A Group report On Taste and preferences of The tobacco industry

SUBMITTED BY:1). CHOKSI HEMAL 2). DIYORA DIPAK S. 3). DOBARIYA TUSHAR A. 4). GAJJAR DHAVAL 5). GAJJAR JAINISH 6). JANI TEJAS 7). JOSHI ARJUN U. 8). MANGUKIYA NIKUNJ M. 9). SHIYANI KAMLESH 10). SATASIYA DILIP A. 3006 3007 3008 3011 3012 3016 3017 3022 3075 3187

SUBMITED TO:-

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CERTIFICATE

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PREFACE
"You can tell whether a man is clever by his answers. You can tell whether a man is wise by his questions."
Naguib Mahfouz

One of the recurrent themes in our report has been the importance of tobacco as a beverage in the mind of customer. Apart from tobacco how different firms of tobacco are attracting the consumers is also a focus area of our report. During the past few decades we have lived in a culture that is the evidence of changing consumption pattern of tobacco and growing verities of tobacco in Indian market. We have chosen to prepare a report on Indian tobacco industry because of its importance for a customer and for the Indian economy; we can never underscore how tobacco is a important medium of foreign revenue for our nation. At first when we were putting down our efforts we have no idea what we would have to say though our report but however we put aside all doubts and began to examine the past of tobacco industry that how with the passage of the time tobacco industry has grown and became a strength for our economy as well the present scenario, and where the future lies of Indian tobacco industry. Every industry has struggled to achieve its goals. Generation have given their best to make life better for their off spring. There is nothing mysterious or hidden about it no alternative to effort. And yet we failed to follow the winning trace. More than the problems outside globalization recession, inflation, instability and so on- we are concerned about the inertia that has gripped the tobacco industry psyche, the mindset of defeat. We believe that when we believes in our goals that what we dream of can became reality results will began to follow. In the chapters of our report we have introduced with our work and extent of our knowledge regarding different concept of marketing and business environment and how we have linked the report with the practical issue of tobacco industry.

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ACKNOWLEDGEMENT

As per laid down curriculum the Third Year of B.B.A. we are assigned to make a report on teast and preferences of the people on tobacco industry. We are thank you to each & every person for providing us and supplying an adequate and defused information and their best support and guidance for completion of our report.

We really appreciate the work and systematic efforts of our professor Mr. Bhaumik Nayak and shilpa trivedi who are helped guided and support us positively and enthusiastically in getting our work done.
SUBMITTED BY:1). CHOKSI HEMAL 2). DIYORA DIPAK S. 3). DOBARIYA TUSHAR A. 4). GAJJAR DHAVAL 5). GAJJAR JAINISH 6). JANI TEJAS 7). JOSHI ARJUN U. 8). MANGUKIYA NIKUNJ M. 9). SHIYANI KAMLESH 10). SATASIYA DILIP A. 3006 3007 3008 3011 3012 3016 3017 3022 3075 3187

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INDEX
CH-NO:NAME OF CHEPTER CERTIFICATE PREFACE AKNOWLEDGEMENT ********* TABLE OF CONTENT 1 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2 3 3.1 3.2 3.3 3.4 3.5 3.6 4 4.1 4.2 4.3 RESEARCH METHODOLOGY RESEARCH OBJECTIVE RESEARCH DESIGN RESEARCH APPROACH RESEARCH SOURCES CONTACT METHOD RESEARCH INSTRUMENT SAMPLING PLAN ANALYSIS OF RESEARCH LIMITATIONS LITRETURE REVIEW INTRODUCTION TO TOBACCO HISTORY HARMS OF TOBACCO FORM OF TOBACCO TOBACCO FARMING IN INDIA PROCESS OF TOBACCO IMPORT&EXPORT SENERIO ANALYSIS OF TOBACCO INDUSTRY SIZE AND STRUCTURE OF INDUSRY MAJOR PLAYER AND MARKET SHARE SWOT ANALYSIS ******** 8 9 10 11 12 12 13 14 16 19 20 23 27 29 33 34 38 43 59 60
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PAGE NO.

4.4 4.5 4.6 5 5.1 5.2 5.3 5.4 6 6.1 6.2 6.3 7

PEST ANALYSIS VALUE CHAIN OF TABACCO INDUSTRY FIVE FORCE ANALYSIS ANALYSIS OF MARKETING MIX PRODUCT PRICE PROMOTION PLACE ANALYSIS OF STP SEGMENTATION TARGETING POSITIONING
SENSITIVITY AND BRAND PREFERANCES WITH SPECIAL FOCUS ON VARIOUS FORM OF TOBACCO.

64 72 76 82 90 97 101

104 109 110 ANALYSIS OF CONSUMER PRICE AND 111

8 9

Conclusion and findings BIBLIOGRAPHY ************************************

151 153

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PART-1 RESEARCH METHODOLOGY

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WHAT IS RESEARCH METHODOLOGY?

Methodology is defined as 1. "the analysis of the principles of methods, rules, and postulates employed by a discipline"; 2. "the systematic study of methods that are, can be, or have been applied within a discipline"; or 3. "a particular procedure or set of procedures."

1.1)RESARCH OBJECTIVE:Research objective can be define as the purpose or motive behind the research though which the researcher tries to conclude some of the major and minor findings. There are two types of objectives in research. Primary and secondary objective. (1) Primary objective:-

Our researchers primary objective is to identify the consumers preferances and consumption habit of tobacco. (2) Secondary objective: To analyze the situation of tobacco market in india. To understand competitive framework of Indian tobacco industry. To analyze the marketing mix strategy adopted by various big tobacco marketers. To understand the various internal and external factors affecting Indian tobacco industry.

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(1.2) Research Design:Research design is also known as framework or blue print of the research. There are three types of research design:-

(1)

Exploratory Research Design:-

Exploratory Research Design means to find something new that help us to collect preliminary information and research hypothesis consumption.

(2)

Descriptive Research Design:-

Descriptive Research Design means to describe any situation or information in detail.

(3)

Causal Research Design:-

Causal Research Design means to study the cause and effect relationship of the situation. Here in the market research we have use Exploratory Research Design and Descriptive Research Design. We started with Exploratory Research for the following reason and ended with Descriptive Research by explaining each topic in detail. To know the position of major players in the field of note book and long book. To know the consumer preferences on long book and note book . To know the brand preferences for notebook and long book.

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1.3) DATA SOURCES: The source from which we get the information or data for research is known as Data source.

(1)

Primary Data: -

Primary data consists of the information which is freshly collected for the specific purpose at hand. Newly / Freshly gathered information is known as primary data. For our project sources for primary data are personal interview with the holder of pan shop and parsons who consume the tobacco. For getting the primary data we have visited the different pan shops Lalit pan shop Pandit pan shop New way pan shop Jai ambe pan shop And many more.. Secondary Data: like

(2)

Secondary data consist of information that already exist somewhere and having been collected for another purpose. The data which are already exist & which was gathered earlier for, magazines any other purpose is known as secondary data, sources of secondary data are websites, etc. WWW. docstok. Com WWW.tobaccocontrol. Com www.tobaccofreekids.org www.tobaccofreekids.org www.notobacco.org www.imperial-tobacco.com
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1.4) Research Approach:-

After deciding the data source we will get the information from our respondent i.e. Consumers. Primary data can be collected in following five ways:

(1) Observational Research:Fresh data can be collected by observing the consumers when they shop or consume the products. Important point can be noted down while analyzing the behavior of consumer.

(2) Survey Approach:It refers to face to face or direct communication with the respondents. In this predecided questions are asked to respondents. It is the suited for descriptive research.

(3) Focused Group Approach:In this researcher select people who are potential to afford their products. The trained moderator will ask the questions to the respondents and he will note the important points regarding his preferences.

(4) Experimental Approach:In this approach two mutually exclusive groups are selected having similar characteristics, keeping the same controllable factor and same variable in both groups but providing them different treatment to observe the differences in their opinion. Here we have used Survey Research Approach to know about consumers beliefs, preferences and satisfaction regarding the consumption with the help of survey instrument known as Questionnaire.

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1.5) CONTACT METHODS:In this we decide the method through which we can contact the respondent to get the information. Some of them are as follows:

(1) Personal Interview:It is a face to face communication with respondents. By this types of interview we can get the reliable information and researcher is able to complete all the questions. Explanation is given for the questions which are not understood by the respondents.

(2) Telephonic Interview:In this researcher ask questions to respondent on telephone. It is the best method for gathering information quickly and is less costly also. But in this type of method researcher can not get reliable, accurate and correct information.

(3) Mail Questionnaire:A structure questionnaire is prepared and sends to the respondents. The respondent is supposed to fill up the questionnaire and send it back to the researcher. This is very time consuming. (4) Online Interview:In this type of research we ask the questions to respondents online through chat or Email. Large number of respondents can be covered and it is less costly.

For our research we have used PERSONAL INTERVIWE for getting reliable information. We met consumer of various age group and income group to know their consumption habit and preferences related to tobacco industry.

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(1.6). RESEARCH INSTRUMENTS:Basically there are mainly 3 types of Research Instruments. They are: 1) Questionnaire; 2) Qualitative measures, 3) Mechanical Devices. In our research we have used questionnaire as a Research Instrument.

Types of Questionnaire:
(1) Structured Questionnaire:In these types of Questionnaire all the questions are pre decided formal and it is asked in a logical sequences.

(2) Unstructured Questionnaire:In this types of Questionnaire questions are ready but not asked in logical sequence. Research can ask any question at any question at any time according to his wish as the format is not pre decided.

Types of Questions:
Open ended questions : It means where respondents is allowed to answer in his own way by using own words and sentences. Here freedom is provided to respondents to answers. Close ended questions : It means where respondents are provided the options and is supposed to answer from those alternatives only. Here freedom is not provided to respondent to answer. For our report we have used STRUCTURED QUESTIONNAIRE that includes both of open ended questions and close ended questions. In close ended type of questions we have used Dichotomous Questions and multiple choice questions.
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1.7).SAMPLING PLAN:-

a. b. c.

Sample Unit Sample Size Sample Procedure

Sample: Sample is a segment of the population selected for research to represent the population as a whole. In our report the sample is consumers who are consuming the tobacco in Ahmadabad.

Sample Unit: Sample Unit means who is to be surveyed? We have done the survey on Pan-parlor and the customers of tobacco product& we met the consumer personally and we had find the reason behind the consumption of tobacco.

Sample Size: Sample Size means how many people should be surveyed? We have surveyed 200 people who are consuming tobacco in Ahmadabad. And pan-parlor given below.

Lalit pan shop Pandit pan shop New way pan shop Jai ambe pan shop And many more..
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Sampling Procedure: - Sampling procedure means how should the respondent be chosen. There are two types of sampling procedure. Probability Non probability

On the Probability bases sample, where each element of population has given equal chance of getting selected. In our report we are not going survey according to the probability methods.

On the Non-Probability bases sample, where each element of population has not given equal chance of getting selected. In our report we have done survey according to the non-probability methods.

In Non Probability we have done the survey according to the convenience. We surveyed the different kind of pan shop and we collect the information which we can collect with the responds of the consumers.

In our research we used non probability sampling procedure by convenience sampling as all the units of population do not get known and equal chance to be selected as a samples.

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1.8) ANALYSIS OF RESEARCH:-

Analysis of our research is divided into 5 parts: They are: (1) (2) (3) (4) Screening Coding Decoding Tabulation General Tabulation Cross Tabulation (5) Pie charts

A detail introduction of Stationerys aspects is as follows:

(1) Screening: Screening involves collections of all necessary information through questionnaire and then identifies the eligible questionnaires data useful for research. In this process we have discriminated the correct questionnaire and conducted our analysis. On the basis of these error free questionnaires we have conducted the further analysis.

(2) Coding: In the second stage of our analysis we have marked 1 to 300 numbers on the questionnaires. That means our sample size was 300 respondents. Each and every question of questionnaire and the option of given in each question was also assigned a code

(3)

Decoding:

In this steps of our analysis the same method which we have applied at the time of coding in the actual questionnaire. In the computer first of all we have entered 300 respondents as R1, R2, R3, R4, R5.R300 and the questions 1 to 27 We use a single sheet for all the single answers questions and for each multiple choice question we have used different sheet.
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(4)Tabulation:

In the tabulation stage we as researcher have used 2 types of tabulation: (a) General Tabulation (b) Cross Tabulation

(a)

General Tabulation:

In general tabulation we have arranged the data in forms of table for every question likewise type of numbers of respondent & income.
Income Less then 10000 10000-20000 20000-40000 Above 40000 People 75 65 47 13 Percentage 37.5 32.5 23.5 6.5

(b)

Cross Tabulation: We have also tried to articulate the relation between entities.

Example:-age of the respondent and income group AGE & INCOME GROUP
Spending Age 1-18 19-25 26-35 36-45 46-55 Above 55 Total 11 15 04 05 08 01 48 08 30 12 04 05 04 63 03 18 17 07 03 02 50 01 18 07 10 01 02 39 23 85 40 26 17 09 200 Less than 100 100-300 300-500 Above 500 Total

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(5)Pie charts:

We have also presented the information collected from our side in the form of pie chart also so that a clear idea about the responses given by them can be obtained.

Example:MONTHLY INCOME OF PEOPLE WHO CONSUME TOBACCO

13

47

75

LESS THAN 10000 10001-20000 20001-40000 40001 ABOVE

65

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1.9) LIMITATION:-

There are certain limitations to be faced while doing this researches. (1) Time: It is the time consuming as it took nearly 6-7 months for data collection, primary survey and analysis of it of 200 sample size. (2) Cost: It becomes more expensive due to primary survey done to know the preference of consumers towards tobacco. (3) Area: The Geographical area was limited to Ahmedabad only. There for result may be restricted or limited. (4) Professional Approach: For the purpose of analysis we have not used any high technical software. So problems and loopholes may be found.

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Part-2 LITRETURE REVIEW

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1)

This article analyses consumption patterns, socio-economic distribution and household choice of a variety of tobacco products across rural and urban India. Using a multinomial logit model, we examine the choice behaviour of a household in deciding whether and which tobacco products to consume. Household-level data covering 120,309 households have been used for this. We find that most forms of tobacco consumption are higher among socially disadvantaged and lowincome groups in the country. Variables such as education, sex ratio, alcohol and pan consumption were found to be significant factors determining tobacco consumption habits of Indian households. The effect of some of the factors on the probability of consumption differs for certain types of tobacco products, increasing some and decreasing others. Addictive goods such as alcohol and pan were found to be complementary to tobacco consumption

2)

The main objective of this paper is to analyze the pattern of tobacco consumption and its health implications in India. We use various rounds of National Sample Survey for this purpose. The paper finds that, though there is a reduction in tobacco consumption in the form of bidi and cigarette in India as a whole, this decrease is compensated for by an increase of pan consumption in rural India. It has also been observed that the consumption of tobacco is more among the poor in India and we argue that the consequent higher health care spending arising out of tobacco related diseases leaves them economically worse off. Thus the paper concludes that, apart from the economic gains that tobacco industry is generating, tobacco use also imposes burden, especially on users, in the form of numerous tobacco related diseases and high health care spending. This, coupled with the fact that the investment on health by government is declining over the years, has the potential to trap the poor in a vicious circle of poverty and ill health. Hence government policy needs to be targeted towards an effective control of tobacco use.

