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Home , Cigarette holder, Gold Flake, Smoking, Wills Navy Cut

Introduction

"I like to think of fire held in a man's hand. Fire, a dangerous force, tamed at his fingertips. I often wonder about the hours when a man sits alone, watching the of a , and thinking. I wonder what great things have come from such hours. When a man thinks, there is a spot of fire alive in his mind--and it is proper that he should have the burning point of a cigarette as his one expression."

A cigarette is a product consumed via and manufactured out of cured and finely cut leaves, which are combined with other additives, then rolled or stuffed into a paper-wrapped cylinder generally less than 120 mm in length and 10 mm in diameter. The cigarette is ignited at one end and allowed to smolder for the purpose of of its smoke from the other which is usually filtered at the end and is usually inserted in the mouth. They are sometimes smoked with a . The term cigarette as commonly used, refers to a tobacco cigarette but can apply to similar devices containing other herbs, such as . They are colloquially known as 'cigs', '', 'ciggies', 'straights', 'cancer sticks', ' sticks', 'coffin nails' and 'fags'. are proven to be highly addictive, as well as a cause of multiple types of cancer, disease, , circulatory disease and birth defects. A cigarette is distinguished from a by its smaller size, use of processed leaf, and white paper wrapping. are typically composed entirely of whole leaf tobacco. Commercially manufactured cigarettes are relatively simple objects consisting mainly of a tobacco , paper, PVA glue to bond the outer layer of paper together, and often also a cellulose acetate based filter.

In the beginning of the 16th century, beggars in Seville, Spain developed the first paper-rolled cigarettes when they collected discarded cigar butts, shredded them, and rolled them in scraps of paper. Although the Spanish elite first dismissed them as recycled garbage, these , or little cigars, eventually gained popularity during the 18th century. Cigarette smoking spread to Italy and Portugal, and eventually to the rest of Europe and into Asia. Cigarettes were largely unknown in the English-speaking world before the Crimean War, when British soldiers began emulating their Ottoman Turkish comrades, who resorted to rolling their tobacco with newsprint. The cigarette was named sometime in the 18th century.

During World War I and World War II, cigarettes were rationed to soldiers. During the second half of the 20th century, the adverse effects of cigarettes started to become widely known and text-only health warnings became commonplace on cigarette packets. The United States has not yet implemented graphics-based cigarette warning labels, which is considered a effective method to communicate to the public the dangers of cigarette smoking. Canada and Australia, however, have both textual warnings and graphic visual images displaying, among other things, the damaging effects tobacco use has on the . The cigarette has evolved much since its conception; for example, the thin bands that travel transverse to the "axis of smoking" (thus forming circles along the length of the cigarette) are alternate sections of thin and thick paper to facilitate effective burning when being drawn, and retard burning when at rest. Synthetic particulate filters remove some of the tar before it reaches the smoker.

Companies like Marlboro a brand of Cigarette made by Altria which started manufacturing cigarettes in 1924 gave advertisements that Marlboro is a „women‟s cigarette‟ based on the slogan “Mild as May”. It became the most popular brand of United States in 2001. Marlboro became so popular that its sales never came down in the States and earned huge revenues. It started giving sponsorship to motor sports and racing cars. It was the main sponsor for Ferrari Formula One car and Yamaha in Super Bike Racing. It became famous globally till 2003 through Ferrari when it won the world championship of Formula One Racing. In mid-2006, special "racing editions" of Marlboro Red were sold in the UK, with a Ferrari-inspired design, although the Ferrari name and badge were not used.

Mostly people smoke cigarettes for pleasure or because of frustration or problem. Once they start they get addicted to it. It is very difficult to overcome the habit of smoking till one becomes used to it. In foreign countries most of the people started smoking cigarettes because of celebrities smoking in films and serials. This gave a boost to the cigarette manufacturing companies by increase in their sales and also promotion of the product as the demand increased. Most countries in the world have a legal of 18. Seven exceptions are Austria, Belgium, Denmark, Germany, Portugal, the United Kingdom, and The Netherlands, where the age is 16.

