Comparative Research on Market Size of Cigarette Brand of IT

Comparative Research on Market Size of Cigarette Brand of ITC Ltd.

REASEARCH REPORT ON

“Comparative Research on Market Size of Cigarette Brand of ITC Ltd.”

Master of Business Administration

2009-11

SUBMITTED TO: SUBMITTED BY:G.B.T.U. Gopal JiaswalLucknow Roll no. 0928570006

MBA (4th Sem.)

INSTITUTE OF TECHNOLOGY AND MANAGEMENT PANCHLI, MEERUT


ACKNOWLEDGEMENT

Before, I get into thick of things, I would like to add a few heartfelt words for all

those people who were part of this report in numerous ways, and gave their unending

support throughout. I wish to express my thanks and gratitude to all those who have

provided the valuable support, insight and encouragement during my research at ITC Ltd.

In the process of completing this project Comparative research on Cigarette brands. I

have received cooperation from many quarters.

I express my sincere gratitude and indebtness to Mr. Krishna Awtar Pandey, my

research guide for his inspiring guidance, cooperation and for giving me an opportunity

to enhance my skill in the field of my project in carrying out my research successfully. I

am thankful for his guidance, patience and consummate support. He came to my help

when it counted and I extend my heartiest thanks to him form enlightening my path.

Moreover, I would also like to acknowledge my profound sense of gratitude and

indebtness for Mrs. Sachi Rana (H.O.D. MBA Deptt.) for her cooperation, guidance,

support and precious suggestions that motivated me in completing this project.

I would like to extend my heartily gratitude to Mr.Deepak Gupta (Faculty,

MBA) for his contribution, generous help, personal support and his valuable suggestions,

guidance and personal attention, which enabled me to complete my research.

I wish to express grateful feelings and thanks to all the faculties of MBA

department, who helped me in various ways in the research completion and for their

valuable suggestions. I am thankful for their generous help, personal support and their

valuable suggestions during the course of MBA.

I express my thanks to my friends who helped me during my research. I don’t

have enough words to express my love and thanks to my loving and caring guardians,

especially for their endless love and care. It was their constant encouragement and their

trust in me that has helped me at every crucial stage of development.


I also feel grateful and elated in expressing my indebtedness to all those who have

directly or indirectly helped me in accomplishing this research work.

I wish to express grateful feelings and thanks to ITC Ltd for giving me such a great

opportunity to complete my research.

Gopal Jaiswal


STUDENT DECLARATION

I, GOPAL JAISWAL under signed hereby declare that the project report on

“Comparative Research on Market Size of Cigarette Brand of ITC Ltd”. complied and

submitted under the guidance of Mr. Deepak Gupta , Faculty of Management, ITM,

Meerut is my original work. The empirical finding in this reports are based on the

annual reports of the company. While preparing this report, I have not copied material

from any report.

GOPAL JAISWAL

Roll No. – 0928570006

M.B.A.III Sem.


PREFACE

The changing marketing scenario emerging by virtue of liberalization in last one

decade has introduced a vast variety of new concepts. Behavioral analysis gives much

information at a single time.

In the changed business scenario, where organizations are required to compete

globally, benchmarks have also become global, organization survival and excellence

requires not only meeting the targets, but also setting up of global standards. In the

present scenario, to achieve world-class excellence or even surpass them depends upon

the efficiency-marketing scenario of the company, which is the most important for any

organization.

The quest of productivity, quality and speed has spawned a remarkable number of

management tools and techniques. Total quality management, bench marking, and Time

based competition. Out servicing partnering, reengineer, change management of feeling

the gap between the originations and the consumer, on the bases of market research are

conducted by the big organizations.

Now it is a world of “world of cut throat competition”. The concept of

marketing has been changed completely; customer has become aware in the every field in

the current time, today’s market is customer oriented. The prime motive of the company

should be customer delight and hence to survive and achieve organizational goals.

Cigarette is one of the tobacco products. ‘Cigarette’ itself has a niche in the

market. Tobacco products are excisable item, which is controlled by the Government.

The Government earns much money from tobacco product due to much excise duty on

tobacco product. The tobacco companies work under the rule and regulations of the

Government. It is very necessary and compulsory for manufacturers of tobacco to take

license from the Government.


This research report has been divided in to various parts. First part gives an

introduction about the project. Second part contains profile of the company and its financial

overview. Third part is objective and scope of study. Fourth part is all about research

methodology. Finally data interpretation and analysis of data, on the basis of analysis some

recommendations and conclusions are given.

In the end I would like the evaluators and readers to do a comprehensive study of my

project and express their views and recommend valuable suggestions that would greatly

enhance our knowledge of the subject.


CONTENTS

1 ACKNOWLEDGEMENT

2 EXECUTIVESUMMARY

3 OBJECTIVE OF THE PROJECT

4 INTRODUCTION

5 COMPANY PROFILE

6 SWOT ANALYSES

7 RESEARCH METHDOLOGY

8 DATA ANALYSIS & INTERORETATION

9 CONCLUSIONS

10 LIMITATIONS


11 RECOMMENDATIONS

12 BIBLIOGRAPHIES

13 QUESTIONNAIRES


EXECUTIVE SUMMARY


EXECUTIVE SUMMARY

The aim and objective of this research is to measure the brand image during the product

purchase.

ITC has a large customer base providing three types of cigarettes.

My area of research is SHARANPUR and adjoining places. I have chosen this topic

(project) because fulfilling brand images needs of the people is a major task, slight

improvement of which will lead to an increased customer base and higher customer

retention ratio which will lead to an increased customer base and higher customer

retention ratio which will lead to an increase in company’s sales and an enhanced brand

image.


OBJECTIVE OF THE RESEARCH


Research Objective

Primary Objective

1. To find out “brand image of ITC Ltd. in area of Sharanpur”

2. Find out whether there is an image mismatch between the FMCG brand and customer.

Secondary Objectives:-

1-To find out how to improve the brand image

2-Which is higher selling brand in deferent area

3-Which brand ensure proper availability of CIGGRETE? 4- How much ITC Product contributed in every outlet?

5- To find out Brand Promotional activity in the Market.

6- To create the ways to promote ITC as BRAND.

7- To determine the demand of the Cement.

8- To design marketing Strategy


The research conducted thus emphasized in fulfilling following

objectives:

FROM THE ORGANIZATION POINT OF VIEW

Organization would be coming to know about the dealers attitude and their

Complaints by this they can take corrective measures to rectify the complaints.

Organization can also find its market share

MY POINT OF VIEWS:-

I while undergoing my training got familiar with the organization “ITC Ltd.”

Cigarettes” and came to know about the working of the organization as well as the

services, policies etc. of the organization.


INTRODUCTION


INTRODUCTION

Marketing Research is a vehicle through we can obtain information about present

and potential customer’s behavior, their reaction and prospective about marketing.

Learning more about the consumer and marketing is the heart of marketing research. The

objective of this study is to know about the consumer’s perception & preference towards

cigarette of ITC Ltd.

‘Cigarette’ itself has a niche in the market The Tobacco industry is developing

with speed of app. 15%. The ITC enjoys a good position in the Cigarette Market by

launching - Checkers, Hi-Val, Royal Classic and Gold Crest - in the extremely

competitive US market. The coming up of Multinational in the field has made it tough

for the company to capture the same market share as it was enjoying few decades ago.

Since thirty years put now seeing the current requirements the company decided to

change its old pattern and planned to walk with the Traits. This study contains the about

the reaction of consumers towards the Cigarette. The target consumers are there figured

and the area for research is also sound and through it.

Tobacco consumption is growing at a rate of 2-3% per annum. India is the third

largest producer and eighth largest exporter of tobacco and tobacco product in the world.

The largest selling cigarette in India is of ITC Ltd according to experts ITC commands a

72% market share in the country and hence it is a market leader in the segment. . This

report is aiming to find out the market size of cigarette of ITC Ltd. This project is also

directed to find out the contribution share of the various brands of ITC Ltd and the taste

and preferences of cigarette consumers.

The population survey was conducted in pre-allocated areas. Total number of

respondents is 500, in which only 33% said that they smoke. Out of them 43% said that

they consume cigarette. 70.42 % cigarette consumers consume ITC cigarette in the

specified area. Quality of the product and Packaging is good but customers think that the

price of the product is average. Availability of the ITC cigarette is good in the retail

stores. Awareness about the brand is also found to be satisfactory. Most of the consumers


of ITC cigarette are found to be satisfied with the product. We find that the cigarette

brand of ITC limited has a very good position in the market among the customers.

Majority of consumers go for the taste of cigarette and brand name. While some of the

consumers of cigarette emphasize on the price.

ITC is enjoying the market leadership in the industry not because of its products

but another reason is that it is the first entrant in the Indian cigarette market. Most of the

cigarette brands of ITC are doing well while a few are not in a good position. ITC should

offer some offers and discounts to the customers and retailers.


THE TOBACCO INDUSTRY IN INDIA

4 players - ITC, Godfrey Phillips, VST and GTC, dominate the cigarette industry

in India. These four companies together control almost 99% of the market. The cigarette

industry faces competition mainly from the unorganized sector 'BIDI' manufacturers, who

are protected from high duties due to small-scale industry status. Affected by steep duty

hikes, the industry has been facing stagnant volume growth in the last 2-3 years.

Based on the contribution from various products, ITC’s business can be divided

into three main divisions, namely cigarettes, tobacco and agri-products. ITC’s mainstay

of earnings is cigarettes (87%) and tobacco (3%). Agri-products business contributes 5%

of the total revenues, while other businesses of hotels, paper and packaging collectively

contribute the balance 5%.

Tobacco today is one of the largest contributors to Indian excise collections.

Despite that the industry has been getting step-motherly treatment by the central

government. The industry has been facing regular increase in excise duty on cigarettes in

every budget for past so many years. The cigarette industry in particular has been

suffering both at the hands of central government as well as state governments.

Industry background:

India is the third largest producer and eighth largest exporter of tobacco and

tobacco product in the world. While India's share in the world's area under tobacco crop

has risen from 9% to 11% in the last 3 decades, its share in production has inched up

from 8% to 9% in tobacco industry. Asia and America, together account for 75% of

world's production of tobacco. China, USA and India are the three leading tobacco-

producing nations in the world. Andhra Pradesh, Gujarat and Karnataka account for the

major portion (80%) of raw tobacco production in India. These states produce FCV

tobacco, bidi tobacco, natu tobacco, cigar tobacco, cheroot tobacco and snuff tobacco.


Other states which manufacture tobaccos are Maharashtra, Orissa, Tamil Nadu, West

Bengal, UP and Bihar.