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Part-3
Introduction Of Tobacco

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3. INTRODUCTION TO TOBACCO:3.1). HISTORY OF TOBACCO:-

Tobacco is deeply rooted in our history. Because the export of tobacco financed shipment of essential goods from England, it became the lifeblood of the early settlers. Tobacco sales continue to play a major role in the U.S. economy. Approximately one-third of the total annual production is exported. Leaf and manufactured product exports have grown since 1988 and now appear to be leveling off. Generally, imported tobacco is a lower grade than domestic leaf. It is used in the manufacture of generic cigarettes, which in 1992 were 30 percent of the market. American leaf is used in the brand name production. Tobacco is the seventh largest cash crop of the 50 states. One acre produces an average yield of $3,862. In comparison, corn, cotton, and peanuts yield $262, $380, and $691 per acre, respectively. The five largest producing states of flue-cured tobacco for 1992 are: The tax on tobacco products is now the second largest revenue generated for the U.S. Treasury, exceeded only by the excise tax collections from gasoline. Tobacco is the most heavily taxed of any consumer product by percent of retail price. The taxes generated are not only from excise, but from income, employment, property, and sales taxes.
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ECONOMIC HISTORY OF TOBACCO PRODUCTION:Tobacco occupies a prime place in the Indian economy on account of its considerable contribution to the agricultural, industrial and export sectors. India is the second largest producer of tobacco in the world. China and the USA rank first and third, respectively, in terms of tobacco cultivation. Brazil, Turkey, Zimbabwe, Malawi, Italy and Greece are the other major tobacco producing countries. Tobacco contributes substantially to the economies of these countries. In 2000.2001, the contribution of tobacco to the Indian economy was to the Extent of Rs 81,820 million, which accounted for about 12% of the total excise collections. Foreign exchange earnings during the same period were Rs 9030 million, accounting for 4% of Indias total agricultural exports. Endowed with Favorable agro-climatic attributes such as fertile soil, rainfall and ample sunshine, India has the potential of producing different varieties of tobacco with varied flavors. KEY MESSAGES:. Tobacco cultivation has a history of about 8000 years. . Europeans were introduced to tobacco when Columbus landed in America in 1492. . Portuguese traders introduced tobacco in India during 1600. Tobacco became a valuable Commodity in barter trade and its use spread rapidly. . Tobaccos easy assimilation into the cultural rituals of many societies was facilitated by The medicinal (and perhaps intoxicating) properties attributed to it. . Tobacco smoking became a popular leisure activity in Europe during the early seventeenth Century. . Introduced initially in India as a product to be smoked, tobacco gradually began to be used in several other forms. Paan (betel quid) chewing became a widely prevalent form of smokeless tobacco use. . Although some Chinese and European systems of medicine supported the use of tobacco, Ayurveda. the Indian system of medicine. never supported the use of tobacco as medication. . The ill effects of tobacco use on human health were recognized even in the sixteenth century, which led to restrictions on its use even in earlier centuries. . Tobacco thrived everywhere in the world despite social (and some religious) disapproval The immediate and tangible benefits that accrue from tobacco cultivation, manufacture and marketing act as incentives for farmers to grow tobacco and for the government to encourage tobacco cultivation and manufacture. Tobacco has developed from a commodity to which great importance and value were attached (because of its presumed medicinal and evident intoxicant properties), and hence used for barter trade during the sixteenth and seventeenth centuries, to a cash crop in subsequent periods.
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The following aspects of tobacco can help in understanding why it has developed as a cash crop: 1. Tobacco has been contributing substantially to the total agricultural income. 2. It yields high net returns per unit of cultivation as compared to other crops. 3. It provides employment opportunities, both in agriculture and activities involved in the manufacture of tobacco products.

4. It is a major foreign exchange earner. 5. It is an important source of revenue, which can be tapped relatively more easily than many other commodities. In view of its special qualities, a levy on it does not cause marked substitution effects and what the noted fiscal expert, Richard Musgrave terms .the spite effects. Therefore, in practically every fiscal budget in India, the finance minister proposes raising a levy on tobacco products and justifies it on the ground that tobacco consumption is injurious to health.

6. There is considerable domestic and international demand for tobacco and its products. The historical developments relating to the economic aspects of tobacco in India can be studied in two periods: the colonial era before India became independent in 1947 and the post- Independence period of national governance and policy-making.

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Pre-Independence period

Tobacco was initially grown in the Deccan region (South Central India), during 1605, and later spread to other parts. The Virginia variety of tobacco was introduced in India in Andhra Pradesh in 1920 by the British officers of the Indian Leaf Tobacco Development Industry Sir Forbes Watsons Cultivation and preparation of tobacco in India (1871), said to be one of the earliest publications on tobacco, tells us more about Indian tobacco. The earliest forms of cigarettes have been attested in Central America around the 9th century in the form of reeds and smoking tubes. The Maya, and later the Aztecs, smoked tobacco and various psychoactive drugs in religious rituals and frequently depicted priests and deities smoking on pottery and temple engravings. The cigarette, and the cigar, was the most common method of smoking in the Caribbean, Mexico and Central and South America until recent times.

The South and Central American cigarette used various plant wrappers; when it was brought back to Spain, maize wrappers were introduced, and by the seventeenth century, fine paper. By 1830, the cigarette had crossed into France, where it received the name cigarette; and in 1845, the French state tobacco monopoly began manufacturing them.

In the English-speaking world, the use of tobacco in cigarette form became increasingly popular during and after the Crimean War, when British soldiers began emulating their Ottoman Turkish comrades and Russian enemies. This was helped by the development of tobaccos that are suitable for cigarette use, and by the development of the Egyptian cigarette export industry.

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3.2).HARMS OF TOBACOO:I. MAGNITUDE OF THE PROBLEM Each year in India an estimated total of 700,000-900,000 new cancers are diagnosed, 2001; Murthy et al., 1990; Yeller and Jussawalla, 1992). Nearly half of allcancers in men occur at sites associated with tobacco use. These sites include: mouth (oral cavity),lip and tongue,oropharynx, hypo pharynx, pharynx, esophagus, larynx, lung and urinary bladder. In women, less than one fifth of cancers occur at these sites, ,predominantly in oesophagus and oral cavity, but cancers of the cervix and breast constitutes over 40%of all cancers. The lower proportion of tobacco related cancers (TRCs) among women is mostly explained bythe fact that, tobacco use, especially smoking, is more common among men than among women.The number of newly diagnosed TRCs each year in India has been estimated at approximately 250,000(NCRP, 2001). In men, lung cancer is numerically thehighest among all registered cancers in the sixpopulation-based registries (Bangalore, Barshi,Bhopal, Chennai, Delhi and Mumbai), but when cancers at all oral sites are combined - oral cavity,tongue and lip - oral cancer vies for first place withlung cancer. Registry-wise, lung cancer and oral cancerjockey for first place in four registries, with theexceptions of Bangalore, where oesophageal cancer ishighest, and the rural registry at Barshi, whereoropharyngeal cancer is highest. In the otherregistries, oropharyngeal cancer vies for third placealong with oesophageal cancers, followed by laryngealcancer, except in Delhi, where laryngeal cancer takesthird place and cancers of the pharynx and of theoesophagus follow in nearly equal proportions. Inwomen, oral cancer takes first place among TRCs inall the Registries; it is closely followed by oesophagealcancer and then the other TRCs follow in much smallerproportions. Cancers of the urinary bladder are alsoconsidered among the tobacco related cancers by theNCRP (IARC, 1986) and they form a small fraction ofthem in both men and women (NCRP, 2001). II. EVIDENCE FOR CAUSATION BY TOBACCO Epidemiological studies from around the worldhave provided sufficient evidence that the smoking oftobacco as cigarettes and bidis causes cancer of the respiratory tract and the upper digestive tract(International Agency for Research on Cancer (IARC),1986). Similarly, smokeless tobacco including theforms most commonly used in South Asia, has beendemonstrated to cause oral cancer and other head andneck cancers (IARC, 1985). The risks of these cancersare substantially increased in tobacco users who havea high-level consumption of alcohol (IARC 1986). Sinceevidence up to 1985 has been extensively reviewed bythe IARC, in this paper largely post-1985 studies areincluded.

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III. ORAL CANCER Since 1985, eight case-control studies on oralcancers conducted in India from places as diverse asBangalore, Bhopal, Chennai, Mumbai and Trivandrum, have given fresh evidence of the role oftobacco smoking and chewing in cancer causation. Fiveof these studies reported significant estimated relative risks to current chewers of pan with tobacco compared to non-chewers: in men, the relative risks varied from 1.8 to 5.8 and, the values for women ranged from 30.4 for currentchewers to 42.4 ever chewers in the two studies that included women. In three studies conducted in Trivandrum, male cases and controls were stratified by habit for having ever been a regular pan-tobacco chewer compared tothose who never had chewed or smoked, relative risks for oral cancer at different subsites were reported at8.75, 6.1 and 14.3. All eight studies reported significant doseresponse trends for frequency of pan-tobacco chewing per day, and six out of the eight studies reported significant trends for duration as well. Retention of the quid overnight, analyzed in one study, showed a36-fold risk. Use of tobacco with lime was identified as a risk factor for oral and oropharyngeal cancers in a largehospital-based case-control study in Pakistan, yieldingrelative risks of 10.4 for women and 13.7 for men, compared to those who neither chewed nor smoked.

VII. LUNG CANCER Studies on lung cancer from around the world have led to the conclusion that the proportion of lung cancer attributable to smoking is of the order of 90%. In two casecontrol studies of lung cancer in India, Bidi smokers had a relative risk of 5.8 and 11.6, while cigarette smokers had values of 5.6 and 7.7. Smokers of more than 20 Bidi per day had relative risks of 12.25 and 33.2 and smokers of more than 20 cigarettes daily, 5.8 and 26.8.

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3.3). FORMS OF TOBACCO:Tobacco is consumed in two ways, either by smoking or chewing. While smoking the following tobacco products are consumed: Cigarette, Cigar, Bidi (Hand rolled, leaf wrapped country cigarettes) and to chew the products are: Raw tobacco, Supari (Arecanut), Gutkha, Pan Parag etc.. Due to diverse climatic conditions every type of tobacco is grown in India. Almost 90% of area is accounted for by Nicotine tobacem. And 10% by Nicotina Restica. Only one third of the tobacco output in the country is Flue cured Virginia (FCV) variety, suitable for cigarette manufacturing. There are seven major categories of tobacco, Viz. Flue cured Virginia tobacco (FCV), Burley, Oriental, Bark flue cured, Sun cured, Light flue cured cigar and Dark flue cured. Flue cured Virginia tobacco is mainly used for manufacture of cigarettes. Light air cured tobacco is used in the manufacture of bidis. Unmanufactured tobacco is also consumed in India, for chewing purpose

1). FLUE-CURED:Also known as bright leaf is carefully force dried in barns using a clean heat source and produces a golden colored leaf. It is the principle ingredient in cigarettes. North Carolina is the leading grower of flue-cured tobacco, which is also grown in Virginia, South Carolina, Georgia, Florida, and Alabama. 2). FIRE-CURED:It is used in snuff, chewing tobacco, and strong cigars. 3). MARYLAND AIR-CURED :It is used in cigarettes and as cigar filler. 4). DARK AIR-CURED:It is used in chewing and smoking tobaccos, snuff, and as cigar filler. 5). CIGAR TYPES: FILLER, BINDER, AND WRAPPER:There are grown in the Northeast, Wisconsin, and Puerto Rico.

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6). PERIQUE:It is noted for its pleasing aroma, is used sparingly in fancy smoking tobacco blends and is grown in Louisiana in very limited quantities. Cigarettes:-

Gutkha

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 Beedi

Raw tobacco

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TYPES OF TOBACCO:BEEDI TOBACCO:

This occupies 30%.35% of the total area under tobacco cultivation and Is grown in Gujarat, Karnataka and Maharashtra. Nearly 85% of the worlds beedi tobacco is grown in India. The average yield varies between 1000 and 1700 kg/hectare in Karnataka and Gujarat, respectively.
FCV TOBACCO:

It is grown in Andhra Pradesh and Karnataka. A small quantity of this tobacco is also grown in Orissa (Rayagada) and Maharashtra (Gadchiroli). It is the most remunerative crop due to the demand from domestic cigarette manufacturers and importers. In 2000.2001, the average yield of FCV tobacco was 1710 kg/hectare. Fifty per cent of the FCV grown in India is used by the domestic cigarette industry while the remaining is exported.
BURLEY TOBACCO:

This air-cured form of tobacco is used for cigarette blends and is grown in Andhra Pradesh.
HOOKAH TOBACCO:

(Nicotiana rustica variety) It is used for smoking and is grown in Uttar Pradesh, Bihar, West Bengal and Orissa.
CHEWING TOBACCO:

This is used for gutka, snuff and pipe tobacco. It is grown in Tamil Nadu, Uttar Pradesh, Bihar, West Bengal and Orissa.
NATU TOBACCO:

It is sun-cured and grown in Andhra Pradesh.

CIGAR TOBACCO:

This type of tobacco is grown in West Bengal and Tamil Nadu.

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3.4). TOBACCO FARMING IN INDIA:-

Andhra Pradesh, Gujarat, Karnataka, Maharashtra, Bihar and Tamil Nadu are the major tobacco producing states in India. Around 65% of Indias production comes from Andhra Pradesh (34%), Gujarat (22%) and Karnataka (11%). Tobacco is also grown in Orissa, Uttar Pradesh and West Bengal, Andhra Pradesh, Gujarat, Karnataka and Uttar Pradesh together account for over 90% of the total tobacco production in the country. Currently, Indian tobacco is exported to more than 80 countries spread over all the continents. Farmers who grow tobacco are different from other farmers in several ways. It is those differences that make this audit guide useful. Due to the high value of tobacco, both per acre and per pound and the level of Government regulation of the industry, special problems and opportunities exist. A detailed paper trail is generated for legal sales of tobacco, and complex schemes have developed to facilitate illegal sales. If you have not read Chapter 1, you should consider going back and reading the parts on market structure, Government regulation, and illegal schemes before you proceed. They would give you a basic understanding of the market environment and how the farmer, dealer, warehouse, and Government agencies interact.

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3.5) PROCESS OF TOBACCO:THE HARVEST:The harvest begins in January and extends for some weeks. The tobacco is picked by hand in six passages, each of which takes about seven days. The harvest begins at ground level and moves upward, removing only two or three leaves per passage. About 120 days pass between the transplantation of the seedlings to the end of the harvest; during this time each plant has be examined 170 times on average an extremely labor-intensive affair.

The Corojo Harvest:The uppermost leaves of the plant, the Semi Corona and Corona deliver the exceptionally aromatic and fullbodied parts for cigar production. In Centro one finds the most beautiful and finest of leaves with a balanced flavor. The best leaf quality is found in the Centro Fino. The aromatically less distinctive, lower leaves on the plant are called the Libre de Pie and Uno y Medio; they display especially fine burn characteristics.

