A Brief History of Tobacco - DOC - DOC by Levone

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									                   Table of contents


Topic name                             Page#


Dedication ------------------------------------------03
Acknowledgment --------------------------------------04
Executive summary -----------------------------------05
Mission Statement------------------------------------08
Introduction ----------------------------------------09
History----------------------------------------------09
Overview of industry---------------------------------13
British American Tobacco-----------------------------18
PTC background and achievement ----------------------23
Introduction of products-----------------------------25
Marketing Analysis ----------------------------------30
Competitive Analysis---------------------------------35
Consumer Analysis------------------------------------39
Segmentation-----------------------------------------43
Sales Analysis---------------------------------------50
Distribution Strategy--- ----------------------------61
PTC promotion Strategy------ ------------------------69
SWOT Analysis of PTC------------------- -------------79
SWOT Analysis of Competitors ------------------------82
Recommendations-------- -----------------------------84
References-------------------------------------------90
Survey questioner -----------------------------------91




                                                      1
                      Dedication


We dedicate this project to our teacher, Mr. SAFDAR
NAZEER and our parents who is the source of motivation
and inspiration through out our studies.




                                                         2
                     Acknowledgment


First of all thanks to Almighty Allah, who have given
us the strength and knowledge to complete this
project. We would like to specially thank for the help
of our marketing teacher sir Safdar Nazir who helped
us a lot regarding this project. Then we would like to
thanks for the cooperation of Mr. Najeeb, the Quality
manger of PTC, he give us a lot of information and
guided us.   We have learned a lot with the kind
guidance of sir.Safdar Nazir and we think we have
achieved our goal of learning practical things.




                                                         3
                         Executive Summary


PTC is a multinational organization having its parent
company, the British American Tobacco, located in
England.   PTC is a cigarette manufacturer and is one
of the highly respected multinationals in Pakistan.
The tobacco industry is one of the most important
sectors of the economy and PTC has become a major
player in this industry by keeping thousands of people
employed; and by contributing to the annual GDP of
Pakistan through the large amount of taxes paid on
cigarette manufacturing and sales.                 By having the
mission of being the “first choice for everyone,” PTC
is obviously portraying itself as a very focused,
determined and goal-oriented company.                 Its objectives
are not only related to sales and profits, but are
also reflective of the excellent corporate culture and
the high level of ethical responsibility that the
company takes on.
     PTC   is    an     organization        well    suited     from   all
facets     –     that        is   -      operations,         marketing,
organizational structure, leadership, and motivational
aspects    –    every    element       perfectly      blends    in    its
success story.        On one hand, PTC has firm values and
believes   that       have    played    a    significant       part    in
building and maintaining its corporate culture, while
on the other hand, it has high marketing standards
which take more into account than just the sales of
cigarettes.      It listens and reacts to the concerns of
its stakeholders especially since it is operating in a

                                                                        4
highly controversial industry.               From a business point
of view, it takes great strategic steps to market and
enhance the image of its brands while complying with
all the government regulations.                  Its major competitor
is Lackson Tobacco Company, which adopts a number of
immoral marketing practices that PTC has to counter
ethically since it is a multinational.                      In addition,
PTC     understands        the     highly    significant          role     of
information technology in today‟s global economy, and
thus pays special attention to the implementation of
IT in all of its departments.                    Every department has
its   own   network        system    and    database      that        provide
increased       communication              and      reliable            data.
Especially,    in    the     factories,      PTC    has     a    number   of
latest      machinery        for      manufacturing             and     their
performance is commendable.
        The Akora Khattak factory was set up after Jhelum
factory to meet the increasing demand.                      The various
processes     at     the     factory       and    machinery       used    to
manufacture cigarettes are simply fascinating.                         Latest
machines such as Loga, Mark 8, and Mark 9 are being
used.     PTC has a great consideration for quality of
its product.       Quality monitoring starts from the point
where tobacco is purchased to the point of sale and
even after the sale.             All the customer complaints are
taken care of and efforts for constant improvement in
quality are made.           In fact, the company is so quality
conscious     that     it     invests       million    of       rupees     in
procurement of machinery that improves the quality of


                                                                            5
cigarettes.    Mark 9 machines are usually purchased for
this reason.
     Ultimately, it is evident that PTC has adopted
world-class standards in its internal as well as its
external   activities   and   thus   has   been   extremely
successful in its core business.




                                                          6
              Mission statement

“Transform    PTC    to   perform   with   the   speed,
flexibility    and    enterprising    sprite     of   an
innovation, consumer-focused company” and long
term vision of becoming




                                                           7
                    PAKISTAN TOBACCO COMPANY


INTRODUCTION OF THE ORGANIZATION:


     History:
     Pakistan Tobacco Company is the member of the
     multinational       British       American         Tobacco         group
     (BAT).      In    Pakistan,       BAT        carries         out    its
     business under the name of PAKISTAN TOBACCO
     COMPANY (PTC).
     Pakistan         Tobacco     Company          is       the     first-
     multinational         company           of         Pakistan          and
     completed 58 years of its operations in the
     country. Company was incorporated in Pakistan
     and is listed on the three stock exchanges of
     the country. It was established in the same
     year when Pakistan takes its birth in 1947,
     and    taking      over     the    business            of    imperial
     Tobacco Company (India).the parent company of
     PTC    is   british       American      tobacco(BAT),a             well
     reputed     company        that   stands          second      in    the
     global      cigarette       market.PTC         was      the        first
     foreign      company        to    set        up     business         in
     Pakistan.
     It had three branches – Karachi, Jehlum, Akora
     Khattak, but Karachi factory has been closed
     since 1992 due to heavy loss and some other
     reasons.
     First plant was set in a warehouse in Karachi
     port    with     monthly     production           of    30    million
                                                                                8
cigarettes against sales of 60 million, the
gaps being filled up by import.
When Pakistan came into being all tobacco was
imported in for production of cigarettes the
rapid    expansion        of    cigerete     market      led    to
establishment      of     jhelu       factory    in    1955    the
same    year      (PTC     became       a   public       limited
company). But in 1952 development project was
initiated in N.W.F.P.hence PTC was the first
foreign investment in Pakistan and pioneered
the manufacture of cigerets and cultivation of
virgenia       tobaccos    in     the    country       and    also
dtarted research work in the field of tobacco
to produce finest quality tobacco in order to
give way to the top quality American Tobacco
in Pakistan.
Factory was established in 1955 at Jehlum, PTC
became a Public Limited Company in the same
year.In 1965, because of fiscal incentives a
factory was established in Dhaka. In December
1971, east Pakistan was lost and the effect on
PTC    was     traumatic       both    psychologically         and
operationally. 60 % of the sales volume was
lost and the company was left holing a massive
production      capacity       and    inventories       surplus.
Surgical measures were essential for survival
and     this     include        of      management       by     30
%retrenchment,           separation         of        over     500
employees and a cut in employment for those
retained. With the resettlement of operations

                                                                     9
    to meat increasing demand, a cigerrate factory
    was    set    up    at    akora      khattak      in   1975.major
    developments since then are modernization of
    GLT (re drying)plant in facilities at akora
    khattakand jhelum factory (the Karachi plant
    having       been    closed     in    late     1991)       and     the
    acquisition of high speed loga was operated to
    meet the increasing demand
    1975 a new cigarette factory was set up at
    Akora Khattak to meet the increasing demand.
    Akora Khattak factory is one of the largest
    factories of N.W.F.P.
     Mission statement of Pakistan Tobacco Company


    “Transform         PTC    to   perform      with       the    speed,
    flexibility         and    enterprising           sprite      of    an
    innovation, consumer-focused company” and long
    term vision of becoming

    “First choice for everyone”

    vision

    „First choice for everyone’



    KEY OBJECTIVES:

    To    regain       volume     and     value      leadership       by
    positioning         variable      brands     in    all       consumer
    related segments of the market. The focus is
    on    the    light       segment,     ASU    30(adult        smokers
    under 30 years ),and premier brands.
                                                                             10
    The established leading positions in markets
    where it is not already strong.

    To drive world class standards in products
    process    and    services     through   passionate
    skilled and confident people

    To meet stakeholders expectations.

    To   be   seen   as   a   responsible   company    in
    acontroversial indestury.

    To meet these objectives, PTC is taking the
    following initiatives

    Establish        a    focused     segments        and
    differentiated brand portfolio

    Create a winning cooperate culture with focus
    on vision, mission and values.

    Restructure      PTC,s    cost   base   to   become
    competitive locally and globally




                                                             11
OVERVIEW OF CIGARETTE INDUSTRY :


The cigarette industry is heavily dominated by giant
firms   and   state-owned   tobacco   monopolies.   Cigarette
producing companies are based around the world. There
are two entrenched interests that have opinions about
the cigarette industry:


(a) Participants in the industry, and (b) people
affected by the deaths attributable to tobacco use.
These interests conflict, and since they involve large
amounts of money, long-held (historically) belief
systems, and the premature deaths of loved family
members.
Participants in the industry argue that commercial
tobacco production is a vital part of the American and
world economy. Thousands of farmers in the United
States, alone, make their living from raising tobacco
leaves for use by the industry. It is estimated that
the tobacco industry contributes billions of dollars
in tax revenue to the federal government every year.


Varieties of Tobacco
Cigarettes are a blend of three main popular tobaccos:
bright, burley and oriental. Most bright and burley is
grown in the United States, while oriental tobacco,
also known as Turkish, is grown in several
Mediterranean countries. Bright, which is often called
flue-cured or Virginia tobacco, is similar to the
large-leaf Spanish tobacco.

                                                           12
Bright Tobacco
Bright tobacco matures from the bottom leaves up, so
they are picked first, then each succeeding layer as
they mature, until only the top leaves are left for
final harvest. Leaves are graded according to their
position on the stalk.
Harvesting
As the bottom leaves of bright tobacco are picked or
primed, they are placed on a mechanical harvester.
Pulleys move them to the top of the machine where they
are compressed in metal racks with tines that pierce
the leaf. Most tobacco farmers today utilize
mechanical harvesters. As the harvesters move over a
row of tobacco plants, the mature leaves are pulled
off the stalk and transported up to removable trailers
at the top of the harvester.
Curing
The first step in preparing harvested bright tobacco
for market is curing. The crop is placed in specially
equipped containers known as bulk barns. Forced-air
heat flows through the leaves of bright tobacco during
a five-to-seven-day drying process. This draws out the
bright lemon or golden color that gives bright tobacco
its name.
After curing, bright tobacco will be sold to various
domestic and foreign manufacturers in one of two ways:
through marketing agreements between farmers and
manufacturers or at auction.

