requirement: - when any companies want to enter into any

industry, how much capital will require that industry need to find out.

Higher the requirement of capital, lesser industry will interest to enter.

Same thing is also applicable to tobacco industry.

Page 77 of 152

IV. Product differentiation: - whether industry having different kind of

products is there or not. Companies who want to enter into tobacco

industry require having different kind of products offer to customers.

V. Economies of scale: - it means larger the production, higher the

benefits. Because of attraction of higher production by existed

companies, new companies want to enter into tobacco industry. There

are various types of economies of scale i.e. increasing return to scale,

decreasing return to scale, and constant return to scale.

[2] BARGAINING POWER OF BUYERS: -

Here, companies will decide who having bargaining power customers/buyers

and industry. If customer affects price determination, then bargaining power

of customer is high and vice versa. Following points will determine whether

customer having bargaining power or not.

I. Volume of purchase: - total quantity buyers will purchase is volume of

purchase. If purchase in high quantity, they having higher affection to

bargaining power. In tobacco industry, bargaining power of customer is

very low in volume of purchase because buyers buy products of tobacco

in very small quantity.

II. Importance of product to buyers: - whether buyers require product on

frequent bases or not. If any product is important for buyers, then

bargaining power of customers is high. Same condition is also

applicable to tobacco industry. All buyers used to purchase according to

their preferences.

III. Switching cost to marketer: - if buyers go to other industry from our

industry, how much it affect to business of industry. Tobacco having

less switching cost because buyers usually buy in small quantity.

IV. Extent of buyers‟ information: - if customer is aware about the product

information, bargaining power is higher. Extent of buyers‟ information

means the level of information which is known by the buyers.

V. Ability of buyer for backward integration: - any customer of tobacco

cannot establish their own tobacco industry. Tobacco having low

bargaining power for backward integration.

Page 78 of 152

[3] BARGAINING POWER OF SUPPLIERS: -

Reduction or increase in number to any industry.

I. Important of product to suppliers: - power of ITC which provide raw

tobacco to the customers, it having higher bargaining power. If ITC

stop supplying raw materials to Tobacco Industry, it affect very hard.

For example, maruti cannot run without tyres so MRF as suppliers of

tyres is very important.

II. Switching cost to suppliers: - Can suppliers are afforded to lose

buyers? If ITC leave tobacco industry, is it affordable to it or not?

III. Potential for forward integration: - Can suppliers have enough power to

become marketer? How it will affect to existed industry? Whether ITC

is capable to become manufacturer of tobacco? Bargaining power is

higher in forward integration.

IV. Ability of substituting product: - can buyer substitute the product of

suppliers? Cigarette is not available without tobacco. If product can

substitute, bargaining power is higher. But it is not possible in tobacco.

Suppliers cannot used substitute of raw materials.

[4] RIVALRY AMONG EXISTING FIRM: -

I. Number of firms: - number of player is high, competition is high. If

number of player is less but their strength is high, it having high

competition. In tobacco number of player is very low. Competitive

rivalry is likely to be affected by number of firms, their relatives‟

market share, competitive strength etc.

II. Growth of industry: - Faster the speed of growth, higher the level of

entry is there. There is always continuous growth in tobacco due to

consumption habit. the industry growth pattern in India in last few

decades is shown very high.

III. Cost structure: - higher the fixed cost, higher the level of competition.

In variable cost, competition is low. Fixed costs are those expenses

which industry must require spending. So it will increase competition

for spending high.

Page 79 of 152

IV. Product standardization: - higher product standardization will result into

higher competition level. If customer expects more products, then

competition is high.

V. Exit barriers: - can industry easily exit or not? If industry had done high

investment then industry cannot exit easily. In tobacco exit barriers is

very high because invested crores of rupees.

VI. Economies of scale: - if any industry having larger player, competition

is high.

[5] SUBSTITUTE: -

I. Extent of substitute: - substitute means present of different products

having similar features. For example coffee is substitute of tea. Tobacco

industry having less availability in market.

II. Importance of product: - whether product is important to buyers or not.

Page 80 of 152

Chepter-5

Analysis of marketing mix

Page 81 of 152

MARKETING MIX

Product Price Place Promotion

Variety List Price Channels Advertising

Quality Discounts Coverage Promotions

Design Allowance Assortment Personal Selling

Brand Name Payment Period Location Publicity

Packaging Credit Terms Inventory

Services Transportation

Warranties

Target Market

Page 82 of 152

1). PRODUCT:-

(1.1) LEVELS OF PRODUCT:-

product package:-

Product refers to anything that marketer offers to customer which will result in to

satisfaction of need or want of pre determine target segment.

1) CORE BENEFIT:-

The fundamental level is core benefit. The service or benefit that customer is

really buying is known as core benefit.

Customer prefer cigarette for referesh ment, it‟s core benefit given to customer

Itc,gtc,and Kothari brothers tobacco producer‟s give benefit to

customer it‟s core benefit.

Page 83 of 152

2) BASIC PRODUCT :

The marketer must turn the core benefit into basic produc t without basic

product marketer can not provide the core benefit to customer.

Raw tobacco, cigarette, Gutkha, bidi

3)EXPECTED PRODUCT:-

It‟ combination of attribute and features that customer normally expected while

consuming product..

Menthol rush, menthol canter fresh, menthol classic .wills regular….

4) AUGMENTED PRODUCT:-

It‟s that exceeds customer expectation .customer enjoy the services.

Customer enjoy the cigar ; and provide highest level of satisfaction and prove

more beyond customer Expectation.

Itc –wills menthol rush. It provides centre fresh gel flavour into the filter

of menthol rush.

5) POTENTIAL PRODUCT:-

Products, which does not existence in the market but expected in future .

Add Something new ,innovative in tobacco industry which is not available but

provide in future

Page 84 of 152

Page 85 of 152

(1.2) Classification of products:-

Product is anything which is offered to market for attention, acquisition and

consumption that will satisfy the needs and wants of customers.

Classification of products:-

Product

Consumer goods Industrial goods

Consumer goods:-

The goods which is purchased by final consumer for personal consumption.

