Perception towards Surrogate Advertising

A project submitted to

University of Mumbai for partial completion of the degree of

Bachelor of Management Studies

Under the Faculty of Commerce

By

Namrata Murli Wadhwa

Under the Guidance of

Prof. Chirag Pagaria

V.E.S College of Arts, Science & Commerce,

Sindhi Society, Chembur East,

Mumbai - 400071

2019
 ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and the depth is so

enormous.

I would like to acknowledge the following as being idealistic channels and fresh dimensions

in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do this

project.

I would like to thank my Principal, Dr Anita Kanwar for providing the necessary facilities

required for completion of this project.

I take this opportunity to thank our Coordinator Dr. Mahalakshmi Sankar, for her moral

support and guidance.

I would also like to express my sincere gratitude towards my project guide Prof. Chirag Pagaria

whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference books and

magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped me in the

completion of the project especially my Parents and Peers who supported me throughout my

project.
 V.E.S College of Arts, Science & Commerce,
Sindhi Society, Chembur East,
Mumbai - 400071

Certificate
This is to certify that Ms. Namrata Wadhwa has worked and duly completed her Project Work for the
degree of Bachelor of Management Studies under the faculty of commerce in the subject of marketing
and her project is entitled, “Perception towards Surrogate Advertising” under my supervision.

I further certify that the entire work has been done by the learner under my guidance and that no part of it
has been submitted previously for any Degree or Diploma of any University.
It is her own work and facts reported by research and investigations.

Name and Signature of

Guiding Teacher

External Examiner

Date of submission:
 Declaration

I the undersigned Ms. Namrata Wadhwa, here by, declare that the work embodied in this project work
titled “Perception towards Surrogate Advertising”, forms my own contribution to the research work
carried out under the guidance of Prof. Chirag Pagaria is a result of my own research work and has not
been previously submitted to any other University for any Degree/Diploma to this or any other University.
Wherever reference has been made to previous work of others, it has been clearly indicated as such and
included in the bibliography.
I, Hereby further declare that all the information of this document has been obtained and presented in
accordance with academic rules and ethical conduct.

Name and Signature of the learner

Certified by

Name and signature of the Guiding Teacher

 INDEX

Chapters Index Page No.

1. Executive Summary 7
2. Chapter 2- Introduction
2.1 Introduction 8
2.2 Surrogate Advertising
2.3 Origin of Surrogate Advertising
2.4 Surrogate Advertising in India
2.5 Different forms of Surrogate Advertising
2.6 Companies following Surrogate Advertising
2.7 Sales figures of Companies
2.8 The Latest Proposal
3. Chapter 3- Legislative Measures
3.1 Legislative Measures 28
3.2 Aftermath of the Ban
3.2.1 Tobacco
3.2.2 Liquor
3.3 I & B Ministry’s Slashing of Surrogate Ads

3.4 Celebrities behind Surrogate Advertising

3.4.1 Time to say NO
3.5 Impact of Surrogate Advertising on People
3.6 Liquor Advertisements on Television
3.7 Campaigns run by Liquor Brands
4. 4 Research design

4.1 Purpose of Study

4.2 Objectives of Study
4.2 Research Methodology adopted 31
5. 5 Data Analysis 33
5.1 Case Study on ITC Limited
5.1.1 Introduction
5.1.2 Major Products
5.1.3 Sale of Cigarette
5.1.4 Ban on Smoking
5.1.5 Controversial Example
5.1.6 Analysis
 5.2 Bacardi’s Market Share scenario & Current Market
Strategy
5.3 Key Findings
5.4 Concluding Remarks
6. 6.1 Conclusion 37
6.2 Suggestions 39
6.3 Limitations of Study
7. 7.1 Bibliography
7.2 Webliography
 1. EXECUTIVE SUMMARY

The literal meaning of ‘Surrogate advertising’ is duplicating the brand image of one product
extensively to promote another product of the same brand. Advertisement, as a popular medium of paid
communication has drawn public ire time and again for moving away from the truth and the consumers
‘right to know' to providing false images. The masked creative leave it to the consumers to read
between the lines. Surrogate advertising is done when the original product is not allowed to advertise
itself on mass media. In India, alcohol brands are not allowed to give advertisements on television, so
alcohol marketing firms use surrogate products like mineral water, soda, juice to hit consumers with
the brand name. The brand name of the alcohol product is the same as the surrogate product.

Indian laws do not allow alcohol and alcohol companies to advertise, but a few of these advertisers
have extended their brands to other categories purely in an attempt to advertise. Surrogate advertising
happens when the brand extension is seen as a guide for a product that is almost non-existent
in commercial terms. Product advertising for liquor and cigarette companies is banned in the country
since 1995 by Cable Television Network (regulation) act. This ban is now likely to be extended to
advertising of extended brands. The very purpose of banning liquor advertisement is defeated by
surrogated advertising. In India, the trend of surrogated advertisement gathered momentum with the
Cable TV Network Regulation Act, which prohibits alcohol and liquor advertisement on TV channels.

Due to the ban, liquor companies focused more on promotions for brand building. The ban on
advertising of alcohol beverage products has severely handicapped communication with consumers.
Companies with liquor brand are not advertising liquor product; instead they have extended the equity
of their brand into other fields. However as the TV was the most effective medium of advertising,
surrogated advertising on TV became popular. In the mean time, some producers entered new segments
under the liquor brand or advertised these products under liquor brand. The surrogated advertisement
from liquor companies intensified further through sponsorship advertisements from liquor companies
intensified further attracting youth. In late 2001, the broadcasters began arising socially responsible
advertisement sponsored by liquor companies. By early 2002, surrogated advertisement of liquor
brands had intensified like never before on satellite TV channels. Keeping this thing in mind I decided
to conduct a research to find out whether really this surrogated ad helps to recall the original brand.
Through the use of articles, researching websites, case studies I was able to find out the impact of
surrogate ads on people.
 2.1 INTRODUCTION

Advertising is a form of marketing communication used to promote or sell something; usually a

business's product or service. Advertising is to promote the sales of a product or service and also to
reach masses to inform about the product attributes. It is an effective way of communicating the value
of a product or service with large exposure to target consumer. It uses different types of appeals to
connect to consumers spread across the globe. Virtually any medium can be used for advertising.
Commercial advertising media can include wall paintings, billboards, street furniture components,
printed flyers and rack cards, radio, cinema and television adverts, web banners, mobile telephone
screens, shopping carts, web popup, skywriting, bus stop benches, human billboards and forehead
advertising, magazines, newspapers, etc. Any place an "identified" sponsor pays to deliver their
message through a medium is advertising

1. Television advertising- This is the most common mode of advertisement. As we have discussed
earlier in the article, substitutes are used to portray the concerned product. Advertisements of beverages
are significant example of these.

2. Online advertising- This has become one of the widest medium for use after the boom of technology
and internet globally. Companies can find easy audiences here which fall in the potential target
segments. This medium also has advantages of low costs and more target customer’s effective reach.
Beverage Companies promote their products extensively through this medium be it social networking
platforms or community forums.

3. Billboard Advertising- In the outdoor world far from the silver screen of moving images and sound,
billboards are used for these types of advertisements. For the brand to choose this way, they need to
create strong brand identification among consumers. Generally the name of the brand along with the
image from the TVC or the message are used which creates the immediate recall among the consumers
for the brand products if they are exposed to it earlier in one form or the other.

4. Celebrity Advertising- Although the audience is getting smarter and smarter, and the modern-day
consumer is getting immune to the exaggerated claims made in a majority of ads, there exists a section
of advertisers that still bank upon celebrities and their popularity for advertising their products. Using
celebrities for advertising involves signing up celebrities for campaigns, which consist of all sorts of
advertising including television or even print ads. How effective these ads are, is something that each
consumer himself can determine.
After implementation of the Cable Television Networks Regulation Act - 1999, new advertising appeal
used by most liquor companies circumvented the ban by what is called surrogate advertising. Literally
Surrogate Advertising means using the Brand Image of one product (i.e. legally Allowed-to-Promote),
the companies attempt to promote another product (i.e. legally Banned-to-Promote). There are
numerous reasons for companies to restore themselves to such advertisements.

One of the most common among them is to circumvent a prohibition by law in several countries on
direct advertisements of particular products besides its unhealthy.

Hence different techniques used to promote such brands might include, endorsing their products using
public service announcements, advertising well established brand duplicating the brand image of one
product extensively to promote another product of the same brand or if not the case, endorsing
themselves as discharging some social obligation towards the society (Ex: Officers Choice – Alcohol).
Whereas the primary objective of the companies behind such prohibition is to compensate the losses
occurred due to such prohibition.

