Analysis of Cigarette Industry

SEMINAR ON

BUSINESS POLICY

“ANALYSIS OF CIGRATE INDUSTRY"

Submitted For the Partial Fulfillment of the Degree of

2009-2010

UNDER THE GUIDANCE

SUBMITTED BY

Roll NO.

BABU BANARASI DAS NATIONAL INSTITUTE OF TECHNOLOGY & MANAGEMENT, LUCKNOW

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ACKNOWLEDGEMENT

No presentation is the work only of the author. I owe much to the

people who have played significant role in the development of the

project . I have immensely benefited from the comments,

observations made by several individuals including Dr. Vishal jain,

Head of Department

My special thanks to Mr. for the guidance in preparing this project

report.

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TABLE OF CONTENT

1. Introduction of industry a. Scope – company external environment

2. Macro a. Govt. laws, rules b. macro economics indicators supporting industry (time element)

3. Political Environmenta. Social consideration (value, culture, and life style)b. Demographies c. Present status

4. Micro a. Competitors b. Suppliersc. Buyers d. Substitute / by producte. New entrants

5. Internal analysis 6. Structure 7. Culture

a. Resources, value chain, competencies8. Scanning

a. Swot analysisb. Mission, vision, objective (review)

9. Strategiesa. Businessb. Corporatec. Functional

10.Execution a. Reconstruction of facilities behavioural and functional issues

11.Evaluation and analysis a. Final data (3years)

12.Recommendations 13.Future of industry 14.Conclusions

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INTRODUCTION OF INDUSTRY

CIGARETTE

Unlit filtered cigarettes

"Cig" redirects here. For other uses, see Cig (disambiguation).

A cigarette (French "small cigar", from cigar + -ette) is a product consumed

through smoking and manufactured out of cured and finely cut tobacco leaves and

reconstituted tobacco, often combined with other additives,[1] then rolled or stuffed

into a paper-wrapped cylinder (generally less than 120 mm in length and 10 mm in

diameter). The cigarette is ignited at one end and allowed to smoulder for the

purpose of inhalation of its smoke from the other (usually filtered) end, which is

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inserted in the mouth. They are sometimes smoked with a cigarette holder. The

term cigarette, as commonly used, refers to a tobacco cigarette but can apply to

similar devices containing other herbs, such as cannabis.

Nicotine, the primary psychoactive chemical in tobacco, is addictive.[2] Cigarette

use by pregnant women use has also been shown cause birth defects (which

include mental and physical disability).[3] On average, each cigarette smoked

shortens lifespan by 11 minutes and smokers who die of tobacco-related disease

lose, on average, 14 years of life.

Rates of cigarette smoking vary widely. While rates of smoking have leveled off or

declined in the developed world, they continue to rise in the undeveloped world.

A cigarette is distinguished from a cigar by its smaller size, use of processed leaf,

and white paper wrapping. Cigars are typically composed entirely of whole-leaf

tobacco.

Cigarettes are the most frequent source of fires in private homes and the European

Union wishes to ban by 2011 cigarettes that are not fire-safe[7].

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HISTORY

A reproduction of a carving from the temple at Palenque, Mexico, depicting a

Mayan priest smoking from a smoking tube.

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, were the most common method of smoking in the

Caribbean, Mexico and Central and South America until recent times

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Cigarettes were largely unknown in the English-speaking world before the

Crimean War, when British soldiers began emulating their Ottoman Turkish

comrades, who resorted to rolling their tobacco with newsprint

The cigarette was named some time in the 18th century: beggars in Seville began

to pick from the ground the cigar ends left by the señoritos ("rich, young men"),

wrapped the tobacco remains with paper and smoked them. The first attested use in

this habit can be seen in three 18th-century paintings by Francisco de Goya: La

cometa (The Kite), La merienda en el Manzanares (Picnic by the River

Manzanares) and El juego de la pelota a pala (The Ball and Paddle Game).

In the George Bizet opera Carmen, which was set in Spain in the 1830s, the title

character Carmen was at first a worker in a cigarette factory.

The use of tobacco in cigarette form became increasingly popular during and after

the Crimean War. This was helped by the development of tobaccos that are

suitable for cigarette use. During World War I and World War II, cigarettes were

rationed to soldiers. During the second half of the 20th century, the adverse health

effects of cigarettes started to become widely known and text-only health warnings

became commonplace on cigarette packets. The United States and The United

Kingdom have not yet implemented graphical cigarette warning labels, which is

considered a more effective method to communicate to the public the dangers of

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cigarette smoking.[10] Canada, Australia, and New Zealand, however, have both

textual warnings and graphic visual images displaying, among other things, the

damaging effects tobacco use has on the human body.

The cigarette has evolved much since its conception; for example, the thin bands

that travel transverse to the "axis of smoking" (thus forming circles along the

length of the cigarette) are alternate sections of thin and thick paper to facilitate

effective burning when being drawn, and retard burning when at rest. Synthetic

particulate filters remove some of the tar before it reaches the smoker.

