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1. INTRODUCTION 1.

1 Background Surya Nepal Private Ltd (SNPL) was established in 1986 with a Vision of "Growth through Quality and Excellent". It is a joint venture between British American Tobacco (BAT) holding 2%, ITC Limited with 59% and Nepalese entrepreneurs holding 39% of the share. It has its factory in Simra, with the head office located in Kathmandu. Surya Nepal is now the largest private sector enterprise in Nepal with 70-75 % of the total market share. A subsidiary of ITC Limited, consist 95% of the total market share in the premium segment and 60% in the general segment. It serves 75000 retailers, through its 6000 secondary wholesale and 60 distribution channels making Surya Nepal one of the most efficient and effective marketing company in Nepal. The company initially started its production with two brands of cigarette namely, Naulo and Bijuli of which Naulo was later dropped. SNPL competes with Nepal Tobacco Company, Perfect Blends Pvt. Ltd, Seti Cigarette Factory and Gorkha Lahari Pvt. Ltd for the market share. It also competes with the substitute products like khaini, gutka, cigar, bindi, chewing gums etc. Its businesses also includes marketing of the readymade garments under the name Springwood and John players with a total business turnover of over US $100 million. It is committed to its corporate vision enduring value for all stakeholders and was awarded the prestigious FNCCI National Excellence Award during the year 2007 for being the best-managed corporation in Nepal. The company is the recipient of various national safety and environmental awards and is also ISO-9001: 2000 certified. (Surya Nepal Pvt. Ltd., 2008) The various product category of Surya Nepal are: Cigarette Surya Classic, Surya Luxury Kings, Surya Lights, Polar ice, Shikhar, Shikhar Lights, Khukuri Filter, Bijuli and Chautari. Garment The garment products of SNPL are John Players and Springwood. Surya Nepals garments division is the first facility operating on 100% automated cutting for yarn-dyed fabric in the entire SAARC region. After the success of the John Players range of branded men's wear, the company now introduces the Springwood range of branded men's wear.

Capital Structure Authorized capital 65,000,000 Issued capital, subscribed & paid up 20,160,000

(i) Target market/segment: As the smoker are not alike and they have different needs, wants and desires and the different backgrounds, education and experience, Surya Nepal has differentiated its product as per these criteria. The Surya cigarette market of Nepal is highly differentiated and can be broken down into several categories. One categorization, for example, is based on price positioning in the market. Another categorization is based on product design and taste, for example king size cigarettes, filter cigarettes and menthol cigarettes. Pack size (e.g. packs of 10 cigarettes or socalled big packs containing 20 cigarettes). Such categorization is important when analyzing the market and market-specific consumer preferences. The bases of the segmentation of the Surya cigarette are as follows: Demographic segmentation:Demographic segmentation helps Surya Nepal easily to locate and reach the specific segments of the market in a cost effective way. Surya Nepal has specially made plan cigarette targeted to consumers who are old fashioned and live in the rural areas of Nepal. Bijuli cigarette is specially made for consumer of rural areas of Nepal. Aagain, filter cigarettes like Khukuri and Pilot is targeted at semi-urban consumers and who has satisfactory income level and specially those who perform heavy physical work. To target these people who perform heavy physical work, Surya Nepal has positioned pilot and khukuri brand as the sign of bravery. The other brand offered is King size filter and it includes cigarette like Shikhar, Surya and Surya ice. These King size filter , especially Surya ice and regular Surya cigarette is targeted to young adults and the achiever of urban areas of Nepal who belong to the premium class. Premium classes who consume Surya King size filter cigarette are bankers, high level government employees etc. However, it is to be noted that does not strictly follow the demographic segmentation. The supply of the cigarettes to these demographic areas is done on the basis of demand of these cigarettes. For example:- We often find Bijuli cigarettes in kathamndu valley also though ot its targeted to the rural areas. Hence, one of the bases of segmentation for Surya cigarette is demographic but they have not ignored other types of segmentation too. Gender:-

