DEPARTMENT OF MANAGEMENT

TERM PAPER REPORT

TITLE

Study on BCG Matrix of ITC Company

Submitted By:
Haziq Mushtaq

Roll No:
RR-1803-A-18

Registration No:
10800085

Submitted To:
Miss Anju Saini (LSB)

DEPARTMENT OF MANAGEMENT
LOVELY PROFESSIONAL UNIVERSITY
PHAGWARA
(2009)
 Acknowledgement
I sincerely feel that the credit of this term paper could not be narrowed to only
one individual as the whole work is outcome of integrated efforts of all those
concerned with it through whose cooperation and effective guidance I could
achieve its completion.

I wish to place my profound indebtness and deep sense of obligation to Miss

Anju Saini, Senior lecturer Lovely Professional University for providing me with
the opportunity to work on such an interesting topic. I also want to pay my
gratitude and sincere thanks to my esteemed mam for being supportive and
lenient during the entire tenure of this term paper.

When emotions are involved words fail to mean. My heart full sincere gratitude
to my parents, who have supported, encouraged and helped me throughout my
life and academic career.

HAZIQ
MUSHTAQ
 ABOUT ITC [INDIA TOBACCO COMPANY LIMITED]

ITC is one of India's foremost private sector companies with a market

capitalisation of over US $ 22 billion and a turnover of over US $ 5 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 ranks among India's `10 Most Valuable (Company)
Brands', in a study conducted by Brand Finance and published by the Economic
Times. ITC also ranks among Asia's 50 best performing companies compiled by
Business Week.

ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty

Papers, Packaging, Agri-Business, Packaged Foods & Confectionery,
Information Technology, Branded Apparel, Personal Care, Stationery, Safety
Matches and other FMCG products. While ITC is an outstanding market leader
in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and
Agri-Exports, it is rapidly gaining market share even in its nascent businesses
of Packaged Foods & Confectionery, Branded Apparel, Personal Care and
Stationery.

As one of India's most valuable and respected corporations, ITC is widely

perceived to be dedicatedly nation-oriented. Chairman Y C Deveshwar calls this
source of inspiration "a commitment beyond the market". In his own words:
"ITC believes that its aspiration to create enduring value for the nation provides
the motive force to sustain growing shareholder value. ITC practices this
philosophy by not only driving each of its businesses towards international
competitiveness but by also consciously contributing to enhancing the
competitiveness of the larger value chain of which it is a part."

ITC's diversified status originates from its corporate strategy aimed at creating
multiple drivers of growth anchored on its time-tested core competencies:
unmatched distribution reach, superior brand-building capabilities, effective
supply chain management and acknowledged service skills in hoteliering. Over
time, the strategic forays into new businesses are expected to garner a
significant share of these emerging high-growth markets in India.

ITC's Agri-Business is one of India's largest exporters of agricultural products.

ITC is one of the country's biggest foreign exchange earners (US $ 3.2 billion in
the last decade). The Company's 'e-Choupal' initiative is enabling Indian
agriculture significantly enhance its competitiveness by empowering Indian
farmers through the power of the Internet. This transformational strategy,
which has already become the subject matter of a case study at Harvard
Business School, is expected to progressively create for ITC a huge rural
distribution infrastructure, significantly enhancing the Company's marketing
reach.

ITC's wholly owned Information Technology subsidiary, ITC Infotech India Ltd,
provides IT services and solutions to leading global customers. ITC Infotech has
carved a niche for itself by addressing customer challenges through innovative
IT solutions.

ITC's production facilities and hotels have won numerous national and
international awards for quality, productivity, safety and environment
management systems. ITC was the first company in India to voluntarily seek a
corporate governance rating.

ITC employs over 26,000 people at more than 60 locations across India. The
Company continuously endeavors to enhance its wealth generating capabilities
in a globalising environment to consistently reward more than 3, 39,000
shareholders, fulfill the aspirations of its stakeholders and meet societal
expectations. This over-arching vision of the company is expressively captured
in its corporate positioning statement: "Enduring Value- For the nation- For the
Shareholder."
 ITC MISSION

To enhance the wealth generating capability of the enterprise in a globalising

environment, delivering superior and sustainable stakeholder value

ITC VISION

Sustain ITC's position as one of India's most valuable corporations through

world class performance, creating growing value for the Indian economy and
the Company’s stakeholders.

ITC Limited which previously stood for Imperial Tobacco Company of India
Limited, is one of India`s foremost private sector companies with a market
capitalization of more than US $ 15 billion and a turnover of US $ 4.75 billion.
Rated among the World's Best Big Companies by Forbes magazine, ITC ranks
third in pre-tax profit among India's private sector corporations.