Since January 1, 2007 all cigarette machines in public places in Germany must attempt to verify the customers age by requiring the insertion of a debit card. Turkey, which has one of the highest percentages of smokers in its population, has a legal age of 18. Another curiosity is Japan, one of the highest tobacco consuming nations, which requires purchasers to be 20 years of age. However, due to the prevalence of cigarette vending machines in the most public of places the effectiveness of an underage ban is in doubt. In other countries, such as or (especially Kerala) it is legal to use and purchase tobacco products regardless of age. Approximately 5.5 trillion cigarettes are produced globally each year by the , smoked by over 1.1 billion people, which is more than 1/6 of the world's total population.

Many governments impose restrictions on smoking tobacco, especially in public areas. The primary justification has been the negative health effects of secondhand smoke. Laws vary by country and locality. In India the ban on tobacco and cigarettes has been implied since 2002, but still the companies continue to manufacture cigarettes as the smoking habits of the consumers do not change. Through sponsorship these companies try to publish their brand name and promotion of their product. Cigarette advertisement is also done through movies where the celebrities smoke cigarettes in the film. This also helps in brand and sales promotion. The Indian government is trying hard to impose strict actions against these advertisements and promotion. Even though by imposing strict tax rate these companies are able to continue their business as 1.1 billion people of the world consume cigarettes. In many parts of the world tobacco advertising and even sponsorship of sporting events has been outlawed. The ban on tobacco advertising and sponsorship in the EU in 2005 has prompted Formula One Management to look for races in areas that allow the tobacco sponsored teams to display their livery. As of 2007, only Ferrari retains tobacco sponsorship, continuing their relationship with Marlboro until 2011. In spite of the ill effects and health hazards people continue to smoke cigarettes for pleasure or because of habit. This habitual of the people helps the companies to overcome the ban and advertisement on cigarettes and tobacco.

About the cigarettes Industry of India

The Cigarette Industry is one of the oldest industries in India. It is an important agro-based industry. It is highly labour intensive and provides livelihood to about five million people directly and indirectly. Cigarette is an item falling under the First Schedule to the Industries (Development & Regulation) Act, 1951 and requires an industrial license.

The cigarette industry has always been on the receiving end when it comes to imposition of taxes and duties in the financial budget of the country. The industry has been reeling under ever-increasing excise duties and innovative form of taxes like luxury tax. Also, due to the high taxes in the country, the competitiveness of the Indian cigarette manufacture is adversely affected in the global market. Its growth is being further stifled by the imposition of ban on smoking at public places and ban on advertisements. In addition to this, increasing awareness about harmful effect of smoking and lawsuits in western countries has made the entire scenario pretty gloomy for the industry. This leads to increased government regulation and public litigation and a reduced ability to promote the product. In such a scenario, cigarette companies in India are going in for unrelated diversification. Also, with the increasing threat to the tobacco industry as a whole and decreased consumption levels of cigarettes, need gaps in the market are being met by new products like non-tobacco , - (betel leaf) -free gum lets , and substitutes and tobacco patches like ‘Click’ which are targeted at the traditional cigarette consumer base.

At present, there are 19 units in the organized sector engaged in the manufacture of cigarettes with a total installed capacity of about 147.377 billion pieces per annum. The production of cigarettes during 2001-02 was 60577 million sticks. During the current year i.e. 2002-03 (April 2002 to December, 2002) the production has been 43198.20 million sticks. In terms of volume, bids dominate the Indian market for tobacco products.

India is the second largest producer of tobacco in the world after . It produced 572 million kilograms of tobacco in 2002-2003. India only holds a meager 0.7% share of the US$30 billion global Import- trade in Tobacco, with cigarettes/cigarette accounting for 85% of the Country's total tobacco exports.

The tobacco industry holds tremendous potential for India. For the government, it means excise duties and export revenues, and for the Country in general, it translates into huge employment opportunities. Despite being the second largest producer, India is only the ninth largest exporter of tobacco and tobacco products in the world. Out of the total tobacco produced in India, only one-third is flue- cured tobacco suitable for cigarette manufacturing. Most of the tobacco produce is suitable for the manufacture of , bidis and other cheap tobacco products, which have no demand outside the country. There is only an export demand for flue-cured tobacco, which is used for cigarette manufacturing.