Advertising has been considered as a means of information about brands which confuses consumer
and often misguides. Ads for controversial products, which cause a negative reaction,
and thereby offence, can result in negative publicity, complaints to advertising regulatory bodies,
falling sales, and product boycotts. Surrogate advertising is a form of advertising which is used
to promote banned products, like tobacco, cigarettes and alcohol, in the disguise of another product.
 2.2 SURROGATE ADVERTISING

Surrogate advertising refers to the strategy used by companies and advertisers to promote a product
clandestinely, because the law of the land may not permit the advertising of the product. Liquor and
cigarette companies use this route as many countries do not allow the advertising of such products or
at least keep a close watch on such advertising.

During the period when electronic media was government controlled in India, its code of conduct
did not allow the advertising of tobacco, liquor, and real estate products and services. The first two
products were obviously to avoid persuasive communication, which may wittingly or unwittingly
affect impressionable minds. The advertising of real estate and gold was presumably not allowed on
the tube to avoid showcasing products that a majority of Indians could not afford. Everything, however,
changed when the satellite channels entered the fray. Liquor advertisements were openly flaunted, even
on channels such as Sony and Zee.

Many advocacy groups, which have been spearheading movements against tobacco, tobacco-based
products, and liquor have worked relentlessly against Kingfisher, a beer brand, openly advertised for
Kingfisher bottled water. Teacher’s brand of liquor has taken the surrogate route of giving out
‘Achievement awards’ to achievers from various fields. Some of them include Vikram Chandra, a
television news anchor, Mahesh Bhupati, the famous tennis player, and filmmaker Yash Chopra. If
these are achievers’ awards, why do women not find a place? Probably because the primary target
audience for the product are males. Each advertisement has the picture of an achiever with the headline:
‘Saluting the spirit of sportsmanship’ or ‘Saluting the spirit of persuasion’, depending on who appears
in the advertisement.

Cigarette brand Red & White also sponsors ‘bravery awards’. The Red & White bravery awards are
given to people from various sections of the society with much fanfare. Film star Vivek Oberio who is
associated with the anti- tobacco lobby as its representative, was selected by Godfrey Philips India (the
largest manufacturer of Red & White and the second largest manufacturer of cigarettes in India) for
the award for the year 2005. The actor however refused to accept the award saying that the awards
were a form of surrogate advertising.
In India, the trend of surrogate advertisement gathered momentum with the Cable
TV Network Regulation Act, which prohibits tobacco and liquor advertisements on TV
channels. The liquor industry has intentionally blurred the line between products, advertising `old
wine' in a `new bottle,' only this time with a soft-drink label. By August 2002, the I&B Ministry had
banned 12 advertisements and leading satellite TV channels including Zee, Sony, STAR and Aaj Tak
were issued notices to explain their rationale behind carrying surrogate liquor advertisements.
Answering to the notices, Zee and STAR stopped telecasting the advertisements, followed soon by Aaj
Tak and Sony. In addition, the I&B Ministry hired a private monitoring agency to keep a watch on all
the advertisements for violation of the Act. These developments led to heated debates over the issue of
surrogate advertising by liquor companies being allowed on national media. Though the companies
involved came out strongly against the I&B Ministry’s decision, they seemed to have no other choice,
given the highly regulated nature of the liquor business.

Analyst remarked that there was lot of hypocrisy underlying the government policy. They said “on
the one hand they allow these ‘socially bad’ products to be manufactured and sold and then they deny
the manufacturers the right to propagate knowledge of their products in order to drive sales. If
something is bad and cannot be advertised, why allow it to be sold at all?” Liquor producers
spent heavily on advertising on the electronic media, particularly TV. Though the broadcasters were
bound by the 30 years old advertising code, which stated that “No advertisements shall be permitted
which relates to or promotes cigarettes and tobacco products, liquor, wines and other intoxicants,”
the telecast of such product continued blatantly over the years

More over the satellite channels garnered about 50% of their revenue from liquor and cigarettes
advertisements. In the peak seasoned it gets almost doubled. Due to the ban, liquor companies focused
more on promotions for brand building. They started sponsoring events that projected the “glamour”
of the brands, like track racing, car rallies etc.

However, as the TV was the most effective medium of advertising, surrogate advertising on TV became
popular. The liquor producers seemed to have ensured that the ban was only on the paper.
 2.3 ORIGIN OF SURROGATE ADVERTISING

It is said that birth of surrogate advertising happened in Britain, where housewives started protesting
against liquor advertisements which provoked their husbands. The protest rose to a level where liquor
advertising had to be banned and brand owners seeing no way out decided to promote fruit juices and
soda under the brand name; the concept later emerged as surrogate advertisements.

"Surrogate advertising is a reflection of the hypocritical society that we live in. We consider some
products good enough to be sold but not good enough to be advertised. A marketer has to sell his
product, and will find means to promote it. I don't blame him."

A surrogate advertisement is one in which a different product is promoted using an already

established brand name. Such advertisements or sponsorships help in contribute to brand recall. The
different product shown in the advertisement is called the “Surrogate.” It could either resemble the
original product or could be a different product altogether, but using the established brand of the
original product. This type of advertising uses a product of a fairly close category, as: club soda,
mineral water in case of alcohol, or products of a completely different category (for example, music
CD's or playing cards) to hammer the brand name into the heads of consumers. The banned product
(alcohol or cigarettes) may not be projected directly to consumers but rather masked under another
product under the same brand name, so that whenever there is mention of that brand, people start
associating it with its main product (the alcohol or cigarette). The sponsoring of sports/cultural/leisure
events and activities also falls under the purview of surrogate advertising.
 2.4 SURROGATE ADVERTISING IN INDIA

In India, it is perfectly legal to manufacture liquor and cigarettes and sell them freely, but it is illegal
to advertise them through the public media. And this is precisely the context in which we are faced
with surrogate advertising. Though the law bans surrogate advertising, there is no practical
enforcement as it is difficult to establish clearly that a particular product being advertised is indeed a
"surrogate product" and not a "legitimate business." The solution perhaps is to explore the possibility
of a ban on the further extension of alcohol and tobacco brands into other categories.

Audiences joyfully applauded when Tamil film actor Rajnikanth flipped his cigarette in the air before
lighting it up, or empathized with Shahrukh Khan when he consumed liquor in the movie Devdas.
However, audiences might be deprived of such opportunity in future, if the Ministry of Health's
proposal to ban the depiction of actors smoking on the silver screen (and also on television programs)
is implemented. Several popular heroes, role models for the youth, depict addiction on screen, thus,
spreading wrong signals to the youth and children who tend to imitate the same in their own lives. But
the government's notification was squashed by the courts as it scuttled creative freedom.

The above proposal has to be seen in the context of the prevailing laws in India which do not permit
the advertising of cigarettes and liquor on public media. However, it is quite legitimate to manufacture
and sell these products. Interestingly, liquor and cigarette sales are the major revenue generators for
the government by way of taxes and duties levied on these items.

As public advertising of these products is not permissible, marketers of cigarette and alcoholic products
have for long been using the path of surrogate advertising to provide them with the requisite marketing
exposure. Indian audiences have, therefore, been exposed to surrogate advertising for quite a long time.
In view of this fact, some watchdog organizations started complaining that these ads were perhaps
encouraging people to consume tobacco and liquor, indirectly.
 2.5 DIFFERENT FORMS OF SURROGATE ADVERTISING-

The Government’s rule states that advertisements which lead to the sale, consumption and promotion
of liquor and cigarettes should not be allowed. In response, the marketers of such products spend their
promotional budgets on alternative products of the same brand name and thus, indirectly build the
liquor/ cigarette brand. The budget is often used for advertising surrogate products. For example
Bagpiper whisky is promoted using soda water, the Kingfisher beer ad talks about its mineral water,
Smirnoff Vodka ad seem to be selling audio cassettes and CDs. Many brands progressively strengthen
their relationship with the non alcoholic product. For example, The Haywards 5000 beer commercials
use dartboards as the surrogate product and the brand has gone one step further by associating itself
with with a sport “darting” and is sponsoring National Darts Championships. The imagery used in most
commercials is that which one can associate with alcohol. Apart from the brand name, scenes like-
machoism, dim lights, people partying and making merry together, etc further help in connecting the
brand name with the alcohol- based product.
Sports sponsorship is another major such investment area for liquor companies. The alcohol based
brand gets associated with the sport and receives visibility via advertising and below-the-line
marketing. However some brand like Foster’s (beer) associated with Formula One internationally—do
not advertise but only engage themselves with the event.