                                                        13
Marketing Agreements
Today, many tobacco farmers have marketing
agreements with manufacturers under which all
or part of their tobacco crop is sold
directly to the manufacturers. For example,
British American Tobacco fulfills much of its
tobacco requirements through its Tobacco
Farmer Partnering Program.
In this program a farmer brings the crop to a
receiving station. It is unloaded, visually
inspected, moisture tested with electronic
equipment and then graded. The farmer often
stands beside the grader and observes the
evaluation of each bale of tobacco. This is
an opportunity for face-to-face communication
between the seller and the buyer. Soon
thereafter, the tobacco grower leaves the
receiving station with a check in hand.
Auctions
Tobacco is also sold by some growers through
the auction system. At auctions, multiple
buyers compete for baled tobacco that has
been brought to a central warehouse. At one
time, auctions were the principal way that
tobacco was sold, but today many growers
prefer to sell their crops directly to
manufacturers.
Burley Tobacco
The process of growing and selling burley tobacco is
similar to that of bright, but there are significant

                                                       14
differences in the way burley is harvested and cured.
Harvesting
When harvesting burley, the entire stalk is cut by
hand and air-cured in natural atmospheric conditions
over an eight-week period.
Curing and Shipping
Because the entire stalk is cut and hung to cure,
instead of leaf by leaf like bright, the stalks are
hand-stripped after curing. After curing, burley is
reddish-brown, much darker than bright tobacco. The
leaves are then graded by their position on the stalk.
The stalk is discarded and the burley leaves put into
80- to 90-pound bales for shipment to market.
Initial Processing and Aging
After purchase, leaf tobacco must be processed at the
stemmer, where moisture is added to make the tobacco
pliable enough to remove its large stems. Once the
stems are removed, the tobacco is hydraulically prized
or compressed into boxes or porous wooden vats called
hogsheads. These will be stored in special warehouses
for approximately two years, while the tobacco
undergoes a natural aging and mellowing process.
Primary Processing
Upon completion of the aging process, these same
hogsheads and boxes are delivered to Primary
Processing facilities in preparation for cigarette
manufacturing. In these facilities the tobacco
undergoes a conditioning process where high
temperatures and humidity restore moisture to suitable
levels for cutting and blending tobacco and completing

                                                        15
the cigarette making process.
Bright, burley and oriental tobaccos are precisely cut
and blended according to time-honored formulas, or
recipes, to produce tobaccos for various brands of
cigarettes. These brand recipes include ingredients
and flavors that are added to the tobacco to give each
brand its unique characteristics.
Cigarette Making and Packing
the blended tobacco or cut filler leaves Primary
Processing and is delivered by a pneumatic feed system
to cigarette making machines (called makers) within
the factory. At the maker, the tobacco is stored
temporarily in hoppers which continuously allow
measured amounts of filler to drop down onto prepared
cigarette paper. The paper is wrapped around the
tobacco and sealed to form continuous rods.
These are then cut to proper length for cigarettes.
Filter-tipped brands have a double-length filter
inserted between every two cigarettes; filters are
sealed to the rods and then cut in half to produce two
cigarettes, each one having a filter on one end.
Packer machines insert cigarettes into packs, packs
into cartons and cartons into cases. The cases are
then conveyed to the Finished Goods Department for
temporary storage. From there they are shipped to
warehouses to be sold to wholesalers and   retailers.




                                                        16
BRITISH AMERICAN TOBACCO
 Progress In historical Perspective:
With more than 300 brands in its portfolio British
American Tobacco is the world‟s second largest
quoted tobacco group having leadership in more than
50 of the 180 markets where they do business. The
Group has 87 factories in 66 countries producing
some 792 billion cigarettes in 2003. Their
companies, including associated companies, employ
more than 85,000 people worldwide. By 1912, just a
decade after BAT‟s business was founded, they
became one of the world‟s top dozen companies by
market capitalisation.
British American Tobacco has grown considerably in the
last   decade,     delivering   a    total   shareholder     return
that has outperformed the FTSE 100 over the last one,
five   and   ten   year   periods.    The    Group   continues     to
successfully pursue its strategy of organic growth and
investment in new markets and acquisitions.
Martin Broughton, who retires at the end of June after
10 years leading the Group as Chief Executive and, for
the last five, as Chairman, believes the Group has the
strategy,    the   brands,   the    people    and    the   focus   to
deliver sustainable growth and long term shareholder
value. He also sees the Group as leading the tobacco
industry      in      demonstrating          Corporate       Social
Responsibility and accountability.
In terms of organic growth, the local brands grew
slightly and the real stars shone more brightly. BAT‟s
four global 'drive‟ brands – Pall Mall, Kent, Dunhill
                                                                   17
and Lucky Strike – grew by 13 per cent between them.
Kent's volume reached almost 30 billion, improving 14
per cent while Dunhill, already over the 30 billion
mark, was up 8 per cent. Lucky Strike had a difficult
time but performed more strongly as 2003 progressed.
Pall Mall broke the 30 billion barriers for the first
time, powering ahead by 32 per cent, largely due to an
impressive performance in Italy.
Italy also demonstrates ability to achieve growth
through acquisition. Buying Ente Tabacchi Italiani
(ETI) has given BAT a much higher quality business in
Italy, taking them to the number two position in the
second largest tobacco market in the European Union
The proposed Reynolds American transaction, combining
R.J. Reynolds (RJR) and Brown & Williamson (B&W) US
businesses, will also create a stronger and more
sustainable business, in which the Group will have a
42 per cent share. The process of achieving the
various regulatory approvals is proceeding and we
expect the transaction to be completed around the
middle of 2004.
Turning to productivity, the key developments in 2003
included the major restructuring in Canada and the UK,
as BAT continues their drive for an effective and
efficient integrated supply chain. BAT believes that
it can improve their service to customers, as well as
releasing funds that can then be invested in their
brands to increase the momentum behind their organic
growth. BAT is also committed to saving some £200
million a year in overheads and indirects by 2007 and

                                                        18
made a good start in 2003, saving some £64 million.
BAT has became very active in business development
throughout the 90s and into this decade, with new
investments in Hungary, Poland, Ukraine, Russia,
Uzbekistan, Romania, Cambodia and now Italy, amongst
others, and major merger and acquisitions activity in
the United States and Mexico. Its $1.5 billion
acquisition in 1997 of Cigarrera La Moderna was then
the largest foreign investment ever in Mexico. Then of
course there was the Rothmans merger in 1999.
In 2000, BAT also acquired the 58.5 per cent of
Imasco, the Group's Canadian associate, which it did
not already own, giving us full ownership of Canada's
Imperial Tobacco and its significant market share. In
2003 BAT proposed to combine its US business, Brown &
Williamson, with RJ Reynolds, creating a new company
called Reynolds American that will be 42 per cent
owned by BAT.
Also in 2003 BAT won permission to acquire the Italian
state tobacco company, Ente Tabacchi Italian S.P.A.
(ETI), at auction for a price of £1.6 billion. The ETI
acquisition put British American Tobacco in the number
two position in the European Union's second-largest
tobacco market.
In 2002, BAT built and launched factories in Turkey
and South Korea, the world‟s seventh and eighth
largest tobacco markets. Our new factory in Nigeria
opened in 2003 and has helped spark increased turnover
and growth, in volumes as well as in stakeholder
engagement -- they have published their first social

                                                        19
report. In China, the world's largest cigarette
market, the Chinese National Tobacco Corporation has a
monopoly position.
While BAT‟s discussions in China continue, albeit more
slowly than it would like, BAT has been given
permission to build a factory in Sichuan Province, on
a site that should provide it with the opportunity for
a business of significant scale. The Chinese
Government has done an excellent job in modernising
the sector, and BAT believes it can help the Chinese
tobacco industry to develop further.
Overall, BAT is putting resources into markets where
it believes market share and profitability can be
increased. Many countries are considering privatising
state-owned tobacco companies and BAT considers all
such opportunities very carefully.
BAT is committed to building value for it‟s
shareholders, and it believes there is real value
embedded not only in how it runs it‟s business but in
how a company is put together; in its ability to see
the world as it really is; in it's ability to pick and
retain talent; to build relationships of trust with
consumers, suppliers, distributors and partners, and
to manage high quality brands. Perhaps above all in
today‟s economy, there is particular strength in the
ability to root local businesses in a vast range of
different cultures around the globe.




                                                        20
Guiding Principles
BAT‟s Guiding Principles describe key characteristics
of its organisation, which it aims to nurture.*
Strength from Diversity
It reflects the cultural mix within the Group and a
working environment where employees‟ individual
differences are respected and enjoyed. It also
reflects BAT‟s aim of harnessing diversity - of
people, cultures, viewpoints, brands, markets and
ideas - to create opportunities and strengthen
performance.
Open Mindedness
It reflects openness to change, opportunities and new
ideas, including ways of addressing regulatory issues
and the changing expectations in society. BAT seeks to
be active listeners, genuinely considering others‟
viewpoints and not prejudging.
Freedom through Responsibility
It reflects the devolved nature of the Group and its
belief that decisions should be taken throughout the
organisation at the appropriate level, as close to the
consumer as possible, and that decision makers should
accept responsibility for their decisions.
Enterprising Spirit
It has been a characteristic of BAT‟s business through
a century of operations. It is reflected in its
ability to grow its business and its value within many
challenging environments, through the confidence to




                                                        21
seek out opportunities for success, to strive for
innovation and to accept considered risk-taking as
part of BAT‟s way of working.
The flexibility, new thinking, financial strength and
long term vision that has given us „sticking‟ power
for a century will continue to drive us forward in
search of continuing success.


PAKISTAN TOBACCO COMPANY LTD


Background and Achievements*
Pakistan Tobacco Company, a subsidiary of the BAT was
established in 1947.It took over the business from
Imperial Tobacco Company (India), operational since
1929 in the territory that form Pakistan. It was the
first multinational to set up business in Pakistan.
PTC   pioneered the cultivation of Virginia Tobacco and
the manufacture of cigarettes in Pakistan.
The first full-fledged factory was set up in 1955 at
Jehlum and that same year PTC became a Public limited
company. At the time of partition all tobacco was
imported. But in 1952 ,a development project for
tobacco leaf was initiated in NWFP which progressed
rapidly. A re drying plant was set up at Akora Khattak
and cultivation of Virginia tobacco commenced.
After the separation of East Pakistan in 1971 and the
withdrawal of Dacca and Chittagong (Bangladesh)




                                                        22
factories ,a new cigarette factory was set up at Akora
Khattak in 1975to meet the increasing demand.
     PTC is the single largest tax payer in the
      private sector contributing a large amount to the
      government
     It has employed over 6000 thousand people at its
      factories both at Akora Khattak and Jehlum and
      throughout the tobacco growing areas of NWFP and
      Punjab.


