Llast Final Touch2 Q. 6

8/8/2019 Llast Final Touch2 Q. 6

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Table of contents

Topic name Page#

Dedication ------------------------------------------03

Acknowledgment --------------------------------------04

Executive summary -----------------------------------05

Mission Statement------------------------------------08

Introduction ----------------------------------------09

History----------------------------------------------09

Overview of industry---------------------------------13British American Tobacco-----------------------------18

PTC background and achievement ----------------------23

Introduction of products-----------------------------25

Marketing Analysis ----------------------------------30

Competitive Analysis---------------------------------35

Consumer Analysis------------------------------------39

Segmentation-----------------------------------------43

Sales Analysis---------------------------------------50

Distribution Strategy--- ----------------------------61

PTC promotion Strategy------ ------------------------69

SWOT Analysis of PTC------------------- -------------79

SWOT Analysis of Competitors ------------------------82

Recommendations-------- -----------------------------84

References-------------------------------------------90

Survey questioner -----------------------------------91

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Dedication

We dedicate this project to our teacher,Mr. SAFDAR

NAZEERand ourparents who is the source of motivation

and inspiration through out our studies.

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Acknowledgment

First of all thanks to Almighty Allah, who have given

us the strength and knowledge to complete this

project. We would like to specially thank for the help

of our marketing teacher sir Safdar Nazir who helped

us a lot regarding this project. Then we would like to

thanks for the cooperation of Mr. Najeeb, the Quality

manger of PTC, he give us a lot of information and

guided us. We have learned a lot with the kind

guidance of sir.Safdar Nazir and we think we haveachieved our goal of learning practical things.

Executive Summary

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PTC is a multinational organization having its parent

company, the British American Tobacco, located in

England. PTC is a cigarette manufacturer and is one

of the highly respected multinationals in Pakistan.

The tobacco industry is one of the most important

sectors of the economy and PTC has become a major

player in this industry by keeping thousands of people

employed; and by contributing to the annual GDP of

Pakistan through the large amount of taxes paid on

cigarette manufacturing and sales. By having themission of being the first choice for everyone, PTC

is obviously portraying itself as a very focused,

determined and goal-oriented company. Its objectives

are not only related to sales and profits, but are

also reflective of the excellent corporate culture and

the high level of ethical responsibility that the

company takes on.

PTC is an organization well suited from all

facets that is - operations, marketing,

organizational structure, leadership, and motivational

aspects every element perfectly blends in its

success story. On one hand, PTC has firm values and

believes that have played a significant part in

building and maintaining its corporate culture, while

on the other hand, it has high marketing standardswhich take more into account than just the sales of

cigarettes. It listens and reacts to the concerns of

its stakeholders especially since it is operating in a

highly controversial industry. From a business point

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of view, it takes great strategic steps to market and

enhance the image of its brands while complying with

all the government regulations. Its major competitor

is Lackson Tobacco Company, which adopts a number of

immoral marketing practices that PTC has to counter

ethically since it is a multinational. In addition,

PTC understands the highly significant role of

information technology in todays global economy, and

thus pays special attention to the implementation of

IT in all of its departments. Every department has

its own network system and database that provideincreased communication and reliable data.

Especially, in the factories, PTC has a number of

latest machinery for manufacturing and their

performance is commendable.

The Akora Khattak factory was set up after Jhelum

factory to meet the increasing demand. The various

processes at the factory and machinery used to

manufacture cigarettes are simply fascinating. Latest

machines such as Loga, Mark 8, and Mark 9 are being

used. PTC has a great consideration for quality of

its product. Quality monitoring starts from the point

where tobacco is purchased to the point of sale and

even after the sale. All the customer complaints are

taken care of and efforts for constant improvement in

quality are made. In fact, the company is so qualityconscious that it invests million of rupees in

procurement of machinery that improves the quality of

cigarettes. Mark 9 machines are usually purchased for

this reason.

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Ultimately, it is evident that PTC has adopted

world-class standards in its internal as well as its

external activities and thus has been extremely

successful in its core business.

Mission statement

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Transform PTC to perform with the speed,

flexibility and enterprising sprite of an

innovation, consumer-focused companyand long

term vision of becoming

PAKISTAN TOBACCO COMPANY

INTRODUCTION OF THE ORGANIZATION:

History:

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Pakistan Tobacco Company is the member of the

multinational British American Tobacco group

(BAT). In Pakistan, BAT carries out its

business under the name of PAKISTAN TOBACCO

COMPANY (PTC).

Pakistan Tobacco Company is the first-

multinational company of Pakistan and

completed 58 years of its operations in the

country. Company was incorporated in Pakistan

and is listed on the three stock exchanges of

the country. It was established in the sameyear when Pakistan takes its birth in 1947,

and taking over the business of imperial

Tobacco Company (India).the parent company of

PTC is british American tobacco(BAT),a well

reputed company that stands second in the

global cigarette market.PTC was the first

foreign company to set up business in

Pakistan.

It had three branches Karachi, Jehlum, Akora

Khattak, but Karachi factory has been closed

since 1992 due to heavy loss and some other

reasons.

First plant was set in a warehouse in Karachi

port with monthly production of 30 million

cigarettes against sales of 60 million, thegaps being filled up by import.

When Pakistan came into being all tobacco was

imported in for production of cigarettes the

rapid expansion of cigerete market led to

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establishment of jhelu factory in 1955 the

same year (PTC became a public limited

company). But in 1952 development project was

initiated in N.W.F.P.hence PTC was the first

foreign investment in Pakistan and pioneered

the manufacture of cigerets and cultivation of

virgenia tobaccos in the country and also

dtarted research work in the field of tobacco

to produce finest quality tobacco in order to

give way to the top quality American Tobacco

in Pakistan.Factory was established in 1955 at Jehlum, PTC

became a Public Limited Company in the same

year.In 1965, because of fiscal incentives a

factory was established in Dhaka. In December

1971, east Pakistan was lost and the effect on

PTC was traumatic both psychologically and

operationally. 60 % of the sales volume was

lost and the company was left holing a massive

production capacity and inventories surplus.

Surgical measures were essential for survival

and this include of management by 30

%retrenchment, separation of over 500

employees and a cut in employment for those

retained. With the resettlement of operations

to meat increasing demand, a cigerrate factorywas set up at akora khattak in 1975.major

developments since then are modernization of

GLT (re drying)plant in facilities at akora

khattakand jhelum factory (the Karachi plant

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having been closed in late 1991) and the

acquisition of high speed loga was operated to

meet the increasing demand

1975 a new cigarette factory was set up at

Akora Khattak to meet the increasing demand.

Akora Khattak factory is one of the largest

factories of N.W.F.P.

Mission statement of Pakistan Tobacco Company

Transform PTC to perform with the speed,

flexibility and enterprising sprite of an

innovation, consumer-focused companyand long

term vision of becoming

First choice for everyone

vision

First choice for everyone

KEY OBJECTIVES:

To regain volume and value leadership by

positioning variable brands in all consumer

related segments of the market. The focus is

on the light segment, ASU 30(adult smokers

under 30 years ),and premier brands.

The established leading positions in markets

where it is not already strong.

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To drive world class standards in products

process and services through passionate

skilled and confident people

To meet stakeholders expectations.

To be seen as a responsible company in

acontroversial indestury.

To meet these objectives, PTC is taking the

following initiatives

Establish a focused segments and

differentiated brand portfolio

Create a winning cooperate culture with focus

on vision, mission and values.

Restructure PTC,s cost base to become

competitive locally and globally

OVERVIEW OF CIGARETTE INDUSTRY :

The cigarette industry is heavily dominated by giant

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firms and state-owned tobacco monopolies. Cigarette

producing companies are based around the world. There

are two entrenched interests that have opinions about

the cigarette industry:

(a) Participants in the industry, and (b) people

affected by the deaths attributable to tobacco use.

These interests conflict, and since they involve large

amounts of money, long-held (historically) belief

systems, and the premature deaths of loved family

members.Participants in the industry argue that commercial

tobacco production is a vital part of the American and

world economy. Thousands of farmers in the United

States, alone, make their living from raising tobacco

leaves for use by the industry. It is estimated that

the tobacco industry contributes billions of dollars

in tax revenue to the federal government every year.

