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Post Purchase Audit Relationship Report for Wills Navy Cut- ITC

Group 6, Section S3

A POST PURCHASE AUDIT RELATIONSHIP RESEARCH PROJECT ON WILSS NAVY CUT A PRODUCT OF ITC LIMITED

Group - 6 Team Members: Avnish Kaushik Bhavana Bhandari Maunil Shah Shivendu Shekhar Mishra Saurabh Srivastava

Great Lakes Institute of Management

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Post Purchase Audit Relationship Report for Wills Navy Cut- ITC

Group 6, Section S3

Contents
INTRODUCTION ............................................................................................................................................. 5 INCEPTION AND EVOLUTION .................................................................................................................... 5 ITC – A BRIEF PROFILE ........................................................................................................................... 5 CIGARETTES HISTORY ............................................................................................................................ 7 CIGARETTES & TOBACCO INDUSTRY ..................................................................................................... 7 ITC TIMELINE ......................................................................................................................................... 9 COMPANY BUSINESS PROFILE..................................................................................................................... 10 INDUSTRY & SECTOR PROFILE................................................................................................................. 10 TOBACCO INDUSTRY PROMOTION AND SPONSORSHIP ......................................................................... 11 LEADING CIGARETTE BRANDS PROMOTED IN INDIA .......................................................................... 12 MARKETING TACTICS .............................................................................................................................. 12 SLIM CIGARETTES TARGETING WOMEN ............................................................................................. 12 TARGETING HEALTH CONSCIOUS CONSUMERS.................................................................................. 13 SURROGATE ADVERTISING METHODS-POST BAN ADVERTISING TOBACCO PRODUCTS IN INDIA ..... 14 ITC SWOT ANALYSIS ................................................................................................................................ 15 STRENGTHS ......................................................................................................................................... 15 WEAKNESS .......................................................................................................................................... 15 OPPORTUNITY ..................................................................................................................................... 15 THREATS .............................................................................................................................................. 16 COMPETITIVE MARKET OF WILLS NAVY CUT (WNC) .......................................................................... 17 PRODUCT PORTFOLIO ............................................................................................................................. 18 CIGARETTES PORTFOLIO: ........................................................................................................................ 21 GROWTH: .................................................................................................................................................... 22 KEY FINANCIALS .......................................................................................................................................... 25 NET PROFIT MARGIN (NPM) ................................................................................................................... 25 CURRENT RATIO ...................................................................................................................................... 26 MERGERS & ACQUISITIONS .................................................................................................................... 27 AUDIT RELATIONSHIP SUMMARY ............................................................................................................... 29 SURVEY QUESTIONS ................................................................................................................................ 29 OVERVIEW OF SURVEY DATA .................................................................................................................. 29 Great Lakes Institute of Management Page 2

Post Purchase Audit Relationship Report for Wills Navy Cut- ITC

Group 6, Section S3

CONSUMER DETAILS AND ANALYSIS................................................................................................... 29 CONSUMPTION FREQUENCY AND SATISFACTION .............................................................................. 31 CONSUMER PREFERENCE FOR LOOSE CIGARETTES ............................................................................ 32 CUSTOMER RELATIONSHIP ................................................................................................................. 33 CUSTOMER SATISFACTION.................................................................................................................. 34 NAVY CUT FOR ITS USERS ................................................................................................................... 37 IMPACT OF BRAND WILLS ON NAVY CUT ........................................................................................... 37 STATISTICAL ANALYSIS ................................................................................................................................ 39 REFERENCES ................................................................................................................................................ 41 ANNEXURES ................................................................................................................................................ 41

Great Lakes Institute of Management

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Post Purchase Audit Relationship Report for Wills Navy Cut- ITC

Group 6, Section S3

Table of Figures

Figure 1: Indian Tobacco Industry- Major Players ........................................................................................ 7 Figure 2: Indian Cigarette Market- Major Players & Market share .............................................................. 8 Figure 3: ITC Diversification Profile ............................................................................................................. 10 Figure 4: Slim Cigarettes for Women .......................................................................................................... 12 Figure 5: Cigarettes for health conscious consumers ................................................................................. 13 Figure 6: ITC Product Collage ...................................................................................................................... 20 Figure 7: ITC Cigarette Portfolio.................................................................................................................. 21 Figure 8: ITC Sales Distribution (Rs. Crores) ................................................................................................ 22 Figure 9: ITC Cigarette Sales Growth (Million Nos.).................................................................................... 23 Figure 10: Indicative Sales of individual product categories (Mar 2010) ................................................... 24 Figure 11: ITC Net Profit Margin for last 5 years ........................................................................................ 25 Figure 12: ITC Current Ratio for last 5 years ............................................................................................... 26 Figure 13: Age of Users ............................................................................................................................... 30 Figure 14: Occupation of users ................................................................................................................... 30 Figure 15: Income range of users ............................................................................................................... 30 Figure 16: Income Class Division ................................................................................................................. 31 Figure 17: Cigarette consumption of users ................................................................................................. 31 Figure 18: Consumption Patterns ............................................................................................................... 32 Figure 19: Impulse Behaviour Analysis ....................................................................................................... 32 Figure 20: Users smoking time period ........................................................................................................ 33 Figure 21: Factors for Purchase .................................................................................................................. 33 Figure 22: Choice of Navy Cut Vs Other brands .......................................................................................... 34 Figure 23: Customer Satisfaction ................................................................................................................ 35 Figure 24: Product Availability .................................................................................................................... 35 Figure 25: WNC Vs Other Brands ................................................................................................................ 36 Figure 26: Product Recommendation ......................................................................................................... 36 Figure 27: Navy Cut to its users.. ................................................................................................................ 37 Figure 28: Brand Impact.............................................................................................................................. 38 Figure 29: Brand Ranking ............................................................................................................................ 38