Surya cigarettes are targeted to male group only. Surya Nepal strictly discourages the consumption of Suryas brand by the female consumer. Income, education and occupation:Income has been an important variable for Surya Nepal for distinguishing between the market segment because it is the indicator of the ability to pay for a specified types of cigarettes offered by Surya Nepal. For a consumer whose income level is low, Surya Nepal offers bijuli, Khukuri and Pilot. For a moderate income level Surya Nepal offers Shikhar cigarettes and for high income level it offers Surya regular. Surya Nepal has very carefully combined income with the demographic variables to define and target the segment more accurately. Surya Nepal also updates the consumer. For example:- If the certain smoker smokes Pilot cigarettes and his income level rises, Sikhar or luxury kings may be appropriate type of cigarettes for them. The other example may be, when a people for rural areas comes to city, he might not be consuming the same Bujuli cigarette. He would rather switch on to filter (Pilot or Shikhar or Surya luxury kings) because of the change in the demographics. Similarly,

(ii) Motivation and needs: Surya Nepal had only tough competition from Janakpur cigarette factory. However, very soon Surya Nepal outperformed Janakpur cigarette factory. The reason behind this was that Surya Nepal not only believed in meeting a consumers needs for smoking to smoke, it also serves the affiliation needs. Thus, the Surya Nepal cigarette fulfilled both the rational and emotional motives whereas janakpur ciagarettes only served rational needs. Here the rational needs

(ii) CDS The following are the purchase process of the consumer of Suryas ciagarettes:

Problem Recognition

Consuming the Suryas cigarettes for the first time is triggered by the external stimuli such as peer-group. As per the brand officer the first time users often consumer Suryas cigarettes by becoming influence from others. The positioning of the different varieties of the Suryas cigarettes also plays major role here. For example: A person having high affiliation needs can be easily influenced by their friends for the sake of acceptance. However, as the first time users are not known to the different brands of the cigarettes available in the market the brand loyalty may not be very consistent. To achieve the brand loyalty, Surya Nepal has made compulsion to most of the retailers to place the cigarette in the plastic case in the shop from where the consumers can view clearly. This showcasing of the cigarettes often reminds the consumers to buy the cigarette. Habitual users consumption need recognition may be divided into the following categories I. With established consumption patterns Consumption is ranked as a majority who smoked anytime of the day, those who smoked after a fixed interval of time, and those that smoked after meals or during breaks. II. With established consumption occasions Frequent smokers did not exhibit specific occasion consumption. Less frequent smokers ranked occasions as follows with friends, office breaks, with alcoholic beverages, when alone, when stressed and lastly to improve concentration. III. Significant variation was found in the sample based on consumer gender wherein frequency of consumption with females was substantially lower and occasions were largely with friends or with alcoholic beverages. Females tended not to smoke at office or in public places. Pre-purchase Search Rarely an active search brand familiarity and loyalty among smokers is significant as Surya Nepal is FMCG product. Alternative seeking is minimal and varies inversely with rate of consumption (i.e. frequent smokers of Surya cigarettes at most of the times do not exhibit variety seeking buying behavior)

Evaluation of Alternatives The evaluation of the alternatives may be taste, brand, association with self-image, availability, size, hardness, price, health. Interestingly Surya Nepal has wide range of products and it can meet the stated needs of all type of smoker. For example: A person who is health conscious might not be willing to buy hard Surya again and again. For such health conscious people, Surya offers Surya light ciagarettes.

Purchase Decision and Implementation There is limited problem solving behaviours and consumers of Surya cigarettes shows huge brand lolaylty towards this product.Transforming a purchase intention into a purchase decision is influenced by a variety of factors. In the long-term decision to purchase is based on the decision to continue, reduce or quit smoking, and is based on the following criteria (in descending order of rank) Personal health, family pressure, family health, religious reasons, guilt. Brand decision is based on image (further dependent on peer image and association with self-image). It should be noted however, that these ranks were given by consumers themselves and guilt is liable to play a larger part among the younger target audience (i.e. first-time smokers) than admitted.

Unanticipated Situational Factors (e.g. Reactions of salespersons) are rare in occurrence and do not have significant impact on the purchase decision.

6. Post-purchase Behaviour Satisfaction or dissatisfaction is not dependent on many factors and remains roughly similar for each consumer across purchase periods Post-purchase evaluation is very significant for first-time users (First time use is defined as consumption not purchase as it is not usually linked with direct purchase by the final user). This phenomenon decreases as use become more prevalent, though no specific dividing timeline or use could be identified where such evaluation loses significance. Thus, cigarette consumers exhibit typical habitual buying behaviour. Once loyalty is established, they change brand infrequently, and tend to remain loyal to a brand for extended periods of time, which change only due to extrinsic factors like change in peer group,

discontinuation of brand (as in the case of Wills Lights) etc. Habitual buying results in automatic reach for the brand behaviour, thus minimising the sales push opportunity and maximising the need for advertising and positioning in the consumers mind. There is a high-degree of brand familiarity as opposed to brand conviction and consumers find it hard to defend their purchase decision. Post-purchase evaluation is not a frequent occurrence though must be considered by the marketer, as given the frequency of consumption, a single bad experience could put a loyal consumer off the brand for life.