Varieties of Tobacco

Cigarettes are a blend of three main popular tobaccos:

bright, burley and oriental. Most bright and burley is

grown in the United States, while oriental tobacco,

also known as Turkish, is grown in several

Mediterranean countries. Bright, which is often called

flue-cured or Virginia tobacco, is similar to thelarge-leaf Spanish tobacco.

Bright Tobacco

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Bright tobacco matures from the bottom leaves up, so

they are picked first, then each succeeding layer as

they mature, until only the top leaves are left for

final harvest. Leaves are graded according to their

position on the stalk.

Harvesting

As the bottom leaves of bright tobacco are picked or

primed, they are placed on a mechanical harvester.

Pulleys move them to the top of the machine where they

are compressed in metal racks with tines that pierce

the leaf. Most tobacco farmers today utilizemechanical harvesters. As the harvesters move over a

row of tobacco plants, the mature leaves are pulled

off the stalk and transported up to removable trailers

at the top of the harvester.

Curing

The first step in preparing harvested bright tobacco

for market is curing. The crop is placed in specially

equipped containers known as bulk barns. Forced-air

heat flows through the leaves of bright tobacco during

a five-to-seven-day drying process. This draws out the

bright lemon or golden color that gives bright tobacco

its name.

After curing, bright tobacco will be sold to various

domestic and foreign manufacturers in one of two ways:

through marketing agreements between farmers andmanufacturers or at auction.

Marketing Agreements

Today, many tobacco farmers have marketing

agreements with manufacturers under which all

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or part of their tobacco crop is sold

directly to the manufacturers. For example,

British American Tobacco fulfills much of its

tobacco requirements through its Tobacco

Farmer Partnering Program.

In this program a farmer brings the crop to a

receiving station. It is unloaded, visually

inspected, moisture tested with electronic

equipment and then graded. The farmer often

stands beside the grader and observes the

evaluation of each bale of tobacco. This isan opportunity for face-to-face communication

between the seller and the buyer. Soon

thereafter, the tobacco grower leaves the

receiving station with a check in hand.

Auctions

Tobacco is also sold by some growers through

the auction system. At auctions, multiple

buyers compete for baled tobacco that has

been brought to a central warehouse. At one

time, auctions were the principal way that

tobacco was sold, but today many growers

prefer to sell their crops directly to

manufacturers.

Burley Tobacco

The process of growing and selling burley tobacco issimilar to that of bright, but there are significant

differences in the way burley is harvested and cured.

Harvesting

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When harvesting burley, the entire stalk is cut by

hand and air-cured in natural atmospheric conditions

over an eight-week period.

Curing and Shipping

Because the entire stalk is cut and hung to cure,

instead of leaf by leaf like bright, the stalks are

hand-stripped after curing. After curing, burley is

reddish-brown, much darker than bright tobacco. The

leaves are then graded by their position on the stalk.

The stalk is discarded and the burley leaves put into

80- to 90-pound bales for shipment to market.Initial Processing and Aging

After purchase, leaf tobacco must be processed at the

stemmer, where moisture is added to make the tobacco

pliable enough to remove its large stems. Once the

stems are removed, the tobacco is hydraulically prized

or compressed into boxes or porous wooden vats called

hogsheads. These will be stored in special warehouses

for approximately two years, while the tobacco

undergoes a natural aging and mellowing process.

Primary Processing

Upon completion of the aging process, these same

hogsheads and boxes are delivered to Primary

Processing facilities in preparation for cigarette

manufacturing. In these facilities the tobacco

undergoes a conditioning process where hightemperatures and humidity restore moisture to suitable

levels for cutting and blending tobacco and completing

the cigarette making process.

Bright, burley and oriental tobaccos are precisely cut

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and blended according to time-honored formulas, or

recipes, to produce tobaccos for various brands of

cigarettes. These brand recipes include ingredients

and flavors that are added to the tobacco to give each

brand its unique characteristics.

Cigarette Making and Packing

the blended tobacco or cut filler leaves Primary

Processing and is delivered by a pneumatic feed system

to cigarette making machines (called makers) within

the factory. At the maker, the tobacco is stored

temporarily in hoppers which continuously allowmeasured amounts of filler to drop down onto prepared

cigarette paper. The paper is wrapped around the

tobacco and sealed to form continuous rods.

These are then cut to proper length for cigarettes.

Filter-tipped brands have a double-length filter

inserted between every two cigarettes; filters are

sealed to the rods and then cut in half to produce two

cigarettes, each one having a filter on one end.

Packer machines insert cigarettes into packs, packs

into cartons and cartons into cases. The cases are

then conveyed to the Finished Goods Department for

temporary storage. From there they are shipped to

warehouses to be sold to wholesalers and retailers.

BRITISH AMERICAN TOBACCO

Progress In historical Perspective:

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With more than 300 brands in its portfolio British

American Tobacco is the worlds second largest

quoted tobacco group having leadership in more than

50 of the 180 markets where they do business. The

Group has 87 factories in 66 countries producing

some 792 billion cigarettes in 2003. Their

companies, including associated companies, employ

more than 85,000 people worldwide. By 1912, just a

decade after BATs business was founded, they

became one of the worlds top dozen companies by

market capitalisation.British American Tobacco has grown considerably in the

last decade, delivering a total shareholder return

that has outperformed the FTSE 100 over the last one,

five and ten year periods. The Group continues to

successfully pursue its strategy of organic growth and

investment in new markets and acquisitions.

Martin Broughton, who retires at the end of June after

10 years leading the Group as Chief Executive and, for

the last five, as Chairman, believes the Group has the

strategy, the brands, the people and the focus to

deliver sustainable growth and long term shareholder

value. He also sees the Group as leading the tobacco

industry in demonstrating Corporate Social

Responsibility and accountability.

In terms of organic growth, the local brands grewslightly and the real stars shone more brightly. BATs

four global 'drive brands Pall Mall, Kent, Dunhill

and Lucky Strike grew by 13 per cent between them.

Kent's volume reached almost 30 billion, improving 14

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per cent while Dunhill, already over the 30 billion

mark, was up 8 per cent. Lucky Strike had a difficult

time but performed more strongly as 2003 progressed.

Pall Mall broke the 30 billion barriers for the first

time, powering ahead by 32 per cent, largely due to an

impressive performance in Italy.

Italy also demonstrates ability to achieve growth

through acquisition. Buying Ente Tabacchi Italiani

(ETI) has given BAT a much higher quality business in

Italy, taking them to the number two position in the

second largest tobacco market in the European UnionThe proposed Reynolds American transaction, combining

R.J. Reynolds (RJR) and Brown & Williamson (B&W) US

businesses, will also create a stronger and more

sustainable business, in which the Group will have a

42 per cent share. The process of achieving the

various regulatory approvals is proceeding and we

expect the transaction to be completed around the

middle of 2004.

Turning to productivity, the key developments in 2003

included the major restructuring in Canada and the UK,

as BAT continues their drive for an effective and

efficient integrated supply chain. BAT believes that

it can improve their service to customers, as well as

releasing funds that can then be invested in their

brands to increase the momentum behind their organicgrowth. BAT is also committed to saving some 200

million a year in overheads and indirects by 2007 and

made a good start in 2003, saving some 64 million.

BAT has became very active in business development

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throughout the 90s and into this decade, with new

investments in Hungary, Poland, Ukraine, Russia,

Uzbekistan, Romania, Cambodia and now Italy, amongst

others, and major merger and acquisitions activity in

the United States and Mexico. Its $1.5 billion

acquisition in 1997 of Cigarrera La Moderna was then

the largest foreign investment ever in Mexico. Then of

course there was the Rothmans merger in 1999.

In 2000, BAT also acquired the 58.5 per cent of

Imasco, the Group's Canadian associate, which it did

not already own, giving us full ownership of Canada'sImperial Tobacco and its significant market share. In

2003 BAT proposed to combine its US business, Brown &

Williamson, with RJ Reynolds, creating a new company

called Reynolds American that will be 42 per cent

owned by BAT.