The Criollo Harvest:The Criollo plant carries six or seven pairs of leaves, which are divided into the classifications Ligero, Seco, Volado und Capote. The younger leaves at the top which are exposed to sun, have a stronger flavor and a higher nicotine content. The Seco leaves from the center of the plant are somewhat milder. The bottom leaves, exhibit the least flavor, as they are the oldest and have had the most shade. They are primarily used as filler.

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AIR-DRYING:The bundled leaves are brought into the drying sheds (Casas del Tabaco) to dry. These are aligned on an East/ West so that the sun warms one end of the shed in the morning and the other in the afternoon. Temperature and air humidity are carefully regulated by opening and closing doors located at both ends. The tobacco leaves are attached in pairs by way of needle and cord to wooden poles (Cujes or Poles), which are hung just above the ground. During the drying process which takes about 50 days, they are gradually hung higher and higher in the shed. The leaves first turn yellow and then through the oxidation process, take on their famed golden brown colour.

THE FIRST FERMENTATION:-

The tobacco leaves are packed together into bundles (Gavillas) and then moved into the fermentation house. Here they are stacked in piles (Pilones), reaching over three feet high. If the temperature of the tobacco rises above 35C, the piles are dismantled and allowed to cool until they can again be heaped up. The first fermentation lasts about 30 days, within which the leaves take on an even colour, resins are reduced, and ammonia and other unwanted components are dissipated.

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DE-RIBBING AND SORTING:The tobacco leaves are moistened with water in order to avoid discoloration. Subsequently the main ribs are removed. The leaves are then sorted, depending upon intended purpose, colour, size and quality. The complete de-ribbing and final sorting in up to 50 different categories takes place much later in the factory.

THE SECOND FERMENTATION:The leaves are again bundled together and stacked into meter-high piles (Burros). The tobacco goes through a chemical change which positively influences its taste and flavour, and allows any remaining foreign components to diminish. The second fermentation is stronger than the first and lasts up to 60 days. The wrappers undergo the shortest fermentation.

STORAGE:After resting for some days on ventilation racks, the tobacco is pressed into bundles called Tercios, which are wrapped in palm bark or banana leaves. These bundles are delivered to local collection points, which are under the control of the state monopoly habanos. From this moment on, the Republic of Cuba assumes responsibility over the further treatment of the tobacco. The Tercios are kept up to three years in depots for some formats even longer until they are needed by the cigar factories. The taste and flavour of the tobacco continues to improve during this storage period.

THE PREPARATION OF THE TOBACCO:The wrapper leaves are moistened so that they are supple and smooth; afterwards they are hung up over night so that the humidity can distribute itself evenly along the leaf. The next day Despallidores remove the central ribs by halving the tobacco leaf. Next the leaves are sorted by the Rezagadoras into piles by size, colour and structure. The binder and filler do not require humidifying. The various types of leaves have different ripening intervals; the blending master attentively supervises the development of each sort. Subsequently, the leaves go to the blending station, where under strict safety precautions the blending process takes place. It is here that the carefully guarded secret recipes for each Habanos are kept. The mixtures are handed out to the cigar rollers (Torcedores), the amount of which is just enough for the production of 50 cigars.
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THE PRODUCTION OF CIGARS:At the heart of each factory is the Galera. It is here that the Torcedores create the various sorts and formats. The only tools employed are a wooden table, a sharp blade (Chaveta), a guillotine, a small pot of vegetable adhesive and above all skillful fingers. Each Torcedor is able to daily roll about 120 cigars which perfectly keep to the prescribed lengths and diameters. Samples of their work are regularly examined by quality testers, and should the cigars not be found good, this is very serious affair for the Torcedor as they are paid by the piece.

THE ESCAPARATE:Directly from the work bench, the cigars are delivered to a climate-controlled room, the Escaparate, which is equipped with high cedar wood shelves. For at least three weeks and sometimes for several months, the finished cigars are stored here under ideal conditions: The temperature lies between 16C and 18C and the relative humidity between 65% to 70%.

COLOR DETERMINATION AND ATTACHMENT OF CIGAR BANDS In order for a perfect presentation of the cigars, the Escogedor (color sorter) sorts them into 65 different shades of color. A second Escogedor arranges the cigars into boxes so that the color tones from dark to light are presented from left to right. He also chooses which side of the cigar will be displayed when the box is opened at a later date. The Escogedores belong to the best paid workers in the factory. The Anilladora (bander) removes the cigars from the box in order to attach the bands. Under no circumstances may she change the arrangement selected by the Escogedor nor the side of the cigar to be displayed. The packed boxes are now secured with the guarantee seal of the Cuban government. The crates are made of cedar so that the cigars can breathe and mature further.

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3.6). IMPORT AND EXPORT SENERIO:Indias Tobacco exports are likely to touch Rs. 16,050 million towards the end of current fiscal from Rs. about Rs. 15060.20 million in last fiscal as its growers are set to export more than 60% of their produce in view of domestic tobaccos rising demand in countries like Russia, Vietnam, U.K., Germany and Belgium. The aforesaid estimates are made by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) on Prospects of Tobacco to Exports for Current Fiscal, emphasising that domestic tobacco sector in the past few years has come out of ressession, the impact of which would be favourable and amount to higher tobacco exports. ASSOCHAM President, Mr. Venugopal N. Dhoot said, export potential of India tobacco could be much more provided Indian farmers are paid reasonably well for growing tobacco crops proportionally as happens in leading tobacco growing countries such as Brazil & Zimbabwe. Tobacco farmers, in country like Brazil are paid $ 1.8 per kg as against $2 per kg in Zimbabwe. In India, the tobacco growing farmers condition is poorer as they are paid only 80-90 cent per kg. On top of it, Indian tobacco industry is highly taxed particularly its cigarettes segment, in which the tax component is around 350% as against 70% in Brazil & Zimbabwe, pointed out Mr. Dhoot. Productivity is high in Zimbabwe at 3200Kg per hectare, whereas it is 1900 kg in Brazil and around 2000Kg in India. However, tobacco leaves of Brazil and Zimbabwe contain high nicotine and a sizeable unwanted external content. Indian tobacco, on the other hand, contains negligible nicotine and other toxic matter and is famous for fascinating flavours. The Chamber assessment also reveals that in 2005-06 tobacco exports in quantity were 1,65,882 tonnes and value terms the export realization was to the tune of Rs. 14047.20 Million. According to the figure available with ASSOCHAM during 2006-07, tobacco exports in value terms comprised Rs. 15060.20 million. In volume their quantity was estimated around 1,70,005 tonnes. This is despite that the tobacco industry had been facing some recession on account of export pricing in the past, trends for which now appear to be favourable. It is because of this that chamber has projected higher exports value for tobacco products as well as their quantity. Russia was the largest importer of Indian tobacco in 2005-06. It imported 27,513 tonnes of tobacco (leaf and products) from India. It was followed by Belgium (15,411 tonnes), Vietnam (7749 tonnes), the UK (7721 tonnes) and Germany (6354 tonnes). During 200607, their imports respectively were Russia (27,950 tonnes), Belgium(15,800 tonnes), Vietnam (7949 tonnes), the UK (7921 tonnes) and Germany (6524 tonnes)
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Among group the nations, West Europe, by importing 30 % (43,213 tonnes) of Indian tobacco, was the largest importer. East Europe, which imported 40,167 tonnes (20%), came in second. South Asia & South East Asia bought 31,656 tonnes (22%),Africa 12,618 tonnes(9%), West Asia 7917 tonnes (6%), North and South Americas 4192 tonnes (3%) and Australia 2244 tonnes (2%) in 2005-06. In India, about 6 million farmers are engaged in cultivation of tobacco and about 36 million people are dependent on the tobacco industry, either directly or indirectly. Hookah tobacco paste 879 Kg led the exports of tobacco products followed by cigarettes 1011 Kg. Of the total exports of tobacco items form the country, unmanufactured tobacco accounts for 80% to 85% and the manufactured tobacco products account for 20% to 25%. Of the unmanufactured tobacco exports Flue Cured Virginia (FCV) tobacco is the single largest item accounting for 75% to 80% of the tobacco exports. The other varieties exported are Burley, HDBRG, Natu, DWFC, Top leaf and Jutty all are cigarette tobaccos. Noncigarette tobaccos exported are Lalchopadia, Judi, Rustica for chewing purposes and bidi tobacco in small quantities. The export of non-cigarette tobaccos is at levels of 8-10%. Contrary to international trend, Indias tobacco production is dominated by non-cigarette tobaccos. FCV tobacco is the major export variety, as it constitutes about 70% of the total unmanufactured tobacco exports. The FCV tobacco is grown principally in Andhra Pradesh (70 per cent), Karnataka (29 per cent) and Maharashtra and Orissa (below one per cent). Andhra Pradesh and Karnataka are the two main FCV tobacco-growing regions. Currently the situation in the global tobacco market is transforming into a favourable market environment for tobacco exports due to several reasons. Brazilian export prices have almost leveled the most expensive American tobacco prices. Zimbabwean farm prices have also seen higher the Brazilian prices. Increasing cost of production and the significant amount of export cesses imposed on tobacco exports by the Governments of Zimbabwe and Malawi recently made their tobaccos further expensive. The newly opened East European and CIS markets are not in a position either to absorb high cost tobaccos or cigarettes made with high conversion cost. Phasing out of farm subsidies by European Union will further enhance price competitiveness of Indian tobacco. Under these circumstances, India can become a major player in the Indian tobacco market if it can harness the emerging opportunities and enhances its exports to the major import markets.

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The advantages for Indian tobacco are a low unit production cost; average export prices of Indian FCV tobacco are more competitive than that of Brazil, USA, Zimbabwe; low conversion costs of tobacco into cigarettes in Indian compared to in UK and in USA; low to medium nicotines to suit the current requirement of world markets; anticipated decline in production in China, USA, Zimbabwe, EU in the next five years due to declining consumption in USA & EU, government controls to restrict production in China, phasing out of Agri subsidies by EU and Land invasions & Land acquisition in Zimbabwe i.e. change of tobacco farms from White farmers to Native farmer; and phasing out of Agricultural subsidies in European Union and Argentina; etc. ASSOCHAM has suggested several measures needs to improve the quality and yield of tobacco through improved package of practices at the farm level, improved curing and grading facilities, transfer of technology to the farmers and image promotion abroad. Rich and varied Indian geographic and agro-climatic conditions foster consistent availability of wide range of tobaccos for export all through the year. Indian tobacco, by virtue of its qualities, sheer volumes and diversity, is progressing gracefully to occupy its rightful place in the world tobacco market.

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CHAPTER:-4 ANALYSIS OF TOBACCO INDUSTRIES

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4.1). Tobacco industry in India

India is the second largest producer of tobacco in the world after China. It produced 572 m kgs of tobacco in FY03. However, India holds a meager 0.7% share of the US$ 30 bn global trade in tobacco, with cigarettes accounting for 85% of the country's total tobacco exports. Despite being the second largest producer, India is only the ninth largest exporter of tobacco and tobacco products in the world. Out of the total tobacco produced in India, only one-third is flue-cured tobacco suitable for cigarette manufacturing. Most of the tobacco produce is suitable for the manufacture of chewing tobacco, bidis and other cheap tobacco products, which have no demand outside the country. In India, three major cigarette players dominate the market, primarily ITC with 72% market share, Godfrey Phillips with 12% and VST with 8% share of the market. Chewing tobacco has been a tradition in India for centuries. Of the total amount of tobacco produced in the country, around 48% is in the form of chewing tobacco, 38% as bidis, and only 14% as cigarettes. Thus, bidis, snuff and chewing tobacco (such as gutka, khaini and zarda) form the bulk (86%) of India's total tobacco production. In the rest of the world, production of cigarettes is 90% of total production of tobacco related products. The per capita consumption of cigarettes in India is merely a tenth of the world average. This unique tobacco consumption pattern is a combination of tradition and more importantly the tax imposed on cigarettes over the last 2 decades. Cigarette smokers pay almost 85% of the total tax revenues generated from tobacco. The tobacco industry is one of the most profitable industries in the world. Tobacco companies use their enormous wealth and influence both locally and globally to market their deadly products. Even as advocacy groups and policy makers work to combat the tobacco industrys influence, new and manipulative tactics are used by tobacco companies and their allies to circumvent tobacco control efforts. It is important for tobacco control advocates to know which companies are present in their country, how and where they operate, the types and quantity of products sold, and marketing tactics used to sell tobacco products. It is important to note that the tobacco companies typically report market data annually at least several months after the end of the fiscal year. By its nature, annual market data reported by analysts and tobacco companies are one or two years old. It is also important to note that information about the tobacco industry in India is not always readily available. This is particularly true for the loosely regulated bidi and smokeless sectors.

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In India, the tobacco industry is divided into three distinct and powerful sectors: bidis (smoking products hand-rolled in tendu leaves), smokeless tobacco (mainly chewing tobacco) and cigarettes. Bidis are the most popular tobacco products consumed in India48% of the market. Smokeless tobacco makes up 38% and cigarettes only 14% of the market.4 Some aspect of the tobacco industry,whether it be tobacco farming, manufacturing, or distribution, is present in every Indian state, making tobacco control a truly national effort. This report, like the tobacco industry in India, has sections on each of the tobacco sectors as well as examples of tobacco promotion, sponsorship and corporate social responsibility efforts designed to increase consumption and industry profits. 2. The Bidi Industry Bidis are slim hand-rolled, unfiltered cigarettes that are rolled in brown tendu or temburni leaves and held together by a string. The product is often flavoured, and in general bidis are stronger tasting than regular cigarettes. Bidis are cheaper than cigarettes which makes them very popular in rural areas and among the poor.5-6 While bidis are the number one tobacco product used in India, very little is actually known about the organization of the bidi industry. Bidi production is fragmented and because most brands are hand-rolled in individual homes on a small scale, the bidi industry is considered to be a cottage industry.5 In 1995 the Ministry of Statistics and Programme Implementation estimated there were over 6,600 bidi manufacturers in India, compared to 40 cigarette factories and 55 smokeless tobacco factories.4 While recent numbers are not available, it is still clear that bidi manufacturers greatly outnumber other types of product manufacturers.

