RURAL MARKETING PROJECT ON ITC CIGARETTES

Name Enrollment No.

Sourav Pramanik 09BS0002392
Swarnabha Dey 09BS0002492
Vivek Bhagat 09BS0002750
Zoom Guha 09BS0003104

SECTION: D

IBS, KOLKATA

Page 1 of 26
 RURAL MARKETING PROJECT ON ITC CIGARETTES

Name Enrollment no.

Sourav Pramanik 09BS0002392
Swarnabha dey 09BS0002492
Vivek Bhagat 09BS0002750
Zoom Guha 09BS0003104

Marketing Management 2

IBS, Kolkata

Date of submission: 17.11.2009

Page 2 of 26
AUTHORIZATION:

The report is submitted as partial fulfillment of the requirement of MBA

Program of IBS.

Page 3 of 26
Acknowledgements

First of all, we are immensely indebted to Mr. Ashim Ghosh, Director, IBS
Kolkata & Mr. Shibashis Chakraborty, Faculty Member of Marketing
management, IBS Kolkata for giving us the opportunity to work for such an
interesting project.

We like to specially acknowledge with thanks, the support of our faculty Mr.
Shibashis Chakraborty without whom, this project would have been incomplete.
Her intense knowledge in this subject has made this project a huge success.

We would also like to thank Mr. Anirban Sen (Area Manager of Tobacco
Sector, ITC) & Mr. Sakhawat Ali (Distributor of ITC cigarettes) without whom
our project would have been a very difficult task.

We would be failing in our duty if we do not thank our respondents who gave their
valuable time and answered the survey questions with tremendous patience and
understanding.

Page 4 of 26
Table of contents:
Topic Page No.

Executive Summary 01

Introduction 02

Company profile 03

Product-line of ITC ltd. 05

Distribution channel of ITC Ltd. 07

Pricing of ITC cigarettes 08

Price point segmentation 10

Consumption Preferences 11

Sales pattern 14

4 A’s of Marketing 15

Conclusions 20

Attachments 21

References 22

Page 5 of 26
List of illustrations:
Topic Page No.

Distributors’ Price List(table 2) 08

Demand as a % of Total Demand(fig 3) 08

Whole Salers’ Price List(table 3) 09

Retailer Price List(table 4) 09

Price point segmentation(table 5) 10

Customer Preferences in Urban Area(table 6) 11

Customer Preferences Pie Chart(fig 4) 11

Sales of ITC Cigarettes in Urban Area Pie Chart 14

Sales of ITC Cigarettes in Rural Area Pie Chart 14

Page 6 of 26
Executive Summary
The Indian rural market with its vast size and demand base offers a huge opportunity that MNC’s cannot afford
to ignore. With 128 million households, the rural population is nearly three times the urban. As a result of the
growing affluence, fuelled by good monsoons and the increase in agricultural output to 200 million tonnes
from 176 million tons in 1991, rural India has a large consuming class with 41 per cent of India's middle-class
and 58 per cent of the total disposable income.

The importance of the rural market for some FMCG and durable marketers is underlined by the fact that the
rural market accounts for close to 70 per cent of toilet-soap users and 38 per cent of all two-wheeler purchased.

The rural market accounts for half the total market for TV sets, fans, pressure cookers, bicycles, washing soap,
blades, tea, salt and toothpowder, What is more, the rural market for FMCG products is growing much faster
than the urban.

This project that was assigned was to prepare the consumption pattern & sales distribution of a product in urban
market and rural market in and around Kolkata. The product that was chosen for this project was ITC cigarettes.
Keeping in mind the four A’s of marketing, Availability, Affordability, Acceptability & Awareness, the steps
for the project was taken.

Data were collected on the basis of the distribution of various products of ITC cigarettes, their sales and
consumption patterns both in rural as well as urban areas, amongst the people of different earning status, in and
around Kolkata. After collecting the data a random sampling was done to analyze the price point variation of
the different ITC cigarette products.

To collect the data we have interviewed the customers/consumers of ITC cigarette, the sellers, distributors, and
the area manager of Tobacco Sector, ITC.

Along with the consumption pattern, this project has also thrown a light on the change on the consumption
pattern of cigarette in recent days due to the awareness of the people for their health.

