INTRODUCTION TO THE ORGANIZATION

The business of British American Tobacco was originally established in 1902, when-to end an

intense trade war. The Imperial Tobacco Company of the United Kingdom and the American

Tobacco Company of the United States agreed to form a joint venture, the ‘British-American

Tobacco Company Limited.The BAT business began life in countries as diverse as Canada,

China, Japan, Denmark, Germany, New Zealand, South Africa and Australia – but not the UK or

the USA. By 1910, its operations had extended to the West Indies, India, Ceylon (now Sri

Lanka). East Africa, Java, Malaya (now Malaysia) and Nigeria. BAT listed on the London Stock

Exchange in 1912 and British investors acquired most of its American parent’s shares.BAT held

strong market positions around the world and had leadership in more then50 markets. Since

1994, the group has grown global market share from 10.7percent to over 15 percent. BAT has 86

factories in 64 countries. BAT uses more than 700 million kilos of tobacco and has 25 leaf

growing projects and 23 leaf processing plants, with over 300 brands in BAT portfolio and a

market share of 15percent, make the cigarette chosen by one in seven of the world’s one billion

adult smokers. BAT differentiated portfolio of brands included well established international

brands such as Lucky Strike, Kent, Dunhill, Benson & Hedges, 555,Viceroy, Pall Mall. John

Player Gold Leaf (JPGL). BAT is the second largest quoted tobacco group with annual shipment

of more than 800 billion cigarettes.

PAKISTAN TOBACCO COMPANY

Pakistan Tobacco Company is the first-multinational company of Pakistan andrecently

completed 54 years of its operations in the country. The company is themember of the

multinational British American Tobacco group, which employs over 100,000 people, operates in

180 countries and is one of the top 5 FMCG trade-marketing companies in the world.

History of Pakistan Tobacco Company

PTC was incorporated in Pakistan and is listed on the three stock exchanges of thecountry. It was

established in the same year when Pakistan took its birth in 1947, andtook over the business of

Imperial Tobacco Company (India). It had three branches –Karachi, Jehlum and Akora Khattak,

but Karachi factory however has been closed since1992 due to heavy losses and some other

reasons. The first plant was set in a warehouse in Karachi port with monthly production of

30million cigarettes against sales of 60 million, the gaps being filled up by import. When

Pakistan came into being all tobacco was imported in for production of cigarettes. But in1952, a

development project was initiated in N.W.F.P. and the top quality American Tobacco found way

to Pakistan.A factory was established in 1955 at Jehlum, and PTC became a Public

LimitedCompany in the same year. In1975 a new cigarette factory was set up at Akora Khattakto

meet the increasing demand. Akora Khattak factory is now one of the largestfactories of

N.W.F.P. Pakistan Tobacco Company has divided the whole country into 5 regions (Central

Punjab, Southern Punjab, Northern Region, Lower Sind and Upper Sind). With in each region,

there are four to six areas, and each area is further sub-divided into directdelivery and wholesale.

In total, the company has five regions, 22 areas, 355distributors and 12 area ware houses.After

six years of serial losses (1997-2002), Pakistan Tobacco Company Limited had managed to

swing back to a profit of Rs354 million in 2001. The accounts for the six months to end-June

2002, released recently, show 2% slip in the top line to Rs10.8billion, from Rs.11.0 billion for

the corresponding period of last year. Pre-tax profit, nonetheless, rose sharply by 175 % to

Rs.417 million, from Rs.152 million and after tax profit showed growth of 92 % to Rs.248

million, from Rs.129 Million. New products introduced during the past two years accounted for

33 % of PTC's sales during the six months under review, during which the company said to have

unparalleled performance in new product innovation in the cigarette industry. The company has

continued to claim that four out of the five top selling brands in Pakistan are those of PTC. They

include Gold Flake, Capstan, John Players Gold Leaf and Embassy. The company had paid the

last cash dividend in 1995. The 10- rupee share in PTC had hit its record high at Rs.162 in 1994.

The price slipped over the years to hit the lowest Rs8.50 in 2000; but the stock has now

recovered to Rs60.25.The Board did not declare a dividend for shareholders for 2001 and used

all of the profit to wipe out the huge accumulated deficit of Rs.337 million on the balance sheet.