If India adopted a rational tax policy for the tobacco industry that encouraged the growing of export tobacco, tobacco farmer income would increase and export revenue would grow. If India adopted China's tax policy on tobacco, tax revenue could rise from the current Rs 6,031 crores to Rs 54,000 crores. China's economy- oriented tax policies have given cigarettes 100% share of domestic tobacco consumption. This strong domestic base has proved to be conducive to exports as well as revenue generation. The Indian tobacco industry makes a very substantial contribution to employment. 35 million people are directly or indirectly engaged in the production and selling of tobacco & tobacco products as shown in the table below.

In terms of volume, bidis dominate the Indian market for tobacco products. This traditional Indian smoke has shown steady growth during the review period, although manufacturers report that sales are not as high as in the 1980s. Cigarettes dominate the manufactured tobacco products market. This invaluable study analyses the market for cigarettes in India over the time period 1998-2002 and provides forecasts to the year 2007. This title investigates key trends and developments and can be used to evaluate competitive threats; identify strategic partners and acquisition targets; analyse market and brand share trends and forecast growth opportunities.

About the Company

ITC was incorporated on August 24, 1910 under the name of 'Imperial Tobacco Company of India Limited'. The Company's ownership progressively Indianised and the name of the Company was changed to I.T.C. Limited in 1974. In recognition of the Company's multi-business portfolio encompassing a wide range of businesses of Cigarettes & Tobacco, Hotels, Information Technology, Packaging, Paperboards & Specialty Papers, Agri-Exports, Foods, Lifestyle Retailing and Greeting Gifting & Stationery - the full stops in the Company's name were removed effective September 18, 2001. The Company now stands rechristened 'ITC Limited'.

ITC is one of India's foremost private sector companies with a market capitalization of nearly US $ 15 billion and a turnover of over US $ 4.75 billion. ITC is rated among the World's Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine, among India's Most Respected Companies by Business World and among India's Most Valuable Companies by Business Today. ITC also ranks among India's top 10 `Most Valuable Company Brands', in a study conducted by Brand Finance and was also published by the Economic Times. ITC employs over 21,000 people at more than 60 locations across India. The Company continuously endeavors to enhance its wealth generating capabilities in a globalizing environment to consistently reward more than 4,65,000 shareholders, fulfill the aspirations of its stakeholders and meet societal expectations.

ITC pioneered the cultivation and development of Leaf Tobaccos in India. ITC has helped the Indian farmer grow quality leaf tobaccos and linked him to global markets. ITC is the largest buyer, processor and exporter of leaf tobaccos in India - creating a global benchmark as the single largest integrated source of quality tobaccos. ITC serves in 48 countries across more than 69 destinations. ITC buys nearly 50 per cent of all tobacco types grown in India. ITC's Green Leaf Processing at Chirala and Anaparti in Andhra Pradesh, the tobacco hub of India, are benchmarked with the best in the world. ITC process and deliver 120 million kilo grams of high quality tobaccos annually. ITC's collaboration with related Government agencies has helped develop new varieties of tobaccos and explore new areas for tobacco cultivation.

ITC is the market leader in cigarettes in India. It's highly popular portfolio of brands includes Insignia, India Kings, Classic, , , Navy Cut, Scissors, , Berkeley, Bristol and Flake. The Company has been able to build on its leadership position because of its single minded focus on value creation for the consumer through significant investments in product design, innovation, manufacturing technology, quality, marketing and distribution. In the extremely competitive US market, ITC offers high-quality, value-priced cigarettes. ITC's cigarettes are produced in its state-of-the-art factories at Bangalore, Munger, Saharanpur and Kolkata. These factories are known for their high levels of quality, contemporary technology and work environment.

