Professional Documents
Culture Documents
Strategic Marketing
Final Report
Instructor
: Vannaseng Ounalom
Prepared by :
ID: 090328
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Executive Summary
Lao Tobacco Limited (LTL) is the joint venture of State Lao Tobacco and Imperial
Tobacco Group, the 4th largest international tobacco company, after the State Lao Tobacco
had operated under no profit for long period. Imperial Tobacco Group hold 57% share
equaled to the amount of investment of $12 million and State Lao Tobacco holds 43%
(seatca.org website). Since new reform of Lao Tobacco Limited (LTL), number of the
companys products has introduced to the markets such as A1, A2, A3, A Menthol, A
Premium, A Spearmint, A1 Menthol, Yasoub Lao Red, Yasoub Lao Menthol, and another 2
foreign licensing brands, Bastos and West (Lao Tobacco Limited).
According the National Institute of Statistics report on National Adult Tobacco survey
of Cambodia on 2011, the adult smokers are increasing every year (who.int website). Phnom
Penh is a highest population density province with population of more than 2,000,000 people.
On the next few years the number of smokers in Cambodia is expected to increase as the
current biggest group of age is between 15 to 19 years old (tourismcambodia.com website).
People are having more money as they are starting to have fewer babies. The market shares of
high price cigarettes are growing which show a high capacity of people using more luxury
products (HIL).
Cigarette market in Cambodia is currently not having any good mid-price brand to
fulfill the need of the mid-price segment (HIL). When the consumers have more money and
want to swap to a better quality brand, they go directly to the high price brand because there
are no other options for them. Therefore, bringing A3 to Cambodia market during this period
will have a high chance to be successful.
Currently there are 3 major competitors that are providing cigarette in Cambodia such
as: British American Tobacco (BAT), Japan Tobacco International, Viniton Group Co., Ltd.
with other import cigarettes. Some of their brands are very famous and well known such as:
Lucky Strike, 555, Winston, Mild Seven, Camel, and etc. Although, they are very successful
in delivering high quality product to consumers but they dont have any good product at the
mid-price.
Cambodia is focusing on encouraging foreign investor to invest in their county as
the main engine for economic growth. This policy had allowed us to have a great opportunity
to generate the production of A3 in Cambodia in the future. The free trade agreement will
allow the price of cigarette to be lower. There will be more tobacco consumption leads to an
increase in cigarette demand. The tobacco tax in Cambodia is lower if compare to the other
Southeast Asia countries. The tobacco tax of retail price in Cambodia is only 20% while
Vietnam is 36%, and Thailand is 62% (tobaccoevidence.net website).
Exporting A3 to Cambodia will have a high chance to extent the volume of A-brand
and gain market share of the mid-price brand from ITG competitors. Adult population whose
are in the working age and university student and having a middle income from 200 USD to
1,000 USD per month is the main target consumer for our product. We are expected to be a
brand leadership on the mid-price segmentation within two years. To achieve this objective,
we will focus on two main groups of people in Phnom Penh, college students and office
workers with the age of 20 to 50 years old, who have a middle income. These groups of
people are more sociable, having more responsibility and more purchasing power on luxury
product. We plan to enter our product in Cambodia market on October, 2014 since it is the
starting of the high season and it is the first quarter of the year.
3
The marketing target for the first year is to get 100% of product availability in 15
wholesalers, 80% of 1,000 semi wholesalers, and 70% of 26,000 retailers, and 5% of market
share. The sales volume of A3 for the first year is targeted at 5,040 master cases, with the
revenue of 1,612,800 USD; the net profit will be 60% of the total revenue. To achieve this
objective we will provide approximately 363,530 USD for the first year marketing plan.
On the production the new packaging design will be developed to make it more
unique and for value adding to consumer and enhancing the brand perceptions. The test of A3
is already unique as we are using a high technology machine into our production process and
produce from a high quality Virginia tobacco.
For measuring and monitoring the Marketing planning process, the marketing control
will be a process of monitoring the proposed plans and adjusting the necessary things. We
will have our own objective in controlling target.
Contents
1. Introduction.................................................................................................. 4
Current Market Assessment.................................................................................. 4
2.
2.1.
Market Definition......................................................................................... 4
2.2.
Market Forecast........................................................................................... 4
2.3.
Consumer Analysis........................................................................................ 5
2.4.
Competitor Analysis...................................................................................... 6
2.5.
2.6.
