Marketing Strategy of the UK Cigarette Industry, Communicaton

    Дисциплина: Экономика
    Тип работы: Реферат
    Тема: Marketing Strategy of the UK Cigarette Industry, Communicaton

    Introduction

    I’m looking at this issue for unit communication.

    The subject of this report is “Marketing Strategy of the UK Cigarette Industry”.

    It would cover the information about the main manufacturers such as “Imperial Tobacco”, “Gallaher Group Ltd” and “British American Tobacco” in the UK. The whole

    point of this report is aimed at talking about marketing strategies that the tobacco manufactures are using for staying in the market.

    Three of the world’s five largest tobacco companies are based in the UK. BAT, with 11% of the global market, is the world’s second largest tobacco company, after Philip

    Morris

    which has 18%, while Imperial Tobacco and Gallaher hold fourth and fifth places respectively

    Imperial Tobacco

    Imperial Tobacco Group is the world number four in the cigarette manufacture and distribution sector. Its brands are divided into several ranges so as to reach a wide a market

    as possible. They include Embassy and Regal, Davidoff (so-called \"luxury\" cigarettes), SuperKings and John Player Specials (mid-priced), and Lambert Butler (more cheaply

    priced).

    However the group\'s business does not focus just on cigarettes. Imperial Tobacco also produces cigars, pipe tobacco brands, and is also the world leader in

    hand-rolling tobacco with the Drum brand. Not to mention RIZLA, making the firm a giant in the cigarette paper market too (

    in 1997 Imperial Tobacco bought Rizla, the hand-rolling cigarette paper company).

    Imperial’s share of the UK cigarette market has been steadily increasing in recent years and now stands at 44.9%.In 2004 the company reported overall operating profits of

    Ј1,218 million, of which Ј454m were derived from UK sales.

    In 2002 it acquired the German tobacco company Reemtsma. Imperial also has a 43% stake in the Swedish snuff producer, Skruf.

    British American Tobacco

    British American Tobacco (BAT), the world\'s second largest tobacco company, is based in Britain.

    It is the world\'s most international tobacco group, with brands sold in 180 markets around the world.

    STRAT

    The tobacco industry as a whole is suffering from growing awareness of the health risks of smoking and aggressive anti-smoking legislation, particularly in developed markets.

    The tobacco companies have managed to offset declines in developed markets by expanding to underdeveloped markets and in the short to medium-term at least, falls in volumes in

    developed markets will be offset by increases in underdeveloped markets.

    Tobacco stocks are thus far from the greatest growth story around; however, what they do offer investors is fairly strong cash flows and dividends. Years of working around the

    anti-smoking lobby and government legislation have kept the industry on its toes; tobacco bosses stand accused of many things but sloth and inefficiency are not amongst them; which is

    good from an investor’s point of view.

    The company says that a combination of good operational performance, effective cash management and a continued focus on reducing costs, leaves it well placed to build on this

    positive momentum - sentiments that we are inclined to agree with.

    We and several other tobacco companies, including the other two largest international companies

    Philip Morris and JT International

    have worked together to develop new, globally consistent International Marketing Standards for the appropriate promotion and distribution of tobacco products world wide.

    They represent a ‘raising of the bar’, and establish a benchmark for the industry world wide.

    Launched in September 2001 and building on our existing principles, the International Marketing Standards set down detailed guidance on all aspects of tobacco marketing, from

    print, billboards and electronic media to promotional events, packaging and sponsorship.

    We believe the Standards will have a real impact in many parts of the world where restrictions on tobacco marketing are lower, for example, than in the UK or western Europe. We

    areinviting more tobacco companies to subscribe to the Standards, and we aim to work with regulators to see them incorporated into laws or agreements that ensure effective local

    implementation.

    Central to the Standards is our long held commitment to ensuring that no marketing activity is directed at, or particularly appeals to, youth. For example, the Standards make it

    absolutely clear that our marketing activities should not appeal to youth or suggest that smoking enhances popularity or sporting,sexual or professional success.

    New baseline

    Our companies’ adherence to the Standards is covered by a continuous review cycle involving audit committees, internal audit and local management.

    In many parts of the world, existing laws or voluntary codes fall short of the Standards. We have now established a common basis for clearly understood marketing practice. It

    sets a new baseline for acceptable tobacco marketing worldwide that significantly ‘raises the bar’. Of course in any countries with even tighter restrictions, we will abide by the

    laws and restrictions those countries set.

    The new Standards are part of our commitment to supporting, and helping to deliver, balanced tobacco regulation that meet society\'s expectations, while ensuring that adult

    consumers can continue making informed choices about a legal product.

    Dialogue

    In January 2000 we proposed a Partnership for Change, with 20 practical suggestions for building constructive dialogue amongst the industry, government, public health groups and

    others on tobacco issues, including marketing.

    We aim for the Marketing Standards to be a further basis for building constructive dialogue. We seek to consult with stakeholders on the Standards and welcome their views,

    including on how best to monitor adherence.

    Strategies

    So dominating the tobacco market, Imperial Tobacco pursues an aggressive expansion strategy. Other than its large European market, the group has taken over the Horizon, John

    Brandon and Peter Stuyvesant brands, which has taken it into the Australian and New Zealand markets, and bought out Tobaccor, the second biggest cigarette producer in Sub-Saharan

    Africa, giving it a firm foothold on the African continent and in Madagascar.Finally, Imperial Tobacco acquired the licence to distribute Marlboro (Philip Morris group) in the United

    Kingdom and in 2002 it took over the German cigarette firm (the world\'s fourth biggest manufacturer) Reemtsma, thus strengthening its position in Central and Eastern Europe.

    Gareth Davis, chief executive of the biggest tobacco manufacturer in Britain, Imperial Tobacco, predicted yesterday that there would be no reduction in the number of people

    smoking in England and Wales following the partial ban on smoking in public spaces, planned by the government for the summer of 2007.

    Mr Davis said smokers \"were resilient and adaptable\" and would \"quickly learn\" the lessons from a smoking ban introduced in Ireland last year. While he attacked proposed

    restrictions on smoking in p...

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