Great Lakes Institute of Management

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Education & Stationary and Personal health care products. In 2004. In November. Agri-business division was set up to export commodities. ‘Choupal’ initiative was started in 2000 in MP with soya farmers. Food & Agri-business. Great Lakes Institute of Management Page 5 . ITC under the name of ITC Bhadrachalam Paperboards Ltd. For the initial six years. ventured in paperboards market which later in the year 2002 became a division of the company retaining its name. ITC targeted Cigarettes and leaf tobacco business slowly the company started moving into different sectors as a result of this packaging& printing business was set up in 1952 as a strategically backward integration towards its tobacco unit. create employment and earn foreign exchange thus ITC Welcomgroup Hotel Chola came into being. I. in August 2002 it became a subsidiary of the company and renamed as Surya Nepal Pvt. Ltd. Today the company is a strong hold in the hospitality industry with over 100 hotels across the country. In 1990. ITC always had the nation’s interest on its agenda and acquisition of a hotel in Chennai was done for the same. Information Technology. India’s first rural mall ‘Choupal sagar’ was started in August 2004 at Sehore. Retail.ITC Group 6. so as to create tourism infrastructure.C Limited in 1974 and finally in 2001 rechristened to ‘ITC Limited’ ITC has a multiple portfolio ranging from of business Cigarettes & tobacco.T. company acquired a paperboard manufacturing facility BIPCO which improved customer service and a wide array of products. this division merged with company’s Tribeni Tissues Division and Paperboard & Specialty Papers Division was formed. At present 24 such choupal sagar are operating in 3 states. Hotels.Post Purchase Audit Relationship Report for Wills Navy Cut. Surya Tobacco Co was set up in 1985 in Nepal. Section S3 INTRODUCTION INCEPTION AND EVOLUTION ITC – A BRIEF PROFILE ITC a century old company initially named as Imperial Tobacco Company of India Ltd and later India Tobacco Company Ltd in 1970. Packaging.

Expressions range of greeting cards was launched. candyman. In 2005 ITC introduced a range of bath & body care products with Essenza Di Wills brand name. A man’s clothing brand. notebooks was started in 2002 classmate notebooks were launched in 2003 to cater to a wide range of students. Paperkraft.ITC Group 6. Section S3 In 2000. ITC ventured in lifestyle retailing segment with the same Wills for men and women in the year 2000. ashirvaad atta. ITC’s entry into food business started in 2001 with the launch of ‘Kitchens of India’ ready to eat dishes. sunfeast and bingo. Safety matches initiatives was started in 2002 and brands like iKno. Great Lakes Institute of Management Page 6 . In 2006. Mangaldeep (incense stick). In 2000. Aim Mega and Aim Metro were launched. Wills Lifestyle became the title partner for India Fashion Week this helped gain recognition from buyers and retailers as a single largest B2B platform for fashion industry. In the forthcoming years ITC launched various brands like mint-o. John Players was initiated in 2002. Other stationary items were launched under the same brand name. Totally comprising of 200 products under six brand names. ITC ventured into another flourishing sector information technology and started its own subsidiary ITC Infotech India Ltd.Post Purchase Audit Relationship Report for Wills Navy Cut. Aim.

Major Players Great Lakes Institute of Management Page 7 . 1300 crores were invested to have state of art technology to deliver a product of finest quality to its consumers. Section S3 CIGARETTES HISTORY ITC is a market leader in cigarettes in India. CIGARETTES & TOBACCO INDUSTRY Tobacco chewing is a tradition in India.ITC Group 6. Tobacco Industry ITC Godfrey Phillips VST 13% 9% 78% Figure 1: Indian Tobacco Industry.7 percent of a $30 billion global market. the Kolkata production factory is the world’s first cigarette company to earn ISO140001 certification making itself a benchmark for companies around the world.Post Purchase Audit Relationship Report for Wills Navy Cut. The chart below shows the total tobacco production. India is second largest producer of tobacco following China holding a total global market share of 0. ITC has four production units.

ITC Group 6. In the domestic market there are four major players. Section S3 India.Post Purchase Audit Relationship Report for Wills Navy Cut.Major Players & Market share Great Lakes Institute of Management Page 8 . ITC is the market leader. and the market share is shown below. inspite of being the second largest producer of tobacco is the ninth largest exporter of tobacco and related products. Indian Cigarette Market ITC Godfrey Phillips VST Others 8% 12% 8% 72% Figure 2: Indian Cigarette Market.

ITC Group 6. Section S3 ITC TIMELINE 1920 •Imperial Tobacco Co. 2008 Great Lakes Institute of Management Page 9 . •Company got manufacturing business of Tobacco Manufacturing India Ltd. •Navy cut launched at Rs 24 for a pack of 10 sticks. 1994 1996 •‘Classic Ultra Milds’ and ‘Wills Natural Lights’ brands were launched •Flat 10 packs were launched.Post Purchase Audit Relationship Report for Wills Navy Cut. 1973 1986 •ITC Filtrona Ltd. •‘Wills Flake Premium Filter’ and ‘Scissors Filter’ were introduced 1987 • ‘Hero’ and ‘Classic mild’ cigarettes launched at small lengths and premium ends respectively 1993 •‘Scissors Standard’ introduced. Company manufactured and distributed cigarettes. of India was incorporated. a joint venture between ITC and Filtrona was started to manufacture high technology filters. 1953 •Government approval for setting three new processing factories. •10s hinged –lid packs were introduced for regular size filters 1997 •Factory in Bengaluru began its operations. Sole manufacturer of specialty papers like cigarettes tissue paper. 1999 2003 • ‘India kings’ marketed in contour packs and ‘insignia’ was launched in shoulder box.