Types of consumer goods

A. Convenience goods

B. Shopping goods

C. Specialty goods

D. Unsought goods

(A) Convenience goods

It means that consumer use those goods which are buying frequently,

immediately or without buying extra effort. Customer not to spend more

time but he directly purchase it.

Page 86 of 152

Types of convenience goods:-

Staple goods

Impulse goods

Emergency goods

Staple goods

Consumer uses those goods which are purchase on regular bases.

Impulse goods

Consumer uses those goods which are purchased without any planning .

Emergency goods

Consumer used those goods which purchased when needs comes or

urgent.

Tobacco customers are consuming tobacco on regular basis so tobacco is

staple goods. Occasionally consumers consume tobacco to reduce the

stress so it is also consider as impulse goods.

Page 87 of 152

(1.3) Product line and mix:-

Product line:-

Product line can be defined as the group of closely related product which is

similar in function distributed through similar network which have very less

price difference and which are targeted to the similar group of customer.

Product line length:-

The products line of different tobacco brands are as follows:

ITC

GOLDFREY PHILLIPS

GTC

VST

Page 88 of 152

Line stretching:-

Firm stretch product line increase number of product by stretching line and

product expanding product line.

Downward market stretch:-

To stretch product line in downward market. Firm launch a product for

lower class customers is called downward stretch.

Example:-

First the kuber retail price was 0.50 paisa but they increase the price of

kuber 0.75 paisa so,they introduced the new kanchan kuber for 0.50

pasiafor there customers.

Up market stretch:-

To stretch product line in upward market. Firm launch a product for

middle class people to higher class people it called up market stretch.

Example:-

In this first the itc introduced the goldflake but they have to introduced

Wills insigna for there upper level customer .

Page 89 of 152

Two way stretch:-

Firm serving the middle market might decline to stretch their line in both

directions.

Ex:-

in this example the godfrey Phillips the company using two way stretch

like royel class customer they come out with jaisalmer for middle

customer they comeout with stellar and for lower level customer they

introduced four square.

Packaging:-

Packaging of tobacco item should be attractive. It includes name of

Manufacture Industry, expire date, manufacture date, mrp, ingredient use in

product etc. and tobacco use nouse plastic packaging system also.

Page 90 of 152

2).PRICE:-

Price is monetary value of product that consumer need to pay on purchase of

product.

1). List price:-

Here need to prepare the sales price to different distributors and customers of

different types of tobacco likes bidi, cigar, cigarette, gutkha. We select price

by various method of pricing.

2).discounts:-

If customers make payment in cash is a liable for certain discount. At hot

rate discount should provide on purchase of product. Here need to keep

certain factors in mind while providing discount

a). Type of purchase,

b). Quality of product,

c). Quantity purchase by the customer.

3). Payment period:-

If a purchase made on credit base in how much time period customer should

liable to pay amount. Generally it should be short term like 10 days, 15 days,

1 month.

4). Credit term:-

If a customer purchase product on credit, he should require to follow certain

terms and condition.

Page 91 of 152

METHODS OF PRICING

There are main six Methods to determine the Price, which are as follows:

MARKUP PRICING:-

Mark up pricing is the simplest pricing method and also known as cost-plus

pricing method. Here the desired Profit Margin, or Return or Mark up is being

added in the cost of the product.

The equation of Mark up Price is as follows:

Here

TARGET RETURN PRICING:-

Another pricing approach is Target Profit/Return Pricing. The firm tries to

determine the price at which it will have the target profit it is seeking. This

pricing method is use by public utilities, which are constrained to make a fair

return on their investment.

PERCEIVED VALUE PRICING:-

Here in this method the industry sets its target price based on customer

perceptions of the product value. The targeted value and price then drive

decisions about product design and what costs can be incurred. As a result,

pricing begins with analysing consumer needs and value perceptions and a price

is set to match consumers1 perceived value.

VALUE PRICING:-

An industry must find out what value buyers assign to different competitive

offers. However, measuring value of the product could be difficult. Sometimes

consumers are asked how much they would pay for a basic product and for each

benefit added to the offer or an industry might conduct experiments to test the

value of different product offers. If the seller charges more than the buyers'

perceived value, the industry's sales will suffer.

Page 92 of 152

GOING RATE PRICING:-

In going-rate pricing, the firm bases its price largely on competitors' prices, with

less attention paid to its own costs or to demand. The firm might charge the

same as more, as or less than its chief competitors.

AUCTION PRICING:-

Auction based pricing is also used when firms bid for jobs. Using sealed-bid

pricing (auction pricing), a firm bases its price on how it thinks competitors will

price, rather than on its own costs or on the demand. The firm wants to win a

contract (Tender) and winning the contract (Tender) requires pricing less than

other firms do. Yet the firm cannot set its price below a certain level. It cannot

price below cost without harming its position. In contrast, the higher the

industry sets its price above its costs, the lower its chance of getting the

contract.

Companies usually do not set a single price, but rather develop a pricing

structure that reflects variations in Geographical Demand and Costs, Market-

Segment Requirements, Purchase Timing, Order Levels, Delivery Frequency,

Guarantees, Service Contracts and other factors. Price Adaptation Strategies,

Geographical Pricing, Discount and Allowances, Promotional pricing

differentiate pricing.

Page 93 of 152

Price list of itc ltd

Disributer price list

Page 94 of 152

Wholeseller price list of itc

Page 95 of 152

Retailer price list of itc

Price point segmentation:-

Page 96 of 152

3). PROMOTION:-

The tobacco industry engages in a comprehensive marketing strategy to create

the impression that tobacco use is widespread and acceptable. These strategies

include direct advertising (ads on TV or in magazines and at point of sale) and

indirect advertising such as sponsorship of sports and concerts, product

placement, and brand stretching. In India, despite an advertising ban having

passed in 2003, cigarette companies in particular consistently exploite loopholes

in the law and relaxed enforcement to market their products and attract new

users. Examples include:

• In 2010, Godfrey Phillips India broke into the Indian chewing industry with

the launch of Pan Vilas, a premium pan masala brand, and planned to invest Rs

1 billion ($US 22 million) over three years on marketing the product. Nita

Kapoor, vice president of marketing and corporate affairs said in reference to

promoting Pan Vilas that the company would “push this product aggressively to

penetrate deeper in the market.”71 Considering recent declines in cigarettes

sales, the successful marketing of a pan masala brand will allow Godfrey

Phillips easier access to the smokeless tobacco market. The company plans to

launch a zarda product by the end of 2011.

