MG-220 Marketing Management

Consolidated Report

Presented by:BBA-C (Fall: 2012)

Muhammad Usman Sarwar

(L12-4774)

Muhammad Meesum

(L12-4786)

Khawaja Osama Tahir

(L12-4723)

Wasay Warraich

(L11-4720)

Ahmed Naeem Sheikh

(L12-4874)

Taimoor Javed

(L12-4883)

Presented to: Mr. Talha Salam

Dated: 11th November 2013

Contents

History.............................................................................................................................................................................2

Pakistan Tobacco Company

Consolidated Report
Industry review...............................................................................................................................................................3
Industry in which company operates..........................................................................................................................3
Evolution of tobacco Industry....................................................................................................................................4
Challenges faced by the industry................................................................................................................................4
BRANDS........................................................................................................................................................................5
Legacy........................................................................................................................................................................5
Present brands.............................................................................................................................................................5
Gold Leaf....................................................................................................................................................................5
Capstan.......................................................................................................................................................................5
Gold Flake..................................................................................................................................................................6
Benson & Hedges.......................................................................................................................................................6
Dunhill........................................................................................................................................................................6
MARKETING.................................................................................................................................................................7
Marketing Research....................................................................................................................................................7
The brand-marketing..................................................................................................................................................7
The trade marketing....................................................................................................................................................7
The problems encountered by Pakistan Tobacco Company...........................................................................................8
Background of the problem........................................................................................................................................8
Effect of the problem..................................................................................................................................................8
Overcoming the problem................................................................................................................................................9
Brand ambassadors.....................................................................................................................................................9
Promotion in tobacco shops........................................................................................................................................9
Promotion via small tobacco stands...........................................................................................................................9
Souvenirs and other promotional products.................................................................................................................9
Conclusion....................................................................................................................................................................10
Bibliography..................................................................................................................................................................11

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History
British American Tobacco (BAT) was founded in 1902 in a joint venture of UKs Imperial Tobacco
Company and USA American Tobacco Company (BORIO, Gene). BAT sold 694 million cigarettes
in 2012; moreover it recorded 4914 million in sales revenue in Asia-Pacific. BAT has 44 factories that
are currently operating in more than 39 countries. It employs more than 55000 people worldwide. BAT
has more than 200 brands in its portfolio. (Corporate Brochure, 2013)
Pakistan Tobacco Company (PTC) member British American Tobacco Company was one of the first
foreign multinational investments in Pakistan. PTC was incorporated in 1947 immediately after
independence, thus taking over the business of Imperial Tobacco Company of India that had been
operational in the subcontinent since 1905 (Corporate Brochure, 2013). In 2012 PTC had a market share
of 50.4%. In 2008, PTC sold 40.8 billion sticks. The demand for sticks is increasing 2.2% on yearly basis.
(Business Recorder)