     PTC is committed to being a good corporate
      citizen. Over many years it has been :
     Donating to a number of deserving causes.
     Contributing to and is strongly supporting
      measures related to the natural resources and
      environmental needs of the country.
     It has been in to tree plantation over the last
      few decades to meet wood fuel requirements and
      for better environment in both rural and urban
      areas where it is providing free of cost
      saplings.
     Educating growers in the latest techniques and
      promoting modern technology in agriculture that
      has benefited not only tobacco growers but also
      all agriculturists in the region.
     Sponsoring and promoting sports activities.
     Running free mobile dispensaries.
     Plays a significant role in the eradication of
      Poppy cultivation by providing alternate income

                                                         23
       source to the inhabitants of ancestral Poppy
       cultivation area.
Introduction of product:


PTC’S BRANDS REVIEW:


JHELUM FACTORY
   GOLD LEAF
   CAPSTAN
   B&H
   GOLD FLAKE (Soft cup)
   GOLD FLAKE(Supreme)
   WILLS INTL.


AKORA KHATTAK FACTORY
   CAPSTAN FILTER
   GOLD FLAKE
   WILLS NAVY CUT
   EMBASSY FILTER
   EMBASSY KINGS


Here is a brief review of four well-known brands of
PTC:
JOHN PLAYER GOLD LEAF
JPGL is growing very fast and has captured the premium
brand market. It dominates the premium brand category
and contributing significantly to PTC‟s overall value
share leadership. The brand‟s dynamic performance can
be attributed to its established image and the
company‟s continuous endeavours towards improving
                                                        24
brand quality and total brand offer. JPGL is now
strongly placed as the benchmark cigarette brand in
Pakistan.
WILLS KINGS
Since its re launch in 1997 this brand has done
considerably well consolidating it‟s position in the
market. WILLS KINGS new blend was launched in 1998
with a view to cater to the changing consumer needs.
It was received with warmth and pleasure by the
consumers and the brand share has grown ever since.
With further planned inputs to improve the total mix,
substantial volume improvements are expected.
EMBASSY
PTC manufactures two sub brands of EMBASSY- EMBASSY
KINGS and the other EMBASSY FILTER. This brand is
showing a strong market growth in the overall low
price segment .As it is very much popular in Punjab
therefore it has come to be known as the Punjab brand.
The brand remains the outright volume leader in
Pakistan.
GOLD FLAKE
Since its re launch in NWFP where it has the
reputation of being predominantly a “Punjabi” brand
this brand is slowly but surely being reinvigorated to
take off largely through the untiring efforts of the
personnel at the area sales office, directed both at
the retailers and the consumers.




                                                        25
 BRAND CATAGORIES:*
PTC has six major brands having a total of 19 variants
as follows:


     BESON&HEDGES(B&H)
     GOLD LEAF(PG)
     GOLD FLAKE(SX)
     CAPSTAN(RA)
     WILLS(WI)
     EMBASSY(CH)


CATEGORY 1
In upper premium category we have:


 I. “BENSSON & HEDGES”(B&H-Special)
II. “BENSSON & HEDGES”(B&H-Lights)


CATEGORY 2
In premium category is placed


 I. “GOLD LEAF” (PG-20HL)
II. “GOLD LEAF” (PG-10HL)


CATEGORY 3
In media category
 I. CAPSTAN INTL.(RA-20SS)
II. WILLS INTL.(WI-20HL)
III. WILLS INTL.(WI-10HL)



                                                     26
 IV. CAPSTAN FILTER(AY-10SS)
  V. WILLS KINGS(BP-20HL)
 VI. WILLS FILTER(NT-10SS)
VII. WILLS GOLD FILTER(20HL)
VIII. GOLD FLAKE(SX-20HL)


 CATEGORY 4
 In low category:


  I. EMBASSY KINGS(CH-20HL)
 II. EMBASSY FILTER(CL-10SS)


 PTC’S MARKETING PRINCIPLES:
 PTC is proud of its strong reputation for supreme
 quality brands. It does not believe in compromise on
 quality and standard and gives high importance and
 value to aggressive but legitimate marketing in order
 to ensure sustained image and performance. In major
 markets across the country, PTC‟s trade marketers are
 frequently rated highly in customer surveys on
 professionalism and service. It aims to satisfy adult
 consumers' demands better and more profitably than the
 competitors.
 PTC believes strongly that tobacco should never be
 marketed to youth. It should only be marketed to adult
 smokers, in an appropriate way that takes account of
 the risks posed to health. It also believes adults who
 have chosen to smoke should be able to receive
 information about what they buy, and we should be able
 to communicate responsibly with them about their

                                                         27
brands. And in this direction much of PTC‟s marketing
department‟s efforts are aimed at ASU30* category
smokers and is trying its utmost to win them over.


PTC‟s marketing is not designed to 'sell smoking'.
That would be wrong – and a waste of marketing effort.
Rather PTC is working in a long-established, mature
product category, where people already know what the
basic product is. There would be no commercial sense
to trying to market to informed customers who don't
want the product.
PTC‟s marketing is about brands; retaining the brand
loyalty of its customers, and winning them over from
competing brands. Its brands are amongst its most
important assets. As well as complying with all laws
and many voluntary codes on marketing, it has for many
years been guided by a clear set of British American
Tobacco Advertising Principles.


These have set out, for example,
   PTC‟s advertising and promotional activities will be
    directed at adult smokers.
   No health claims will be made about tobacco
    products.
   People appearing in advertising will not be, or
    appear to be, younger than 25.




                                                        28
Moreover PTC strongly adheres to and respects all the
laws and promulgated regulations such as the “50 meter
Clause”* which implies that no merchandising material
shall be displayed on any outlet within close
proximity of schools or other educational
institutions, religious seminaries, mosques, hospitals
etc violation of which may incur government penalties.


The government of Pakistan has recently revised the
Health Warning Legislation. As per the guidelines, the
new health warning “Smoking causes cancer and heart
diseases – Ministry of Health” will be printed on the
flap (top) on front side of the cigarette packs in
Urdu and on the back in English. It will cover 30% of
the pack on each side in rectangular box.


MARKETING ANALYSIS:
Marketing at PTC is divided into three further
categories: marketing research, brand marketing and
trade marketing the marketing research department
carries out its surveys and other such activities
to find out the demand for each brand, and to
discover the potential cigarette market. the brand
marketing department comprise of brand managers who
have   the responsibility the success and health of
their individual brands. Each brand manager designs
and executes promotions to increase the sale of his
brand. Advertising through different medias and




                                                        29
sponsorships of event is also the job of brand
marketing. The trade marketing staff works direct
in the field and interacts with the distributers,
wholesalers, retailers, and the customers. PTC is
renowned for conceiving brands attaining the status
of a classic.   It has been consistently meeting
consumer expectations for the past ten years with
the popular international brand names like Benson
and Hedges, John Players Gold Leaf, Wills, Capstan,
and Embassy which is the largest selling brand in
the market.   PTC, through 343 distributors,
services a very large retail and wholesale network
across the country.
    PTC has always been looked upon as one of the
most dynamic organizations with its exuberance to
quickly adapt to the changing needs of the market.
PTC has also been a harbinger in establishing
scientific methods of marketing research to focus
on the changing consumer requirements.    As part of
this tradition, the company recently conducted a
detailed urban and rural retailer census, a
gigantic task never undertaken by any business
outfit in Pakistan.   The census facilitated in
determining the volume of business, region wise
requirements/demands and also helped in
streamlining PTC‟s current distribution network
thereby reducing costs.   Total of about 270,000
retailers and over 7000 wholesalers were surveyed.
PTC is also a pioneer in introducing filter
cigarettes in Pakistan as early as 1955.    More

                                                       30
recently, keeping in view the shift towards light,
gold leaf lights has been introduced in the market
representing the house of gold leaf as a truly
international offer keeping with the times and
remaining in tune with the changing needs, and
tastes of PTC‟s consumers.
In keeping up with its tradition of being in the
cutting edge of marketing innovation, PTC co-
sponsored the launch of the epic movie Titanic in
Pakistan, thereby setting a singular precedent of
providing quality entertainment to the nation.   And
this was within three months after the “Explore the
World” promotion campaign for Gold Leaf was ran, to
which PTC received in excess of 1500, 000 consumer
entries.   PTC is constantly endeavoring to
introduce novel and innovative measures to further
the marketing graph and offset the extraneous
adverse affects.
PTC is one of a very few companies in Pakistan
which is paying a great deal of attention to the
retail marketing.   It started a retail excellence
program, which is a set of structured presentations
covering subjects such as business ethics, trends,
customer focus and how to satisfy customer needs
profitably.   It enables PTC to develop and roll out
best-practiced retailer methods, which will enhance
retailer profitability and their relationship with
the company in order to regain market leadership in
the future.   The focus is how to provide a “world-
class” service to consumers, sharing company

                                                       31
information and plans, and gaining feedback.           PTC
holds numerous trade meetings with its distributors
and retailers, which no doubt helps to strengthen
the relationship and be responsive to their
requirements better than any other FMCG company in
the market place.      These meetingsare held at high
quality venues and a gift from PTC is given to each
retailer as a token of appreciation for their
attendance.     This is a unique concept in the market
as PTC is the only company in Pakistan to embark on
such a program for retailers working in line with
the company‟s vision to be “first choice for
everyone”.      The intention is to transform PTC‟s
field staff role into business advisor rather than
a mere salesman.      In short, the program focuses on
business building as a whole rather than a
propaganda forum for selling cigarettes.        PTC
stresses the importance of expanding customer base
through good service and the removal of counterfeit
cigarettes from the market.        Overall, the key goal
is not to deceive a trusted consumer for short-term
goals.



MARKETING STRATEGY AUDIT
The   mission     statement   at    PTC   is   “Dare    to   be
different.”
The mission is market oriented as its word project the
company‟s present image, which is successfully been
carried by their Sales and marketing department.

                                                             32
PTC has always tried to bring new and grand-marketing
events (Voyage of discovery – JPGL) to project is the
company different from its competitors.


The company‟s marketing budgets had always been the
highest in the industry but for the past two years
Lakson Tobacco Company has increased its budgets to
compete on equal grounds with them.
Marketing Objectives & Goals:
   Sales translated into turnover
   Budget for cost
   Profitability


The   marketing     objectives    as   mentioned   earlier   are
inline with the corporate strategy and are very much
clear and appropriate for the marketing department.
This is proved by their two consecutive re-launches
(Capstan & Gold Flake), which are done to make up for
the lost sales volume and profits.