The company is headed by Yogesh Chander Deveshwar. It employs over 20,000

people at more than 60 locations across India and is listed on Forbes 2000.
 EXECUTIVE SUMMARY

• ITC was incorporated on August 24, 1910 under the name of 'Imperial

Tobacco Company of India Limited'.

• ITC's Packaging & Printing Business Division was set up in 1925.

• In 1975 the Company launched its Hotels business with the acquisition

of a hotel in Chennai.

• In 1979, ITC entered the Paperboards business.

• In 1990, ITC acquired Tribeni Tissues Limited.

• In 2000, ITC's Packaging & Printing business launched a line of high

quality greeting cards under the brand name 'Expressions'.

• ITC also entered the Lifestyle Retailing business with the Wills Sport

range of international quality relaxed wear for men and women in 2000.

• In 2000, ITC spun off its information technology business into a wholly

owned subsidiary, ITC InfoTech India Limited.

• From 2002 onwards, ITC have also ventured in the market of safety

matches, agarbattis and fragrances.

 BUSINESS MIX OF ITC LTD.

FMCG
 Cigarettes
 Foods
 Lifestyle Retailing
 Greeting, Gifting & Stationery
 Safety Matches
 Agarbattis

Paperboards & Packaging

 Paperboards & Specialty Papers
 Packaging

Agri – Business
 Agri-Exports
 E-Choupal
 Leaf Tobacco

HOTELS
Group Companies
 ITC InfoTech; etc.
 While ITC continues in its traditional businesses of Cigarettes, Hotels,
Paperboards, Packaging and Agri-Exports, it is gaining market share in its
nascent businesses of Packaged Foods & Confectionery, Branded Apparel
and Greeting Cards.

 ITC's wholly owned Information Technology subsidiary, ITC InfoTech India

Limited, is pursuing emerging opportunities in providing end-to-end IT
solutions, including e-enabled services and business process outsourcing.
CORE VALUES:

 Trusteeship
 Customer Focus
 Respect For People
 Excellence
 Innovation
 Nation Orientation

CORE VALUES DEFINED

Trusteeship
As professional managers, we are conscious that ITC has been given to us in
"trust" by all our stakeholders. We will actualize stakeholder value and interest
on a long term sustainable basis.

Customer Focus
We are always customer focused and will deliver what the customer needs in
terms of value, quality and satisfaction.

Respect for People

We are result oriented, setting high performance standards for ourselves as
individuals and teams.
We will simultaneously respect and value people and uphold humanness and
human dignity.
We acknowledge that every individual brings different perspectives and
capabilities to the team and that a strong team is founded on a variety of
perspectives.
We want individuals to dream, value differences, create and experiment in
pursuit of opportunities and achieve leadership through teamwork.
Excellence
We do what is right, do it well and win. We will strive for excellence in whatever
we do.

Innovation
We will constantly pursue newer and better processes, products, services and
management practices.

Nation Orientation
We are aware of our responsibility to generate economic value for the Nation.
In pursuit of our goals, we will make no compromise in complying with
applicable laws and regulations at all levels

CORE PRINCIPLES
ITC's Corporate Governance initiative is based on two core principles. These
are:

• Management must have the executive freedom to drive the enterprise

forward without undue restraints; and
• This freedom of management should be exercised within a framework of
effective accountability.
• ITC believes that any meaningful policy on Corporate Governance must
provide empowerment to the executive management of the Company,
and simultaneously create a mechanism of checks and balances which
ensures that the decision making powers vested in the executive
management is not only not misused, but is used with care and
responsibility to meet stakeholder aspirations and societal expectations.

Cornerstones
From the above definition and core principles of Corporate Governance emerge
the cornerstones of ITC's governance philosophy, namely trusteeship,
transparency, empowerment and accountability, control and ethical corporate
citizenship. ITC believes that the practice of each of these leads to the creation
of the right corporate culture in which the company is managed in a manner
that fulfils the purpose of Corporate Governance.

Trusteeship
ITC believes that large corporations like itself have both a social and economic
purpose. They represent a coalition of interests, namely those of the
shareholders, other providers of capital, business associates and employees.
This belief therefore casts a responsibility of trusteeship on the Company's
Board of Directors. They are to act as trustees to protect and enhance
shareholder value, as well as to ensure that the Company fulfills its obligations
and responsibilities to its other stakeholders. Inherent in the concept of
trusteeship is the responsibility to ensure equity, namely, that the rights of all
shareholders, large or small, are protected.