Learning Surya Nepal felt that there were several segments present in the market based on demographics, gender, income, education and occupancy. Surya Nepal knew that one product not cater the needs of all the segments. It also knew that the competitor ( Janakpur cigarette company and Marlboro) was not able to discover the consumer motives. Hence, Surya Nepal introduced various products that could fulfill the consumer needs. For example: Bijuli for rural areas and old fashioned people, Khukuri and Pilot for the people who do physical work more often and Shikhar and Surya Luxury kings for high income level people. Khukuri was positioned as Sahasi ko ek matra chahna, Luxury Kings was promoted for the achiever (those person those who have achieve something like new job, salary growth, education etc). All these messages exactly matched with the motives and interests of the consumers. This leaded to the information processing and transfer of messages to short-term memory. To get the message transferred to the long term memory and for effective brand recognition and recall, lots of factors play their role. Surya Nepal knew that Janakpur Cigarette Company was the major competitor and Surya Nepal had to do something different to enter into the long term memory of the smoker. As we know advertisements of the tobacco products are not allowed through TV ads and radio, Surya Nepal made some master plan for the promotion. Surya Nepal advertised through hoarding boards for its various products. For the effective brand recognition and recall, Surya Nepal persuaded most of the retailers to display the packet of Surya cigarettes in the shop. To display these cigarettes Surya Nepal provided plastic case for each retailer. Such display of the Surya cigarette through plastic case gave continuous exposure to the Surya cigarettes towards the consumer. Hence, the

information were encoded and passed to the long term memory of the target audience leading to the brand recall and recognition. However, something is lacking in the aspect of consumer involvement. Repeated exposures solely do not guarantee effective learning. Surya Nepal needs continuously make the consumers learn about their offering through new methods. This will ensure strong learning of the Surya;s product by the consumers. One of the approaches would be integrated marketing approach. Recent news in Kantipur was that the government is approaching private sector for the revival of Janakpur Cigarette Company. As per the Kantipur news, the total worth of Janakpur Cigarette Factory is one thousand core. Even if government sells some of the non performing assets and does joint venture with private sector, this can easily steal the large portion of the Suryas market share. Also, the different varieties of cigarettes are already known by the consumer. It has been only two years since the Janakpur Cigarette Company has become dysfunctional. So the brand name of Janakpur cigarettes is still fresh. After the revival, if Janakpur Cigarette Company starts using different promotional tool, then it might be difficult. So, its time for Surya Nepal to search new horizon to make the consumer learn and increase the brand loyalty to the maximum. As, stated above one of the new approaches to make the consumer learn is integrated marketing approach. Personality The marketer of Surya Nepal has been trying to appeal to understand how personality influences consumption behavior. Such knowledge enables them to better understand their consumers and segment and target those consumers who are likely to respond positively to their product communication. The marketers of Surya Nepal targets ethnocentric consumers by stressing a nationalistic feelings in their promotional appeals. In packaging of all the variety of Surya Cigarettes, we can see Made in Nepal. This is necessary because of the presence of the internal brands of cigarettes in Nepal particularly, Marlboro. Brand personality provides an emotional identity for a brand and encourages consumers to respond with feelings and emotions towards it. The marketers of Surya Nepal has understood this

and implemented in their marketing strategies as well. Hence, we can see that smokers see Khukuri and Pilot as The marketer of Surya Nepal also learned about consumer innovators. There are about 12-15 % of the consumer innovators among the consumer in Suryas product. This helped the Surya Nepal to launch new variety, Polar Ice into their product offerings. Surya Nepal knew that group of consumers were existing, who did not like smoking n sunny/hot days. The implied needs of those consumers were cigarette that could give them some coolness in sunny days. With the research Surya Nepal found that the consumers of Surya Luxury kings were particularly consumer innovators. They were like innovators with pockets ready to try something new. Finally, after the few sample production of Surya Ice, the demand increased radically. Obviously, this caused in the decrement of sales of Surya Luxury kings but in actual sense, there was a shift in the consumption from one variety to other. The Surya Ice did affect the sales of Luxury kings but then Polar ice was also the product of Surya Nepal itself.

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