Page 7 of 26
Introduction:
The report has been prepared to understand the consumption pattern & sales distribution of ITC
cigarettes in urban market and rural market. This study also detailed information about the
Availability, Affordability, Affordability & Awareness (4 A’s of Marketing) of the ITC
cigarettes in rural as well as in urban markets.

Purpose & Scopes:

The Purpose of this report is to list out the different brands of ITC cigarettes which are consumed in
the urban market & that in the rural market. Although the sampling has been carried out only in few
selective cities, the general Stock Keeping Units (SKU’s) are more or less the same all over cities.
The same applies for the villages also where we have conducted the surveys.

Sources and Methods:

Data collected is predominantly Primary data. In preparing this report, we have interviewed
Shopkeepers, Paanwalas, Wholesellers, Distributors, Company persons & Customers at several
places in Kolkata & Howrah which include Saltlake City, Garia, Patuli, Haatibagan, Shyambazar,
Khanna, Ultatanga, Beleghata & Panchanantala (Howrah) , Bandhaghat (Howrah). Among the
villages we had chosen Krishnanagar, Barrackpore, Ranaghat & Shantipur for conducting our
surveys.

Report Organization:
The report reviews the different kinds of brands consumed in urban and rural market, analyses the
different trends in their consumption pattern, and summarizes them at the end.

Limitations:
There was time constraint as the research had to be done in a short time & we had to cover cities as
well as villages. Cost constraints were faced. Scarcity of resources was a problem. Only a limited
number of shop-keepers & Customers could be interacted with.

Page 8 of 26
Company Profile:

ITC Limited which previously stood for Imperial Tobacco Company of India Limited is an
Indian conglomerate with a turnover of US $ 4.75 billion. It ranks third in pre-tax profit among
India's private sector corporations. The company has its registered office in Kolkata.

The company is currently headed by Yogesh Chander Deveshwar. It employs over 20,000 people at
more than 60 locations across India and is listed on Forbes 2000. The Training Centre of the
company is in Munger, Bihar. ITC is also known as "Chatkal" (especially in Munger).

List of products & brands:

ITC has a diversified presence in different sectors. They are mentioned below-

TABLE-1

Sectors Brands/ Companies/ Products

Cigarettes Wills, Gold Flake, Navy Cut, Insignia, India Kings, Classic Verve, Classic, Silk
Cut, Scissors, Capstan, Berkeley, Bristol and Flake.
Hotels ITC Welcomgroup Hotels, Palaces and Resorts is India's second largest hotel
chain with over 80 hotels. Based out of Hotels Division Headquarters at the
ITC Green Centre in Gurgaon, ITC Welcomgroup is also the exclusive
franchisee of The Luxury Collection brand of Starwood Hotels and Resorts in
India .
Paperboards & ITC Bhadrachalam Paperboards Limited & ITC Tribeni Tissues Division are
Specialty Papers now under one roof --> Paper Boards and Specialty Papers Division. There are
4 Units under one umbrella - Bhadrachalam, Tribeni, Bollarum and Kovai.ITC
PSPD
Packaging & India's Largest Packaging Solution provider with In-house film manufacturing
Printing Business capability. Multi-locational manufacturing facilities to cater to domestic and
export requirements. Product Range includes Cartons (Folding & Fluted),
Flexibles (Reels & Pouches), Shoulder Box, HL's & CBO, Printed Cork Tipping,
Gay wraps. ITC PPB .
Agricultural Agri-Business, Leaf Tobacco, Gold Ribbon, Blue Ribbon, Aqua Kings, Aqua
Industry Bay, Aqua Feast and Peninsular.
Packaged Foods & Kitchens of India, Aashirvaad, Sunfeast, Mint-O, Candyman, Bingo Snacks .
Confectionery
Branded Apparel Wills Lifestyle, John Players, Miss Players
Toiletries Essenza Di Wills, Fiama Di Wills, Superia, Vivel Di Wills, Vivel
Education & Expressions,Classmate, Paperkraft
Stationery Products
Information ITC InfoTech
Technology
Safety Matches iKno, Mangaldeep, VaxLit, Delite(Discontinued) and Aim Brands acquired
from Wimco (Western India Match Company): Ship , Homelite (Swedish
Matches)
Incense Sticks Mangaldeep, Spriha,Yantra
Page 9 of 26
While ITC continues in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and
Agri-Exports, it is gaining market share in its nascent businesses of Packaged Foods & Confectionery,
Branded Apparel and Greeting Cards.