ITC is the leading player in domestic cigarette market. The company commands over 60% market share both in value and volume terms. The company has some of the leading brands of cigarettes like Wills, Gold Flake etc in its portfolio. The cigarette business forms the bread & butter business of the company. It gets more than 85% of revenues. The company has slowly and steadily nurtured its brands over the years to secure this position. With margins as high as 40% in cigarette business the company has generated huge amount of cash from its operations and is thus facing the problem of plenty. The problem is not just restricted to ITC it is through for other tobacco companies also. Though ITC's management has good track record in managing its cigarette business, its report card on diversification and success of these unrelated business has not been good.

Achievements

 Achieved five star Health and Safety Rating from the British Safety Council for its cigarette factories at Bangalore, Munger, Kolkata and Saharanpur and the "Sword of Honor" for Bangalore & Saharanpur for 2006-07.  Bangalore, Kolkata and Saharanpur cigarette factories won the prestigious Greentech Safety Gold Award for the year 2007 in the manufacturing sector. These awards are in recognition of the high level of performance that the units have achieved in Environment Health and Safety (EHS). Saharanpur along with Kolkata and Munger factories were honored with the same award in 2006.  Bangalore Factory has also received the Platinum Award for outstanding achievement in safety management in 2006.  Bangalore Factory has won the "Safety Innovation Award 2006" for Innovative Safety Management System from the Safety & Quality Forum (Institution of Engineers) and also Unnatha Suraksha Puraskara Award from NSC Karnataka Chapter.  The cigarette factory at Kolkata was awarded the "1st National Security Today Award 2007" in the category of Best Maintained Fire Safety System.  Bangalore, Munger & Kolkata have won the prestigious Greentech Environment Excellence Gold Award for the year 2008.  Munger factory won the Excellence in Water Management Award from CII-GBC for 2010.  GOLD FLAKE

 Gold Flake is a widely-sold cigarette brand in India and . It is sold in various varieties, including Gold Flake Kings (84mm), Gold Flake Lights, Gold Flake Filter (Filter tipped) and Gold Flake (plain). It is a well- positioned brand in India and is the market leader in its segment. This brand is owned, manufactured and marketed by ITC which is leader in cigarette industry in India. Other popular cigarette brands owned by ITC are Wills, Scissors. It is sold in three varieties. Gold Flake Kings is the largest selling brand of cigarettes in India. It has a mild flavour. Goldflake Filter King Size Lights (84mm) Goldflake lights is milder than Gold Flake and contains comparatively less . Goldflake Filter (Small) Goldflake Filter (small) has the strongest flavour amongst the three brands.. A pack of 10 costs about 34 Indian rupees. Goldflake Plain (Filter less). The very original Goldflake is simply known as Gold Plain or Plain in southern markets. It is the strongest of all.  The cigarette market in India has 4 players ITC, a British American Tobacco (BAT) affiliate, is the largest cigarette manufacturer with 66% of the market share. Godfrey Phillips India (GPI), a Phillip Morris affiliate, and Vazir Sultan Tobacco (VST), a BAT affiliate, each have 13% of the total market share. Golden Tobacco Company (GTC) has 8% of the market share. There are lots of popular brands which are present in the Indian market. They are divided into 3 segments which are super premium, premium, and bingo segments. Few of the brands in these categories are: - Super premium - Wills Insignia Premium- Wills Classic/Milds , Wills Silk Cut, Gold Flake/Lights, four square Bingo– Bristol, Red and White.    Origin of the Name

 Goldflake was neither a brand nor a process of manufacturing cigarettes. The word "Gold Flake" refers to cigarettes made using 'bright rich golden tobacco'. Brands other than wills gold flake are Bacons' Gold Flake, Hignett's Golden Flaked Honey Dew, Salmon and Gulckstein's Gold Flake.  Launch and Promotion

 ITC launched the brand Gold flake in India in the seventies. The source of the positioning of Gold Flake can be traced back to its early days. In the Seventies, India was a country of the genteel rich. People aspired to be honorable and genteel. The lifestyle of the upper class was what the customers aspired for. The initial ads said, “Wherever you go they are good”,” Having fun wish you were there” “Worth its length in gold”, then came the Gracious People Campaigns “For the Gracious People” as the headline followed by, “A touch of Gold”, with the headline "A tribute to the Gracious People".  Gold Flake had been traditionally positioned as a premium cigarette. It targeted adult, male SEC A category smokers. It was meant to be a cigarette for the best and the rich – the gracious people of India. It did not differentiate itself specifically from other brands. The brand was compared with Gold for the quality and purity of experience. Advertising emphasised this comparison to gold. The statement – “For the gracious people” summed the core of the brand. The gracious people as defined by the brand were the premium class they were successful, elegant, and responsible, and had a sense of purpose.