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 (Areca

nut), 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. As per World Health

Organization (WHO), reported the prevalence tobacco habits in India to be, Bidis (34%),

Cigarettes (31%), Chewing tobacco (19%), Hookah (9%), Cigars-cheroots (5%), and

Snuff(2%).

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.

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.


India is a major grower and exporter of tobacco in the world. Presently India is

among top three producers of tobacco in the world. Despite lower proportion of total

produce being exported Indian exports it figure among top 10 exporters of the product in

the world. In addition to being the largest contributor to government coffers, the industry

also provides employment to more than 26mn people in the country both directly and

indirectly. The Indian tobacco is largely used for making beedis and chewing products

like khaini etc. Tobacco is a very peculiar crop, it is grown in rain starved areas on soils

which are otherwise not suitable for any other crop. Thus it makes use of the least

resources available to it, to give a produce which provides so much to government coffers

in terms of excise, exports as well as employment that today the per acre earning of

Farmers from a special type of tobacco are much higher than any other crop grown in the

country.

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. There are various types of tobacco grown in the country but most of the

exports of tobacco by our county is of Flue Cured Virginia (FCV) type. The Indian

tobacco exported, is mostly used as filler in the international cigarettes. Infect like any

other agri-product, the characteristics of tobacco, its taste, its aroma and other properties

largely depend on the soil or area in which it is grown. Moreover cigarette smokers are

very particular about the taste, the aroma of their cigarette brand. So it becomes

extremely necessary to maintain the blend of tobacco used for cigarette manufacturing to

give the same quality product to consumers. This is to maintain the consistency of taste of

a brand.


Woes of the tobacco industry:

If we take a glance at the current situation of the tobacco industry we will find

that the situation is just like that of a farmer killing the hen that laid golden eggs. Today

the government is milching the industry, especially the cigarette industry, to such an

extent that the industry would very soon die an unnatural death. Infact the indications

from trend of consumption and excise collection just corroborate these fears.

Presently tobacco industry's contribution to excise has increased from mere 7.2%

in 1987-88 to 12% in 2000-01. This is in contrast with the international scenario where

the cigarette contribution to total tobacco consumption has increased. Besides this,

already the cigarette industry is gasping for breath due to imposition of luxury tax or

entry tax by various states ranging from 1.5% to 10%.

The legislation dates back to 1975 when the Tobacco Board Act was introduced

to develop the tobacco industry, which facilitated regulation of production and curing of

tobacco, fixed minimum prices and provided subsides to tobacco growers. Again in 1975,

Cigarettes Act of 1975 was passed. It was India's first national level anti- tobacco

legislation and prescribed all packages to carry the warning "Cigarette smoking is

injurious to health". Prevention and Control of Pollution Act was introduced in 1988,

which included smoking in the definition of air pollution. The Motor Vehicles Act of

1988 made it illegal to smoke or spit in a public vehicle.

The Cable Television Networks Amendment Act of 2000 prohibited the

transmission of tobacco commercials on cable television across the country. In February

2001, Indian Prime Minister Vajpayee's union cabinet introduced Cigarettes and other

Tobacco Products Bill. This was a multifaceted anti-tobacco legislation to replace the

Cigarettes Act of 1975. According to this bill, smoking in public places would be

outlawed, sale of tobacco to people under 18 years of age would be prohibited, tobacco

packages required to have warnings and it also prohibited tobacco companies from

advertising and sponsoring sports and cultural events. This bill covers most tobacco

products like cigarettes, cigars, bidis, cheroots, pipe tobacco, hookah tobacco, chewing

tobacco, panmasala and gutkha. A first time offender will result in a fine of rupees 200


and a second time offender will result in a fine of rupees 1,00,000 and imprisonment for

up to three years. Delhi was the first to impose a ban on smoking in public. In 1996,

Delhi Prohibition of Smoking and Non- Smokers Health Protection Act was passed. This

act prohibited sale of cigarettes 100 meters from the school building and to minors. The

offender was fined a sum of rupees 100. But it was difficult to enforce this act and had

little real impact, the key problem being lack of manpower to enforce the law. In 1999,

Kerala High Court came out with a judgment prohibiting smoking in public places,

including parks and highways and Goa banned smoking in public places through anti-

tobacco legislation. For the past three years, Tamil Nadu and Andhra Pradesh have

banned the marketing and sales of gutkha.

In such a scenario of rising taxes and decreasing consumption, any further

imposition of levies or taxes on the cigarette industry seems unjustified. So I think that

the government should give a glance to these aspects and should try to see the situation

from cigarette industry's point of view before finalizing any proposal.

Annual Per Capita Adult Cigarette Consumption

0

500

1000

1500

2000

2500

3000Japan

US

UK

China

Nepal

Pakistan

B'desh

India

Source: Tobacco Institute of India


PRESENT SCENARIO

Cigarette manufacturers are planning to raise the rates because of the high taxes

and recently VAT in many states and the price of a few cigarette brands have been raised

already. A pack of the premium brand Classic was re-priced at Rs 88 from Rs 80 earlier

while a pack of the mid-market Gold Flake brand was now priced at Rs 40 against Rs 38

earlier. The economy brand Silk Cut had also been revised upwards marginally from Rs

20 now, retailers added.

Tobacco industry in India, boasts of a growth of 25 percent per year. The cigarette

market in the country is estimated at 2 million sticks including made in Goa, a quantum

jump from six lakh sticks in 1997. Cigarette is the largest segment of the tobacco industry

in the country. India today is the largest consumer of cigarette overtaking USA two years

ago.

The cigarette market is witnessing flurry of launches from the MNC’s by having

their collaborations done with the India partners. These collaborations done by then are

in two ways either shares of profits or technical partnership. The largest selling cigarette

in India is of ITC Ltd. It Commands a 72% market share in the country.

Prevention against the diseases that come with tobacco usage is based primarily

on public and individual education to drop the habit or preferably not to begin in the first

place. Some of the steps to be taken as suggested are

Providing effective protection from involuntary exposure to tobacco smoke

Providing effective program of health promotion and health education

Effective smoking cessation program

Prominent health warnings on tobacco product packing

Progressive elimination of tobacco advertising

Financial measures to discourage tobacco consumption

Preventing children from becoming addicted to tobacco


Tobacco consumption is growing at a rate of 2-3% per annum. Since there is good

growth in the cigarette industry but there are many restrictions and hurdles created in this

industry by the government. So the companies need to move forward with care. Firms

should also focus on the risk distribution against the core competency.


COMPANY PROFILE


ITC Ltd. An Overview

THE COMPANY PROFILE

ITC is one of India's foremost private sector companies with a market

capitalisation of nearly US $ 18 billion and a turnover of over US $ 5.1 Billion. ITC is

rated among the World's Best Big Companies, Asia's 'Fab 50' and the World's Most

Reputable Companies by Forbes magazine, among India's Most Respected Companies by

Business World and among India's Most Valuable Companies by Business Today. ITC

also ranks among India's top 10 `Most Valuable (Company) Brands', in a study conducted

by Brand Finance and published by the Economic Times. ITC has a diversified presence

in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business,

Branded Apparel, Packaged Foods & Confectionery, Greeting Cards and other FMCG

products. While ITC is an outstanding market leader in its traditional businesses of

Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining market

share even in its nascent businesses of Packaged Foods & Confectionery, Branded

Apparel, Personal Care and Stationery.

The ITC LtdType Public (BSE:ITC)

Founded August 24, 1910Radha Bazar Lane, Kolkata, India

Headquarters Virginia House, Kolkata, India

Key people Y C Deveshwar, ChairmanK Vaidyanath, Director, Partho Chatterjee, CFO

Industry Tobacco, Foods, Hotels, Stationery, Greeting Cards

Products Cigarettes, Packaged Food, Hotels, Apparel

Revenue $ 5.1 billion USD

Employees Over 29000

Website www.itcportal.com

http://en.wikipedia.org/wiki/Category:Types_of_companies

http://www.itcportal.com/

http://en.wikipedia.org/wiki/Website

http://en.wikipedia.org/wiki/Employment

http://en.wikipedia.org/wiki/United_States_dollar

http://en.wikipedia.org/wiki/Revenue

http://en.wikipedia.org/wiki/Garment_Industry

http://en.wikipedia.org/wiki/Hospitality_industry

http://en.wikipedia.org/wiki/Food_manufacture

http://en.wikipedia.org/wiki/Cigarettes

http://en.wikipedia.org/wiki/Product_(business)

http://en.wikipedia.org/wiki/Greeting_Cards

http://en.wikipedia.org/wiki/Stationery

http://en.wikipedia.org/wiki/Hotels

http://en.wikipedia.org/wiki/Foods

http://en.wikipedia.org/wiki/Tobacco_industry

http://en.wikipedia.org/wiki/Industry

http://en.wikipedia.org/wiki/Y_C_Deveshwar

http://en.wikipedia.org/wiki/India

http://en.wikipedia.org/wiki/Kolkata

http://en.wikipedia.org/wiki/India

http://en.wikipedia.org/wiki/Kolkata

http://en.wikipedia.org/wiki/1910

http://en.wikipedia.org/wiki/August_24

http://www.bseindia.com/price_finder/stockreach.asp?scripcd=500875

http://en.wikipedia.org/wiki/Bombay_Stock_Exchange

http://en.wikipedia.org/wiki/Public_company


As one of India's most valuable and respected corporations, ITC is widely

perceived to be dedicatedly nation-oriented. Chairman Y C Deveshwar calls this source

of inspiration "a commitment beyond the market". In his own words: "ITC believes that

its aspiration to create enduring value for the nation provides the motive force to sustain

growing shareholder value. ITC practises this philosophy by not only driving each of its

businesses towards international competitiveness but by also consciously contributing to

enhancing the competitiveness of the larger value chain of which it is a part."

ITC's diversified status originates from its corporate strategy aimed at creating multiple

drivers of growth anchored on its time-tested core competencies: unmatched distribution

reach, superior brand-building capabilities, effective supply chain management and

acknowledged service skills in hoteliering. Over time, the strategic forays into new

Businesses are expected to garner a significant share of these emerging high-growth

markets in India.

ITC's Agri-Business is one of India's largest exporters of agricultural products.

ITC is one of the country's biggest foreign exchange earners (US $ 3.2 billion in the last

decade). The Company's 'e-Choupal' initiative is enabling Indian agriculture significantly

enhance its competitiveness by empowering Indian farmers through the power of the

Internet. This transformational strategy, which has already become the subject matter of a

case study at Harvard Business School, is expected to progressively create for ITC a huge

rural distribution infrastructure, significantly enhancing the Company's marketing reach.