Manufacturing

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Commercially manufactured cigarettes are seemingly simple objects consisting

mainly of a tobacco blend, paper, PVA glue to bond the outer layer of paper

together, and often also a cellulose acetate–based filter.[11] While the assembly of

cigarettes is straightforward, much focus is given to the creation of each of the

components, in particular the tobacco blend, which may contain over 100

ingredients,[12] many of them flavourants for the tobacco. A key ingredient that

makes cigarettes more addictive is the inclusion of reconstituted tobacco, which

has additives to make nicotine more volatile as the cigarette burns.[1]

Paper

The paper for holding the tobacco blend may vary in porosity to allow ventilation

of the burning ember or contain materials that control the burning rate of the

cigarette and stability of the produced ash. The papers used in tipping the cigarette

(forming the mouthpiece) and surrounding the filter stabilise the mouthpiece from

saliva and moderate the burning of the cigarette as well as the delivery of smoke

with the presence of one or two rows of small laser-drilled air holes.[13]

According to Simon Chapman, a professor of public health at the University of

Sydney, burning agents in cigarette paper are responsible of fires and reducing

them would be a simple and effective means of dramatically reducing the ignition

propensity of cigarettes[14]. Since 1980s Philipp Morris and RJ Reynolds

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developped fire-safe cigarettes but they didn't market them. Self-extinguising

cigarettes are better value for smokers because a cigarette that burns down to the

filter has to be replaced -- whereas one that goes out on its own can always be relit

The burn rate of cigarette paper is regulated through the application of different

forms of microcrystalline cellulose to the paper.[15] Cigarette paper has been

specially engineered by creating bands of different porosity to create "fire-safe"

cigarettes. These cigarettes have a reduced idle burning speed which allows them

to self-extinguish.[16] This fire-safe paper is manufactured by mechanically altering

the setting of the paper slurry.

New York was the first U.S. state to mandate that all cigarettes manufactured or

sold within the state comply with a fire-safe standard. Canada has passed a similar

nation-wide mandate based on the same standard. Many other U.S. states have

passed or are considering fire-safe mandates.

European union wishes to ban in 2011 cigarettes that are not fire-safe. According

to a study made by European Union in 16 European countries, 11000 fires were

due to cigarettes between 2005 and 2007. They caused 520 deaths and 1600 people

injured [18]

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Tobacco blend

The tobacco end of a cigarette

The process of blending, like the blending of scotch and cognac, gives the end

product a consistent taste from batches of tobacco grown in different areas of a

country that may change in flavour profile from year to year due to different

environmental conditions.[19]

Modern cigarettes produced after the 1950s, although composed mainly of

shredded tobacco leaf, use a significant quantity of tobacco processing by-products

in the blend. Each cigarette's tobacco blend is made mainly from the leaves of flue-

cured brightleaf, burley tobacco, and oriental tobacco. These leaves are selected,

processed, and aged prior to blending and filling. The processing of brightleaf and

burley tobaccos for tobacco leaf "strips" produces several by-products such as leaf

stems, tobacco dust, and tobacco leaf pieces ("small laminate").[19] To improve the

economics of producing cigarettes, these by-products are processed separately into

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forms where they can then be possibly added back into the cigarette blend without

an apparent or marked change in the cigarette's quality. The most common tobacco

by-products include:

Blended leaf (BL) sheet: a thin, dry sheet cast from a paste made with

tobacco dust collected from tobacco stemming, finely milled burley-leaf

stem, and pectin.[20]

Reconstituted leaf (RL) sheet: a paper-like material made from recycled

tobacco fines, tobacco stems and "class tobacco", which consists of tobacco

particles less than 30 mesh in size (~0.599 mm) that are collected at any

stage of tobacco processing.[21] RL is made by extracting the soluble

chemicals in the tobacco by-products, processing the leftover tobacco fibres

from the extraction into a paper, and then reapplying the extracted materials

in concentrated form onto the paper in a fashion similar to what is done in

paper sizing. At this stage ammonium additives are applied to make

reconstituted tobacco an effective nicotine delivery system.[1]

Expanded (ES) or improved stems (IS): ES are rolled, flattened, and

shredded leaf stems that are expanded by being soaked in water and rapidly

heated. Improved stems follow the same process but are simply steamed

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after shredding. Both products are then dried. These two products look

similar in appearance but are different in taste.[19]

Whole tobacco can also be processed into a product called expanded tobacco. The

tobacco is "puffed", or expanded, by saturating it with supercritical carbon dioxide

and heating the CO2 saturated tobacco to quickly evaporate the CO2. This quick

change of physical state by the CO2 causes the tobacco to expand in a similar

fashion as polystyrene foam. This is used to produce light cigarettes ("Lights") by

reducing the density of the tobacco and thus maintain the size of a cigarette while

reducing the amount of tobacco used in each cigarette.[19]

A recipe-specified combination of brightleaf, burley-leaf and oriental-leaf tobacco

will be mixed with humectants such as propylene glycol or glycerol, as well as

flavouring products and enhancers such as cocoa, licorice, tobacco extracts, and

various sugars, which are known collectively as "casings". The leaf tobacco will

then be shredded, along with a specified amount of small laminate, expanded

tobacco, BL, RL, ES and IS. A perfume-like flavour/fragrance, called the

"topping" or "toppings", which is most often formulated by flavor companies, will

then be blended into the tobacco mixture to improve the consistency in flavour and

taste of the cigarettes associated with a certain brand name.[19] As well, they replace

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lost flavours due to the repeated wetting and drying used in processing the tobacco.

Finally the tobacco mixture will be filled into cigarettes tubes and packaged.

In recent years, the manufacturers' pursuit of maximum profits has led to the

practice of using not just the leaves, but also recycled tobacco offal[1] and the plant

stem.[22] The stem is first crushed and cut to resemble the leaf before being merged

or blended into the cut leaf.[23]

Taxation

See Cigarette taxes in the United States for a state-by-state comparison.