Also in 2003 BAT won permission to acquire the Italian

state tobacco company, Ente Tabacchi Italian S.P.A.

(ETI), at auction for a price of 1.6 billion. The ETI

acquisition put British American Tobacco in the number

two position in the European Union's second-largest

tobacco market.

In 2002, BAT built and launched factories in Turkey

and South Korea, the worlds seventh and eighth

largest tobacco markets. Our new factory in Nigeria

opened in 2003 and has helped spark increased turnoverand growth, in volumes as well as in stakeholder

engagement -- they have published their first social

report. In China, the world's largest cigarette

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market, the Chinese National Tobacco Corporation has a

monopoly position.

While BATs discussions in China continue, albeit more

slowly than it would like, BAT has been given

permission to build a factory in Sichuan Province, on

a site that should provide it with the opportunity for

a business of significant scale. The Chinese

Government has done an excellent job in modernising

the sector, and BAT believes it can help the Chinese

tobacco industry to develop further.

Overall, BAT is putting resources into markets whereit believes market share and profitability can be

increased. Many countries are considering privatising

state-owned tobacco companies and BAT considers all

such opportunities very carefully.

BAT is committed to building value for its

shareholders, and it believes there is real value

embedded not only in how it runs its business but in

how a company is put together; in its ability to see

the world as it really is; in it's ability to pick and

retain talent; to build relationships of trust with

consumers, suppliers, distributors and partners, and

to manage high quality brands. Perhaps above all in

todays economy, there is particular strength in the

ability to root local businesses in a vast range of

different cultures around the globe.

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Guiding Principles

BATs Guiding Principles describe key characteristics

of its organisation, which it aims to nurture.*

Strength from Diversity

It reflects the cultural mix within the Group and a

working environment where employees individual

differences are respected and enjoyed. It also

reflects BATs aim of harnessing diversity - of

people, cultures, viewpoints, brands, markets and

ideas - to create opportunities and strengthenperformance.

Open Mindedness

It reflects openness to change, opportunities and new

ideas, including ways of addressing regulatory issues

and the changing expectations in society. BAT seeks to

be active listeners, genuinely considering others

viewpoints and not prejudging.

Freedom through Responsibility

It reflects the devolved nature of the Group and its

belief that decisions should be taken throughout the

organisation at the appropriate level, as close to the

consumer as possible, and that decision makers should

accept responsibility for their decisions.

Enterprising Spirit

It has been a characteristic of BATs business througha century of operations. It is reflected in its

ability to grow its business and its value within many

challenging environments, through the confidence to

*

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seek out opportunities for success, to strive for

innovation and to accept considered risk-taking as

part of BATs way of working.

The flexibility, new thinking, financial strength and

long term vision that has given us sticking power

for a century will continue to drive us forward in

search of continuing success.

PAKISTAN TOBACCO COMPANY LTD

Background and Achievements

*

Pakistan Tobacco Company, a subsidiary of the BAT was

established in 1947.It took over the business from

Imperial Tobacco Company (India), operational since

1929 in the territory that form Pakistan. It was the

first multinational to set up business in Pakistan.

PTC pioneered the cultivation of Virginia Tobacco and

the manufacture of cigarettes in Pakistan.

The first full-fledged factory was set up in 1955 at

Jehlum and that same year PTC became a Public limited

company. At the time of partition all tobacco was

imported. But in 1952 ,a development project for

tobacco leaf was initiated in NWFP which progressed

rapidly. A re drying plant was set up at Akora Khattak

and cultivation of Virginia tobacco commenced.

After the separation of East Pakistan in 1971 and thewithdrawal of Dacca and Chittagong (Bangladesh)

factories ,a new cigarette factory was set up at Akora

Khattak in 1975to meet the increasing demand.

*

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PTC is the single largest tax payer in the

private sector contributing a large amount to the

government

It has employed over 6000 thousand people at its

factories both at Akora Khattak and Jehlum and

throughout the tobacco growing areas of NWFP and

Punjab.

PTC is committed to being a good corporate

citizen. Over many years it has been :

Donating to a number of deserving causes.

Contributing to and is strongly supporting

measures related to the natural resources and

environmental needs of the country.

It has been in to tree plantation over the last

few decades to meet wood fuel requirements and

for better environment in both rural and urban

areas where it is providing free of cost saplings.

Educating growers in the latest techniques and

promoting modern technology in agriculture that

has benefited not only tobacco growers but also

all agriculturists in the region.

Sponsoring and promoting sports activities.

Running free mobile dispensaries.

Plays a significant role in the eradication of

Poppy cultivation by providing alternate income

source to the inhabitants of ancestral Poppy

cultivation area.

Introduction of product:

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PTCS BRANDS REVIEW:

JHELUM FACTORY

GOLD LEAF

CAPSTAN

B&H

GOLD FLAKE (Soft cup)

GOLD FLAKE(Supreme)

WILLS INTL.

AKORA KHATTAK FACTORY

CAPSTAN FILTER

GOLD FLAKE

WILLS NAVY CUT

EMBASSY FILTER

EMBASSY KINGS

Here is a brief review of four well-known brands of

PTC:

JOHN PLAYER GOLD LEAF

JPGL is growing very fast and has captured the premium

brand market. It dominates the premium brand category

and contributing significantly to PTCs overall value

share leadership. The brands dynamic performance can

be attributed to its established image and the

companys continuous endeavours towards improving

brand quality and total brand offer. JPGL is now

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strongly placed as the benchmark cigarette brand in

Pakistan.

WILLS KINGS

Since its re launch in 1997 this brand has done

considerably well consolidating its position in the

market. WILLS KINGS new blend was launched in 1998

with a view to cater to the changing consumer needs.

It was received with warmth and pleasure by the

consumers and the brand share has grown ever since.

With further planned inputs to improve the total mix,

substantial volume improvements are expected.EMBASSY

PTC manufactures two sub brands of EMBASSY- EMBASSY

KINGS and the other EMBASSY FILTER. This brand is

showing a strong market growth in the overall low

price segment .As it is very much popular in Punjab

therefore it has come to be known as the Punjab brand.

The brand remains the outright volume leader in

Pakistan.

GOLD FLAKE

Since its re launch in NWFP where it has the

reputation of being predominantly a Punjabi brand

this brand is slowly but surely being reinvigorated to

take off largely through the untiring efforts of the

personnel at the area sales office, directed both at

the retailers and the consumers.

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BRAND CATAGORIES:*

PTC has six major brands having a total of 19 variants

as follows:

BESON&HEDGES(B&H)

GOLD LEAF(PG)

GOLD FLAKE(SX)

CAPSTAN(RA)

WILLS(WI)

EMBASSY(CH)

CATEGORY 1

In upper premium category we have:

BENSSON & HEDGES(B&H-Special)

BENSSON & HEDGES(B&H-Lights)

CATEGORY 2

In premium category is placed

GOLD LEAF (PG-20HL)

GOLD LEAF (PG-10HL)

CATEGORY 3

In media category

I. CAPSTAN INTL.(RA-20SS)II. WILLS INTL.(WI-20HL)

III. WILLS INTL.(WI-10HL)

IV. CAPSTAN FILTER(AY-10SS)

*

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V. WILLS KINGS(BP-20HL)

VI. WILLS FILTER(NT-10SS)

VII. WILLS GOLD FILTER(20HL)

VIII. GOLD FLAKE(SX-20HL)

CATEGORY 4

In low category:

I. EMBASSY KINGS(CH-20HL)

II. EMBASSY FILTER(CL-10SS)

PTCS MARKETING PRINCIPLES:

PTC is proud of its strong reputation for supreme

quality brands. It does not believe in compromise on

quality and standard and gives high importance and

value to aggressive but legitimate marketing in order

to ensure sustained image and performance. In major

markets across the country, PTCs trade marketers are

frequently rated highly in customer surveys on

professionalism and service. It aims to satisfy adult

consumers' demands better and more profitably than the

competitors.

PTC believes strongly that tobacco should never be

marketed to youth. It should only be marketed to adult

smokers, in an appropriate way that takes account of

the risks posed to health. It also believes adults whohave chosen to smoke should be able to receive

information about what they buy, and we should be able

to communicate responsibly with them about their

brands. And in this direction much of PTCs marketing

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departments efforts are aimed at ASU30* category

smokers and is trying its utmost to win them over.