Transparency
ITC believes that transparency means explaining Company's policies and
actions to those to whom it has responsibilities. Therefore transparency must
lead to maximum appropriate disclosures without jeopardizing the Company's
strategic interests. Internally, transparency means openness in Company's
relationship with its employees, as well as the conduct of its business in a
manner that will bear scrutiny. We believe transparency enhances
accountability.

Empowerment and Accountability

Empowerment is an essential concomitant of ITC's first core principle of
governance that management must have the freedom to drive the enterprise
forward. ITC believes that empowerment is a process of actualizing the
potential of its employees. Empowerment unleashes creativity and innovation
throughout the organisation by truly vesting decision-making powers at the
most appropriate levels in the organizational hierarchy.

ITC believes that the Board of Directors are accountable to the shareholders,
and the management is accountable to the Board of Directors. We believe that
empowerment, combined with accountability, provides an impetus to
performance and improves effectiveness, thereby enhancing shareholder
value.

Control
ITC believes that control is a necessary concomitant of its second core principle
of governance that the freedom of management should be exercised within a
framework of appropriate checks and balances. Control should prevent misuse
of power, facilitate timely management response to change, and ensure that
business risks are pre-emptively and effectively managed.

ETHICAL CORPORATE CITIZENSHIP

ITC believes that corporations like itself have a responsibility to set exemplary
standards of ethical behavior, both internally within the organisation, as well as
in their external relationships. We believe that unethical behavior corrupts
organizational culture and undermines stakeholder value.

The governance structure

Flowing from the philosophy and core principles, Corporate Governance in ITC
shall take place at three interlinked levels, namely –

• Strategic supervision by the Board of Directors

• Strategic management by the Corporate Management

Committee
 ITC BUSINESS PORTFOLIO:

 Cigarettes, other FMCG

 Hotels

 Agri Business Leaf Tobacco Agri Commodities

 Paperboard, paper and packaging

 InfoTech

RURAL INITIATIVES

 ITC's Agri-Business is India's second largest exporter of agricultural

products. ITC is one of the India's biggest foreign exchange earners (US $
2 billion in the last decade). The Company's 'e-Choupal' initiative is
enabling Indian agriculture significantly enhance its competitiveness by
empowering Indian farmers through the power of the Internet. This
transformational strategy, which has already become the subject matter
of a case study at Harvard Business School, is expected to progressively
create for ITC a huge rural distribution infrastructure, significantly
enhancing the Company's marketing reach.

 The company places computers with Internet access in rural farming

villages; the e-Choupal serve as both a social gathering place for
exchange of information (Choupal means gathering place in Hindi) and
an e-commerce hub. What began as an effort to re-engineer the
procurement process for soy, tobacco, wheat, shrimp, and other cropping
systems in rural India has also created a highly profitable distribution and
 product design channel for the company—an e-commerce platform that
is also a low-cost fulfilment system focused on the needs of rural India.
The e-Choupal system has also catalyzed rural transformation that is
helping to alleviate rural isolation, create more transparency for farmers,
and improve their productivity and incomes.

CORPORATE PHILANTHROPY

 ITC E-Choupal creatively leverages information technology to set up a

meta-market in favour of India's small and poor farmers, who would
otherwise continue to operate and transact in 'un-evolved' markets.

 As of July 2007, services through 6400 e-Choupal across 8 states, reach

more than 4 million farmers in about 40,000 villages. ITC intends scaling
up the initiative with 20,000 choupals and 700 saagars to reach 10
million farmers in 100,000 villages by 2010.

 Free access to Internet is also opening windows of rural India to the world
at large. ITC E-choupal is now being regarded as a reliable delivery
mechanism for resource development initiatives. Its potential is being
tested through pilot projects in healthcare, educational services, water
management and cattle health management with the help of several
service providers including organizations. When Classmate notebooks
were launched, it came up with the initiative of contributing 1 rupee
towards the education of poor children, from every single notebook it
sold.

UNDERSTANDING THE MODEL (BCG MATRIX)

Dogs:

Low Market Share / Low Market Growth

In these areas, your market presence is weak, so it's going to take a lot of hard
work to get noticed. Also, you won't enjoy the scale economies of the larger
players, so it's going to be difficult T to make a profit.

Cash Cows:

High Market Share / Low Market Growth

Here, you're well-established, so it's easy to get attention and exploit new
opportunities. However it's only worth expending a certain amount of effort,
because the market isn't growing and your opportunities are limited.
Stars:
High Market Share / High Market Growth

Here you're well-established, and growth is exciting! These are fantastic

opportunities, and you should work hard to realize them.

