RURAL MARKETING PROJECT ON ITC CIGARETTES

Name
Sourav Pramanik Swarnabha Dey Vivek Bhagat Zoom Guha

Enrollment No.
09BS0002392 09BS0002492 09BS0002750 09BS0003104

SECTION: D

IBS, KOLKATA
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RURAL MARKETING PROJECT ON ITC CIGARETTES

Name
Sourav Pramanik Swarnabha dey Vivek Bhagat Zoom Guha

Enrollment no.
09BS0002392 09BS0002492 09BS0002750 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.

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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.

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Table of contents:
Topic
Executive Summary Introduction Company profile Product-line of ITC ltd. Distribution channel of ITC Ltd. Pricing of ITC cigarettes Price point segmentation Consumption Preferences Sales pattern 4 As of Marketing Conclusions Attachments References

Page No.
01 02 03 05 07 08 10 11 14 15 20 21 22

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List of illustrations:
Topic
Distributors Price List(table 2) Demand as a % of Total Demand(fig 3) Whole Salers Price List(table 3) Retailer Price List(table 4) Price point segmentation(table 5) Customer Preferences in Urban Area(table 6) Customer Preferences Pie Chart(fig 4) Sales of ITC Cigarettes in Urban Area Pie Chart Sales of ITC Cigarettes in Rural Area Pie Chart

Page No.
08 08 09 09 10 11 11 14 14

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Executive Summary
The Indian rural market with its vast size and demand base offers a huge opportunity that MNCs 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 As 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.

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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 As 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 (SKUs ) 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.

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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 belowTABLE-1 Sectors Cigarettes Hotels Brands/ Companies/ Products Wills, Gold Flake, Navy Cut, Insignia, India Kings, Classic Verve, Classic, Silk Cut, Scissors, Capstan, Berkeley, Bristol and Flake. 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 . ITC Bhadrachalam Paperboards Limited & ITC Tribeni Tissues Division are now under one roof --> Paper Boards and Specialty Papers Division. There are 4 Units under one umbrella - Bhadrachalam, Tribeni, Bollarum and Kovai.ITC PSPD India's Largest Packaging Solution provider with In-house film manufacturing 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 . Agri-Business, Leaf Tobacco, Gold Ribbon, Blue Ribbon, Aqua Kings, Aqua Bay, Aqua Feast and Peninsular. Kitchens of India, Aashirvaad, Sunfeast, Mint-O, Candyman, Bingo Snacks . Wills Lifestyle, John Players, Miss Players Essenza Di Wills, Fiama Di Wills, Superia, Vivel Di Wills, Vivel Expressions, Classmate, Paperkraft ITC InfoTech iKno, Mangaldeep, VaxLit, Delite(Discontinued) and Aim Brands acquired from Wimco (Western India Match Company): Ship , Homelite (Swedish Matches) Mangaldeep, Spriha, Yantra
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Paperboards & Specialty Papers Packaging & Printing Business

Agricultural Industry Packaged Foods & Confectionery Branded Apparel Toiletries Education & Stationery Products Information Technology Safety Matches Incense Sticks

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.

FMCG

Hotels

Paper boards & Packaging

IT

AgriBusiness
Leaf Tobacco

Cigarettes

Paper Boards

Foods

Packing

AgriCommodities E-Choupal

Lifestyle Retailing

Education & Stationary

FIG.-1

Safety Matches

Incent Sticks

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ITC is the market leader in cigarettes in India. With its wide range of invaluable brands, it has a leadership position in every segment of the market. It's highly popular portfolio of brands includes Insignia, India Kings, Classic, Gold Flake, Silk Cut, Navy Cut, Scissors, Capstan, Berkeley, Bristol and Flake. The Company has been able to build on its leadership position because of its single minded focus on value creation for the consumer through significant investments 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.

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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 wholesalers . Distributors distribute its stock to hawkers via cycles. A hawker gets one day credit. WHOLESALERS Retailers dont get any credit from wholesalers; they need to purchase in cash HAWKERS

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.