The goals are set by the department keeping in mind
the objectives. The         brand managers sets their own
sales   targets     which   are    then    matched   with    the
performance of the brands every month.


Marketing Strategy:
As PTC exists in a „Fragmented industry‟, the company
takes advantage of its multinational connections and
uses „Image Differentiation Strategy‟. The company has
established an image of a quality product provider at
                                                              33
an   affordable      price,    along   with    its   attractive        and
eye-catching      marketing     campaigns.     The   company       makes
use of Societal Marketing Concept to project itself.


COMPETITORS ANALYSIS:


In year 2000, PTC underwent a major transformation by
taking bold initiatives towards regaining leadership
in the market.        Price repositioning on brands in the
medium    and     low     segment      provided      PTC        with    an
opportunity     to      gain    competitive      advantage,        which
resulted in increased volumes and market share.                        Its
daring steps forced competition to revert to similar
but desperate reactions.          Bringing down the prices of
their brands in medium and low segment resulted in
major    cannibalization        and    lower     gains     in    overall
volume than PTC.        PTC‟s main competitor is the Lackson
Tobacco Company.         However, there are also mushrooming
brands called the “Mardanwalls.”                 The third element
that is of a major concern to PTC is the counterfeit
and the tax evaded brands.             Table 3 shows the market
share of PTC and its competitors.


“Market Share of PTC and its Competitors”


          Pakistan Tobacco              47.70%
          Lackson Tobacco               45.20%
          Mardanwallas                   2.20%
          Counterfeit/other
          Tax evaded brands              5.90%
                                                                        34
Lackson Tobacco Company (LTC):                  LTC is PTC‟s largest
competitor and the second legal cigarette manufacturer
in the Pakistan besides PTC.                 Marlbro and Red & White
are a few of its brands.                LTC used to be affiliated
with Phillip Morris, the giant in the global cigarette
market; however, this association was dissolved few
years ago.        Its market share is actually greater than
PTC, around 46.2%.                The main goal of LTC is money
making and it believes in short-term gains rather than
long-term       benefits.          Surprisingly,          LTC        uses   quite
unethical       marketing         strategies    –     for       example         –    a
number of        “under-the-table” deals are made with the
retailers       to     convince       them      to    take           off    PTC‟s
merchandize       from     their     store,     and       to    accept      LTC‟s
merchandize.         This obviously results in a huge loss to
PTC    as   it       costs    around     Rs.     100           000    to    fully
merchandize a small shop.
       From marketing point of view, it seems that LTC
is not really clear as to what exactly does it wants
to    portray     through     advertisements          –    that       is    –    its
advertisements do not relate with the brands.                                   For
example, the T.V. advertisement for Diplomat portrays
an image of royalty and cruising abroad while the cost
of the cigarette is around Rs. 10.                        Its price is not
properly    positioned        in     relation    to       the    theme,         thus
this promotion lacks harmony.                  Secondly, LTC hits PTC
directly     as      far     as     competition       in        promotion           is

                                                                                    35
concerned.        For example, In 2001 PTC ran a promotion
for     Gold    Flake       called     “Qismet       ka     Sitara.”           The
promotion gave the chosen consumers an opportunity to
make their wishes, which were granted by PTC.                                  Two
weeks later, LTC designed its promotion for Diplomat
which offered customers large amount of cash prizes,
and     gold    bricks.         The        promotion       had     the     direct
message: “Khawahishat ka kia karna, zaroorton ko poora
karen.”         PTC     has    never        counterattacked          LTC       this
directly.         Normally,          LTC‟s    BTL      (below       the     line)
activities       are    quite       strong.          LTC     has     25%       more
resources and three times more salesman than PTC, and
this almost unlimited budget is due to tax evasion.
LTC‟s cigarettes are not completely tax evaded, a very
small     amount       of     tax     is     paid;        however,        it    is
insignificant compared to the 65%(of revenue) that PTC
pays as taxes.          In the light of all these facts, LTC
seems like a corrupt company; nonetheless, it signed
the “voluntary code of conduct,” in partnership with
PTC.     LTC maybe gaining a greater market share from
PTC, but it is doing so at the cost of its morals and
ethics.        The unethical acts cannot be hidden from the
public    for     forever.           The    following       table        presents
brand-wise yearly volume for PTC and LTC.




                                                                                 36
          “Brand-wise yearly Volume of cigarettes sold by LTC
          and PTC”
             Lackson                              Pakistan
             Tobacco                              Tobacco
              Brands       No. of cigarettes       Brands        No. of cigarettes
                              sold/year                             sold/year
                            (in millions)                         (in millions)

           Red & White           177           Benson & Hedges         0.4
               K-2               141              Gold Leaf            361
            Diplomat             231               Capstan             245
           Morven Gold          1560                Wills               40
                                                  Gold Flake           884
                                                   Embassy             652

          LTC Total Sale        2109           PTC Total Sale        2182.4




Mardanwallas: These brands are manufactured in Mardan and
thus are called the “Mardanwallas.”                These are normally low
category cigarettes (under Rs. 10) for example Gold Street.
The goal of the Mardanwalls is solely money-making, and are
not concerned about acquiring a strong position in the
market.   These are also 100% tax evaded.                The government has
made legislation regarding this issue; however, nothing has
been done so far.      Secondly, their factories are located in
the northern areas so tax evasion becomes very easy.                          No
proper marketing structure or strategies exist for these
brands.   Their ATL activities, which include electronic and
print media, are extremely low.                These brands usually survive
on BTL activities, which mainly consist of posters.


                                                                                     37
                CONSUMER ANALYSIS


Q1: What is your age?

          Under 16 years    0%
          16 to 25          90%
          25 to 35          10%
          35 to 50          0%
          50 and above      0%

Q3.   Are you smoker?


          Yes               83.33%
          No                16.66%
Q4: Which brand of PTC do you use?

          Benson.           16.66%
          Gold leaf.        66.66%
          Capstan.          16.66%
          Gold flak.        0%
          Embassy.          0%

Q5. Are you satisfied with the tobacco quality of it?


          Yes               76.66%
          No                23.34%
Q6. Are you satisfied with price of it?


          Yes               60%
          No                40%




                                                        38
Q7. Are the prices of brands of Pakistan Tobacco
Company is better then the Competitors?

          Yes                    83.33%
          No                     16.67%

Q8: How did you come to know about the PTC?

          From friend.           33.33%
          By seeing it           6.662%
          somewhere.
          Through net.           50%
          Through
          advertisement.
          Other                  10%

Q9. Are you a regular user of these brands?


          Yes                    80%
          No                     20%


Q10. Are you satisfied with the quality of these
brands?
               Full satisfied.         20%
               Some what               80%
               satisfied?
Q11: Do you think that PTC provides better brands as
compared to others?
               Yes                     82%
               No                      18%




                                                       39
Q12: Which brand of PTC u uses a lot?

           Benson.         20%
           Gold leaf.      40%
           Capstan.        30%
           Gold flak.      10%
           Embassy.        0%

Q13. Are you satisfied with the marketing promotion of
   PTC?
           Yes             90%
           No              10%
Q14. What do you think cigarettes are properly packed
and prevented from the external environment?
          Yes             92%
          No              8%
Q15: What do you think about the price of these
brands?
          Cheap.           40%
          Expensive.       60%
Q16: Do you use the brands of PTC if yes then which
one?

           Benson.         10%
           Gold leaf.      20%
           Capstan.        40%
           Gold flak.      30%
           Embassy.        0%




                                                        40
Q17: What do you think about the material use in these
brands .Is it hard to smoking?
           Yes                   80%
           No                    20%
Q18: Does PTC have any Political impact?
           Yes                    10%
           No                     90%
Q19. Is PTC contributing socially in country?
           Yes                    70%
           No                     30%
20: Do you use other brands then PTC brands?
           Yes                    20%
           No                     80%
Q21:which department you think should be improve in
order to better the quality of PTC brand?

          Marketing         20%
          department.
          Sales             60%
          department.
          Management        10%
          department.
          IT department     10%
          Cora department   0%

Q23: Do you think PTC provides change taste than
others?
           Yes                    90%
           No                     10%



                                                      41
SEGMENTATION
Company’s Withdrawal and entering new segments:
PTC has entered various segments since its beginning
such as light cigarette segment, which is very small
in our country. They have not been able to compete
with the illegitimate light cigarettes available here
and capture some market share. The market share2 of
JPGL lights is 0.47%. Which proves our point that the
company should withdraw this particular cigarette from
this segment. Benson & Hedges Lights has been launched
in 1999
PTCs consumers – adult smokers – drive everything it
does. The goal is to satisfy consumers‟ demands better
and more profitably than our competitors. PTC invests
effort and care in understanding consumers‟
preferences, and knows that just as adults make
informed choices about smoking, adult smokers make
informed choices about brands. Consumer demand varies
according to social and economic circumstances, the
culture of a society and the maturity of its industry.
PTC does not believe in „one brand fits all‟, but with
a diversified, portfolio, PTC‟s brands meet key
consumer taste preferences around the world.
A key element of our long-term strategy is to change
the mix of our portfolio in favour of the premium
international brand segment. The Rothmans merger
increased the proportion of premium international
brands significantly, and improved our profitability
as a result. Although the world market was basically

                                                        42
flat during 2001, PTC international brand volumes have
grown.
PTC has a clear focus on its local brands, with
particular emphasis on the four drive brands – Wills,
Gold Flake, Embassy & Capstan – which collectively
grew volume by 10 per cent during 2001. Benson & Hedge
sand John Player Gold Leaf are a part of PTC‟s
international brand portfolio, playing a key strategic
role in the different regions where it does business.
PTC is a company that has one of the very latest
technologies in manufacturing cigarettes in Asia. They
do not set aside the old machines but utilize all of
them in order to produce more and meet their demands
before hand. The industry comprises of different
technological glances but PTC tries to put itself in a
position where this area in not much behind. Akora
Khattak Factory and Jehlum Factory are the two where
cigarettes are produced. The production and
utilization of machines is looked after by them as
well as by the employees working at PTC head Office.
BAT tries its best to look after this area as it is
one of the very important aspects of a manufacturing
firm.
There are two things, which are monitored in order to
be at the edge. Quality improvement is monitored all
the way so that new innovations are made to handle the
issues. The product development department is working
for the innovation in this area. They give the
proposals and ten those proposals are checked if they
fall in line with the technology footprint. Innovation

                                                        43
concerning the product is worked out when they see
that there is a need for another entry in the market.
They have to analyze the market and introduce more
brands.
PTC is improving from one machine to another in order
to be at the top in this respect. Before they used 10
machines to produce a specific number of cigarettes
but now they utilize only 2 new machines in order to
produce the same number if cigarettes. The fast
machines have high amount of excise and sales tax. In
order to use high quality technology the company has
to plan for heavy expenditure, which is done when they
have the excess money, capital expenditure in this
case.
To prove their quality the best and according to
international standards PTC has proven to be an ISO
certified company. They have to exceed consumer
expectation. Inline with the quality they have to take
care the regulatory requirements, PR objectives etc.
they have to advertise heavily also.
BASES FOR SEGMENTATION:
Macro-environment
Demographic
                       Population growth
Population growth in Pakistan is about 2.5% annually.
This population explosion creates an opportunity for
the cigarette manufacturers.
                       Population age mix
Pakistan,   with   a   rapid   population   growth,   is   the
country where young adults age 25 to 40 and some teens

                                                            44
(above 18) are the major consumers of cigarettes. So
these groups are the main targets of PTC.
 Ethnic Markets
In Pakistan almost every one is a Pakistani. But each
social      class    or       group     (segmentation)            has     certain
specific     wants      and    buying        habits.    PTC       has   directed
their product and promotions to all these groups.
Educational group
Mostly the people in Pakistan are illiterate and they
want to smoke strong tobacco with out knowing its more
harmful     effects.      So    PTC‟s        brands    are       mostly    strong
tobacco.