• The ITC group uses two of its popular cigarette brands, Wills and John Player,

as the brand name of lifestyle retailing stores that sell clothing. The Wills

Lifestyle brand is a well-established brand and also sponsors India‟s annual

Fashion Week73, stretching the cigarette brand name so that it is associated

with the glamour of fashion and not just the deadly tobacco product.

• In 2009, 700 buses in Mumbai carried pan masala advertisements. While

advertising non-tobacco pan masala products is not illegal in India, their

presence on buses is considered surrogate advertisement for tobacco products

because the same brand name and packaging exists for both pan masala and

chewing tobacco products.

What Is Surrogate Advertising?

Surrogate advertising is advertising which embeds a brand or product message

inside an advertisement which is ostensibly for another brand or product. For

example, a cigarette company might issue public service announcements

relating to a topic such as lung cancer, using the company's logo or distinctive

brand colors in the ads so that people are exposed to the company's branding

without seeing an explicit ad for the company's product. The company would

justify the advertisement by claiming that it's an example of social

responsibility.

Page 97 of 152

Example: - Pan Parag Pan massala - advertisement - and Adversement of

various soda's - well I realize that these are methods used by tobacco and

alcohol manufacuters to adv. real product - which is tobacco based or alcohol

based.

Adv of zero tobacco - pan massala and soda seems harmless - but people do get

the message and then buy products of the same company with tobacoo and

alcohol.

Page 98 of 152

Sales Promotion

In this kind of advertisement they attract the man by

showing the effect of the real man personality. in this kind of

advertisement they show s the power of the man who smoke

the cigarette who is really feels like real man

Sales promotion consists of a diverse collection of incentive tools, mostly, short

term designed to stimulate quicker of greater purchase of particular or service

by consumers or a trade.

Advertising and personal selling often work closely with another promotion

tools, Sales promotion consists of short terms incentive to encourage the

purchase or sale of a product credit services, where as advertising and personal

selling offer reason to buy a product or service. The sales promotion invites and

rewired quick response Advertising says “Buy our product” but sales promotion

says “By it. now”. It effects is for a short term only and dose not builds a long-

term brand preferences. Sales promotion is a short-term objective, which is used

to increase the sales.

Page 99 of 152

Sales promotion made by the tobacco is the discount given on the purchase of

its tobacco‟s.

Example: - turkiesh blend using sales promotion tools as a gift to consumer

and give one whole package with lighter and Cadbury chocolate and also give

lottery coupon and winner gets prize in sales promotion.

Advertising

Advertising includes any information or persuasive message carried by a non-

personal medium and paid for by a sponsor above product is in the same way

identified in the message.

Traditional mass media television and magazines are most commonly used. it

saves as a substitute for a sales person talking to an individual prospect.

In this kind of advertisement they shows love for each othere but

reason for love is cigarette so ,they use the indirect advertisement for

the promotion of tobacco.

Like we can see the pan masala advertisement on television but they

mostly sells there gutka brand by showing the pan masala breand.

Page 100 of 152

4). PLACE:-

Introduction

Place (or placement) decisions are those associated with channels of distribution

that serve as the means for getting the product to the target customers. The

distribution system performs transactional, logistical, and facilitating functions.

Distribution decisions include market coverage, channel member selection,

logistics, and levels of service. Place is about getting the products to the

customer. Some examples of distribution decisions include distribution

channels, market coverage (inclusive, selective, or exclusive distribution),

specific channel members, inventory management, warehousing, distribution

centers, order processing and transportation.

Meaning

Place includes all industry activities involved in making the product available to

target consumers. It includes: channels of distribution, the extent of market

coverage, managing discrepancies of quantity and assortment, retail locations,

and the management of inventory, transportation, and logistics.

Ultimately, Place is involved in making the product convenient for the target

customers to purchase.

Coverage

Distribution channels can be defined by the number of levels involved. Each

layer of marketing intermediaries, or "middlemen," that performs some work in

bringing the product and its ownership closer to the final buyer is a channel

level.

Because the producer and the final consumer both perform some work, they are

part of every channel. We use the number of middlemen to indicate the length

of a channel, as depicted below:

Page 101 of 152

Channel 1 called a direct marketing channel, has no middlemen. It consists of a

industry selling directly to customers. For example, Lands' End sells direct

through mail order, by telephone, and via the Internet.

Channel 2 called indirect marketing channels. It contains one intermediary level

which, in consumer markets, is typically a retailer. For example, the makers of

televisions, cameras, tires, furniture, and many other products sell their goods

directly to large retailers such as Wal-Mart and Sears, which then sell the goods

to final consumers.

Page 102 of 152

CHAPTER:-6

ANALYSIS OF STP OF

TOBACCO

Page 103 of 152

1). MARKETING SEGMENTATION:

Market segmentation is the act of sub dividing a market into distinct sets of

customers who merit attention. Targeting these customers for marketing by

evaluating, selecting and concentrating becomes a corollary to segmentation.

Market segmentation assumed importance in the context of intense competition

market is bombarded with. A market consists of buyers, and buyer differs in one

or more ways. They may differ by their wants, resources, locations, products

requirements. These variables have to be considered in the process of

segmentation.

There is different level of market segmentation. They are mass marketing;

segment marketing and micro marketing markets can be segmented on the

geographical basis, demographical basis, psychological basis, behavioral basis

and loyalty status.

Tobacco segments its market on the following basis:

1).Geographical segmentation:

Geographic segmentation means dividing the market in to different segments

based on the geographic variables such as Nations, States, Cities, towns … If

we talk about tobacco. Products, they have the products we can categorized

these products in to the Geographic Segmentation.

Page 104 of 152

Page 105 of 152

2). Psychographic segmentation

Psychographic segmentation divides buyers into groups based on social class,

lifestyle or personality characteristics.

It divides buyers into different group‟s base on social class, lifestyle, or

personality characteristics

Example: - life style: - wills Insigna for royal class people.

Example: - Personality: - Marlboro- it is for rugged personality.