But the important thing is that the shareholders' equity is back in the black. At end-June 2002,

shareholders’ equity amounted to Rs2.820 billion, with Rs.2.555 billion being the paid up

capital. For PTC, it isn't still a smooth journey. "We reiterate that tax evading sector remains a

major threat to the government revenue and to our business," directors complain in their half

term report, adding that the steps taken by the government in the past to check evasion had been

encouraging. However, recent increase in activities of the tax-evading sector was stated to be

alarming; the company urging government support in the matter.

VISION STATEMENT

1st choice For Everyone

MISSION STATEMENT

Transform PTC to perform with the speed, flexibility and enterprising sprite of an innovation,

consumer-focused company.

PRODUCTS OF THE COMPANY

The main product of the company is cigarette

Main Brands of the company

1. Benson & hedges

In 1873, Richard Benson & William Hedges started a partnership in London. From the very start,

the idea was to make Benson & Hedges a style statement, which is why the business started from

London’s fashionable West End.

PTC launched Benson & Hedges in Pakistan in March 2003. Made with the finest hand picked

golden Virginia tobacco from across three continents, the brand is packed with perfection to seal

its freshness.

2. John player gold leaf

The story of John Player Gold Leaf has to start from the story of its founder, John Player. An

enterprising businessman, John Player started a small tobacco selling business in 1877 and

turned it into a thriving cigarette company, John Player and Sons.

With a distinct lifebuoy and sailor trademark, John Player Gold Leaf has an identity entrenched

in sailing and maritime adventure. Thus staying true to John Player’s very first big brand -

Player’s Gold Leaf Navy Cut cigarettes.

3. Dunhill

Dunhill is imported from other countries.

OTHER BRANDS OF THE COMPANY

1. Capstan by Pall Mall

Capstan has a rich heritage, originating in Britain in the 19th century. The brand was created

under the auspices of W.D. & H.O. WILLS at Bristol and London.

2. Gold Flake

Gold Flake, like many of our brands, also boasts its origins at W.D. & H.O. WILLS

where it was a premium brand around the end of the 19th century.

Launched in 1982, in a 'soft cup' packaging, the brand took off when it was repositioned in the

value for money segment and later a 'hinge lid' variant was introduced in 2000.

3. WILLS

WILLS takes its name from the heritage of one of the original Imperial Tobacco

Company families: the Wills Brothers of London.

4. Embassy

Embassy, the third leading volume brand in Pakistan, is most popular in the Punjab

where it enjoys a leading position due to its equity and loyalty

Competitors of Pakistan Tobacco Company

There are also competitors of Pakistan Tobacco Company which are given as follows:

1. Lakson Tobacco Company

2. Mardan wallas Tobacco Company

3. Counterfeit Brands

Lakson tobacco company

Lakson Tobacco is competing Pakistan Tobacco Company. This is major competitor

of Pakistan Tobacco. This company is manufacturing following brands:

• Marvin Gold

• K.2

• Diplomat

• Red & White

Mardan wallas Tobacco Company

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 doneso 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 and

print media, are extremely low. These brands usually survive on BTL activities, which mainly

consist of posters

Counterfeit brands

Counterfeit brands emerge as a threat for PTC, and later become competition as well. In

Pakistan, the concept of copyright laws and its implications is almost non-existent. As a result,

these brands are manufactured without any fear. As a result, PTC has suffered a huge loss in the

recent years as its premium brand Gold Leaf, has been copied in three different qualities with

three different prices for each. These brands are normally sold in thickly populated villages to

uneducated and low-income people, and at interchanges and motorways. There are also other tax

evaded – that are smuggled brands in the market. These are called ITBs (International Transit

Brands). These are usually smuggled from Peshawar through Afghanistan or Dubai

Market shares:

Market Share of PTC and its Competitors

Pakistan Tobacco 45.70%

Lackson Tobacco 44.20%

Mardanwalls 2.20%

Counterfeit/other 1.8%

MARKETING EFFORTS

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 for

success and health of their individual brands. Each brand manager designs and executes

promotions to increase the sale of his brand. Advertising through different media’s and

sponsorships of event is also the job of brand marketing. The trade marketing staff works direct

in the field and interacts with the distributors, wholesalers, retailers, and the customers.PTC has

been consistently meeting consumer expectations for the past ten years with the popular

international brand names like Benson and Hedges, John Players Gold Leaf, Wills, Capstan, and