Household patterns
The traditional household pattern in Pakistan is joint
family where grand parents, parents and their children
and the children of their children live together. So
living    in     this    kind    of     system    is    discouraging         for
young smokers.


Geographic and Social class:
Opportunities


In Punjab a large number of people in lower class use
to smoke “Embassy” which is one of the main driving
brands      of    PTC.     PTC        advertises       it        (embassy)     in
different ways (media), a lucky draw scheme (sheran da
mela) and the name of a famous singer Ibrar –ul-haq
is   also    a    associated          with    embassy       to    attract    the
existing customers.

                                                                               45
In Sindh and NWFP the most selling brand is “Capstan”,
95% of Capstan sales is from Karachi region and 50% of
“Capstan International” from NWFP.


Threats
In    this    class          people     are   more    price          conscious     so
reduction          in       the   prices      of     Lakson‟s         brands     may
decrease the sales volume of PTC if customers switch
to Lakson‟s brands.
Economic Environment:
Majority of the population of Pakistan belongs to the
low   class        and      has   low    purchasing        power.         The   taxes
imposed by the govt. on tobacco industry are also very
high that causes a significant increase in the prices
of cigarettes which takes the quality brands away from
the reach of the majority. So for this segment (lower
class)       PTC    has       introduced      “    Embassy”          and        “Gold
Flake”.       For       lower     middle      there        is    “Capstan”       and
“Wills” and for high and upper class there is “Gold
Leaf” and “Benson and Hedges”.


Environmental :
PTC is promoting itself as an environmental friendly
organization by adopting “tree plantation” campaign.
PTC   planned           3   million     trees*     annually          in   different
areas of the country.


Technological :
PTC    is    the        pioneer    of    using     latest        technology       in
Pakistan.          The       machine       they      use        to    manufacture

                                                                                   46
cigarettes    “Loga       Max”    can    produce     8000      sticks       per
minute. Although now Lakson is also using the same
technology but it was PTC which introduced it in the
country.     Everyone        knows      that       technology         has     a
significant         effect         on      company‟s            production
capabilities.       Use     of    this     technology          (Loga    Max)
enables PTC to fulfill the market demand well in time
and more efficiently.


Political
Ministry of Health has made all possible efforts in
informing    the    masses       that    smoking     is    injurious         to
health and PTC maintains that “smoking is an adult
choice”. Cigarettes are being manufactured and each
packet   must   contain       a   warning      “    Tobacco      seriously
damages health” or “smoking is injurious to health”.
But as such it has no effect on company's marketing
strategies         and       tactics,          although          cigarette
manufacturers can not promote it as “good for health"
product.
The law “no smoking in public places” might effect
sales volume because the people who use to smoke for
style or fashion may give it up.


Cultural
In Pakistan the basic traditions, customs and values
are   not   much     different       but   because        of    the    “dish
culture”    mostly       young    generation       like    European         and
American culture which leads to liberalism so these


                                                                             47
youngsters go for smoking as an essential of stylish
life.
On the other hand in villages the elderly people smoke
“Hukka” and the youngsters smoke cigarettes. The sole
reason behind it is that the young generation does not
really see why should they be dependant upon someone
to fill up the paraphernalia of Hukka, and even if
they have to do it themselves it is time consuming and
so   they    prefer    ready   to    smoke   stylish    cigarettes
instead of Hukka.
Task Environment:
As mentioned earlier, the population of Pakistan is
growing by 2.7% annually and number of smokers are
increasing as well. Market size therefore is getting
larger      and   it   is    and    opportunity   for   cigarette
manufactures. But unfortunately Lakson has emerged as
a strong competitor of PTC and has attracted all the
10% growth of potential consumers where PTC was not
able to do so. This tough competition is brining a
decline in the profits of the company due to which PTC
has decreased the prices of almost all it‟s brands
(except Benson & Hedges) to remain in the competition.
Major Market Segments
PTC segments its consumer market according to social
classes     and   it   has   different    offerings     for   these
segments: -
Upper              Benson & Hedges
Middle             Gold Leaf
Lowe middle        Capstan
Lower              Embassy, Gold Flake

                                                                 48
                    Sales Analysis


PTC’s AREA SALES OFFICE
 An overview of operations:
The internee had an eight week (2 Months) stint at the
Area Sales Office Peshawar. Over the course of the
internship he had attachment with personnel from all
the departments at the sales office. The Peshawar
sales office is situated at Malik Adda, Sardar Garhi
near the Afghan Rehabilitation Centre, Peshawar.
Here is a brief overview of the organization of the
Sales Office.
AREA MANAGER:
The Area Office is headed by the Area manager who
supervises all the sales and other trade marketing
activities for the entire province including those of
Landi Kotal (FATA) and Chitral (FANA). The Area
manager is the key decision maker at the sales office
and is at the helm of affairs to whom all the TMO’S
and each staff member of the office report while he
himself is accountable to the Regional manager at the
regional office at Rawalpindi.
The total number of employees at the sales office is
37.This includes the following:
  1) AREA MANAGER
  2)3 TMO’S
  3)6 SP’S on Suzuki vans.
  4) 9 Moto SP’s
  5)10 Drivers.
  6)4 Admin. personnel.

                                                        49
    7)2 loaders
    8)1 Watchman
    9)1 Electrician/Carpenter


   The staff at the office who operate the Warehouse
    comprises basically of three people. There is a
    Warehouse Executive, an Assistant Warehouse
    Executive and an Excise Clerk. Besides, there are
    two loaders whose job is to load stock onto the
    trucks and vice versa.


CF ACCOUNTANT:
There is a CF accountant at the sales office whose job
is to keep accounts of the expenses at the sales
office including payment of salaries to employees
excluding managers, payment of T.E, food, refreshment,
electricity etc.


TMO:
There are three TMO’s at the Peshawar office who have
been assigned their respective stations or markets.
Each TMO has been provided with a laptop and a suzuki
van for market visits .This person heads a team of
SP’s who are answerable to him. The job of a TMO
centres around the market i.e he is the immediate
authority who assigns tasks to SP‟s under him, visits
and inspects the outlets, checks and ensures
availability of stock at the shops, inquires about the
position of brands Vis-à-vis competing brands, handles


                                                        50
merchandising activities and directs his SP‟s for
further course of action.


SP:
SP mainly performs marketing functions. He goes by his
FCP. This FCP is in fact a monthly schedule of tasks
assigned to an SP. Besides, there is an activity
planner sheet for each SP which specifies the number
of beats to be visited by the SP over the month.


Each SP visits shops in his beat i.e the specific area
assigned to him in a particular market. One beat could
encompass an area with maximum 50 shops. SP makes
consumer contact, communicates with the shopkeeper,
examines availability and display, deals with the
merchandising material and sees whether the
distributor‟s salesman makes regular sales calls at
the shops in his beat or not.
The Sales Promoters have been provided with motor
bykes (for urban areas) and Suzuki vans for carrying
out activities in rural areas.
   The sales office also has a large storehouse
    exclusively for the merchandising material including
    posters, boards, hoardings, stickers, ready made
    cabins, D&D cigarettes, display modulars, cabinets,
    counter, sun shades, tube shades etc. that are
    provided to valued outlets all over the entire
    province.
   There is an electrician/carpenter who works on
    contract at the sales office. His job is to repair

                                                          51
  and fix boards and accessories such as tubes,
  electric metres, counters and modulars. He is only
  concerned with the merchandising.
CS3:
A networking system called CS3 has been installed at
the office via which the sales office communicates
with both the regional office as well as the Head
office at Islamabad and also both the factories. It is
an online business application tool that allows the
office to stay in touch with and access other PTC
sales offices all across the country. This system is
indispensible to warehouse staff since the entire
procedure of receiving orders and delivering stock is
processed in the CS3. The CS3 contains all the stock
data of the distributors .The code for Peshawar in the
CS3 system is “34”.Likewise every station has its own
respective code through which it could be accessed.
This business application system has been designed in
“INFORMIX” language. This system facilitates online
costing and ensures reduction of complexities.    A tall
pole has been erected at the office building which is
linked to the Pak Data Com office which have provided
the networking facility to the sales office.
LOTUS NOTES:
Lotus notes is a communication software with fool
proof reliable and efficient information sharing and
exchange facilities. It has dynamic E-mail features
and is used to send and receive messages and other
required data to and from the regional as well as the


                                                        52
head office. PTC has integrated its entire networking
system through this software.




Area Sales Offices’ Warehouse Organization
The Peshawar office houses a fairly large Warehouse
that contains stock of cartons of cigarettes
manufactured by factories of PTC located at both
Jhelum and Akora Khattak. The internee formally
started internship at the sales office by spending the
first two days with the staff dealing with the
Warehouse.
Warehouse Executive
The Warehouse is supervised by the Warehouse
Executive. The job of the Warehouse Executive is to
figure out all the paper work such as receiving
orders, making entries into the CS3 system, preparing
DSR, checklists, bank endorsement summary, sending
requisition for replenishment of stock at the
Warehouse etc. He is assisted by an Assistant W.H
Exec.
Excise clerk
Besides, there is an Excise clerk (whose job is to go
to the bank after receiving the order along with
copies of Bank Endorsement Summary and inform the
warehouse exec of the receipt of cash from the
distributor).
There are two loaders who load cartons onto the
trucks.
The rule for stacking is as follows:

                                                        53
     Five cartons containing 10HL are to be placed
      with one on top of the other.
     For 20HL four cartons are to be placed in the
      same manner.
     The Warehouse can accommodate almost 1600
      cartons.