PTCs marketing is not designed to 'sell smoking'.That would be wrong and a waste of marketing effort.

Rather PTC is working in a long-established, mature

product category, where people already know what the

basic product is. There would be no commercial sense

to trying to market to informed customers who don't

want the product.

PTCs marketing is about brands; retaining the brand

loyalty of its customers, and winning them over from

competing brands. Its brands are amongst its most

important assets. As well as complying with all laws

and many voluntary codes on marketing, it has for many

years been guided by a clear set of British American

Tobacco Advertising Principles.

These have set out, for example,

PTCs advertising and promotional activities will be

directed at adult smokers.

No health claims will be made about tobacco

products.

People appearing in advertising will not be, or

appear to be, younger than 25.

Moreover PTC strongly adheres to and respects all thelaws and promulgated regulations such as the 50 meter

Clause* which implies that no merchandising material

shall be displayed on any outlet within close

*

*

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proximity of schools or other educational

institutions, religious seminaries, mosques, hospitals

etc violation of which may incur government penalties.

The government of Pakistan has recently revised the

Health Warning Legislation. As per the guidelines, the

new health warning Smoking causes cancer and heart

diseases Ministry of Health will be printed on the

flap (top) on front side of the cigarette packs in

Urdu and on the back in English. It will cover 30% of

the pack on each side in rectangular box.

MARKETING ANALYSIS:

Marketing at PTC is divided into three further

categories: marketing research, brand marketing and

trade marketing the marketing research department

carries out its surveys and other such activities

to find out the demand for each brand, and to

discover the potential cigarette market. the brand

marketing department comprise of brand managers who

have the responsibility the success and health of

their individual brands. Each brand manager designs

and executes promotions to increase the sale of his

brand. Advertising through different medias and

sponsorships of event is also the job of brand

marketing. The trade marketing staff works directin the field and interacts with the distributers,

wholesalers, retailers, and the customers. PTC is

renowned for conceiving brands attaining the status

of a classic. It has been consistently meeting

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consumer expectations for the past ten years with

the popular international brand names like Benson

and Hedges, John Players Gold Leaf, Wills, Capstan,

and Embassywhich is the largest selling brand in

the market. PTC, through 343 distributors,

services a very large retail and wholesale network

across the country.

PTC has always been looked upon as one of the

most dynamic organizations with its exuberance to

quickly adapt to the changing needs of the market.

PTC has also been a harbinger in establishingscientific methods of marketing research to focus

on the changing consumer requirements. As part of

this tradition, the company recently conducted a

detailed urban and rural retailer census, a

gigantic task never undertaken by any business

outfit in Pakistan. The census facilitated in

determining the volume of business, region wise

requirements/demands and also helped in

streamlining PTCs current distribution network

thereby reducing costs. Total of about 270,000

retailers and over 7000 wholesalers were surveyed.

PTC is also a pioneer in introducing filter

cigarettes in Pakistan as early as 1955. More

recently, keeping in view the shift towards light,

gold leaf lights has been introduced in the marketrepresenting the house of gold leaf as a truly

international offer keeping with the times and

remaining in tune with the changing needs, and

tastes of PTCs consumers.

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In keeping up with its tradition of being in the

cutting edge of marketing innovation, PTC co-

sponsored the launch of the epic movie Titanic in

Pakistan, thereby setting a singular precedent of

providing quality entertainment to the nation. And

this was within three months after the Explore the

World promotion campaign for Gold Leafwas ran, to

which PTC received in excess of 1500, 000 consumer

entries. PTC is constantly endeavoring to

introduce novel and innovative measures to further

the marketing graph and offset the extraneousadverse affects.

PTC is one of a very few companies in Pakistan

which is paying a great deal of attention to the

retail marketing. It started a retail excellence

program, which is a set of structured presentations

covering subjects such as business ethics, trends,

customer focus and how to satisfy customer needs

profitably. It enables PTC to develop and roll out

best-practiced retailer methods, which will enhance

retailer profitability and their relationship with

the company in order to regain market leadership in

the future. The focus is how to provide a world-

class service to consumers, sharing company

information and plans, and gaining feedback. PTC

holds numerous trade meetings with its distributorsand retailers, which no doubt helps to strengthen

the relationship and be responsive to their

requirements better than any other FMCG company in

the market place. These meetingsare held at high

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quality venues and a gift from PTC is given to each

retailer as a token of appreciation for their

attendance. This is a unique concept in the market

as PTC is the only company in Pakistan to embark on

such a program for retailers working in line with

the companys vision to be first choice for

everyone. The intention is to transform PTCs

field staff role into business advisor rather than

a mere salesman. In short, the program focuses on

business building as a whole rather than a

propaganda forum for selling cigarettes. PTCstresses the importance of expanding customer base

through good service and the removal of counterfeit

cigarettes from the market. Overall, the key goal

is not to deceive a trusted consumer for short-term

goals.

MARKETING STRATEGY AUDIT

The mission statement at PTC is Dare to be

different.

The mission is market oriented as its word project the

companys present image, which is successfully been

carried by their Sales and marketing department.

PTC has always tried to bring new and grand-marketing

events (Voyage of discovery JPGL) to project is the

company different from its competitors.

The companys marketing budgets had always been the

highest in the industry but for the past two years

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Lakson Tobacco Company has increased its budgets to

compete on equal grounds with them.

Marketing Objectives & Goals:

Sales translated into turnover

Budget for cost

Profitability

The marketing objectives as mentioned earlier are

inline with the corporate strategy and are very much

clear and appropriate for the marketing department.

This is proved by their two consecutive re-launches

(Capstan & Gold Flake), which are done to make up for

the lost sales volume and profits.

The goals are set by the department keeping in mind

the objectives. The brand managers sets their own

sales targets which are then matched with the

performance of the brands every month.

Marketing Strategy:

As PTC exists in a Fragmented industry, the company

takes advantage of its multinational connections and

uses Image Differentiation Strategy. The company has

established an image of a quality product provider at

an affordable price, along with its attractive and

eye-catching marketing campaigns. The company makes

use of Societal Marketing Concept to project itself.

COMPETITORS ANALYSIS:

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In year 2000, PTC underwent a major transformation by

taking bold initiatives towards regaining leadership

in the market. Price repositioning on brands in the

medium and low segment provided PTC with an

opportunity to gain competitive advantage, which

resulted in increased volumes and market share. Its

daring steps forced competition to revert to similar

but desperate reactions. Bringing down the prices of

their brands in medium and low segment resulted in

major cannibalization and lower gains in overall

volume than PTC. PTCs main competitor is the LacksonTobacco Company. However, there are also mushrooming

brands called the Mardanwalls. The third element

that is of a major concern to PTC is the counterfeit

and the tax evaded brands. Table 3 shows the market

share of PTC and its competitors.

Market Share of PTC and its Competitors

Pakistan Tobacco 47.70%

Lackson Tobacco 45.20%

Mardanwallas 2.20%

Counterfeit/other

Tax evaded brands 5.90%

Lackson Tobacco Company (LTC): LTC is PTCs largest

competitor and the second legal cigarette manufacturer

in the Pakistan besides PTC. Marlbro and Red & White

are a few of its brands. LTC used to be affiliated

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with Phillip Morris, the giant in the global cigarette

market; however, this association was dissolved few

years ago. Its market share is actually greater than

PTC, around 46.2%. The main goal of LTC is money

making and it believes in short-term gains rather than

long-term benefits. Surprisingly, LTC uses quite

unethical marketing strategies for example a

number of under-the-table deals are made with the

retailers to convince them to take off PTCs

merchandize from their store, and to accept LTCs

merchandize. This obviously results in a huge loss toPTC as it costs around Rs. 100 000 to fully

merchandize a small shop.