ITC's wholly owned Information Technology subsidiary, ITC Infotech India Limited, is

aggressively pursuing emerging opportunities in providing end-to-end IT solutions,

including e-enabled services and business process outsourcing. ITC's production facilities

and hotels have won numerous national and international awards for quality,

productivity, safety and environment management systems. ITC was the first company in

India to be rated for Corporate Governance by ICRA, an associate of Moody's Investors

Service, which accorded it the second highest rating, signifying "a high level of assurance

on the quality of corporate governance."


ITC employs over 29,000 people at more than 60 locations across India. Ranked

among India's most valuable companies by the 'Business Today' magazine, The Company

continuously endeavors to enhance its wealth generating capabilities in a globalising

environment to consistently reward more than 3,83,000 shareholders, fulfill the

aspirations of its stakeholders and meet societal expectations. This over-arching vision of

the company is expressively captured in its corporate positioning statement: "Enduring

Value. For the nation. For the Shareholder."

Over-arching vision of the company is expressively captured in its corporate

positioning statement: "Enduring Value. For the nation. For the Shareholder."

THE ITC VISION

THE ITC MISSION


Key points

Strong volume growth in the core cigarette business in Q1FY2005—11% year-

on-year, among the highest in the previous ten quarters. This is the third consecutive year

of no excise duty increase and the second year of no price hike in cigarettes, leaving

scope for the company to hike cigarette prices and boost its profits further.

Diversification is paying off with non-cigarette businesses like hotels, paper and

agri-products turning around.

ITC's core business of cigarettes, we believe, will continue to grow at 4% in

FY2008 in volume terms. Besides, it has made an entry into bakery and other fast moving

consumer goods (FMCG) product lines (such as soaps, detergents and food products),

which will benefit from its strengths in distribution. Meanwhile almost all of ITC's earlier

diversifications are paying off—the hotels, paper and the agri-product ventures are likely

to return the cost of capital invested in the next couple of years. Its capital expenditure

needs are limited and litigation risks have all but disappeared. Hence we expect higher

dividend payouts. We recommend buying this Apple Green stock.


Increase in other expenditure mainly coming from increased advertisement spends

before the "Cigarettes and Other Tobacco Products (Prohibition of Advertisement and

Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003"

ITC has diversified presence in

Cigarettes : W. D. & H. O. Wills, Insignia, India Kings, Classic, Gold Flake, Navy

Cut, Scissors, Capstan, Berkeley, Bristol and Flake

Hotels : ITC Welcomgroup chain of Hotels

Paperboards & Specialty Papers : ITC Bhadrachalam Paperboards Limited"ITC

Tribeni Tissues Division" Now there are four units under one name --> Paper

Boards and Specialty Papers Division, Unit - Bhadrachalam, Tribeni, Bollarum

and Kovai.

Agricultural Industry : Agri-Business, Leaf Tobacco, Gold Ribbon, Blue Ribbon,

Aqua Kings, Aqua Bay, Aqua Feast and Peninsular

Packaged Foods & Confectionery: Kitchens of India, Aashirvaad, Sunfeast, Mint-

O, Candyman, Bingo Snacks

Branded Apparel : Wills Lifestyle, John Players, Miss Players

Personal Care : Essenza Di Wills, Fiama Di Wills, Superia, Vivel Di Wills, Vivel

Greeting Card : Expressions

Information Technology : ITC Infotech

Safety Matches : iKno, Mangal Deep(Discontinued), VaxLit(Discontinued),

Delite(Discontinued) and Aim Brands acquired from Wimco (Swedish Matches)

Incense Sticks : Mangaldeep, Spriha

Stationery : Classmate, Paperkraft, Saathi

http://en.wikipedia.org/wiki/Stationery

http://en.wikipedia.org/w/index.php?title=Incense_Sticks&action=edit&redlink=1

http://en.wikipedia.org/wiki/Matchsticks

http://en.wikipedia.org/wiki/Information_technology_consulting

http://en.wikipedia.org/wiki/Greeting_Cards

http://en.wikipedia.org/wiki/Personal_Care

http://en.wikipedia.org/wiki/Garment_Industry

http://en.wikipedia.org/wiki/Aashirvaad

http://en.wikipedia.org/wiki/Confectionery

http://en.wikipedia.org/wiki/Food_processing

http://en.wikipedia.org/wiki/Agriculture

http://en.wikipedia.org/wiki/Pulp_and_paper_industry

http://en.wikipedia.org/wiki/Hospitality_industry

http://en.wikipedia.org/wiki/Gold_Flake

http://en.wikipedia.org/wiki/W._D._%26_H._O._Wills

http://en.wikipedia.org/wiki/Tobacco_industry


Products of ITC Ltd.

History of ITC Ltd

ITC was incorporated on August 24, 1910 under the name of 'Imperial Tobacco

Company of India Limited'. Its beginnings were humble. A leased office on Radha Bazar

Lane, Kolkata, was the centre of the Company's existence. The Company celebrated its

16th birthday on August 24, 1926, by purchasing the plot of land situated at 37,

Chowringhee, (now renamed J.L. Nehru Road) Kolkata, for the sum of Rs 310,000. This

decision of the Company was historic in more ways than one. It was to mark the

beginning of a long and eventful journey into India's future. The Company's headquarter

building, 'Virginia House', which came up on that plot of land two years later, would go

on to become one of Kolkata's most venerated landmarks. The Company's ownership

progressively Indianised, and the name of the Company was changed to I.T.C. Limited in

1974. In recognition of the Company's multi-business portfolio encompassing a wide


range of businesses - Cigarettes & Tobacco, Hotels, Information Technology, Packaging,

Paperboards & Specialty Papers, Agri-Exports, Foods, Lifestyle Retailing and Greeting

Gifting & Stationery - the full stops in the Company's name were removed effective

September 18, 2001. The Company now stands rechristened 'ITC Limited'.

Though the first six decades of the Company's existence were primarily devoted

to the growth and consolidation of the Cigarettes and Leaf Tobacco businesses, the

Seventies witnessed the beginnings of a corporate transformation that would usher in

momentous changes in the life of the Company.

ITC's Packaging & Printing Business was set up in 1925 as a strategic backward

integration for ITC's Cigarettes business. It is today India's most sophisticated packaging

house. In 1975 the Company launched its Hotels business with the acquisition of a hotel

in Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola'. The objective of

ITC's entry into the hotels business was rooted in the concept of creating value for the

nation.

In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam

Paperboards Limited, which today has become the market leader in India. Also in 1990,

leveraging its agri-sourcing competency, ITC set up the Agri Business Division for

export of agri-commodities. The Division is today one of India's largest exporters.

In 2000, ITC launched a line of high quality greeting cards under the brand name

'Expressions'. In 2002, the product range was enlarged with the introduction of Gift

wrappers, Autograph books and Slam books. In 2003, the company rolled out

'Classmate', a range of notebooks in the school stationery segment.

ITC also entered the Lifestyle Retailing business with the Wills Sport range of

international quality relaxed wears for men and women in 2000. The Wills Lifestyle

chain of exclusive stores later expanded its range to include Wills Classic formal wear

(2002) and Wills Clublife evening wear (2003). ITC also initiated a foray into the

popular segment with its men's wear brand, John Players, in 2002. In 2006, Wills

Lifestyle became title partner of the country's most premier fashion event - Wills

http://www.itcportal.com/the_itc_profile/ads/ad.htm


Lifestyle India Fashion Week. In 2007, the Company introduced 'Miss Players'- a

fashion brand in the popular segment for the young woman.

In 2000, ITC spun off its information technology business into a wholly owned

subsidiary, ITC InfoTech India Limited, to more aggressively pursue emerging

opportunities in this area. Today ITC InfoTech is one of India’s fastest growing global IT

and IT-enabled services companies and has established itself as a key player in offshore

outsourcing, providing outsourced IT solutions and services to leading global customers.

ITC's foray into the Foods business is an outstanding example of successfully

blending multiple internal competencies to create a new driver of business growth. It

began in August 2001 with the introduction of 'Kitchens of India' ready-to-eat Indian

gourmet dishes. In 2002, ITC entered the confectionery and staples segments with the

launch of the brands mint-o and Candyman confectionery and Aashirvaad atta (wheat

flour). 2003 witnessed the introduction of Sunfeast as the Company entered the biscuits

segment. ITC's entered the fast growing branded snacks category with Bingo! in 2007.

In 2002, ITC's philosophy of contributing to enhancing the competitiveness of the

entire value chain found yet another expression in the Safety Matches initiative. ITC now

markets popular safety matches brands like iKno, Mangaldeep, Aim, Aim Mega and Aim

Metro. ITC's foray into the marketing of Agarbattis (incense sticks) in 2003 marked the

manifestation of its partnership with the cottage sector.

ITC introduced Essenza Di Wills, an exclusive range of fine fragrances and bath

& body care products for men and women in July 2005. Inizio, the signature range under

Essenza Di Wills provides a comprehensive grooming regimen with distinct lines for men

(Inizio Homme) and women (Inizio Femme). Continuing with its tradition of bringing

world class products to Indian consumers the Company launched 'Fiama Di Wills', a

premium range of Shampoos, Shower Gels and Soaps in September, October and

December 2007 respectively. The Company also launched the 'Superia' range of Soaps

and Shampoos in the mass-market segment at select markets in October 2007 and Vivel

De Wills & Vivel range of soaps in February and Vivel range of shampoos in June 2008.


The Core CompetencyITC 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. Its highly popular

portfolio of brands includes Insignia, India Kings, Classic, Gold Flake, Silk Cut, Navy

Cut, Scissors, Capstan, Berkeley, Bristol and Flake. ITC's leadership is founded on its

core strategy of continuously enhancing product values through significant investments

in product design, manufacturing technology, quality, marketing and distribution. In just

the last 5 years, ITC has made capital investments of over Rs. 7 billion in its cigarettes

business. In ITC, one of the pioneers of market research in India, the consumer is still the

King. The Company continuously endeavors to provide its consumers products that are

benchmarked to international quality. This strategic focus on the consumer has paid ITC

handsome dividends. The most important of these is its enriched product mix, unmatched

by competition. ITC's share of filter cigarettes in the country is more than 70%.

In pursuit of international competitiveness, ITC has launched four brands -

Checkers, Hi-Val, Royale Classic and Gold Crest - in the extremely competitive US

market. Recently ITC has launched Royale Classic, Gold Cut and Scissors Filter Kings

cigarettes in the Middle East. The response to these brands has been encouraging. ITC's

cigarettes are produced in its state-of-the-art factories at Bangalore, Munger, Saharanpur

and Kolkata. These factories are known for their high levels of productivity and very

contemporary work environment.