Post Purchase Audit Relationship Report for Wills Navy Cut. Paperboards and Packaging. ITC also has significant presence in Hospitality. ITC has evolved from a major Tobacco producing company to a dominant FMCG business. Agri-business and Information technology sector.ITC Group 6. FMCG Hotels Paperboards and Packaging Paperboards & Specialty Papers Agri-Business Agri Commodities & Rural Services Information Technology Cigarettes & Cigars Hotels ITC Infotech Food Restaurants Packaging e-Choupal Lifestyle Retailing Leaf Tobacco & Spices Inputs Personal Care Education & Stationery Safety Matches Agarbattis Figure 3: ITC Diversification Profile Great Lakes Institute of Management Page 10 . Section S3 COMPANY BUSINESS PROFILE INDUSTRY & SECTOR PROFILE As a part of its diversification strategy.

The Wills Lifestyle brand is a well-established brand and also sponsors India’s annual Fashion Week. Wills and John Player. In 2009. and planned to invest Rs 1 billion ($US 22 million) over three years on marketing the product. stretching the cigarette brand name so that it is associated with the glamour of fashion and not just the deadly tobacco product. The event titled “Four Square. as the brand name of lifestyle retailing stores that sell clothing. cigarette companies in particular consistently exploited loopholes in the law and relaxed enforcement to market their products and attract new users. Examples include: In 2010. and brand stretching. The advertising ban in India is not strictly enforced and tobacco companies take advantage by promoting their products in ways that are illegal. Godfrey Phillips India broke into the Indian chewing industry with the launch of Pan Vilas. for example in an auto-rickshaw or a local bus the adds of tobacco-free pan masala( whose advertising is not banned in INDIA) are used and in turn they promote the tobacco products. despite an advertising ban having passed in 2003. a premium pan masala brand.ITC Group 6. Great Lakes Institute of Management Page 11 . Surrogate advertising techniques are used by the companies for advertising. Four Square.be Tamil Nadu’s Next Singing Sensation” was heavily promoted through limited edition cigarette packs. product placement. a popular Godfrey Phillips India brand. Therefore parallel branding exercise is done for Pan masala which in turn adds to brand value of cigerret The ITC group uses two of its popular cigarette brands. In India.Post Purchase Audit Relationship Report for Wills Navy Cut. Section S3 TOBACCO INDUSTRY PROMOTION AND SPONSORSHIP The tobacco industry engages in a comprehensive marketing through direct advertising (ads on TV or in magazines and at point of sale) and indirect advertising such as sponsorship of sports and concerts. sponsored a concert series and talent contest in the city of Chennai.GET FAMOUS. large billboards. point of sales displays and contest entry locations across the city.

Golden Tobacco also has a slim cigarette called June. Section S3 LEADING CIGARETTE BRANDS PROMOTED IN INDIA Cigarette companies aggressively advertise their brands in order to attract new smokers and to encourage current smokers to switch brands.ITC Group 6. International. cigarette companies are focusing on targeting young urban consumers and middle-upper income consumers. Local brand Gold Flake had the largest cigarette market share in India (31%). The first slim cigarette to hit the Indian market was the Stellar Slims brand by Godfrey Phillips in 2007. cigarette companies in India see the potential for growth by attracting women.all of which are owned by ITC Group. ITC Group launched Wills Classic Verve slim cigarettes targeted at women and first time smokers.Post Purchase Audit Relationship Report for Wills Navy Cut. Companies are also shifting brands away from unfiltered variants to filtered variants. Figure 4: Slim Cigarettes for Women The brand is marketed as having lower levels of nicotine with the satisfaction of a regular cigarette. MARKETING TACTICS SLIM CIGARETTES TARGETING WOMEN Although the female smoking population is currently very small (about 3%). ITC describes the brand packaged in a shiny red as “India’s trend setting cigarette…defines ubercool urban style. followed by Wills (18%) and Scissors (8%) . In 2008. Great Lakes Institute of Management Page 12 . Slim cigarette brands have been launched to appeal to women smokers.

cigarette brands are still misleadingly marketed as being healthier. December 2010 Campaign for Tobacco-Free Kids Golden Tobacco markets Diet Blue cigarettes which use “ECOTINE technology and is low in TSNA does less damage to smokers. As of 2006. misleading or deceptive. cigarette companies have created new products and tactics to counteract consumer knowledge. India prohibits tobacco product packaging and labeling from containing information that is “false. One such tactic is to use misleading terms (ex “low-tar”) on cigarette packaging or in advertisements that encourage health concerned smokers to switch to cigarettes brands that they perceive as safer. King sized satisfaction” . “mild” and “low-tar”. Golden Tobacco also claimed that ‘LoeTobac has been found to have “safer delivery levels” of tar. This includes prohibiting the use of terms such as “light”. Section S3 TARGETING HEALTH CONSCIOUS CONSUMERS As Indian customers become more aware of the health risks associated with tobacco use.Post Purchase Audit Relationship Report for Wills Navy Cut.” or that is likely to create misperceptions about the characteristics or heath effects of tobacco products. Diet Blues are also described as having almost zero carcinogens making them “the safer option for existing habitual smokers. carbon monoxide and tobacco-specific nitrosamines than other brands. Low Tobaco cigarettes launched by Golden Tobacco in 2006 claim to contain 50% less tobacco than regular cigarettes.” Great Lakes Institute of Management Page 13 .” On the company website. Figure 5: Cigarettes for health conscious consumers This also offers consumers that are concerned about health risks from tobacco an alternative to quiting. Despite these restrictions.’ Stellar Slims Cigarette ad “Low nicotine.ITC Group 6.