Embassy which is the largest selling brand in the market. PTC, through 343 distributors, services

a very large retail and wholesale network across thecountry.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 establishing scientific 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 PTC’ scurrent

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 market representing 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 PTC’s consumers. 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 Leaf was 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 extraneous adverse

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 distributors and 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 meetings are held at high quality venues and a gift from PTC is given to

each retailer as token of appreciation for their attendance. This is a unique concept in the market

as PTC is the only comp- any in Pakistan to embark on such a program for retailers working in

line with the company’s vision to be “first choice for everyone”. The intention is to transform

PTC’s 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.

PTC stresses 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.

DITRIBUTION CHANNEL

FACTORY

WHOLESELLER

DISTRIBUTOR

RETAILER

CONSUMER

PRODUCTS

Capstan

Capstan has a rich heritage, originating in Britain in the 19th century. The brand was created

under the auspices of W.D. & H.O. WILLS at Bristol and London. Capstan has grown by leaps

and bounds to become the fastest growing brand of Pakistan Tobacco Company (PTC) in the

year 2001, recording a staggering growth rate of 104%, overtaking sales volume of the major

competitive brand in the early part of the year, and consistently outselling it throughout.

Gold Flake

Gold Flake, like many of our brands, also boasts its origins at W.D. & H.O. WILLS where it

was a premium brand around the end of the 19th century. Launched in 1982,in a 'soft cup'

packaging, the brand took off when it was repositioned in the value for money segment and later

a 'hinge lid' variant was introduced in 2000. Gold Flake is PTC’s largest brand in volume terms

and is also a significant contributor towards the value share. A highly successful pack design

change in 2004, soon after the new pack was launched in the market and Gold Flake smokers

accept the new design of the pack, at this point an aggressive promotion in the market that would

ensure the maximum exposure of competition smokers to the new pack. There are three new

variants were added into the family; Gold Flake 14HL, Gold Flake 10HL and Gold Flake 10SC,

in order to offer the consumers a wider choice.

Wills King

WILLS takes its name from the heritage of one of the original Imperial Tobacco Company

families: the Wills Brothers of London. Wills is also a well known brand in Pakistan.

Embassy

The third leading volume brand in Pakistan is most popular in the Punjab where it enjoys a

leading position due to its equity and loyalty. Embassy continued its growth in the year

2001fortifying its position in the market. The brand registered a growth of 3%over 2000. Major

focus during the year remained on the introduction of more consumer relevant packaging

variants. In the 3rd quarter of 2001 the brand family was extended with the introduction of

Embassy filter 16ss pack followed by Embassy kings 14HL variant. With the launch of these

variants, the family now offers more choice to itsconsumer at affordable price.

PROMOTION

The different types of marketing activities are:

Point of Purchase Display

By placing products trail packs on the different shops to promote the sales.

Posters and Leaflets

Display posters and fliers in fronts of shops.

SALES PROMOTION

By giving the incentives to the distributors, whole sellers and retailers like to get the product on

credit and sell to the consumer and enhance their and the Company sales.

Contests and lotteries

PTC uses different schemes, providing gifts in the packs and by giving winning prizes by means

of lotteries to promote sale and to beat competitor.

Rebates

They usually provide the rebates to the retailers and whole sellers who want to establish their

business on their own or who usually contact with them directly.

 

 

SP’s OBJECTIVES

Toping up

Talking with shopkeeper, tell them about their company, brand and advantages of the brand. The

SP will bring awareness, if the shopkeeper did not know about the company and their brand.

Pack Display/Pack facing: Small 4 or 3 row displays at hotspots in which prescribed pangram is

implemented.

Brand Availability

To conform from the shopkeeper that all the brands are available or not, means to ensure all time

availability of the stocks in the respective beats by doing the exercise of toping up.

Consumer Contact

It is the SP activity that he will contact the consumers and will write their names, complete

addresses, phone no and will also write the competitors brand which the consumers use and will

also get the consumers feed back after testing their own brand.