ITC's wholly owned Information Technology subsidiary, ITC Infotech India Limited, is pursuing
emerging opportunities in providing end-to-end IT solutions, including e-enabled services and
business process outsourcing.

Product -mix of ITC Ltd:

P

IT

ITC Ltd.

Hotels Paper boards IT Agri-

FMCG & Packaging
Business
Cigarettes Leaf
Paper Boards
Tobacco

Foods Packing Agri-

Commodities

Lifestyle
E-Choupal
Retailing

Education
& Stationary

FIG.-1
Safety Matches

Incent Sticks Page 10 of 26

ITC is the market leader in cigarettes in India. With its wide range of invaluable brands, it has a leadership
position in every segment of the market. It's highly popular portfolio of brands includes Insignia, India
Kings, Classic, Gold Flake, Silk Cut, Navy Cut, Scissors,
Capstan, Berkeley, Bristol and Flake.

The Company has been able to build on its leadership position

because of its single minded focus on value creation for the
consumer through significant investments in product design,
innovation, manufacturing technology, quality, marketing and
distribution.

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

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

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

Page 11 of 26
DISTRIBUTION CHANNEL OF ITC Ltd.

GODOWN (AREA MANAGER)

At the point of delivery distributors

need to pay cash and collect stock.

DISTRIBUTORS

Distributors give maximum

of 1 month credit to its . Distributors distribute its
wholesalers stock to hawkers via cycles. A
hawker gets one day credit.

WHOLESALERS HAWKERS
Retailers don’t get any
credit from
wholesalers; they need
to purchase in cash

RETAILERS
HAWKERS

CUSTOMERS

FIG-2

In the distribution channel the price of cigarettes changes from distributors to wholesalers to retailers to
hawkers. The several details regarding pricing are discussed in the next part.

Page 12 of 26
Pricing Of ITC Cigarettes:
DISTRIBUTOR’S PRICE LIST:
TABLE-2

Brands Purchasing price/1000 Demand (as a percentage of

packets (Rs.) total demand)
India Kings 3836.20 0.76%
Insignia 3950.00 0.50%
Classic Mild 3791.00
Ultra Mild 3791.00 5.06%
Menthol 3791.00
Gold Flake King 3527.20
Light 3527.20 43.03%
Honey Dew 2363.29
Navy Cut King 3650.00
Regular 3100.00 22.15%
Small 2136.00
Flake 1543.20 18.98%
Silk Cut 1640.20 9.52%
Demand(as a percentage of total
demand)
Insignia
Silk Cut India kings 0.50%
9.52% 0.76%
Classic
5.06%

Flake
18.98%
Gold Flake
43.03%

Navy Cut
22.15%

COMMENTS:- FIG-3

 Distributor’s earns a profit margin of 1.8% after charging VAT of 12.5%.

 The distributors can achieve approximately 75% of their target i.e.; if company asks the distributor to
sell 100 packs he is only able to sell 75 packs. We can conclude the overall consumption went down to
25%.

Page 13 of 26
  Combining both the markets (Urban & Rural), there exists maximum demand for Gold Flake in the
market. Gold Flake contributes to 43.03% of the total demand for ITC cigarettes.

WHOLESALER’S PRICE LIST: TABLE-3

Brands Purchasing Price/10 sticks (Rs.) Selling Price/10 sticks (Rs.)

India Kings 43.50 43.75
Insignia 45.00 50.50
Classic Mild 42.55 43.00
Ultra Mild 42.55 43.00
Menthol 42.55 43.00
Gold Flake King 39.55 40.00
Light 39.55 40.00
Honey Dew 26.60 26.80
Navy Cut King 36.50 37.00
Regular 31.00 31.20
Small 21.36 21.50
Flake 17.36 17.50
Silk Cut 17.36 17.50*
COMMENTS:-
 Wholesalers’ earns a commission per 1000 packets and even gain on the margin amount, i.e. the
difference between their purchasing price and their selling price.
 *Price of Silk Cut varies by 0.10 per unit based on demand for the product.