Question Marks (Problem Child):

Low Market Share / High Market Growth

These are the opportunities no one knows what to do with. They aren't
generating much revenue right now because you don't have a large market
share. But, they are in high growth markets so the potential to make money is
there.

Relative Market Share

According to the proponents of the BCG It captures the relative market share of
a business unit or product. But that is not all! It allows the analyzed business
unit be pitted against its competitors. As earlier emphasized above, this is due
to the sometime correlation between relative market share and the product’s
cash generation. This phenomenon is often likened to the experience curve
paradigm that when an organisation enjoys lower costs, improved efficiency
from conducting business operations overtime. The basic tenet of this
postulation is that the more an organisation performs a task often; it tends to
develop new ways in performing those tasks better which results in lower
operating cost (Cipher 2006). What that suggests is that the experience curve
effect requires that market share is increased to be able to drive down costs in
the long run and at the same time a company with a dominant market share
will inevitably have a cost advantage over competitor companies because they
have the greater share of the market. Hence, market share is correlated with
experience.
A case in point is Apple Computer’s flagship product called the iPod, which
occupies a dominant 73% share the portable music player market (Cantrell
2006). Analysts believe it is the impetus for Apple's financial rebirth 40% of
Apple's sales is attributed to the iPod product line (Cantrell 2006). Similarly,
Dell’s PC line shares the same market dominance theory as the iPod. The PC
manufacture giant occupies a worldwide market share of 18.1%, which is
commensurate to its large market revenue above its competitors

Market Growth
Market growth axis, correlates with the product life cycle paradigm, and
predicates the cash requirement a product needs relative to the growth of that
market. A fast growing market is generally considered attractive, and pulls a lot
of organisation’s resources in an effort to increase gains. A case in point is the
technological market widely consider by experts as a fast growing market, and
tends to attract a lot of competition. Therefore, a product life cycle and its
associated market play a key role in decision-making.

Cash Cows
These products are said to have high profitability, and require low investment
for the fact that they are market leaders in a low-growth market. This viewpoint
is captured by the founders themselves thus:
The cash cows fund their own growth. They pay the corporate dividend. They
pay the corporate overhead. They pay the corporate interest charges. They
supply the funds for R&D. They supply the investment resource for other
products. They justify the debt capacity for the whole company. Protect them
according to experts surplus cash from cash cow products should be
channelled into Stars and Questions in order to create the future Cash Cows.
Stars
Stars are leaders in high growth markets. They tend to/should generate large
amounts of cash but also use a lot of cash because of growth market
conditions. For example, Apple Computer has a large share in the rapidly
growing market for portable digital music players

Question Marks
Question Marks have not achieved a dominant market position, and hence do
not generate much cash. They tend to use a lot of cash because of growth
market conditions. Consider Hewlett-Packard’s small share of the digital
camera market, behind industry leader Canon’s 21% (Canon 2006). However,
this is a rapidly growing market.

Dogs
Dogs often have little future and are big cash drainers on the company as they
generate very little cash by virtue of their low market share in a highly low
growth market.
Consider Pfizer’s Inspra (Gibson 2006): “Pfizer launched this drug in Q4 2003
and continues to pump money into this problem child, despite anaemic sales of
roughly $40 million in the $2.7 billion heart-failure market dominated by
Toprol-XL (metoprolol). It was thought to gain market share and become a star,
and eventually a cash cow when the market growth slowed. But, according to
industry’s experts, Inspra is likely to remain a dog, despite any amount of
promotion, given its perceived safety issues and a cheaper, more effective
spironolactone in the same Pfizerportfolio. Because Pfizerinvested heavily in
promotion early on with Inspra, the drug's earnings potential an positive cash
flow is elusive at best. A portfolio analysis of Pfizer's cardiovascular franchise
would suggest redeploying promotional spend on Inspra to up-and-coming
stars like Caduet (amlodipine/atorvastatin) or torcetrapib to ensure those drugs
reach their sales potential.

Compatibility
During E3 2007 Media and Business Summit, Phil Harrison, Sony CEO
showcased a Itc Limited phone using the PlayStation's XMB. A select group of
phones are also said to integrate into PlayStation Home

During the announcement of Itc Limited K850, W960 and W910 some review
sites have shown that those mentioned phones sport a new media manager to
replace the standard Itc Limited File Manager which possesses a UI that
resembles the XMB interface found on ItcPS3 and PSP products. The mobile
developer site confirmed from their spec sheets and white papers that the XMB
media manager is standard to the phones running Java Platform 8 also known
as A200 Platform.