Market Intelligence

The SP is also responsible to note the competition Activity of their competitors and look at their

promotional tools they use. And also give market intelligence report to TM about the competitors

which they use in the market.

Temporary Merchandizing Activity:

The following tools include in temporary merchandizing activity.

Posters

Stickers

Bunting

Permanent Merchandizing Activity

Fascia

Tube

Shade

Counter

CORPORATE SOCIAL RESPONSIBILITY

PTC has been at the forefront of CSR subsequent to its initiatives of afforestation, mobile free

dispensaries, eye care via Layton Rehmutullah Benevolent Trust, Learning Resource Centre, non

formal education through the NGO Adult basic education society, supporting citizen’s

foundation to prove educational facilities for the children and installation of water filtration units.

Rehabilitation of earth quack Affectees in Battagram, inaugurated in September 2006.In

November 2006 PTC undertook a project to combat the spread of viral hepatitis in northern

Areas. In 2005 PTC became the first company in Pakistan to publish a duly audited social report.

Second cycle of the social reporting dialogue, based on issues identified in the stakeholders

mapping classification exercise, was competed in November 2006 and the social report is

planned for publication in early 2008. Best practices of Good Corporate Conduct Governance

being adhered to include producing an Annual Report that provides quality information to all

stakeholders

Environment, Health & Safety (EH&S)

Being fully alive to its role as a responsible corporate citizen PTC has implemented a well

structured EH&S programme in addition to embedding internationally recognized best practices.

PTC is committed to ensure that it nurture an environment where its employees and surrounding

communities are safe from any hazards that may affect their health and minimize the impact of

its operation on biodiversity. PTC’s commitment to EH&S was further strengthened during 2006

as PTC achieved significant improvements on the EH&S road map. Both its production facilities

were rectified with ISO 14001 earning the “Evergreen” status. PTC has consistently sustained its

accreditation in last seven surveillance audits with zero major and minor points. PTC’s efforts

has further been sustained with National Forum for Environment & Health awarding PTC the

Annual Environment Excellence award on “Health, Safety and Environment” for second

consecutive year in 2006.Through out the company’s history, it has maintained a strong stance

on corporate and social responsibility, it strongly believes in building effective and constructive

partnership with communities by helping address various EH&S issues. Over the years the

company has invested substantial resources in terms of finances and manpower in various

initiatives like Mobile Free Dispensaries, Learning Resource Centre and Portable Water.

Environment, Health & Safety (EH&S) Policy:

It is PTC’s Policy to:

Provide and maintain a safe and healthy working environment including use of cleaner

technologies and safe systems of work for all its employees and non-company personnel

on the company premises.

Pay due regard to all impact of its activities on the physical environment.

Comply with all applicable National laws and regulations and BAT policy pertaining to

Environment Health and Safety.

Establish procedures to regularly assess and reviewing the EH&S impact of its present

and future and seek continuous improvement to its EH&S performance.

SWOT ANALYSIS

STRENGTHS

Continuous learning and improvement.

Sustainable growth.

Environmental standards achievement.

Market leadership in the world.

Being beneficial to the community (Corporate Social Responsibility)

Diversified workforce and environment.

Technologically advanced machinery and equipments.

Good salaries packages.

Focus on health and safety on the company premises.

Training and development of its employees.

WEAKNESSES

Salaries difference between workers who work more and the one who put minimum

efforts.

Technological advancement would decrease the workforce and unemployment will

increase.

Very minimum marketing as compare to its competitors.

Workers are always under threat because of downsizing.

Improper distribution of work

OPPORTUNITIES

Greater opportunity of promoting lower brands in rural region.

PTC has the potential to further improve the cost reduction method.

Create a better work environment in GLT department because of more hazards in this

department.

Lowering the downsizing will create a good image in the eye of regulatory authorities

and government.

Focus on its key brands i.e. high growth like Gold Flack this year’s growth was around

27%.

Export of premium brands

THREATS

Some of its competitors are also producing high quality brands like Marlboro by

Lackson.

Internationally some countries are continuously promoting anti-smoking slogans like the

ban of smoking in Bhutan in 2002.

Better marketing campaigns by rivals.

Their well-established brands are highly copied by some local manufacturer.

The political, economic situation is not stable in Pakistan.

Limitation of their product

Decline in tobacco growth