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industry is divided into two different sectors: organized and unorganized. The organized sector is factory based and production is increasingly mechanized; and the unorganized sector is made up of home-based production and small cooperatives.5 Most production and hand-rolling is done at home by women and children.5 Tobacco industry analyst, Euromonitor International, estimates that 20% of bidis are produced in the organized sector and 80% in the unorganized sector.7 Even organized factories tend to outsource production to individual homes.5 Because the bidi industry is fragmented there are no specific figures on how many bidis are sold or produced. It is estimated that 750 billion to 1.2 trillion sticks are produced annually.4 According to Euromonitor International, the bidi industry in India is worth Rs200 billion ($4.1 billion USD).8 Bidis are much cheaper than cigarettes and smokeless tobacco products due mainly to unequal levels of taxation on the different products. Bidis cost between Rs2.50-5.00 for 25 sticks (less than one Rs per stick)9 whereas the leading brand of gukta costs Rs3-4 per unit.10 The leading brand of cigarettes costs Rs 80-88 for 20 sticks (Rs4-4.4 per stick).11 In 2009, Euromonitor reported that bidi volume sales were down 5% from the previous year because of a ban on smoking in public places.9 Despite being fragmented, the bidi industry still has a powerful voice in Indian politics which keeps taxes on bidi products low and regulations lax. The major lobbying organization for bidis is the All India Bidi Federation which represents the entire bidi industry.12 Other organizations that lobby nationally and regionally for the bidi industry include: All India Beedi, Cigar & Tobacco Workers Federation (New Delhi) Karnataka State Beedi Workers Federation S.K.Beedi Workers Federation Karnataka Beedi Industry Association Mumbai Beedi Workers Union (Maharashtra) All Bengali Beedi Workers and Employees Federation (Calcutta) According to Euromonitor International, no single bidi company or brand has more than a 5% market claim.8 Large bidi producers have their own territory (state or district) where they dominate the market with little competition from other bidi companies.6 There are a few regional players that sell their bidi brands in more than one state or district, including Ganesh Beedi Works, Kajah Beedi Co and Bharat Bidi Works.9 There is no national bidi brand and at one time it was estimated that there were over 300 different brands across India. Some notable brands include: o 502 Pataka produced by Pataka Biri Manufacturing
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o 501 Ganesh produced by Magalore Ganesh Beedi Works o Top regional brands such as Dinesh in South India, Taj in North India, and Howrah in East and Northeast India. While bidi production is concentrated in the west and south of India,9 it has also been estimated that each state has around 200 bidi manufactures.

The Smokeless Industry Popular among rural and urban consumer, smokeless tobacco is also much more popular among woman than smoking.16 The smokeless industry in India is highly fragmented some products are commercially manufactured but many are made in the home and sold locally.17 Smokeless tobacco products in India include khaini, gutka, mawa, gudhaku, and zarda. Type of Smokeless Tobacco Khaini/ Kharra Gutka (Gutkha) Description Mixture of sun-dried tobacco and lime.1 A dry mixture of crushed areca nut, tobacco, catechu (spices), lime, aromas and flavourings as well as other additives. General term for areca nut product. Does not usually contain tobacco and is often confused with Gutka. Uses shavings of areca nut, tobacco and lime. A paste made of tobacco and molasses. Raw tobacco that is scented using spices such as saffron.

Pan Masala

Mawa Gudhaku Zarda

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Smokeless Tobacco Company Shares Retail Volume (%) Company 2001 2002 2003 2004 2005 2006 Name Dhariwal 11.5 11.8 11.8 12 12 12.3 Industries Ltd (Manikchand Group) Dharampal 7.8 8.2 8.8 9.3 9.5 8.8 Satyapal Ltd (DS Group) Som 3.7 3.8 4.3 4.2 4 4.7 Sugandh Industries Ltd Shree 2.3 2.5 2.5 2.8 2.8 3 Meenakshi Food Products Pvt Ltd Kothari 4.5 4.5 4.2 4.3 4.3 4 Products Ltd Others 70.2 69.2 68.4 67.4 67.4 67.2

2007 12.3

2008 12.5

2009 12.5

7.8

7.2

5.5

3.2

3.5

3.5 68.4

2.8 69

2 68.8

In a recent Global Adult Tobacco Survey, it was reported that khaini is the most commonly used tobacco product in India, followed by gutka. However, according to Euromonitor International, Gutka is the most popular form of chewing tobacco sold in India and is estimated to account for approximately 80% of chewing tobacco total volume sales. This discrepancy is mainly a difference between actual prevalence of use and what Euromonitor International is able to measure in terms of volume. More people in India report using khaini, but gutka companies such as Dharwal Industries are larger and more organized and therefore more likely to report product sales.22 In general, smokeless tobacco products are very cheap and are sold in single use packets for Rs1-3 (less than one cent US). Unbranded smokeless products, including unbranded khaini,, are common, keeping the products cheap and unregulated.

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In India, retail volume sales of smokeless tobacco products increased by 82% between 1999 and 2009. After a 2008 smoking ban and tax increase on unfiltered cigarettes, chewing tobacco sales increased by 6.5% as low-income smokers switched to cheaper smokeless products. The smokeless tobacco industry in India is controlled by a few large national companies and many different regional players. The top five companies account for 31% of sales, the rest is controlled by regional players that often only operate in one district in a state. In general, Indian smokeless tobacco users prefer to buy locally.

companies and Popular Brands The smokeless tobacco industry in India is

controlled by a few large national companies and many different regional players.22 The top five comp account for 31% of sales, the rest is controlled by regional players that often only operate in one district in a state. In general, Indian smokeless tobacco users prefer to buy locally. Market Share of Top India Smokeless Brands Retail Volume (%) Brand Company 2009 name RMD Gutkha Dhariwal 12.5 Industries Dilbagh Som Sugandh 6 Industries Tulsi Dharampal 3.7 Satyapal Baba Dharampal 3.5 Satyapal Goa Shree 3.5 Meenakshi Food Products Pan Parag Kothari 2 Products

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Most smokeless tobacco companies in India just produce one brand. Different flavour varieties and packaging sizes are sold under the one brand name. The brand name is also often used to sell a non-tobacco pan masala product. Uniting a tobacco product and nontobacco product under one name is a clever marketing technique, as India has an advertising ban in place that prevents the direct advertising of tobacco products. Tobacco products that are packaged identically to pan masala benefit from the association made between the two products. Market leading brand RMD Hot Pan Masala and Khaini with the same packaging Dhariwal Industries- As one of the oldest smokeless tobacco companies in India, it is also currently the market leader.22 The company is part of the Manikchand Group which also has interests in packaging, bottled water, power and real estate among other things.24 Dhariwal Industries manufactures its products in Vadodara, Pune and Bangalore.

Dhariwal Industries produces gutka under the brand name RMD which is the number one seller in India. The company also uses the RMD name for pan masala. Dharampal Satyapal The second largest smokeless tobacco company in India.22 Dharampal Satyapal is part of the DS Group which also has interests in food and beverages, packaging, hospitality and hospitality industries, among others. The DS Group manufactures tobacco products in Agartala, Tripura. Produces two smokeless tobacco brands- Tulsi (gutka) and Baba (zarda). Also produces pan masala under the Baba name.26 December 2010 Campaign for Tobacco-Free Kids

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Som Sugandh Industries- Also known as the Dilbagh group, the company is the third largest smokeless tobacco company in India. The Dilbagh Group is based in New Delhi. The company produces three smokeless tobacco products- the second most popular Dilbagh brand (gutka), Talab (gutka) and Hot (khaini). All three brands are also used to sell pan masala. o Talab Gutkha in particular is packaged in attractive sachets making it a hot favourite among youth across all income groups. Kothari Products- Also known as Pan Parag India, and was established in 1973. Most visible product is the Pan Parag brand which is used to sell gutka bu whose main product is pan masala. 4. The Cigarette Industry Cigarette consumption makes up a small portion of the tobacco market in India, only 14% of tobacco products sold are cigarettes.4 Retail volume sales have decreased by 9% in the last ten years from 99.6 billion sticks in 1999 to 90.3 billion sticks in 2009.11 Recent declines in cigarette volumes are mainly due to a 2008 increase in the tax on unfiltered cigarettes. The tax increase has also led to many unfiltered brands being removed from the market.30-31 ITC Ltd stopped unfiltered cigarette production entirely and some companies have launched filter versions of their most popular unfiltered brands to maintain their customers.

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Historic India Cigarette Market Size- Retail Volume (billion sticks) 1999 99.6 2000 98.7 2001 2002 2003 200 2005 2006 200 200 200 4 7 8 9 89.3 91.9 94.5 96.5 100 101.1 99.8 91.2 90.3

Despite recent declines in sales, it is expected that cigarette use will increase overtime as disposable incomes increase in India.33 Euromonitor International predicted in 2008 that if the smokers who currently smoke bidis switched to factory made cigarettes, then Indias cigarette consumption would increase to around 640 billion sticks. This increase would make India the second largest volume cigarette consumer in the world behind China. Cigarette Company Shares Retail Volume (%) 2001 2002 2003 2004 2005 2006 2007 2008 2009 ITC Group 63.9 65.3 66 66.1 67.5 67.8 67.9 71.8 72.9 Godfrey Phillips 9.8 10.7 10.9 11.9 11.1 11.5 11.9 12.9 13.8 India Ltd VST Industries 12.2 10 9.4 8.9 8.7 8.4 8.5 8.5 8.7 Ltd Golden Tobacco 3.6 1.5 Ltd* GTC Industries 9.9 9.7 9.4 9.4 9.2 9 8.6 Ltd Japan Tobacco 1.3 1.4 1.3 Inc Gallaher Group 2 2 2 1.5 1.4 1.3 Plc** Others 2.3 2.4 2.2 2.2 2.2 1.9 1.8 1.9 1.7 Total 100 100 100 100 100 100 100 100 100 ITC Group- ITC was established in 1910 under the name Imperial Tobacco Company of India. The company changed its name to ITC in 2001 to reflect its diverse interest in products outside of tobacco.36 ITC is the leading cigarette manufacturer in India with 73% of the market in 2009. Since 2001, ITC has steadily increased its market share in India and has increased cigarette production by 15% from 57.1 billion sticks in 2001 to 65.8 billion sticks in 2009.
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 Reportedly, the Indian government has a stake in ITC.37-39 While ITC claims that the state does not have any direct shares, the company does report that a large number of ITC shares are held by financial institutions which are majority state owned such as the Life Assurance Corporation of India and Unit Trust of India. The TTC British American Tobacco (BAT) has also has a 32% share.41 ITC generated RS 262.6 billion ($US 28.9 million) in revenue in 2009 through its interest in cigarettes, hotels, cosmetics and toiletries, packaged food, apparel, paperboards and packaging, and agriculture. o ITCs cigarette industry contributed to 66% of the companys total revenue for the fiscal year ending March 2010. ITC has five cigarette factories in Bangalore, Kolkata, Munger, Ranjangaon, and Saharanpur. In addition to its operations in India, ITC also has cigarette subsidiary Surya Nepal, which is a joint venture with British American Tobacco. Godfrey Phillips India- Established in India in 1936 as an import company for Godfrey Phillips, UK. The company has since established itself as a major local manufacture of cigarettes in India. Godfrey Phillips is the second largest cigarette company in India with 14% of the market. Since 2001, the company has seen continuous growth in market share and has increased its cigarette production by 43% from 8.7 billion sticks in 2001 to 12.5 billion sticks in 2009. Godfrey Phillips India has two major stake holders - the KK Modi Group, an industrial conglomerate based in Mumbai, and the international tobacco company Philip Morris International (PMI) which together hold a total of 71% of the company.43 In May 2009, KK Modi acquired an additional 10.8% stake in Godfrey Phillips from PMI, bringing its total share to 47% and PMIs to 25%. Godfrey Phillips India has a leaf division that provided tobacco leaf for production in- country and for export. The company also sells tea. o The cigarette segment accounted for 92% of Godfrey Phillips India revenue for the financial year ending March 2010. Ghaziabad (near Delhi) and Andheri (near Mumbai). Currently, a new factory is being built in Rabale. o The company has a strong presence in North and West India, and in an attempt to increase the companys reach in India, Godfrey Phillips is aggressively expanding distribution into the states of Tamil Nadu and Orissa.
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VST Industries- Established in 1930. Before the company changed its name to VST Industries in 1984, it was known as the Vazir Sultan Tobacco Co.46 VST Industries is the third largest cigarette company in India with 9% of the market. Between 2001 and 2009 the company lost market positioning and saw a 28% decrease in volume sales. o Since 2008, declines in growth have reversed. VST Industries reported a 4.5% increase in volume production for the fiscal year ending in March 2010, as well as record profits. VST Industries is an affiliate of BAT, which holds a 32% stake in the company. The company sells economy priced cigarettes, and has a strong presence in South India. o Besides cigarettes, VST Industries also sells unmanufactured and cut tobacco leaf. VST Industries has a manufacturing facility located in Andhar Pradesh.
Market Share of Top Ten India Cigarette Brands Retail Volume (%) Brand Company name
Gold Flake Wills Scissors Four Square Capstan Bristol Charminar Red & White Charms Cavenders ITC Group ITC Group ITC Group Godfrey Phillips India Ltd ITC Group ITC Group VST Industries Ltd Godfrey Phillips India Ltd VST Industries Ltd Godfrey Phillips India Ltd

2009
31.2 18.2 8.4 7.9 7.4 6.9 4 3 3 2.5

Golden Tobacco- Established in India in 1930 as the first wholly-owned Indian tobacco company in the country.49 Formally known as GTC Industries, renamed Golden Tobacco after demerging from its retail business in 2008.50 Golden Tobacco is the fourth largest cigarette company in India with 1% of the market. In 2001, the company controlled 10% of the cigarette market but saw a dramatic decline in market share and production in 2008 after the tax increase on unfiltered cigarettes.11 In 1979, the company was acquired by Dalmia Group which also has interests in telecommunications, chemicals, and textiles. The Dalmia group holds a 36% share of the company.49 The company has two major production facilities in Mumbai and Baroda.
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Transnational Tobacco Companies (TTC) Presence in India The expansion of TTC in India has been limited by restrictions on FDI by cigarette companies in the country.35 However, as described previously, three of the top international tobacco companies currently have stakes in local manufactures. Despite restrictions, TTCs continue to focus on India because of the potential growth of the cigarette market.51 British American Tobacco (BAT) - BAT is a British company headquartered in London, England. BAT is ranked third in the global tobacco market.52 BAT is a stakeholder in ITC and VST Industries and owns approximately 32% of each tobacco company.41, 47 BAT attempted to increase its stake in ITC from 32% to 51% but the company has been prevented from doing so by the Indian government and restrictions on FDI.

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Philip Morris International (PMI) - PMI is a U.S. company with headquarters in Lausanne, Switzerland. PMI is ranked second in the global tobacco market behind China National Tobacco Company. 52 PMI currently owns a 25% stake in Godfrey Phillips India after selling part of its shares to KK Modi in 2009.44 In 2009, after years of trying to get approval to independently manufacture Marlboro cigarettes in India, PMI allowed production of its most popular brand to start under the supervision of Godfrey Phillips Leading Cigarette Brands Promoted in India Cigarette companies aggressively advertise their brands in order to attract new smokers and to encourage current smokers to switch brands.58-60 From March 2009 to March 2010, cigarette leader ITC spent 5.1 billion Rs ($114.7 million USD) on advertising and promotion.40 According to Euromonitor International, cigarette companies are focusing on targeting young urban consumers and middle-upper income consumers.61 Companies are also shifting brands away from unfiltered variants to filtered variants. 61 In 2009, local brand Gold Flake had the largest cigarette market share in India (31%), followed by Wills (18%) and Scissors (8%) - all of which are owned by ITC Group. Slim cigarettes targeting women Although the female smoking population is currently very small (about 3%),21 cigarette companies in India see the potential for growth by attracting women. Since 2007, slim cigarette brands have been launched to appeal to women smokers.32 The first slim cigarette to hit the Indian market was the Stellar Slims brand by Godfrey Phillips in 2007.62 The brand is marketed as having lower levels of nicotine with the satisfaction of a regular cigarette.62 In 2008, ITC Group launched Wills Classic Verve slim cigarettes targeted at women and first time smokers. ITC describes the brand packaged in a shiny red as Indias trend setting cigarette[that] defines ubercool urban style. Golden Tobacco also has a slim cigarette called.

