Marketing Plan for British American Tobacco Company (BAT) - Essay Example

 Executive summary The report provides a detailed analysis of the BAT current situational environment and marketing objectives that should be implemented during the change process. The report will discuss BAT marketing environment, the situational analysis and BAT marketing objectives. BAT is experiencing harsh marketing environment due to various regulatory issues and negative criticism of traditional brands. BAT target market includes individuals aged 18-24 years who prefer their personal individuality and refreshing lifestyles of smoking. BAT is a British multinational company that deals with the manufacture and sell of tobacco-related products, but the increased consumer awareness of the health hazards of its products has forced the company to focus efforts towards the development of e-cigarettes that have minimal nicotine. Table of contents page number 1.0 Introduction…………………………………………………………………………..4 2.0 Company overview……………………………………………………………………4 3.0 BAT marketing objectives……………………………………………………………4 4.0 Marketing environment analysis……………………………………………………..5 5.0 Situation analysis (SWOT analysis)………………………………………………….7 6.0 Target market…………………………………………………………………………9 7.0 Marketing mix strategy………………………………………………………………9 8.0 Bibliography………………………………………………………………………….11 1.0 Introduction The report entails the marketing plan of BAT and considers the current marketing environment, situational analysis and marketing objectives that should be implemented in order the changes in consumer attitudes towards consumption of the traditional tobacco products such as cigarettes and cigars. The report will also outline the marketing mix strategy that BAT should implement in order to attain the marketing objectives. 2.0 Company overview British American Tobacco (BAT) has market presence in more than 200 countries across the world, but has received criticism due to its controversial products that have adverse health effects to the consumers (Richter and Palazzo 2005, p 396). Some of the leading global brands include Lucky Strike, Benson & Hedges, Pall Mall, Dunhill and Rothmans. BAT has strong market presence in Britain and entire European market and its traditional products such as cigars, pipe tobacco and cigarettes are experiencing decline in demand due to high consumer awareness of the adverse impacts of nicotine on their health (Lee, Gilmore and Collin 2004, 91). In response, BAT has started developing next-generation products that include the heat-not-burn devices and electronic cigarettes. BAT has implemented a new vision strategy that will enable the company attain leadership of the global tobacco industry and enhance the shareholder value. 3.0 BAT marketing objectives Marketing is concerned with anticipating and meeting the changing consumer needs and preferences through offering new products, new uses of the product and added benefits to the products (Saxena 2005). The success of marketing requires identification of clear, specific and measurable marketing objectives that will guide the company in attainment of the overall organisational strategic vision. The following are the marketing objectives of BAT I. Increase the manufacturing of next-generation products like tobacco inhalation devices and e-cigarettes by at least 30 percent in order to counter the growing consumer dissatisfaction with the traditional products. The next-generation products have low nicotine levels and reflect the changing social attitudes of consumers towards tobacco-related products. II. The second marketing objective for BAT is to increase BAT market share in emerging markets such as Brazil, Argentina and China by 25 percent in order to counter competition from other established players in those markets. BAT should implemented integrated marketing communications mix that aims at building and sustaining relationships with customers and ensuring brand loyalty (Dahlen, Lange and Smith 2010). III. The third marketing objective of BAT is to rebrand and differentiate the company through positioning BAT as a tobacco company that cares for the health of consumers. BAT should build a new brand identity that focuses on the differentiated benefits of next-generation products and efforts undertaken in ensuring environmental stewardship (Ferrell and Hartline 2012). 4.0 Marketing environment analysis The external environmental variables such as the prevailing regulatory environment, the economic environment and social cultural environment will influence the success of BAT marketing plan (Palmer 2012). PESTLE (political, economic, social-cultural, technological, legal and ecological) environment analysis model is useful in understanding the impact of the external environment on BAT marketing activities (Orcullo 2008). The political environment in UK is not ideal for BAT marketing activities since legislators have raised concerns on BAT advertisements that are targeted to the youth. The government has hinted at increasing excise taxes and strict packaging regulations in order to control the high rate of tobacco usage in the country (Freeman and Chapman 2008, p 583). The current geopolitical tensions between the Western powers and growing terrorism threats may disrupt the operations of BAT in Asian markets. The economic environment is ideal for BAT marketing since the UK economy is experiencing sustained economic growth and increase in disposable incomes of consumers. UK is experiencing a decline in unemployment and stable interest rates (Palmer 2012). The current social-cultural environment is characterised by high consumer awareness due to high educational levels, shifts in consumer attitudes to low nicotine products and urban lifestyles. BAT’s new marketing strategy of increasing penetration of next-generation products is aligned with the current social cultural attitudes and preferences of the target market thus the marketing plan will attain high success (Gill 2010). The technological environment supports BAT marketing plan since the high internet penetration and advanced communication technologies will enable BAT promotions reach a wider audience at minimal costs. BAT will take advantage of digital advertisements to enhance brand awareness and create more loyal customers. The legal environment is challenging since available laws have not stemmed the problem of counterfeits and illicit trade across the borders. BAT faces threat of more regulation due to increase in tobacco related deaths in UK and this may hinder BAT distribution strategy in the market (Neuman, Bitton and Glantz 2002, p 1325). BAT must deal with the current ecological environment changes that have led to high environmental interest groups that accuse BAT manufacturing operations of polluting the environment through high emissions and toxic waste. BAT will have to invest in conserving the environment through using cleaner energy sources, reducing the emissions of toxic waste in the environment, and using renewable packaging (Russell and Cohn 2012). BAT is facing growing competition from foreign brands such as Imperial tobacco, Philip Morris and Japan Tobacco International and thus it should consider expanding in to emerging markets in order to sustain its revenues and attain global brand identity (Russell and Cohn 2012). 5.0 Situation analysis (SWOT analysis) The SWOT analysis identifies BAT’s position in the tobacco industry and strengths that will enable the company attain its marketing objectives. The SWOT analysis will identify the strengths, weaknesses, opportunities and threats of BAT (Bohm 2009). Strengths BAT has certain strengths that have enabled the company to attain competitive edge in the market. BAT has international market presence and global brands thus it is capable of attaining higher market penetration for the next-generation products (Daft 2010). BAT has adequate technology, equipments and manufacturing facilities that can cater for the increase in demand for low nicotine products. BAT has invested in best tobacco leaf farming practices and supports more than 100,000 farmers in leaf farming. BAT has adequate research and development capabilities that are critical in designing new products that meet the expectations of consumers. For instance, BAT pioneered research in flavoured cigarettes in order to cater for different individual consumer preferences and differentiate the cigarette products (DuBrin 2012). BAT scientists are highly qualified in designing products that reduce nicotine harm in line with the company marketing objectives. Strength of the company is the high liquidity and financial resources that can enable the company implement an aggressive marketing campaign across the world. The financial resources are critical for next-generation product development and research activities that have resulted to reduced-harm products like the electronic cigarettes (Koontz and Weihrich 2010). Weaknesses However, BAT suffers various weaknesses that may hinder the attainment of the marketing objectives such as the high criticism and negative reputation associated with the traditional tobacco products. Various health agencies such as World Health Organisation (WHO) have warned that tobacco is the leading cause of cancer related deaths across the world. BAT has a limited promotional activity across various markets due to legal hurdles on tobacco advertisements and packaging. BAT has not implemented an effective marketing campaign that will create awareness of the new products and has relied on the wholesalers to pass the message to the target consumers. BAT has experienced a dip in the sales of cigarette brands due to high excise taxes and high fixed costs occasioned by the recent investments in modern manufacturing facilities (Harrison 2013). Opportunities There is a high growth of business opportunities offered by the emerging economies that have adopted Western cultural values such as Brazil and Argentina. China offers an ideal market for BAT expansion and BAT should enhance the penetration of the new products in China. Another opportunity for BAT is strategic partnerships and acquisitions that will enable the company extend the brand portfolio and reduce hurdles of entering emerging markets. The company