Operations

In 2009 ITC Limited announced that it was moving its North American
headquarters from Research Triangle Park, North Carolina to Atlanta. The
headquarters move was part of a plan to reduce its workforce, then 10,000
employees, by 20%. As of that year Itc Limited had 425 employees in Research
Triangle Park; the staff had been reduced by hundreds due to layoffs. Stacy
Doster, a spokesperson of Itc Limited, said that the proximity to Hartsfield-
Jackson Atlanta International Airport's flights to Latin America and the
operations of AT&T Mobility influenced the decision to move the USA
headquarters. Itc Limited will close the Research Triangle site
COWS
• Cigarettes

DOGS
• Investment

• Golf resorts

OTHERS
 • Agarbattis
• Safety Matches

STARS
• Hotels
• Paperboards/Packaging.
• Agri business

MARKET SHARE OF ITC LTD

 Outstanding market leader

• Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports

 Gaining market share

• Nascent businesses of Packaged Foods & Confectionery, Branded Apparel
and Greeting Cards.
Segment Dominance Contribution %
Revenue
PBIT
Cigarettes 70% share 77.0% 87.7%

Paper & Packaging board –

Package. 1 in Asia 7.3% 10.7%
Agri 1of the largest
Business exporters 7.0% 3.7%
from India
Hotels ITC Group ranks No.2
4.3% 5.4%
FMCG 20% share of 4.4% -7.5%
(Others) greeting
cards market,
'Aashirvaad' atta is
No.1 in branded
Segment

ANALYSING THE BCG MATRIX OF ITC LIMITED:

Stars Question Mark ?

• Hotels • FMCG- Others

• Paperboards/
Packaging.
• Agri business.
 Cows Dogs

• FMCG-Cigarettes • ITC INFOTECH

1. COWS:

ITC`s cigarette business:

 Market leadership
 Powerful brands across segments
 Leadership in all segments - geographic & price
 Extensive FMCG distribution network
 Direct servicing of 1,00,000 markets & 2 million retail outlets
 World-class state-of-the-art technology and products
 Investment - Rs.10 billion in six years
 Exciting long term growth potential

Growth Potential:

 Cigarettes account for only 15% of tobacco consumed in India unlike

world pattern of 85% due to prolonged punitive taxation
 Cigarettes (15% of tobacco consumption) contribute nearly 85% of
Revenue to the Exchequer from tobacco sector
 Of the 58% of adult Indian males who consume tobacco, barely 15%
can afford cigarettes
 Biri : Cigarettes ratio = 10 : 1
 Annual per capita adult cigarette consumption in India is appx. one tenth
world average : 141
 Future growth depends on relative rates of growth of per capita income
and moderation in taxes
2. STARS:

ITC`s Paperboard Industries:

 Market leader in growth segment - value added coated boards

 World-class contemporary technology
• Elemental Chlorine Free (ECF) Pulp Mill fully operational – only one
of its kind in India meeting world-class environmental standards
 Internationally competitive quality and cost
 Social farm forestry in mill command area to improve access to cost
effective fibre & to attain self-sufficiency
• Biotech research based high yielding Clones – effectiveness tested
in nearly 68,000 hectares
 Fully integrated operations with in-house pulping capacity at appx. 1.10
lac MT
• Expansion programme underway; source of sustainable
competitive advantage

ITC`s Agri commodity Business:

 Farm linkages in 14 states covering Soya, Wheat, Rice, Marine products,

Coffee etc.
 Unique CRM programme in commodity exports
 Leveraging IT for the transformational ‘e-Choupal’ initiative
• Rural India’s largest Internet-based intervention
• Over 38000 villages linked through around 6400 e-Choupals
servicing over 3.5 million farmers
 Distinctive sourcing capability for ITC’s Foods business

ITC`s Hotel Business:

ITC-Welcome group: a leading hotel chain in India

  Strategy to establish presence in key business locations to complete the
chain achieved in end 2004
 Over 5200 rooms under 4 distinct brands

CATEGORY BRAND POSITIONING

Luxury ITC Hotel: Luxury “Mansions of

Collection Luxury”

Upper Scale Welcome Hotel: “Passion for

Sheraton Quality”

Upper- mid- scale Fortune Hotels “Promise of True

Value”

Heritage Welcome Heritage “Unique

Experiences”

 Capacity expansion underway at Bangalore and Chennai; plans for other

locations also being progressed
 Fastest growing hotel chain with highest operating efficiency (PBDIT/Net
Income @ 45%) amongst the 3 leading chains
 Leverages unique service proposition and international alliance with
Starwood Hotels & Resorts
• ‘Luxury Collection’ / ‘Sheraton’

3. Question Mark- ?

Wills Lifestyle
ITC's Lifestyle Retailing Business Division has established a nationwide
retailing presence through its Wills Lifestyle chain of exclusive specialty
stores, which offers:

• Wills Classic work wear

• Wills Sport relaxed wear
• Wills Club life evening wear
• Wills Signature designer wear

It believes in the philosophy of Enjoying the Change' - the change that

comes through actively exploring one's own multifacetedness and
stretching one's limits. Wills Lifestyle provides a truly 'International Shopping
Experience' through world-class ambience, customer facilitation and clearly
differentiate d product presentation. Plans to increase its footprints by doubling
the number the stores and triple the floor area and thus open larger stores.