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Targeting health conscious consumers with misleading claims As Indian customers become more aware of the health risks associated with tobacco use, cigarette companies have created new products and tactics to counteract consumer knowledge. One such tactic is to use misleading terms (ex low-tar) on cigarette packaging or in advertisements that encourage healthconcerned smokers to switch to cigarettes brands that they perceive as safer. This also offers consumers that are concerned about health risks from tobacco an alternative to quiting.64 As of 2006, India prohibits tobacco product packaging and labeling from containing information that is false, misleading or deceptive, or that is likely to create misperceptions about the characteristics or heath effects of tobacco products. This includes prohibiting the use of terms such as light, mild and low-tar.65 Despite these restrictions, cigarette brands are still misleadingly marketed as being healthier. Loe Tobac cigarettes launched by Golden Tobacco in 2006 claim to contain 50% less tobacco than regular cigarettes.66-67 Golden Tobacco also claimed that LoeTobac has been found to have safer delivery levels of tar, carbon monoxide and tobacco-specific nitrosamines than other brands.68 Stellar Slims Cigarette ad Low nicotine, King sized satisfaction

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Brands that appeal to young tech-savvy smokers. India has a very large technology industry and a growing information technology culture. Cigarette companies are capitalizing on the technology trend by introducing premium brands that appeal to younger consumers. Godfrey Phillips launched I-gen in 2006. I-gen cigarettes have a black filter and the black, red and silver packaging is aimed at making the product look trendy and contemporary.70 The brand is descried on the companys website as a cigarette that holds the promise cigarette quality and immense style.62 In 2005, Golden Tobacco launched Chancellor XP. XP refers to the Windows operating system and the brand is designed to appeal to Indias information technology workers.9

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6. Corporate Social Responsibility (CSR) Tobacco companies maintain CSR programs in an effort to counter negative attention regarding their deadly business. This practice is particularly prevalent in India. By donating funds to noble causes, the perception of cigarette companies by the public and policy makers improves. The true goals of industry-sponsored programs have been revealed through internal tobacco industry memos released to the public by U.S. legal settlements. CSR programs: Serve the industrys political interests by preventing effective tobacco control legislation. Marginalize public health advocates. Preserve the industrys access to youth. Create allies and preserve influence among policymaking and regulatory bodies. Defuse opposition from parents and educators. Bolster industry credibility. In India, cigarette companies integrate themselves into local communities that they operate in through CSR activities. They also work nationally to create goodwill with the public and policy makers in an attempt to protect their profits. Since 1990 Godfrey Phillips India has sponsored the Bravery Awards (first under the brand name Red and White and now under the company name). The Bravery Awards annually honors citizens that perform physical and social acts of bravery. Indian film actress Preity Zinta acted as an ambassador of the awards from 2006-08. The awards have also launched blood drives and the Amodini-Women's Empowerment initiative. In 2000, the ITC launched e-Choupal, an IT training program for Indian framers. The program claims to reach over 4 million farming families, connecting them to a digital infrastructure that enables them to link to a more formal market. ITC also supports primary education, women empowerment and environmental initiatives. Smokeless tobacco companies are also known to use CSR tactics in the communities that they operate in. The DS Group, which includes Dharampal Satyapal, contributes to a wide range of social issues in Assam and Tripura. Activities include the renovation of Pallimangal H.S. School and contributions to economic development projects of ethnic and tribal groups in North Eastern States. The tobacco industry in India is complex and powerful. Knowing where and how the industry operates is essential to creating and advocating for strong tobacco control policies. Unless strong tobacco control regulations are put in place and enforced in India, the tobacco industry will continue to expand and profit from addicting consumers to its deadly products.
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4.2). MAJOR PLAYERS AND MARKET SHARE:THE MAJOR PLAYERS :-

Godfrey Phillips (India) Ltd. V.S.T. Industries Ltd ITC Limited G.T.C. Industries Ltd

MARKET SHARE OF MAJOR PLAYER IN INDIAN MARKET:-

INDIAN cigarette player mkt share

GTC, 8 VST, 8

ITC
Godfrey Phillips, 12 Godfrey Phillips VST

GTC
ITC , 72

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4.3) SWOT ANALYSIS:-

STRENGTH

THREATS

SW OT
OPPORTUNITY

WEAKNESES

A SWOT Analysis is requiring checking the industrys Strength, Weakness, Opportunities and Threats. It will give the overall idea about competitor and current situation of the industry. Strength and Weakness are the industry internal characteristic that can be improved by the industry while Opportunity and Threats are the external factors which will predict the current condition of the industry to make decision.

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 STRENGTH:-

Biggest and the largest player in the Indian tobacco market with a market share of 80%. Its Gold Flake tobacco brand is the largest FMCG brand in India - and this single brand alone holds 70% of the tobacco market.

A industrys strength is its resources and capabilities that can

be used as a basis for developing and competitive advantage. The increase in living standards of people, now they spend more on tobacco. As we are offering good quality at reasonable price so it will definitely attract customers so our venture is less risky. Our industry has different types of tobacco. Each of them offers the high quality. Our target market is Gujarat which is one of the most developing states of India. Gujarat is immerging as an industrial hub to many growing industries. More and more investment means more industries, more housing and more construction. All this is positive sign for the tobacco industry to prosper. When we talk about tobacco it has been found that following are its strengths. There are many players it is like a perfect competition. The labor does not require much specific qualification and skill.

WEAKNESSES:-

It still has to consolidate its foot in the cigar market largely dominated by Godfrey Philips.

In the tobacco industry, the labour work on the part of workers

is very tedious and laborious. Workers often complaint about the work load. Huge capital investment is requiring on the machineries.
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 OPPORTUNITIES:-

ITC is moving into new and emerging markets like developing countries of Eastern Europe, Africa etc. Gujarat which is one of the most developing states of India is emerging as an industrial hub with many growing industries like, fast malls, big buildings, residential expansion and more housing so future requirement of the tobacco and bricks very high. Our research and survey so that people are interested in buying of the tobacco which is qualitative and at the same time something which is offered at a reasonable time. This thinking matches which our Industry policy to produce the best at the least. By using eco-friendly technology the unit may get an edge over the other players in the market THREATS:- The obvious threat is from competition, both domestic and international. - Health hazard - Increasing tax in Cigarettes Competition, this is one of the biggest threats faced by all the business. Existence of big tobacco industry such as I.t.c tobacco, etc poses tough competition for us.

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 SWOT MATRIX:-

Its resource and capabilities High demand

Huge investment already big players

Eco friendly technology Scope for expansion

Competition Supply position Unpredictable

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4.4). PEST ANALYSIS:-

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(1) Political factor:Govt. Policy affects the business in very deep. The low cost local brand can affect the leader of tobacco industries. Government focus on no promotion of the tobacco product directly on t.v or other media. More over the government decision to substantially upgrade 28 Regional airports in smaller tour and privatization and expansion of Delhi and Mumbai airport industry in India. The upgrading of national highways connecting various parts of India has affect the tobacco retail management. In the govt of Indias the promotion of tobacco product is less so there is a very hard to be in the local market. There is a rule in india that a person is less than 18 cant be buy a tobacco product from the anywhere. The govt of India have restrict the consumption of tobacco on the roads and public place. For past few years the market of the tobacco industries is increasing in rapidly so the relevant steps taken by government of India. In union budget there is a duty and tax on tobacco product increasing rapidly by government.

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(2).Economical:-

In economical effect industry has to check out that there is a huge part of tobacco industries in Indian economy in increment of GDP.

The tobacco industrys can also help to give a chance to get a more valued country in all over the world by exporting tobacco products.

Now slowdown fear is now hovering on the sector because of the government restriction on tobacco industries.

In India form medium to long term the fundamental are very perishing. The continued economic or with increased in test in the India market and improved international access.

By the rules and regulation of Indian government the consumption is decreasing in India so, its not helpful term for industrial overview.

With a view to restriction on tobacco products in india but the larger amount of the public can use the product of tobacco and tobacco is there habit so, market is in mood of increasing. There is a rules and regulation are very strict but there is a large player like itc who are the dominant player in the market.
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(3) Socio-cultural factor: Socio cultural factor includes two parts (a) Socio (b)Culture If any industry are show towards the society than you can understand that society are developing the culture. If you understand the socio factor than you can understand the cultural factor. (a) Socio factor: It include the demographical factor like Population:India is the second largest population country of the world more than 125 corer. population is there. So because of high population it is the positive effect towards the tobacco industry because as population are more the habit for tobacco get more traffic & also occupancy rate is increase at the time of marriage season. Male-female ratio: In India male ratio is more than the female ratio so there is a great demand of the tobacco product from the both of the side from the market of the tobacco. In the research of the news paper there is a consumption of tobacco product is more by male so great market for male in india.

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Literacy level: Literacy level in india is very less so people dont know about the harms of tobacco product when they use it for first time after the use they knowsthe harms but that became their habits. Income level: In India the income level of the Indian people is very less than others country so they live the tenseful life so for reduce the tension they use the tobacco products. Average age of society: In India there are teenagers are more than the old people so they are the fond of the enjoyment so the student who has the habit of the consumption they give the habit to the other people. (b) Cultural factor: Culture means it is the set of Norms, Value of ritual, Philosophy of country is the highest important to any industry. If you are not know the culture of any country than you cannot do the business in that country For example: So when the itc introduce the new product they first research about the Indian culture and their habits. Like they introduced the wills insigna which is the royal cigarette

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(c) Language: Language is also play an important role in any country. Because whatever you communicate in your language it may be some different meaning in other country. For example:In India there is a great value of the product of the itc like Bristol ,wills ,gold flake and others the most of the people known the brand as a company this is the great strength of the itc in India.

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(4) Technological factor: Technological factors include following factor. (a) Status of technology: Status of technology includes Advance technology Moderated technology Suitable infrastructure for technology Hear hotel industry have to check out that what technology they are using right now whether it is advance, moderated, or outdated technology. In tobacco they are using the dual filter for save the lips of the people who smoking. For example: In india the itc useing the duel refind tobacco techniques that will help the person for reduce the chance of the cancer or many others. Or the mant tobacco company tells that accha khaiye nischint rahiye But the tobacco is always harmful to any one. (b) Pace of technology: Pace of technology means how fast technology is changing in the country. In the country like America, china, Japan, India the technology is taking change at very fast rate as compare to china, Japan, & American technology the Indian is not fast growing as in that country so it is the backward point to tobacco industry in India.
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(c) Cost of technology: Cost of technology means what is the cost of adopting technology. For example:In india our country is the developing country the price of the technology is very high for the developing country so the developing country cant be adopt the new technology easily.

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4.5). VALUE CHAIN OF TOBACCO INDUSTRY:-

VALUE CHAIN analysis was suggested by Michel porter. The VALUE CHAIN analysis is under taken by tobacco industry to understand that how an industry can deliver a VALUE to its final consumers. The activity in VALUE CHAIN is divided into two parts.

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 Primary activity :Primary activities are those activities which are essential to be perform for any manufacturing .these activity include that ,entire process ranging for buying raw material to providing satisfactory services,to the customer. There are five main activities as following . (1) In bound logistic; This activity reflect managing the raw tobacco &parts equipment coming inside the industry it suggest that all material coming from the supplier Of raw tobacco(farmer) inside the industry should be treated carefully started properly. HARVESTING. This first step is a labour-intensive activity involving high amounts of child labour. Using only their hands, tobacco household members remove leaves from plant stalks. DRYING. Once harvested, leaves are transferred to drying sheds, sewn together, placed on drying sticks, and air-cured. Tobacco quality and storage time are dependent on weather conditions. BALING. A manual operated jack is used to make tobacco bales weighing up to 120 kgs. Workers load leaf of the same grade and compress it into bales wrapped in hessian, or burlap, cloth. (2) Operation;Its related with the process of converting raw tobacco into the final tobacco product .here the porter suggests that entire process should be carefully handle ,so that it does not relation into deterioration of the quality of the final products(cigarette, cigar .gutkha).

(3) Out bound logistic:its related with the activities includes in managing the final product whether it should be stored in the warehouses or going out in the market for selling purpose during this stage here industry shoud give proper attention for managing warehouses &proper transportation systems.
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(4) Marketing &sales;This activity related with the marketing and sales activities of industry here industry should develop proper marketing& distribution .the marketing of tobacco product is very much difficult because of rule and regulation of government .so here industry should develop proper& perfect advertising system. SELLING. During the selling season farmers sell tobacco to U.S. buyers at the Lilongwe auction floors. Farmers are told the date of sale so they can observe the auctioning of their tobacco bales. BUYING. 3 U.S. subsidiary companies buy over 95% of Malawis tobacco and sell to cigarette makers like Philip Morris. Limbe Leaf, a subsidiary of Universal Corporation (Virginia) purchases 50% of the crop. (5) Services;Once the product is to be sold final consumers there should be take care Of final consumer even after the sales .there should be continuously Get the feedback and provide the needed services to the consumers To keep them satisfy,

2) Secondary activities:This activities are desirable for any industry such activity add value to the primary activities so that each primary activities can be performed accurately. To deliver satisfaction . The following are the secondary activities. (1) Firms infrastructure;Its include basic activities available in industry.such as road .proper lighting, water facility continuous power facility .this will help the Industry to undertake production activity properly.
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(2) Human resource Skilled &loyal human resource is an valuable asset for any industry such kind of people add value to the final product while production Is taken place or they can satisfy the consumer during the sales activities. (3) Technology development;It reflect usages of technology by the organization industry must use Altramodern.state of the art technology for rapid &qualitative production. (4) Procurement:It reflect the activity include purchasing the raw material(raw tobacco) From farmers &other supplier ,here porters has suggested that There should be purchase good quality of raw material from the repated suppliers.

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4.6). FIVE FORCE ANALYSIS:-

Five force Analysis:-

Potential Entrance

Suppliers

Rivalry amongst exiting firm

Buyers

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1. 2. 3. 4. 5.

Threat of new entrance Bargaining power of buyers Bargaining power of suppliers Rivalry amongst existing firms Threat of substitute

If marketers want to know factors affecting any industry or tobacco industry, these 5 elements will helpful. Whether competition level is high, moderate, low can know with these elements. Five force analyses were given by father of strategies, Michel polter. Here, we can use 5 elements for the purpose of study of tobacco industry.

[1] THREAT OF NEW ENTRANCE:It refers to how easily one industry can enter into tobacco industry. There are various rules that any industry should have to follow for entering into this segment. Any industry cannot enter into tobacco industry because it is required to have very huge capital investment. Following barriers will decide position of new entrance in organization. I. Government policy: - however, this is the most affecting factor for entrance of new industry. Whichever companies want to enter into tobacco industry must require following various conditions. Not injurious for health, not create air pollution, safe for smoking etc are rules of primary basis which all tobacco companies require to follow. In many cases government policy and regulation are important entry barriers like prior to the economic liberalization in India. Monopoly: - monopoly means industry having no competition. This is very rare situation. In tobacco industry monopoly is not there. If we analysis the whole Indian tobacco industry than we can say that market structure industry is non monopolistic. Capital requirement: - when any companies want to enter into any industry, how much capital will require that industry need to find out. Higher the requirement of capital, lesser industry will interest to enter. Same thing is also applicable to tobacco industry.