SURROGATE ADVERTISING METHODS-POST BAN ADVERTISING TOBACCO PRODUCTS IN INDIA   Direct advertising of display-boards at point-of-sale advertising. Launching Mobile Smoking Lounge(MSL). Section S3 ITC plans to peruse creating “less harmful cigarettes” and is expected to promote mid and low tar cigarettes towards consumers in the future.‘Courtsey of Choice’.the introduction of this air-conditioned smoking lounge which has a long queue of young smokers waiting to get inside to smoke Innovative Collaboration.Post Purchase Audit Relationship Report for Wills Navy Cut. a NPO by ‘Shri Ravishankar’ of ‘Art of Living’ Releasing mis-leading new letters Introduction to Hooka-Café Collaboration with hotels by using.ITC and Vyakti vikas Kendra.ITC Group 6.where smoking is allowed Influencing public opinion through print media      Great Lakes Institute of Management Page 14 .

especially cigarettes. It is because of this reason that company is not able create further brand Image of the product There are many products in the same market produced by ITC.4 to 0. then India’s cigarette consumption would increase to around 640 billion sticks.ITC Group 6. Section S3 ITC SWOT ANALYSIS STRENGTHS • • • • • • Smoking is addictive The main strength of the company is the brand Image of Wills Navy cut. So it is difficult for ITC to maintain its focus on promotion and distribution on one brand. This increase would make India the second largest volume cigarette consumer in the world behind China. for example Gold flake etc. In spite of ban on the advertisement the product was at No.6. Because of its addictive nature the demand elasticity of tobacco products.Post Purchase Audit Relationship Report for Wills Navy Cut. is relatively low at about 0. OPPORTUNITY • • If the smokers who currently smoke bidi is switched to factory made cigarettes. which are of same price segment.2 position within the cigarette portfolio The ability to provide a product range of exceptional originality and quality The steady margins and sales value of the product are due to its high perceived quality and less price The company can easily take care of demand and supply of the product with its excellent distribution network Will navy cut has excellent brand image and is promoted by various indirect advertisement like ITS having Wills lifestyle showrooms or sponsoring sports tournaments WEAKNESS • • • In ability of the company to hold large advertisement campaign after Ban on cigarette advertisement in INDIA. Page 15 Great Lakes Institute of Management .

Out of almost 950 million population of INDIA. only 120 million are smokers which give a lot of scope to expand. THREATS • • • • Uncertainty of government regulation. publishing Tobacco newsletters. and NGO's causes adverse effect on the sales Wills navy cut is perceived to be a brand that causes most number of incurable cancer disease. they may quit smoking due to its ill effects and hazards. this causes the migration of regular smokers to a less perceived mild brands. they successfully associated smoking behaviour with increasing social liberation and emancipation of women. The tobacco industry has tried to introduce smoking among Indian women by several innovative methods such as showing smoking scenes in films by famous personalities who are considered role models for Indian women. can be used by companies to promote their project. it will eventually be possible to explore new outlets not previously seen as preferred target market. because of which major players like ITC and Godfrey Philips had to stop production of cigarettes Increasing taxation on tobacco products cause the prices of cigarettes to go up and due to this the retail consumption of a particular brand gets adversely effected The next threat may also be the changing habits of the consumer. This may affect the sales as well as the brand image of the product The launch of anti-smoking campaign by Govt. Introduction of ‘mobile smoking lounges’ and the Hookah Café/Shisha Bar culture in India. Great Lakes Institute of Management Page 16 .ITC Group 6.Post Purchase Audit Relationship Report for Wills Navy Cut. Indirect advertising campaign for example by ITS's E-chaupals and awards are used to promote the brand and the product. India is a potential target of tobacco giants due to its billion strong populations and many non-smokers. for example recently the 'Logo' that 'smoking kills' was required to cover almost 80% of the pack area. Section S3 • • • • • • • In India the current population 713998 (in thousands) people out of 1334914 are expected to be in the range of 15 to 49 years by 2020 which will be a huge representation of potential target consumer Due to diversity in the range of products.

which makes up 1. which is the second largest cigarette company in India. Four Square Premier and Four Square Super). Section S3 COMPETITIVE MARKET OF WILLS NAVY CUT (WNC) WNC faces a competition from sources in India and outside India.3% of Indian Cigarette Market. the competition with Transnational Tobacco Companies is not that fierce. ITC Company. which is ranked second in the global tobacco market behind China National Tobacco Company.. It holds a market share of 1% in Indian cigarette industry. which is the third largest cigarette manufacturer in India. among which Gold Flake is the market leader in India in terms of retail volume with more than 30% of market share in 2009. Cavanders and Tipper. The major brands of cigarette it produces include Panama. The reason for this is attributed to the restriction laid on foreign direct investment in cigarette manufacturing. The companies outside of India are called Transnational Tobacco Companies (TTC).Post Purchase Audit Relationship Report for Wills Navy Cut. which is a British company and ranked third in global tobacco market. The other TTC Company is Philip Morris International. Charminar and Gold. and manufacture one of the brands like Marlboro.ITC Group 6. VST owns brands like Charms. Companies within India include Godfrey Phillips India Ltd. Additional to the competition from other companies. Japan Tobacco International is the other TTC Company which has their product in India. They have stake in Godfrey Phillip India Ltd. Great Lakes Institute of Management Page 17 . BAT attempted to raise its stake in ITC but was restricted by the Indian government because of the FDI restriction. Red and White. which is sold in India. Apart from Indian companies. Chancellor and Flair. The other competitor of WNC is VST Industries. Competition is with brands like Gold Flake and Scissors. It is affiliated with ITC Company and manufactures the brand called Berkley. WNC faces tremendous competition from other cigarette products of its own manufacturer. Jaisalmer. The major players among TTC are British American Tobacco (BAT). The other major company in India which produces cigarettes is Golden Tobacco Limited. Four Square Special. It owns some of the popular cigarette brands in the country like Four Square (Four Square Kings.