RETAILER'S PRICE LIST: TABLE-4

Brands Purchasing price/10 Selling Price/ 10 sticks Selling Price/ stick

units (Rs.) (RS.) (RS.)
India Kings 43.75 47.50 5.00
Insignia 50.50 55.50 6.00
Classic Mild 43.00 47.00 5.00
Ultra Mild 43.00 47.00 5.00
Menthol 43.00 47.00 5.00
Gold Flake King 40.00 44.00 4.00
Light 40.00 44.00 4.00
Honey Dew 26.80 29.00 3.00
Navy Cut King 37.00 40.00 4.00
Regular 31.20 34.00 3.50
Small 21.50 24.00 2.50
Flake 17.50 19.00 2.00
Silk Cut 17.50 20.00 2.00

Page 14 of 26
COMMENTS:-
 Price of India Kings varies because of location and their purchasing price. Though purchasing price of
Navy Cut and Navy Cut King varies but selling price does not change because of negligible variation.

Price point segmentation:

On the basis of MRP of cigarettes & customer’s affordability in different areas, the total Cigarette line of ITC
Ltd. can be divided into three major segments. Those are mentioned below-

TABLE-5

Price bands Brands MRP/10 sticks (Rs.) Price/sticks (Rs.)

Above Rs. India Kings 47.50 5.00
40/pack Insignia 50.00 6.00
Classic Mild 47.00 5.00
Ultra Mild 47.00 5.00
Menthol 47.00 5.00
Gold Flake King 44.00 4.50
Light 44.00 4.50
Rs. 20- Navy Cut King 40.00 4.00
40/pack Regular 34.00 3.50
Small 24.00 2.50
Gold Flake Honey dew 29.00 3.00
Below Rs. Flake 19.00 2.00
20/pack Silk Cut 20 2.00

There exist mainly three Price-bands- 1. Above Rs.40/pack

2. Rs. 20-40/pack

3. Below Rs. 20/pack.

The first price band is for the higher end of the market.

The second price band is for the upper middle & middle class customers existing in the market. This price band
has a larger share in the market.

The third price band is for the lower end of the market.

Page 15 of 26
Consumption preferences:
Customer- Preference in URBAN AREA: TABLE-6

Income group Composition Brand Preference

Name of the Brands Percentage of people
Below Rs.10,000/ month 41.50% Gold Flake 16.20%
Flake 18.19%
Silk Cut 1.11%
Beedi 6.00%
Rs. 10,000- 30,000/ month 34.33% Navy Cut 8.06%
Classic 0.03%
Gold Flake 17.60%
Flake 8.64%
Rs. 30-000- 50,000/ Month 15.07% Navy Cut 8.46%
Classic 1.01%
Gold Flake 3.50%
India Kings 2.10%
Above Rs. 50,000/ month 9.10% Navy cut 6.46%
Classic 1.15%
India Kings 1.49%
Gold Flake = King + Light + Honey Dew

Navy Cut = King + Regular + Small FIG-4

Classic = Mild + Ultra mild + Menthol

TABLE-7 Customer preference

Brand name Customer Preference (%)

Gold Flake 16.20 + 17.60 + 3.50 = 37.30 OBSERVATIONS:

Flake 19.30 + 8.64 = 33.94  In urban area consumers tend to have liking for the
Gold Flake more in comparison with other ITC brands.Gold
Flake is
Flake
Navy Cut 8.06 + 8.46 + 6.46 = 22.98 cheaper cost wise and satisfies customer needs.
Flake
 Navy Cut is more preferable in Higher Income group
India kings 2.10 + 1.49 = 3.59 Navy Cut
 Flake is preferred by people of low income group.
India kings
Classic 0.03 + 1.01 + 1.15 = 2.19  Some people having an income level below Rs. 5,000
Clasic
consume ‘Beedi’ and/or Flake.
Silk Cut
Silk Cut 1.11
Customer’s preference
Beedi

Beedi 6.00
in rural area

Page 16 of 26
The customers of rural market are not exactly same as that of urban market. There is a significant difference in
demographic, psychographic & social environment between the two class of people. So it is important for
marketers to segment the rural market using appropriate variablesnmto decide on their marketing strategies.
Marketers of rural area use alternative segmentation scheme to segment the rural market.