II.

III.

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IV.

Product differentiation: - whether industry having different kind of products is there or not. Companies who want to enter into tobacco industry require having different kind of products offer to customers. Economies of scale: - it means larger the production, higher the benefits. Because of attraction of higher production by existed companies, new companies want to enter into tobacco industry. There are various types of economies of scale i.e. increasing return to scale, decreasing return to scale, and constant return to scale.

V.

[2] BARGAINING POWER OF BUYERS: Here, companies will decide who having bargaining power customers/buyers and industry. If customer affects price determination, then bargaining power of customer is high and vice versa. Following points will determine whether customer having bargaining power or not. I. Volume of purchase: - total quantity buyers will purchase is volume of purchase. If purchase in high quantity, they having higher affection to bargaining power. In tobacco industry, bargaining power of customer is very low in volume of purchase because buyers buy products of tobacco in very small quantity. Importance of product to buyers: - whether buyers require product on frequent bases or not. If any product is important for buyers, then bargaining power of customers is high. Same condition is also applicable to tobacco industry. All buyers used to purchase according to their preferences. Switching cost to marketer: - if buyers go to other industry from our industry, how much it affect to business of industry. Tobacco having less switching cost because buyers usually buy in small quantity. Extent of buyers information: - if customer is aware about the product information, bargaining power is higher. Extent of buyers information means the level of information which is known by the buyers. Ability of buyer for backward integration: - any customer of tobacco cannot establish their own tobacco industry. Tobacco having low bargaining power for backward integration.
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II.

III.

IV.

V.

[3] BARGAINING POWER OF SUPPLIERS: Reduction or increase in number to any industry. I. Important of product to suppliers: - power of ITC which provide raw tobacco to the customers, it having higher bargaining power. If ITC stop supplying raw materials to Tobacco Industry, it affect very hard. For example, maruti cannot run without tyres so MRF as suppliers of tyres is very important. II. Switching cost to suppliers: - Can suppliers are afforded to lose buyers? If ITC leave tobacco industry, is it affordable to it or not? Potential for forward integration: - Can suppliers have enough power to become marketer? How it will affect to existed industry? Whether ITC is capable to become manufacturer of tobacco? Bargaining power is higher in forward integration. Ability of substituting product: - can buyer substitute the product of suppliers? Cigarette is not available without tobacco. If product can substitute, bargaining power is higher. But it is not possible in tobacco. Suppliers cannot used substitute of raw materials.

III.

IV.

[4] RIVALRY AMONG EXISTING FIRM: I. Number of firms: - number of player is high, competition is high. If number of player is less but their strength is high, it having high competition. In tobacco number of player is very low. Competitive rivalry is likely to be affected by number of firms, their relatives market share, competitive strength etc. Growth of industry: - Faster the speed of growth, higher the level of entry is there. There is always continuous growth in tobacco due to consumption habit. the industry growth pattern in India in last few decades is shown very high. Cost structure: - higher the fixed cost, higher the level of competition. In variable cost, competition is low. Fixed costs are those expenses which industry must require spending. So it will increase competition for spending high.

II.

III.

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IV.

Product standardization: - higher product standardization will result into higher competition level. If customer expects more products, then competition is high. Exit barriers: - can industry easily exit or not? If industry had done high investment then industry cannot exit easily. In tobacco exit barriers is very high because invested crores of rupees. Economies of scale: - if any industry having larger player, competition is high.

V.

VI.

[5] SUBSTITUTE: I. Extent of substitute: - substitute means present of different products having similar features. For example coffee is substitute of tea. Tobacco industry having less availability in market. Importance of product: - whether product is important to buyers or not.

II.

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Chepter-5 Analysis of marketing mix

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MARKETING MIX

Product
Variety Quality Design Brand Name Packaging Services Warranties

Price
List Price Discounts Allowance Payment Period Credit Terms Transportation

Place
Channels Coverage Assortment Location Inventory

Promotion
Advertising Promotions Personal Selling Publicity

Target Market

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1). PRODUCT:-

(1.1) LEVELS OF PRODUCT:product package:Product refers to anything that marketer offers to customer which will result in to satisfaction of need or want of pre determine target segment. 1) CORE BENEFIT:The fundamental level is core benefit. The service or benefit that customer is really buying is known as core benefit. Customer prefer cigarette for referesh ment, its core benefit given to customer Itc,gtc,and Kothari brothers customer its core benefit. tobacco producers give benefit to

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2) BASIC PRODUCT : The marketer must turn the core benefit into basic produc t without basic product marketer can not provide the core benefit to customer. Raw tobacco, cigarette, Gutkha, bidi 3)EXPECTED PRODUCT:It combination of attribute and features that customer normally expected while consuming product.. Menthol rush, menthol canter fresh, menthol classic .wills regular. 4) AUGMENTED PRODUCT:Its that exceeds customer expectation .customer enjoy the services. Customer enjoy the cigar ; and provide highest level of satisfaction and prove more beyond customer Expectation. Itc wills menthol rush. It provides centre fresh gel flavour into the filter of menthol rush. 5) POTENTIAL PRODUCT:Products, which does not existence in the market but expected in future . Add Something new ,innovative in tobacco industry which is not available but provide in future

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(1.2) Classification of products:Product is anything which is offered to market for attention, acquisition and consumption that will satisfy the needs and wants of customers. Classification of products:Product

Consumer goods

Industrial goods

Consumer goods:The goods which is purchased by final consumer for personal consumption.

Types of consumer goods A. Convenience goods B. Shopping goods C. Specialty goods D. Unsought goods (A) Convenience goods It means that consumer use those goods which are buying frequently, immediately or without buying extra effort. Customer not to spend more time but he directly purchase it.

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 Types of convenience goods: Staple goods Impulse goods Emergency goods

Staple goods Consumer uses those goods which are purchase on regular bases.

Impulse goods Consumer uses those goods which are purchased without any planning . Emergency goods Consumer used those goods which purchased when needs comes or urgent. Tobacco customers are consuming tobacco on regular basis so tobacco is staple goods. Occasionally consumers consume tobacco to reduce the stress so it is also consider as impulse goods.

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(1.3) Product line and mix:Product line:Product line can be defined as the group of closely related product which is similar in function distributed through similar network which have very less price difference and which are targeted to the similar group of customer. Product line length:-

The products line of different tobacco brands are as follows: ITC GOLDFREY PHILLIPS GTC VST

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Line stretching:Firm stretch product line increase number of product by stretching line and product expanding product line. Downward market stretch:To stretch product line in downward market. Firm launch a product for lower class customers is called downward stretch.

Example:-

First the kuber retail price was 0.50 paisa but they increase the price of kuber 0.75 paisa so,they introduced the new kanchan kuber for 0.50 pasiafor there customers. Up market stretch:To stretch product line in upward market. Firm launch a product for middle class people to higher class people it called up market stretch.

Example:In this first the itc introduced the goldflake but they have to introduced Wills insigna for there upper level customer .
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 Two way stretch:Firm serving the middle market might decline to stretch their line in both directions.

Ex:in this example the godfrey Phillips the company using two way stretch like royel class customer they come out with jaisalmer for middle customer they comeout with stellar and for lower level customer they introduced four square. Packaging:Packaging of tobacco item should be attractive. It includes name of Manufacture Industry, expire date, manufacture date, mrp, ingredient use in product etc. and tobacco use nouse plastic packaging system also.

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2).PRICE:Price is monetary value of product that consumer need to pay on purchase of product. 1). List price:Here need to prepare the sales price to different distributors and customers of different types of tobacco likes bidi, cigar, cigarette, gutkha. We select price by various method of pricing. 2).discounts:If customers make payment in cash is a liable for certain discount. At hot rate discount should provide on purchase of product. Here need to keep certain factors in mind while providing discount a). Type of purchase, b). Quality of product, c). Quantity purchase by the customer. 3). Payment period:If a purchase made on credit base in how much time period customer should liable to pay amount. Generally it should be short term like 10 days, 15 days, 1 month. 4). Credit term:If a customer purchase product on credit, he should require to follow certain terms and condition.

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METHODS OF PRICING There are main six Methods to determine the Price, which are as follows:
MARKUP PRICING:-

Mark up pricing is the simplest pricing method and also known as cost-plus pricing method. Here the desired Profit Margin, or Return or Mark up is being added in the cost of the product. The equation of Mark up Price is as follows:

Here

TARGET RETURN PRICING:-

Another pricing approach is Target Profit/Return Pricing. The firm tries to determine the price at which it will have the target profit it is seeking. This pricing method is use by public utilities, which are constrained to make a fair return on their investment.
PERCEIVED VALUE PRICING:-

Here in this method the industry sets its target price based on customer perceptions of the product value. The targeted value and price then drive decisions about product design and what costs can be incurred. As a result, pricing begins with analysing consumer needs and value perceptions and a price is set to match consumers1 perceived value.

VALUE PRICING:-

An industry must find out what value buyers assign to different competitive offers. However, measuring value of the product could be difficult. Sometimes consumers are asked how much they would pay for a basic product and for each benefit added to the offer or an industry might conduct experiments to test the value of different product offers. If the seller charges more than the buyers' perceived value, the industry's sales will suffer.

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 GOING RATE PRICING:-

In going-rate pricing, the firm bases its price largely on competitors' prices, with less attention paid to its own costs or to demand. The firm might charge the same as more, as or less than its chief competitors.
AUCTION PRICING:-

Auction based pricing is also used when firms bid for jobs. Using sealed-bid pricing (auction pricing), a firm bases its price on how it thinks competitors will price, rather than on its own costs or on the demand. The firm wants to win a contract (Tender) and winning the contract (Tender) requires pricing less than other firms do. Yet the firm cannot set its price below a certain level. It cannot price below cost without harming its position. In contrast, the higher the industry sets its price above its costs, the lower its chance of getting the contract. Companies usually do not set a single price, but rather develop a pricing structure that reflects variations in Geographical Demand and Costs, MarketSegment Requirements, Purchase Timing, Order Levels, Delivery Frequency, Guarantees, Service Contracts and other factors. Price Adaptation Strategies, Geographical Pricing, Discount and Allowances, Promotional pricing differentiate pricing.

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Price list of itc ltd

Disributer price list

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Wholeseller price list of itc

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Retailer price list of itc

Price point segmentation:-

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3). PROMOTION:The tobacco industry engages in a comprehensive marketing strategy to create the impression that tobacco use is widespread and acceptable. These strategies include direct advertising (ads on TV or in magazines and at point of sale) and indirect advertising such as sponsorship of sports and concerts, product placement, and brand stretching. In India, despite an advertising ban having passed in 2003, cigarette companies in particular consistently exploite loopholes in the law and relaxed enforcement to market their products and attract new users. Examples include: In 2010, Godfrey Phillips India broke into the Indian chewing industry with the launch of Pan Vilas, a premium pan masala brand, and planned to invest Rs 1 billion ($US 22 million) over three years on marketing the product. Nita Kapoor, vice president of marketing and corporate affairs said in reference to promoting Pan Vilas that the company would push this product aggressively to penetrate deeper in the market.71 Considering recent declines in cigarettes sales, the successful marketing of a pan masala brand will allow Godfrey Phillips easier access to the smokeless tobacco market. The company plans to launch a zarda product by the end of 2011. The ITC group uses two of its popular cigarette brands, Wills and John Player, as the brand name of lifestyle retailing stores that sell clothing. The Wills Lifestyle brand is a well-established brand and also sponsors Indias annual Fashion Week73, stretching the cigarette brand name so that it is associated with the glamour of fashion and not just the deadly tobacco product. In 2009, 700 buses in Mumbai carried pan masala advertisements. While advertising non-tobacco pan masala products is not illegal in India, their presence on buses is considered surrogate advertisement for tobacco products because the same brand name and packaging exists for both pan masala and chewing tobacco products.

What Is Surrogate Advertising?

Surrogate advertising is advertising which embeds a brand or product message inside an advertisement which is ostensibly for another brand or product. For example, a cigarette company might issue public service announcements relating to a topic such as lung cancer, using the company's logo or distinctive brand colors in the ads so that people are exposed to the company's branding without seeing an explicit ad for the company's product. The company would justify the advertisement by claiming that it's an example of social responsibility.
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Example: - Pan Parag Pan massala - advertisement - and Adversement of various soda's - well I realize that these are methods used by tobacco and alcohol manufacuters to adv. real product - which is tobacco based or alcohol based.

Adv of zero tobacco - pan massala and soda seems harmless - but people do get the message and then buy products of the same company with tobacoo and alcohol.

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Sales Promotion

In this kind of advertisement they attract the man by showing the effect of the real man personality. in this kind of advertisement they show s the power of the man who smoke the cigarette who is really feels like real man
Sales promotion consists of a diverse collection of incentive tools, mostly, short term designed to stimulate quicker of greater purchase of particular or service by consumers or a trade. Advertising and personal selling often work closely with another promotion tools, Sales promotion consists of short terms incentive to encourage the purchase or sale of a product credit services, where as advertising and personal selling offer reason to buy a product or service. The sales promotion invites and rewired quick response Advertising says Buy our product but sales promotion says By it. now. It effects is for a short term only and dose not builds a longterm brand preferences. Sales promotion is a short-term objective, which is used to increase the sales.
Page 98 of 152

Sales promotion made by the tobacco is the discount given on the purchase of its tobaccos. Example: - turkiesh blend using sales promotion tools as a gift to consumer and give one whole package with lighter and Cadbury chocolate and also give lottery coupon and winner gets prize in sales promotion.

Advertising Advertising includes any information or persuasive message carried by a nonpersonal medium and paid for by a sponsor above product is in the same way identified in the message. Traditional mass media television and magazines are most commonly used. it saves as a substitute for a sales person talking to an individual prospect.

In this kind of advertisement they shows love for each othere but reason for love is cigarette so ,they use the indirect advertisement for the promotion of tobacco. Like we can see the pan masala advertisement on television but they mostly sells there gutka brand by showing the pan masala breand.

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4). PLACE:Introduction Place (or placement) decisions are those associated with channels of distribution that serve as the means for getting the product to the target customers. The distribution system performs transactional, logistical, and facilitating functions. Distribution decisions include market coverage, channel member selection, logistics, and levels of service. Place is about getting the products to the customer. Some examples of distribution decisions include distribution channels, market coverage (inclusive, selective, or exclusive distribution), specific channel members, inventory management, warehousing, distribution centers, order processing and transportation. Meaning Place includes all industry activities involved in making the product available to target consumers. It includes: channels of distribution, the extent of market coverage, managing discrepancies of quantity and assortment, retail locations, and the management of inventory, transportation, and logistics. Ultimately, Place is involved in making the product convenient for the target customers to purchase. Coverage Distribution channels can be defined by the number of levels involved. Each layer of marketing intermediaries, or "middlemen," that performs some work in bringing the product and its ownership closer to the final buyer is a channel level. Because the producer and the final consumer both perform some work, they are part of every channel. We use the number of middlemen to indicate the length of a channel, as depicted below:

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Channel 1 called a direct marketing channel, has no middlemen. It consists of a industry selling directly to customers. For example, Lands' End sells direct through mail order, by telephone, and via the Internet. Channel 2 called indirect marketing channels. It contains one intermediary level which, in consumer markets, is typically a retailer. For example, the makers of televisions, cameras, tires, furniture, and many other products sell their goods directly to large retailers such as Wal-Mart and Sears, which then sell the goods to final consumers.