WelcomHotel Vadodara and WelcomHotel Grand Bay Page 18 Hotels Great Lakes Institute of Management . Conserves. Navy Cut. Chutneys. Scissors.ITC Group 6. Menthol. ii. iii. Stylites. Sunfeast Dark Fantasy Choco fills. Essenza Di Wills (Range of Fragrances) ii. Wills. Vivel Portfolio (Vivel Di Wills and Vivel are high quality ranges of soaps and shampoos for the upper-mid and mid-market consumer segments) iv. Sunfeast Golden Bakery. Gold Flake Kings. Biryanis and Desserts. Sunfeast Marie Light. Regular. Berkeley. 555. shower gels and bathing bar) iii. India Kings. Sunfeast Pasta. Aashirvaad: Staples. Wills Sport relaxed wear. Wills Clublife evening wear) ii.Post Purchase Audit Relationship Report for Wills Navy Cut. Colour Pencils) ii. Sunfeast Benne Vita Flaxseed Biscuits. John Player (offers a complete fashion wardrobe) Personal Care i. Papercraft (Premium Executive Stationery Needs) Safety Matches (Brands: i Kno. Willis Lifestyle (Wills Classic work wear. Bristol. Branded Cuisine ( Bukhara. Capstan. D. Spices. Bingo (Snack Food) Lifestyle Retailing: i. Instant Mixes and Ready Meals. Classmate (Stationery) iii. Insignia. Colour Crew (Wax Crayons. Mint-o (Confectionary) v. Dakshin and DumPukht) ii. Sunfeast Dark Fantasy. Mild & Ultra Mild). Silk Cut. Sunfeast Dream Cream. International Cuisine (West View and Pan Asian) Hotels (ITC Green Centre in Gurgaon is the headquarters of ITC's Hotels Business) i. Players and Flake. Kitchen of India: Ready to eat products. O. & H. Gold Flake Premium. Lucky Strike. Sunfeast Glucose. Fiama Di Wills (a premium range of personal care products comprising shampoos. conditioner. Classic (Verve. Section S3 PRODUCT PORTFOLIO Category FMCG Products Cigarettes & Cigars: W. Aim and Aim Mega) Agarbattis(Mangaldeep) Restaurants i. Sunfeast Sweet ‘n’ Salt. Sunfeast Special. Benson & Hedges. Sunfeast Snacky. Sunfeast: Snack food (Sunfeast Milky Magic. Menthol Rush. Sunfeast Yippee!) iv. Foods: i. Sunfeast Nice. Candyman (Confectionary) vi. Superia (Superia range of soaps and shampoos have been launched to cater to the large popular market in the personal care category) Education and Stationary i. WelcomHotels: WelcomHotel Rama International Aurangabad.

Fortune Hotels iv. Chennai and Sheraton New Delhi iii. ii. Opaque Papers. Flexible Packaging iii. Sheraton Hotels: Sheraton Rajputana Hotel Jaipur. Retail. Specialty (Liquid Packaging. Recycled: Coated Duplex Whiteback. Life Sciences and Transportation & Logistics. Niche Papers.Post Purchase Audit Relationship Report for Wills Navy Cut. Media & Entertainment. Graphics (Coated Cards. Engineering Services. Playing Card Boards) Packaging i. WelcomHeritage v.ITC Group 6. Spices and Agri Inputs ITC Infotech: Banking Financial Services & Insurance (BFSI). Cast Coated Boards and Gypsum Liners) iii. Hospitality. Ivory Cards. Sheraton Park Hotel and Towers. Tobacco Packaging Agri Commodities and Rural Services E-Choupal Leaf Tobacco. Consumer Packaged Goods (CPG). MG Craft Papers. Cigarette Tissues. Travel. Barrier Coated Cartonboards. Solid Bleached Boards. Papers (Woodfree Fine Papers. Manufacturing. Superfine Printing) iv. WelcomEnviron (ITC Hotels' vision for a green world) Paperboards and Packaging Paperboards and Specialty Papers i. Coated Duplex Greyback and White Liner) ii. Cupstock. Section S3 Vishakhapatnam. Electrical Insulation Papers. Packaging (Virgin: Folding Box Boards. Sheraton Chola Hotel Chennai. Agri-Business Information Technology Great Lakes Institute of Management Page 19 . Carton Board Packaging (Printed Carton and Fluted Cartons) ii.

ITC Group 6.Post Purchase Audit Relationship Report for Wills Navy Cut. Section S3 Figure 6: ITC Product Collage Great Lakes Institute of Management Page 20 .

D. Regular. Mild & Ultra Mild) 555 Benson & Hedges Silk Cut Scissors Capstan Berkeley Bristol Lucky Strike Players Flake Figure 7: ITC Cigarette Portfolio Great Lakes Institute of Management Page 21 . Wills Gold Flake Kings Cigars Gold Flake Premium Armentros Hand Rolled Navy Cut Insignia India Kings Classic (Verve. O.Post Purchase Audit Relationship Report for Wills Navy Cut. Menthol Rush. & H. Menthol. Section S3 CIGARETTES PORTFOLIO: Cigarettes & Cigars Cigarettes W.ITC Group 6.

ITC Group 6. Section S3 GROWTH: Cigarettes are a major driver of business in the ITC portfolio and can be seen from the below sales data that they contribute the maximum revenues. 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 2006 2007 2008 2009 2010 Figure 8: ITC Sales Distribution (Rs.Post Purchase Audit Relationship Report for Wills Navy Cut. Crores) Great Lakes Institute of Management Page 22 .