3). Demographic segmentation

Demographic segmentation consists of dividing the market into groups based on

variables such as Age, Gender, Life Cycle, Income, Occupation, Education,

Religion, and Nationality...

Demographic segmentation means divide market into groups based on variable

such as age, gender, life cycle, income, occupation, education, region,

generation and nationality.

Example: - gender(women) Pine, miss cigarette which is targeted to female.

Income

Income is very useful in demographic segmentation. We use this variable for its

product and sale different price packages, for e.g. .it‟s come out with tobacco

products which affordable so the poor consumer can buy a tobacco.

Example:- Bristol(ITC) for lower class

Gold flake, wills(ITC) for middle class

Jesalmer(g.p) for higher class

Page 106 of 152

Page 107 of 152

4).Behavioural segmentation

Behavioural segmentation divides buyers into groups based on their knowledge,

attitudes, uses or responses to a product.

Behavioural Segmentation divides buyers into groups based on their knowledge,

attitudes, uses or responses to a product. Many Marketers believe that behaviour

variables are the best starting point for building Market segments.

Page 108 of 152

Targeting

(1) Single Segment Concentration:-

Single segment concentration means company is targeting only one segment.

(2)Selective Specialization:-

Selective specialization means company is targeting all three market and each

market they have targeted one segment.

(3)Product Specialization:-

Product specialization means company is targeting only one mallet & producing

all the product for that market.

Example: - ITC. It only produce the cigarette and Kothari brothers only focus

on Gutkha.

(4)Market Specialization:-

Market specialization means company is targeting one market and producing all

the product for that market

Page 109 of 152

Positioning

“Positioning is the act of designing companies offering & image to occupier the

distinctive place in the mind of target segment.

Tobbacco‟s Positioning Strategy

tobacco is world‟s No.2 industry because It has a good area for production in

india of, &

product differentiation :-

in tobacco many company producing different product. for benefit of different

taste of consumer. here .

ex;-gold flake come out with the taste of honey and other hand four square

come out with extra strong tobacco taste which create different brand position

in mind of consumer.

image differentiation:-

Here company create distinctive image in mind of consumer .so they can

easily devlope brand image better way in mind of customer .

ex- ITC come out with their premium brand like a wills insigne

for executive class people ofr create good image different in compare to it’s

competitor.

channel differentiation;

how company easily reach to it‟s customer to compare it‟s competitors.

company benefit where less channel in distribution .so .they reduce the cost of

commission and brokerage .

People differentiation:

The person who are promoting the tobacco product must be skillfull and

aggressive in nature. They must be given specific training so that they can easily

different than other competitors. The person who involve in the activity are very

well trained, responsive in nature, Knowledgeable, courtesy.

Ex: ITC have their owned representative which are promoting the product and

give to information to dealer how to promote their brand so they can create

different than competitors.

Page 110 of 152

Chapter:-7

ANALYSIS OF CONSUMER PRICE AND

SENSITIVITY AND BRAND PREFERANCES

WITH SPECIAL FOCUS ON VARIOUS

FORM OF TOBACCO.:-

Page 111 of 152

CHART-1

AGE GROUP OF THE PEOPLE WHO CONSUME

TOBACCO:-CHART:-

INTERPRITATION:-

In conclusion we can say that more number of businessmen is habituated for

having consumption of tobacco products. They contribute 53% in total

consumption. 25%, 20%, 21% are contribution done by government servant,

professional, others respectively.

20

25

53

21

AGE GROUP OF CONSUME TOBACCO

PROFESSIONAL

GOVT.SERVENT

BUSINESS

OTHER

AGE RANGE PEOPLE

less than 18 21

18-25 84

26-35 41

36-45 25

46-55 17

above 56 12

Page 112 of 152

CHART-2

INCOME OF THE PEOPLE WHO CONSUME THE TOBACCO:-

INCOME RANGE PEOPLE

LESS THAN 10000 75

10001-20000 65

20001-40000 47

40001 & ABOVE 13

CHART:-

INTERPRITATION:-

People having income less than 10000, their numbers are 75 which are near to

40% in total consumption. Person who earn 10001 to 20000, their number are

65 which are near to the 38%. 32% of the total consumption covered by the

income group of 20001 to 40000.

75

65

47

13

MONTHLY INCOME OF PEOPLE WHO CONSUME TOBACCO

LESS THAN 10000

10001-20000

20001-40000

40001 ABOVE

Page 113 of 152

CHART-3

OCCUPATION OF THE PEOPLE WHO CONSUME TOBACCO

OCCUPATION PEOPLE

STUDENT 81

PROFESSIONAL 20

GOVT.EMPLOYEE 25

BUSINESS 53

OTHERS 21

CHART:-

INTERPRITATION:-

Here, we came to know that amongst the all types of consumers, student and businessmen are in very huge numbers, while Professionals, Government employees are comparatively less consuming customers. High personality of businessmen and high lifestyle of student lead more consumption of tobacco products.

81, 40%

20, 10%25, 12%

53, 27%

21, 11%

OCCUPATION OF PEOPLE WHO CONSUME TOBACCO

STUDENT

PROFESSIONAL

GOVT.SERVENT

BUSINESS

OTHER

Page 114 of 152

CHART-4 TO 8

WHICH FORM OF TOBACCO PERSON CONSUMES:-

Forms of tobacco People

Cigarettes 98

Gutkha 26

Bidi 25

Cigar 19

Raw tobacco 32

Chart:-

Interpretation:-

Cigarette is consumed more because of high consumption by student and businessmen .Here Gutkha, bidi, cigar and raw tobacco are having low

consumption rate while cigarette is having very high consumption because of high demand from youth as well as high demand from business persons.

98

26

25

19

32

forms of tobacco consume by people

Cigarettes

Gutkha

Biddi

Cigar

Raw tobacco

Page 115 of 152

CHART-9

WHAT’S THE REASON BIHIND TOBACCO CUNSUME BY PEOPLE:-

REASON PEOPLE

STRESS REDUCE 30

AS A HABIT 117

FILL LIKE A MAN 13

FOLLOW OTHERS 14

GIVE COMPANY TO FRIEND 22

OTHERS 4

CHART:-

INTERPRITATION:-

Here,to follow other people and to give company to friends,people consume tobacco very less but as a habit they consume more .The class, consume

tobacco as a habit is a very big compare to other all groups.They can’t change their habit.They can’t control stress so to reduce their stress they consume

more tobacco .