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CHAPTER:-6 ANALYSIS OF STP OF TOBACCO

Page 102 of 152

1). MARKETING SEGMENTATION:

Market segmentation is the act of sub dividing a market into distinct sets of customers who merit attention. Targeting these customers for marketing by evaluating, selecting and concentrating becomes a corollary to segmentation. Market segmentation assumed importance in the context of intense competition market is bombarded with. A market consists of buyers, and buyer differs in one or more ways. They may differ by their wants, resources, locations, products requirements. These variables have to be considered in the process of segmentation.

There is different level of market segmentation. They are mass marketing; segment marketing and micro marketing markets can be segmented on the geographical basis, demographical basis, psychological basis, behavioral basis and loyalty status.

Tobacco segments its market on the following basis:

1).Geographical segmentation:

Geographic segmentation means dividing the market in to different segments based on the geographic variables such as Nations, States, Cities, towns If we talk about tobacco. Products, they have the products we can categorized these products in to the Geographic Segmentation.

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Page 104 of 152

2). Psychographic segmentation

Psychographic segmentation divides buyers into groups based on social class, lifestyle or personality characteristics. It divides buyers into different groups base on social class, lifestyle, or personality characteristics Example: - life style: - wills Insigna for royal class people. Example: - Personality: - Marlboro- it is for rugged personality.

3). Demographic segmentation

Demographic segmentation consists of dividing the market into groups based on variables such as Age, Gender, Life Cycle, Income, Occupation, Education, Religion, and Nationality... Demographic segmentation means divide market into groups based on variable such as age, gender, life cycle, income, occupation, education, region, generation and nationality. Example: - gender(women) Pine, miss cigarette which is targeted to female. Income Income is very useful in demographic segmentation. We use this variable for its product and sale different price packages, for e.g. .its come out with tobacco products which affordable so the poor consumer can buy a tobacco. Example:- Bristol(ITC) for lower class Gold flake, wills(ITC) for middle class Jesalmer(g.p) for higher class

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Page 106 of 152

4).Behavioural segmentation

Behavioural segmentation divides buyers into groups based on their knowledge, attitudes, uses or responses to a product. Behavioural Segmentation divides buyers into groups based on their knowledge, attitudes, uses or responses to a product. Many Marketers believe that behaviour variables are the best starting point for building Market segments .

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Targeting
(1) Single Segment Concentration:Single segment concentration means company is targeting only one segment.

(2)Selective Specialization:Selective specialization means company is targeting all three market and each market they have targeted one segment.

(3)Product Specialization:Product specialization means company is targeting only one mallet & producing all the product for that market. Example: - ITC. It only produce the cigarette and Kothari brothers only focus on Gutkha. (4)Market Specialization:Market specialization means company is targeting one market and producing all the product for that market

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Positioning
Positioning is the act of designing companies offering & image to occupier the distinctive place in the mind of target segment. Tobbaccos Positioning Strategy tobacco is worlds No.2 industry because It has a good area for production in india of, & product differentiation :in tobacco many company producing different product. for benefit of different taste of consumer. here . ex;-gold flake come out with the taste of honey and other hand four square come out with extra strong tobacco taste which create different brand position in mind of consumer. image differentiation:Here company create distinctive image in mind of consumer .so they can easily devlope brand image better way in mind of customer . ex- ITC come out with their premium brand like a wills insigne for executive class people ofr create good image different in compare to its competitor. channel differentiation; how company easily reach to its customer to compare its competitors. company benefit where less channel in distribution .so .they reduce the cost of commission and brokerage . People differentiation: The person who are promoting the tobacco product must be skillfull and aggressive in nature. They must be given specific training so that they can easily different than other competitors. The person who involve in the activity are very well trained, responsive in nature, Knowledgeable, courtesy. Ex: ITC have their owned representative which are promoting the product and give to information to dealer how to promote their brand so they can create different than competitors.

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Chapter:-7 ANALYSIS OF CONSUMER PRICE AND SENSITIVITY AND BRAND PREFERANCES WITH SPECIAL FOCUS ON VARIOUS FORM OF TOBACCO.:-

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CHART-1 AGE GROUP OF THE PEOPLE WHO CONSUME

AGE RANGE less than 18 18-25 26-35 36-45 46-55 above 56 PEOPLE 21 84 41 25 17 12

TOBACCO:-CHART:AGE GROUP OF CONSUME TOBACCO

21

20 25

PROFESSIONAL GOVT.SERVENT BUSINESS OTHER

53

INTERPRITATION:In conclusion we can say that more number of businessmen is habituated for having consumption of tobacco products. They contribute 53% in total consumption. 25%, 20%, 21% are contribution done by government servant, professional, others respectively.

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CHART-2
INCOME OF THE PEOPLE WHO CONSUME THE TOBACCO:-

INCOME RANGE LESS THAN 10000 10001-20000 20001-40000 40001 & ABOVE

PEOPLE 75 65 47 13

CHART:-

MONTHLY INCOME OF PEOPLE WHO CONSUME TOBACCO

13

47

75

LESS THAN 10000 10001-20000 20001-40000 40001 ABOVE

65

INTERPRITATION:People having income less than 10000, their numbers are 75 which are near to 40% in total consumption. Person who earn 10001 to 20000, their number are 65 which are near to the 38%. 32% of the total consumption covered by the income group of 20001 to 40000.
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CHART-3
OCCUPATION OF THE PEOPLE WHO CONSUME TOBACCO

OCCUPATION STUDENT PROFESSIONAL GOVT.EMPLOYEE BUSINESS OTHERS

PEOPLE 81 20 25 53 21

CHART:OCCUPATION OF PEOPLE WHO CONSUME TOBACCO

21, 11% STUDENT 81, 40% 53, 27% PROFESSIONAL GOVT.SERVENT BUSINESS OTHER 25, 12% 20, 10%

INTERPRITATION:Here, we came to know that amongst the all types of consumers, student and businessmen are in very huge numbers, while Professionals, Government employees are comparatively less consuming customers. High personality of businessmen and high lifestyle of student lead more consumption of tobacco products.

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CHART-4 TO 8 WHICH FORM OF TOBACCO PERSON CONSUMES:Forms of tobacco Cigarettes Gutkha Bidi Cigar Raw tobacco People 98 26 25 19 32

Chart:forms of tobacco consume by people

32 Cigarettes 19 Gutkha 98 Biddi Cigar Raw tobacco 26

25

Interpretation:Cigarette is consumed more because of high consumption by student and businessmen .Here Gutkha, bidi, cigar and raw tobacco are having low consumption rate while cigarette is having very high consumption because of high demand from youth as well as high demand from business persons.
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CHART-9
WHATS THE REASON BIHIND TOBACCO CUNSUME BY PEOPLE:-

REASON STRESS REDUCE AS A HABIT FILL LIKE A MAN FOLLOW OTHERS GIVE COMPANY TO FRIEND OTHERS

PEOPLE 30 117 13 14 22 4

CHART:-

REASON BEHIND TOBACCO CONSUMPTION

4

22

30 STRESS REDUCE AS A HABIT FILL LIKE A MAN FOLLOW OTHERS GIVE COMPANY TO FRIEND OTHERS 117

14
13

INTERPRITATION:Here,to follow other people and to give company to friends,people consume tobacco very less but as a habit they consume more .The class, consume tobacco as a habit is a very big compare to other all groups.They cant change their habit.They cant control stress so to reduce their stress they consume more tobacco .

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CHART-10 WHERE PEOPLE CONSUME TOBACCO:PLACE AT HOME ONLY OUTSIDE HOME ONLY PAN STALL WORK PLACE ANYWERE PEOPLE 6 59 55 18 62

CHART:WHERE PEOPLE CONSUME TOBACCO

39

48 LESS THAN 100 101-300 301-500

50

MORE THAN 501

63

INTERPRITATION:Mostly, people consume tobacco at pan stall or outside of home. At home they cant consume tobacco because of presence of family members. We all know consumption of tobacco is believed very habit in our society so people try to avoid consuming tobacco at home .

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CHART-11 MONTHLY EXPENCES ON TOBACCO:EXPENCES LESS THAN 100 101-300 301-500 MORE THAN 501 PEOPLE 48 63 50 39

CHART:MONTHLY EXPENCES FOR TOBACCO

39

48
LESS THAN 100 101-300 301-500

50 63

MORE THAN 501

INTERPRITATION:Here,all types of group spending are almost same.There are 48 people who spend less than 100 Rs.,63 people who spend 101 Rs. to 300 Rs while 50 people spending more than 300 Rs. But less than 500 Rs. Morever 39 People who spend more than 500 Rs. For consumption of tobacco in one month.

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CHART-12 HOW FREQUNTLY CONSUMPTION OF CIGARETTE:Time period Daily Two-three day Weekly Occasionally People 88 16 8 10

Chart:People
10
8

16

Daily Two-three day Weekly Occasionally 88

Interpretation:Amongst the 200 people,120 people are cigarette consumers ,in which 88 people are consuming cigarette on daily basis, while 16 people are consuming cigarette on 2-3 days basis,while 8 &10 people are consuming cigarette respectively on weekly and occasionally.Thus the daily consumers are having more numbers compare to any other group of consumers.
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CHART-13 HOW FREQUNTLY CONSUMPTION OF GUTKHA:Time period Daily Two-three day Weekly Occasionally People 91 11 1 3

Chart:People
1 3 11 Daily Two-three day Weekly Occasionally

91

Interpretation:Most of gutkha consumer consume gutkha daily because of their uncontrolled habit .Amongst 106 gutkha consumers ,91 consumers consuming gutkha on daily basis.Thus it is thrice than sum total of all other gutkha consumers group.

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CHART-14 HOW FREQUNTLY CONSUMPTION OF BIDI:People 17 0 1 2

Daily Two-three day Weekly Occasionally

Chart:People
2 0 1 Daily Two-three day Weekly Occasionally 17

Interpretation:Amongst 200 people , only 20 people are consuming bidi.Here we can conclude that very poor class people who cant afford more money behind tobacco consumption are only bidi consumer because bidi is available at cheaper price amongst all others tobacco products .Morever where cigarette and other types of tobacco product are not available specifically in rural area , people of this area are mostly consumers of bidi.

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CHART-15 HOW FREQUNTLY CONSUMPTION OF CIGAR:People 1 5 8 10

Daily Two-three day Weekly Occasionally

Chart:-

People
1 5 10 Daily Two-three day Weekly Occasionally

Interpretation:Amongst 200 people, only 24 people are consuming cigar. Cigar is consuming by very less number of people due to high price. Amongst 24 cigar consumers, most of consumer consuming cigar on weekly basis or occasionally. Thus we can say the daily consumption of cigar is very less. The target segment of cigar for marketer is high income class people.
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CHART-16 HOW FREQUNTLY CONSUMPTION OF RAW TOBACC0:People 45 2 3 1

Daily Two-three day Weekly Occasionally

Chart:People
2 3 1 Daily Two-three day Weekly Occasionally 45

Interpretation:Amongst 200 people ,51 people are raw tobacco consumer, we can say it is average numbers.45 people amongst 51 people are consuming raw tobacco on daily basis so we can say that 90% of total raw tobacco consumers are daily basis raw tobacco consumers .

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CHART-17 HOW FREQUNTLY CONSUMPTION OF TOBACCO:Time period Daily Two-three day Weekly Occasionally People 168 16 3 13

Chart:-

how frequntly people consume tobacco

6 16

13

Daily Two-three day

Weekly
Occasionally 165

Interpretation:Here tobacco consumers mostly consume tobacco on daily basis.There are very few people who consume tobacco on weekly basis or occasionally.Only 16 people amongst 200 people consume tobacco on 2-3 days basis.Because of habit of tobacco consumption , 168 people consume tobacco on daily basis .
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CHART-18
QUENTYTY BOUGHT BY PEOPLE WHO CONSUME CIGARETTE:-

Quantity 0 to 5 6 to 10 11 to 15 Above 15

People 93 22 3 4

Chart:-

People
3 4 22 0 to 5 6 to 10 11 to 15 Above 15 93

Interpretation:Amongst 120 cigarette consumers, 93 cigarette consumers consume cigarette in 0 to 5 volume while 22 people are consuming in 6 to 10 volume. Moreover very less consumer consume cigarette more than 10 volume.

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CHART-19
QUENTYTY BOUGHT BY PEOPLE WHO CONSUME GUTKHA:-

0 to 5 6 to 10 11 to 15 Above 15

People 58 40 5 2

Chart:-

People
5 2 0 to 5 6 to 10 40 58

11 to 15
Above 15

Interpretation:Amongst 106 gutkha consumers, 58 people consuming gutkha in 0 to 5 volume while 40 people consuming gutkha in quantity of 6 to 10 volumes so we can say most of gutkha consumers consume gutkha in quantity between 0 to 5 & 6 to 10 volume.
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CHART-20 QUENTYTY BOUGHT BY PEOPLE WHO CONSUME BIDI:People 4 8 3 3

0 to 5 6 to 10 11 to 15 Above 15

Chart:-

People
3 4 0 to 5 3 6 to 10 11 to 15 Above 15

Interpretation:Here we came to across all type of consumer. Amongst 20 consumers, average numbers of consumers are having all type of group. But, 8 people which are more than all groups are consuming bidi in quantity of 6 to 8 volume.

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CHART-21
QUENTYTY BOUGHT BY PEOPLE WHO CONSUME CIGAR:0 to 5 6 to 10 11 to 15 Above 15 People 24 2 0 0

Chart:People
00 2 0 to 5 6 to 10 11 to 15 Above 15 24

Interpretation:Here, most of cigar consumers consume cigar in quantity of 0 to 5 volume , so we can conclude that consumers are consuming cigar in very small quantity .

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CHART-22
QUENTYTY BOUGHT BY PEOPLE WHO CONSUME RAW TOBACC0:0 to 5 6 to 10 11 to 15 Above 15 People 43 6 1 0

Chart:People
0 6 1

0 to 5 6 to 10 11 to 15 Above 15

43

Interpretation:Amongst 51 consumers, most of consumers, almost 43 consumers consume raw tobacco in quantity of 0 to 5 volume.
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CHART-23
QUENTYTY BOUGHT BY PEOPLE WHO CONSUME TOBACCO:-

Quantity 0 to 5 6 to 10 11 to 15 Above 15

People 139 38 14 9

Chart:-

Quantity bought by people of tobacco

9

14

0 to 5 38 6 to 10 11 to 15 139 Above 15

Interpretation:There are 139 consumers consuming tobacco in 0 to 5 volume, so we can say that very large number of people consume tobacco in 0 to 5 volume .38 people consuming tobacco in 6 to 10 volume but very less numbers of people consume tobacco in 11 to 15 and above 15 volume.