From marketing point of view, it seems that LTC

is not really clear as to what exactly does it wants

to portray through advertisements that is its

advertisements do not relate with the brands. For

example, the T.V. advertisement for Diplomat portrays

an image of royalty and cruising abroad while the cost

of the cigarette is around Rs. 10. Its price is not

properly positioned in relation to the theme, thus

this promotion lacks harmony. Secondly, LTC hits PTC

directly as far as competition in promotion is

concerned. For example, In 2001 PTC ran a promotion

for Gold Flake called Qismet ka Sitara. The

promotion gave the chosen consumers an opportunity tomake their wishes, which were granted by PTC. Two

weeks later, LTC designed its promotion for Diplomat

which offered customers large amount of cash prizes,

and gold bricks. The promotion had the direct

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message: Khawahishat ka kia karna, zaroorton ko poora

karen. PTC has never counterattacked LTC this

directly. Normally, LTCs BTL (below the line)

activities are quite strong. LTC has 25% more

resources and three times more salesman than PTC, and

this almost unlimited budget is due to tax evasion.

LTCs cigarettes are not completely tax evaded, a very

small amount of tax is paid; however, it is

insignificant compared to the 65%(of revenue) that PTC

pays as taxes. In the light of all these facts, LTC

seems like a corrupt company; nonetheless, it signedthe voluntary code of conduct, in partnership with

PTC. LTC maybe gaining a greater market share from

PTC, but it is doing so at the cost of its morals and

ethics. The unethical acts cannot be hidden from the

public for forever. The following table presents

brand-wise yearly volume for PTC and LTC.

Brand-wise yearly Volume of cigarettes sold by LTC

and PTC

Lackson

Tobacco

Pakistan

Tobacco

Brands No. of cigarettes Brands No. of cigarettes

sold/year sold/year

(in millions) (in millions)

Red & White 177 Benson & Hedges 0.4

K-2 141 Gold Leaf 361

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Diplomat 231 Capstan 245

Morven Gold 1560 Wills 40

Gold Flake 884

Embassy 652

LTC Total Sale 2109 PTC Total Sale 2182.4

Mardanwallas: These brands are manufactured in Mardan and

thus are called the Mardanwallas. These are normally low

category cigarettes (under Rs. 10) for example Gold Street.

The goal of the Mardanwalls is solely money-making, and are

not concerned about acquiring a strong position in the

market. These are also 100% tax evaded. The government has

made legislation regarding this issue; however, nothing has

been done so far. Secondly, their factories are located in

the northern areas so tax evasion becomes very easy. No

proper marketing structure or strategies exist for these

brands. Their ATL activities, which include electronic andprint media, are extremely low. These brands usually survive

on BTL activities, which mainly consist of posters.

CONSUMER ANALYSIS

Q1: What is your age?

Under 16 years 0%16 to 25 90%

25 to 35 10%

35 to 50 0%

50 and above 0%

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Q3. Are you smoker?

Q4: Which brand of PTC do you use?

Q5. Are you satisfied with the tobacco quality of it?

Q6. Are you satisfied with price of it?

Benson. 16.66%

Gold leaf. 66.66%

Capstan. 16.66%

Gold flak. 0%

Embassy. 0%

Yes 83.33%No 16.66%

Yes 76.66%No 23.34%

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Q7. Are the prices of brands of Pakistan Tobacco

Company is better then the Competitors?

Q8: How did you come to know about the PTC?

Q9. Are you a regular user of these brands?

From friend. 33.33%

By seeing it

somewhere.

6.662%

Through net. 50%

Through

advertisement.Other 10%

Yes 83.33%

No 16.67%

Yes 60%No 40%

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Q10. Are you satisfied with the quality of these

brands?

Full satisfied. 20%Some what

satisfied?

80%

Q11: Do you think that PTC provides better brands as

compared to others?

Yes 82%No 18%

Q12: Which brand of PTC u uses a lot?

Q13. Are you satisfied with the marketing promotion of

PTC?

Yes 90%No 10%

Benson. 20%

Gold leaf. 40%

Capstan. 30%Gold flak. 10%

Embassy. 0%

Yes 80%No 20%

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Q14. What do you think cigarettes are properly packed

and prevented from the external environment?

Yes 92%

No 8%Q15: What do you think about the price of these brands?

Cheap. 40%

Expensive. 60%Q16: Do you use the brands of PTC if yes then which

one?

Q17: What do you think about the material use in these

brands .Is it hard to smoking?

Yes 80%No 20%

Q18: Does PTC have any Political impact?

Yes 10%No 90%

Q19. Is PTC contributing socially in country?

Yes 70%No 30%

20: Do you use other brands then PTC brands?

Benson. 10%

Gold leaf. 20%

Capstan. 40%

Gold flak. 30%Embassy. 0%

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Yes 20%No 80%

Q21:which department you think should be improve in

order to better the quality of PTC brand?

Q23: Do you think PTC provides change taste than

others?

Yes 90%No 10%

SEGMENTATION

Companys Withdrawal and entering new segments:

PTC has entered various segments since its beginning

such as light cigarette segment, which is very small

Marketing

department.

20%

Sales

department.

60%

Management

department.

10%

IT department 10%

Cora department 0%

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in our country. They have not been able to compete

with the illegitimate light cigarettes available here

and capture some market share. The market share2 of

JPGL lights is 0.47%. Which proves our point that the

company should withdraw this particular cigarette from

this segment. Benson & Hedges Lights has been launched

in 1999

PTCs consumers adult smokers drive everything it

does. The goal is to satisfy consumers demands better

and more profitably than our competitors. PTC invests

effort and care in understanding consumerspreferences, and knows that just as adults make

informed choices about smoking, adult smokers make

informed choices about brands. Consumer demand varies

according to social and economic circumstances, the

culture of a society and the maturity of its industry.

PTC does not believe in one brand fits all, but with

a diversified, portfolio, PTCs brands meet key

consumer taste preferences around the world.

A key element of our long-term strategy is to change

the mix of our portfolio in favour of the premium

international brand segment. The Rothmans merger

increased the proportion of premium international

brands significantly, and improved our profitability

as a result. Although the world market was basically

flat during 2001, PTC international brand volumes havegrown.

PTC has a clear focus on its local brands, with

particular emphasis on the four drive brands Wills,

Gold Flake, Embassy & Capstan which collectively

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grew volume by 10 per cent during 2001. Benson & Hedge

sand John Player Gold Leaf are a part of PTCs

international brand portfolio, playing a key strategic

role in the different regions where it does business.

PTC is a company that has one of the very latest

technologies in manufacturing cigarettes in Asia. They

do not set aside the old machines but utilize all of

them in order to produce more and meet their demands

before hand. The industry comprises of different

technological glances but PTC tries to put itself in a

position where this area in not much behind. AkoraKhattak Factory and Jehlum Factory are the two where

cigarettes are produced. The production and

utilization of machines is looked after by them as

well as by the employees working at PTC head Office.

BAT tries its best to look after this area as it is

one of the very important aspects of a manufacturing

firm.

There are two things, which are monitored in order to

be at the edge. Quality improvement is monitored all

the way so that new innovations are made to handle the

issues. The product development department is working

for the innovation in this area. They give the

proposals and ten those proposals are checked if they

fall in line with the technology footprint. Innovation

concerning the product is worked out when they seethat there is a need for another entry in the market.

They have to analyze the market and introduce more

brands.

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PTC is improving from one machine to another in order

to be at the top in this respect. Before they used 10

machines to produce a specific number of cigarettes

but now they utilize only 2 new machines in order to

produce the same number if cigarettes. The fast

machines have high amount of excise and sales tax. In

order to use high quality technology the company has

to plan for heavy expenditure, which is done when they

have the excess money, capital expenditure in this

case.

To prove their quality the best and according tointernational standards PTC has proven to be an ISO

certified company. They have to exceed consumer

expectation. Inline with the quality they have to take

care the regulatory requirements, PR objectives etc.

they have to advertise heavily also.

BASES FOR SEGMENTATION:

Macro-environment

Demographic

Population growth

Population growth in Pakistan is about 2.5% annually.

This population explosion creates an opportunity for

the cigarette manufacturers.

Population age mix

Pakistan, with a rapid population growth, is the

country where young adults age 25 to 40 and some teens(above 18) are the major consumers of cigarettes. So

these groups are the main targets of PTC.