3.
Market Vision............................................................................................ 11
3.2.
Market Mission.......................................................................................... 12
3.3.
Financial Objective..................................................................................... 12
4.
Market Segment......................................................................................... 12
4.2.
Target Market............................................................................................ 13
4.3.
Market Positioning...................................................................................... 14
4.4.
Product Strategy......................................................................................... 15
4.5.
Pricing Strategy.......................................................................................... 15
4.6.
Distribution Strategy................................................................................... 16
4.7.
Budget Requirement.......................................................................................... 19
6.
Key Success............................................................................................... 20
Control............................................................................................................ 21
References.............................................................................................................. 23
Appendix............................................................................................................ 25
1.
Introduction
5
Lao Tobacco Limited (LTL) is the joint venture of State Lao Tobacco and Imperial
Tobacco Group (ITG), the 4th largest international tobacco company, after the State Lao
Tobacco had operated under no profit for long period. Imperial Tobacco Group hold 57%
share and State Lao Tobacco holds 43%. Since new reform of Lao Tobacco Limited, number
of the companys products has introduced to the markets such as A1, A2, A3, A Menthol, A
Premium, A Spearmint, A1 Menthol, Yasoub Lao, and another one foreign licensing brand,
Bastos. A-brands are the mid-price and the value brands of the Lao Tobacco Limited; after
the joint venture of the Lao Tobacco Company and the Imperial Tobacco on December 2001,
the sales volume of A-brands are constantly grow and become the value brand for LTL. Abrands are best-selling in the Laos market in nationwide. The main consumers of A-brands
are the middle income people who earn between 1,500,000 to 5,000,000 kip per month with
the age of 18 to 50 years old (LTL).
this group of people because they will become our main customers in the next few years. If
we are success it will lead to the great sales volume and market share future.
When we compare to China, Vietnam, and Thailand, the inflation rate of Cambodia is
lower and the tobacco tax also lower. Also the trend of cigarette market in Cambodia is
projected to keep growing, people started to smoke a high price brand which means people
have more money to spend on luxury items. Therefore, Cambodia is the best place for us to
bring our product in (HIL).
If we decide to launch A3 in this city there will be a high change to increase the sales
volume. In addition, Huotraco International Limited is also a subsidiary company of Imperial
Tobacco Group (ITG). They are operating business by producing and selling cigarette in
nationwide in Cambodia. They are currently had only high price and low price brands and
doesnt have any mid-price brand available in the market to fulfill the need of this market
segment (HIL). As we have a business partner in the area, we might design to produce A3 in
local and not need to pay for any import fee.
old. And the average cigarette smoking per day is 20 sticks and usually by the daily purchase
(Who.int website)
In addition to the above analysis, a brand research and the consumer research are highly
required in order to have more understanding about the consumers behavior and have ideas
for the brand innovation in the future. Dealing with the marketing team of Huotraco
International Limited is another choice for gathering information about the distribution
channel in Cambodia market and to export the product to their countries. Also we have to
deal with the logistic company and the taxation department in Cambodia to gain information
about their import tax and other necessary information.
Description
Investment policy: Foreign investment or private sector
investment is becoming increasingly important for Cambodia
as the private sector assumes its position as the main engine
for economic growth. This policy had allowed us to have a
great opportunity to generate the production of A3 in
Economical
products.
Constantly growth of GDP: GDP amount has been steadily
grown and per capita GDP has also steadily increased means
Legal
more profit.
Raising tax on tobacco: WHO has called on countries to raise
taxes on tobacco. If Cambodia implements the tax policy as
the WHO advising the number of tobacco consumption will
reduce as an increasing of the tax will directly force the
Technological
Sociological
awareness to consumers.
Family member is one factor that causes effect to the
cigarette smoker to quit smoking: as many people are aware
of the danger of using cigarette. Tobacco use leads most
commonly to diseases affecting the heart, liver and lungs, with
smoking being a major risk factor for heart attacks, strokes,
chronic obstructive pulmonary disease (COPD) (including
emphysema and chronic bronchitis), and cancer (particularly
lung cancer, cancers of the larynx and mouth, and pancreatic
cancer). It also causes peripheral vascular disease and
10
hypertension.
Friends are the reason for people to start smoking: if one
of the groups most likely to begin smoking, young teenager is
also one of the most susceptible to peer pressure. Quite often,
this is the time of life when young people rely most heavily on
friends of the same age for social support and affirmation. If a
child in a social circle starts experimenting with tobacco, it's
all too easy for him or her to lead peers into smoking as well
Family issue: is another factor that causes people to smoke.