Cigarettes are a significant source of tax revenue in many localities. This fact has

historically been an impediment for health groups seeking to discourage cigarette

smoking, since governments seek to maximize tax revenues. Furthermore, some

countries have made cigarettes a state monopoly, which has the same effect on the

attitude of government officials outside the health field.[24] In the United States, the

states partially determine the rate of cigarette taxes, and states where tobacco is a

significant farm product tend to tax cigarettes least.[25] It has been shown that

higher prices for cigarettes discourage smoking. Every 10 percent increase in the

price of cigarettes reduced youth smoking by about seven percent and overall

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cigarette consumption by about four percent.[26] Thus increased cigarette taxes are

proposed as a means to reduce smoking.

Many people in the UK now illegally import cigarettes due to the increasing tax. A

packet is less than half the price in some other countries, making illegal importers a

large profit, while still providing very cheap cigarettes. The average price for 20

legal cigarettes is £5.20, while imported packs are sold for less than £3; this is due

to the high taxation.

Sale

A smoking symbol, usually signifying that smoking is allowed.

A Woolworths supermarket cigarette counter in NSW, Australia. Other Australian

states currently prohibit such large displays.

Before the Second World War many manufacturers gave away collectible cards,

one in each packet of cigarettes. This practice was discontinued to save paper

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during the war and was never generally reintroduced, though for a number of years

Natural American Spirit cigarettes included "vignette" cards depicting endangered

animals and American historical events; this series was discontinued in 2003. On

April 1, 1970 President Richard Nixon signed the Public Health Cigarette Smoking

Act into law, banning cigarette advertisements on television in the United States

starting on January 2, 1971. However, some tobacco companies attempted to

circumvent the ban by marketing new brands of cigarettes as "little cigars";

examples included Tijuana Smalls, which came out almost immediately after the

ban took effect, and Backwoods Smokes, which reached the market in the winter

of 1973–1974 and whose ads used the slogan, "How can anything that looks so

wild taste so mild."

Beginning on April 1, 1998, the sale of cigarettes and other tobacco products to

people under 18 has been prohibited by law in all fifty states of the United States.

The legal age of purchase has been additionally raised to 19 in Alabama, Alaska,

New Jersey, Utah, and Nassau, Suffolk, and Onondaga Counties in New York.[27]

The intended effect of this is to prevent upper class high school students from

purchasing cigarettes for their younger peers. Legislation was pending as of 2004

in some other states. In Massachusettsand Virginia, parents and guardians are

allowed to give cigarettes to minors, but sales to minors are prohibited.

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Similar laws exist in many other countries. In Canada, most of the provinces

require smokers to be 19 years of age to purchase cigarettes (except for Quebec,

Saskatchewan, Manitoba and Alberta, where the age is 18). However, the

minimum age only concerns the purchase of tobacco, not use. Alberta, however,

does have a law which prohibits the possession or use of tobacco products by all

persons under 18, punishable by a $100 fine. Australia, New Zealand and Pakistan

have a nationwide ban on the selling of all tobacco products to people under the

age of 18.

Since 1 October 2007, it has been illegal for retailers to sell tobacco in all forms to

people under the age of 18 in three of the UK's four constituent countries (England,

Wales and Scotland) (rising from 16). It is also illegal to sell lighters, rolling

papers and all other tobacco-associated items to people under 18. It is not illegal

for people under 18 to buy or smoke tobacco, just as it was not previously for

people under 16; it is only illegal for the said retailer to sell the item. The age

increase from 16 to 18 will be in force in Northern Ireland starting 1 September

2008. In the Republic of Ireland, bans on the sale of the smaller ten-packs and

confectionery that resembles tobacco products came into force on May 31, 2007 in

a bid to cut underaged smoking. The UK Department of Health plans to follow suit

with the ten-pack ban.

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Tabak-Trafik in Vienna. Since January 1, 2007, all cigarette machines in Austria

must attempt to verify a customer's age by requiring the insertion of a debit card or

mobile phone verification.

Most countries in the world have a legal smoking age of 18. Five exceptions are

Austria, Belgium, Denmark, Portugal, and the Netherlands, where the age is 16.

Since January 1, 2007, all cigarette machines in public places in Germany must

attempt to verify a customer's age by requiring the insertion of a debit card.

Turkey, which has one of the highest percentage of smokers in its population,[29]

has a legal age of 18. Another curiosity is Japan, one of the highest tobacco-

consuming nations, which requires purchasers to be 20 years of age (suffrage in

Japan is 20 years old).[30]. Beginning in July 2008, Japan will enforce this age limit

at cigarette vending machines through use of the taspo smart card. In other

countries, such as Egypt, it is legal to use and purchase tobacco products regardless

of age. Germany raised the purchase age from 16 to 18 on the 1 September 2007.

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Some police departments in the United States occasionally send an underaged

teenager into a store where cigarettes are sold, and have the teen attempt to

purchase cigarettes, with their own or no ID. If the vendor then completes the sale,

the store is issued a fine.[31] Similar enforcement practices are regularly performed

by Trading Standards Officers in the UK and the Gardaí Siochana, the police force

of the Republic of Ireland.[32]

Consumption

Approximately 5.5 trillion cigarettes are produced globally each year and are

smoked by over 1.1 billion people or greater than one-sixth of the world

population. While smoking rates have leveled off or declined in developed nations,

they continue to rise in developing parts of the world. Smoking rates in the United

States have dropped by half from 1965 to 2006 falling from 42% to 20.8% of

adults.[5] In the developing world, tobacco consumption is rising by 3.4% per year.