Post Purchase Audit Relationship Report for Wills Navy Cut. Section S3 Cigarettes also are the maximum volume drivers and have a consistent growth in the volume of cigarette sales as reflected in the chart below.ITC Group 6. Cigarettes 86000 84000 82000 80000 78000 76000 74000 72000 70000 Mar 2006 Mar 2007 Mar 2008 Mar 2009 Mar 2010 Figure 9: ITC Cigarette Sales Growth (Million Nos.) 84040 81265 80723 78370 75894 Cigarettes Great Lakes Institute of Management Page 23 .

ITC Group 6.Post Purchase Audit Relationship Report for Wills Navy Cut. Section S3 Cigarette’s pie in ITC portfolio can be seen below(as per records in 2010) Branded Package Foods Cigarettes Coffee Fruit Pulp Hotel Sales/Services Marine Products Miscellaneous Items Branded Garments Others Paper Printing/Packaging Materials Rice Smoking Tobaccos Soya Extraction Soya Oil Soya Seeds Unmanufactured Tobacco Figure 10: Indicative Sales of individual product categories (Mar 2010) Great Lakes Institute of Management Page 24 .

8 21.8 20. ITC’s profit margin consistently lingers in early twenties.2 %.4% in Mar’ 07. The decline in margins was explained by the experts due to the increased taxes and duties levied by the Govt.2% in Mar’ 06 declined to 21.4 21.4 22. The NPM for Mar’ 10 stands at ~21.6 21.6 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10 Figure 11: ITC Net Profit Margin for last 5 years Net Profit Margin(%) Great Lakes Institute of Management Page 25 .2 21 20. Below are some key indicators regarding the finances of the company.Post Purchase Audit Relationship Report for Wills Navy Cut.2 22 21. Net Profit Margin(%) 22. Section S3 KEY FINANCIALS Financial strength of a company determines the actual performance of a company.ITC Group 6. NET PROFIT MARGIN (NPM) The NPM of 22.

6 0.ITC Group 6.2 1 0.2 in March ’06 which increased to 1.Post Purchase Audit Relationship Report for Wills Navy Cut. currently it is just under 1.6 1.4 in March’ 09.4 0. Current Ratio 1.8 0.4 1. Section S3 CURRENT RATIO Current ratio for ITC was around 1.2 0 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10 Figure 12: ITC Current Ratio for last 5 years Current Ratio Linear (Current Ratio) Great Lakes Institute of Management Page 26 .

ITC bought BIPCO for Rs. every now and then tried to diversify its businesses. After the acquisition it was renamed to ITC Paperboards and Speciality Papers.000 tonnes. As per the contract. insurance etc. Great Lakes Institute of Management Page 27 . the Israel based firm had to supply more VSAT to ITC. WIMCO had a market share of 13% and was not generating profits at the time it was acquired by ITC. This acquisition enhanced the company’s capacity to generate paperboards by 65. acquired Bilt Industrial Packaging Company Ltd (BIPCO). Section S3 MERGERS & ACQUISITIONS ITC Ltd.Post Purchase Audit Relationship Report for Wills Navy Cut. Bilt Industrial Packaging Company Ltd. ITC aimed at expanding the project to several other than existing states of the country. 233 crores.. ITC also had plans to use its e-choupal setup and diversify services in areas such as healthcare. The acquisition was aimed keeping in mind increasing market demand of a range of such products. ITC signed a contract with Gilat Satellite Networks Ltd. Following this strategy ITC acquired West Indian Match Company also known as WIMCO. was a Coimbatore based company. ITC Ltd.ITC Group 6. Growing market demand of ITC’s echoupal was the driving force behind the signing of this contract.

ITC steadily bought Leela’s shares and gradually moved its stake to 3. ITC also acquired Technico’s proprietary technology used for cost beneficial and quick introduction of new varieties of potatoes. Marubeni was a Fortune 500 multinational and dealt in a number of industries other than food.943 shares. ITC Ltd. declared tie-up with Marubeni Corporation. The “Technituber” technology developed by Technico benefited ITC in providing different varieties of potatoes. India and Middle Eastern countries.ITC Group 6. company’s desire to hold a strong position in the hospitality industry cannot be ignored. through its investment division Russell Credit took over Australian agriculture-biotech company Technico. China.72%. ITC increased its hold in EIH group to 14.1 lakh shares in Leelaventure. Even though ITC management declared these moves as regular business activities. Section S3 ITC Ltd. Companies decided on exporting grain products. soya-bean. With Technico’s subsidiaries ITC also reached markets of potato supplying in Canada. ITC wanted to indulge in agriculture commodities export business supplying to Japan and few other countries in Asia. maize etc.98% by acquiring 93. Great Lakes Institute of Management Page 28 . This move strengthened ITC’s food business. With the acquisition. ITC through its subsidiary Russel Credit bought 27. Companies had plans to gradually move towards food processing and grain storage. Japan.Post Purchase Audit Relationship Report for Wills Navy Cut.

88. Students constitute 23. Age group of the consumers lies in the range 18 to 30 with 70.43% are either salaried or self employed.24% users of Wills Navy Cut are male.59% consumers in the 26-30 years age group and the remaining 29.ITC Group 6. Section S3 AUDIT RELATIONSHIP SUMMARY An Audit Relationship survey is basically a post purchase exercise to measure the relationship between the consumer and the product/service. 500000.53% of consumers and the remaining 76.33% have a salary bracket of Rs. 250000-50000 and 33.Post Purchase Audit Relationship Report for Wills Navy Cut.42% in the 18-25 age group.33% draw a salary of more than Rs. Among those who are employed. Gender 2. 58. SURVEY QUESTIONS Annexure A: List of survey questions OVERVIEW OF SURVEY DATA Annexure B: Summary of survey data CONSUMER DETAILS AND ANALYSIS Out of the total number of respondents. 88% Female Figure 11: Gender of users Great Lakes Institute of Management Page 29 . 12% Male 15.