30

117

13

14

224

REASON BEHIND TOBACCO CONSUMPTION

STRESS REDUCE

AS A HABIT

FILL LIKE A MAN

FOLLOW OTHERS

GIVE COMPANY TO FRIEND

OTHERS

Page 116 of 152

CHART-10

WHERE PEOPLE CONSUME TOBACCO:-

PLACE PEOPLE

AT HOME ONLY 6

OUTSIDE HOME ONLY 59

PAN STALL 55

WORK PLACE 18

ANYWERE 62

CHART:-

INTERPRITATION:-

Mostly, people consume tobacco at pan stall or outside of home. At home they can’t consume tobacco because of presence of family members. We all know consumption of tobacco is believed very habit in our society so people try to

avoid consuming tobacco at home .

48

63

50

39

WHERE PEOPLE CONSUME TOBACCO

LESS THAN 100

101-300

301-500

MORE THAN 501

Page 117 of 152

CHART-11

MONTHLY EXPENCES ON TOBACCO:-

EXPENCES PEOPLE

LESS THAN 100 48

101-300 63

301-500 50

MORE THAN 501 39

CHART:-

INTERPRITATION:-

Here,all types of group spending are almost same.There are 48 people who spend less than 100 Rs.,63 people who spend 101 Rs. to 300 Rs while 50

people spending more than 300 Rs. But less than 500 Rs. Morever 39 People who spend more than 500 Rs. For consumption of tobacco in one month.

48

63

50

39

MONTHLY EXPENCES FOR TOBACCO

LESS THAN 100

101-300

301-500

MORE THAN 501

Page 118 of 152

CHART-12

HOW FREQUNTLY CONSUMPTION OF CIGARETTE:-

Time period People

Daily 88

Two-three day 16

Weekly 8

Occasionally 10

Chart:-

Interpretation:-

Amongst the 200 people,120 people are cigarette consumers ,in which 88 people are consuming cigarette on daily basis, while 16 people are consuming

cigarette on 2-3 days basis,while 8 &10 people are consuming cigarette respectively on weekly and occasionally.Thus the daily consumers are having

more numbers compare to any other group of consumers.

88

16

8

10

People

Daily

Two-three day

Weekly

Occasionally

Page 119 of 152

CHART-13

HOW FREQUNTLY CONSUMPTION OF GUTKHA:-

Time period People

Daily 91

Two-three day 11

Weekly 1

Occasionally 3

Chart:-

Interpretation:-

Most of gutkha consumer consume gutkha daily because of their uncontrolled habit .Amongst 106 gutkha consumers ,91 consumers consuming gutkha on

daily basis.Thus it is thrice than sum total of all other gutkha consumers group.

91

11

1

3

People

Daily

Two-three day

Weekly

Occasionally

Page 120 of 152

CHART-14

HOW FREQUNTLY CONSUMPTION OF BIDI:-

People

Daily 17

Two-three day 0

Weekly 1

Occasionally 2

Chart:-

Interpretation:-

Amongst 200 people , only 20 people are consuming bidi.Here we can conclude that very poor class people who can’t afford more money behind

tobacco consumption are only bidi consumer because bidi is available at cheaper price amongst all others tobacco products .Morever where cigarette and other types of tobacco product are not available specifically in rural area ,

people of this area are mostly consumers of bidi.

17

0 1

2

People

Daily

Two-three day

Weekly

Occasionally

Page 121 of 152

CHART-15

HOW FREQUNTLY CONSUMPTION OF CIGAR:-

People

Daily 1

Two-three day 5

Weekly 8

Occasionally 10

Chart:-

Interpretation:-

Amongst 200 people, only 24 people are consuming cigar. Cigar is consuming by very less number of people due to high price. Amongst 24 cigar consumers, most of consumer consuming cigar on weekly basis or occasionally. Thus we can say the daily consumption of cigar is very less. The target segment of cigar for marketer is high income class people.

1

5

8

10

People

Daily

Two-three day

Weekly

Occasionally

Page 122 of 152

CHART-16

HOW FREQUNTLY CONSUMPTION OF RAW TOBACC0:-

People

Daily 45

Two-three day 2

Weekly 3

Occasionally 1

Chart:-

Interpretation:-

Amongst 200 people ,51 people are raw tobacco consumer, we can say it is average numbers.45 people amongst 51 people are consuming raw tobacco on daily basis so we can say that 90% of total raw tobacco consumers are daily basis raw tobacco consumers .

45

23 1

People

Daily

Two-three day

Weekly

Occasionally

Page 123 of 152

CHART-17

HOW FREQUNTLY CONSUMPTION OF TOBACCO:-

Time period People

Daily 168

Two-three day 16

Weekly 3

Occasionally 13

Chart:-

Interpretation:-

Here tobacco consumers mostly consume tobacco on daily basis.There are very few people who consume tobacco on weekly basis or occasionally.Only 16 people amongst 200 people consume tobacco on 2-3 days basis.Because of habit of tobacco consumption , 168 people consume tobacco on daily basis .

165

16

613

how frequntly people consume tobacco

Daily

Two-three day

Weekly

Occasionally

Page 124 of 152

CHART-18

QUENTYTY BOUGHT BY PEOPLE WHO CONSUME CIGARETTE:-

Quantity People

0 to 5 93

6 to 10 22

11 to 15 3

Above 15 4

Chart:-

Interpretation:-

Amongst 120 cigarette consumers, 93 cigarette consumers consume cigarette in 0 to 5 volume while 22 people are consuming in 6 to 10 volume. Moreover very less consumer consume cigarette more than 10 volume.

93

22

3 4

People

0 to 5

6 to 10

11 to 15

Above 15

Page 125 of 152

CHART-19

QUENTYTY BOUGHT BY PEOPLE WHO CONSUME GUTKHA:-

People

0 to 5 58

6 to 10 40

11 to 15 5

Above 15 2

Chart:-

Interpretation:-

Amongst 106 gutkha consumers, 58 people consuming gutkha in 0 to 5 volume while 40 people consuming gutkha in quantity of 6 to 10 volumes so we can say most of gutkha consumers consume gutkha in quantity between 0 to 5 & 6 to 10 volume.