should acquire competitors in Asian countries such as Indonesia, Taiwan and Thailand in order to increase the market presence in Asia (Yach & Bettcher, 2000, p 211). Threats BAT faces the threat of illicit tobacco trade and counterfeits that are disguised as genuine BAT brands. Another threat is the possibility of excise tax increases and tightening of advertisement and packaging regulations that will increase the compliance costs (Ferrell & Hartline 2012). BAT is experiencing stiff competition from other market players such as Philip Morris and China National Tobacco Company. Accordingly, the changes in regulatory measures by government such as measures aimed at curbing tobacco smoking are a real threat for BAT. 6.0 Target Market BAT has segmented its market according to geographical location, demographics of the consumers and lifestyles of the consumers (Ferrell & Hartline 2012). BAT targets individuals aged 18-24 years who consider smoking a cool lifestyle. The company consumers are mainly located in urban cities that have and consider low-nicotine smoking as a refreshing lifestyle. 7.0 Marketing Mix Product strategy BAT product strategy should offer differentiated products that have minimal health effects to the consumers (Smith and Taylor 2004). The next-generation products will have differentiated benefits and the packaging should exemplify the quality of the products. Price strategy The next-generation products such as heating devices and electronic cigarettes are high-quality products and premium pricing is essential for high acceptance by the target market. At the introduction stage, BAT should provide discounts, coupons and occasional price reductions in order to encourage usage and grow the market share (Palmer 2012). Distribution strategy Most of the BAT products are light-weight and thus various channels of distribution such as use of partners, wholesalers and retailers will be critical in delivering the products to the target consumers (Partridge 1999). BAT must implement a mass distribution strategy to Chinese and emerging markets in order to ensure constant availability of the new products at the shelves and increase the products recognition. Promotion strategy BAT must implement an integrated marketing communication mix strategy that includes various channels of communicating to the target consumers. The company should combine advertisement, direct marketing, public relations, sales promotions, and digital marketing (Smith and Taylor 2004). The promotional messages must outline BAT brand ideals of minimising health effects of nicotine and the differentiated product offerings. The sales promotion team, public relations and advertisement teams must ensure that the promotional messages are consistent and aligned with the new strategic vision and marketing objectives (Tuckwell 2013). 9.0 Bibliography Bohm, A. 2009. The SWOT analysis. Muchen: GRIN Verlag. Daft, R. L. 2010. Management. Mason, Ohio: South-Western cengage Learning. Dahlen, M., Lange, F and Smith, T. 2010. Marketing communications: a brand narrative approach. New York: Cengage Learning. DuBrin, A.J. 2012. Essentials of management. Mason, Ohio: Thomson Learning. Ferrell, O.C & Hartline, M. 2012. Marketing strategy. New Jersey: Cengage Learning. Ferrell, O.C and Hartline, M. 2012. Marketing strategy. New York: Cengage Learning.. Freeman, B & Chapman, S. 2008. ‘The case for the plain packaging of tobacco products’, Journal of addiction, Vol 103, Issue 4, pp 580-590. Gill, R. 2010. Theory and practice of leadership. London: Sage Publications Ltd. Harrison, A.L. 2013. Business environment in a global context. Oxford: Oxford University Press. Koontz, H & Weihrich, H. 2010. Essentials of management: an international perspective. New Delhi: Tata McGraw-Hill. Lee, K., Gilmore, A.B & Collin, J. 2004. ‘Breaking and re-entering: British American Tobacco in China 1979-2000’, An International Peer-reviewed journal for health professionals and others in tobacco control, Vol 13, Issue supplement 2, pp 88-95, doi:10.1136/tc.2004.009258. Neuman, M., Bitton, A & Glantz, S. 2002. ‘Tobacco industry strategies for influencing European Community tobacco advertising legislation’, The Lancet, Vol 359, Issue 9314, pp 1323- 1330. Orcullo, N. 2008. Fundamentals of strategic management. Manila: Rex Book Store. Palmer, A. 2012. Introduction to marketing: theory and practice. Oxford: Oxford University Press. Partridge, L. 1999. Strategic management. London: Financial Times Management. Richter, U & Palazzo, G. (2005). ‘CSR business as usual? The case of the tobacco industry’, Journal of Business Ethics, Vol 61: pp 387-401. Russell, J & Cohn, R. 2012. SWOT analysis. Oxford: Oxford University Press. Saxena, R. 2005. Marketing management. New Delhi: Tata McGraw-Hill Education. Smith, P.R and Taylor, J. 2004. Marketing communications: an integrated approach. New York: Kogan Page Publishers. Tuckwell, K.J. 2013. Integrated marketing communications. Toronto: Pearson Education Canada. Yach, D & Bettcher, D. 2000. ‘Globalisation of tobacco industry influence and new global responses’, Vol 9, Issue 2, pp 206-216. Read More