ITC's FMCG businesses have one of the largest retail networks in the country,

consisting of over 2 million retailers. Its reach covers a wide range of the retail spectrum,

from premium outlets in the metros to small shops in the interiors of rural India.

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.

ITC's Cigarettes business has won numerous awards for its quality, environmental

management systems and product excellence.


Plant locationITC's cigarettes are produced in its state-of-the-art factories at-

Bangalore,

Monger,

Saharanpur

Kolkata

SISTER CONCERN COMPANIES

ITC Bhadrachalam Paperboards Ltd (56.00%)

BFIL Finance Ltd (99.99%)

BFIL Securities Ltd (99.98%)

MRR Trading & Investment Ltd (99.98%)

ITC Hotels Ltd (71.23%)

Srinivasa Resort Ltd (68%)

Bay Island Hotels Ltd (100%)

Greenace Holding Ltd (100%)

Fortune Park Hotel Ltd (99.99%)

Russell Credit Ltd (100%)

ITC Infotech Ltd (100%)

All India Tobacco Company Ltd (100%)

Elan Enterprises Ltd (100%)

ITC Global Holdings Pvt Ltd (100%)


COMPETITIONToday’s world is the world of Competition. In every field there is competition,

the success of any company or product is also largely depends upon competition. At

present scenario customer became aware about the market, he has full knowledge of the

market.

Competition provides a good quality of product to the customers. If a company

wants to survive itself he will have to face through-cut competition. In liquor industry

there is also competition. The increasing awareness and exposure to wines among

consumers and the removal of quantitative restrictions in 2001 has been a big boost to the

wine industry. It saw the emergence of new companies like GODFREY PHILLIPS

INDIA LIMITED, set up recently by two non-resident Indians (NRIs) from USA. The

consumption of liquor is growing at 20 per cent per annum. ‘CIGARETTE’

consumption in the country is slated to treble in the next ten years with the segment for

strong beer segment registering high growth. It boasts of a growth of 25 per cent per year.

The increasing awareness and exposure to wines among consumers and the removal of

quantitative restrictions in 2001 has been a big boost to the wine industry.

Pie chart showing the cigarette market shares in India among big players


Cigarette Brands

Name of the Product Company

01. India King Indian Tobacco Company02.Classic Indian Tobacco Company03.Gold Flakes Indian Tobacco Company04.Gold Flakes King Indian Tobacco Company05.Filter Indian Tobacco Company06.Wills Indian Tobacco Company07.Wills Light Indian Tobacco Company08.Wills King Indian Tobacco Company09.Wills Filter Indian Tobacco Company10.Wills Flakes Indian Tobacco Company11.Scissors Indian Tobacco Company12.Tiger Indian Tobacco Company13.Charms Filter King Wazir Sultan Tobacco14.Charms Wazir Sultan Tobacco15.Charminar Wazir Sultan Tobacco16.Charminar Special Wazir Sultan Tobacco17.Cavenders Godfrey Phillips India Ltd.18.Cavenders Filter Godfrey Phillips India Ltd.19.Cavenders Leaf Godfrey Phillips India Ltd.20.Uttam Brooke Bond India Ltd.21.Cavenders Magnum Godfrey Phillips India Ltd.22.Four Square King Godfrey Phillips India Ltd.23.Four Square Filter Godfrey Phillips India Ltd.24.Four Square Special Filter Godfrey Phillips India Ltd.25.Chesterfield Godfrey Phillips India Ltd.


The major Competitors of ITC Ltd. Products

1) Godfrey Philips India Ltd.

Godfrey Phillips is the second largest player in the Indian cigarette industry with an

annual turnover of Rs11bn. Incorporated in 1936; the company’s operations primarily

span the entire northern and western part of the country. The company established its

own manufacturing facilities in 1944. Godfrey Phillips has two major stakeholders, the

K.K. Modi Group and Philip Morris, and has over 15,000 shareholders. Headquartered in

Delhi, Godfrey Phillips today boasts of two manufacturing facilities - located in

Ghaziabad (near Delhi) and in Andheri (Mumbai), a state of the art R&D centre in

Mumbai and a tobacco-buying unit in Guntur (Andhra Pradesh). The Company today

manufactures some of the most popular cigarette brands in the country like Red and

White, Four Square, Jaisalmer, Cavenders, Tipper and Prince.

2) Gallaher Asia Limited

The Company's roots date back to 1857 when Tom Gallaher started a business

making Irish roll tobacco in Londonderry, Northern Ireland. In 1900, Queen Victoria

awarded Gallaher a Royal Warrant, and in 1928 it became a public company for the first

time. The first major acquisition took place in 1936 with Senior Service, then J.R.

Freeman in 1947. Benson & Hedges was acquired in 1955, and Gallaher launched Silk

Cut in 1963. The biggest change in the Company's history thus far happened in 1968

when American Tobacco Co. acquired Gallaher. American Tobacco Co. changed its

name in 1969 to American Brands, Inc. After Gallaher became a wholly owned

subsidiary of American Brands, Inc., it had several other diversified interests such as an

optical company (Dollond & Aitchison) a kitchenware company (Prestige) and a whisky

manufacturer (Whyte & Mackay). However, these were gradually disposed of, and

Gallaher, under the ownership of American Brands, Inc., refocused as a 100% tobacco

company in January 1996.


Gallaher demerged from American Brands in May 1997 and for the first time;

Gallaher's Group Plc shares were listed on both the London Stock Exchange and its

ADRs on the New York Stock Exchange. American Brands, Inc. also took the step of

changing its name, and is now known as Fortune Brands, Inc.

Since 1997, the Group has been transformed from a predominantly British and

Irish company into a leading international tobacco group, assisted by the acquisitions of

Liggett-Ducat and Austria Tabak. It is truly an international tobacco manufacturing and

wholesale company now, employing over 11,000 people, with manufacturing plants in

the UK, Russia, Kazakhstan, Austria, Sweden, Poland, Romania and Ukraine. Today,

Gallaher is the fifth largest international tobacco company in the world – and the fourth

biggest in Europe (based on billions of cigarettes sold each year)

BUSINESS

4 players - ITC, Godfrey Phillips, VST (also a BAT affiliate) and GTC dominate

the Indian cigarette industry. These four companies together control almost 99% of the

market. The cigarette industry faces competition mainly from the unorganized sector

'bidi' manufacturers, who are protected from high duties due to small-scale industry

status. Affected by steep duty hikes, the industry has been facing stagnant volume growth

in the last 2-3 years. Cigarette sales dropped by 4% in volume terms in FY00. The 2000-

01 budget also hiked excise on all types of cigarettes by 5%.

Based on the contribution form various products, ITC’s business can be divided

into three main divisions, namely cigarettes, tobacco and agri-products. ITC’s mainstay

of earnings is cigarettes (63%) and tobacco (3%). Agri-products business contributes 5%

of the total Rs80bn revenues, while other businesses of hotels, paper and packaging

collectively contribute the balance 5%.


Cigarettes/ Tobacco:

ITC has a broad-based presence in all the segments of the cigarette market.

Scissors is the brand leader in volumes and Wills Gold Flake family is the single largest

consumer product trademark in India. Of the total produce more than 70% is in the filter

cigarette category while rest is in non-filter category. The company has also shifted 45%

of its cigarette sales in form of hinged lid packaging. During FY00 the company extended

its Gold Flake brand to other tastes and flavours. Two of its brands namely, Checkers and

Hi-Val sell more than 100mn sticks per month in USA. Cigarette volumes declined by

2.4% yoy in FY00. Average per unit realizations however improved during the year by

9% yoy to Rs1049 per 1000 sticks.

Tobacco:

ITC’s India Leaf Tobacco Division (ILTD) procures tobacco directly from

farmers and also through auctions/ traders. ILTD works with the Tobacco Board to help

farmers in developmental activities. ILTD also supplies tobacco to an associate company

VST and other cigarette companies, besides exporting. ITC is one of the leading

exporters of leaf tobacco. Exports are mainly to Latin America, South East Asia, and

Western Europe and also to CIS markets. The division's performance has got affected due

to oversupply situation in the global market. Moreover unauthorized production of

tobacco has also increased leading to excess availability. Tobacco board has recently

declared a crop holiday in the state for tobacco. The Andhra Pradesh plant of the

company at Chirala was awarded Golden Peacock award for environmental management

during FY00. The plant has also been awarded social accountability Standard

certification from Bureau Veritas Quality International. The company produced 24,026

tons of unmanufactured tobacco during FY00. It contributed 3% of the total revenue

during the year.


Hotels: ITC Limited entered the hotels business in 1975 with the acquisition of a hotel in

Chennai, which was Hotel Chola. Since then the ITC-Welcomgroup brand has become

synonymous with Indian hospitality. Today amongst India's finest and fastest growing

hotel chains, it consists of over 90 hotels across 77 destinations in India. These include

super deluxe and five star hotels, heritage palaces, havelis and resorts and full service

budget hotels. The 442-room ITC Maurya at New Delhi is not only amongst the leading

business hotel in the country, but is in a class by itself. Bukhara at ITC Maurya in New

Delhi has been declared the Best Indian Restaurant in the world by 'The Restaurant

Magazine', UK. It has also been voted the Best Restaurant in Asia and was the only

Indian restaurant to feature in the list of 50 Best Restaurants in the World from 2002 to

2007. The 386-room ITC Maratha, opened in February 2001, is perceived as amongst the

leading and the finest properties in Mumbai, designed in a grandiose classic style, the

hotel pays tribute to Mumbai's colonial roots and the spirit of the Great Marathas.

ITC has been investing very heavily in its hospitality business. During FY00 the

company acquired land from its subsidiary, ITC hotels and started construction of Super

Deluxe hotel. The construction work is till in progress. The company's Maurya Sheraton

hotel has received ISO14001 certification during the year.

INFORMATION TECHNOLOGY

ITC Infotech, a global IT services company, is today one of India’s fastest

growing IT services and solutions providers. Based out of a picturesque 35-acres campus

in the heart of Bangluru city, ITC Infotech, through wholly owned subsidiaries in the UK

and US, provides outsourced IT services and solutions to leading global customers. ITC

Infotech offers IT services and solutions across five key industry verticals: Banking,

Financial Services & Insurance (BFSI), Consumer Packaged Goods (CPG) & Retail,

Manufacturing & Engineering Services, Travel, Hospitality & Transportation and Media

& Entertainment. ITC Infotech conforms to the highest standards in international process

quality, with ISO 27001, ISO 9001, SEI CMM Level 5 and BS 7799 accreditations.