Dr. Vijay Mallya, the Chairman and Head of UB group, after buying out the Bangalore team named
the team as Royal Challengers Bangalore promoting the liquor brand namely “Royal Challenge” which
is one of the merchandise produced by United Beverages Group. Royal Challenge liquor was likely to
be promoted and in constant eyes of media as well as consumers through the Cricket Team of Royal
Challengers Bangalore.
2.6 COMPANIES FOLLOWING SURROGATE ADVERTISING

CATEGORY BRANDS SURROGATES

Seagram’s
Mc Dowell’s Water & Soda
Bagpiper Water, Soda, Music cassettes
& CD
Bacardi Music
Kingfisher Soda, Mineral Water
Wills Lifestyle Apparels & Accessories
ALCOHOL Imperial Blue Cassettes & CDs
Officer’s Choice Mineral Water
Royal Challenge Golf Accessories
Smirnoff Vodka Fruit juices
White Mischief Holidays
CATEGORY BRANDS SURROGATES
Rajnigandha Kesar Pan Masala
Goa Gutka Pan Masala
Pan Parag Pan Masala
TOBACCO manikchand Filmfare Awards
Chainikhaini Pan Masala
GopalZarda GopalSupari 132

Red & White Cigarettes Bravery Award Ceremony

Gold Flake Tennis tournaments
CIGARETTES Wills Fashion Store
Four Square White water rafting &
gliding
Charms Audio Cassettes and CDs
 2.7 Sales Figures of Companies

Table: 1- Shows the sales volume units of royal stag from the year 1998 – 2015 in India.

Year Sales (In million cases)

1998 0.47
1999 0.61
2000 1.00
2001 1.12
2002 1.75
2003 2.14
2004 3.00
2005 3.42
2006 4.2
2007 5.6
2008 6.8
2009 8.4
2010 10.4
2011 12.5
2012 14.00
2013 15.40
2014 17.34
2015 19.72

Table: 2- Shows the sales volume units of Bagpiper whisky from the year 1998 – 2015 in India.

Year Sales (In million cases)

1998 5.00
1999 5.14
2000 5.25
2001 5.58
2002 5.79
2003 6.00
2004 6.60
2005 8.94
2006 10.00
 2007 12.42
2008 15.40
2009 16.40
2010 16.50
2011 15.40
2012 15.50
2013 14.00
2014 15.80
2015 17.00

Table: 3- Shows the sales volume units of Imperial Blue from 1998 – 2015.

Year Sales (In million cases)

1998 0.14
1999 0.20
2000 0.29
2001 0.45
2002 1.10
2003 1.29
2004 1.48
2005 1.94
2006 2.50
2007 3.10
2008 3.80
2009 4.80
2010 6.10
2011 7.20
2012 8.80
2013 9.34
2014 10.00
2015 11.23
Table: 4- Shows the sales volume units of McDowell’s whisky from 1995-2015.

Year Sales (In million cases)

1998 1.92
1999 2.01
2000 2.23
2001 2.77
2002 3.80
2003 4.00
2004 5.50
2005 6.10
2006 8.70
2007 11.50
2008 13.40
2009 13.50
2010 14.30
2011 16.10
2012 19.30
2013 20.12
2014 20.27
2015 21.30
 2.8 The latest proposal: allow socially responsible ads by liquor companies

Faced with a 7 to 11 percent loss in revenues after the ban on both direct and indirect liquor
advertising, a group of TV broadcasters has submitted a suggestion to the government to permit them
to use socially responsible ads backed by liquor companies. A committee of broadcasters headed by
I&B special secretary Mr. R.R. Shah, which was established by the government recently to find out
what constitutes surrogate ads, has mentioned to the government that socially useful advertisements
funded by liquor companies should be allowed on TV channels according to a top official in a private
TV channel. Socially useful ads sponsored by liquor companies are a very famous concept in the US
and the UK, and are likely to be well accepted in India as well, as a member of the committee on
surrogate ads. Since public service validation does not lead to promotion of liquor ads, these cannot be
clubbed with direct/indirect or even surrogate advertising of liquor. The socially useful ads or public
service endorsements, which this committee is referring to, may not essentially talk about drunken
driving as some liquor companies have been doing so far. Although the
government has not decided whether to allow liquor companies to advertise socially responsible ads
on. TV channels there are feelers that the government is warm to the idea. In fact, broadcasters are
even open to the idea of the government is warm to the messages can be allowed on TV channels. For
instance, if the government feels that only medically helpful or crime prevention messages must be
beamed on channels, broadcasters are ready to abide.

I. Advertising in the Liquor category on Television registers a negligible dip of 2% in 2003 as

compared to 2002-

Key Results-

Advertising in the Liquor category marks a dip of 2% in 2003 compared to2002.

Feature Films are the most preferred program genre for Liquor Advertisingin 2003.A look at the
trend of TV advertising in the Liquor category in year 2003compared to 2002-
 We can see that Advertising shows a negligible dip of 2% in year 2003 as compared to the year 2002.
The above graph shows the indexed spends of the Liquor category on Television Advertising since the
year 2002. Advertising in the Liquor category is expected to be quite periodic in nature.

II. Where do we see ads for Liquor?

The graph shows that almost 29% of the total advisement on Liquor is on Feature Films. The other
program genres, which are favoured by Liquor category, are as follows- Drama/Soap, News Bulletin,
Cricket, Music Shows/songs, and Comedies and many more.
 3.1 LEGISLATIVE MEASURES:

The Cigarettes & Other Tobacco Products (Prohibition of advertisement and regulation of trade and
commerce, production, supply and distribution) Act, 2003: This Act was enacted to implement measures
to ensure that effective protection is provided to non-smokers from involuntary exposure to tobacco
smoke and to protect children and young people from being addicted to the use of tobacco;
It was also considered expedient to prohibit the consumption of cigarettes and other tobacco products
which are injurious to health with a view to achieving improvement of public health in general as
enjoined by article 47 of the Constitution;
Section 3(a) of the said act defines 'advertisement' as including: 'any visible representation by way of
notice, circular, label, wrapper or other document and also includes any announcement made orally or
by any means of producing or transmitting light, sound, smoke or gas'
Interpretation: Surrogate advertisements clearly come under the definition as it involves making the
tobacco labels clearly visible to people through other products by the same name. Moreover the public
is always reminded orally of the tobacco's brand name through the advertisements of such other products.
So such advertisements are liable to be a subject matter of this Act and therefore subject to its restrictions.

Section 5(1) of the Act states: 'No person engaged in, or purported to be engaged in the production,
supply or distribution of cigarettes or any other tobacco products shall advertise and no person having
control over a medium shall cause to be advertised cigarettes or any other tobacco products through that
medium and no person shall take part in any advertisement which directly or indirectly suggests or
promotes the use or consumption of cigarettes or any other tobacco products.'

Section 5(3) of the Act states: 'No person, shall, under a contract or otherwise promote or agree to
promote the use or consumption of—
(a) Cigarettes or any other tobacco product; or
(b) Any trade mark or brand name of cigarettes or any other tobacco product in exchange for a
sponsorship, gift, prize or scholarship given or agreed to be given by another person.'
The Ministry of Health and Family Welfare made certain amendments to the above act in 2005, stating
that the word 'indirect advertisement' mentioned in Section 5(1) would mean:
# The use of a name or brand of tobacco products for marketing, promotion or advertising other goods,
services and events;
# The marketing of tobacco products with the aid of a brand name or trademark which is known as, or in
use as, a name or brand for other goods and service;
# The use of particular colors and layout and/or presentation those are associated with particular tobacco
products; and
# The use of tobacco products and smoking situations when advertising other goods and services.

ASCI is a voluntary self-regulation council, registered as a not-for-profit Company under section 25 of

the Indian Company Act. It's formed to safeguard against the indiscriminate use of advertising for the
promotion of products which are regarded as hazardous to society or to individuals to a degree or of a
type which is unacceptable to society at large.

Section 6 of the said code states: 'Advertisements for products whose advertising is prohibited or
restricted by law or by this code must not circumvent such restrictions by purporting to be
advertisements for other products the advertising of which is not prohibited or restricted by law or by
this code. In judging whether or not any particular advertisement is an indirect advertisement for product
whose advertising is restricted or prohibited, due attention shall be paid to the following:
(a) Visual content of the advertisement must depict only the product being advertised and not the
prohibited or restricted product in any form or manner.
(b) The advertisement must not make any direct or indirect reference to the prohibited or restricted
products.
(c) The advertisement must not create any nuances or phrases promoting prohibited products.'