 The consumer was bounded in the Indian ethos and roots. He was perceived to be unapproachable and sociable only in his high class. ITC's share of filter cigarettes in the country is more than 70%. In pursuit of international competitiveness, ITC has launched four brands - Checkers, Hi-Val, Royale Classic and Gold Crest - in the extremely competitive US market. Recently ITC has launched Royale Classic, Gold Cut and Scissors Filter Kings cigarettes in the Middle East. The response to these brands has been encouraging.

The Scenario : DEMOGRAPHICS-AGE

18-24 25-30 31-35 36-45 46+

0% 0%

23% 18%

59%

DEMOGRAPHICS-SALARY

<10K 10K-25K >25K

21% 18%

61%

DEMOGRAPHICS-SEX

SEX FEMALE 18%

SEX MALE 82%

Factors Determining Purchase Decisions (Mean) On A Scale Of 5

5.00 4.51 4.50 4.00 3.31 3.49 3.43 3.27 3.50 3 2.80 3.00 2.50 2.00 1.50 1.00 0.50 0.00 BRAND COMPANY PRICE TASTE LOOKS AVAILABILITY PACKING

5.0 4.5 4.0 3.5 3.0 2.5 MALE 2.0 FEMALE 1.5 1.0 0.5 0.0

FACTORS INFLUNECING PURCHASE % PACKAGING 6%

BRAND 18% AVAILABILITY COMPANY 19% 8% LOOKS 3% PRICE 12%

TASTE 34%

30 30

25

20

15

10

7 5 6 5 0 0 3 0 GOLD FLAKE NAVY CUT CLASSIC MARLBORO BENSON STELLER OTHERS BRAND PREFERENCE gold flake(kings)-scorecard :

MEAN RATING OF GOLD FLAKE ON A SCALE OF 5

4.3 4.27 4.50 3.83 3.7 4.00 3.63 3.27 3.50 3.07 3.00 2.50 2.00 1.50 1.00 0.50 0.00

3.0 LIGHTS 4

FEMALE MALE

0.0 REGULAR 23

0 5 10 15 20 25

BRAND LOYALTY

CHANGE RECOMMENDATION DRIVE AWAY BORROW

BORROW 13% CHANGE DRIVE AWAY 44% 23%

RECOMMENDATION 20%

10 9 8 7 6 5 10 4 7 3 2 4 4 1 2 0 0 0 LOOKS PACKING PRICE SMOOTH DON’T LIKE DON’T POOR THE TASTE KNOW TOBACCO

PACKAGING BRAND 14% 16% AVAILABILITY 10% COMPANY 16% LOOKS 12% PRICE 11% TASTE 21%

4.5 5 4.5 4.9 5.0 4.5

4.0 4 3.3 3.3 3.0 2.9 1.8 2.3 2.9 2.0 2.5 1.9 MALE 1.0 FEMALE 0.0 FEMALE MALE

Benefits of the Products

People smoke cigarettes for many reasons as it helps in losing weight, release from stress, if anyone has a stuffy nose, and smoking will help the unobstructed. It also aids in relaxation and reducing boredom. Smoking a filter cigarette causes lesser harm to health than non filter cigarettes. The benefits of the product have been divided into two categories.

Primary Benefits. Secondary Benefits.

 Superior quality.  Improves concentration.

 Consistent quality.  Reduces stress.

 Smoothness.  Helps lose weight.

 Mildness.  Helps to relax and reduce

boredom.

 Refreshing.  Helps to socialize.

 Less Tar level.  Acts as appetite suppressant.

 A companion when lonely.