One of the useful segmentation schemes for rural areas used in India is the Socio-economic Classfication
(SEC), using two variables, namely occupation of the chief wage earner & the type of house that they live in.

The scheme classifes rural consumers into four classes, R1, R2, R3 & R4.

SEC R1:

The charecteristics of each class are mentioned below- Landlord farmers, educated, exposed to urban
environment with their children studying in nearby towns, exhibit a lifestyle close to urban areas, adopt modern
technology, own consumer-durable products such as tractors, refrigerators, two-wheelers & sometimes even
four-wheelers.

SEC R2:

Rich farmers, with about 5 acres of land, may not be educated, but want their children to be educated, aspire to
have social status, own some of the consumer-durable products like television, tractor & two-wheelers.

SEC R3:

Landhoding size between 2 & 5 acres, with childrenstudying in village schools,conservative in technology
adoption, own some consumer-durable products.

SEC R4:

Agricultural or non-agricultural labor with a low income, utilize subsidized food-grains & other products
distributed through the public distribution system.

Tobacco consumption of these clases vary depending on their affordability, taste & preferences.the brand
preferences of several socio-economic classes are discussed below in detais.

Page 17 of 26
TABLE-8

Social economic Average Monthly Composition Brand Preference

class (SEC) Income
Name of the Brands Percentage of
people
SEC R1 RS. 30,000 - 50,000 8.23% Gold Flake 7.96%
Navy Cut 0.27%
SEC R2 RS. 10,000 – 30,000 25.75% Gold Flake 9.78%
Flake 10.82%
Beedi 5.15%
SEC R3 Rs. 5,000 – 10,000 33.52% Flake 10.06%
Beedi 23.46%
SEC R4 Below Rs. 5,000 32.50% Beedi 32.50%
FIG-5 Table-9

Brand Customer Preference

Customer Preference
Name (%)
Flake 10.82 + 10.06 = 20.88

Flake
20.88% Gold Flake 7.96 + 9.78 = 19.54

Gold Flake
Beedi
61.11%
19.54% Navy Cut 0.27

Beedi 5.15 + 23.46 + 32.50 =

Navy Cut 61.11
0.27%

*other brands are not available in Rural Market.

Observations:
 In rural area customer prefers beedi over cigarettes because of their low income.
 But when we consider cigarette sector as a whole consumer wants to have Flake in comparison with
others.
 People belonging to SEC R4 do not consume any ITC cigarettes, they consume beedi only.
 People belonging to SEC R3 generally consume beedi. But within a week after getting the wages or
after selling of their vegetables they prefer to consume Flake.
 Villagers mainly prefer Flake due to its low price.

Page 18 of 26
Sales Pattern:

Sales of ITC cigarettes in Urban area:-

Brand name Monthly sales
(as a percentage Classic Sales
Of total monthly 2% Insignia
sales) Silk Cut 1%
India Kings 5%
3%

Gold Flake 36.66% Gold Flake

Flake 37%
Navy Cut 24.71% 27%
Flake 27.11%
India kings 3.23% Navy Cuit
25%
Classic 2.33%
Silk Cut 4.77%
Insignia 1.19%

Observations:
Gold flake is occupying the highest market share in the cigarette sector. The reason behind this may be cited as
its high affordability as per urban people’s income & its high availability in every shop.

Sales of ITC cigarettes in rural area:

Brand Name Monthly sales
(as a percentage
Other ITC
Sales
Of total Brands
monthly sales) Navy Cut 9.06
Flake 48.3% 13.97%

Gold Flake 28.67% Flake

48.30%
Gold Flake
Navy Cut 13.97%
28.67%

Other ITC brands 9.06%

Page 19 of 26
Observations:
High demand of Flake in rural sector makes it the market leader. Consumers in rural area can easily
afford Flake because of its low price and availability at every common store. Other product which is
highly consumed in rural area is beedi.