Article 13 of the convention talks about tobacco advertising, promotion and sponsorship: It provides that
even if the constitution doesn't permit a comprehensive ban on tobacco advertising, it can resort to other
ways too like
# Prohibiting advertisements which create an erroneous impression on consumers.
# Restrict use of direct/indirect incentives encouraging public use of tobacco.
# Restrict media advertising in a period.
# Restrict tobacco sponsorships of public events.
 3.2 AFTERMATH OF THE BAN

The industry and the advertising fraternity were caught off guard, when the government-imposed
restrictions on airing liquor and cigarette ads on television, early this year.
Thisprompted the advertising agencies to evolve in their communication strategy. Whatemerged out of it
was even more unfathomable. Surrogate advertising became the new-age mantra, raising the issue of
ethics in advertising as always. While the industry scouted for new products to associate with their brands,
ad agencies burnt their gray cells to conceive creative ads, to subtly promote the brand over the new
product. The ban has divided the entire industry between multinationals and local home grown companies.
From the point of view of Indian players', the biggest threat today is the entry of global majors who will
have an unrestricted license to sell as the free import regime asper the WTO commitment comes into force
from March 2001. These MNC’s not only have well-known brands, but also have deep pockets. And
advertising is their most potent weapon. Television would be the quickest and the most effective way to
reach the maximum number of people, throughout the country, in the shortest possible time. Print media
has its own shortcomings, with the multiplicity of languages that people speak in
India. Also print media cannot beat the effectiveness of the audiovisual medium of television. The impact
of ban on various industries -:

3.2.1 TOBACCO

The likely fallouts of the ban on cigarette sales could be

-Cigarette volumes, which have been registering diminishing growth, could decline further if restrictions
on smoking in public places are implemented strictly.

-Domestic industry players will be at a disadvantage to their international counterparts

who enjoy free access to communicate on television channelsuplinked from outside India and seen in
the country by a very wide cross-section of the population.

New brand launches would become extremely difficult. ITC with its wide brand portfolio consisting of
the most well-known brands in the country and the widest distribution reach
among the cigarette companies is better placed than any other competitor in an atmosphere where no
advertising is allowed.
3.2.2 LIQUOR

Domestic liquor majors have been facing increasing competition from internationalbrands launched in
the country by leading global liquor majors post removal of restriction on imports. Restriction on the
most effective medium of advertising i.e. television would obviously hamper brand building. The ban
on liquor advertising has in a way it came as a blessing in disguise since it created an entry barrier for
any new prospective player. McDowell has used this ban to its advantage by using surrogate advertising
for products like mineral water and soda, which also generated additional revenue for the company. With
a view to actively develop this area, the company has franchised the bottling and sale of McDowell’s
purified drinking water and soda, which are now available in over 75 cities in the country. The company
Is also planning to launch cigars in a high price range, which it plans to import and sell under its own
brand name. It is primarily focusing on the youngsters as its target market with its USP being that cigars
are less harmful than cigarettes. These areas used by the company for surrogate advertising have been
identified to be yielding high-margins, especially if one compares with the present margins in the liquor
industry. Global players who are already in the market such as Bacardi, Pernod Ricard, UDV, Fosters,
etc, who would have been relying on building up their brand equities in the local markets are in for a
tough time. It could even have some fall out on the considerations of some global players who have not
yet firmed up India plans. Another big advantage that smaller domestic players will have is that they
will become more attractive acquisition targets, if not for their brands, at least for their distribution reach
which will now be even more critical in a scenario of restricted advertisements
 3.3 I & B Ministry’s Slashing of Surrogate Ads

IBF Flays surrogate liquor ads

The Indian Broadcasting Foundation (IBF) has come down heavily on surrogate liquor ads. While asking
channels to withdraw commercials of close to a dozen products, it has also sought changes in several
other ads.

The ones that have been seen as inappropriate are ads for 8 P.M. Apple Juice where two generals are
seen exchanging drinks, Bagpiper Hero, Bacardi Breezers, Johnnie Walker, McDowell’s Signature and
Whitehall Party, among others. In some other ads such as the one for Mc Dowell’s Mera No. 1, it has
said that the term spirit should be removed. The words ‘Rare Spirit’ should be removed from the Royal
Channel Golf Accessories while it has suggested a brand new commercial for Aristocrat Premium
Apple Juice. Recent at a meeting of the IBF subcommittee on surrogate advertising, the apex body
comprising all the major broadcasters has categorically said that members of the Confederation
of Indian Alcoholic Beverage Companies(CIABC). Seagram, Jagjit Industries and all other alcohol
companies must get product of their commercials approved both at the storyboard stage and after
production of the commercial. It also said that liquor companies must provide authentic data in the
form of a letter from the Chairman or Member of the Board or the auditors giving details of
the surrogate products’

Manufacturing facilities launch date, distribution networks and details of the product category
registration. The subcommittee said that if the commercial promotes an apple juice, mineral water or
soda, it should be presented in a suitable manner and not shown as an accessory to alcohol drinking. The
recent clampdown on surrogate ads will affect the television channels as the industry spends over Rs.
300 crores on advertising. According to medial planners, huge amounts of money are spent on regional
channels such as Alpha Punjabi, Marathi and Bangla or ETC Punjabi, the expenditure is not very high.
The rates for spots on these channels are very low, said a Delhi based media planner. Meanwhile, the
liquor companies continue to claim that these ads were for genuine products that are available in the
market. The companies had, in fact, some months back, placed samples and other proofs before the
Government to defend their case.
The government, meanwhile, said that the channels would have to adhere to the Advertisement Code,
which is part of the Cable Television Networks (Regulation)Act, 1995 as they can take action against
channels violating the code by asking cable operators to black out the channel. According to the IBF’s
code, if a liquor company does not have an adequate number of the product that it was trying to project
on television available in the market through sufficient distribution outlets, TV channels do not accept
the ads of that company. The case of Hayward’s was cited as an example and how the ads were taken
off the air by TV channels when it was found out the market did not have an adequate number of dart
boards the company was advertising on TV, the IBF source said. Apart from the government, the IBF
was in the process of finalizing its own advertising and programming code, which was an attempt
towards voluntary self-regulation, “he added.
Bans on tobacco advertising, promotion and sponsorship are effective at reducing
smoking

A comprehensive ban on all TAPS activities significantly reduces exposure to smoking cues resulting
from tobacco advertising and promotion. This in turn significantly reduces the industry’s ability to
continue promoting and selling its products, both to young people who have not yet started to use tobacco
as well as to adult tobacco users who want to quit. About a third of youth experimentation with tobacco
occurs as a result of exposure to TAPS. Protecting people from TAPS activities can substantially reduce
tobacco consumption, and the more channels in which tobacco advertising and promotion are prohibited,
the less likely that people will be exposed to TAPS. Comprehensive bans on TAPS reduce cigarette
consumption in all countries regardless of income level. In high income countries, a comprehensive ban
that covers tobacco advertising in all media and also includes bans on all promotions or displays using
tobacco brand names and logos has been documented to decrease tobacco consumption by about 7%,
independent of other tobacco control interventions.
 3.4 Celebrities behind Surrogate Advertisements

The number of Indian celebrities endorsing alcohol, tobacco and junk food brands runs into several
dozen and covers everybody from Bollywood A-listers to "have beens" and minor television starlets.
Endorsements of products considered unhealthy or which can cause potential damage to one’s health are
so widespread and deep that it would not be wrong to blame our film stars and cricketers for a significant
part of the growing burden of lifestyle ailments.

Though alcohol and tobacco advertising – direct and indirect – is banned in the country, our film stars
have no qualms about promoting alcohol and tobacco brands under the fig leaf of “surrogate
advertising”. So when King Khan SRK says “Have I made it large”, you know he is talking about Royal
Stag whisky and not music CDs.

In commercials celebrating 25 years of Vimal Pan Masala, Bollywood’s "cool guy" Ajay Devgn says
"iske dane dane me kesar hai", but even a child can make out that he is not promoting saffron from
Kashmir but pan masala which carries a statutory health warning (“Chewing of Pan Masala is injurious
to health”). Other youth icons - Priyanka Chopra (Rajnigandha), Saif Ali Khan (Pan Bahar) – too are
asking the youth to buy products which are patently unhealthy.
 Priyanka may justify her endorsement saying she is advertising Rajnigandha cardamom (elaichi) and
not pan masala. However, it is well known that tobacco industry has traditionally used pan masala brands
as surrogate to promote gutkha, which now stands banned in most Indian states. Also remember that
Rajnigandha comes from the same company that makes India’s two leading zarda brands – Tulsi and
Baba. Flavoured elaichi thus becomes a surrogate for both pan masala and zarda sold under
Rajnigandha's name – this is what marketers call brand extension.

Not just tobacco brands, Priyanka has not even hesitated to be associated with alcohol brands. She, along
with others from the film industry, has been a recipient of the Teacher’s Achievement Award - instituted
by Beam Global Spirit and Wine Inc, makers of India’s top selling scotch whisky, Teacher’s.