The awkward years between pure, dependent-on-parents
childhood and independent young adulthood. If they see the
Environmental
Description
Strong and outstanding brand image: A3 is created great
perception to Lao people, because of its high quality tobacco
and beautiful packaging that could easily catch people eyes.
11
Weaknesses
more tobacco inside the stick and can smoke longer (LTL).
High cost: cost structure of A3 will be a bit higher than the
cost of any other mid-price brands of another tobacco
manufactures in Cambodia. Because the import tax will be add
Opportunities
12
Threats
children.
Economic recession: it could be a great factor to the business
We will provide our product to 15 wholesalers, 1,000 semi wholesalers, and 26,000
retailers throughout the 12 district in Phnom Penh city (HIL). Our target for the first year is to
get 100% of product availability in wholesaler outlet, 80% for semi wholesalers, and 70% for
retail outlet. We are expecting for the market share of A3 for the first year is 5% and 10% for
the following year. The volume of A3 for the first year target is 5,040 master cases. Target for
the first quarter is 1,008 master cases, second quarter 1,512 master cases, thirst quarter 1,512,
and the fourth quarter 1,008 master cases.
To have high brand image of A3 after the grand opening within 3 months.
To gain 100% of distribution in wholesales outlet, 80% in semi wholesales outlet, and
following quarters.
To achieve the sales volume of 178,856 master cases on the first year.
We will focus on group of people who are smoking and prefer a high quality midprice brand. We identify on three group of market segment demographic, geographic, and
psychographic behavioral.
We are targeting on male college students and office workers with the age of 20 to 50 years
old, who are on the average of middle income from 200 USD to 1,000 USD. We will also
target on the people who live in Phnom Penh city and a sociable people who are looking for a
high quality brand for creating their image in the society. These groups of people are more
sociable and have capability to by our product. They also have a high responsible for the
society and having capability on making decision on their own. We will satisfy these groups
of people by offering a high quality of product with the reasonable price.
15
poster, sticker, and leaflet will pay an important part of our communication. A product
website will be created for group of people who are always rely on the digital technology.
A3 (LTL) $0.75
According to the graph above, A3 has three main competitive brands from three
different companies. Lao Tobacco Limited is providing a highest quality cigarette in the
market, although the price is higher than the other companies brand but it is not a big
different. Another three main competitor set themselves as a good price but the qualities of
their products are a lot lower than A3 and the lowest price is Winston from BAT.
Base on the brands positioning showing in the graph, LTL trend to serve a high
quality mid-price product to the customer with a reasonable price.
Value Proposition to Customer
Both perceptual value and physical value are providing to A3 consumers:
-
Perceptual Value: A3 giving a high quality tobacco on the reasonable price with a
modern and well-known brand name cigarette to consumers.
16
Physical Value: a beautiful and modern packaging is added to the physical value
of the A3. The filter is shorter than the competitive cigarette which means more
tobacco on a cigarette stick.
The factory price is the price that the company sells to our
17
The retail price is the price for consumers; the price is in pack at
0.75 USD per pack.
Product
Wholesaler
Retailer
Consumer
As we mention at the beginning that both Lao Tobacco Limited and Huotraco
International is a joint venture company of Imperial Tobacco Group (ITG). Therefore we will
export our A3 to Huotraco International. A3 will be delivered to wholesalers by their sales
team, retailers could either buy form the sales team or wholesalers on their area.
4.8. Promotional
and
Communication Activities
18
Marketing
To achieve the above distribution target promotional and marketing activities should
be implemented for supporting the sales volume on every quarter.
Events:
etc.
Event at night club (24,000 USD)
- The event will be organize on twice a month
- Invite celebrities, famous singer, and DJ
- Hiring promotion girls to invite for offering sampling cigarette to smokers.
- Having interesting games for getting people attention and having the customers to
get involve to get free gift such as: T-Shirt, keychain, coupon for free dinner, and
etc.
USD)
Quarter 2: Retailer Incentive Program (18,400 USD)
Providing incentive to the retailers who sell A3 most and giving those A-brand
lighters, T-Shirt, and polo shirt.
o Lighter 28,000 pcs (7,000 USD)
o T-shirt 2,700 pcs (6,000 USD)
19
= 32,000 USD
Quarter 4: Exclusive Retailer Program (12,000 USD)
For the exclusive retail outlet who sales only A3 and Huotraco International
brands will get a coupon to win the lucky draw price such as: refrigerator,
television, rice cooker, and etc.