Education and stationery

 ITC’s Greeting & Gifting products include Expressions range of greeting
cards and gifting products.
 The gifting portfolio includes autograph books, slam books, party
invitations, letter pads, gift-wraps, popup books & mini books. The
business also markets Expressions Regalia, a connoisseur's collection of
greeting cards.
 ITC has a tie-up with the NGO SOS Children's Villages of India. This
range comprises social cause cards and desk calendars.
 ITC's stationery brands Paper Kraft & Classmate are the most
widely distributed brands across India.
 ITC has invested in building a digital library of world class images
at its business headquarters at Chennai.
 The business also exports greeting cards to the U.S., Europe, UAE.
Foods
 ITC made its entry into the branded & packaged Foods business in August
2001 with the launch of the Kitchens of India brand.
 A more broad-based entry has been made since June 2002 with
brand launches in the Confectionery, Staples and Snack Foods segments.
  The packaged foods business is an ideal avenue to leverage ITC's
prove n strengths in the areas of hospitality and branded cuisine,
contemporary packaging and sourcing of agricultural commodities.
 The unwavering commitment to internationally benchmarked quality
standards enable d ITC to rapidly gain market standing in all its 6 brands:
• Kitchens of India
• Aashirvaad
• Sun feast
• mint-o
• Candyman
• Bingo!

4. DOGS
ITC InfoTech
 A service delivery footprint spanning over 140 countries
 ITC InfoTech conforms to the highest standards in international
process quality, with ISO 27001, ISO 9001, SEI CMM Level 5 and
BS 7799 accreditations. Featured amongst Top 100 Global
Outsourcing Companies in the Leaders category
 ITC InfoTech offers IT services and solutions across five key industry
verticals: Banking, Financial Services & Insurance (BFSI), Consumer
Packaged Goods (CPG) & Retail, Manufacturing & Engineering
Services,
 Travel, Hospitality & Transportation and Media & Entertainment.

PRODUCT LIFE CYCLE

We also know that a business becomes a cash cow when it is a maturity stage.
But will this strategy, shift the company’s product life cycle curve back to stars
where there is more growth possible?

RECENT DIVERSIFICATIONS:

Wills Lifestyle:

 ITC's Lifestyle Retailing Business Division has established a nationwide

retailing presence through its Wills Lifestyle chain of exclusive specialty
stores, which offers:
• Wills Classic work wear
• Wills Sport relaxed wear
• Wills Club life evening wear
• Wills Signature designer wear

 It believes in the philosophy of ‘Enjoying the Change' - the change that

comes through actively exploring one's own multifacetedness and
stretching one's limits.
 Wills Lifestyle provides a truly 'International Shopping Experience'
through world-class ambience, customer facilitation and clearly
differentiated product presentation.
  Plans to increase its footprints by doubling the number the stores and
triple the floor area and thus open larger stores.

Greeting Cards and Gift Items:

 ITC's Greeting & Gifting products include Expressions range of greeting

cards and gifting products.
 The gifting portfolio includes autograph books, slam books, party
invitations, letter pads, gift-wraps, popup books & mini books.
 The business also markets Expressions Regalia, a connoisseur's collection
of greeting cards.
 ITC has a tie-up with the NGO SOS Children's Villages of India. This range
comprises social cause cards and desk calendars.
 ITC's stationery brands Paper Kraft & Classmate are the most widely
distributed brands across India.
 ITC has invested in building a digital library of world class images at its
business headquarters at Chennai.
 The business also exports greeting cards to the U.S., Europe, UAE.

Foods:

 ITC made its entry into the branded & packaged Foods business in
August 2001 with the launch of the Kitchens of India brand.
 A more broad-based entry has been made since June 2002 with brand
launches in the Confectionery, Staples and Snack Foods segments.
 The packaged foods business is an ideal avenue to leverage ITC's proven
strengths in the areas of hospitality and branded cuisine, contemporary
packaging and sourcing of agricultural commodities.
 The unwavering commitment to internationally benchmarked quality
standards enabled ITC to rapidly gain market standing in all its 6 brands:
• Kitchens of India
• Aashirvaad
• Sun feast
 • mint-o
• Candyman
• Bingo!