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Pricing Of ITC Cigarettes:

DISTRIBUTORS PRICE LIST :
TABLE-2

Brands
India Kings Insignia Classic

Gold Flake

Navy Cut

Mild Ultra Mild Menthol King Light Honey Dew King Regular Small

Flake Silk Cut

Purchasing price/1000 Demand (as a percentage of packets (Rs.) total demand) 3836.20 0.76% 3950.00 0.50% 3791.00 3791.00 5.06% 3791.00 3527.20 3527.20 43.03% 2363.29 3650.00 3100.00 22.15% 2136.00 1543.20 18.98% 1640.20 9.52%

Demand(as a percentage of total demand)

Silk Cut 9.52% India kings 0.76% Insignia 0.50% Classic 5.06%

Flake 18.98% Gold Flake 43.03%

Navy Cut 22.15%

COMMENTS:-

FIG-3

Distributors 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%.
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 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.

WHOLESALERS PRICE LIST:

Brands
India Kings Insignia Classic Mild Ultra Mild Menthol King Light Honey Dew King Regular Small Purchasing Price/10 sticks (Rs.) 43.50 45.00 42.55 42.55 42.55 39.55 39.55 26.60 36.50 31.00 21.36 17.36 17.36

TABLE-3

Gold Flake

Navy Cut

Flake Silk Cut

Selling Price/10 sticks (Rs.) 43.75 50.50 43.00 43.00 43.00 40.00 40.00 26.80 37.00 31.20 21.50 17.50 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:

Brands
India Kings Insignia Classic Purchasing price/10 Selling Price/ 10 sticks Selling units (Rs.) (RS.) (RS.) 43.75 47.50 50.50 55.50 43.00 47.00 43.00 47.00 43.00 47.00 40.00 44.00 40.00 44.00 26.80 29.00 37.00 40.00 31.20 34.00 21.50 24.00 17.50 19.00 17.50 20.00

TABLE-4

Price/ 5.00 6.00 5.00 5.00 5.00 4.00 4.00 3.00 4.00 3.50 2.50 2.00 2.00

stick

Gold Flake

Navy Cut

Mild Ultra Mild Menthol King Light Honey Dew King Regular Small

Flake Silk Cut

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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 & customers affordability in different areas, the total Cigarette line of ITC Ltd. can be divided into three major segments. Those are mentioned belowTABLE-5

Price bands
Above Rs. 40/pack

Brands
India Kings Insignia Classic Mild Ultra Mild Menthol King Light King Regular Small Honey dew

Gold Flake Rs. 2040/pack Navy Cut

Below Rs. 20/pack

Gold Flake Flake Silk Cut

MRP/10 sticks (Rs.) 47.50 50.00 47.00 47.00 47.00 44.00 44.00 40.00 34.00 24.00 29.00 19.00 20

Price/sticks (Rs.) 5.00 6.00 5.00 5.00 5.00 4.50 4.50 4.00 3.50 2.50 3.00 2.00 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.

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Consumption preferences:
Customer- Preference in URBAN AREA:
Income group Below Rs.10,000/ month Composition 41.50%

TABLE-6

Rs. 10,000- 30,000/ month

34.33%

Rs. 30-000- 50,000/ Month

15.07%

Above Rs. 50,000/ month

9.10%

Brand Preference Name of the Brands Percentage of people Gold Flake 16.20% Flake 18.19% Silk Cut 1.11% Beedi 6.00% Navy Cut 8.06% Classic 0.03% Gold Flake 17.60% Flake 8.64% Navy Cut 8.46% Classic 1.01% Gold Flake 3.50% India Kings 2.10% Navy cut 6.46% Classic 1.15% India Kings 1.49%

Gold Flake = King + Light + Honey Dew Navy Cut = King + Regular + Small Classic = Mild + Ultra mild + Menthol Brand name Gold Flake Flake Navy Cut India kings Classic Silk Cut Beedi Customer Preference (%) 16.20 + 17.60 + 3.50 = 37.30 19.30 + 8.64 = 33.94 8.06 + 8.46 + 6.46 = 22.98 2.10 + 1.49 = 3.59 0.03 + 1.01 + 1.15 = 2.19 1.11 6.00 TABLE-7 FIG-4

Customer preference

OBSERVATIONS:
In urban area consumers tend to have liking for the Gold Flake more in comparison with other ITC brands. Flake is Gold Flake cheaper cost wise and satisfies customer needs. Flake Navy Cut is more preferable in Higher Income group Navy Cut Flake is preferred by people of low income group. India kings Some people having an income level below Rs. 5,000 Clasic consume Beedi and/or Flake.
Silk Cut
Beedi Customers preference in rural area

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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.