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Graphics on cigarette packets

Tobacco packaging warning messages

Some countries require cigarette packs to contain warnings about health. The

United States was one of the first. Other countries include most of Europe,

Australia and in Asia (e.g. Hong Kong)

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Smoking bans

Many governments impose restrictions on smoking tobacco, especially in public

areas. The primary justification has been the negative health effects of secondhand

smoke.[35] Laws vary by country and locality. See:

Smoking bans

Smoking bans by country

Cigarette butt

Cigarette butts thrown on the ground of the Dipsea Trail.

The common name the remains of a cigarette after smoking is a "cigarette butt" or

simply "butt." It comprises about 30% of the cigarette's original length. The butt

consists of a tissue tube which holds a filter and some remains of tobacco mixed

with ash. In extreme cases the filter is slightly burned. Cigarette butts are one

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source of tobacco for minors and low income people. The shape of a butt hinges on

the manner of stubbing out. The intensely pressed butt possesses irregular shape at

the end and wrinkled tissue. Cigarette butts may be a subject of studies over

popularity of brands producing cigarettes.

Cigarette litter

A cigarette disposal canister, encouraging the public to dispose of their cigarettes

properly.

Cigarette filters are made from cellulose acetate and is biodegradable, however

depending on environmental conditions it can be resistant to degradation.

Accordingly, the duration of the degradation process is cited as taking as little as 1

month to 3 years[36] to as long as 10-15 years[37].

This variance in rate and resistance to biodegradation in many conditions is a

factor in littering[38] and environmental damage[39]. It is estimated that 4.5 trillion

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cigarette butts become litter every year.[37] In the 2006 International Coastal

Cleanup, cigarettes and cigarette butts constituted 24.7% of the total collected

pieces of garbage, over twice as many as any other category.[40]

Cigarette butts contain the chemicals filtered from cigarettes and can leach into

waterways and water supplies.[41]

Cellulose acetate and carbon particles breathed in from cigarette filters is suspected

of causing lung damage[42][43].

Cigarette advertising

In many parts of the world tobacco advertising and even sponsorship of sporting

events has been outlawed. The ban on tobacco advertising and sponsorship in the

EU in 2005 has prompted Formula One Management to look for races in areas that

allow the tobacco sponsored teams to display their livery. As of 2007, only the

Scuderia Ferrari retains tobacco sponsorship, continuing their relationship with

Marlboro until 2011.

In some jurisdictions, such as Saskatchewan, Canada and Alberta, Canada, the

retail store display of cigarettes is completely prohibited if persons under the legal

age of consumption have access to the premises

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SCOPE – COMPANY EXTERNAL ENVIRONMENT

The Cigrate industry is witnessing a spate of new channels being launched every

year. CIGRATE is also penetrating into the rural areas and is a promising

segment. Homes with CIGRATE s are expected to grow from 112 million to 200 million in a

few years.

Current size: Rs 45,400 crore

Projected size by 2010: Rs 74,600 crore

CAGR: 26%

India boasts of being the third largest Cigrate market in the world today. And

pay CIGRATE market is expected to grow from the present 70 million to all

CIGRATE market.

The fact that 40 per cent households of India are still without Cigrate

connectivity highlights the scope of growth in the segment. The majority of the

revenue generated in the Cigrate industry is through advertisements, followed by

subscriptions. The Indian Cigrate advertisements market is currently valued at

about US$ 1,067 million and is expected to grow at a rapid rate with the increase

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in the number of channels and the Cigrate viewers. Over the next five years, the

subscription revenues are poised to be the growth driver of the Indian Cigrate

industry. The number of pay CIGRATE homes and the increased subscription

rates will increase the subscription revenues. The spread among the lower-

income groups is very low and offers a wide scope for growth. The Indian Cigrate

industry is currently being dominated by Star India, which is the top player in the

sector at present.

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Macro a. Govt. laws, rules

INITIAL JURISDICTION AND RULES

The Federal Communications Commission first established rules in 1965 for

cable systems which received signals by microwave antennas. In March

1966, the Commission established rules for all cable systems (whether or not

served by microwave). The Supreme Court affirmed the Commission's

jurisdiction over cable in United States v. Southwestern Cable Co., 392 U.S.

157 (1968). The Court ruled that "the Commission has reasonably concluded

that regulatory authority over CACIGRATE is imperative if it is to perform

with appropriate effectiveness certain of its responsibilities." The Court

found the Commission needed authority over cable systems to assure the

preservation of local broadcast service and to effect an equitable distribution

of broadcast services among the various regions of the country.

In March 1972, new rules regarding cable Cigrate became effective. These

rules required cable Cigrate operators to obtain a certificate of compliance

from the Commission prior to operating a cable Cigrate system or adding a

Cigrate broadcast signal. The rules applicable to cable operators fell into

several broad subject areas -- franchise standards, signal carriage, network

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program nonduplication and syndicated program exclusivity, nonbroadcast

or cablecasting services, cross-ownership, equal employment opportunity,

and technical standards. Cigrate who originated programming were subject

to equal time, Fairness Doctrine, sponsorship identification and other

provisions similar to rules applicable to broadcasters. Cable operators were

also required to maintain certain records and to file annual reports with the

Commission concerning general statistics, employment and finances.

In succeeding years, the Commission modified or eliminated many of the

rules. Among the more significant actions, the Commission deleted most of

the franchise standards in 1977, substituted a registration process for the

certificate of compliance application process in 1978, and eliminated the

distant signal carriage restrictions and syndicated program exclusivity rules

in 1980. In 1983, the Commission deleted its requirement that cable

operators file financial information. In addition, court actions led to the

deletion of the pay cable programming rules in 1977.