5. Budget Requirement
CATALOG
Grand opening
of A3 at
Raffles Hotels
Le Loyal
Event at Night
DETAILS
Invite celebrities
Invite wholesalers and retailers
Invite business people
Invite dealers
Invite celebrities
Invite famous DJ
Having PGs for A3 sampling
Having game for getting
customers attention and
Club
TIMES
PRICE
USD
ESTIMATED
BUDGET
ANNUALLY
USD
1 day event
50, 000
50,000
24 events
1,000
24,000
192 days
200
38,400
Only for
320
4,480
involving
Giving A&P Material for the
game winners
HORECA
activities at
restaurants,
beer gardens
involving
Giving A&P Material for the
and coffee
shops
Wholesaler
game winners
Incentive
first month
Program
of the
20
Retailer
Incentive
Program
USD)
Brand awareness and brand
education program
Retailer Incentive Program
Buy 10 get 1 free
Exclusive Retailer Program
launching
4Program
246,650
363,530 USD
Competitors
As others competitors are not providing as high quality product as A3 in a mid-price segment.
A3 will have a high completive for other brands with a high chance of being successful.
Number of consumers
In the next few years the number of cigarette consumer will be increasing as the great number
of the population on 2010 is between the ages of 15 to 19 years old, this group of people will
start smoking in next few years (populationpyramid.net)
Running business in Cambodia it is good way because it has more the demand of
purchasing of the consumers.
The sales volumes of high price cigarettes are increasing which mean people are having more
money and more demand of cigarette product.
Royalty of customer
Having numbers of A3 royalty consumers will be a great successful of the business. Since A3
is providing a high quality cigarette for the consumers, it will be able to create great royalty
consumers.
6.2.
Factor of Business
22
7. Control
For measuring and monitoring the Marketing planning process, the marketing control will be
a process of monitoring the proposed plans and adjusting the necessary things. We will have
our own objective in controlling target; the right controlling will be resulted in project
successful.
The controlling process is involved estimation, evaluation, and monitoring. To make
sure that all marketing processes are implemented in the right direction, the A Brand Manager
has to check and compare every process and the result with the marketing plan and objective
setting.
We will have many approach of controlling such as: sales analysis, quality controls,
budgets control, customer relationship management (CRM) systems, activities of competitor
to aspects of our plan, performance of any promotional activities, market response or
acceptance to the pricing policies and service levels. In addition, the controlling of sales
performance of A3 is also need to be taken for example: sales performance by segment,
location, by consumers. Those key factors will improve selling of A3. If our plan doesnt
work, another plan needs to be done according to the evaluation of the first plan.
23
References
http://www.who.int/fctc/reporting/Cambodia_annex1_National_Adult_Tobacco_Survey_
2011_final_report.pdf
http://www.seatca.org/dmdocuments/13_tax_policies_for_tobacco_industry_in_lao_pdr
Lao Tobacco Limited
http://www.tourismcambodia.com/travelguides/provinces/phnom-penh/population .htm
http://www.workinasia.net/recruiters/lao-tobacco-limited-14587.html
Huotraco International Limited
http://populationpyramid.net/cambodia/
http://www.bles.dole.gov.ph/PUBLICATIONS/Current%20Labor
%20Statistics/STATISTICAL%20TABLES/PDF/Tab75.pdf
http://cambodiacalling.blogspot.com/2009/06/cigarettes-in-cambodia.html
http://www.cambodiainvestment.gov.kh/investment-enviroment/economic-trend.html
http://www.bat.com/group/sites/UK__9D9KCY.nsf/vwPagesWebLive/DO52AD6X?
opendocument&SKN=1
http://www.jti.com/
http://www.viniton.com/plus/list.php?tid=8
http://www.tobaccoevidence.net/pdf/sea_activities/Hanoi_Ross.pdf
https://www.google.la/search?q=Lao+Tobacco+limited+brands&hl=th-LA&gbv=2&
prmd=ivns&source=lnms&tbm=isch&sa=X&ei=DytnU-qSK4iPkwWaiIHQCg&ved=0
CAUQ_AU
http://www.who.int/campaigns/no-tobacco-day/2014/event/en/
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Appendix
25