5840

5 2

People

0 to 5

6 to 10

11 to 15

Above 15

Page 126 of 152

CHART-20

QUENTYTY BOUGHT BY PEOPLE WHO CONSUME BIDI:-

People

0 to 5 4

6 to 10 8

11 to 15 3

Above 15 3

Chart:-

Interpretation:-

Here we came to across all type of consumer. Amongst 20 consumers, average numbers of consumers are having all type of group. But, 8 people which are

more than all groups are consuming bidi in quantity of 6 to 8 volume.

4

8

3

3

People

0 to 5

6 to 10

11 to 15

Above 15

Page 127 of 152

CHART-21

QUENTYTY BOUGHT BY PEOPLE WHO CONSUME CIGAR:-

People

0 to 5 24

6 to 10 2

11 to 15 0

Above 15 0

Chart:-

Interpretation:-

Here, most of cigar consumers consume cigar in quantity of 0 to 5 volume , so we can conclude that consumers are consuming cigar in very small quantity .

24

2

00

People

0 to 5

6 to 10

11 to 15

Above 15

Page 128 of 152

CHART-22

QUENTYTY BOUGHT BY PEOPLE WHO CONSUME RAW TOBACC0:-

People

0 to 5 43

6 to 10 6

11 to 15 1

Above 15 0

Chart:-

Interpretation:-

Amongst 51 consumers, most of consumers, almost 43 consumers consume raw tobacco in quantity of 0 to 5 volume.

43

61

0

People

0 to 5

6 to 10

11 to 15

Above 15

Page 129 of 152

CHART-23

QUENTYTY BOUGHT BY PEOPLE WHO CONSUME TOBACCO:-

Quantity People

0 to 5 139

6 to 10 38

11 to 15 14

Above 15 9

Chart:-

Interpretation:-

There are 139 consumers consuming tobacco in 0 to 5 volume, so we can say that very large number of people consume tobacco in 0 to 5 volume .38 people consuming tobacco in 6 to 10 volume but very less numbers of people consume tobacco in 11 to 15 and above 15 volume.

139

38

149

Quantity bought by people of tobacco

0 to 5

6 to 10

11 to 15

Above 15

Page 130 of 152

CHART-24

WHAT THE PEOPLE CONSIDER WHEN BUY THE TOBACCO:-

PEOPLE CONSIDER PEOPLE

BRAND NAME 92

WORD OF MOUTH COMMUNICATION 15

ADVERTISEMENT 20

AVAILIBLITY 61

OTHRS 12

CHART:-

INTERPRITATION:-

Here we came to know that around 50% of total people consider brand name while consuming tobacco. While 30% people consider easy availability of the tobacco .Thus all other factors are not so much important but we can’t ignore these factors.

92

1520

61

12

PEOPLE'S CONSIDERATION WHILE BUY TOBACCO

BRAND NAME

WORD OF MOUTH COMMUNICATION

ADVERTISEMENT

AVAILIBLITY

OTHRS

Page 131 of 152

CHART-25

CIGARETTE PEOPLE

WILLS 61

FOUR SQUARE 36

GOLD FLAKE 58

BRISTOL 27

OTHERS 28

CHART:-

INTERPRITATION:-

Here, most of cigarette consumers consuming wills and goldflake to satisfy their habit.Here forsquare,Bristol consumers are also in significant numbers.

29%

17%28%

13%

13%

CIGARETTE

WILLS

FOUR SQUARE

GOLD FLAKE

BRISTOL

OTHERS

Page 132 of 152

CHART-26

GUTKHA PEOPLE

R M D 49

KUBER 20

SILVER 36

VIMAL 26

TULSI 27

OTHERS 7

CHART:-

INTERPRETATION:-

Amongst all type of gutkha RMD having more numbers of consumers so we can say that RMD is market leader in gutkha segment market.

30%

12%

22%

16%

16%

4%

GUTKHA

R M D

KUBER

SILVER

VIMAL

TULSI

OTHERS

Page 133 of 152

Chart-27

People aware about tobacco are injurious and reason for cancer:-

Respond People

Yes 196

No 4

Chart:-

INTERPRETATION:-

Amongst 200 peoplee, 196 people are aware about adverse effect of tobacco

though they are consumiong tobacco because of uncontrolled habit of tobacco.

196

4

awareness of people about side effects

Yes

No

Page 134 of 152

CHART-28

What’s the reason behind the people who consume the tobacco:-

Reason People

Out of control 149

Good imual system 41

Others 10

Chart:-

INTERPRETATION:-

Most of people consume tobacco because of their uncontrolled habit of

consuming tobacco.They can‟t control their habit of consuming tobacco.