Such blatant association with tobacco and alcohol brands is worrisome because the UN projects Priyanka
as an ambassador for child rights and adolescent health. The objective of celebrity endorsement is brand
recall and brand association. The commercial advertising is so powerful that young girls would associate
Priyanka with Rajnigandha rather than seeing her as the goodwill ambassador for UNICEF. Awards to
promote liquor brand Officer’s Choice and tobacco brand, Red and White, have had several public
figures endorsing them in the past. In order to dodge regulatory action, the Red and White award was
named the Godfrey Phillips National Bravery Awards.

Urmila Matondkar can be seen in commercials selling a tea brand called “502 Pataka” in a rural/semi
urban setting. This is a surrogate ad for India’s largest selling bidi brand with the same name. The website
of the Pataka Group says “with a production capacity of 110 million sticks of bidi per day, Pataka is the
largest bidi manufacturing company in India”. Just note the production figure – 100 million sticks a day!
Pataka’s bidi business dates to 1952 whereas it started manufacturing tea only in 2000, around the time
India legislated the anti-tobacco law.

India has strong policies on advertising, promotion and sponsorship by alcohol and tobacco companies
but no enforcement over surrogate advertisements. There are other loopholes too. Though advertising of
liquor and tobacco products is banned in India, alcohol companies can promote their brands legally at
points of sale.
 3.4.1 TIME TO SAY NO

It is common to see a famous sports person or movie star endorsing soda water, music compact discs
and mouth fresheners that are brand extensions for companies that market alcohol, pan masala or tobacco
by the same brand names.

Such endorsements earn celebrities exorbitant amounts of money. Though it is often claimed by the
companies that they are not advertising the products they cannot legally promote, the fact remains that
surrogate advertising increases their brand recognition and sales as well.

There have been celebrities who have thought with their conscience and refused to do such
advertisements. These include cricketer Sachin Tendulkar, badminton champion P Gopichand, pop
singer Shaan and actors Ranbir Kapoor and Vivek Oberoi. They have valued the health and well-being
of the general public over endorsing carcinogenic products for monetary gains. It is high time others do
so too.

Famous Sports person Sachin Tendulkar could have earned Rs 20 crore a year, but the Master Blaster
chose not to endorse a liquor brand as he wanted to set an example for the youngsters.

Endorsing brands is one of the major source of income for celebrities. Turning down a huge amount
of money because you don't want to influence your fans negatively is applaudable. Abhishek
refused a deal worth Rs. 10 crores because he didn't want to promote alcohol. He also said, "I
personally don't believe that any revenue is good revenue. There has to be an endorser -brand fit
that raises the product's equity. I need to personally believe in the brand before taking i t up. I
wouldn't endorse a product I don't use."
 3.5 The Impact of Surrogate Advertising on People-

A market survey in 2001 revealed that advertising has a direct influence on the consumption habits of
431 million people in India and an indirect impact on 275 million `aspirants' from the lower income
group. Considering this and realising that nearly 50 per cent of the television owners have access to cable
channels, there is no doubt that the hidden call for alcohol consumption behind the surrogate
advertisements is not escaping the eyes of viewers in the world's fourth highest liquor-consuming
country. The very purpose of banning liquor advertisements is defeated by surrogate advertising.

Sociological studies have shown that, in India, a significant share of income of a large section of the
population is spent on liquor, potentially leading to financial distress and health hazards. According to
the International Wine and Spirit Board, a liquor industry publication, there will be a jump in the number
of people reaching the legal drinking age of 25 within the next few years. The implication is that the
problem is going to grow.

The motivations of firms look even more suspect when they advertise products that cannot be bought.
In 2002, for example, Jagatjit Industries, the maker of Aristrocrat Whisky, advertised a product called
`Aristrocrat Apple Juice.' The company reportedly confirmed availability of the fruit juice in Delhi,
Haryana, Punjab and Rajasthan, yet, no reputed shop in Delhi had ever seen it, let alone sell it.

Understanding the gravity of the situation, the Indian Broadcasting Foundation (IBF) has started to take
on the surrogate liquor advertisements. In a recent board meeting, the IBF decided that Jagatjit Industries
and other liquor manufacturing units must get production of the advertisement approved both at the
`storyboard stage' and after the production of the commercial.

It also ruled that that if liquor companies promote any juice, mineral water or soda, these should be
shown in a proper manner and not as trimmings to liquor advertisement.
These are welcome steps, but the key point lies in enforcement. If, in a free society, producers have a
legitimate right to let consumers know about their products through advertisements, consumers have the
right to information in adverts that are clear and honest.

Surrogate advertisements are not only misleading, but also false and dishonest in many cases. With
surrogate advertising so widespread, this is the moment to tackle the problem head-on.

The 2009-'10 Global Youth Tobacco Survey, conducted by the World Health Organization among
schools with children between 13 years and 15 years, illustrates the impact of such advertising.

The survey found that 14.6% of youth currently use tobacco – 21%-24% of boys said that they thought
smoking would get them more friends and make them look more attractive. At least three-fourths of
those who participated in the survey remembered seeing pro-cigarette advertisements in the preceding
month.

A systematic review published in 2003 concluded that tobacco advertising and promotion increase
the likelihood of adolescents picking up smoking. Surveys in the United States have shown that most
adolescents remember advertisements of tobacco and their logos. The ability of children to recall such
information was also correlated with intent to smoke, initiation and level of consumption.

One study, drawing on data from Organization for Economic Co-operation and Development
(OECD) countries, reported that total expenditure on alcohol advertising is linked to higher consumption
and argued that advertising bans could result in significant reductions in consumption. Whether young
people are directly targeted by alcohol advertisers or not, they are exposed to alcohol advertising on
television, in print media, and on radio.
 3.6 LIQUOR ADVERTISEMENTS ON TELEVISION

1) Royal Stag

Seagram’s Royal Stag is a premium liquor brand of Pernod Ricard India. Its target audience are young,
confident and progressive male audience of the country. The brand has a tagline- 'It's your life, make it
large'. Since laws have been tightened regarding advertisements on television by liquor and tobacco
brands, Royal Stag have innovated ways to drive home its intended message. The brand has been
sponsoring games and other entertainment related events in India as well as abroad. A look at any of its
advertisements will reveal that the campaign has been designed across music Cds while giving maximum
exposure to the brand, its main objective and the target audience. There have been a number of
advertisements featuring cricketers and movie stars to make them alluring to the youth sections. A study
of the company’s website will reveal advertisements where ideas have been camouflaged. In the website
www.pernod-ricard-india.com there are pictures of events where royal stag is a sponsor. There is image
of an event-Amit Trivedi Live where the tag line reads Music sounds perfect with no artificial flavours.

The sponsor is royal stag barrel select mega music, a clear allusion to royal stag barrel select whisky. As
information provided by the company itself they have forays into movie, music, cricket as well as
television commercials. Royal Stag Large Short Films is a web portal that acts as a commonplace to
showcase short films made by established directors of the industry as well as budding directors who
want to “make it large”. Royal Stag Mega Music is a platform to promote music and is associated with
television music events like Royal Stag MTV unplugged and Royal Stag Mirchi Music Award. Royal
Stag Mega Cricket sponsors a number of cricketing events in the country and leading cricketers feature
in their advertisements. Beneath the veil of their promotion of talent in various fields there is
endorsement of their liquor business. The target audience is vulnerable.
 2) United Spirits

Royal Challenge is one of the premium whisky brands of United Spirits, a Diageo group company.
Popular in India Royal Challenge has been associated with surrogate advertising to promote its main
objective. In India the team Royal Challenger Bangalore is synonymous with the liquor brand-‘Royal
Challenge’. Advertisements have also come up in television channels of after match parties being
sponsored by “Signature” another well known liquor brand of United Spirits. A country like India where
people are passionate about the game of cricket, surrogate advertisements of liquor brands can have
damaging consequences. These advertisements glorify a lifestyle which can be debated. Royal challenge
have been the proud partners of IPL teams like Royal Challenge Bangalore, Pune Warriors India, Delhi
Daredevils and Kings XI Punjab. They also partner the Sahara Force India Formula 1 team, a competitive
car racing team in the world circuit. Mcdowell’s No.1 another whisky brand from the same group is
widely consumed in India and the brand uses surrogate advertising for television commercials. Mcdowell
No.1’s television advertisement, ‘No.1 Yaari’ shows the journey of three young friends through
difficulties, fun and frolic. While celebrating the spirit of friendship the advertisement ends with the line-
‘Asli yaari ka No.1 ehsaas’ with McDowell’s No.1’s logo displayed prominently. McDowell sponsors a
major football team of the country, Mohun Bagan. Focusing on youth, games and aspirations associated
with them, McDowell is reaching its objective.
 3) KAMLA PASAND PAN MASALA

Kamla Pasand Pan Masala has come up with a surrogate advertisement of its product. The
advertisement is titled, ‘Choti Choti Baatein’. It revolves around an upwardly mobile successful and
classy Indian young man who is travelling places and is known for his gentlemanly behaviour and
taste. He finds success in things he does and loves to explore different hues of life. He takes pride in
consuming Kamla Pasand Pan Masala which suits his lifestyle. There is a small statutory warning at
the end that chewing of pan masala is injurious to health. However, this is too small in comparison to
the alluring message that the beautifully crafted advertisement convey. Target audience, as observed
earlier, the young people who love to experiment and are impressionable at times. The gloss of an elite
lifestyle acts as the bait for undermining the larger health hazard which chewing of pan masala can
lead to.
 3.7 Campaigns run by liquor brands

Chained for years by strict norms, alcohol brands have relied heavily on associations with events and
surrogate advertising, promoting an assortment of products including mineral water and music CDs. It's
only recently that some slightly more direct avenues have opened up. Rather than hawk the spirit, alcohol
and beer makers are using branded content on television and the chatter on social media to promote their
brands.

