CRITICAL FACTORS IN FMCG CIGARETTE

CRITICAL FACTORS IN FMCG CIGARETTE

Tobacco consumption pattern in India.

Legal cigarettes account for just 9% of overall tobacco consumed in India. The balance 91% of consumption is represented by traditional products like chewing tobacco, bidis, khaini etc. and illegal cigarettes.

This is unlike the rest of the world where tobacco is synonymous with cigarettes, representing 90% of tobacco consumption.

Tobacco - Important commercial crop in India

India is the world’s 2nd largest producer and a major exporter of tobacco. With an estimated annual production of 800 million kgs., tobacco is an extremely important commercial crop in the country, providing livelihood to 45.7 million people.

Tobacco products generate significant tax revenues amounting to more than Rs.43,000 crores annually.

Due to large consumer base, there are large numbers of layers in the whole distribution hierarchy and many intermediaries involved in the whole system

Geographical Distribution of Consumer base - POP points are geographically dispersed across India including rural and urban areas. The POPs for cigarettes include Pan Shop around the corner of the street, street food stalls, kirana stores, Supermarkets, Hypermarkets in the urban area and rural areas POPs of cigarettes includes Pan Shop around the bazaar or city place, dhabas along the highways, tea stalls in the haats, supermarket and kirana stores etc

Purchase Frequency - Cigarettes are addiction based products. The frequency of purchase of cigarettes is very high, so availability becomes critical. Therefore, the whole supply chain is backed by strong transportation and logistics support

Product Familiarity - Consumers are familiar to the product. Thus importance of field force is limited to the extent of making the product available

Degree of Brand Loyalty - Cigarette brands enjoy the highest brand loyalty of all consumer products, with less than 10% changing brands annually, so in this case the availability is more important as their will be pull demand.

Impulsive Nature of Product - Nicotine is a highly impulsive product. So availability is the most critical factor. Therefore, delivery should be supported by a strong and efficient supply, logistics and transportation system

Speed and complexity of decision making - Speed of decision making process is high and complexity is low. Thus the importance of expertise of field force is low

Crisis Purchase - As cigarette is an addictive product, so element of crisis purchase becomes relevant here so availability is the most important factor

Seasonality of Product - No specific time band attached with the purchase of cigarettes. 

There is a consistent demand for the product

Negative and Positive Re-enforcement - Cigarette is a product which is not subjective to either positive or negative re-enforcement as because it is more of an addiction based product. So for this building a right ambience and a shopping experience are not vital

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Milan Tomic

Hi. I’m Designer of Blog Magic. I’m CEO/Founder of ThemeXpose. I’m Creative Art Director, Web Designer, UI/UX Designer, Interaction Designer, Industrial Designer, Web Developer, Business Enthusiast, StartUp Enthusiast, Speaker, Writer and Photographer. Inspired to make things looks better.

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