149

41

10

why people consume tobacco

Out of control

Good imual system

Others

Page 135 of 152

CROSS TABULATION:-

(1) Income and forms of tobacco: -

CHART:-

0

10

20

30

40

50

60

70

Cigarette Gutkha Bidi Cigar Raw tobacco

11 12

1 17

63

45

7

14 12

22 20

1

10 1114 13

40

9

inco

me

gro

up

forms of tobacco

1-18 year

18-25 year

26-35 year

36-45 year

Forms Income Cigarette Gutkha Bidi Cigar

Raw tobacco Total

Less than 10000 33 15 9 3 19 79

10000-20000 39 28 6 13 14 100

20000-40000 30 31 6 7 7 81

above 40000 8 6 0 0 4 18

total 110 80 21 23 44 278

Page 136 of 152

(2). OCCUPATION AND FORMS OF TOBACCO:-

CHART:-

0

10

20

30

40

50

60

70

1-18 year 18-25 year

26-35 year

36-45 year

46-55 year

Above 55 year

11

63

22

14

63

12

45

20

13

6 51

7

14 5 31

1410

0 1 0

712 11 9 7

2

occ

up

atio

n

forms of tobacco

Cigarette

Gutkha

Bidi

Cigar

Raw tobacco

Occup. Forms

Students Professional Govt. job Business Others Total

Cigarette 59 10 14 24 11 118

Gutkha 44 8 13 30 10 105

Bidi 4 1 3 10 4 22

Cigar 14 3 6 2 1 26

Raw tobacco

12 5 3 24 4 48

Total 133 27 39 90 30 319

Page 137 of 152

(3) FORMS OF TOBACCO AND AGE:-

FORMS AGE

Cigarette Gutkha Bidi Cigar Raw tobacco

Total

1-18 year 11 12 1 1 7 32

18-25 year 63 45 7 14 12 141

26-35 year 22 20 1 10 11 64

36-45 year 14 13 4 0 9 40

46-55 year 6 6 5 1 7 25

Above 55 year

3 5 3 0 2 13

Total 119 101 21 26 48 315

CHART:-

0

10

20

30

40

50

60

70

1-18 year 18-25 year

26-35 year

36-45 year

46-55 year

Above 55 year

11

63

22

14

63

12

45

20

13

6 51

7

14 5 31

1410

0 1 0

712 11 9 7

2

form

s o

f to

bac

co

age

Cigarette

Gutkha

Bidi

Cigar

Raw tobacco

Page 138 of 152

(4) AGE GROUP AND SPENDING BEHIND TOBACCO CONSUMPTION.:-

Spending Age

Less than 100 Rs.

100-300 Rs. 300-500 Rs. Above 500 Rs.

Total

1-18 11 08 03 01 23

18-25 15 30 18 18 85

26-35 04 12 17 07 40

36-45 05 04 07 10 26

46-55 08 05 03 01 17

Above 55 01 04 02 02 09

Total 48 63 50 39 200

CHART:-

0

10

20

30

40

50

60

70

18-25 year26-35 year36-45 year46-55 yearAbove 55 year

63

22

14

63

45

20

13

6 57

14 5

3

1410

0 1 0

12 119

7

2

AGE GROUP AND SPENDING BEHIND TOBACCO

11

12

1

1

7

Page 139 of 152

(5.1) AGE GROUP AND FREQUENTLY CONSUMPTION OF CIGARETTE:-

Frequency Age

Daily Every 2-3 days

Weekly occasionally Total

1-18 year 7 1 2 1 11

18-25 year 45 21 3 3 62

26-35 year 20 0 0 1 21

36-45 year 11 1 0 2 14

46-55 year 2 2 2 0 6

Above 55 year 2 0 0 1 3

Total 87 15 7 8 117

CHART:-

0

10

20

30

40

50

60

70

1-18 year18-25 year26-35 year36-45 year46-55 yearAbove 55 year

11

63

22

14

63

12

45

20

13

6 51

7

14 5 31

1410

0 1 0

712 11 9 7

2

AGE GROUP AND FREQUENTLY CONSUMPTION OF CIGERATTE

Cigarette

Gutkha

Bidi

Cigar

Raw tobacco

Page 140 of 152

(5.2) AGE GROUP AND FREQUENTLY CONSUMPTION OF GUTKHA.:-

Frequency Age

Daily Every 2-3 days

Weekly occasionally Total

1-18 year 10 1 1 0 12

18-25 year 34 7 0 0 41

26-35 year 21 0 0 0 21

36-45 year 12 0 0 1 13

46-55 year 5 2 0 0 7

Above 55 year 4 1 0 0 5

Total 86 11 1 1 99

CHART:-

0

10

20

30

40

50

60

70

18-25 year 26-35 year 36-45 year 46-55 year Above 55 year

63

22

14

63

45

20

13

6 57

14 5 3

1410

0 1 0

12 11 9 72

AGE GROUP AND FREQUENTLY CONSUMPTION OF GUTKHA

11

12

1

1

7

Page 141 of 152

(5.3) AGE GROUP AND FREQUENTLY CONSUMPTION OF BIDI:-

Frequency Age

Daily Every 2-3 days

Weekly occasionally Total

1-18 year 1 0 0 0 1

18-25 year 4 0 1 2 7

26-35 year 1 0 0 0 1

36-45 year 2 0 0 1 3

46-55 year 5 0 0 0 5

Above 55 year 4 0 0 0 4

Total 17 0 1 3 21

CHART:-

0

10

20

30

40

50

60

70

18-25 year 26-35 year 36-45 year 46-55 year Above 55 year

63

22

14

63

45

20

13

6 57

14 5 3

1410

0 1 0

12 11 9 72

AGE GROUP AND FREQUNTLY CONSUMPTION OF BIDI

11

12

1

1

7

Page 142 of 152

(5.4) AGE GROUP AND FREQUENTLY CONSUMPTION OF CIGAR:-

Frequency Age

Daily Every 2-3 days

Weekly occasionally Total

1-18 year 0 1 0 0 1

18-25 year 1 0 5 7 13

26-35 year 0 3 3 3 9

36-45 year 0 0 0 0 0

46-55 year 0 1 0 0 1

Above 55 year 0 0 0 0 0

Total 1 5 8 10 24 CHART:-

0

10

20

30

40

50

60

70

18-25 year 26-35 year 36-45 year 46-55 year Above 55 year

63

22

14

63

45

20

13

6 57

14 5

3

1410

0 1 0

12 119

7

2

AGE GROUP AND FREQUNTLY CONSUMPTION OF CIGAR

11

12

1

1

7

Page 143 of 152

(5.5) AGE GROUP AND FREQUENTLY CONSUMPTION OF RAW TOBACCO:-

Frequency Age

Daily Every 2-3 days

Weekly occasionally Total

1-18 year 6 1 0 0 7

18-25 year 11 1 0 1 13

26-35 year 11 0 2 0 13

36-45 year 9 0 0 0 9

46-55 year 6 0 1 0 7

Above 55 year 2 0 0 0 2

Total 45 2 3 1 51 CHART;-

0

10

20

30

40

50

60

70

18-25 year 26-35 year 36-45 year 46-55 year Above 55 year

63

22

14

63

45

2013

6 571

4 5 3

1410

0 1 0

12 11 9 72

AGE GROUP AND FREQUNTLY CONSUMPTION OF RAW TOBACCO

11

12

1

1

7

Page 144 of 152

(6). OCCUPATION AND REASON FOR TOBACCO:-

occupation

reason

Students Professi-

onal

Govt.

job

Business Others Total

Reduce stress 10 5 7 17 1 40

As a habit 45 9 14

39 13 120

Fill like man 7 0 1 2 1 11

Follow others 7 1 0 2 0 10

Give company to friends 16 5 1 4 4 30

Others 3 1 0 2 1 7

Total 88 21 23 66 20 218

CHART:-

0

10

20

30

40

50

60

70

18-25 year26-35 year36-45 year46-55 yearAbove 55 year

63

22

14

63

45

20

13

6 57

14 5

3

1410

0 1 0

12 119

7

2

OCCUPATION AND REASON FOR TOBACCO CONSUMPTION

11

12

1

1

7

Page 145 of 152

CHI - SQUARE:-

(1) FORMS OF TOBACCO AND INCOME GROUP:-

Expected frequency of cell (1,1) = 79 x110 = 31

278

Expected frequencies of different cells are indicated in brackets in the cells.