These reflect the company’s ongoing enterprise-wide focus to ensure that every

engagement, program and project delivers international quality consistently.

Industry Recognition

Premier analyst and market research agencies have recognized ITC Infotech’s

position as the preferred IT partner. It has been:

Featured amongst Top 100 Global Outsourcing Companies in the Leaders

category - International Association of Outsourcing Professionals

Ranked amongst Top 10 Specialty Application Development Providers - Global

Services, CMP Media.

Named amongst major Indian global service providers for PLM implementation

and engineering services - ARC Advisory

Listed as a leading Player in CRM & CPG Space – Forrester

Mentioned amongst Top Offshore SAP Service Providers – Forrester

Foods

ITC made its entry into the branded & packaged Foods business in August 2001

with the launch of the Kitchens of India brand. A more broad-based entry has been made

since June 2002 with brand launches in the Confectionery, Staples and Snack Foods

segments. The packaged foods business is an ideal avenue to leverage ITC's proven

strengths in the areas of hospitality and branded cuisine, contemporary packaging and

sourcing of agricultural commodities.

All products of ITC's Foods business available in the market today have been

crafted based on consumer insights developed through extensive market research. Apart

from the current portfolio of products, several new and innovative products are under

development in ITC's state-of-the-art Product Development facility located at Bengaluru.

The Foods business is today represented in 4 categories in the market. These are:

Ready To Eat Foods

http://www.kitchensofindia.com/


Staples

Confectionery

Snack Foods

In order to assure consumers of the highest standards of food safety and hygiene,

ITC is engaged in assisting outsourced manufacturers in implementing world-class

hygiene standards through HACCP certification. The unwavering commitment to

internationally benchmarked quality standards enabled ITC to rapidly gain market

standing in all its 6 brands:

Kitchens of India

Aashirvaad

Sunfeast

Mint-o

Candyman

Bingo!

Lifestyle Retailing

ITC’s Lifestyle Retailing Business Division has established a nationwide retailing

presence through its Wills Lifestyle chain of exclusive specialty stores. Wills Lifestyle, as

a fashion destination, offers a tempting choice of Wills Classic work wear, Wills Sport

relaxed wear, Wills Clublife evening wear & fashion accessories, Essenza Di Wills – an

exclusive range of fine fragrances and bath & body care products for men and women

and Fiama Di Wills – a range of premium shampoos and shower gels. Wills Lifestyle has

also introduced Wills Signature designer wear, created by the leading fashion designers

of the country. With a distinctive presence across segments at the premium end, ITC has

also established John Players as a brand that offers a complete fashion wardrobe to the

youth of today. The launch of Miss Players with its range of trendy fashion wear for

young women has been a successful addition to the youthful offering. With its brands,

ITC is committed to build a dominant presence in the apparel market through a robust

portfolio of offerings.

http://www.itcportal.com/foods/foods_bingo.html

http://www.itcportal.com/foods/foods_mint-o.html

http://www.itcportal.com/foods/foods_mint-o.html

http://www.itcportal.com/foods/foods_sunfeast.html

http://www.itcportal.com/foods/foods_aashirvaad.html

http://www.itcportal.com/foods/foods_kitchens.html


Wills Lifestyle has been established as a chain of exclusive specialty stores

providing the Indian consumer a truly 'International Shopping Experience' through world-

class ambience, customer facilitation and clearly differentiated product presentation.

Wills Lifestyle complements the range of premium apparel with a tempting choice of

fashion accessories.

Wills Sport, fashionable relaxed wear for men and women.

Wills Classic work wear is positioned as the brand for new age leaders, who are

changing the rules of business and encouraging a dynamic culture of enterprise,

innovation and teamwork.

ITC forayed into the youth fashion segment with the launch of John Players in

December 2002 and is committed to be the No. 1 fashion brand for the youth. John

Players offers complete and vibrant wardrobes of Casual wear, Party wear, Work wears,

Denims, Outer wear and Suits & Jackets, incorporating the most contemporary trends, an

exciting mix of colors, playful styling, trendy textures and comfortable fits.

The launch of Miss Players has added to ITC’s youthful portfolio. The range which spans

trendy tops, funky denims, smart trousers and stylish dresses along with a whole range of

cool fashion accessories has been designed keeping in mind the tastes of the young Indian

woman.

Education and stationary products

ITC made its entry into the stationery business in 2002 with its premium range of

notebooks, followed in the year 2003 with the more popular range to augment its

offering.

ITC's stationary Brands are marketed as "Classmate" and "Paperkraft", with

Classmate addressing the needs of school goers and Paperkraft targeted towards college

students and executives. The Paperkraft range consists of premium stationery with a

wide variety for executives to choose from. The assortment consists of notepads & multi

subject notebooks in hard, soft covers & multiple binding formats including spirals, wiros

etc.


Classmate - India's largest National brand, reaching 50,000 outlets across the

country, has over 300 variants in its range which comprises notebooks, long books,

practical books, drawing books, scrap books, reminder pads etc. A recent addition to the

Classmate portfolio has been the Classmate Fun N Learn range of children books

targeting pre school learners.

The Business has launched Geometry Boxes for school students branded as

‘Classmate Invento’. The Mathematical Instruments Box comprises world-class

precision compass, high quality plastic instruments coupled with interesting trivia and

useful information.

ITC also markets a range of Greeting Cards and Gifting products under the Brand

"Expressions". The gifting portfolio includes autograph books, slam books, party

invitations, letter pads, gift-wraps, pop up books & mini books. In recognition of its

quality products & processes, the business has been awarded with ISO 9001:2000

Safety matches

ITC’s range of Safety matches include popular brands like i Kno, Mangaldeep,

Aim, Aim Mega and Aim Metro. With differentiated product features and innovative

value additions, these brands effectively address the needs of different consumer

segments. The Aim brand is the largest selling brand of Safety Matches in India. ITC also

exports regular and premium safety matches brands to markets such as Middle East,

Africa and the USA. The successful acquisition of Wimco Ltd. by Russell Credit Ltd.

Agarbattis (incense sticks)

The Company commenced marketing Agarbattis (incense sticks) sourced from

small-scale and cottage units in 2003. This business leverages the core strengths of ITC

in nation-wide distribution and marketing, brand building, supply chain management,

manufacture of high quality paperboards and the creation of innovative packaging

solutions to offer Indian consumers high quality Agarbattis. Mangaldeep Agarbattis are


available in a wide range of fragrances like Rose, Jasmine, Bouquet, Sandalwood,

Madhur, Durbar, Tarangini, Anushri, Ananth and Mogra.

Mangaldeep Yantra is a special offering from ITC and this specially created

fragrance evokes the ambience of a temple. The premium ranges from ITC; Mangaldeep

Spriha has two offerings, Pratiti and Sarvatra and are specially hand rolled by Cottage

Industries.

Seven out of 10 Mangaldeep Agarbatti manufacturing units are ISO 9000

certified.

Packaging and printing :

The company has leadership position in cigarette and liquor packaging The

company's much-talked about acquisition of Rollatainers didn't materialize and it was

called off. The division attained Level-6 in the international Quality rating system from

an international accreditation agency. It also got World Star award for excellence in

packaging. The exports by the division increased by 20% yoy following technology

upgradation at its manufacturing plants.

Specialty paper:

ITC operates a 33000 tpa plant at Tribeni, West Bengal, to manufacture specialty

papers, mainly with the imported wood pulp. Besides captive consumption, ITC also

exports cigarette-packaging paper to BAT subsidiaries in Africa and Central Asia.

Margins in the business have been adversely affected with stiff price competition from

domestic as well as imported products post reduction in import duty. ITC has been

scouting for an international joint venture partner for upgrading technology in this

business. The division received certification under ISO9001 quality standards and Gold

Star award from Royal Society for Prevention of Accidents UK. The specialty paper

division contributed Rs1bn to the total revenues during FY00 compared to Rs880.5mn in

FY99. The company produced 16355 tons of specialty paper during the year.

International business division, which is involved in handling exports from the company,


did exports of Rs3.2bn during FY00. The division exports agri-products to various

countries across the globe. Recently the division has decided to set up e-choupals for

shrimps and coffee. These e-choupals would provide up-to-date information regarding

local and global weather and scientific practices followed at different places to farmers.

The division has plans of setting up 300 such choupals across the country in current year.

ITC also has a infotech division, which is being realigned to focus on e-commerce

software solutions. The company plans to hive off its Infotech division into a separate

subsidiary.

Earnings sensitivity factors:

Excise duty changes on cigarettes

New product launches: Rothmans’ international brand portfolio may be

launched through ITC, as Rothmans has withdrawn proposal for 100% subsidiary

post global merger with BAT.

Leaf tobacco crop depends on weather conditions and has significant impact on

raw material costs.

Export markets reduce dependence on domestic market. Exports are also affected

by the domestic crop production.


Paper/ paperboard margins depend on international paper and wood pulp prices as

well as changes in custom duty rates.

Excise duty exemption in northeastern states.

Growing gray market for foreign branded cigarettes

Success in new business ventures

Returns from investments in hotel business

Financial Review of ITC Ltd

ITC Ltd posted a 16 per cent rise in gross income at Rs 6009 crore in the fourth

quarter (Q4) of fiscal 2009-10 (against Rs 5279 crore in Q4 of fiscal 2008-09) with post-

tax profit up 14 per cent at Rs. 736 crore (from Rs 650 crore) after adjusting for income

tax refunds. For the full year 2007-08, ITC gross turnover rose to Rs.21966 crore (from

Rs 19636 crore in 2006-07) while profit before tax rose to Rs 4571 crore (from Rs 3926

crore) and profit after tax for 2007-08 to Rs 3120 crore (from Rs 2699 crore). Cigarettes,

reeling under a higher taxation regime, reported Q4 net sales of Rs 3583 crore (Rs3294

crore in Q4 of 2006-07) with segment gross profit at Rs 870 crore for Q4 (against Rs 741

crore).For the full year 2007-08, gross sales from the cigarettes business was Rs13825

crore (from Rs 12833 crore in 2006-07) while the segment gross profit from the cigarettes

business was Rs 3634 crore (from Rs 3172 crore in 2006-07).