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Ethnic Markets

In Pakistan almost every one is a Pakistani. But each

social class or group (segmentation) has certain

specific wants and buying habits. PTC has directed

their product and promotions to all these groups.

Educational group

Mostly the people in Pakistan are illiterate and they

want to smoke strong tobacco with out knowing its more

harmful effects. So PTCs brands are mostly strong

tobacco.

Household patterns

The traditional household pattern in Pakistan is joint

family where grand parents, parents and their children

and the children of their children live together. So

living in this kind of system is discouraging for

young smokers.

Geographic and Social class:

Opportunities

In Punjab a large number of people in lower class use

to smoke Embassy which is one of the main driving

brands of PTC. PTC advertises it (embassy) in

different ways (media), a lucky draw scheme (sheran da

mela) and the name of a famous singer Ibrar ul-haqis also a associated with embassy to attract the

existing customers.

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In Sindh and NWFP the most selling brand is Capstan,

95% of Capstan sales is from Karachi region and 50% of

Capstan International from NWFP.

Threats

In this class people are more price conscious so

reduction in the prices of Laksons brands may

decrease the sales volume of PTC if customers switch

to Laksons brands.

Economic Environment:

Majority of the population of Pakistan belongs to thelow class and has low purchasing power. The taxes

imposed by the govt. on tobacco industry are also very

high that causes a significant increase in the prices

of cigarettes which takes the quality brands away from

the reach of the majority. So for this segment (lower

class) PTC has introduced Embassy and Gold

Flake. For lower middle there is Capstan and

Wills and for high and upper class there is Gold

Leaf and Benson and Hedges.

Environmental :

PTC is promoting itself as an environmental friendly

organization by adopting tree plantation campaign.

PTC planned 3 million trees* annually in different

areas of the country.

Technological :

PTC is the pioneer of using latest technology in

Pakistan. The machine they use to manufacture

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cigarettes Loga Max can produce 8000 sticks per

minute. Although now Lakson is also using the same

technology but it was PTC which introduced it in the

country. Everyone knows that technology has a

significant effect on companys production

capabilities. Use of this technology (Loga Max)

enables PTC to fulfill the market demand well in time

and more efficiently.

Political

Ministry of Health has made all possible efforts ininforming the masses that smoking is injurious to

health and PTC maintains that smoking is an adult

choice. Cigarettes are being manufactured and each

packet must contain a warning Tobacco seriously

damages health or smoking is injurious to health.

But as such it has no effect on company's marketing

strategies and tactics, although cigarette

manufacturers can not promote it as good for health"

product.

The law no smoking in public places might effect

sales volume because the people who use to smoke for

style or fashion may give it up.

Cultural

In Pakistan the basic traditions, customs and valuesare not much different but because of the dish

culture mostly young generation like European and

American culture which leads to liberalism so these

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youngsters go for smoking as an essential of stylish

life.

On the other hand in villages the elderly people smoke

Hukka and the youngsters smoke cigarettes. The sole

reason behind it is that the young generation does not

really see why should they be dependant upon someone

to fill up the paraphernalia of Hukka, and even if

they have to do it themselves it is time consuming and

so they prefer ready to smoke stylish cigarettes

instead of Hukka.

Task Environment:As mentioned earlier, the population of Pakistan is

growing by 2.7% annually and number of smokers are

increasing as well. Market size therefore is getting

larger and it is and opportunity for cigarette

manufactures. But unfortunately Lakson has emerged as

a strong competitor of PTC and has attracted all the

10% growth of potential consumers where PTC was not

able to do so. This tough competition is brining a

decline in the profits of the company due to which PTC

has decreased the prices of almost all its brands

(except Benson & Hedges) to remain in the competition.

Major Market Segments

PTC segments its consumer market according to social

classes and it has different offerings for these

segments: -Upper Benson & Hedges

Middle Gold Leaf

Lowe middle Capstan

Lower Embassy, Gold Flake

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Sales Analysis

PTCs AREA SALES OFFICE

An overview of operations:

The internee had an eight week (2 Months) stint at the

Area Sales Office Peshawar. Over the course of the

internship he had attachment with personnel from all

the departments at the sales office. The Peshawar

sales office is situated atMalik Adda, Sardar Garhi

near theAfghan Rehabilitation Centre, Peshawar.

Here is a brief overview of the organization of theSales Office.

AREA MANAGER:

The Area Office is headed by theArea manager who

supervises all the sales and other trade marketing

activities for the entire province including those of

Landi Kotal (FATA) and Chitral (FANA). TheArea manager

is the key decision maker at the sales office and is

at the helm of affairs to whom all the TMOS and each

staff member of the office report while he himself is

accountable to the Regional manager at the regional

office at Rawalpindi.

The total number of employees at the sales office is

37.This includes the following:

1) AREA MANAGER

2)3 TMOS3)6 SPS on Suzuki vans.

4) 9 Moto SPs

5)10 Drivers.

6)4 Admin. personnel.

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7)2 loaders

8)1 Watchman

9)1 Electrician/Carpenter

The staff at the office who operate the Warehouse

comprises basically of three people. There is a

Warehouse Executive, anAssistant Warehouse

Executive and an Excise Clerk. Besides, there are

two loaders whose job is to load stock onto the

trucks and vice versa.

CF ACCOUNTANT:

There is a CF accountant at the sales office whose job

is to keep accounts of the expenses at the sales

office including payment of salaries to employees

excluding managers, payment of T.E, food, refreshment,

electricity etc.

TMO:

There are three TMOs at the Peshawar office who have

been assigned their respective stations or markets.

Each TMO has been provided with a laptop and a suzuki

van for market visits .This person heads a team of

SPs who are answerable to him. The job of a TMO

centres around the market i.e he is the immediate

authority who assigns tasks to SPs under him, visitsand inspects the outlets, checks and ensures

availability of stock at the shops, inquires about the

position of brands Vis--vis competing brands, handles

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merchandising activities and directs his SPs for

further course of action.

SP:

SP mainly performs marketing functions. He goes by his

FCP. This FCP is in fact a monthly schedule of tasks

assigned to an SP. Besides, there is an activity

planner sheet for each SP which specifies the number

of beats to be visited by the SP over the month.

Each SP visits shops in his beat i.e the specific areaassigned to him in a particular market. One beat could

encompass an area with maximum 50 shops. SP makes

consumer contact, communicates with the shopkeeper,

examines availability and display, deals with the

merchandising material and sees whether the

distributors salesman makes regular sales calls at

the shops in his beat or not.

The Sales Promoters have been provided with motor

bykes (for urban areas) and Suzuki vans for carrying

out activities in rural areas.

The sales office also has a large storehouse

exclusively for the merchandising material including

posters, boards, hoardings, stickers, ready made

cabins, D&D cigarettes, display modulars, cabinets,

counter, sun shades, tube shades etc. that areprovided to valued outlets all over the entire

province.

There is an electrician/carpenter who works on

contract at the sales office. His job is to repair

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and fix boards and accessories such as tubes,

electric metres, counters and modulars. He is only

concerned with the merchandising.

CS3:

A networking system called CS3 has been installed at

the office via which the sales office communicates

with both the regional office as well as the Head

office at Islamabad and also both the factories. It is

an online business application tool that allows the

office to stay in touch with and access other PTC

sales offices all across the country. This system isindispensible to warehouse staff since the entire

procedure of receiving orders and delivering stock is

processed in the CS3. The CS3 contains all the stock

data of the distributors .The code for Peshawar in the

CS3 system is 34.Likewise every station has its own

respective code through which it could be accessed.

This business application system has been designed in

INFORMIX language. This system facilitates online

costing and ensures reduction of complexities. A tall

pole has been erected at the office building which is

linked to the Pak Data Comoffice which have provided

the networking facility to the sales office.

LOTUS NOTES:

Lotus notes is a communication software with fool

proof reliable and efficient information sharing andexchange facilities. It has dynamic E-mail features

and is used to send and receive messages and other

required data to and from the regional as well as the

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head office. PTC has integrated its entire networking

system through this software.