1984 CONGRESSIONAL POLICY AND RULES

In October 1984, the U.S. Congress amended the Communications Act of

1934 by adopting the Policy Act of 1984. The 1984 Cable Act established

policies in the areas of ownership, channel usage, franchise provisions and

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renewals, subscriber rates and privacy, obscenity and lockboxes,

unauthorized reception of services, equal employment opportunity, and pole

attachments. The new law also defined jurisdictional boundaries among

federal, state and local authorities for regulating Cigrate Industry.

1992 CONGRESSIONAL POLICY AND RULES

Following the 1984 Cable Act, the number of households subscribing to

Cigrate industry increased, as did the channel capacity of many cable

systems. However, competition among distributors of cable services did not

increase, and, in many communities, the rates for cable services far outpaced

inflation. Responding to these problems, Congress enacted the Cigrate

Consumer Protection and Competition Act of 1992. The 1992 Cable Act

mandated a number of changes in the manner in which cable Cigrate is

regulated.

In adopting the 1992 Cable Act, Congress stated that it wanted to promote

the availability of diverse views and information, to rely on the marketplace

to the maximum extent possible to achieve that availability, to ensure cable

operators continue to expand their capacity and program offerings, to ensure

cable operators do not have undue market power, and to ensure consumer

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interests are protected in the receipt of cable service. The Commission has

adopted regulations to implement these goals.

1996 CONGRESSIONAL POLICY AND RULES

In adopting the Telecommunications Act of 1996, Congress noted that it

wanted to provide a pro-competitive, de-regulatory national policy

framework designed to accelerate rapidly private sector deployment of

advanced telecommunications and information technologies and services to

all Americans by opening all telecommunications markets to competition.

The Commission has adopted regulations to implement the requirements of

the 1996 Act and the intent of Congress.

29

Social Consideration and Social Clauses in Public

Procurement – Workability Europe´s Declaration

Public Procurement covers 16 % of EU’s Gross domestic product. In

connection with Public Procurement total economic advantages should

always be considered, not only a certain unit price. Best value for tax payers

money does not mean the cheapest offer – value for money may also include

social clauses. Social considerations should be included in Public

Procurement as one criterion like quality and environmental criteria.

If possible Public Procurement should be reserved for supported

employment, i.e. to sheltered workshops and sheltered employment

programmes.

30

Micro Competitors, Suppliers, Buyers , Substitute / by product, New entrants

31

COMPANY PROFILE

Marlboro (cigarette)

Marlboro logo

Marlboro is a brand of cigarette made by Philip Morris USA (a branch of Altria)

within the US, and by Philip Morris International (now separate from Altria)

outside the US. It is famous for its billboard advertisements and magazine ads of

the Marlboro Man.

Philip Morris, a London-based cigarette manufacturer, created a New York

subsidiary in 1902 to sell several of its cigarette brands, including Marlboro. By

1924 they were advertising Marlboro as a woman's cigarette based on the slogan

"Mild As May".

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The brand was sold in this capacity until World War II when the brand faltered and

was temporarily removed from the market. At the end of the war, three brands

emerged that would establish a firm hold on the cigarette market: Camel, Lucky

Strike, and Chesterfield. These brands were supplied to US soldiers during the war,

creating an instant market upon their return.

During the 1950s Reader's Digest magazine published a series of articles that

linked smoking with lung cancer. Phillip Morris, and the other cigarette companies

took notice and each began to market filtered cigarettes. The new Marlboro with a

filtered end was launched in 1955. In the early 1960s Philip Morris invented

"Marlboro Country" and distilled their manly imagery into the rugged cowboys

known as the "Marlboro Men."

The brand is named after Great Marlborough Street, the location of its original

London Factory. Richmond, Virginia is now the location of the largest Marlboro

cigarette manufacturing plant.

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Varieties

Marlboro Reds

Reds (Red) (original)

Medium (Dark Red)

Menthol (Dark Green)

Menthol Lights (Light Green)

Menthol Ultra Lights (Light Green)

Lights (Gold)

Ultra Lights (Silver)

Milds (Dark Blue)

Flavor Plus (white with red lines): features a sliding lid pack and tobacco in

the filter for extra flavor

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No. 27 Blend (Bronze)

No. 29 Blend (Bronze)

MX4 Flavor (Medium)

Virginia Blend (Metallic-silver) This is known as their highest grade normal

production cigarette

Black Menthol (Japan Only)

Ice Mint

Smooth

Menthol Smooth (Teal-Grey)

72s: Red, Light, and Ultra Light

72s Menthol: Green, Blue

Marlboro Snus: Rich, Mild, Mint, Spice: In Dallas and Indianapolis.

Marlboro MST(moist smokeless tobacco): Original, Long Cut and Fine Cut,

Wintergreen, Long Cut and Fine Cut: In Atlanta, GA

All cigarettes are available in the standard 85mm (Kings) or 100mm (100's) size

with the exception of the 72s varieties, which measure 72mm.

35

The type of Marlboro cigarette, No. 27 blend gets its name from the number of

attempts that the company Marlboro spent trying to get the right blend they wanted

for this cigarette. At the time of creation, there was no name specified for the

cigarette. But after Marlboro was satisfied on the 27th attempt, leads to the name

now. This nomenclature follows the pattern used by WD-40. The No. 27 blend

cigarette was originally released as Marlboro's "Christmas blend", and following

brisk sales, was brought to market in its current packaging. Original cartons and

packs for the blend were black with red, and normally available only during the

holiday season.