Instead of pushing the benefits (or cool quotient) of beer, whiskey or vodka, advertisers are using TV
programs (like The Dewarists), live music (NH7 Weekender, Guetta's recent shows) and social media
initiatives on Facebook and Twitter to link themselves to a hip, fun culture.

But for restricted alcohol advertisers, social media and branded content qualify as minor miracles. They
offer more focused access to their target consumer - urban, young, spendthrift and upwardly mobile.
"The power centre is today shifting from the brand itself to the consumer who recognizes and likes or
dislikes the product it is associated with," says Samar Singh Sheikhawat, senior vice president -
marketing, UB Group.

UB, which sells both Heineken and Kingfisher beer, controls over 90% of digital traffic in the segment.
It launched a "beer up" initiative for Kingfisher on Twitter, setting up an offline meeting for its followers,
and throwing in entertainment such as a stand-up comic. Heineken used Bollywood music as a
background score for its worldwide "The Date" commercial, which premiered on digital media and
which at last count had almost 10 million views on YouTube.

Carlsberg's Hungama Nights concerts featuring singer Hard Kaur were aimed at popularising Tuborg
Strong beer. Taking the campaign to social media, says marketing director Sobodh Marwah, increased
the brand's 'fans' six to seven times.

In February, Carlsberg brought the UEFA Euro 2012 Championship trophy to India. The Danish brewer
ran a social media campaign inviting enthusiasts to vote for their city to be a pitstop in a three-city tour.
It now intends to build on the same campaign by selecting one fan to travel to Warsaw for a semi-final
to hand over the award for man of the match.
Even a craft beer brand like Doolally worked on an integrated booking system with Facebook that
allows attendees to broadcast their plans to attend the Doolally Oktoberfest in Germany. It used other
social media platforms too (giving for instance the "mayor" of Doolally a free pint of beer on mobile
social networking site Foursquare) and maintains a stream of conversation on Twitter.

However, social media cannot be the only medium. It works better when the audience is niche and the
message targeted — with Bacardi's music centric initiatives for example — but may not be as critical to
a mass brand like Kingfisher beer. "Brands that use a surrogate that advocates a certain way of life are
much better placed," says K S Chakravarthy, national creative director, Draftfcb Ulka, talking about the
limitations of social media. "With club soda there's a limit to what you can do," he adds.
Marketing consultant Harish Bijoor believes that the target audience for social media is impatient and
content ages rapidly: "Fighting fatigue will be the key challenge." Brands that would otherwise rely on
sports and live events have brought branded TV programming into the mix. With Indian and western
musicians and a travelogue/documentary format, the debut season of The Dewarists (backed by scotch
brand Dewar’s) was hotly debated on social media.
The episodes made it to YouTube via an official channel allowing even people who missed the TV
screening a chance to be a part of the discussion. Teacher's, the largest selling scotch whiskey in India,
promoted a show called Teacher Achiever's Club that "reflected its core ideals of achievement and
aspiration," according to Harish Moolchandani, managing director and CEO of Beam India, the company
that markets Teacher's.

While brands and agencies have talked about 360-degree communication programmes for a while now,
perhaps no category needs these as desperately as alcohol. Branded content is expected to attract loyal
viewers who in turn associate with it on social media and are able to make use of web-based promotions
for on-ground events.

Rajeev Samant co-founder of Sula Wines, has seen a 40% annual increase in the tour of his vineyards
after he began Sula Fest, a mixture of wine, music and food. But he admits: "We don't measure the actual
sales of wine at this event, but prefer to focus on growing its size and scale. There are so many facets to
wine and wine drinking that we want to use to strengthen the brand."
 4. RESEARCH & DESIGN

4.1 Purpose of the study

1) To understand whether the advertising of surrogate of the same brand leads to recall the original
product.

2) The study also hopes to reveal whether the youth will still be attracted to buy these products by
viewing the surrogate advertisement even though the original products are harmful to the health of
the consumers.

3) To study the impact on the minds of youth who can get attracted to consume the original product as
they are endorsed by celebrities (where in they actually increase the cost of the product by using
celebrities in the advertisements.)

4) To study whether the youth actually develops a habit of drinking/ smoking by watching these
advertisements

4.2 Objectives of the study

1) To know the impact of surrogate advertisements on people.

2) To know the level of customer awareness about surrogate advertisements.

3) To know whether the youth is actually reacting to such surrogate advertisements.

4) To study the factors which attract the youth to decide for purchase of the original product and how
the youth relate it with the surrogate product.

5) To find out the influence of surrogate advertisements on consumer buying behavior.

4.3 Research Methodology adopted

This study is based on analysis of secondary data (literature) available on the subject and
Case studies of advertisements of brands. Some brands are associated with Liquor and some are
associated with Tobacco. The television commercials uploaded on YouTube have been studied. In case
of ITC & Bacardi, the website has also been accessed to study their own claims as well as the television
commercials posted in their websites. By reviewing all the advertisement, our purpose is to see the
impact of surrogate advertisement on Indian youth. What kind of image advertiser wants to show them
to create brand awareness?

Secondary data or second-hand data will form the basis will form the basis of my study in this project

Data collection methods-

a) Newspapers, journals and periodicals

b) Research papers
c) Internet
d) Magazines
e) Reference books based on marketing and advertising
 5. DATA ANALYSIS

5.1 CASE STUDY ON ITC LIMITED

5.1.1 INTRODUCTION

ITC Limited or ITC is an Indian conglomerate headquartered in Kolkata, West Bengal. Its diversified
business includes five segments: Fast-Moving Consumer Goods (FMCG), Hotels, Paperboards &
Packaging, Agri Business & Information Technology. Established in 1910 as the Imperial Tobacco
Company of India Limited, the company was renamed as the Indian Tobacco Company Limited in 1970
and further to I.T.C. Limited in 1974. The periods in the name were removed in September 2001 for the
company to be renamed as ITC Ltd.

Its diversified business includes five segments Fast Moving Consumer Goods (FMCG), Hotels,
Paperboards & Packaging, Agri Business & Information Technology.

5.1.2 MAJOR PRODUCTS

ITC was formed on 24 August 1910 under the name of Imperial Tobacco Company of India Limited and
the company went public on 27 October 1954. The earlier decades of the company's activities centered
mainly around tobacco products. In the 1970s, it diversified into non-tobacco businesses. But cigarettes
and tobacco still continue to be the major selling products of this company. Ironically, apart from these
products which are extremely hazardous and fatal, the company is also a major producer and supplier of
few essentially vital and wholesome goods and supplies some of which have been stated below:

Foods: ITC's major food brands include Kitchens of India; Aashirvaad, Mint-o, gum-o, B natural,
Sunfeast ,Candyman, Bingo! and Yippee!. ITC is India's largest seller of branded foods with sales of
over Rs. 4,600 crore in 2012- 13. It is present across 5 categories in the Foods business namely Staples,
Snack Foods, Ready-To-Eat Foods, Juices and Confectionery.

Lifestyle apparel: ITC sells its products under the Wills Lifestyle and John Players brands. Wills
Lifestyle was accorded the ‘Superbrand’ status and John Players was included in the top 10 ‘Most
Trusted Apparel Brands 2012’ by The Economic Times.
Personal care products include perfumes, haircare and skincare categories. Major brands are Fiama Di
Wills, Vivel, Essenza Di Wills, Superia and Engage.

Stationery: Brands include Classmate, PaperKraft and Colour Crew. Launched in 2003, Classmate went
on to become India's largest notebook brand in 2007.