29% 12. 71% 18-25 26-30 31 above Figure 13: Age of Users Occupation 4.5 lacks 2. 18% 10. 0% Below 18 5.Post Purchase Audit Relationship Report for Wills Navy Cut. 25% 4.ITC Group 6. 44% 1-2. 59% Salaried Self Employed Unemployed Student Figure 14: Occupation of users Income less than 1 lack 4. 25% 1. 6% 7. 0% 0. 23% 0. Section S3 Age 0.5-5 lacks 5 Lacks above Figure 15: Income range of users Great Lakes Institute of Management Page 30 . 0% 3.

46 and Median value 3. Cigarettes Per day 2. Consumption of cigarette varies from the mean at approximately 3. 18% Figure 17: Cigarette consumption of users Great Lakes Institute of Management Page 31 .001-135. 47% 3 to 5 6 to 8 9 above 3. Range of number of sticks smoked per day is 10. Government of India.000 >175. On an average Wills Navy cut consumers from the survey smoke less than country average.ITC Group 6. Standard deviation is approximately 3. Section S3 Wills Navy cut is more popular among males.2 as per Global Adult Tobacco Survey 2009-2010 released by Ministry of Health and Family Welfare.Post Purchase Audit Relationship Report for Wills Navy Cut.000 Figure 16: Income Class Division CONSUMPTION FREQUENCY AND SATISFACTION Please refer Figure 17 below for consumption frequency details.000 135. Average number of cigarettes smoked per day by an Indian is 6. None of the consumers are un-employed and around 25% of the respondents who use Wills Navy cut are students. On an average consumers smoke around 4 sticks per day. most of the consumers fall in the upper-middle and high income class (Please refer ). Income Class Middle Upper-middle High Rs per annum 90. 23 % 8. Major chunk of earning consumers are working for a company. Among those who earn.001-175. 12% <= 2 4.4 cigarettes per day.

Section S3 Mean Median Standard Deviation Range 3.ITC Group 6.882352941 3 3. Number one reason is that they strongly agree to buy loose cigarettes in order to limit the consumption.Post Purchase Audit Relationship Report for Wills Navy Cut. Lastly they feel that it is costly to buy a packet. Even those who smoke daily are concerned about the quantities they smoke. Next important reason is that they do not want to carry a packet back home due to family constraints.461978353 10 Figure 18: Consumption Patterns CONSUMER PREFERENCE FOR LOOSE CIGARETTES Interestingly. Strong Agree Why do you buy loose cigarette Costly to buy a pack Don't want to carry a pack (Family issue) To limit the consumption Easy availability of loose cigarette 5 3 2 10 2 Agre e 4 1 7 3 4 Neut ral 3 5 2 3 2 Disagr ee 2 3 2 0 0 SD 1 3 1 0 3 NA 0 2 1 1 3 Total 43 49 71 35 Rank 3 2 1 4 Figure 19: Impulse Behaviour Analysis Great Lakes Institute of Management Page 32 . consumers buy loose cigarettes for varied reasons.

Half of the respondents have been loyal to the brand for past 2 years.ITC Group 6. Consumers also like functional properties of the cigarette such as taste and hardness. 12.Post Purchase Audit Relationship Report for Wills Navy Cut.5% in the bracket of 1 year to 2 years. 12% 2.5% have been smoking Wills Navy cut for past 6 months to 1 year and the remaining 12. price is not top criterion to buy the cigarette. It is a good mix of old and new consumers indicating brand loyalty and scope to target new consumers. Section S3 CUSTOMER RELATIONSHIP 50% of the respondents have been smoking Wills Navy cut for more than 2 years. 13% Figure 20: Users smoking time period less than 6 months 6 months to 1 year 1 . Why do you prefer WNC It is a hard cigarette I like its taste Become used to it It is relatively cheap 5 6 5 8 2 4 7 6 3 4 3 0 3 2 4 2 1 0 1 4 1 2 2 2 3 Total 62 60 62 49 Rank 2 3 1 4 Figure 21: Factors for Purchase Great Lakes Institute of Management Page 33 . At the same time. The kind of relation that consumers have with the product can be termed as dependency for most of the users. Next comes the fact the Wills Navy cut is a hard cigarette and consumers like its taste in that particular order. 25% started with 6 months. 25% 8. Even though Wills Navy cut is cheap when compared to other cigarettes. new consumers have started smoking the brand. Smoking Duration 4. 50% 2.2 year more than 2 years Major reason why respondents prefer Wills Navy cut over other brands of cigarettes is that they feel they have become used to smoking it.

85 % customers expressed that they are extremely delighted with the product. 65% yes No Figure 22: Choice of Navy Cut Vs Other brands CUSTOMER SATISFACTION Customer Satisfaction is an important performance indicator. When expectations are high and the product fails to live up to the expectations. customers will be disappointed. a reason for customer satisfaction. When enquired if Navy Cut has met or exceeded expectations. However. A satisfied customer is a loyal customer and acts like a brand ambassador for the product. Over 85% of the customers have expressed their satisfaction with Wills Navy Cut cigarettes. look out for other options to satisfy their need. Expectations are a crucial factor. Section S3 About 65% of respondents say that they would prefer Wills Navy cut over any other brand. Great Lakes Institute of Management Page 34 . Some other brands have higher preference for these customers at present. As word to mouth marketing is very effective and free of cost. 35% think otherwise.ITC Group 6. 35% 11.Post Purchase Audit Relationship Report for Wills Navy Cut. Smoke Navy cut if other brands are available 6.

no bad smell after smoking Availability All the customers are extremely delighted with the availability of Wills Navy Cut in the market. Relaxation of mind Sensational on minimum quantity. Availablility 0% Yes No 100% Figure 24: Product Availability Great Lakes Institute of Management Page 35 . Low cost Distastefulness.Post Purchase Audit Relationship Report for Wills Navy Cut. Section S3 Customer Satisfaction No 16% Yes 84% Figure 23: Customer Satisfaction The various reasons for customer satisfaction are different. the top reasons are as stated below:       The nicotine level gives a much needed kick.ITC Group 6.