4 A’s of marketing:-
The rural market may be appealing but it is not without its problems: Low per capita disposable
incomes that is half the urban disposable income; large number of daily wage earners, acute
dependence on the vagaries of the monsoon; seasonal consumption linked to harvests and festivals
and special occasions; poor roads; power problems; and inaccessibility to conventional advertising
media.

However, the rural consumer is not unlike his urban counterpart in many ways.

The more daring MNC’s are meeting the consequent challenges of availability, affordability,
acceptability and awareness (the so-called 4 A’s).

Availability: Table-10

Brands Variance (if Units/pack Availability

any) In Urban Market In Rural market
Gold Flake Honey Dew 10 High Moderate
20 High Moderate
King 10 High Moderate
20 High Low
Light 10 High Moderate
20 High Low
Flake N/A 10 High High
20 High High
Navy Cut King 10 High Moderate
20 High Low
Regular 10 High moderate
20 High Low
Small 10 High High
20 High Moderate
India Kings N/A 10 Low Low
20 Moderate* Low
Silk Cut N/A 10 Moderate Low
20 Low** Low
Insignia N/A 10 Low Low
20 Low Low
Berkeley N/A 10 Low Low
20 Low Low
Page 20 of 26
*India kings is generally consumed by people of high income group who generally prefer to buy the big pack
instead of buying the small pack.

**Silk Cut is consumed by the people of lower income group who generally purchase the smaller pack instead
of larger one.

Affordability:
Affordability in rural area- FIG-6

INCOME
RURAL MARKET
80,000

70,000

60,000

50,000
Navy Cut Gold Flake
45,000

40,000

35,000 Increase

30,000

25,000 Gold Flake Flake Beedi

20,000
Decrease Decrease
15,000

10,000
Flake Beedi
5,000
Beedi
Decrease
0

BRANDS
In rural market, the poverty-level is quite high. Therefore, the number of people in the low income group cannot
afford cigarettes, they only consume beedis. As the income level increase the amount of consumption of beedi
also decreases. Same applies for Flake also which is consumed by the people of lower middle & upper-middle
income group.

Page 21 of 26
But same does not hold good for Gold flake which is generally consumed by people of higher -middle & High
income-group. It has been observed that with the increase in income the no. of sticks of cigarettes consumed per
day increases, thereby total consumption also increases. Navy Cut is only consumed by higher income group.

Affordability in urban area-

FIG-7

Income

1,00,000 URBAN MARKET

90,000

80,000

70,000 Navy Cut Insignia Classic India Kings

60,000
Increase
50,000
Navy Cut Gold Flake
40,000
Decrease
30,000
Gold Flake Flake
20,000
Increase Decrease
10,000
Gold Flake Flake Silk Cut Beedi
0

BRANDS

Beedi is only consumed by people of lower income group. In the case of urban market, consumption of Gold
flake at first increases due to positive correlation between income & cigarette consumption. But after a certain
point, that decrease due to shifting of the customers from Gold Flake to other luxury brands like Navy Cut,
Classic etc.

Navy Cut, insignia, Classic are consumed by people of very higher income group only.

Page 22 of 26
Acceptability-

Rural market Urban Market

 Beedi is more acceptable by the people of
lower income group as it is available at lower
prices & in greater quantities – which gives
value for money.
 Majority of rural customers do not think
about their health while buying a packet of
cigarette/ beedi. For this reason, they
generally purchase beedi or less costly
cigarettes without filters.
 Beedi is preferred by those people whose
incomes are lesser than Rs. 5,000. In urban
area, Flake & Silk Cut are two substitutes for
beedi as the price of those is very low (Rs. 2
only).
 Urban people are more health- conscious
than rural people. For this reason the
acceptability of beedi is less in cities
compared to villages & demand for filtered
cigarettes are more.

 Small packs are more acceptable  Small & large both packs are acceptable
depending on the income group

Awareness:

Creating awareness among target customers about the product is one of the most challenging jobs. Basicall y
company does awareness programmers when the target customers are unaware of the product.

While tobacco advertising was banned in India in 2004, the year the study began, cigarette companies are
coming up with new ways to reach a relatively untapped audience. They do Event sponsorship and lifestyle
stores centered on tobacco products are slipping through the cracks of the law. Research has shown that most of
the youngsters are addicted to smoking. Keeping in mind ITC has launched Wills Life Style garments brand
which has basically targeted the youngsters. They actually promote their cigarettes through this brand. Such
Tobacco use rose with measures of receptivity, including having use of tobacco promotional item (such as
wearing a T-shirt that advertises tobacco).