Safety Matches and Agarbattis: Ship, i Kno and Aim brands of safety matches and the Mangaldeep
brand of agarbattis (Incense Sticks)

Hotels: ITC's Hotels division (under brands including WelcomHotel) is India's second largest hotel chain
with over 90 hotels throughout India. ITC is also the exclusive franchise in India of two brands owned
by Sheraton International Inc. Brands in the hospitality sector owned and operated by its subsidiaries
include Fortune Park Hotels and WelcomHeritage Hotels.

Paperboard: Products such as specialty paper, graphic and other paper are sold under the ITC brand by
the ITC Paperboards and Specialty Papers Division like Classmate product of ITC well known for their
quality.

Packaging and Printing: ITC's Packaging and Printing division operates manufacturing facilities at
Haridwar and Chennai and services domestic and export markets.

Information Technology: ITC operates through its fully owned subsidiary ITC Infotech India Limited,
which is a SEI CMM Level 5 company.

5.1.3 SALE OF CIGARETTE

ITC Ltd sells 80 percent of the cigarettes in India, where 275 million people use tobacco products and
the total cigarette market is worth close to $6 billion (around Rs.65,000 crore). ITC's major cigarette
brands include Wills Navy Cut, Gold Flake Kings, Gold Flake Premium lights, Gold Flake Super Star,
Insignia, India Kings, Classic (Verve, Menthol, Menthol Rush, Regular, Citric Twist, Mild & Ultra
Mild), 555, Silk Cut, Scissors, Capstan, Berkeley, Bristol, Lucky Strike, Players, Flake and Duke &
Royal. ITC's equity shares are listed on Bombay Stock Exchange, National Stock Exchange of India and
Calcutta Stock Exchange. The company's Global Depository Receipts (GDRs) are listed on the
Luxembourg Stock Exchange.
 Shareholders ( as on 31-March-2013) Shareholding

Foreign Companies (mainly British American 30.54%

Tobacco Company)

Foreign Institutional Investors 19.68%

Banks, Financial Institutions, Insurance Companies 33.44%

and Mutual Funds

Bodies Corporate 04.91%

Public and others 10.59%

GDRs 00.30%

Total 100.00%

5.1.4 BAN ON SMOKING:

Smoking in public places was prohibited nationwide from 2 October 2008 under the Prohibition of
Smoking in Public Places Rules, 2008 and COTPA. The nationwide smoke-free law pertains only to
public places. Places where smoking is restricted include auditoriums, cinemas, hospitals, public
transport (aircraft, buses, trains, metros, monorails, taxis) and their related facilities (airports, bus
stands/stations, railway stations), restaurants, hotels, bars, pubs, amusement centres, offices (government
and private), libraries, courts, post offices, markets, shopping malls, canteens, refreshment rooms,
banquet halls, discotheques, coffee houses, educational institutions and parks. Smoking is allowed on
roads, and inside one's home or vehicle. Then Health Minister Anbumani Ramadoss was quoted as
saying, ‘Smoking on the road or the park will save others from the wrath of passive smoking". On the
contrary, Savitha SK, deputy health officer, BBMP, quoted "For those who have any doubts, road is a
public place. Smoking in public places, including roads, is banned by law,’ Smoking is also permitted
in airports, restaurants, bars, pubs, discotheques and some other enclosed workplaces if they provide
designated separate smoking areas. Anybody violating this law will be charged with a fine of 3200. The
sale of tobacco products within 100 yards of educational institutions is also prohibited. However, this
particular rule is seldom enforced.
5.1.5 CONTROVERSIAL EXAMPLE:

ITC, India's leading cigarette maker, is offering help to those who want to quit smoking. It has begun
selling a nicotine gum called "KwikNic", as an alternative to cigarettes. It works on the principle of
Nicotine Replacement Therapy (NRT) and helps reduce the urge for tobacco. NRT involves the use of
products that provide low doses of nicotine but do not contain the toxins found in smoke.

Analysts claim ITC's NRT products are unlikely to dent its cigarette sales. "These are at best long-term
alternatives and ITC's gross sales are too huge for any new product like this to have any significant
impact on its mainstream products in the short to medium term," says Amnish Aggarwal, Senior Vice
President, Motilal Oswal Securities. In 2012-13, ITC reported gross sales of Rs 25987.20 crore from
cigarettes.

It appears a win-win proposition for ITC. It sells cigarettes to smokers. And NRT gums to those trying
to quit. If some resume smoking again, ITC's cigarettes are still available.

5.1.6 ANALYSIS

Although government has banned advertisement of commodities like cigarette because these products
are injurious to health. However, since these commodities generate high revenues and a way had to be
found to make the commodities available to general public without directly advertising and
circumventing law.

Considering a particular example, A petition filed in 1999 before the High Court of Delhi by the
Voluntary Health Association of India, where a ban was sought on the sponsorship of the Indian cricket
team by the Wills brand of cigarettes manufactured by ITC. The appearance of the ‘Wills’ logo on the
sports apparel worn by the cricketers facilitated the repeated telecasting of that logo to millions of
viewers.
5.2 BACARDI’S MARKET SHARE SCENARIO AND CURRENT MARKET
STRATEGY

Bacardi picks up local consumer insights to infuse new spirit into stagnating sales. Chilling out on a
beach in the middle of the day has a universal appeal. Or does it not, it appears, In India. Which is why
Bacardi is on the verge of releasing a brand-new campaign for the Indian market, which replaces the
earlier trademark global TV commercial? Sure, the fun, colours and passion are all there because the
target group of tipplers between the ages of 25 and 45 years hasn’t changed. Only, in place of sun, sea
and sand in the afternoon, the setting is an evening bash after a tiring day’s work. That marks a radical
for the Cuban rum maker. This is the first time anywhere in its worldwide markets that Bacardi Martini
has had to leave its global communication to local taste. What made Bacardi Martini take such a
significant step? The answer lays in the way the market for white spirits, and white rum in particular,
has evolved over the last few years. Today, the white spirits market accounts for less than 5 percent of
total liquor sales in India and is dominated by gin. White rum and vodka make up less than 2 per cent of
the total liquor sales

Considering many global brands have thought twice about bringing their international campaign. So,
Bacardi began with its worldwide Indian market, how is it that Bacardi chose this option? Part of the
explanation lays in the fact that Bacardi faced a major challenge in defining consumers in the
first place. Although rum as a category, primarily dark rum, accounted for 13 to 14 per cent of the total
market in 1998, consumer loyalty was extremely high and hard to break. So, the task before Bacardi
was a formidable one.

Price was another barrier since Bacardi came at a premium of over 250 per cent to local rums and
whiskies. Research at the time showed that, at best, Bacardi could possible pick-up rum drinkers on the
fringes, who were open to trying out other types of rum. But this number was too small and uncertain.
Bacardi could hope to draw in these consumers long as it preserved the strong, macho properties of
dark rum. Most rum drinkers chose the product to make a statement about them and standout in the
crowd. “The change we are making in India, while subtle, recognizes the need to balance the
playfulness of Bacardi with more of a work ethic if we are to connect even more with
the Indian consumer” Jeff Macdonald Marketing director, Bacardi Martini India Limited. Research
also should that up market consumers were more concerned with how a drink enhanced their image
rather than with taste positioning of freedom and passion to get consumer to associate the drink with
youthfulness.

The communication was followed up with elaborate below the line activities. Such as promos (free
glasses with a bottle of Bacardi). To increase trials, Bacardi launched a miniature 60 ml bottle at Rs.
35 and then a 375 ml print bottle for Rs. 180. The idea was torope in consumers who found the drink
expensive. The last few years saw Bacardi (in common with other liquor companies) hit by the blanket
ban on advertising in the electronic media. In the absence of direct product advertising, the company
was left with no option but to rely on below the line activities, such as a dance parties and promotions.
The standard of surrogated advertising was taking time since the parent company wasn’t used to this
form of advertising. Late last year Bacardi kicked off a study to find out what would push sales.

The answer lay in making its surrogate communication more relevant for the Indian
target audience. While Bacardi targeted a wider consumer segment, young executives dominated its
consumption. The company discovered these people are serious about their careers, which have higher
priority than having fun. Fun follows after work, while its previous communication was all about fun.
Based on the findings, the company roped in filmmaker Prasoon Pandey to create a new film under the
aegis of its advertising agency McCann – Erickson.