2 Ʃ (oi-ei)2

ei

= (33-31)2 + (15-23)

2 + (9-6)

2 +…… (4-3)

2

31 23 6 3

= 0.13+2.78+1.5+2.29+4.08+0.025+0.034+0.5+3.125+1+0.125+2.78+0+0+2.77+

0.14+0.2+1+1+0.33

= 23.81

D.f. = (r-1) (c-1)

= (5-1) (4-1)

= (4) (3)

= 12

On 1 d.f. and at 5% level of significance table value of 2 =21.03.

2cal > 2

tab

. .. H0 may be rejected.

Forms Income Cigarette Gutkha Bidi Cigar

Raw tobacco Total

Less than 10000

33 (31)

15 (23)

9 (6)

3 (7)

19 (12) 79

10000-20000 39 (40)

28 (29)

6 (8)

13 (8)

14 (16) 100

20000-40000 30 (32)

31 (23)

6 (6)

7 (7)

7 (13) 81

above 40000 8 (7)

6 (5)

0 (1)

0 (1)

4 (3) 18

total 110 80 21 23 44 278

Page 146 of 152

(2) Forms of tobacco and age group :-

Expacted frequency of cell (1,1) = 32 x119 = 12

315

Expacted frequencies of different cells are indicated in brackets in the cells.

2 Ʃ(oi-ei)2

ei

= (11-12)2 + (12-10)

2 + (1-2)

2 +…… (2-2)

2

12 10 2 2

= 0.08+0.4+0.5+1.33+0.8+1.89+0+0.44+0.33+3.86+0.17+0.05+2.25+5+0.1+0.07

+0+0.33+3+1.5+1+0.5+4.5+0.5+2.25+0.8+0.25+4+1+0

= 36.89

D.f. = (r-1) (c-1)

= (5-1) (6-1)

= (4) (5)

= 20

On 1 d.f. and at 5% level of significance table value of 2 =31.41

2cal > 2

tab

. .. H0 may be rejected.

FORMS AGE

Cigarette Gutkha Bidi Cigar Raw tobacco

Total

1-18 year 11 (12)

12 (10)

1 (2)

1 (3)

7 (5)

32

18-25 year 63 (53)

45 (45)

7 (9)

14 (12)

12 (21)

141

26-35 year 22 (24)

20 (21)

1 (4)

10 (5)

11 (10)

64

36-45 year 14 (15)

13 (13)

4 (3)

0 (3)

9 (6)

40

46-55 year 6 (9)

6 (8)

5 (2)

1 (2)

7 (4)

25

Above 55 year

3 (5)

5 (4)

3 (1)

0 (1)

2 (2)

13

Total 119 101 21 26 48 315

Page 147 of 152

(3) OCCUPATION AND FORMS OF TOBACCO:-

Expacted frequency of cell (1,1) = 118 x133 = 49

319

Expacted frequencies of different cells are indicated in brackets in the cells.

2 Ʃ(oi-ei)2

ei

= (59-49)2 + (10-10)

2 + (14-14)

2 +…… (4-5)

2

49 10 14 5

= 2.04+0+0+2.45+0+0+0.11+0+0+0+2.78+0.5+0+2.67+2+

0.82+0.5+3+3.57+0.5+3.2+0.25+1.5+7.14+0.2

= 33.23

D.f. = (r-1) (c-1)

= (5-1) (5-1)

= (4) (4)

= 16

On 1 d.f. and at 5% level of significance table value of 2 = 26.30

2cal > 2

tab

. .. H0 may be rejected.

Occup.

forms Students Professiona

l Govt. job Business Others total

Cigarette 59 (49)

10 (10)

14 (14)

24 (33)

11 (11)

118

Gutkha 44 (44)

8 (9)

13 (13)

30 (30)

10 (10)

105

Bidi 4 (9)

1 (2)

3 (3)

10 (6)

4 (2)

22

Cigar 14 (11)

3 (2)

6 (3)

2 (7)

1 (2)

26

Raw tobacco 12 (20)

5 (4)

3 (6)

24 (14)

4 (5)

48

Total 133 27 39 90 30 319

Page 148 of 152

CHAPTER-8

CONCLUSION

AND FINDINGS:-

Page 149 of 152

MAJOR FINDING

By doing extensive research of overall aspect, we have come to the

concussion that subject to the condition and circumstances , the project is

definitely physically, socially, economically, financially and commercially

viable

From the recommendation of the respondents, we have come to many

conclusions and some conclusions are got on our own. We are thinking to

produce a tile which is totally balanced from the view point of price, quality and

durability. We are thinking to provide such a distribution of the titles to the

consumer the channel should be comparatively short so the price can be in

control.

The company will incur a good amount of money for the purpose of

advertisement which will result in the brand reorganisation in the market.

From the survey, we have decided to produce ceramic tiles only but then after

we are going to produce all the types of the tiles.

Our company will provide all those services to the consumer which a tiles

industry should provide.

Page 150 of 152

CHAPTER- 9

BIBLIOGRAPHY:-

Page 151 of 152

Books Marketing management- Phillips kotler

Strategic management- VSP Rao

Retail management

News paper

The Times of India

Business Standard

Websites

WWW. docstok. Com

WWW.tobaccocontrol. Com

www.tobaccofreekids.org

www.notobacco.org

www.imperial-tobacco.com

Page 152 of 152