Stock Specification*
     1 CARTON=10M
     1 M=5 OUTERS(20HL),10 OUTERS(10HL)
     1 OUTER=10 PACKS
     1 PACK=10 STICKS(10HL),20 STICKS(20HL)
     1 CARTON=50 OUTERS(20HL),100 OUTERS(10HL)
     1 CARTON=10,000 STICKS
     1 M= 1000 STICKS
     1 OUTER= 100 STICKS(10HL),200 STICKS(20HL)


The cartons are placed on a four wheel trolley and
pushed with great ease to be loaded onto the trucks.
The Warehouse assistant must be present at the time of
loading. He would mark the outflow of stock of each
brand in the DSR checklist.
The procedure for placing the order is fairly simple.
The distributor who has non-check     account at HBL
Peshawar usually makes a phone call and gives the
order for the required brands specifying its quantity.
He would either issue a bank draft in the name of his




                                                        54
own account at HBL send a TT or would deposit cash in
the account for this transaction.
Each brand has its own distinctive code known both to
the warehouse people and the distributors.
Orders are received almost daily from the distributors
both “Local” as well as those located along the “Rout”
and immediate shipment is made. Each rout distributor
has his own respective code as well as area code.
As soon as the order is received, the Warehouse
Executive feeds the data into the CS3 system using the
specific code of the distributor and takes a rough
print out of a checklist of brands and quantity of
stock to be lifted.
DSR
A checklist on a large sheet called DSR is also
printed which is to be marked by the Warehouse
Assistant while loading the stock.
Bank Endorsement Summary
A Bank Endorsement Summary specifying the quantity and
amount of stock is also prepared which is used to show
the transfer of funds from the distributors account to
the PTC‟s bank account.
This document comprises of three sheets. One copy of
this bank endorsement summary is retained by the bank
whereas, one is kept by the warehouse and one is
dispatched to the head office. The Excise Clerk takes
all the copies to the bank and after completely
scrutinizing the papers and making sure that the
amount has been transferred would inform the W.H staff
of the receipt of cash.

                                                        55
DAI
This document is prepared in the CS3 and a print out
of four copies of this document is taken. One copy is
for the transporter duly signed by him, another copy
is for the distributor, another for the warehouse and
one copy is dispatched to the head office.
E.B.2
A register called E.B.2 is maintained by the Excise
Clerk. In this book he makes entries of receipt of
stock from the factories, the stock lifted by the
distributors and opening and closing stock balance.
Each carton has its own respective serial no# and each
outer has its own code date.
A white board has been fixed onto the wall of the
Warehouse bearing the code dates of cartons arriving
at the warehouse. Area Wise Sales are sent to the
regional office on daily basis. A daily Dispatch
Summary is also made at the day‟s end showing area
wise and brand wise sale.
O.C.F
A fifteen column form is sent to the sales office by
the distributor every ten days to show the following
details
       ten days sale,
       to date sale
                                                        56
     stock on hand
This document is of utmost importance and on this
basis of this OCF forecasting is done and requirements
of DRP are assessed and planned.


DRP
It is to be prepared once a month at the start to show
the quantity of stock to be sold over the month,
target for the coming month, target for the
distributors, lifting plan i.e how much the
distributor is going to lift, and Forecasting for next
month is also done.
SOP
SOP is also received from the regional office which
serves as a plan of sales for the whole month. Stock
replenishment is made as per requirement. For this a
requisition to the head office at Islamabad is to be
sent via the CS3 who would then intimate the factories
for immediate shipment .The stock usually arrives the
next morning.
EHS
Strict precautionary measures have been ensured inside
the warehouse to negotiate with any eventuality e.g
fire breakout. The staff at the warehouse has received
training on how to cope with an undesirable situation.
They have been provided with all the gear including
helmets, coats, boots etc. In addition to this fire
extinguishers have also been provided to them and an
electronic fire sensor has also been installed.


                                                        57
In order to keep mites, beetles and other insects at
bay, special insect repellent tablets are placed in a
small box fixed on the wall. The warehouse is kept
really clean and tidy. There is also a small cabinet
called “Bin” inside the warehouse in which outers and
leftover cigarette packs are placed.


Area Sales Offices’ C.F Accountant:
RESPONSIBILITIES:
The internee had a one day attachment with the CF
Accountant at the Area Sales. Office
There is a CF Accountant at the Sales Office whose job
is to check and manage budget and expenses of all
sorts at the sales office. He     keeps a record of all
the receipts, bills and their payment such as


     Utility bills
     Food, refreshment
     Office repair and maintenance
     Vehicles maintenance and repair
     Vehicles fuel, medical claims of staff
     Office stationary and accessories and
     Other miscellaneous expenses etc.
     He makes payment of salaries to staff such as
      handling allowance of loaders, peon, watchman
      etc. Admin allowance for Warehouse personnel,
      salaries of drivers, and salaries of SP‟s. Apart
      from these CF accountant pays T.E (Travel
      Expenses) of SP‟s and TMO‟s and files claims of
      T.E for the Area Manager.
                                                          58
   Each SP (Sales Promoter) is paid Rs.5000 for
    meeting expenses for a whole month though this
    amount could exceed depending on the nature of
    task and consumption of fuel and other expenses.


   The CF accountant pays cash for any amount up to
    Rs.5000 for any expense. If the amount exceeds
    this figure then he issues a crossed cheque.
   He has nothing to do with the payment of salary
    to the Area Manager nor of the TMO‟s which are
    handled by the Head Office.
   The fund allocated for the Peshawar sales office
    for meeting expenses for a whole month is
    Rs.125000. However, the accountant can request
    amount exceeding the fund through a CF statement
    depending on the requirement. This fund has been
    divided into the following sources i.e Bank,
    Cash, Bills, advances etc.
   The CF Accountant can dispatch 3 three CF
    statements in a month to request the
    reimbursement of the amount expended. Each head
    or area of expenses has its own respective code.
   Each CF statement also known as “Top sheet” bears
    its own CF number.
   The CF accountant prepares cash book voucher in
    which he enters the amount of separate heads of
    expenses. All such cash book vouchers are
    attached to the CF statement and CF summary along



                                                       59
      with the bank statement and sent to the Head
      Office as a claim.
     The CF Accountant must get the endorsement on all
      the papers from the Area Manager before
      dispatching a CF statement.


     He files all the bills, advances paid, issues
      fleet cards for vehicular fuel, and keeps photo
      copies of T.E claims. Moreover, he maintains
      budget files containing details of budget and
      variance.


DISTRIBUTION STRATEGY


CHANNELS OF DISTRIBUTION
Channel of distribution is a system whereby customers
are provided access to an organization‟s products or
services. The distribution network of the Area Sales
Office Peshawar is engaged in two types of sale which
are as follows:


PRIMARY SALE
Primary sale involves the transfer of stock from the
Warehouse to the Distributor‟s go down.


SECONDARY SALE
Whereas, in Secondary sale the distributor carries the
stock to the market.




                                                        60
And for this Pakistan Tobacco Company employes two
main channels of distribution for making it‟s product
available to the consumer. These are as follows:


I) Producer         Distributor         Wholesaler
Retailer         Final Consumer


II) Producer         Distributor           Retailer
Final Consumer


Though a third alternative channel i.e from Producer
to the Distributor and then the final Consumer also
exists but it is almost outdated and is no longer
used.
The Peshawar Area Sales Office which falls in the
North region supplies stock to almost the entire
province including Landi Kotal and Chitral. The Area
Sales Office has a total of 19 distributions all over
the jurisdiction of the Area Sales office having a
systematic supply chain.
These areas have been classified according to their
size and location having their own respective sections
as follows:


PRP1-MINGORA-NOWSHERA,JEHANGIRA,MARDAN,BHAT KHELA


PRP2-D.I KHAN (Maj Mkt),TANK,BANNU,LAKKI MARWAT,KARAK.


PRP3-PARA CHINAR, HANGU, TAL, KOHAT (MAJ MKT).


                                                        61
Likewise “Local” distribution includes the following:


PESHAWAR, CHARSADDA, CHITRAL, LANDI KOTAL.




Procedure For Distributor’s Order
The procedure for placing the order is fairly simple.
The distributor who has non-check account at HBL
Peshawar usually makes a phone call and gives the
order for the required brands specifying its quantity.
He would either issue a bank draft in the name of his
own account at HBL send a TT (Telegraphic Transfer) or
would deposit cash in the account for each
transaction. Orders are received almost daily from the
distributors both “Local” as well as those located
along the “Rout” and immediate shipment is made.


Each of these sections are supervised by their own
respective TMO‟s (Trade Marketing Officers).


STA
The transporter carrying the consignment bears a
document called STA (Stock Transfer Advice) which
shows that stock is being transferred from the factory
to the Warehouse.


AR FORM


                                                        62
STA is also accompanied by this document specifying
quantity, brand quality and excise amount.


The local distributors have their own transport for
lifting the stock. But they make claim for transport
expenses calculated in M’s which will be paid to them
by the company.
For the “Rout” distributors the company has hired its
own transporter with whom it has signed a contract for
supplying stock. But as for payment there are certain
exceptions in certain cases:
SELF
For example if a certain rout distributor fails to
place an order and misses the rout truck then he will
have to lift at his own cost and on his own transport.
This rule is referred to as “SELF”.
F.O.C
In case a distributor gives an order but the quantity
of stock is not enough to justify rout shipment and
other distributors along the rout too have not placed
their orders then for under load truck no rout
shipment is to be carried out. Rather the distributor
will have to lift on his cost but claim will be made
against the factory for the transport expenses.
In another case, suppose the amount of stock at the
warehouse is less and this remaining stock is to be
got rid of, then sales office would call the
distributor even if the order has not been placed by
him and would deliver the stock by its own transport
to the distributor. This would be referred to as PTC.

                                                        63
TP3
A document called TP3 which serves as gate pass would
also be issued to the transporter bearing date,
company‟s address, and serial no‟s of cartons
testifying that the stock is duty paid. It is to be
prepared by the Excise Clerk. It is used for custom
and excise purposes. A rout truck time monitoring form
is handed to the transporter in which the arrival,
departure and unloading time for a particular rout is
to be specified.