ITC - Financial Snapshot

(Rs. 1 crore = Rs. 10 million)

Segment Revenues 2007-2008

1. Segment RevenueYear ended 31.03.2011 (Audited)

a) FMCG - Cigarettes - Gross13825.60

- Net 6634.98- Others – Gross

2511.05- Net 2509.57

Total FMCG – Gross16336.65

- Net 9144.55b) Hotels – Gross

1100.20- Net 1012.10

c) Agri Business – Gross3868.44

- Net3868.44

d) Paperboards, Paper & Packaging - Gross 2364.33

- Net2157.94

Total – Gross23669.62

- Net16183.03

Less : Inter-segment revenue - Gross 2313.68

- Net2235.50

Gross sales / Income from operations21355.94

Net sales / Income from operations13947.53

2. Segment Results


a) FMCG – Cigarettes3634.04

- Others(263.52)

Total FMCG3370.52

b) Hotels410.77

c) Agri Business129.19

d) Paperboards, Paper & Packaging453.14

Total4363.62

Profit Before Tax4571.77

Provision for Taxation1451.67

Profit After Tax3120.10

3. Capital Employeda) FMCG - Cigarettes

2314.64 - Others

1826.66Total FMCG

4141.30b) Hotels

1865.32c) Agri Business

1468.97d) Paperboards, Paper & Packaging 3264.18Total Segment Capital Employed

10739.77

Operating results of ITC Ltd.

Year Ending 31st March 2005 2008 2011Gross Income 8069.37 13585.39 21966.84Excise Duties etc. 4133.89 5710.13 7408.41


Net Income 3935.48 7875.26 14558.43Cost of Sales 2475.45 4846.89 9543.59PBDIT 1460.03 4846.89 5014.84PBDT 1347.48 2985.94 5010.23PBIT 1341.50 2715.50 4576.38PBT 1228.95 2673.07 4571.77Tax 436.51 836.00 1451.67Profit after tax(Before exceptional items)

792.44 1837.07 3120.10

Exceptional Items (Net Of Tax)

- 354.33 -

Profit after taxation 792.44 2191.40 3120.10Dividends 224.55 881.70 1543.18Retained Profits 567.89 1309.70 1576.92

Gross incomes Comparison


Comparison between non-cigarette of different year of ITC Ltd.

Profit trends of ITC Ltd.


MAJOR FACTORS INFLUNCING BUYING BEHAVIOUR

CULTURAL

Culture

Subculture

Social class

Social

Reference group

Family

Roles and status

PERSONAL

Age

Occupation

Economic

Lifestyle

Personality


PHYCHOLOGICAL

Motivation

Perception

Learning

Beliefs

Buyer

OTHER FACTOROTHER FACTOR

ECONOMIC FACTORECONOMIC FACTOR

The economic factor determines the demand and supply of the brands. it can be said that people from any income group can readily have an access to the product and this determines a good for it.

CULTURAL FACTOR

India market has opened up for long and the effect of liberalization can be seen in the culture of the country too. People are opening up to new national product as which were once not even spelled of in the country. Moreover the desi product with an international name such as slice is very of a know substance in the country and is highly liked.

PERSONAL FACTOR

Customers are highly drive to a product by virtue of personal reasons. look for is a ‘construction’ this way it has been quite a successful product.

PSYCHOLOGICAL FACTOR


The slice seals off due to same Psychological factor. People construction it sometimes feel that it’s different from the rest and distinct among the crowd. This helps the craze grow for the brand and its products


RESEARCH METHODOLOGY


RESEARCH METHODOLOGY

Marketing Research is the backbone of marketing. The objective of my research

is to study the consumer perception about Cigarette product of ITC in Indian consumer

durable industry. The nature of this research is exploratory research. Its goal to shed light

on the real nature of the problem and to suggest possible selection and to suggest possible

selection and it involves number of steps.

Methodology The research is exploratory in nature and the approach was very flexible and

judgmental in order to provide opportunity for considering different aspects of the

problem. The enabled the respondents to raise issues and questions which are considered

to our projects.

Exploratory researchIn the case of exploratory research, the focus is on the discovery of ideas.

Objective of the study is to generate new ideas; respondents have been given sufficient

freedom to express themselves. We as the interviewer allowed the participants to discuss

the issue fully when we feel that some important aspects in the discussion are likely to be

left out by the respondent.

Define the Problem & Research Objective:Management must define a problem in broader way. Because it is said that “that

the well defined problem is half solved” and the objective of this research is to study the

consumer perception about ITC Cigarette products in Indian consumer durable industry.


Developing the Research PlanThe second stage of marketing research is to develop the most efficient plan for

gathering the needed information. Research plan development includes decision on the

data sources, Research Approaches, Research Instruments, and Sampling Plans &

Contact Methods.

Size and Selection of Sample

Sample size The size of sample as specified by the project guide is taken for the study. Large

samples give more reliable results than small sample. 500 respondents have been

interviewed for the data collection.

Selection of sample

There are two types of sampling methods:

Probability sampling method

Non-Probability sampling method

Probability sampling has been used in this study. Again this method is divided in

different parts.

Probability sampling method

Random Multi-stage Cluster Systemic

Sampling Sampling Sampling Sampling

Probability sampling has been project. Persons were interviewed, as they were

available at the time. This sampling is also called accidental sampling, as the respondents

in the sample are included merely because of their presence on the spot.


Sampling Plan:Primary data is collected from MEERUT and sub urban areas and respondents are

contacted directly along with the questionnaire.

Sample Procedure:To obtain representative samples. Simple random sampling has been used that

comes under the probability sampling.

Contact Method:

Once the sampling plan has been determined the marketing research must decide

how the subject should be contacted. Personal interviews are used for the collection of

the data.

Methods of data collectionIn this research study process, after the objective of study has been finalized, the

research problem and the design have been chalked out; the next important step is of Data

Collection. This applies for Primary Data as secondary data.

Primary dataPrimary data were collected by conducting personal interviews of retailers in

specified areas in the territory (questionnaire enclosed).

Survey of the outlets and personal interviews of consumers:

This method has been chosen because of the following reasons: -

a. Relevant information could be gathered.

b. Economical

c. Simple to be carried out

d. Conformance to respondents way to thinking

e. Time involved is also not much

This technique is preferred as it is: Economical More informative non-responses

are low Spontaneous relations-which are more realistic lots of supplementary

information, comes up.


Secondary dataSecondary data was collected from the websites of ITC Ltd, and through the press

release, and it was used in designing of the Questionnaire to analyse the market size of

cigarette brand of ITC Ltd. Figures are also collected from annual reports of ITC Ltd.

Magazines, Catalogue, Newspapers, Product Profile & Internet are also used to gather the

secondary data.

Research approachesPrimary data can be collected into five ways – observations, focus groups, survey,

behavioral data & experiments and here I have used survey research.

Survey ResearchSurveys are best suited for exploratory research ITC take survey & resurveyed to

learn about people’s, knowledge, beliefs, preference & satisfaction & to measure these

magnitudes in the general population.

TYPE OF RESEARCH:

The basic type of research are as follows:

1. Descriptive vs Analytical : Descriptive research includes surveys and

finding enquires of different kinds. The MAJOR purpose of descriptive

research is description of the state of affairs as it exits at present. In social

science and business research we quite often use the term ex post facto

research for descriptive research studies.


In analytical research on the other hand the researchers has to use facts or

information already available, and analyze to make a critical evaluation of the

material.

2. Applied vs Fundamental : Research can either be applied (or action) research

or fundamental (or basic or pure) research. Applied reseachaims at finding a

solution for an immediate problem facing a society or an industrial or business

organization , whereas fundamental research is mainly concerned with

generation and with the formulation of a theory. “Gathering knowledge for

knowledge sake is termed as a pure or basic research”.

3. Quantitative vs qualitative: Quantitative research is based on the

measurement of quantity or amount. It is applicable to phenomena that can be

expressed in terms of quantity.

Qualitative research on the other hand is concerned with qualitative

Phenomenon i.e., phenomenon related to or involving quality or kind.

4. Conceptual vs Empirical: Conceptual research is that related to some

abstract idea(s) or theory. It generally used by philosophers and thinkers to

develop new ideas new concept or to reinterpret existing ones.

On the other hand, empirical research relies on experience or observation alone often

without due to regard for system and theory.


RESEARCH PROCESS:

The various step provides a useful guide line regarding the research process:

1. Formulating the research problem.

2. Extensive literature survey.

3. Developing the hypothesis.

4. Preparing the research design.

5. Determining sample design.

6. Collecting of data.

7. Execution of project

8. Analysis of data.

9. Hypothesis of testing.

10.Generalization and interpretation

11. Preparation of the result, i.e., formal write up of conclusion reached.


CUSTOMER SATISFACTION

Satisfaction or dissatisfaction has been called an episodic measure in that it relates

to the quality of ITC Ltd. By contrast, cement quality is a global evaluation of all

past service experiences Research has found that customer, perceived evaluation

of cement quality has an impact on their level of satisfaction. Therefore, cement

quality evaluation is an antecedent to customer satisfaction

In case of quality failure the level of customer dissatisfaction will be determined

by how and where customers attribute the cause of the failure or poor quality. The

process of deciding the cause of a quality failure is called attribution theory.

Controllable and uncontrollable factors are situational in nature and will vary

from one consumer to another.

Managing Consumer Expectations (During Post Purchase Phase)

Managing consumer expectations does not after the service is performed. Service

firms have three strategies they can use after the service has been completed.

First, companies should communicate with customers immediately after the

service is completed to see if expectations were met.

Second, firms can use a follow-up program, such an evaluation survey sent to the

customer through the personal meting or phone call.

Third, companies should have a procedure for dealing with dissatisfied customers

that will assist in managing future expectations.


Upon the completion of a service, service personnel should talk with customers

about the service. If customer expectations have been met, the probability of the

customer coming back is greatly increased.

Some services are difficult for customers to evaluate immediately, so follow up

calls are an effective way to manage customer expectations.

My project forms the part of such services sells services.

If customer expectations have not been met, the service provided was below the

adequate serves level and outside of the tolerance zone.

Tools and Techniques used

Percentage To calculate the percentage of the respondent’s attitude for a particular question,

firstly I made the tally tables, to find number respondents having similar attitude, and

then I have divided that number of respondents with the total number of respondents and

multiplied it with hundred.

Chi Square The major objective of the study was to analyse the market share and customer

satisfaction. For this purpose I used chi square method taken null hypothesis, as

customers are not satisfied with the product. Null hypothesis is taken as the customers are

not satisfied with the product. Level of significance is 5%.

Research InstrumentMarketing Researcher has choice between two main research instruments in

collecting primary data Questionnaire & Mechanical device. Questionnaire has been as a

research instrument.


Questionnaire:Questionnaire contains 09 questions and presented to know about the views of

consumers. In preparing this questionnaire open ended as well as close-ended questions

have been used-

The questionnaire measure the responses using parameter like

Awareness of Brand/product.