Awareness of cigarettes spread through “social networking channels”, which is a part of personal
communication channels. Research has proved that most of the youngsters who are addicted to using tobacco
are influenced by either by their family members, neighbors or friend circles.

Example (Launching of Wills Navy Cut by ITC):-

Tobacco major ITC Ltd had launched Wills Navy Cut Regular size filer cigarettes, priced at Rs 24 a pack of 10
sticks in select markets in north and west India.

"The brand has been launched keeping in mind ITC's objective of delivering superior quality and value to, all its
consumers," the company said in an e-mailed response to NewsWire18.

The new cigarettes, which have been launched in select retail markets such as Mumbai and Pune, could be
rolled out nationally based on the response from these "test markets", ITC's distributors said. Analysts believe
ITC's move to launch the new cigarette directly through retailers instead of the company’s distributor network
could be a part of a strategy to de-emphasize Wills as a tobacco brand.
Page 23 of 26
They believe ITC could be transforming Wills into a Lifestyle brand. Another reason could be the need to plug
product gaps in the lower end of the price band. “A new launch by ITC in the Rs 24 bracket is good. It may be
filling the gaps in that price range, especially after the volume loss from the non- filters segment," said Mr
Anand Shah, analyst with Angel Broking.

CONCLUSIONS:
From the above study it can be concluded that there are several differences between demographic,
psychographic, behavioral & social environment between urban & rural market. If a product is successful in
urban market, not necessarily it’ll be successful in rural market. The success of a product depend on the four
important factors, those are –
1. Availability of the product a particular market
2. Acceptability of the product in a particular market
3. Affordability of the customers to purchase that product &
4. Awareness of the product.

All these parameters also vary from rural to urban market. In this study, we can see that Flake is the highest
selling cigarette of ITC Ltd. in rural market, but it does not has the highest market share in the urban market.
The reverse is true for Gold Flake. The reason main reason behind this is AFFORDABILITY of the customers
concerned. As the per capita income is low in rural areas therefore the villagers does not have the ability to
purchase luxury cigarette brands. Flake the price of which is very low gives “value for money” to them.
Whether in urban areas, people are more concerned with hygiene rather than price. For that reason they are
more prone to buy the cigarettes with high filter quality & low tobacco content. For this reason the brands like
gold flake, navy cut etc. are more popular in urban market than the rural market.

Now- a-days companies are trying to make the product & services on the basis of the needs & preferences of the
rural customers to capture the rural market with 128 million households. The rural population is nearly three
times the urban. Greater the population greater is the opportunity to do a business.

The Indian rural market with its vast size and demand base offers a huge opportunity that MNC’s cannot afford
to be ignored.

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ATTACHMENTS:-
Questionnaire for customers

Name:

Age:

Monthly income:

A. Below Rs.2000 B. Rs. 2000- 5000 C. Rs. 5000-10000 D. Rs.10000-20000 E. Above Rs. 20000

Occupation: Number of family members:

Have you ever heard the name of the following brands?

Gold flake Gold flake king Gold flake light

India kings Navy cut Flake
Classic Navy cut small Insignia
Silk cut Navy cut king Bristol
Scissor Capstan Berkeley

What are the brands that you have tasted?

Gold flake Gold flake king Gold flake light

India kings Navy cut Flake
Classic Navy cut small Insignia
Silk cut Navy cut king Bristol
Scissor Capstan Berkeley

Which of the following statements is true?

I smoke occasionally
I smoke 1-5 times in a day
I smoke 5-10 times in a day
I smoke 10-15 times in a day
I smoke more than 15 times in a day

I used to smoke the same brand all the time.

a. Strongly agree b. Agree c. Neither agree nor disagree d. disagree e. Strongly disagree

Do u smoke ‘Beedi’?

Ans.

Which brand of ‘beedi’ you smoke?

Ans.
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REFERENCES:

The following references were used to complete the project efficiently:

Marketing Management, 12th Edition by Philip Kotler.

Rural Marketing, Pradip Kashyap.

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