PTC’S PESHAWAR DISTRIBUTOR: UNITED BROTHERS:
Over the course of the internship period the internee
also had a three days attachment with the Peshawar‟s
Area Local distributor “UNITED BROTHERS”. The “United
Brothers” have been in the cigarette distribution
business since 1999 having a full fledged Office and a
Warehouse   at Sikander town. United Brothers deal
exclusively in PTC‟s brands and they are regarded as a
valued partner by the Area Sales Office. UB is owned
by Mr.Saleem who often pays visits to the office. UB
uses computer applications in their daily routine
work. They comply with all the rules as laid down by
PTC and have been successful in achieving the targets
given to them.


TOTAL STAFF AT THE DISTRIBUTOR’s OFFICE:
The number of staff at the UB distributor‟s office is
as follows:

                                                        64
   There is a MANAGER who is at the helm of all the
    affairs at the distributor‟s office. The Manager
    supervises all the administrative and managerial
    activities of the office. This person is in close
    contact with the Area Sales Office.
   There is 1 ACCOUNTANT who keeps all the important
    account books such as legers, journal vouchers
    and other cash entry books etc.
   There is also an Assistant Accountant who assists
    the accountant in his respective tasks.
   There are 2 Field Sales Officers who are
    concerned with the sales force activities.
   There is 1 Cashier at the Office whose job is to
    receive cash return from the salesmen upon their
    arrival, examines the notes and coins, counts
    them and then deposits the same in the bank. The
    cashier is assisted by an assistant cashier.


   There are 2 Store keepers at UB who prepare the
    DC (Delivery Challan) in which he makes entries
    of the amount of stock to be carried, the amount
    sold out and their value in monetary terms. He
    gives the required stock to both the Salesmen as
    well as the Sales Promoters.


   There is a MS at the UB distributor‟s office
    whose job is to visit the outlets, clean the
    boards and modulars, check and repair tube
    lights, tube shades and boards.

                                                       65
       There are 2 guards at the UB office.
       There is a driver a cook and peon.


United Brothers Supplies stock to the following areas:


Peshawar Metropolitan Area:
Full coverage is given almost to the entire
Metropolitan area comprising of    all the major markets
of both retail and wholesale of the provincial capital
such as Saddar,University road,Hayatabad etc.
Villages:
United Brothers carries out its regular supply through
its sales force to all the relatively far flung areas
as well as the suburban and those villages located in
the outskirts such as Pabbi, Barraa,Warsak etc.
United Brothers Field Sales Force:
The field sales force of UB comprises of 16 salesmen
as follows:
   1 salesman for the wholesale who carries the stock
    in a Suzuki Van and supplies it to all the
    wholesalers mainly in the selective wholesale
    market.
   There are 2 salesmen for giving coverage to the
    villages.
   Moreover, there are about 13 salesmen who cover the
    retail market exclusively.
Each Salesman is required to maintain a file of his
sales summaries containing the detail of his visits to


                                                          66
the respective beats, names of the outlets and the day
and date of   the sales call.
Each salesman has been given a motorbike for his
mobility. There is a large cube shaped box at the back
in which the stock is kept.


Sales Force Motivation:
From time to time both the Area Sales Office as well
as UB initiates competitions for salesmen. For example
in the month of July there was a competition for Gold
Flake (sx) the criteria for which are as under:


Criteria:*
              Sales Targets-Rs.750
              Productivity-Rs.750
     Promotion Awareness-Rs.250
     Packet Display-Rs.250
     Total Prize Money-Rs.2000
Each salesman had to fulfill the criteria for winning
this prize money. The Salesmen evaluation was to be
done by the Sales Promoter


Field Sales Officer:
UB has appointed 2 Field Sales Officer who have been
assigned the job of supervising the activities of the
salesmen.




                                                        67
PTC’S PROMOTION STATEGY:


PROMOTION
“It is one of the four controllable variables (with
product, price and place) of the marketing mix”.*


Promotion Mix

It is “the range of means available to an organisation
for communication with its target market -
advertising, sales promotion, personal selling,
publicity and public relations.”

The entire scheme of operations pertaining to
promotion at    PTC is mapped out by people at the head
office at Islamabad. They instruct the sales offices
all over the country to execute these operations.

ADVERTISING

“Any paid form of non-personal presentation and
promotion of ideas, goods or services by an identified
sponsor”.*




                                                          68
PTC‟S advertisements that formerly featured in    almost
all the media have declined substantially owing to the
strict media regulations formulated by the government
with the aim of discouraging tobacco related products
particularly cigarettes. Nevertheless, PTC‟s brands
have over the decades through ensuring sustained
superior quality and a bond with both it‟s
distributors, retailers and above all it‟s consumers,
have successfully captured a significant market share.


SALES PROMOTION*
Sales Promotion is “a marketing discipline that
utilizes a variety of incentive techniques to
structure sales related programs targeted to
consumers, trade and or sales levels that generate a
specific, measurable action or response for a product
or service”.
PTC has always been engaged in vigorous sales
promotion activities to lure the consumer towards its
brands.
It employs a number of strategies in this regard such
as “Push Strategy” aimed mainly at the resellers such
as the retailers by offering them various incentives
to secure their brands against those of the
competitors by attracting more consumers towards PTC‟s
high quality brands.




                                                        69
On the other hand “Pull Strategy” aims to attract the
consumer directly which is done mainly through
consumer promotional tools.
During the internship period the internee happened to
experience one such promotional
Program using both the “Pull” and “Push” strategies.


 A scheme was introduced in the month of July for Gold
Flake (sx) which is regarded as relatively weaker
brand in NWFP though having a much stronger reputation
and standing particularly in the   Punjab area. The
scheme entailed an offer of 3 full packs to the
retailers upon the return of ten empty packs along
with the wrapper of the outer duly stamped. Whereas,
for consumers a similar offer was given. However, the
scheme apparently did not meet with much success as
reflected through the response and the attitude of the
retailers.


(a)CONSUMER PROMOTION
Consumer Promotions are directed at the ultimate user
of the good or service. From time to time PTC utilizes
a number of such promotional tools most of which have
been quite successful:
Samples
Sampling allows the consumer to experience the product
or service first hand.
It is the job of the Sales Promoter at PTC‟s Sales
Office to give out free samples of its brands to
smokers who might be loyal to the brand of a rival

                                                        70
producer. For instance free samples of GF 10HL were
given out to smokers by SP‟s during consumer contact.
Coupons
Legal certificate offered by manufacturers and
retailers that grant specified savings on selected
products are called Coupons. They must be presented
for redemption at the Point Of Purchase. Coupons are
used mainly to encourage trial and induce brand
switching.
It main advantage is that it allows the advertiser to
lower prices without relying on cooperation from the
retailer. A number of Coupon schemes have been
introduced for various brand categories from time to
time. A very popular coupon scheme introduced by PTC
was that of “Voyage Of Discovery” on its GL brand in
2001 which stipulated a grand prize of Rs.30,00,000
for winner.
Price Pack
Such deals provide the consumer with something extra
through the pack itself. However, it is less common in
the case of PTC‟s promotional strategies.
Premium
A premium is a tangible reward for performing a
particular act. It is also called incentive marketing
and it works because the premium ads value to the
product.
Recently, there was a scheme introduced whereby all
the retailers were directed to offer the customer an
extra pack of Gold Flake on the production of three
empty packs of 10HL or 20 HL packs of the same brand.

                                                        71
Sweepstakes
Sweepstakes require the participants to submit their
names to be included in a drawing or other chance
selection. Quite often either during sampling or
consumer contact sales promoters take down the names
and addresses of the consumers thus contacted and use
the data among other purposes also for drawing in
which the lucky ones can win loads of exciting prizes.
Games
 The data provided by the Sales Promoters through the
consumer contact is also used for carrying out draws
and then the names of consumers thus obtained from the
draws are then invited to take part in all kids of fun
games. Recently, during the Shandoor Polo Tournament
the Area Office had organized a variety of games such
as “Musical chair” and “Tug of War”


(b) TRADE PROMOTION
Trade Promotion is aimed at the intermediaries such as
retailers and wholesalers. PTC uses several trade
promotion tools such as


Contests
PTC also allows its retailers to participate in
different kinds of contests as part of   the
promotional strategy of a certain brand. There was a
contest recently in which the retailers had to
decorate their shops and winner was to be judged on
the basis of how well the shop had been adorned.


                                                        72
Pop-Displays/Merchandising
PTC offers a variety of merchandising items such as
Banners, counter                 units, Kiosks, Mirrors, Clocks,
Modulars, Tube Shades, Hoardings etc to those valued
retailers who have had an impressive track record of
sales.


Advertising specialties
Specialty advertising includes souvenirs such as hats,
T-shirts, key chains, watches with the logo of either
the brand or the producer. PTC gives away such items
to the consumers through the retailers.


PERSONAL SELLING:
 “Personal Selling, a form of promotion utilising the
services of a sales team; one of the major
controllable variables (with advertising, sales
promotion and publicity) of the promotion mix.”
At PTC        Personal selling activities are performed by
the SP‟s.


PUBLIC RELATIONS:
“Building good relations with the company‟s various
publics by obtaining favourable publicity, building up
a good corporate image, and handling or heading off
unfavourable rumours, stories and events.”
Most of the PR issues are handled by the head office and though the sales office does not have a
PR officer having exclusive PR related functions yet all the TMO’s and SP’s have over the course
of their dealings with the market acquired the skills to negotiate with all kinds of
                                                                                                   73
PTC’S TRADE MARKETING PRACTICES


PTC‟S marketing department has been divided into two
sections:


     BRAND MARKETING
     TRADE MARKETING


 BRAND MARKETING
It is concerned with the marketing activities relating
to the various brands manufactured by PTC. At PTC
Brand marketing consists how best to determine the
needs and wants of potential customers, developing a
sound brand marketing strategy to meet those needs and
wants, and executing a plan that incorporates the
brand marketing strategy focused around the specific
brand being marketed.


 TRADE MARKETING AT THE AREA SALES OFFICE
Almost the entire set of activities at the Peshawar
Area Sales Office is based on the concept of “Trade
Marketing”. It is primarily concerned with channels of
distribution and the subsequent promotional strategies
of brands. It is the duty of all the regional managers
to ensure that    all the go down inventories are
maintained according to the actual and    estimated
requirements.
“Trade marketing” as a notion entails various
marketing related activities such as:


                                                       74
       Sales
       Handling demand orders
       Supply to the distributors and retailers
       All the subsequent Promotional activities etc.
TMO
There are three TMO’s at the Peshawar office who have
been assigned their respective stations or markets.
Each TMO has been provided with a laptop and a Suzuki
van for market visits .This person heads a team of
SP’s who are answerable to him. The job of a TMO
centres around the market i.e.


