Pricing Strategy by the Indian Cigarette Industry
[Type the company name]
2012
Marketing Program Design
ANALYSIS OF PRICING STRATEGY ADOPTED IN THE INDIAN CIGARETTE INDUSTRY
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Table of contents Table of contents 2 1 Introduction: Cigarettes 3 2 Cigarette Industry in India 3 2.1 Cigarette Market Share in India 5 2.2 Price Spread of Cigarettes in India 5 3 Manufacturing Process 6 4 SUPPLY CHAN MANAGEMENT 6 4.1 Distributor 7 4.2 Wholesale Dealer 8 4.3 The Retailer 8 5 Pricing Strategy 11 5.1 Pricing Objective 11 5.2 Determining Demand 11 5.3 Estimating Cost 12 5.4 Selecting a Pricing Method 12 5.5 Selecting the Final Price 12 6 Taxation on Cigarettes (Exhibit 1) 13
1 Introduction: Cigarettes
Nearly 20% of the world’s adult population smokes cigarettes.
Smokers consumed nearly 5.9 trillion cigarettes in 2009, representing a 13% increase in cigarette consumption in the past decade.
India is the second largest manufacturer of cigarette products in the world after China.
India’s consumption per capita stands at 99th place in the world.
(Source: World Health Organization) 2 Cigarette Industry in India
Cigarettes account for less than 15% of tobacco consumed in India unlike world pattern of 85% due to prolonged punitive taxation. Cigarettes (15% of tobacco consumption) contribute the bulk of Revenue to the Exchequer from tobacco sector
48% of adult Indian males consume tobacco. Only 10% of adult Indian males smoke cigarettes as compared to 16% who smoke biris and 33% who use smokeless tobacco
(Source: Global Adult Tobacco Survey India 2010)
Biri: Cigarettes ratio = 8: 1
Annual per capita adult cigarette consumption in India is approximately one tenth of world average. Future growth depends on relative rates of growth of per capita income and moderation in taxes.
Figure [ 1 ]: Per Capita Consumption of Tobacco in India
Per Capita tobacco consumption is ~ 60% of World Average
(Source: World Cigarettes – ERC Statistics,
2012
Marketing Program Design
ANALYSIS OF PRICING STRATEGY ADOPTED IN THE INDIAN CIGARETTE INDUSTRY
[Type the author name]
Table of contents Table of contents 2 1 Introduction: Cigarettes 3 2 Cigarette Industry in India 3 2.1 Cigarette Market Share in India 5 2.2 Price Spread of Cigarettes in India 5 3 Manufacturing Process 6 4 SUPPLY CHAN MANAGEMENT 6 4.1 Distributor 7 4.2 Wholesale Dealer 8 4.3 The Retailer 8 5 Pricing Strategy 11 5.1 Pricing Objective 11 5.2 Determining Demand 11 5.3 Estimating Cost 12 5.4 Selecting a Pricing Method 12 5.5 Selecting the Final Price 12 6 Taxation on Cigarettes (Exhibit 1) 13
1 Introduction: Cigarettes
Nearly 20% of the world’s adult population smokes cigarettes.
Smokers consumed nearly 5.9 trillion cigarettes in 2009, representing a 13% increase in cigarette consumption in the past decade.
India is the second largest manufacturer of cigarette products in the world after China.
India’s consumption per capita stands at 99th place in the world.
(Source: World Health Organization) 2 Cigarette Industry in India
Cigarettes account for less than 15% of tobacco consumed in India unlike world pattern of 85% due to prolonged punitive taxation. Cigarettes (15% of tobacco consumption) contribute the bulk of Revenue to the Exchequer from tobacco sector
48% of adult Indian males consume tobacco. Only 10% of adult Indian males smoke cigarettes as compared to 16% who smoke biris and 33% who use smokeless tobacco
(Source: Global Adult Tobacco Survey India 2010)
Biri: Cigarettes ratio = 8: 1
Annual per capita adult cigarette consumption in India is approximately one tenth of world average. Future growth depends on relative rates of growth of per capita income and moderation in taxes.
Figure [ 1 ]: Per Capita Consumption of Tobacco in India
Per Capita tobacco consumption is ~ 60% of World Average
(Source: World Cigarettes – ERC Statistics,