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Industry review
Industry in which company operates
Pakistan Tobacco Company as its name suggest, belongs to the tobacco industry sector of Pakistan or as
the definition of tobacco industry states: any person, company or entity related to growth, production, sale
or distribution of tobacco or tobacco related products falls in this category (Tobacco industry).
Tobacco and its products are considered to be an agricultural commodity, and are one of the most
extensively used and produced addictive materials in the world, as almost 6 trillion cigarettes are
produced each year and 12 million cigarettes are smoked each minuet around the world (Tobacco
Industry: Market Research Reports, Statistics and Analysis). A few brands are even considered as FMCGs
(FMCG industry). Although since 1960s conclusive proof of adverse health effects of tobacco has led to
an increase in sanctions and regulations for producers and manufacturers of tobacco and tobacco
products. Nonetheless tobacco is being grown in over 124 countries around the world and takes 3.8
million hectares of the total cultivated land in the world. There are only five known countries in which
tobacco is not grown legally (Growing tobacco). In Pakistan tobacco is cultivated on 44,000 hectares to
57,000 hectares of land (Tobacco industry in Pakistan) the tobacco growth rate has been continually
fluctuating over the years; it reached its peak of 162221 tons in the year 1967 as its production had a
growth rate of 29.34%. There was a decline in production rate since after, and tobacco production reached
its minimum of 58102 tons in the year 1973 as the decline rate of tobacco production was -42.25%. Since
1974 there has been an average growth rate of 2.16% in the growth of tobacco in Pakistan (Pakistan
Tobacco, Unmfg., Total Production Annual Growth Rate).
The global tobacco industry generated a turnover of 721 Billion USD in the year 2010 and is projected to
hit 890 Billion USD by the year 2015. The cumulative worth of European, American and Asia-Pacific
markets was worth 670 Billion USD as per 2010 and is expected to be 831 Billion USD by 2015
(Tobacco Industry: Market Research Reports, Statistics and Analysis). Pakistani tobacco industry
contributed the 4.4% or 27.5 Billion PKR of the GDP in 1997.
Tobacco industry is also a good source of income for the government because such products are heavily
taxed. As at 1997, 29.74 Billion PKR was collected as sale tax and exercise duty from the tobacco
industry. Over 5 per cent of all taxes collected by the Pakistani Government come from the tobacco
industry (Tobacco industry in Pakistan).Recently in early part of 2013 the FBR was considering to
increase the tax rate on tobacco products to meet the 30 Billion PKR short fall in the revenue (dawn).

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Evolution of tobacco Industry

Tobacco is originally an American crop and is historically one of the most important crop produces by
American farmers. There is evidence of it being consumed some way near 1000 BC, by the Mayans and
the Aztecs. In the year 1492 Columbus was among the first Europeans to discover tobacco. There are
recorded events of tobacco being sold in Europe in 1497 and since then it became a commodity. Its
commercial production began somewhere in the early 17 th century. It was considered as an important cash
crop hence the colonist Europeans started growing it in there occupied colonial lands, as it can be grown
in any worm moist environment. Thats why it was also planted in the Subcontinent (BORIO, Gene).
After independence Pakistani tobacco industry was not self-sufficient in raw tobacco and was a net
importer in 1948 but it became self-sufficient in 1969. Tobacco is now grown in almost every part of
Pakistan but its primary source is KPK (History of tobacco).
Other than evolution to the level of global production, the tobacco industry also got technical evolutions,
both in production methods and also in products. E.g. The automated cigarette rolling machine made by
James Bonsack in 1881 that revolutionized the production of tobacco products and new products such as
electrical cigarettes (Tobacco industry).

Challenges faced by the industry

The tobacco industry is among those industries that face the most challenges as; they are producing and
selling products that are harmful to both the consumers as well as the environment. Among their biggest
challenges to face are the increasingly health conscious consumers that are quitting smoking, other than
that there are antismoking movements, campaigns and tobacco control organizations, due to which a lot
of sanctions have been imposed on them, according to 2000 regulations advertisement on media has been
restricted for them, advertising has also been limited to tobacco shops in 2010 regulations, and they also
have to print warning labels on their packs. Other than that there product are heavily taxed by the
government, that forces them to increase the price, due to which costumers shift to other brands and they
are no able to retain brand loyal customers.

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BRANDS
Legacy
Pakistan Tobacco Company had some well-known brands back in the 1900s. Some of the brands were:

Star
Player by John player
Capstan
Bristol
Wills King

Present brands
Out of its legacy some of the brands are still present however new brands had also emerged. Few of its
well-known brands are:

Gold Leaf
Capstan
Dunhill
Benson & Hedges
Gold Flake

Gold Leaf
John Player started a small tobacco selling business in 1877 and turned it into a thriving cigarette
company, John Player and Sons.
John Player Gold Leaf is one of the most favorite cigarette brands in Pakistani urban areas and is enjoying
leadership in its segment from last couple of decades.

