global marketing entry strategy

8/2/2019 Global Marketing Entry Strategy

1/19

GLOBAL MARKETING

Team:

Subhashis Guha , Yuva Damodaran , Ashwin Natarajan , J Pavaanjeet Singh

Estila premium women cigarettes in the Philippines


2/19

Team:

Subhashis Guha , Yuva Damodaran , Ashwin Natarajan , J Pavaanjeet Singh

Business Mix: FMCG, Hotels, Paper and Paper Boards,Agri-Business, Information Technology

Main RevenueStream : Cigarette

ITC is one of India's foremost private sector companieswith a market capitalisation of nearly US $ 19 billion

and a turnover of over US $ 5.1 Billion.

Market Share in the IndianCigarette Market


3/19

PEST ANALYSIS

PoliticalThe Current political outlook for the Philippines is stable. Thepolicies of the central government are pro business andfavored towards tax reforms and increased privateparticipation in various sectors.

Areas of concern remain in terms of the securityenvironment in the Mindanao region

EconomicThe Philippines has been affected by the Sub-prime crisis and isgrowing at the rate of 0.4% this year. But the tobacco industry isconsidered recession proof and smokers tend to smoke the samevolumes in a recession.

We expect this growth to be buttressed by the governments focuson the infrastructure sector of the Philippines.

The government allows upto100% FDI in certain sectors

The per capita income of the Philippines is estimated to be 2100$as of 2009, this makes this market lucrative for tobacco.

TechnologicalState of the art manufacturing facilities established havebeen established by competitors in the Philippines.

SocialPhilippines is one of the largest female smoking country in the world(16th in 2008, according to a couple of international surveys)

More and more women are lighting up cigarettes around the worldeven as the smoking rate declines for men. This fact is true even inthe Filippino context.


4/19

Market Attractiveness

In addition to the social factors we mentioned inour PEST analysis we can see the following trendswhich favor the launch of a new brand ofcigarettes: According to a global study on tobacco usage young

Filippino women are ranked 2nd in the consumption oftobacco.

A recent Global Youth Tobacco Survey states that 22%

of Filipino teenagers or 1 in 5 currently smoke. The above mentioned factors in addition to the social

factors already mentioned make this market attractivefor ITC to enter.


5/19

Market Attractiveness UAI study

From our Survey we came across thefollowing preliminary information: Nearly 90% of the women surveyed smoked.

Three-fourths of the women surveyed said that they would want a new

cigarette for women. Over half of our target market was aware about cigarettes for women.

Over 60 % of the target market smokes 2 or more than 2 brands, we are

assuming that it this segment which will try out new cigarettes. These brand

switchers are our target audience.

Conclusion: Based on these four primaryparameters we can say that the market is ready

for the introduction of a new brand of cigarettes

exclusively for women.


6/19

Market Potential

Population of Philippines : 92.23 million (www.census.gov.ph)

Female Population: 46.12 million

55% of the Population in the age range (18 to 64): 28.13 million

12% of adult females are smokers: 3.38 million (WHO report

on Philippines)

High Value Female Smokers (36%): 1.22 million (Based on UAISurvey)

So, Market Potential = 1.22 million female smokers


7/19

Sales Potential

To calculate the sales potential we have tried to estimate the potentialbrand switchers.

Brand switchers = the female smokers smoking more than 3 brands or

the ones willing to try out a new female cigarette brand.

Then we tested the hypothesis that not more than 70% of our target

market will be brand switchers

i.e. Null Hypothesis, H0 : 70%,

Alternate Hypothesis, H1 : 70%

On the basis of the testing we rejected the null at 95% interval

concluding that we may assume at least 70% of our niche market to

respond to our new product.

Sales Potential = 70% of 1.22 million

= 0.85 million female smokers


8/19

Sales Forecast First year

Sales Potential : 0.85 million female smokers

Per Capita Cigarette Consumption in Philippines: 1849 sticks

(www.nationmaster.com)

Sales Potential (no. of Sticks): 1572 million per year

5% Target Market Share on the 1st Year: - 78.6 million sticks

Sales Forecast for the 1st Year (@ 4.47 pesos per stick)

Sales in Value Terms Php 351.34 million
http://www.nationmaster.com/http://www.nationmaster.com/


9/19

SWOT

ANALYSIS

STRENGTHS

1. Strong Financial Reserve

2. Ability to manufacture a wide array of

Products

3. IT enabled six-sigma based product

development processes

4. Excellent Track Record on CSR

WEAKNESSES

1. No exposure in the international cigarette

market

2. High Excise duty in India

3. No brand awareness in Philippines

4. Not a European or US brand

OPPORTUNITIES

1. High percentage of smokers in

Philippines

2. Large women smoking population

3. Open Culture and strong influence of

western societies

4. More than 50% FDI allowed in

Philippines cigarette industry

5. Rising urban women with disposableincome.

SO-Strategies

1.Venture into the Philippine Cigarette

Market. (S1, O1)

2. Present products for Filipino

women(S2, O2)

3. Enter into a JV with a

distributor(S1,O4)

4. Extend the CSR work to get noted at

public and individual levels.