The new advertising is crafted on simple thought of transformation that is how the Bacardi spirit charges
up a lazy evening after a hard days work. Bacardi’s new advertising may have taken a cue from what
most other liquor brand are doing McDowell’s No. 1 Aristocrat and Gilbey’s Green have all tried to
associate themselves with professional success at the work place. Bacardi is confined that its new
initiatives will help bring about a change in consumer habits, although it admits the process may take
time. Its assumptions are based on its observation in the US and UK which have been showing a
clear move from whisky to white spirits among young up market people driven by a combination of
strong image-based marketing initiatives and the fact that white spirit have a wider potential as cocktail
base. In the US, more than 50 per cent of the market is already white spirits; India tends to follow global
trends, “says Macdonald. So we are very confident we can grow this segment and take a leading position
“This year BACARDI objective is to make it even bigger and even hotter, with innovative venues the
hottest international DJs and hot, new Bacardi cocktail” said Mr. Macdonald.
Bacardi Blast compact discs (CDs) will be another thrust area for brand building. The
company is all set to launch the ninth CD in the series, having already sold over 300,000 copies with
four releases reaching number one in the charts. “We plan to have Bacardi Nightshift events in even
more big way,” says Macdonald. And a new on trade promotion concept that will become the hottest
post work party in town. Most of these initiatives are in line with Bacardi Martini’s objective to
garner quick volume in the Indian market. Last year, the company acquired a 51 per cent stakes in
erstwhile white and Mackay (now Whytehall India) and spreading its presence in IMFL whiskies as
well. Apart from this, the company is distributing William Grant’s Scotch
whisky brands and Bacardi Martini’s affiliate John Dewar & Sons Dewars ScotchWhisky in India. But
its experience with white liquor will test whether it’s truly understood the spirit of the Indian Market.
 5.3 KEY FINDINGS

The present research has been conducted in a bid to comprehensive and comparative study of
the advertising strategy used in liquor industry which makes the need of surrogate advertising
exemplary, as the only way of advertising for liquor industry and also to know the effectiveness of
surrogate advertising in influencing customer perception towards the products offered by the company.
Liquor Industry has one of the most lately growing marketing values in our country India. The liquor
industry does market its products by campaign to the entire market of customers. Therefore, the
assurance of the customer is increasing day by day this is mainly due to the advertising. The real
objective of these ads is to make up for the losses occurring to the companies because of ban on direct
ads of parent products these ads are peculiar and the author has identified the following features of these
ads:

(I)Use of the same brand name, tag line and logo as of the parent product (this being the most distinctive
feature),

(II) Use of themes like adventure, party, fun, passion, bravery, masculinity, etc. which go more with the
parent product of the company like liquor, tobacco and cigarettes and;

(III) Use of a surrogate product which can be related (like soda) or unrelated (like cassettes, clothing,
golf accessories) to the parent product.

(IV)It also studies the contribution of such type of advertising in branding and creating a good brand
image and winning brand loyalty of target customers.

This fact is also substantiated by the findings of the present research as most commonly approached
liquor consumers in this research find that surrogate advertisements are not only misleading, but also
false and dishonest in many cases. Instead of an outright ban of surrogate advertising, liquor company
need to underline the need for dialogue and subsequent guidelines outlining dos and dont’s of
advertising. It could specify timings when the ads should be aired, not target children, disallow
teenagers in ads, not allow ads that are glamorous or suggest increased attractiveness to the opposite
sex after alcohol consumption.
 5.4 CONCLUDING REMARKS

• In the case studies it is evident that surrogate advertising is broadcast across channels in Indian
television. While such advertisements are difficult to come across in public broadcasters like
Doordarshan, the trans-national nature of satellite channels makes regulations difficult.
• Surrogate advertisement of tobacco products and liquor has far reaching consequences. The tones of
these advertisements are alarming because they always appeal to aspirations for a better lifestyle.
• Indian law has certain guidelines which does not allow advertisements of harmful products like alcohol
and tobacco on television but surrogate advertisements have succeeded in manipulating the law. The
successful implementation of the brand extension strategy by these companies has added a new
dimension to the problem for the authorities. Punishments have to be stringent to deter companies as
well as broadcasters from surrogate advertisements.
• Different television channels should be made accountable for accepting such advertisements. The
alarming rate of alcohol consumption and intake of tobacco products at a young age is worrying for
the nation.
• These products are getting stereotyped as being the companion of good times and classy lifestyle.
Making it mandatory to give statutory warning on sequences where alcohol intake and tobacco
consumption is shown on television will not help if these surrogate advertisements are allowed to be
aired.
• A greater awareness of the audience about these advertisements is the need of the hour along with the
need for new legislations on surrogate advertisements.
 6.1 CONCLUSION

Surrogate advertising is basically duplicating the brand image of a particular product and then promoting
a different product of the same brand. It has become an ethical issue and has emerged as a
loophole challenge over government rules. Though this upcoming trend is not healthy for the young
consumers & others in the interest of the health of the community; Surrogate ads have proved themselves
a strapping & successful marketing strategy for the forbidden goods today. Surrogate Advertising has
been a powerful medium through which a particular brand reaches to its consumers. Although the
original products have not been advertised on the television, still these brands enjoy a higher sales
volume each and every year. The trend followed by such ads could prove to be boon for big and
established players as they result in higher brand recall value, thereby helping them to push their banned
products further. With government now enforcing ban on surrogate advertisements, companies are
turning to event sponsorship, event organizing, corporate films and more and more innovative integrated
marketing communications strategies

This study was conducted to know the knowledge and perception of customers about surrogate
advertisement and analyse the factors for knowing if surrogate advertisement have any impact on the
consumer buying behavior of surrogate products. It is understood surrogate advertisements are
successful in creating brand recall of the hidden product in the advertisement.

Government need to regulate the laws regarding surrogated advertisement like more imposition of tax
and reduce the number of liquor shop near campus and college because youth are the future of the India.
If youth will addict to alcohol then who will make DEVELOPING INDIA into DEVELOPED INDIA.
 6.2 SUGGESTIONS

There should be stringent regulatory measures to curb the practice, such as:

➢ making transparent laws banning surrogate advertisements for different products under a single
brand names, by amending the Trade Marks Act, for instance;
➢ providing teeth to the Advertising Standards Council of India to enable it take action against false and
misleading advertisements, and keep a close vigil over clever evasion of the law;
➢ asking the electronic and print media to adhere to the advertisement codes and not encourage surrogate
advertisements;
➢ calling on the ASCI address complaints received from consumers against surrogate advertisements and
take appropriate actions immediately;
➢ creating a consumer awareness programme to help people understand the negative impact of surrogate
advertisements;
➢ adopting strict laws to penalize those companies featuring surrogate advertisements without any real
existence of the product; and
➢ Requiring advertising agencies to have full knowledge of the products under the
same brand for which they are promoting advertisements, and taking legal actions against those
agencies which design surrogate advertisements.
➢ Health warnings A single health warning (“Cigarette smoking is injurious to health” or “Drinking
liquor is injurious to health”) is mandatory on packets and any advertisements
 6.3 LIMITATIONS OF THE STUDY

1. A detailed study of all the satellite television channels for the occurrence of these advertisements was
not done due to unavailability of a data bank of such commercials on television over a period of time.

2. A number of other brands have also been left out to objectively assess the extent and nature of these
advertisements in the chosen ones.

3. Latest sales figures could not be arranged due to lack of resources.

 7.1 BIBLIOGRAPHY

BOOKS

1. Philip Kotler, Kevin Lane Keller.(2006). Marketing Management. Pearson Education. 12thEdition.
2. Advertising Management ( Shri Jethwaney)
3. Information & broadcasting ministry
4. Advertising and promotion

JOURNALS

1. Surrogate Advertising in India : a never ending Dilemma (Marketing Mastermind vol IX, 3 MARCH
2009)
2. Surrogate Advertising : what you see is ‘not’ what you get… ( Advertising Express vol IV, 6 JUNE
2004)
3. Kotni.Devi Prasad VV.(2011).The Banned Surrogate Marketing As Brand-New Brand Extension
Advertising.Vol-2.Issue-4
4. Dr. S. G. Khawas Patil. Laxmikant S. Hurne. (2011).Surrogate advertising: A Successful Marketing
Strategy for Liquor, Whisky products. Indian Streams Research Journal.
Vol-I , Issue-V.June.
 7.2 WEBLIOGRAPHY

1. http://www.theadvertisingclub.net/index.php/features/editorial/3224-surrogate-advertising-in-india

2. http://www.drugs.ie/resourcesfiles/ResearchDocs/Global/WHO%20report.pdf

3. https://en.wikipedia.org/wiki/Surrogate_advertising

4. https://www.thehindubusinessline.com/2003/05/23/stories/2003052300090900.htm

5. https://bestmediainfo.com/2016/08/the-art-of-surrogate-advertising/

6. https://web.archive.org/web/20121013004542/http://www.isrj.net/June/2011/Commerce_Surrogate_

Advertising.html