(Pakistan Tobacco Company , 2013)

Capstan
Pall Mall introduced in 1899 by Butler & Butler Company (UK). In 1907 British American Tobacco
Company acquired Pall Mall.
Capstan by Pall Mall, locally produced by PTC, is a well-established brand for the lower SEC in Pakistan.
Over the years Capstan has recorded substantial growth recording a staggering growth of 104% in 2001.
(Pakistan Tobacco Company , 2013)

Gold Flake
Gold flake symbolizes for more, the determination to make things happen, and the optimism to change
the future; it lives in an electrically charged environment that pulsates with energy. Gold Flake has been
successful in recording a phenomenal growth for past 5 consecutive years that being:
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18%(2004), 35%(2005), 27%(2006), 16%(2007), 19%(2008)

Moreover, Capstan ended the year 2010 with 11% share of Pakistani market (Pakistan Tobacco
Company , 2013)

Benson & Hedges

PTC launched Benson &Hedges in Pakistan in March 2003. The objective of introducing this brand was
to establish the locally manufactured B&H Lights as the most preferred offer amongst consumers, in the
premium lights segment and to add image to the B&H family by offering a wider product range. It was
launched in the three metros of Karachi, Lahore and Islamabad/Rawalpindi. (Our Brands, 2013)

Dunhill
Dunhill was launched back in 2005 in the Pakistani market as a quality offer for the top end market. It
was freshly imported and launched targeting the super-premium segment. Dunhill comes with a
commitment of providing the best smoking experience in its class to its consumers. (Pakistan Tobacco
Company , 2013)

MARKETING
Marketing at Pakistan Tobacco Company is divided into three categories:

Marketing research
Brand marketing
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Trade marketing

Marketing Research
Respective department is responsible for carrying out survey and other such type of activities to find out
the demand for its individual brand and to discover potential markets for its cigarettes.

The brand-marketing
Here brand managers have the responsibility for the success and continuity of its brands. For this purpose
brand managers design and execute promotions to increase the sale of brands of its organization.
Advertising and sponsorship of various events also comes under the responsibilities of brand managers.

The trade marketing

The trade marketing staff works direct in the field and interacts with the distributors, wholesalers,
retailers, and the customers. PTC, through 343 distributors, services a very large retail and wholesale
network across the country. PTC has been consistently meeting consumer expectations for the past ten
years with the popular international brand names like Benson and Hedges, John Players, Gold Leaf, Wills.
PTC is also a pioneer in introducing filter cigarettes in Pakistan as early as 1955. It started a retail
excellence program, which is a set of structured presentations covering subjects such as business ethics,
trends, customer focus and how to satisfy customer needs profitably. It enables PTC to develop and roll
out best-practiced retailer methods, which will enhance retailer profitability and their relationship with the
company in order to regain market leadership in the future. The focus is how to provide a world-class
service to consumers, sharing company information and plans, and gaining feedback. PTC holds
numerous trade meetings with its distributors and retailers, which no doubt helps to strengthen the
relationship and be responsive to their requirements better than any other FMCG company in the market
place. These meetings are held at high quality venues and a gift from PTC is given to each retailer as a
token of appreciation for their attendance. This is a unique concept in the market as PTC is the only
company in Pakistan to embark on such a program for retailers working in line with the companys vision
to be first choice for everyone. In short, the program focuses on business building as a whole rather
than a propaganda forum for selling cigarettes. (TURAB ALI KHAN)