Factors affecting while buying the cigarette

Consumption of cigarette of different brands.

Determinant factor for the consumption of cigarette of ITC Ltd.

Satisfaction level of consumer at different parameters.

Behavior of retailers while selling the product.

Analyzing the informationThe step in the marketing research process is to analyse the data and extract the

findings from the collected data.

Findings of the studyIn the later segment of the report findings are mentioned that are relevant to make

the major marketing decisions by the management.


SWOT ANALYSIS


SWOT ANALYSIS

Organization performs SWOT (Strength, Weakness, Opportunity, Threats)

analysis to identify and evaluate their competitive position.

STREGTHS:

The company has excellent distribution system.

The company has built a strong image among the customers.

The company experiences excellent Brand loyalty for its Products from the

customers.

The company has made its Packaging attractive which lures the customers and

consequently the products are favorite among the customers.

WEAKNESSES

Some products have high prices as compared to the other products OF Godfrey

Philips India Ltd. & Gallaher Group.

The company branches are not spread through out the region; as a result load of

the work at the regional offices are tremendous.

The company pays less attention towards advertisement as against its competitors.

The brewery of the company is old and not up to expectation of modern times.

OPPORTUNITIES

India has a vast potential market, which the company can get hold up.

The company can prove to be major threats for its competitor’s if it increases its

marketing efforts.

Tobacco market in India is at a growing stage.

ITC Ltd. should concentrate on the premium segment market.


THREATS

The major threat that company faces is from its competitors who are introducing

products with good features like soft filter and good quality tobacco in the

cigarette at lower cost backed by aggressive promotional schemes to attract buyer.

The arrival of the MNC is a major serious threat for the company.


DATA ANALYSIS


INTERPRETATION AND ANALYSIS OF DATA

The questionnaire was designed to find out the perception of consumer towards

Cigarette of ITC Ltd and to determine the market share of Cigarette of ITC Ltd. The

sample size taken for this questionnaire was 500. The area of survey included Meerut and

suburban area.

The analysis of each question of the questionnaire is as follows:


Q1. Do you smoke?

This question was asked to find out the percentage of smokers among the

surveyed population. The sample size for the survey was 500. Various responses from the

respondents are summarized in the following table:

Response No of respondents

Yes 165

No 335

Total 500

We can further analyze it with the help of a pie chart that is given on the next page.

So we can see from the above figure that among the population surveyed 149

respondents are smokers that constitute a major proportion (approx.33 %) of the

category and 67% of the respondents are non-smokers.


Q2. What do you smoke?

This question was asked so that consumers of cigarette can be sorted out from the

respondents. Responses are summarized in the following table

Product No. of Respondents

Cigarette 71

Bidi 68

Both 26

Total 165

We can also find the percentage number of cigarette consumers with the help of following pie chart.

No. of Respondents

Cigarette43%

Bidi41%

Both16%

Cigarette

Bidi

Both

41.21% of the respondents consume Bidi, 43.03% of the respondents consume

cigarette and 15.76% of the respondents consume both Cigarette and Bidi.


Q3. If cigarette then, what are most determinates factors affect you while buying

cigarette?

This question was asked to find out what are the

factors that affect a consumer buying behaviour while

purchasing a cigarette. Do they emphasize over the

brand/company, price, taste or anything else.

Features No. of Respondents

Brand/Company 43

Price 12

Taste 44

All of the above 12

Any other 8

Total 71


Out of 71 cigarette consumers 60.56 % said that they emphasize on the brand

while 61.97 % said that they prefer the taste and 16.90 % focus on the all given factors

and minority of 11.26 % go for the any other factor.

Factors Determining Purchase of Cigartte

43

12

44

128

05

101520253035404550

Names of Factors

No

. of R

esp

on

den

ts


Q4. Which brand do you prefer most among the following?

This question was asked to find out the percentage

of ITC cigarette consumers. The responses from the

various respondents are given in the following table:

Brands No. of Respondents

ITC 50

VTC 5

GST 4

Godfrey Phillips 7

Don’t know 5

Total 71

Out of 71 cigarette consumers 70 % prefer cigarette of ITC while 7 %, 6 %, 10 %

like the cigarette of VTC, GST and Godfrey Phillips respectively.


Q5. Which product of ITC you like most?

This question was asked to find out the most popular product of ITC Ltd. Four

different options were given, Gold Flake, Wills, Classic and India Kings. The responses

of the respondents are given in the following table.

Brand No. of Respondents

Gold Flake 19

Wills 15

Classic 7

India Kings 6

Any Other 3

The graphical representation of the above table will give a clearer view about the

“Brand Preference” among ITC Cigarette consumers.

Brand Preference among ITC Cigarette Consumers

19

15

7

63

Gold Flake

Wills

Classic

India Kings

Any Other

From the above pie chart it is clear that Gold Flake and Wills are the most popular

brand of ITC Ltd. with a consumer base of 68% of the ITC cigarette consumers.14% of


the respondents prefers Classic and 12% of the respondents prefer India Kings. While 6%

of the respondents prefer any other brand of ITC Ltd.


Q6. Please rate ITC’s product on the following parameters: -

This question was asked to find out the rating of the ITC cigarette on the given

parameters and to find out that which factors satisfies the consumers most.

Features

No. Of Respondents

Very

Good

Good Average Below

Average

Poor

Quality 13 19 12 4 2

Packaging 14 23 9 4 0

Various Varieties of product 15 17 4 9 5

Price 11 12 14 12 1

Availability in retail store 8 22 11 6 3 Awareness about the Product 7 15 8 16 4

Taste 10 22 9 6 3

To analyze the above table Likert scale technique has been used. In this we will

give points to various scales, which have been used to rate the different statements. The

points are given are as follows: -

Very Good : +2

Good : +1

Average : 0

Below Average : -1

Poor : -2

After this we multiply it with the number of respondents for a particular statement

in each scale to get the score for that particular statement. Like this score for each

statement can be obtained.


Thus the score for a particular statement will range from +100 to –100 with the

average score being 0. if the score falls-

Between –100 to –75 it will be considered as Poor.

Between –75 to –25 it will be considered as Below Average.

Between –25 to +25 it will be considered as Average.

Between +25 to +75 it will be considered as Good.

Between +75 to +100 it will be considered as Very Good.

By using all these things the analysis of all the statements in the question is as

follows: -

Quality of the product+37 points

The score of this statement falls between +25 to +75 that means it is good.

According to the respondents Quality of the product is good.

Packaging of the product: + 47 points


According to the respondents Packaging of the product is good.

Various Varieties of product: +28


According to the respondents Various Varieties of product is good.

Price of the product: +20

The score of this statement falls between –25 to +25 that means it is average.

However it has positive score but the price of the product is average.


Availability in retail store: +26

The score of this statement falls between +25 to +75 that means it is Good.

Awareness about the Product: +5

The score of this statement falls between –25 to +25 that mean it is average.

According to the respondents it is considered that Awareness about the Product is just

satisfactory.

Taste of the product: +30

The score of this statement fall between +25 to +75 that means it is good.

According to the respondents Taste of the product can be considered as Good.

All the factors given in this question can analyze the various features of ITC

products. By the analysis it is concluded that Quality of the ITC cigarette has been given

+37 points which indicates that consumers are satisfied with the quality of ITC cigarette,

packaging of the ITC cigarette is given +47 points that indicates that packaging is also

good. Various varieties of the products are given +28 points that are a good performance.

It shows consumers are quite happy with the varieties provided by ITC. Pricing of the

products is given +20 points that indicate average pricing of ITC cigarettes. Availability

of ITC cigarettes in retail stores is given 26 points that shows that retailing of ITC

products is good and consumers get their favorite brands from retailers. Awareness about

the products is not satisfactory and it has been given +5 points. Taste of the ITC products

is given +30 points and it shows consumer satisfaction towards ITC cigarettes. For the

further analysis of this question we can draw the column charts. The representation of

charts is as follows:


QUALITYWISE PERFORMANCE OF ITC CIGARETTE

13

19

12

42

02468

101214161820

Very Good Good Average BelowAverage

Poor

Rating

No.

of

Res

pond

ents

From the above column chart it is clear that out of 50 respondents 32 (64%) rated

the quality of ITC Cigarettes as either “very good or good”. A minority of respondents 6

(12%) is of the view that ITC cigarettes are of “below average or of poor quality.” Rest of

12 (24%) respondents think the quality of ITC Cigarette as “average”

Packaging Base performance of ITC Cigarette

14

23

9

4

00

5

10

15

20

25


Poor

Rating

No.

of

Res

pond

ents


From the above column chart it is clear that out of 50 respondents 37 (74%) rated

the packaging of ITC Cigarettes as either “very good or good”. A minority of respondents

4 (8%) is of the view that packaging of ITC cigarettes is “below average or of poor.” Rest

of 9 (18%) respondents think the packaging of ITC Cigarette as “average”

Variety Base Performance of ITC Cigarette

1517

4

9

5

02468

1012141618


Poor

Rating

No.

of

Res

pond

ents

From the above column chart it is clear that out of 50 respondents 32 (64%)

thinks that ITC has presented sufficient varieties of the cigarette and they rated the

variety dimension of ITC Cigarettes as either “very good or good”. A minority of

respondents 14 (28%) is of the view that ITC has not presented sufficient varieties of the

cigarette and they rated the variety dimension of ITC cigarettes is “below average or of

poor.” Rest of 4 (8%) respondents think the variety of ITC Cigarettes as “average”


Price Base Performance Of ITC Cigarette

1112

1412

1

02468

10121416


Poor

Rating

No.

of

Res

pond

ents

11(22%) of the respondents said price of ITC cigarettes is very good, 12(24%)

said it is good, 14(28%) said average, 12(24%) said it’s below average and only 1(2%)

respondent said it is poor. If I consider the respondents who gave the rating average,

below average and poor, they are not satisfied with the prices and the respondents who

have given rating very good and good considered as satisfied with it. Now I can say that

23(46%) consumers are satisfied and 27(54%) are not satisfied. Overall it can be

considered that price of ITC cigarettes are acceptable.


Availability Base Performance of ITC Cigarette

8

22

11

63

0

5

10

15

20

25


Poor

Rating

No.

of

Res

pond

ents

8(16%) of the respondents said availability of ITC cigarettes is very good,

22(44%) said it is good, 11(22%) said average, 6(12%) said it’s below average and only

3(6%) respondent said it is poor. If I consider the respondents who gave the rating

average, below average and poor, they are not satisfied with the availability and the

respondents who have given rating very good and good considered as satisfied with it.