We found that dissatisfied customers go for India Kings. as most of the user show high probability to continue using Navy Cut and very few unsatisfied customers plan to switch to other brands.ITC Group 6. another product from ITC Limited. Section S3 Will Navy Cut has numerous loyalists. we found that maximum of out user are likely to play a role of brand ambassadors.Post Purchase Audit Relationship Report for Wills Navy Cut. Recommend Navy Cut to others 10 8 6 4 2 0 Most Likely Likely Neutral Inlikely Most Unlikely Figure 26: Product Recommendation Great Lakes Institute of Management Page 36 . Chances To Continue WNC 10 8 6 4 2 0 Excellent very good good fair Poor Figure 25: WNC Vs Other Brands We asked our customers if they would recommend Navy Cut to their friends.

And to some it means fun and a style statement.. Fun & Style Statement. Our customers admit that Navy cut relaxes their mind and gives a desired kick.ITC Group 6. D C B A 0 10 20 30 40 50 60 A B C D Customers interpretation of Wills Navy Cut Desired kick. It gives psychological pleasure and a sense of satisfaction which cannot be replaced by any other product. IMPACT OF BRAND WILLS ON NAVY CUT Brand equity plays an important role in the sales of a product. There are equal chances that a Great Lakes Institute of Management Page 37 . Wills Navy Cut gives me…. Blows troubles away.Post Purchase Audit Relationship Report for Wills Navy Cut. To some it is excuse from work to grab some moments of pleasure. Section S3 NAVY CUT FOR ITS USERS Navy Cut is found to be an essential product for its users. Its effects and outcome creates a huge impact on the product. Figure 27: Navy Cut to its users. a package of pleasure. We also came across users who feel that Navy Cut gives what any other cigarette gives. What other cigarettes gives. Brand popularity is related to the customer’s knowledge of the brand. It acts as a stimuli to concentrate or a screen which filters out all the distractions and result in mental alertness. Brand Wills acts as a financial asset to Navy Cut. some call it a package of pleasure. Helps relax/think.

Post Purchase Audit Relationship Report for Wills Navy Cut.ITC Group 6. Most Prefered Brand Wills Marlboro Benson & Hedges Camel Figure 29: Brand Ranking Great Lakes Institute of Management Page 38 . Brand Impact 7 6 5 4 3 2 1 0 Strongly Agree Agree Neutral Disagree Strongly Disagree Figure 28: Brand Impact Wills brand equity also impacts its market share and mind share of the customer. when asked the customers ranks Wills’ as its most preferred brand of cigarettes and Benson & Hedges is the least preferred. Section S3 Navy Cut user may or may not continue to use the product once Wills brand name is removed from it. Even though the quality of the product might remain same but the purchasing decision or deciding factor to buy a particular product is its brand.

266 . being used to the brand Relative cheapness to other products in the market The sign of the Spearman correlation indicates the direction of association between X (the independent variable) and Y (the dependent variable).404 Correlation Coefficient .108 Significance (2tailed) . Correlation is significant at the 0. *. Great Lakes Institute of Management 17 17 Page 39 .Post Purchase Audit Relationship Report for Wills Navy Cut. Section S3 STATISTICAL ANALYSIS CORRELATION ANALYSIS FOR PRODUCT “MEETING EXPECTATIONS” USING SPSS The survey was based on data collected to analyze the relationship between the consumers and the product or service they consume.01 level (2-tailed).095 .e. the Spearman correlation coefficient becomes 1.302 17 17 N **.356 .ITC Group 6.05 level (2-tailed). Correlation is significant at the 0. When X and Y are perfectly monotonically related.160 . We can also try to find the correlation between whether the expectations of the customer were met and the various factors contributing to the expectations of the consumer as shown in the table below. The Spearman correlation increases in magnitude as X and Y become closer to being perfect monotone functions of each other. Here the dependent variable for the measurement was the “Expectations met” factor of a consumer and the various factors contributing to it were as follows     It is a hard cigarette with relatively higher nicotine levels It has a likeable taste Loyalty to the product i. Spearman's rho for “Expectations being met” Hard Cigarette Likeable taste Used to the brand Relative cheapness .418 .

Also.05 indicating that there is not a statistically significant relationship between the parameters. Also. Great Lakes Institute of Management Page 40 .Post Purchase Audit Relationship Report for Wills Navy Cut. significance levels are far more than .4+. “Likeable taste” and “relative cheapness” are having a positive correlation but not very high values. we can say that: 1) Consumer’s expectation from Navy cut is dependent on the “Hard taste of the cigarette” and “Being used to the brand” as both the parameters have positive values around 0. Also. 2) Hence “Expectations being met” appears to be loosely correlated with the stated factors. Section S3 Based on above correlation coefficients and significance data calculated.ITC Group 6. But still the factors do not have a very high correlation to the expectations being met. it should be noted here that correlation cannot be used to infer a causal relationship between the variables.

telegraphindia.cfm GATS (Global Adult Tobacco Survey) India 2009 .indiatimes.com http://investor.2010 ANNEXURES A: List of survey questions B: Summary of survey results Great Lakes Institute of Management Page 41 .com/annuals.com/company-facts/itc/history/ITC http://www.com http://www.com http://www.itcportal.com/ http://money.ITC Group 6.businessline. Section S3 REFERENCES Database: Prowess CMIE http://www.moneycontrol.com http://www.rediff.Post Purchase Audit Relationship Report for Wills Navy Cut.economictimes.itc-holdings.