ITC

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ITC is the market leader in cigarettes in India. With its wide range of invaluable

brands, it has a leadership position in every segment of the market. It's highly

popular portfolio of brands includes Insignia, India Kings, Classic, Gold

Flake, Silk Cut, Navy Cut, Scissors, Capstan, Berkeley, Bristol and Flake.

The Company has been able to build on its leadership position because of its single

minded focus on value creation for the consumer through significant investments

37

in product design, innovation, manufacturing technology, quality, marketing and

distribution.

All initiatives are therefore worked upon with the intent to fortify market standing

in the long term. This in turns aids in designing products which are contemporary

and relevant to the changing attitudes and evolving socio economic profile of the

country. This strategic focus on the consumer has paid ITC handsome dividends.

ITC's pursuit of international competitiveness is reflected in its initiatives in the

overseas markets. In the extremely competitive US market, ITC offers high-

quality, value-priced cigarettes and Roll-your-own solutions. In West Asia, ITC

has become a key player in the GCC markets through growing volumes of its

brands.

ITC's cigarettes are produced in its state-of-the-art factories at Bengaluru, Munger,

Saharanpur and Kolkata. These factories are known for their high levels of quality,

contemporary technology and work environment.

38

ITC's Cigarettes business has been winning numerous awards for its quality,

environmental management systems and product excellence:

'Best Manufacturer of Cigarettes for the year 2007' by the Tobacco Board

based on previous three years' performance.

Occupational Health and Safety Award 2007 for Excellence in Safety

Management to the Bengaluru, Saharanpur and Kolkata factories from the Royal

Society for Prevention of Accidents (ROSPA), U.K.

5 Star Health and Safety Rating in 2007 from the British Safety Council to the

Bengaluru, Munger, Kolkata and Saharanpur factories and the "Sword of

Honour" for Bengaluru & Saharanpur factories in 2006.

Greentech Gold Award for excellence in Safety Management for the year

2007 to the Bengaluru, Kolkata and Saharanpur cigarette factories for the high

level of performance that the units have achieved in Environment Health and

Safety (EHS). Saharanpur along with Kolkata and Munger factories were honoured

with the Gold award and the Bengaluru Factory with the Platinum Award in

2006.

Greentech Gold Award for Excellence in Environment Management 2007 to

the Bengaluru, Kolkata and Munger factories.

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Safety Innovation Award for 2007 and 2006 for Innovative Safety

Management System to the Bengaluru Factory from the Institution of Engineers

and also the Unnatha Suraksha Puraskara Award 2006 from NSC Karnataka

Chapter.

Golden Peacock Award for Occupational Health and Safety from the Institute

of Directors, New Delhi; Award for Outstanding Performance in Environment

Health and Safety from the CII and the Suraksha Puraskar Award from the

National Safety Council, Mumbai to the Kolkata factory in 2007 and the "1st

National Security Today Award " in the category of Best Maintained Fire

Safety System in 2005.

Occupational Health and Safety Gold Award from the ROSPA, UK; the

Winners Trophy – Safety Health and Environment Award from the CII Eastern

region; National Award for Excellence in Water Management and Innovative

Project Award Initiatives for Energy Conservation from the CII to the Munger

factory in 2007 and also the Excellence in Water Management Award from

CII-GBC for 2006.

All the four factories are certified by Det Norske Veritas (DNV) for ISO 14001,

for their Environment Management Systems, OHSAS 18001 for their Occupational

Health and Safety Management Systems (OHSMS) and the ISO 9000-2000 for

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Quality Management Systems. The Kolkata factory is the first cigarette factory in

India to be awarded the SA 8000 Certificate for Social Accountability by Det

Norske Veritas (DNV) in June 2004.

ITC's R&D Centre at Peenya, Bengaluru has the distinction of being the first

independent R&D centre in India to get ISO 9001 accreditation and certified

with ISO 14001 for Environment Management Systems by DNV. The R&D

Centre is also certified for the standard ISO/IEC17025:2005, by National

Accreditation Board for Testing and Calibration Laboratories (NABL). This

certification is awarded for "General requirement for the competence of Testing &

Callibration Laboratories"

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BALANCE SHEET ITC

Fiscal Year 2007 2006 2005 2004 2003

Fiscal Year End Date 3/31/07 3/31/06 3/31/05 3/31/04 3/31/03

Assets          

Total Assets 32,476,736.0 28,624,880.0 24,335,011.0 22,040,228.0 20,296,263.0

Cash & Short Term Investments

7.3% 7.9% 8.6% 10.2% 11.2%

     Cash 5.9% 5.5% 6.1% 7.8% 3.1%

     Short Term Investments 1.4% 2.4% 2.5% 2.3% 8.2%

Receivables (Net) 20.2% 20.6% 20.8% 20.7% 31.7%

Inventories -Total 5.6% 5.7% 5.4% 4.9% 5.3%

     Raw Materials 1.1% 1.0% 1.0% 0.9%  

     Work in Process 0.7% 0.8% 0.7% 0.8%  

     Finished Goods 3.7% 3.8% 3.7% 3.3%  

     Progress Payments & Other

0.0% 0.0% 0.0% 0.0%  

Prepaid Expenses 1.6%        

Other Current Assets 1.7% 3.4% 4.0% 4.4% 6.1%

Current Assets - Total 36.3% 37.5% 38.8% 40.1% 54.3%

Long Term Receivables 17.8% 17.1% 16.5% 14.8% 3.6%

Investment in Associated Companies

6.3% 6.4% 6.5% 6.2% 5.3%

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Fiscal Year 2007 2006 2005 2004 2003