Area Sales Offices Warehouse Organization

The Peshawar office houses a fairly large Warehouse

that contains stock of cartons of cigarettes

manufactured by factories of PTC located at both

Jhelum and Akora Khattak. The internee formally

started internship at the sales office by spending the

first two days with the staff dealing with theWarehouse.

Warehouse Executive

The Warehouse is supervised by theWarehouse

Executive. The job of the Warehouse Executive is to

figure out all the paper work such as receiving

orders, making entries into the CS3 system, preparing

DSR, checklists, bank endorsement summary, sending

requisition for replenishment of stock at the

Warehouse etc. He is assisted by anAssistant W.H Exec.

Excise clerk

Besides, there is an Excise clerk (whose job is to go

to the bank after receiving the order along with

copies of Bank Endorsement Summary and inform the

warehouse exec of the receipt of cash from the

distributor).There are two loaders who load cartons onto the trucks.

The rule for stacking is as follows:

Five cartons containing 10HL are to be placed

with one on top of the other.

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For 20HL four cartons are to be placed in the

same manner.

The Warehouse can accommodate almost 1600 cartons.

Stock Specification*

1 CARTON=10M

1 M=5 OUTERS(20HL),10 OUTERS(10HL)

1 OUTER=10 PACKS

1 PACK=10 STICKS(10HL),20 STICKS(20HL)

1 CARTON=50 OUTERS(20HL),100 OUTERS(10HL)

1 CARTON=10,000 STICKS

1 M= 1000 STICKS

1 OUTER= 100 STICKS(10HL),200 STICKS(20HL)

The cartons are placed on a four wheel trolley and

pushed with great ease to be loaded onto the trucks.

The Warehouse assistant must be present at the time ofloading. He would mark the outflow of stock of each

brand in the DSRchecklist.

The procedure for placing the order is fairly simple.

The distributor who has non-check account at HBL

Peshawar usually makes a phone call and gives the

order for the required brands specifying its quantity.

He would either issue a bank draft in the name of his

own account at HBL send a TT or would deposit cash in

the account for this transaction.

Each brand has its own distinctive code known both to

the warehouse people and the distributors.

*

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Orders are received almost daily from the distributors

both Local as well as those located along the Rout

and immediate shipment is made. Each rout distributor

has his own respective code as well as area code.

As soon as the order is received, the Warehouse

Executive feeds the data into the CS3 system using the

specific code of the distributor and takes a rough

print out of a checklist of brands and quantity of

stock to be lifted.

DSR

A checklist on a large sheet called DSR is alsoprinted which is to be marked by the Warehouse

Assistant while loading the stock.

Bank Endorsement Summary

A Bank Endorsement Summary specifying the quantity and

amount of stock is also prepared which is used to show

the transfer of funds from the distributors account to

the PTCs bank account.

This document comprises of three sheets. One copy of

this bank endorsement summary is retained by the bank

whereas, one is kept by the warehouse and one is

dispatched to the head office. The Excise Clerk takes

all the copies to the bank and after completely

scrutinizing the papers and making sure that the

amount has been transferred would inform the W.H staff

of the receipt of cash.

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DAI

This document is prepared in the CS3 and a print out

of four copies of this document is taken. One copy is

for the transporter duly signed by him, another copy

is for the distributor, another for the warehouse and

one copy is dispatched to the head office.

E.B.2

A register called E.B.2 is maintained by the Excise

Clerk. In this book he makes entries of receipt of

stock from the factories, the stock lifted by thedistributors and opening and closing stock balance.

Each carton has its own respective serial no# and each

outer has its own code date.

A white board has been fixed onto the wall of the

Warehouse bearing the code dates of cartons arriving

at the warehouse. Area Wise Sales are sent to the

regional office on daily basis. A daily Dispatch

Summary is also made at the days end showing area

wise and brand wise sale.

O.C.F

A fifteen column form is sent to the sales office by

the distributor every ten days to show the following

details

ten days sale,

to date sale

stock on hand

This document is of utmost importance and on this

basis of this OCF forecasting is done and requirements

of DRP are assessed and planned.

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DRP

It is to be prepared once a month at the start to show

the quantity of stock to be sold over the month,

target for the coming month, target for the

distributors, lifting plan i.e how much the

distributor is going to lift, and Forecasting for next

month is also done.

SOP

SOP is also received from the regional office which

serves as a plan of sales for the whole month. Stockreplenishment is made as per requirement. For this a

requisition to the head office at Islamabad is to be

sent via the CS3 who would then intimate the factories

for immediate shipment .The stock usually arrives the

next morning.

EHS

Strict precautionary measures have been ensured inside

the warehouse to negotiate with any eventuality e.g

fire breakout. The staff at the warehouse has received

training on how to cope with an undesirable situation.

They have been provided with all the gear including

helmets, coats, boots etc. In addition to this fire

extinguishers have also been provided to them and an

electronic fire sensor has also been installed.

In order to keep mites, beetles and other insects atbay, special insect repellent tablets are placed in a

small box fixed on the wall. The warehouse is kept

really clean and tidy. There is also a small cabinet

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called Bin inside the warehouse in which outers and

leftover cigarette packs are placed.

Area Sales Offices C.F Accountant:

RESPONSIBILITIES:

The internee had a one day attachment with the CF

Accountant at the Area Sales. Office

There is a CF Accountant at the Sales Office whose job

is to check and manage budget and expenses of all

sorts at the sales office. He keeps a record of all

the receipts, bills and their payment such as

Utility bills

Food, refreshment

Office repair and maintenance

Vehicles maintenance and repair

Vehicles fuel, medical claims of staff

Office stationary and accessories and

Other miscellaneous expenses etc.

He makes payment of salaries to staff such as

handling allowance of loaders, peon, watchman

etc. Admin allowance for Warehouse personnel,

salaries of drivers, and salaries of SPs. Apart

from these CF accountant pays T.E (Travel

Expenses) of SPs and TMOs and files claims of

T.E for the Area Manager.

Each SP (Sales Promoter) is paid Rs.5000 for

meeting expenses for a whole month though this

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amount could exceed depending on the nature of

task and consumption of fuel and other expenses.

The CF accountant pays cash for any amount up to

Rs.5000 for any expense. If the amount exceeds

this figure then he issues a crossed cheque.

He has nothing to do with the payment of salary

to the Area Manager nor of the TMOs which are

handled by the Head Office.

The fund allocated for the Peshawar sales office

for meeting expenses for a whole month is

Rs.125000. However, the accountant can request

amount exceeding the fund through a CF statement

depending on the requirement. This fund has been

divided into the following sources i.e Bank,

Cash, Bills, advances etc.

The CF Accountant can dispatch 3 three CF

statements in a month to request thereimbursement of the amount expended. Each head

or area of expenses has its own respective code.

Each CF statement also known as Top sheet bears

its own CF number.

The CF accountant prepares cash book voucher in

which he enters the amount of separate heads of

expenses. All such cash book vouchers are

attached to the CF statement and CF summary along

with the bank statement and sent to the Head

Office as a claim.

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The CF Accountant must get the endorsement on all

the papers from the Area Manager before

dispatching a CF statement.

He files all the bills, advances paid, issues

fleet cards for vehicular fuel, and keeps photo

copies of T.E claims. Moreover, he maintains

budget files containing details of budget and

variance.

DISTRIBUTION STRATEGY

CHANNELS OF DISTRIBUTION

Channel of distribution is a system whereby customers

are provided access to an organizations products or

services. The distribution network of the Area Sales

Office Peshawar is engaged in two types of sale which

are as follows:

PRIMARY SALE

Primary sale involves the transfer of stock from the

Warehouse to the Distributors go down.

SECONDARY SALE

Whereas, in Secondary sale the distributor carries the

stock to the market.

And for this Pakistan Tobacco Company employes two

main channels of distribution for making its product

available to the consumer. These are as follows:

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I)Producer Distributor Wholesaler

Retailer Final Consumer

II) Producer Distributor Retailer

Final Consumer

Though a third alternative channel i.e from Producer

to the Distributor and then the final Consumer also

exists but it is almost outdated and is no longer used.

The Peshawar Area Sales Office which falls in theNorth region supplies stock to almost the entire

province including Landi Kotal and Chitral. The Area

Sales Office has a total of 19 distributions all over

the jurisdiction of the Area Sales office having a

systematic supply chain.