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TABLE-8 Social economic Average class (SEC) Income SEC R1 SEC R2 Monthly Composition Brand Preference Name of the Brands 8.23% 25.75% Gold Flake Navy Cut Gold Flake Flake Beedi Flake Beedi Beedi Percentage of people 7.96% 0.27% 9.78% 10.82% 5.15% 10.06% 23.46% 32.50%

RS. 30,000 - 50,000 RS. 10,000 30,000

SEC R3 SEC R4

Rs. 5,000 10,000 Below Rs. 5,000

33.52% 32.50%

FIG-5

Table-9 Brand Name

Flake
Flake 20.88% Gold Flake 19.54%

Customer Preference

Customer Preference (%)

10.82 + 10.06 = 20.88

Gold Flake

7.96 + 9.78 = 19.54

Beedi 61.11%

Navy Cut

0.27

Beedi
Navy Cut 0.27%
*other brands are not available in Rural Market.

5.15 + 23.46 + 32.50 = 61.11

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.

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Sales Pattern:

Sales of ITC cigarettes in Urban area:Brand name Monthly sales (as a percentage Of total monthly sales)
36.66% 24.71% 27.11% 3.23% 2.33% 4.77% 1.19%
Navy Cuit 25% Flake 27%

India Kings 3%

Classic 2% Insignia Silk Cut 1% 5% Gold Flake 37%

Sales

Gold Flake Navy Cut Flake India kings Classic Silk Cut Insignia

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 peoples income & its high availability in every shop.

Sales of ITC cigarettes in rural area:

Brand Name Monthly sales (as a percentage Of total monthly sales)
48.3% 28.67% 13.97% 9.06%
Gold Flake 28.67%

Flake Gold Flake Navy Cut Other ITC brands

Navy Cut 13.97%

Other ITC Brands 9.06

Sales

Flake 48.30%

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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 As 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 MNCs are meeting the consequent challenges of availability, affordability, acceptability and awareness (the so-called 4 As).

Availability:
Brands
Gold Flake

Table-10 Availability In Rural market

Moderate Moderate Moderate Low Moderate Low High High Moderate Low moderate Low High Moderate Low Low Low Low Low Low Low Low
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Variance (if Units/pack any) In Urban Market

Honey Dew King Light 10 20 10 20 10 20 10 20 10 20 10 20 10 20 10 20 10 20 10 20 10 20 High High High High High High High High High High High High High High Low Moderate* Moderate Low** Low Low Low Low

Flake Navy Cut

N/A King Regular Small

India Kings Silk Cut Insignia Berkeley

N/A N/A N/A N/A

*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 areaINCOME 80,000 70,000 60,000 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000
Decrease Decrease Gold Flake Flake Beedi Increase Navy Cut Gold Flake

FIG-6

RURAL MARKET

Flake Decrease

Beedi Beedi

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.

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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 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000
Increase Navy Cut Decrease Gold Flake Flake Decrease Gold Flake Flake Silk Cut Beedi Gold Flake Navy Cut Insignia Classic India Kings

URBAN MARKET

Increase

10,000

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.
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AcceptabilityRural 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. Small packs are more acceptable

Urban Market
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 & 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 companys distributor network could be a part of a strategy to de-emphasize Wills as a tobacco brand.
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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 itll 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 MNCs cannot afford to be ignored.

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ATTACHMENTS:Questionnaire for customers

Name: Age: Monthly income: A. Below Rs.2000 Occupation: Have you ever heard the name of the following brands? Gold flake India kings Classic Silk cut Scissor Gold flake king Navy cut Navy cut small Navy cut king Capstan Gold flake light Flake Insignia Bristol Berkeley B. Rs. 2000- 5000 C. Rs. 5000-10000 D. Rs.10000-20000 Number of family members: E. Above Rs. 20000

What are the brands that you have tasted? Gold flake India kings Classic Silk cut Scissor Gold flake king Navy cut Navy cut small Navy cut king Capstan Gold flake light Flake Insignia Bristol 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 Do u smoke Beedi? Ans. Which brand of beedi you smoke? Ans. Page 25 of 26 b. Agree c. Neither agree nor disagree d. disagree e. Strongly disagree

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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