LIMITATIONS

• Assumes market growth rate. A firm may grow the market.

• A “Dog” may be helping other products.

• High market share/Growth is not the only success factor.

• Linkage between market share and profitability is questionable.

SUMMARY

• Gold Flake & Red and White are two most preferred cigarette brands
among smokers. Gold Flake has proved a cash cow for ITC and smokers
prefer this premium brand because of its very good brand image and
taste. Red & White is a very popular brand especially in northern India.
Red & White’s slogan “Hum red and white peeney walon ki baat hu
kuch aur hai” denotes that smokers of this brand belong to league of
 their own. This campaign has helped in positioning this brand among the
smokers.

• Majority of smokers look for taste and smoothness while selecting a

cigarette brand. The taste/smoothness of cigarette depends upon the
quality of tobacco and its blending. So, most companies try to satisfy this
basic need of smokers. Cigarette companies have even launching
variants in its cigarettes like menthol by ITC (sold @ Rs.4.70 per
cigarette) & clove cigarette by GPI, but at premium prices. This extra
taste helps them to earn some extra income from smokers who are able
to afford these premium cigarettes.

• Smoking population would switch to a new cigarette brand only if it has

better taste same price or same quality lower price. Taste and Price are
two attributes which most of the smokers prefer in India. Some people
prefer more taste but are not willing to pay extra and some people prefer
same taste but at low prices which shows that a cigarette which will fulfill
both the needs will be most preferred by smokers. So if a Company offers
any product which fulfils both the conditions, it is likely to attract more
smoking population towards its products.

• The newly launched “Flake Excel” is available on most of the outlets of

the city. The brand equity of ITC has worked its wonders and certainly
this brand equity has helped in easy placement of the newly launched
brand at the outlets. However, the role of ITC’s marketing team i.e. its
Area executives, WD’s, supervisors and salesman in placing the product
cannot be neglected. It is through their joint efforts along with
promotional offers and techniques used by the company which has beard
the fruit and the brand is available on most outlets of the city.

• Average daily repeat of Flake excel at most of the outlets is between 0-3
packs. This is due to the fact that the new brand was launched just two
 months before and many customers are still not aware of this new launch
brand. Also, it takes some time to gain acceptability by customers for a
new launch. So, the average sales may be probably low at this point of
time but as the awareness and acceptability increases, the sales of Flake
excel would certainly rise.

• Despite the best efforts of company and use of various types of

promotional techniques, a large portion of smoking population is still
unfamiliar with Flake Excel. Company has used various techniques like
employing PSU’s at point of purchase, MR team for free sampling of
cigarettes, Postures, Full shops, Planograming etc. Many retailers did not
employ PSU’s at the outlets because of fear that the original cigarette
packets may get stolen. Also sometimes, a retailer used to remove
cigarette packets from PSU’s and even sell it. MR teams focused mainly
on creating awareness among customers of competitive brands and did
not try to aware customers who smoked ITC’s other brands. Full shops
were made using paper sheets which did not last as the rainy season
began and were washed out with one or two rains. Postures had no
chance against heavy rains and were sometimes torn by children passing
nearby. So there existed many flaws in promotional techniques which
aimed at creating awareness, which is responsible for low level of
awareness among the smokers.

• Apart from PSU displays, Retailer pushing had also played a significant
role in promoting this new brand. Company offered various types of
discounts to retailers which ensured him some extra margin by selling
Flake Excel, so most retailers focused on selling this new brand which
also resulted in increased sales of this new brand. So, now retailer
insisted his regular customers to try out this new brand which resulted in
increased sales & awareness.
 • Volume class II, III & IV outlets are major contributors to daily repeated
sales of Flake Excel. Volume class I counters mainly consisted of counters
which have more sale of premium cigarette brands like India Kings, B &
H, Classic, Marlboro etc. Their daily sale of RSFT segment is low and their
RSFT segment sale also mostly consists of premium brands like Gold
Flake. Since most of their regular customers are premium cigarette
smokers or high class customers, so their sales of other RSFT brands
including other established brands is very meagre. So these outlets
provide very low sales of new brand. Customers of Volume II, III & IV class
outlets range from premium to middle class RSFT cigarette smokers, so
these outlets provide more sales of the new brand. Volume class V & VI
counters have very low sales of cigarettes. They mostly sell grocery
goods or other form of tobacco products like bidis, guthkas etc. So, their
overall sales volume is low which results in low sales of new brand from
these outlets.