 Private indulgence for women. Branding of Gold Flake 1) Building the brand image: To create a brand image of Gold Flake the company started branding of the product since it was launched in 1970. In those days India was a country of the genteel rich. The product offered the user the sense of belonging to the upper class. For creating a brand image; the advertisements of Gold Flake launched by the company in the seventies was as per the consumers taste and preference. The first advertisement was the balcony ad “For the Gracious people”, “A touch of Gold”and “A tribute to the gracious people”.But after few years this advertisement became stale as average age of the consumer of Gold Flake had fallen and it also affected the sales of the company because the young smokers did not emphasis with the brand. The brand did not stand for success and respectability because the liberalization and globalization had changed the consumer needs and mindset.To overcome this problem the company followed a brand repositioningstrategy. The brand was still positioned as a premium cigarette but the targetconsumer had changed. Gold Flake then targeted adult as well as young smokers. Itextended beyond SEC „A‟ and included SEC „B‟ as well. The product still differentiated itself on purity and quality of its experience. The advertisement “for the Gracious People” was continued with another slogan added to it “Celebrate the Feeling” to encourage the young smokers. 2) Branding Strategies: Two brand strategies were applied by the company. The first brand strategy is morequalitative in nature and is concentrated on increasing market share and loyaltywhile the second strategy refers to the more quantitative aspects of increasing bottom line profits. The brand extension strategy has also been mentioned. A) “ Honeydew smooth” campaign At a time when sales were stagnating, the tangible and identifiable USP of being honeydew smooth was associated with Gold Flake by revolving all ad campaigns around it. It was meant to be unique and durable. It attempted to reignite loyalty among its consumers. The honey drop icon in everything connected with the brand which signified the identifiable characteristic of the brand. Unlike the previous campaigns, the USP was not derived—it was a tangible offering to the consumer. The honey drop icon was designed to be recognizable, simple and powerful. With this, the campaigns also focused on slogan “The world of Gold flake. Always mellow, Always smooth.”With this, the brand was positioned as a premium cigarette targeting young and adult male smokers from the SEC A & B categories in the twenties. The consumers were projected to be young, upwardly mobile and contemporary and had achieved a smooth balance between the various facets of their lives. The results were visible within a single quarter. Sales had increased. The Indian male identified with the brand and Gold Flake was on the path to success. In 2002,the No. 1 spot in Brand Equity‟s first listing of India‟s 100 biggest FMCG brandswent to Gold Flake. Gold Flake remains India‟s biggest FMCG brand for the year 2003. It continues to be twice as big as its nearest competitor (in terms of sales) and has even grown by almost 8% in the year 2002-03.

B) “Price hikes” In the month of October 2001, the company (ITC) increased prices of its cigarettes by 10-18%. The move was welcomed in the market and there was a 14% jump in the stock price (from Rs.718 on Oct 10 to Rs. 819 on Nov 2). The jump was solely on the reason that ITC is so strong in the market that such a hike will not affect its volumes or market share. Gold Flake (20 stick filter) price was increased from Rs. 46 to Rs. 48 (4.3%increase). In addition to this, the government imposed a 15% natural calamity on all cigarettes. The entire domestic cigarette industry was also suffering from robust grey market of smuggled cigarettes (growth rate 20% p.a. based on price differentials). There was also a removal of quantity restrictions on importing cigarettes which would make all international brands more easily available in the market. In such a scenario brands again (this time in the range of 10-30%). Price of Gold Flake(20 stick filter) now increased from, the company took another bold step by increasing the price of all its filter

S.W.O.T Analysis of Gold Flake

STRENGTHS 1) The main strength of the company is the brand Image of Gold Flake. In spite of ban on the advertisement the product was at No.1 position in FMCG products in 2003-2004 and its sales were up to Rs 3900 crores.

2) The attributes of the product is as per the consumer aspirations, specifications and taste. It has high perceived quality; it is affordable by the consumers. This factor has helped the company to keep steady margin of its sales volume.

3) The company has an excellent distribution channel of network which has enabled the availability of products in different regions as per the consumer demand and supply for the product.