Other Investments 11.8% 11.9% 11.1% 10.2% 8.0%

Property Plant and Equipment - Gross

54.0% 55.4% 57.8% 60.6% 66.2%

     Accumulated Depreciation 29.1% 30.7% 34.0% 36.3% 39.1%

     Property Plant and Equipment � Net

24.8% 24.7% 23.8% 24.3% 27.1%

Other Assets 2.9% 2.4% 3.3% 4.4% 1.7%

     Deferred Charges 0.0% 0.0% 0.0%   0.0%

     Tangible Other Assets 2.9% 2.4% 3.3%   1.7%

     Intangible Other Assets         0.0%

Total Assets 100.0% 100.0% 100.0% 100.0% 100.0%

Liabilities & Shareholders' Equity

Total Liabilities & Shareholders' Equity

32,476,736.0 28,624,880.0 24,335,011.0 22,040,228.0 20,296,263.0

Accounts Payable 6.8% 7.3% 7.6% 7.8% 7.8%

Short Term Debt & Current Portion of Long Term Debt

18.1% 16.6% 14.5% 15.0% 15.6%

Accrued Payroll         0.2%

Income Taxes Payable 1.3% 1.2% 1.2% 1.1% 1.6%

Dividends Payable          

Other Current Liabilities 10.0% 9.9% 10.5% 10.5% 12.1%

Current Liabilities - Total 36.2% 35.0% 33.8% 34.5% 37.2%

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Fiscal Year 2007 2006 2005 2004 2003

Long Term Debt 19.3% 19.7% 20.6% 19.3% 20.2%

     Long Term Debt Excluding Capitalized Leases

19.2% 19.6% 20.4% 19.0% 20.2%

     Capitalized Lease Obligations

0.1% 0.2% 0.2% 0.3% 0.0%

Provision for Risks and Charges

2.0% 2.4% 2.7% 3.3% 3.2%

Deferred Income          

Deferred Taxes 3.7% 3.4% 3.3% 3.5% -0.2%

     Deferred Taxes - Credit 4.0% 3.8%     2.0%

     Deferred Taxes - Debit 0.3% 0.4%     2.2%

Deferred Tax Liability in Untaxed Reserves

Other Liabilities 0.4% 0.5% 0.3% 0.3% 0.4%

Total Liabilities 61.6% 61.0% 60.8% 60.9% 60.8%

Non-Equity Reserves 0.0% 0.0% 0.0% 0.0% 0.0%

Minority Interest 1.9% 2.1% 2.1% 2.0% 2.4%

Preferred Stock 0.0% 0.0% 0.0% 0.0% 0.0%

     Preferred Stock Issued for ESOP

     ESOP Guarantees - Preferred Issued

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Fiscal Year 2007 2006 2005 2004 2003

Common Equity 36.4% 36.9% 37.2% 37.1% 36.8%

Total Liabilities & Shareholders' Equity

100.0% 100.0% 100.0% 100.0% 100.0%

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INTRODUCTION

What is Consumer Buying Behavior?

Definition of Buying Behavior,

Buying Behavior is the decision processes and acts of people involved in buying

and using products.

Need to understand:

Why consumers make the purchases that they make?

What factors influence consumer purchases?

The changing factors in our society.

Consumer Buying Behavior refers to the buying behavior of the ultimate

consumer. A firm needs to analyze buying behavior for:

Buyers' reactions to a firms marketing strategy has a great impact on the

firm's success.

The marketing concept stresses that a firm should create a marketing

mix(MM) that satisfies (gives utility to) customers, therefore need to analyze

the what, where, when and how consumers buy.

Marketers can better predict how consumers will respond to marketing

46

strategies.

Stages of the Consumer Buying Process

Six Stages to the Consumer Buying Decision Process (For complex decisions).

Actual purchasing is only one stage of the process. Not all decision processes lead

to a purchase. All consumer decisions do not always include all 6 stages,

determined by the de2ree of complexity...discussed next.

The 6 stages are :

1. Problem Recognition (awareness of need)--difference between the desired state

and the actual condition. Deficit in assortment of products. Can be stimulated by

the marketer through product information— i.e, see a commercial for a new pair

of shoes, stimulates your recognition that you need a new pair of shoes.

2. Information search-

Internal search, memory.

External search if you need more information. Friends and relatives (word of

mouth). Marketer dominated sources; comparison shopping; public sources

etc.

A successful information search leaves a buyer with possible alternatives.

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3. Evaluation of Alternatives you need to establish criteria for evaluation

features the buyer wants or does not want. Rank/weight alternatives or resume

search. May decide that you want to eat something spicy. If not satisfied with

your choices then return to the search phase. Can you think of another

alternative? Look in the yellow pages etc. Information from different sources

may be treated differently. Marketers try to influence by "framing" alternatives.

4. Purchase decision-Choose buying alternative, includes product, package,

store, method of purchase etc. Purchase May differs from decision, time lapse

between 4 & 5, product availability.

5.Post-PurchaseEvaluation--Outcome Satisfaction or Dissatisfaction.

Cognitive Dissonance, have you made the right decision. This can be reduced by

warranties, after sales communication etc.

Types of Consumer Buying Behavior

Types of consumer buying behavior are determined by:

Level of Involvement in purchase decision. Importance and intensity of

interest in a product in a particular situation.

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Buyer's level of involvement determines why he/she is motivated to seek

information about a certain products and brands but virtually ignores others.

High involvement purchases--Honda Motorbike, high priced goods, products

visible to others, and the higher the risk the higher the involvement. Types of risk:

Personal risk

Social risk

Economic risk

The four type of consumer buying behavior are:

Routine Response Programmed Behavior -- buying low involvement

frequently purchased low cost items; need very little search and decision

effort; purchased almost automatically. Examples include soft drinks, snack

foods, milk etc.