The problems encountered by Pakistan Tobacco Company

Background of the problem
The government of Pakistan has been imposing regulations and restrictions on tobacco industry sector
since 1979. The first anti-smoking ordinance came out that year. According to the ordinance, tobaccos
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companies are supposed to print messages like smoking is bad for health on their packs and also
include them in their advertisement. There has been a drastic increase in the number restrictions and
regulation ordinances regarding smoking in the 21 st century. The 2002 ordinance restricts smoking in
enclosed public and work areas, in 2003 regulations the messages were made more specific e.g. smoking
causes lung cancer. In 2004 Pakistan joined the WHOs convention of tobacco control. Since after the
government has been increasing the number of restrictions and launching anti-smoking campaigns.
Advertisements regarding tobacco products on electronic media have been restricted to a time frame of
3am to 4am other than that advertisement of such products via billboards have also been restricted and
they are also not allowed to give out free samples or sponsor anything in public. As per 2010 sanctions
the size of warning labels has increased to 40% area on both sides of the pack and a discouraging picture
has also been added to the warning label. (tobacco control laws)
Due to increasing public awareness regarding the adverse effects of smoking Pakistan Tobacco
Companys image and goodwill has been effected very badly. As they are selling their customers
products, that possess the potential to kill them. And the customers know it. So how are they supposed to
sell death?

Effect of the problem

In the given circumstances the biggest challenge faced by PTC is the promotion of its old and especially
new products. As all the sanctions disallows it to advertise through the usual promotion channels. Due to
which they have to work with very limited promotion strategies. They cant encourage people to start
smoking, nor can they stop people from quitting smoking. They can only promote their products in a way
to generate brand loyalty. And to add to the difficulties anti-smoking campaigns are changing consumers
association of smoking being a habit of classy and adventurous people to something that kills.

Overcoming the problem

Pakistan Tobacco Company while following all the sanctions and regulations have come up with good
and effective promotional strategies. They promote their new and old products via:-

Brand ambassadors
They directly interact with the customers. Collect their responses/feedback about the products and inform
them about any new products that are being launched under a certain brand e.g. during the Dunhill switch
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launch program by the Pakistan Tobacco Company their brand ambassadors were actively collecting
information/feedback and informing about their new product in the Liberty market area of Lahore.

Promotion in tobacco shops

They display their posters in tobacco shops of both old and new products.

Promotion via small tobacco stands

They setup small cigarette shops decorated with logos of PTC and the brand it offers. The objective of
these shops is the promotion of the companys name and its products. E.g. there is a Dunhill stall installed
by PTC in Cuckoos den meant for promotion purposes.

Souvenirs and other promotional products

PTC provides retailers and loyal customers with promotional material and souvenirs such as shelves, wall
clocks, lighters, etc. with its logos printed on them. (danishmehrdotcom, 17 July, 2012)

Conclusion
Pakistan Tobacco Company although is selling harmful products, but they cant change the nature of their
products. Due to which they are facing a lot of challenges. But they have come with exceptionally great
ideas and strategies to overcome them and keep themselves a going concern and one of the most
profitable organizations in Pakistan.

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Bibliography
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Gene.

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of

Tobacco.

[online].

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<http://www.historian.org/bysubject/tobacco1.htm>
BORIO, Gene. tobacco.org. [online]. [Accessed 14 Oct 2013]. Available from World Wide Web:
<http://www.tobacco.org/resources/history/Tobacco_History20-1.html>
Business Recorder. [online]. [Accessed 14 Oct 2013]. Available from World Wide Web:
<http://www.brecorder.com/company-news/235/1206687/?format=pdf>

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Corporate Brochure. 2013. [online]. [Accessed 14 Oct 2013]. Available from World Wide Web:
<http://www.bat.com/group/sites/uk__3mnfen.nsf/vwPagesWebLive/DO52ADCY/
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BD.pdf?openelement>
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growth-rate>
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from

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Pakistan Tobacco Company

Consolidated Report

Tobacco

industry.

[online].

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<http://wordnetweb.princeton.edu/perl/webwn?s=tobacco%20industry>
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2013]. Available from World Wide Web: <http://piqc.edu.pk/casestudies/Turab-Ali-Khan-Quest-forExcellence-The-Case-of-PTC-TQM-Case-Study.pdf>

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