Marketing System in the Tobacco Industry - Term Paper Example

? Marketing in the Tobacco Industry Task: Marketing in the Tobacco Industry Santa Fe Natural Tobacco Company (SFNTC) is located in the U.S. and has its headquarters in Mexico. The company manufactures and market tobacco cigarettes and other natural tobacco products that are free from additives (Hall, 2004, pp. 1291). It markets processed products through retailers and licensed tobacco distributors. American Spirits is the brand name under which SFNTC. The name appeals to the customer’s growing interest in green things. The natural, additive free cigarettes produced by the company came out about the same time when the green movement began attaining some momentum. The American cigarettes are natural and do not contain chemical additives such as Camel, Kool and Marlboro which are contained in other popular cigarette brands. Philip Morris International is a company engaged in manufacturing and selling of cigarettes and a variety of tobacco products in the outside markets of the United States of America (Wallace, 2004, pp. 440). Tobacco products sold by the company include hand rolling tobacco, pipe tobacco and cigars. It is the leading international tobacco producing company in the number of cigarette brands. The company sells its products in approximately 180 countries. The company’s markets are divided into four geographical segments: Eastern Europe, the European Union Region, Africa and Middle East and Canada and Latin America Region. Philip Morris International employs approximately 12,500 workers in the 9 factories owned by the company in 8 member states. The company sells both international and local brands which range from premium, mid-price and low price. Premium priced brands include Merit, Marlboro, Virginia Slims and Parliament. Mid-price brands are Chesterfield and L&M. international brands include Muratti, Lark, Next, Red & White, Philip Morris and Bond Street. Local cigarette brands of cigarettes owned by the company include Fortune, Champion and Hope in Philippines and Morven Gold in Pakistan. Liggett Vector Brands is a tobacco company in the United States with its headquarters located in North Carolina (Pampel, 2009, pp. 307). The company is marketing, sales and distribution agent for tobacco products manufactured by Vector tobacco and Liggett group. Vector tobacco is a cigarette manufacturing and a research company with qualified and experienced research and development specialists and a top tobacco management team who aim at developing and marketing innovative tobacco products. The company offers products under the trade names of Eve, Liggett Select, Grand Prix, Pyramid and Quest. Liggett Vector Brands also offers assistance with engineering, purchasing and maintenance processes. The company manufactures a variety of cigarette brands and is compliant to the Settlement Agreement between the 46 states and tobacco industries. Liggett Vector Brands complies with the marketing and advertising restrictions contained in the agreement on prohibition of tobacco products marketing to the youth. In the mid 1990s, laws were set against big tobacco companies. This was the time when SFNTC had started expanding its operations. In 1996, the company moved to North Carolina where developed tobacco companies had started scaling back to tobacco growing operations. SFNTC started producing its organic tobacco when the organic food productions act of 1990, which required the U.S. Department of Agriculture (USDA) to set standards- accepted nationally-for organic products, had been passed. Since 2002, the company has been operating as an independent unit of Reynolds America Inc. SFNTC’s fields can be divided into two basing on how the company labels and markets manufactured cigarettes: tobacco grown under requirements of organic ideal and tobacco not grown under requirements to gain organic designation. SFNTC operates in an environmentally sustainable manner. All facilities in the company are wind powered. It is the only tobacco producing company that has earned the Green Power Leadership award, awarded by the U.S. Environmental Protection Agency. SFNTC uses psychographic segmentation as a strategy of targeting cigarette consumers (Beamish, 2012, pp.313). The aim of using psychographic segmentation is to help the company maximize current brand positioning and define new areas of opportunity. In coming up with the psychographic segmentation, SFNTC targeted on understanding the targeted market group in a detailed way. Focus was directed on knowing the personalities of the young adults, the degree to which the current brands fitted their needs, their social behavior, concern and interests. The company, then, took a psychographic study of the young adults and classified them as conservatives, progressives and spoilt brats. In an advertising campaign, the company linked its national brands with national values in target of the conservatives. To target progressives, the tobacco company marketed Lucky Strike brand using Hollywood movies as a vessel. Thus, the industry uses psychographic segmentation of the population and advanced strategies in their advertisements focused on attracting youth consumers. SFNTC invests lots of money in cigarette marketing to attract and maintain current adult smokers to their cigarette brands. Since most brands belong to a few tobacco producing companies, brand switching results to unrecognized impact on SFNTC’s profits. Product advertising is done by the company in accordance to psychographic segmentation to attract new customers, hence, ensuring a continuous cash flow. The nature of imagery employed in the advertisements focuses on the results of the psychographic study. It appeals to the adolescents’ aspirations, who are the targeted group. By marketing basing on psychographic segmentation, SFNTC aims at selling existing products to pave way for introduction of new ones in the marketplace. The company pursues psychographic segmentation to ensure that both national and global brands are geared towards young adults since they are the source of replacement smokers. Philip Morris and Leggett Vector Brand also make use of psychographic segmentations that are similar to those employed by SFNTC. Unlike SFNTC, whose tobacco products are mainly organic, Philip Morris and Leggett Vector companies do not major in manufacturing organic tobacco products. Cigarette consumers prefer organic tobacco cigarettes, which are free from additives, over non-organic tobacco cigarettes. Consequently, SFNTC gains high profits due to massive sales compared to Philip Morris and Leggett Vector Brand. As a result of the high profits attained from SFNTC’s sales, the company undergoes faster developments and project achievements compared to the two companies. The company also receives many customers compared to Philip Morris and Leggett Vector Brand. I would purchase products from SFNTC because they manufacture natural cigarettes which are free from chemical additives that other popular cigarette brands contain. This implies that their tobacco products are safer compared to non-organic ones produced by other companies. SFNTC’s future outlook is to ensure that each office and department of the company identifies any operational difficulties and explores ways to undertake more effective steps to meet future challenges by improving their performance. The future outlook has provided a chance for the middle level managers to improve the quality of their services which will contribute to the raising of the company’s overall performance. The company plans to undertake projects which will not only improve its working, but also the capacity to meet future challenges. The company has plans of upgrading their office technology by replacing their old machines by new and more developed ones to ensure production of high quality organic coffee products. Under technology improvement, SFNTC also has plans of upgrading existing telephone exchange between main buildings of the company to strengthen their communication system. In their future outlook, SFNTC plans to initiate training programs on organic tobacco production and manufacture of additive-free tobacco products. The company also aims at improving the quality of their products in order to attract more customers. In their outlook, there are plans of making SFNTC the company that offers the best compensation benefit package for the welfare of the workers. The company aims at providing a superior value to adult smokers by offering the best combination of product, price and product delivery. Strategy suggestions that SFNTC should consider in their future outlook include making more advertisements for their products to attract more customers. This will in turn increase their profits. The company should also consider coming up with affiliates of their company worldwide to increase their sales. The company should focus on tackling weaknesses in their services and products in preparation to compete adequately on the production of coffee products. SFNTC should consider developing a complaint handling system at the Engineering Department that will enable improvement in the service delivery system and enhance efficiency in complaint management. The future outlook of SFNTC relates to the future of their industry by putting the company in a position to face the growing competition with other tobacco products producing companies. References Hall, L. D. (2006). Brands and their companies: Consumer products and their manufacturers with addresses and phone numbers. Farmington Hills, MI: Thomson Gale. Wallace, R. (2004). The National jobBank 2005. Avon, CON: Adams Media Corp. Pampel, F. C. (2004). Tobacco industry and smoking. New York, NY: Facts On File. Beamish, K. (2012). CIM Coursebook 03/04 Marketing Planning. Hoboken, US: Taylor and Read More