Limited Decision Making buying product occasionally. When you need to

obtain information about unfamiliar brand in a familiar product category,

perhaps. Requires a moderate amount of time for information gathering.

Examples include Clothes know product class but not the brand.

Extensive Decision Making/Complex high involvement, unfamiliar,

expensive and/or infrequently bought products. High degree of

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economic/performance/psychological risk. Examples include cars, homes,

computers, education. Spend a lot of time seeking information and deciding.

Information from the companies MM; friends and relatives, store personnel

etc. Go through all six stages of the buying process.

Impulse buying, no conscious planning.

In order to produce successful ads, you must give people exactly what they want.

This article will teach you why people buy the things they do so you can design

your ads to fulfill these needs.

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SWOT

The diagnosis of a firm’s strengths and weakness can be fruitful only if the

environment factors and market conditions are considered along with the internal

capabilities. This approach essentially involves matching of the internal

capabilities with the environmental opportunities and threat and is known as

SWOT (Strength and Weakness, Opportunities and Threats) analysis.

STRENGTHS :

Strength is a resources, skill or other advantage relative to competition and

the needs of markets a firm serves of anticipates serving. Strength is a distinctive

competence that gives the firm a comparative advantages in the market place.

The key strengths are :

Well trained and highly qualified manpower (both technical & non-technical).

Hi-Fi and world class technology is available.

Hi class facility, reflecting leadership of top-management.

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Financial status of the company is very strong and sound.

WEAKNESS :

A weakness is a limitation or deficiency in resources, skills and capabilities that

seriously impedes effective performance .

OPPORTUNITIES:

An opportunity is a major favorable situation in the firm’s environment.

Identification of a previously overlooked market segment, changes in competitive of

regulatory circumstances, technological changes etc. are examples.

Since, company’s financial profile is quite sound & strong, hence there is lot of scope

to develop.

THREATS :

A threat is a major unfavorable situation in the firm’s environment. It is key

impediment to the firm’s current or desired future positions. The entrance of a new

competitor, slow market growth, major technological change, appearance if a substitute

product are examples.

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The danger of being priced out.

The danger of substitution.

The danger of new competition coming.

Inadequate measures viewed against product, market scope.

High level quality and low price should be maintained.

Time commitment and Business ethics should be adopted and maintained.

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OBJECTIVES OF THE PROJECT

The objectives are.

1. To find the mode of pollution by the Cigrate .

2. To find the find which type of Cigrate less pollute.

3. To find the various sources of information about cars from primary data

through customers.

4. To find and analyses the various parameters of increasing Cigrate .

5. To find the what is effect in city life.

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STRATEGIES

Business

In 1998, after a shake-up in the Korean auto industry caused by

overambitious expansion and the Asian financial crisis, ITC acquired rival

Kia Motors. In 2000, the company established a strategic alliance with

DaimlerChrysler and severed its partnership with the ITC. In 1956, the ITC

was formed. In 2004, however, DaimlerChrysler divested its interest in the

company by selling its 10.5% stake for $900 million.

ITC has invested in manufacturing plants in the North America India as well

as research and development centers in Europe, Asia, North America, and

the Pacific Rim. In 2004, ITC had $57.2 billion in sales in India making it the

country’s second largest corporation. Worldwide sales in 2005 reached

2,533,695 units, an 11 percent increase over the previous year. ITC has set

as its 2006 target worldwide sales of 2.7 million units (excluding exports of

CKD kits). In 2007 it reached 3,961,629 worldwide cigrate sales—

surpassing.

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ITC are sold in 193 countries through some 5,000 dealerships and

showrooms. After a recent survey of cigrate industry, ITC is now the fifth

largest automaker in the world as of 2008.

ITC Company’s brand power continues to rise as it was ranked 72nd in the

2007 Best Global Brands by Interbrand and BusinessWeek survey. brand

value estimated at $4.5 billion. Public perception of the ITC brand has been

transformed as a result of dramatic improvements in the quality of ITC

Cigrate.

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CONCLUSION

The cigarette is taking many initiatives to take advantage of the opportunities as

well as to meet the challenges. The cigarette initiatives in the area of FMCG.

Further, cigarette has drawn an ambitious branch expansion programme to increase

its clientele base and business volumes. The cigarette has also recently appointed a

consultant to guide it in implementation of an enterprise-wide integrated risk

management system. All these efforts will help the cigarette to improve upon the

performance level in the coming years.

In the above research I found that the maximum respondent are smoker.

Mainly in there family only one elder person smoking.

Respondent are smoking more than three cigrate in a day

No effect on smoker caution statement on cigrate packet

In the above research I found that the respondent are giving any important

caution statement on cigrate packet

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SUGGESTIONS AND RECOMMENDATIONS

Caution statement should come out that are attractive and appeals to the

masses.

The companies have to concentration on the factors like ‘prevention of loss.

The Companies can increase its potential through more advertising.

The company should give more training programs.

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L IMITATIONS :

Lack of knowledge of area has also affected the research

Lack of respondents interest to answer the question

It is very difficult to make people understand the significance of conducting

survey.

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BIBLIOGRAPHY

MAGAZINES:

BUSINESS TODAY

BUSINESS INDIA

BUSINESS WORLD

NEWS PAPERS:

ECONOMIC TIMES

THE TIMES OF INDIA

THE HINDUST AN TIMES

THE HINDU

WEBSITE:

www.google.com

www.itc.com

www.marlboro.com

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