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CHART-24
WHAT THE PEOPLE CONSIDER WHEN BUY THE TOBACCO:-

PEOPLE CONSIDER BRAND NAME WORD OF MOUTH COMMUNICATION ADVERTISEMENT AVAILIBLITY OTHRS

PEOPLE 92 15 20 61 12

CHART:-

PEOPLE'S CONSIDERATION WHILE BUY TOBACCO

12 BRAND NAME WORD OF MOUTH COMMUNICATION 61 92 ADVERTISEMENT AVAILIBLITY 20 OTHRS

15

INTERPRITATION:Here we came to know that around 50% of total people consider brand name while consuming tobacco. While 30% people consider easy availability of the tobacco .Thus all other factors are not so much important but we cant ignore these factors.
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CHART-25
CIGARETTE WILLS FOUR SQUARE GOLD FLAKE BRISTOL OTHERS PEOPLE 61 36 58 27 28

CHART:-

CIGARETTE
13% 29% 13% WILLS FOUR SQUARE GOLD FLAKE BRISTOL 28% 17% OTHERS

INTERPRITATION:Here, most of cigarette consumers consuming wills and goldflake to satisfy their habit.Here forsquare,Bristol consumers are also in significant numbers.

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CHART-26
GUTKHA RMD KUBER SILVER VIMAL TULSI OTHERS PEOPLE 49 20 36 26 27 7

CHART:-

GUTKHA
4% 16% RMD 30% KUBER SILVER 16% 12% 22% VIMAL TULSI OTHERS

INTERPRETATION:-

Amongst all type of gutkha RMD having more numbers of consumers so we can say that RMD is market leader in gutkha segment market.
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Chart-27
People aware about tobacco are injurious and reason for cancer:-

Respond Yes No

People 196 4

Chart:-

awareness of people about side effects

4

Yes No

196

INTERPRETATION:Amongst 200 peoplee, 196 people are aware about adverse effect of tobacco though they are consumiong tobacco because of uncontrolled habit of tobacco.

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CHART-28 Whats the reason behind the people who consume the tobacco:Reason Out of control Good imual system Others People 149 41 10

Chart:-

why people consume tobacco

10 41 Out of control Good imual system Others 149

INTERPRETATION:Most of people consume tobacco because of their uncontrolled habit of consuming tobacco.They cant control their habit of consuming tobacco.

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 CROSS TABULATION:-

(1) Income and forms of tobacco: -

Forms Income

Cigarette 33 39 30 8 110

Gutkha 15 28 31 6 80

Bidi 9 6 6 0 21

Cigar 3 13 7 0 23

Raw tobacco 19 14 7 4 44

Total 79 100 81 18 278

Less than 10000 10000-20000 20000-40000 above 40000 total

CHART:70 60 income group 50 40 30 22 14 20 13 12 1 Cigarette Gutkha 45 1-18 year 18-25 year 7 1 Bidi forms of tobacco 63

20
10 0

11

14 10
4 1 Cigar 0

1211 9

26-35 year 36-45 year

Raw tobacco

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(2). OCCUPATION AND FORMS OF TOBACCO:-

Students Occup. Forms Cigarette Gutkha Bidi Cigar Raw tobacco Total

Professional

Govt. job

Business

Others

Total

59 44 4 14 12 133

10 8 1 3 5 27

14 13 3 6 3 39

24 30 10 2 24 90

11 10 4 1 4 30

118 105 22 26 48 319

CHART:70 60 63

50
occupation 40 30 20 10 0 1-18 year 12 11 11

45
Cigarette

Gutkha
22 20 Bidi 665 7 1 46-55 year Cigar 353 02 Raw tobacco 14 12 7 14 11 13 9 10 4 1 0 26-35 year 36-45 year

18-25 year

Above 55 year

forms of tobacco

Page 136 of 152

(3) FORMS OF TOBACCO AND AGE:FORMS AGE

Cigarette Gutkha 11 63 22 14 6 3 119 12 45 20 13 6 5 101

Bidi 1 7 1 4 5 3 21

Cigar 1 14 10 0 1 0 26

1-18 year 18-25 year 26-35 year 36-45 year 46-55 year Above 55 year Total CHART:-

Raw tobacco 7 12 11 9 7 2 48

Total 32 141 64 40 25 13 315

70 60 forms of tobacco 50 40 30 20 12 11 11 1-18 year

63

45 Cigarette Gutkha 22 20 7 14 12 7 14 11 13 9 10 4 1 0 26-35 year age 36-45 year 665 7 1 46-55 year 353 Bidi Cigar 02 Raw tobacco

10
0

18-25 year

Above 55 year

Page 137 of 152

(4) AGE GROUP AND SPENDING BEHIND TOBACCO CONSUMPTION.:Spending Age

1-18 18-25 26-35 36-45 46-55 Above 55 Total CHART:-

Less than 100 Rs. 11 15 04 05 08 01 48

100-300 Rs. 300-500 Rs. Above 500 Rs. 08 03 01 30 18 18 12 17 07 04 07 10 05 03 01 04 02 02 63 50 39

Total 23 85 40 26 17 09 200

AGE GROUP AND SPENDING BEHIND TOBACCO

70 60 50 40 30 20 10 0 18-25 year 26-35 year 36-45 year 46-55 year Above 55 year 14 12 7 45 11 63

12
1 22 20 11 10 1 14 13 9 4 0 665 7 1 5 3 3 2 0 1 7

Page 138 of 152

(5.1) AGE GROUP AND FREQUENTLY CONSUMPTION OF CIGARETTE:Frequency Age

Daily 7 45 20 11 2 2 87

Every 2-3 days 1 21 0 1 2 0 15

Weekly 2 3 0 0 2 0 7

occasionally 1 3 1 2 0 1 8

Total 11 62 21 14 6 3 117

1-18 year 18-25 year 26-35 year 36-45 year 46-55 year Above 55 year Total CHART:-

AGE GROUP AND FREQUENTLY CONSUMPTION OF CIGERATTE

70 60 50 40 30 20 10 0 1-18 year18-25 year26-35 year36-45 year46-55 yearAbove 55 year 12 11 11 14 12 7 22 20 7 11 10 1 14 13 4 0 9 665 7 1 353 2 0 63

45
Cigarette Gutkha Bidi Cigar Raw tobacco

Page 139 of 152

(5.2) AGE GROUP AND FREQUENTLY CONSUMPTION OF GUTKHA.:Frequency Age

Daily 10 34 21 12 5 4 86

Every 2-3 days 1 7 0 0 2 1 11

Weekly 1 0 0 0 0 0 1

occasionally 0 0 0 1 0 0 1

Total 12 41 21 13 7 5 99

1-18 year 18-25 year 26-35 year 36-45 year 46-55 year Above 55 year Total CHART:-

AGE GROUP AND FREQUENTLY CONSUMPTION OF GUTKHA

70 60 50 40 30 20 10 1412 2220 45 11 12 63

1
1 1011 1 1413 4 0 9 665

7
1

7 353 02

0
18-25 year 26-35 year 36-45 year 46-55 year Above 55 year

Page 140 of 152

(5.3) AGE GROUP AND FREQUENTLY CONSUMPTION OF BIDI:Frequency Age

Daily 1 4 1 2 5 4 17

Every 2-3 days 0 0 0 0 0 0 0

Weekly 0 1 0 0 0 0 1

occasionally 0 2 0 1 0 0 3

Total 1 7 1 3 5 4 21

1-18 year 18-25 year 26-35 year 36-45 year 46-55 year Above 55 year Total CHART:-

AGE GROUP AND FREQUNTLY CONSUMPTION OF BIDI

70 60 50 40 30 20 10 0 18-25 year 26-35 year 36-45 year 46-55 year Above 55 year 1412 2220 45 11 12 1 1 1011 1 1413 4 0 9 7 665

63

7
1

353

02

Page 141 of 152

(5.4) AGE GROUP AND FREQUENTLY CONSUMPTION OF CIGAR:Frequency Age

Daily 0 1 0 0 0 0 1

Every 2-3 days 1 0 3 0 1 0 5

Weekly 0 5 3 0 0 0 8

occasionally 0 7 3 0 0 0 10

Total 1 13 9 0 1 0 24

1-18 year 18-25 year 26-35 year 36-45 year 46-55 year Above 55 year Total CHART:-

AGE GROUP AND FREQUNTLY CONSUMPTION OF CIGAR

70
60 50 40 30 63

45

11 12 1 22 20 14 12 7 1 1011 1413 9 4 0 36-45 year 665 1 7 1 7

20
10 0

18-25 year

26-35 year

46-55 year Above 55 year

Page 142 of 152

(5.5) AGE GROUP AND FREQUENTLY CONSUMPTION OF RAW TOBACCO:Frequency Age

Daily 6 11 11 9 6 2 45

Every 2-3 days 1 1 0 0 0 0 2

Weekly 0 0 2 0 1 0 3

occasionally 0 1 0 0 0 0 1

Total 7 13 13 9 7 2 51

1-18 year 18-25 year 26-35 year 36-45 year 46-55 year Above 55 year Total CHART;-

AGE GROUP AND FREQUNTLY CONSUMPTION OF RAW TOBACCO

70

63
45 11 12 22 20 7 14 12 1 11 10 14 13 4 0 9 665 7 1 353 02 1 1 7

60
50 40 30 20 10 0 18-25 year 26-35 year 36-45 year 46-55 year Above 55 year

Page 143 of 152

(6). OCCUPATION AND REASON FOR TOBACCO:occupation reason Reduce stress As a habit Fill like man Follow others Give company to friends Others Total CHART:10 45 7 7 16 3 88 Students Professional 5 9 0 1 5 1 21 Govt. job 7 14 1 0 1 0 23 Business 17 39 2 2 4 2 66 Others 1 13 1 0 4 1 20 Total 40 120 11 10 30 7 218

OCCUPATION AND REASON FOR TOBACCO CONSUMPTION

70 63

60
50

45

11 12 1

40
30 22 20

1 7 11 10 1

20
10 0

14 12
7

14 13
9 4 0 665 7 1 5 3 3 2 0

18-25 year26-35 year36-45 year46-55 year Above 55 year

Page 144 of 152

 CHI - SQUARE:(1) FORMS OF TOBACCO AND INCOME GROUP:-

Forms Income

Less than 10000 10000-20000 20000-40000 above 40000 total

Cigarette 33 (31) 39 (40) 30 (32) 8 (7) 110

Gutkha 15 (23) 28 (29) 31 (23) 6 (5) 80

Bidi 9 (6) 6 (8) 6 (6) 0 (1) 21

Cigar 3 (7) 13 (8) 7 (7) 0 (1) 23

Raw tobacco 19 (12) 14 (16) 7 (13) 4 (3) 44

Total 79 100 81 18 278

Expected frequency of cell (1,1) = 79 x110 = 31 278 Expected frequencies of different cells are indicated in brackets in the cells. 2 (oi-ei)2 ei = (33-31)2 + (15-23)2 + (9-6)2 + (4-3)2 31 23 6 3 = 0.13+2.78+1.5+2.29+4.08+0.025+0.034+0.5+3.125+1+0.125+2.78+0+0+2.77+ 0.14+0.2+1+1+0.33 = 23.81 D.f. = (r-1) (c-1) = (5-1) (4-1) = (4) (3) = 12 On 1 d.f. and at 5% level of significance table value of
2 cal 2

=21.03.

>

tab

. .. H0 may be rejected.

Page 145 of 152

(2) Forms of tobacco and age group :FORMS AGE

Cigarette Gutkha 11 (12) 63 (53) 22 (24) 14 (15) 6 (9) 3 (5) 119 101 12 (10) 45 (45) 20 (21) 13 (13) 6 (8) 5 (4)

Bidi 1 (2) 7 (9) 1 (4) 4 (3) 5 (2) 3 (1) 21

Cigar 1 (3) 14 (12) 10 (5) 0 (3) 1 (2) 0 (1) 26

1-18 year 18-25 year 26-35 year 36-45 year 46-55 year Above 55 year Total

Raw tobacco 7 (5) 12 (21) 11 (10) 9 (6) 7 (4) 2 (2) 48

Total 32 141 64 40 25 13 315

Expacted frequency of cell (1,1) = 32 x119 = 12 315 Expacted frequencies of different cells are indicated in brackets in the cells. 2 (oi-ei)2 ei = (11-12)2 + (12-10)2 + (1-2)2 + (2-2)2 12 10 2 2 = 0.08+0.4+0.5+1.33+0.8+1.89+0+0.44+0.33+3.86+0.17+0.05+2.25+5+0.1+0.07 +0+0.33+3+1.5+1+0.5+4.5+0.5+2.25+0.8+0.25+4+1+0 = 36.89 D.f. = (r-1) (c-1) = (5-1) (6-1) = (4) (5) = 20 On 1 d.f. and at 5% level of significance table value of
2 cal 2

=31.41

>

tab

. .. H0 may be rejected.

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(3) OCCUPATION AND FORMS OF TOBACCO:Occup. forms Cigarette Gutkha Bidi Cigar Raw tobacco Total Students 59 (49) 44 (44) 4 (9) 14 (11) 12 (20) 133 27 5 (4) 39 3 (2) 3 (6) 90 1 (2) 6 (3) 24 (14) 30 8 (9) 3 (3) 2 (7) 4 (5) 319 Professiona Govt. job l 10 (10) 13 (13) 10 (6) 1 (2) 48 14 (14) 30 (30) 4 (2) 26 Business 24 (33) 10 (10) 22 Others 11 (11) 105 total 118

Expacted frequency of cell (1,1) = 118 x133 = 49 319 Expacted frequencies of different cells are indicated in brackets in the cells. 2 (oi-ei)2 ei = (59-49)2 + (10-10)2 + (14-14)2 + (4-5)2 49 10 14 5 = 2.04+0+0+2.45+0+0+0.11+0+0+0+2.78+0.5+0+2.67+2+ 0.82+0.5+3+3.57+0.5+3.2+0.25+1.5+7.14+0.2 = 33.23 D.f. = (r-1) (c-1) = (5-1) (5-1) = (4) (4) = 16 On 1 d.f. and at 5% level of significance table value of
2 cal 2

= 26.30

>

tab

. .. H0 may be rejected.

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CHAPTER-8 CONCLUSION AND FINDINGS:-

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MAJOR FINDING
By doing extensive research of overall aspect, we have come to the concussion that subject to the condition and circumstances , the project is definitely physically, socially, economically, financially and commercially viable From the recommendation of the respondents, we have come to many conclusions and some conclusions are got on our own. We are thinking to produce a tile which is totally balanced from the view point of price, quality and durability. We are thinking to provide such a distribution of the titles to the consumer the channel should be comparatively short so the price can be in control. The company will incur a good amount of money for the purpose of advertisement which will result in the brand reorganisation in the market. From the survey, we have decided to produce ceramic tiles only but then after we are going to produce all the types of the tiles. Our company will provide all those services to the consumer which a tiles industry should provide.

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CHAPTER- 9 BIBLIOGRAPHY:-

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Books
Marketing management- Phillips kotler Strategic management- VSP Rao Retail management

News paper
The Times of India Business Standard

Websites
WWW. docstok. Com WWW.tobaccocontrol. Com www.tobaccofreekids.org www.notobacco.org www.imperial-tobacco.com

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