These areas have been classified according to their

size and location having their own respective sections

as follows:

PRP1-MINGORA-NOWSHERA,JEHANGIRA,MARDAN,BHAT KHELA

PRP2-D.I KHAN (Maj Mkt),TANK,BANNU,LAKKI MARWAT,KARAK.

PRP3-PARA CHINAR, HANGU, TAL, KOHAT (MAJ MKT).

Likewise Local distribution includes the following:

PESHAWAR, CHARSADDA, CHITRAL, LANDI KOTAL.

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Procedure For Distributors Order

The procedure for placing the order is fairly simple.

The distributor who has non-check account at HBL

Peshawar usually makes a phone call and gives the

order for the required brands specifying its quantity.

He would either issue a bank draft in the name of his

own account at HBL send a TT (Telegraphic Transfer) or

would deposit cash in the account for eachtransaction. Orders are received almost daily from the

distributors both Local as well as those located

along the Rout and immediate shipment is made.

Each of these sections are supervised by their own

respective TMOs (Trade Marketing Officers).

STA

The transporter carrying the consignment bears a

document called STA (Stock Transfer Advice) which

shows that stock is being transferred from the factory

to the Warehouse.

AR FORM

STA is also accompanied by this document specifyingquantity, brand quality and excise amount.

The local distributors have their own transport for

lifting the stock. But they make claim for transport

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expenses calculated inMs which will be paid to them

by the company.

For the Rout distributors the company has hired its

own transporter with whom it has signed a contract for

supplying stock. But as for payment there are certain

exceptions in certain cases:

SELF

For example if a certain rout distributor fails to

place an order and misses the rout truck then he will

have to lift at his own cost and on his own transport.

This rule is referred to as SELF.F.O.C

In case a distributor gives an order but the quantity

of stock is not enough to justify rout shipment and

other distributors along the rout too have not placed

their orders then for under load truck no rout

shipment is to be carried out. Rather the distributor

will have to lift on his cost but claim will be made

against the factory for the transport expenses.

In another case, suppose the amount of stock at the

warehouse is less and this remaining stock is to be

got rid of, then sales office would call the

distributor even if the order has not been placed by

him and would deliver the stock by its own transport

to the distributor. This would be referred to as PTC.

TP3A document called TP3 which serves as gate pass would

also be issued to the transporter bearing date,

companys address, and serial nos of cartons

testifying that the stock is duty paid. It is to be

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prepared by the Excise Clerk. It is used for custom

and excise purposes. A rout truck time monitoring form

is handed to the transporter in which the arrival,

departure and unloading time for a particular rout is

to be specified.

PTCS PESHAWAR DISTRIBUTOR: UNITED BROTHERS:

Over the course of the internship period the internee

also had a three days attachment with the Peshawars

Area Local distributor UNITED BROTHERS. The UnitedBrothers have been in the cigarette distribution

business since 1999 having a full fledged Office and a

Warehouse at Sikander town. United Brothers deal

exclusively in PTCs brands and they are regarded as a

valued partner by the Area Sales Office. UB is owned

by Mr.Saleem who often pays visits to the office. UB

uses computer applications in their daily routine

work. They comply with all the rules as laid down by

PTC and have been successful in achieving the targets

given to them.

TOTAL STAFF AT THE DISTRIBUTORs OFFICE:

The number of staff at the UB distributors office is

as follows:

There is aMANAGERwho is at the helm of all theaffairs at the distributors office. The Manager

supervises all the administrative and managerial

activities of the office. This person is in close

contact with the Area Sales Office.

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There is 1ACCOUNTANT who keeps all the important

account books such as legers, journal vouchers

and other cash entry books etc.

There is also anAssistant Accountant who assists

the accountant in his respective tasks.

There are 2 Field Sales Officers who are

concerned with the sales force activities.

There is 1 Cashier at the Office whose job is to

receive cash return from the salesmen upon their

arrival, examines the notes and coins, counts

them and then deposits the same in the bank. The

cashier is assisted by an assistant cashier.

There are 2 Store keepers at UB who prepare the

DC (Delivery Challan) in which he makes entries

of the amount of stock to be carried, the amount

sold out and their value in monetary terms. He

gives the required stock to both the Salesmen aswell as the Sales Promoters.

There is aMS at the UB distributors office

whose job is to visit the outlets, clean the

boards and modulars, check and repair tube

lights, tube shades and boards.

There are 2 guards at the UB office.

There is a driver a cook and peon.

United Brothers Supplies stock to the following areas:

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Peshawar Metropolitan Area:

Full coverage is given almost to the entire

Metropolitan area comprising of all the major markets

of both retail and wholesale of the provincial capital

such as Saddar,University road,Hayatabad etc.

Villages:

United Brothers carries out its regular supply through

its sales force to all the relatively far flung areas

as well as the suburban and those villages located in

the outskirts such as Pabbi, Barraa,Warsak etc.United Brothers Field Sales Force:

The field sales force of UB comprises of 16 salesmen

as follows:

1 salesman for the wholesale who carries the stock

in a Suzuki Van and supplies it to all the

wholesalers mainly in the selective wholesale

market.

There are 2 salesmen for giving coverage to the

villages.

Moreover, there are about 13 salesmen who cover the

retail market exclusively.

Each Salesman is required to maintain a file of his

sales summaries containing the detail of his visits to

the respective beats, names of the outlets and the day

and date of the sales call.

Each salesman has been given a motorbike for his

mobility. There is a large cube shaped box at the back

in which the stock is kept.

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Sales Force Motivation:

From time to time both the Area Sales Office as well

as UB initiates competitions for salesmen. For example

in the month of July there was a competition for Gold

Flake (sx) the criteria for which are as under:

Criteria:*

Sales Targets-Rs.750

Productivity-Rs.750

Promotion Awareness-Rs.250

Packet Display-Rs.250Total Prize Money-Rs.2000

Each salesman had to fulfill the criteria for winning

this prize money. The Salesmen evaluation was to be

done by the Sales Promoter

Field Sales Officer:

UB has appointed 2 Field Sales Officer who have been

assigned the job of supervising the activities of the

salesmen.

PTCS PROMOTION STATEGY:

PROMOTION

*

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It is one of the four controllable variables (with

product, price and place) of the marketing mix.*

Promotion Mix

It is the range of means available to an organisation

for communication with its target market -

advertising, sales promotion, personal selling,

publicity and public relations.

The entire scheme of operations pertaining to

promotion at PTC is mapped out by people at the head

office at Islamabad. They instruct the sales offices

all over the country to execute these operations.

ADVERTISING

Any paid form of non-personal presentation and

promotion of ideas, goods or services by an identified

sponsor.*

PTCS advertisements that formerly featured in almost

all the media have declined substantially owing to the

strict media regulations formulated by the government

with the aim of discouraging tobacco related products

particularly cigarettes. Nevertheless,PTCs brands

have over the decades through ensuring sustained

superior quality and a bond with both its

*

*

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distributors, retailers and above all its consumers,

have successfully captured a significant market share.

SALES PROMOTION*

Sales Promotion is a marketing discipline that

utilizes a variety of incentive techniques to

structure sales related programs targeted to

consumers, trade and or sales levels that generate a

specific, measurable action or response for a product

or service.

PTC has always been engaged in vigorous salespromotion activities to lure the consumer towards its

brands.

It employs a number of strategies in this regard such

as Push Strategy aimed mainly at the resellers such

as the retailers by offering them various incentives

to secure their brands against those of the

competitors by attracting more consumers towards PTCs

high quality brands.

On the other hand Pull Strategy aims to attract the

consumer directly which is done mainly through

consumer promotional tools.

During the internship period the internee happened to

experience one such promotional

Program using both the Pull and Push strategies.

A scheme was introduced in the month of July for Gold

Flake (sx) which is regarded as relatively weaker

brand in NWFP though having a much stronger reputation

*

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and standing particularly in the Punjab area. The

scheme entailed an offer of 3 full packs to the

retailers upon

Llast Final Touch2 Q. 6

Documents

Transcript of Llast Final Touch2 Q. 6