WO-Strategies

1. Lobbying for export promotion zones in

India (W2,O1,O2)

2. Target the niche market of women

smokers, selective distribution to build the

brand. (W3, S2)

3. Brand the product with a western name

and give it the image of a self-dependent

yet caring urban woman. (W3,W4,O5)

THREATS

1.Special taxes and duties on Cigarette

imports in Philippines.

2.Well established international brands in

Philippines

3.Illicit trade and cheap contraband

Products

4.Anti-smoking campaigns from NGOs

and social organizations

5.Currency fluctuations

ST-Strategies

1. Introduce high quality products for

Premium female smokers and those with

disposable income. (S3,T1)

2. Avoid direct confrontation with

established players by targeting a niche

market. (S2,T2)

3. Involve as a social player by promoting

NGOs and community organizations.

(S4,T4)

WT-Srategies

1.Make use of its learning from other

business segments that have a global

presence (W1,T2)

2.After the initial market testing keep the

long-term plan to invest in setting up a

plant. (W2,T1)


10/19

Competitors

Major competitors

All the above mentioned competitors have

significant investments in the distribution chain,full fledged product lines, cash reserves andhence pose a very high threat to our new productline.

Brand Company Presence Price

Vogue BAT Asia- Korea 84 Pesos

ESSE Korea

Tobacco&

Ginseng Corp.

Asia- Korea 75 Pesos

Virginia Slims Philip Morris Asia-

Philippines

80 Pesos


11/19

Target Market

The traits of our targetsegment are:

Age range between 18 to 50

years Independent successful

women

Fashion conscious

High Disposable Income

Caring


12/19

Entry Strategy

51%-49% Joint Venture

Major Distributor/ Big Players like San Miguel

Sales and Marketing - ITC

Leverage distribution strength of the partner

Global Localization Product and Workforce


13/19

Product

Flavor (Menthol, Strawberry, Chocolate) Estila Ice, Estila Pink, Estila High

Fragrance ( Lesser smell of nicotine )

Longer Filters covered with

special tipping paper.

Sleek Look (100 mm length; 3.7 mm

diameter)

Colored sticks

Designer rolling paper.

Packaging (Open book pack)s


14/19

Place

Selective Distribution Dedicated shelves in

departmental stores.

Special Kiosks in leading Malls.

Dispensers in offices

We are using this method of

distribution to:

Build exclusivity

Build a strong brandBe accessible to the target market


15/19

Promotion

Phase 1Teasers Text games,

Website (forum, Computer room)

Magazines

Phase 2Amazing race for women

Phase 3

Advertorials

Club Promotions & Music NightsSpecial events for selectiveaudiences (Call center employees)

Limited Edition Customized Packs


16/19

Print Ad

Cigarette Smoking is Injurious to Health


17/19

Price

Price before distributor 1.98

Import(7% on RP) 0.315

Excise(P20/20 sticks) 1

Sales(10% on RP) 0.45

Inspection 0.0001

Price to distributor 3.75

Dist margin(1.45% on RP) 0.05

Shipping (5% on RP) 0.23

Retailer margin(10% on RP) 0.45

Retail Price 4.48

Price per pack of 20 sticks Php 90


18/19

Pro forma Income Statement

(In Millions) 2010 2011 2012 2013 2014

Revenues 351.82 527.72 791.59 989.48 1236.85

Cost of Goods Sold 337.66 506.48 759.73 949.66 1187.07

Gross Profit 14.16 21.24 31.86 39.82 49.78

Operating Expenses

Advertising and Promotion 12 11 10 10 10

Selling, General and Administrative 5.7 6.7 7.7 7.7 9

Other expenses(Legal etc) 1 1 1 1 1

Total 18.7 18.7 18.7 18.7 20

Income before taxes -4.54 2.54 13.16 21.12 29.78

Income tax(30%) 0.76 3.95 6.34 8.93

Net Income -4.54 1.78 9.21 14.79 20.85


19/19

Thank You!, but remember

CIGARETTE SMOKING IS INJURIOUS TO HEALTH

global marketing entry strategy

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