4) The Gold Flake brand name has been promoted through vacation tours “Gold Flake Golden Getaways”. ITC has also paid Indian tennis stars to endorse Gold Flake cigarettes.

5) In Mumbai, Goldflake from ITC holds the lion's share of the market selling 60 million sticks. Four Square special comes second with 55 million sticks and Wills is third

WEAKNESS

1) The main weakness of the company is that after the ban on advertisement it is not able to promote the product on higher basis as it was promoted before the ban.

2) The other weakness is the manufacturing process which is very time consuming. Sometimes it is very difficult for the company to supply the cigarettes as per the demand; it is because the demand of Gold Flake is increasing rapidly.

3) Most the times the consumer prefers the price of the product first and then the quality and other factors. The price of Gold Flake is Rs 34/- therefore as a high price product the quality is ignored by the consumer and then they prefer to buy ‘bidis’ or ‘pan’.

4) The next weakness is that the company is not able to build a further brand image due to the ban on advertisement. The branding of the company is done on small basis which is hardly ever seen.

5) ITC not only manufacturers Gold Flake but also Wills Navy Cut, Bristol, Four Square etc. It becomes difficult for the company to differentiate and decide the quality, price and other factors of the cigarettes while manufacturing and distributing.

OPPORTUNITIES 1) The opportunity of the company (ITC) is to reduce the price of the product and offer the same quality. This will increase the sales volume of the company.

2) The packaging of the product should be changed and each and every attribute should be mentioned on the packet and also the level of harmless should be mentioned. This will help in ‘Word of Mouth’ marketing.

3) As ITC is being recognized as World's Best Big Companies and the World's Most Reputable Companies by Forbes magazine, the company can launch Gold Flake at international level through collaboration with sports events held at international level and also with other brands.

4) In India the company can launch the product Gold Flake as mild cigarette and less harmful for consumer attraction.

THREATS 1) The threats of the company are competition from international companies. The main competitors are Marlboro, Marlboro Lights, and 555 cigarettes. These companies are famous at international level and also as an imported cigarette brand with affordable price; the consumers prefer to buy them.

2) The promotion done by the company of Gold Flake is through advertisements in magazines and sponsorship, where as the advertisement of the international companies like Marlboro and is done on international level, like sponsorship to Ferrari team in Formula One and also to Super Bike racing. Camel cigarettes give sponsorship to Rally Races in Africa and UK. This is the biggest threat to the brand image of the company at national as well as international level.

3) The next threat may also be the changing habits of the consumer; they may quit smoking due to its ill effects and hazards. This may affect the sales as well as the brand image of the product

4) In future the government may completely put ban on advertisement of cigarettes or also put a ban on sponsorship under the consideration that cigarette is harmful for health. This will be the biggest threat for the product as well as the company.

Conclusion

ITC is the leading player in domestic cigarette market. The company commands over 60% market share both in value and volume terms. The company has some of the leading brands of cigarettes like Wills, Gold Flake etc in its portfolio. The cigarette business forms the bread & butter business of the company. It gets more than 85% of revenues. The company has slowly and steadily nurtured its brands over the years to secure this position. With margins as high as 40% in cigarette business the company has generated huge amount of cash from its operations and is thus facing the problem of plenty. The problem is not just restricted to ITC it is through for other tobacco companies also. Though ITC's organization has good track record in managing its cigarette business, its report card on diversification and success of these unrelated business has not been good.

Today Gold Flake is facing competition from International brands. As an Indian brand ITC is forecasting the changing habits of the consumer, so that the manufacturing of the cigarettes could be done as per the consumers taste and specifications. In 2005-2006 Gold Flake has not retained the No.1 spot in the sales of FMCG products. But its sale margin has increased very miniature compare to 2003- 2004. As per 2006-2007 Gold Flake has not lost its brand image; the brand is still recognized as popular brand of cigarettes. It has been seen that the standard of living of the people is increasing day-by-day. The standard of rural consumer is increasing. The rural areas people prefer to smoke ‘bidis’, but as per their increasing standard they prefer smoking cigarettes. Due to this the sales growth of cigarettes in India is boosting up rapidly.