We can say that 30(60%) consumers are satisfied and 20(40%) are not satisfied. Overall

it can be considered that ITC cigarettes are easily available.


Awareness Base Performance of ITC Cigarette

7

15

8

16

4

02468

1012141618


Poor

Rating

No.

of

Res

pond

ents

From the above column chart it is clear that out of 50 respondents 22 (44%) are

well aware about the ITC cigarette and they rated the awareness of ITC is either “very

good or good”. 20 (40%) of respondents is of the view that awareness of ITC cigarette is

“below average or of poor.” Rest of 8(16%) respondents rated the awareness of ITC

Cigarettes as “average”

Taste Base Performance Of ITC Cigarette

10

22

96

3

0

5

10

15

20

25


Poor

Rating

No.

of

Res

pond

ents


From the above column chart it is clear that out of 50 respondents 32 (64%)

thinks that the taste of ITC cigarette is either “very good or good”. A minority of

respondents 9 (18%) is of the view that taste of ITC cigarette is “below average or of

poor.” Rest of respondents rated the variety of ITC Cigarettes as “average”

The next fact to analyze is “Whether the consumers are satisfied with ITC

Cigarettes or not.”

We can clear above question with the help of Chi Square. For the Chi Square we

can take null hypothesis, as consumers are not satisfied with the ITC Products.

Features No. of Respondents

Satisfied Dissatisfied Total

Quality 32 18 50

Packaging 37 13 50

Various Varieties of product 32 18 50

Price 23 27 50

Availability in retail store 30 20 50

Awareness about the Product 22 28 50

Taste of the product 32 18 50

Total 208 142 350

For satisfied consumers

E (32)=50*208/350 =29.71

The expected value for all satisfied consumers will be 29.71.


For dissatisfied consumers

E (18)=50*142/350 =20.29

Similarly expected value will be 20.29 for all the dissatisfied consumers. Computation of 2

Observed

Frequency

Expected

Frequency O-E (O-E) 2 (O-E) 2/E

32 29.71 2.29 5.2441 0.176510

37 29.71 7.29 53.1441 1.788761

32 29.71 2.29 5.2441 0.176510

23 29.71 -6.71 45.0241 1.515453

30 29.71 0.29 0.0841 0.002831

22 29.71 -7.71 59.4441 2.000811

32 29.71 2.29 5.2441 0.176510

18 20.29 -2.29 5.2441 0.258457

13 20.29 -7.29 53.1441 2.619226

18 20.29 -2.29 5.2441 0.258457

27 20.29 6.71 45.0241 2.219029

20 20.29 -0.29 0.0841 0.004145

28 20.29 7.71 59.4441 2.929724

18 20.29 -2.29 5.2441 0.258457

Total 14.208370


2 = [(O-E) 2] E

= 14.208370

Degree of freedom = (7-1)*(2-1)=6*1=6

At 5% level of significance 2 =14.067 We get above value from the chi square distribution table.

Decision rule

Since calculated value of 2 is greater than tabulated value, it is significant at 5%

level of significance. Hence the null hypothesis is rejected and it is concluded that

consumers are satisfied with the products.

Q7. Are you satisfied with ITC’s cigarette?

In response to the above question the following numbers were found out of 50

respondents are: -

Response No of respondents

Yes 43

No 5

Indifferent 2

Total 50

Out of total 5o consumers 43 respondents said they are satisfied with ITC

cigarettes while 5 respondents said they are not satisfied with ITC cigarettes and 2 the

respondents were indifferent.


Q8. Does the retailer force you to purchase other brands in the absence of demanded brands?

In response to the above question the following responses were found out of 50

respondents: -

Out of 50 consumers 7 said that retailer forces them to purchase other brands in

the absence of demanded brands and 43 said that retailer never forces them to purchase

any other brands in the absence of demanded brands.


Q9. Do you want to give any suggestion to ITC for their product? If yes, then please

Suggestions from the consumers are included in the recommendation section of the

report.


FINDINGS


FINDINGS

From the analysis and interpretation of data we can find the following facts from the

allocated are for the study: -

Only 33% of the total respondents smoke in the allocated area of the study.

43 % of the smokers consume cigarette and 41% consume Bidi, we can say that

the Bidi producers are the main competitors for the cigarette producers in the

Indian cigarette market.

A majority of the cigarette consumers agreed to the fact that most determent

factor that affects them while buying cigarette is taste (62%) and brand (60%) and

cigarette of ITC has a good taste.

Analysis of the questionnaire suggests that ITC has a market share of 70.42 % in

the cigarette market, while the VTC, GST and Godfrey Phillips have captured

7.04 %, 5.63 %, and 9.85 % market respectively while 7 % respondents don’t

know about the company name.

ITC has the market leadership.

Gold Flake and Wills are the most popular brand of ITC Ltd. with a consumer

base of 68% of the ITC cigarette consumers.

Powerful brands across segments and leadership in all segments - geographic &

price and exciting long-term growth potential.

Quality of the cigarette, packaging and varieties is good while consumers say that

the price is average. Availability and taste of the ITC cigarette is said to be good

by the respondents.

Future growth depends on relative prices of product and growth in per capita

income and moderation in taxes.

On the basis of Chi Square we can say that the consumers of ITC product are

satisfied.


86 % of the ITC cigarette consumers are satisfied with the product when 10%

found to be unsatisfied and 4% are indifferent.

14% said that the retailer forces them to purchase another brand in the absence of

demanded brand.


RECOMMENDATIONS


RECOMMENDATIONS

The following are Recommendations for the company to improve itself which the study

has been shown:-

ITC should focus on the sales promotion as competitors are offering lower prices

for the similar type of the products.

ITC should revise the pricing of the cigarettes.

The behavioral analysis of the retailers and customers shows that most of the

customers give the preference to the price of a product, then performance of the

products at most of the times. There are very less people who prefer both the

options. So it should be more and more price oriented.

We can see that the most important factor, which is considered by the retailers to

keep the products of a company, is profit margin. After that it is followed by

brand/company, price of product, various schemes and performance respectively.

Retailers prefer that product, which gives more profit margins so it should

increase profit margin for retailers.

ITC should focus on surrogate advertising as awareness of ITC’s cigarettes is less

among the customers, as direct advertising of tobacco products is banned as per

Indian government rules.

Incentive schemes for Retailers should be started by ITC Ltd to increase the sale,

if they loose the confidence of the Retailers, the company can loose the market

share.

The company Representative should regularly visit to the Retailers to solve their

problems, and to tell them about new products and schemes. This would help

them to know about the consumer behaviour, their taste and preferences.


Schemes provided by the company are also an important factor for the retailers.

Schemes distribution of the Redistribution Stockiest is not so much accepted by

the retailers, so it should provide proper scheme distribution to keep them happy.

The company should also offer some Gifts and scratch coupon schemes for the

consumers.


CONCLUSION


CONCLUSION

The study that has undertaken concludes that the product of ITC is delightful

product for the consumers. Thus from the analysis and interpretation of data we can

conclude the following things. The sale of ITC is good but we should say it satisfactory,

as it is the first entrant in the Indian market.

Conclusion is as follows: -

The awareness of ITC’s cigarettes is less to the consumer due to advertisement

banned.

Taste of Cigarette is the factor that attracts the consumers most while they go for

smoking.

Extensive distribution network

o Over 900 wholesale dealers serving more than 1 million retail outlets

Consumers prefer filtered cigarette to the non-filtered.

Gold Flake & Wills are more preferred by the consumers.

No attractive scheme is offered by the ITC to the retailers and consumers.


LIMITATIONS


LIMITATIONS

In spite of making all my efforts to make the dissertation a perfect one there are

certain limitations in the study, which are felt while conducting the survey. As the study

is an exploratory one designed to find new hypothesis, readers are not suggested to

conclude the result. The study suffers from the basic limitations of the possibilities of

difference between what is recorded and what is true.

In addition, some limitation regarding of the study are mentioned.

The sample size is very less and therefore the test that could be done on large

population cannot be done.

The findings of the survey are based on the subjective opinion of the respondents

and there is no way of assessing the truth of the statements.

There is some respondent’s bias that cannot be removed.

Absence of seriousness of the respondent while filling the questionnaire.

Even after assuring the retailers that the survey was purely for academic purpose,

they were reluctant to share information.

No competitors are interviewed and hence there is a problem of comparing the

brand with others thoroughly. Besides this no help has been taken from any

secondary data of this type in this regard

Some retailers were not friendly and gave distorted information.

Certain questions, which are not properly, respond by the respondent.


And like any other research the limitation of personal bias of respondents

limit the scope of the study.


BIBLIOGRAPHY


BIBLIOGRAPHY

Books:

Kotler, Philip, Marketing Management: Pearson Publication, Kotler Armstrong, Principles of Marketing: Pearson Education,

Beri G.C., Marketing Research: Tata McGraw Hill,

Bhattacharya D.K., Research Methodology: Excel Books,

Gupta S.C., Fundamental of Statistics: Himalaya Publishing House

B.C. Marketing Research

Chabbra T.N. Marketing Management

Magazines:

Business WorldBusiness TodayTobacco or health: A global status report. WHO publication

Websites:

www.itcportal.comwww.itcltd.comwww.itcwelcomgroup.in www.welcomeheritagehotels.comwww.fortunehotels.com

http://www.welcomeheritagehotels.com/

http://www.itcltd.com/

http://www.itcportal.com/


QUESTIONNAIRE


QUESTIONNAIRE

1. Do you smoke?

Yes No

2. What do you smoke?

Bidi Cigarette Both

3. If cigarette then, what are most determinates factors affect you while buying

cigarette?

Brand / Company

Price of Product

Taste

All of the above

Any other

4. Which brand do you prefer most among the following

ITC VST GTC Godfrey Phillips

Don’t know Any other (please specify)……………..

5. Which product of ITC you like most?

Gold Flake Wills Classic

India Kings Other please specify………….

6. Please rate ITC’s product on the following parameters: -

Very good Good Average Below Poor Average

I) Quality


II) Packaging

III) Various Varieties of product

IV) Price

V) Availability in retail store

VI) Awareness about the Product

VII) Taste

7. Are you satisfied with ITC’s cigarette?

Yes No Indifferent

8. Does the retailer force you to purchase other brands in the absence of demanded brands?

Yes No

9. Do you want to give any suggestion to ITC for their product?If yes then Please. ……………

Name:Gender:Occupation:

Comparative Research on Market Size of Cigarette Brand of IT

Documents

steep duty

flue cured

fiama di wills

essenza di

eighth largest

packaging

company continuously

managing consumer