Global Marketing Entry Strategy
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Transcript of Global Marketing Entry Strategy
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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
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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
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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.
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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.
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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.
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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
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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
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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/ -
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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)
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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
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Target Market
The traits of our targetsegment are:
Age range between 18 to 50
years Independent successful
women
Fashion conscious
High Disposable Income
Caring
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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
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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
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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
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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
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Print Ad
Cigarette Smoking is Injurious to Health
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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
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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
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Thank You!, but remember
CIGARETTE SMOKING IS INJURIOUS TO HEALTH