• Flake Excel launch has been successful in converting some customers

from other brands. Although there has been cannibalization to some
extent which is clearly visible as the sales of Navy Cut RSFT have
dropped in July suddenly after Flake excel was launched. The main
reasons responsible for this decline may be that the retailers are focusing
more on Flake Excel as this brand gives them more margins due to heavy
discounts offered by the company on this new brand and some
customers who earlier smoked Navy Cut RSFT may have started smoking
the new brand because it is economical as compared with Navy Cut.

CONCLUSION
Launching Flake Excel is certainly a smart move by the company to strengthen
its brand portfolio. This new brand has certainly been successful in gaining
some share of the competitors. However, despite the best efforts of the
company, a major portion of smoking population is still unaware of availability
of this new brand. This low awareness has been caused due to some flaws in
promotion techniques used by the company. So, some steps need to be taken
to further improve the brand awareness among the smokers.

Retailer to customer pushing had been result of promotional schemes and

discounts offered by the company to retailers. The moment these discounts are
discontinued, the retailer would stop focusing on Flake Excel and the sales may
decline. Similar case had been witnessed in case of Wills Navy Cut. The
company needs to find a solution to this problem.
To be handled with care.

• Strategic forays into emerging high growth markets.

• E-Choupal is a transformational strategy.

• Strong brand building capability will be tested.

• Corporate strategy of creating multiple drivers of growth anchored on its

core competencies and distribution reach.

• Embracing difficult and challenging corporate strategy. (Ex:

Paperboards).

• EHS philosophy: Contribution to the triple bottom line- Economic,

Environment and social capital.

RECOMMENDATIONS

Based on our research and customer feedback, we suggest following

recommendations to M/s ITC Limited which may help the organization to
understand customer wants better and may help ITC add some more valuable
consumers to its customer base.

• ITC may try to offer two variants in Flake Excel but having same price–
one which is light as the existing launch is and the other, whose taste
resembles to competitive brands like Red & White. This will help ITC gain
more market share of the competitive brands as many customers who
are addicted to the taste of competitive brand may switch to Flake Excel
as it would offer them same taste/smoothness at lower price. Retailers
would also feel more motivated to sell Flake Excel as it would provide
more margins to retailers as compared to competitor’s brands.

• To further improve the visibility of new brand and avoid losses from
products installed at PSU’s, becoming deteriorated and damaged (D & D)
the company should use dummy packets of cigarettes instead of
employing actual cigarette packets at PSU’s which would be more
acceptable to retailers. Many retailers are unwilling to employ PSU’s
because they fear that original packets may be stolen by some people
from stacking units causing them loss, so these retailers would also
employ PSU’s at their outlets. Also the retailers would have to keep more
stock with them because he won’t be able to use packets from PSU’s plus
it would ensure permanent visibility at all times.

• The paper backing sheets which the company has used to make full
shops is often washed away in the 1-2 rains. So the marketing team has
again to put again the entire labour in designing the shop again which
results in duplication of efforts and energy. Also it does not ensure
advertisement/visibility of brand name at all times, so if ITC uses paint in
making full shops. It can employ few professional painters for this job
which would paint the outlet according to the need and more perfection.
This would save many costs related to backing sheets, duplication of
work (salary of supervisor) etc. Also, It would ensure more durability and
 the outlet would become a source of all time advertisement/visibility of
brand name.

• Similarly, the postures used by company are made of paper which are
washed away in 1-2 rains and are often torn by children. If the company
uses a special vinyl sheet paper as used by GPI to advertise its Funda
Mint candies, the company can save many costs related to paper. This
paper is so thick and glued with such perfection that it is not easy to
remove it plus it can easily withstand any sort of season. This would be a
more durable source of point of purchase advertisement for the
company.

• The company needs to modify its discount structure allowed to the

retailers. ITC currently offers heavy price discounts to retailers for selling
Flake Excel. However, if ITC in nearby future decides to withdraw these
heavy discounts, it would directly impact the sales of Flake Excel as
mostly the retailers promote this brand because it provides them more
margin than other companies’ brands. Since these brands are very old
and mostly the smokers are aware of them, selling these brands require
less effort of retailers. When the discount would be discontinued, pushing
by retailer would cease which would be clearly visible in the form of
decline in sales. As already discussed, a similar case was been witnessed
with Navy Cut RSFT. Alternatively, the company can offer to bear some
cost of designing & making of special designed racks, display units or
counters at their outlets if the outlet sells a number of specified packets
in some fixed period. It would motivate retailer to achieve the target plus
the racks/display units/ counters would ensure future visibility and
advertisement of company’s products. Also, it would help built some
more loyalty in retailers to company.