   He is the immediate authority who assigns tasks to
    SP‟s under him,
   Visits and inspects the outlets,
   Checks and ensures availability of stock at the
    shops,
   Inquires about the position of brands Vis-à-vis
    competing brands,
   Supervises the distribution network.
   Deals with consumer promotion activities such as
    different types of offers.
   Addressing the grievances of retailers.
   Handling complaints.
   Providing merchandising accessories and handling
    merchandising activities.
   Supervising and maintaining all the important
    documents and papers such as SD20,SD9,CF,CLAIMS
    REGISTER,MERCHANDISING REGISTER etc.

                                                         75
    Organising functions (Concerts, melas etc for
     promoting company‟s name)
    Coordinating different types of surveys.
     Directs his SP‟s for further course of action.


SP
SP performs marketing functions. SP‟s go by their FCP.
This FCP is in fact a monthly schedule of tasks
assigned to an SP. Besides, there is an Activity
Planner Sheet for each SP which specifies the no of
beats to be visited by the SP over the month. Each SP
visits shops in his beat i.e. the specific area
assigned to him in a particular market. One beat could
encompass an area with maximum 50 shops.


    SP makes consumer contact in which he would   give
     away free packet of a particular brand to smokers
     for trial and would also give necessary information
     about the brand, details of which he would enter
     into his Consumer Contact Register.
    Communicates with the shopkeeper about any running
     scheme or proposed scheme or any other offer.
    Listen to and take down consumer and retailer
     complaints which he would later communicate to his
     superiors.
    He examines and ensures stock availability and pack
     display.
    Ensures the full coverage of his respective beat.
    Endeavours to make productive those outlets that
     were formerly unproductive.
                                                           76
   Deals with the merchandising material such as
    posters, stickers, bunting etc.
   And sees whether the distributor‟s salesman makes
    regular sales calls at the shops in his beat or not.
   Moreover, he has to keep a log book in which to make
    entries of departure from and arrival at the beats
    so as to make TE claims at the end of the month.


   The Sales Promoters have been provided with motor
    bikes (for urban areas) and Suzuki vans for carrying
    out activities in rural areas.


SWOT analysis
A scan of the internal and external environment is an
important part of the strategic planning process.
Environmental factors internal to the firm usually can
be classified as strengths (S) or weaknesses (W), and
those external to the firm can be classified as
opportunities (O) or threats (T). Such an analysis of
the strategic environment is referred to as a SWOT
analysis.
The SWOT analysis provides information that is helpful
in matching the firm's resources and capabilities to
the competitive environment in which it operates. As
such, it is instrumental in strategy formulation and
selection.
It ought to be noted that the following SWOT Analysis
is by no means an exhaustive in depth analysis or the
exact picture of the of the state of affairs in the
company, as there are many subtle aspects which are to
                                                         77
be dealt with in a much broader perspective. Rather it
only seeks to express the views of the internee to the
best of his understanding.


SWOT ANALYSIS OF PAKISTAN TOBACCO COMPANY:


Strengths:
In the analysis of the Strengths of the company we
focused on the competencies of the PTC its entirety.


   PTC‟s own reputation as a dynamic enterprise.
   Technological sophistication in terms of highly
    advanced production techniques and manufacturing
    plants.
   Offering superior quality brands has helped the
    company in carving out an image for itself both in
    the market and in the hearts of the consumers thus
    winning the trust of both.
   Highly competent and diverse work force throughout
    the ranks of the company.
   Compliance with the regulations of the government
    and regular payment of taxes has earned the company
    the respect of all and sundry.
   Major contributor to the national revenue of the
    state.
   Major contributor to numerous causes such as
    forestation campaign, free mobile dispensaries,
    training schools and the company‟s concern for the
    eco system.


                                                          78
    A highly advanced and systematic distribution
    network and supply chain.


   Utilization of highly creative and state of the art
    marketing tools.
   Excellent corporate culture, which is more growth,
    oriented.
   A strong interactive communication system.
   And above all the banner of BAT.


Weaknesses:


   Failure of PTC to file a strong case against lower
    quality brands whose producers do not pay any tax to
    the government and yet have maintained a prominent
    presence in the market.
   Cigarette being a controversial product convincing
    the consumer to prefer PTC‟s brands to competitors
    because of the quality of their constituents has
    become an uphill task.
   For gaining an edge over the competitors and in a
    bid to live up to its image in the market much of
    PTC‟s operations are highly costly. So financial
    resources are being extravagantly used.
   Cutting back on such cost may be difficult, because
    of which in recent years the company has done
    extensive across the board retrenchment.




                                                          79
    Opportunities:


    Since PTC has already captured a major share of the
     local market in it‟s pocket which has been ensured
     by the availability of their brands in virtually
     every shop all over the country, so it appears less
     likely that any big attractive opportunity would be
     missed by it. PTC will assess the prospects and will
     avail it as and when as it presents itself.
    However, PTC has a golden opportunity to expand its
     distribution network to the neighbouring Afghanistan
     and realize the prospects of a full fledged
     manufacturing unit in that country.
    This would help them capture another big profitable
     market.
    This big opportunity is backed and justified by the
     existing strong operations of the Area Sales Office
     at Peshawar.


Threats:


    The biggest threat that PTC is faced with at this
     point in time is posed by the widespread rampant
     smuggling of foreign brands that are much cheaper
     and eat away a big chunk of profit of the company.
    Another threat is that of the “counterfeit”
     cigarettes which too are easily available in the
     market. These brands on the one hand because of

                                                           80
    their low quality tarnish the image of the genuine
    brands and on the other deprive the company of a
    good share.
   Tobacco being a controversial product, governments
    enforce strict regulatory measures from time to time
    to discourage its mass production which is also a
    genuine threat for the company.


   Imposition of high taxation on tobacco related
    products especially, cigarettes.
   Speaking plainly of competition one has to
    acknowledge the fact that some brands in the lower
    category such as “Press” and “Morven” are giving a
    tough time to some of the PTC‟s lower category
    brands particularly in NWFP.
   The growing health hazards such as cancer and
    ailment of the heart and their attribution to
    smoking may also create a potential threatening
    situation for the company.
   PTC‟s selective approach towards its retail
    merchandising as opposed to the competitor‟s
    readiness and promptness in their aggressive
    merchandising may create problems for the company.


   In a future scenario there is a great likelihood of
    a possible confrontation between anti-smoking
    campaigners and tobacco produce




                                                          81
SWOT analysis of competitor (LTC)
     Strengths to Ltc         :
     LTC is PTC‟s largest competitor and the second
     legal     cigarette      manufacturer          in    the    Pakistan
     besides    PTC.    LTC       used    to   be     affiliated       with
     Phillip Morris, the giant in the global cigarette
     market.    LTC    has    25%     more     resources        and   three
     times   more     salesman      than     PTC,   and     this      almost
     unlimited budget are due to tax evasion.


     Weaknesses of Ltc:


     The biggest weakness of LTC is money making and
     it believes in short-term gains rather than long-
     term benefits. LTC uses quite unethical marketing
     strategies. Its price is not properly positioned
     in   relation     to    the    theme,     thus      this   promotion
     lacks      harmony.          LTC‟s      cigarettes         are     not
     completely tax evaded; a very small amount of tax
     is paid.


Threats to Ltc:


     According to LTC the biggest threat is the
     growing market share and increasing profit rate
     of PTC. The management of the LTC takes a strong
     notice of their competitor‟s new business
     investments and innovations in this field.




                                                                          82
 RECOMMENDATIONS:


We will put some of our recommendation in front of the
company so that company can improve.
     PTC‟s Area Sales Office should either be
      immediately renovated or shifted somewhere else
      as its present location with the state of its
      office building and the premises in no way give
      an onlooker the impression of a proper PTC‟s
      marketing and sales office in NWFP.


     It is for the reason that any new set up with
      amenities such as air conditioners, and
      comfortable furniture would make the sales force
      sluggish. However, this belief on part of the
      internee has been negated by most of the staff
      members.
      Though the matter has been under discussion for a
      long time but no concrete measures have been
      taken till now.
      However, we recommends that in view of the this
      pressing need of a new building which could serve
      as an office at least on tentative basis, the

                                                         83
    Area Sales Office should be shifted to UB office.
    *




   Both the Area Manager and the TMO‟s have to
    realize that in order to boost the efficiency and
    moral of the sales force they must be motivated.


   It implies that proper appreciation must be
    accorded to them according to their performance
    mostly in the form of monetary reward upon the
    accomplishment of the sales target of each
    respective SP.


   The Sales Office must cut back on their daily
    expenses particularly the extra expenses of the
    fuel of the vehicles and those of telephone at
    the office.


   As stated in the “Analysis” section the SP‟s do
    not have any real job security as they can be
    hired and fired at the behest of the Area
    Manager. Therefore, has to be a system in place
    whereby sales force hiring and termination could
    be done so that no arbitrary decision is taken.


   A canteen must be set up at the Sales Office for
    the staff who at present do not have a proper




                                                       84
    facility for tea and meals which are bought
    mostly from a hotel nearby.


   Besides, a cook must be hired on permanent basis
    to ease up the burden of the Warehouse loader who
    a present has dual or may be more jobs of loader,
    peon, cook as well as a watchman at times.


   The Watchman on duty at the Sales Office is an
    elderly gentleman nearing his eighties should be
    replaced by a young guard who would watch over
    both the office and the warehouse.


   Instead of Suzuki pick ups, Jeeps should be
    provided to the SP‟s who are given four wheelers.
    This is for the reason that Suzuki pick ups have
    not been found to be up to the task particularly
    when it comes to rugged terrain of the rural
    areas for which these vehicles are mostly used.


   As stated in the “Analysis” section PTC‟s GF
    brand was re launched in NWFP with an aim to
    build a market for this brand. Since GF was a
    “Punjabi” brand that is why it was assumed that
    increased marketing efforts will have to be
    applied to make it a success in the province. But
    the initial response from the retailers as well
    as the consumers was not encouraging.
   All the marketing strategies and planning should
    then be aimed at the consumers in such a way that
                                                       85
    the slogans and images carry the message to the
    consumer in a very convincing fashion for winning
    their favour. The modalities of such a strategy
    should be worked out by marketing team familiar
    with the tastes, conventions and preferences of
    the local people.


   And such a course of action applies to other
    brands too.


   The company must have periodic meetings in which
    to allow the staff members at the sales offices
    all over the country to share their experiences
    of the market conditions, tradition, and tastes
    peculiar to a market with the marketing teams at
    the helm of decision making.


   This would in turn facilitate the task of
    marketing department at the head office to chalk
    out effective and efficient strategies for
    different markets according to their demands.


   PTC must initiate a vigorous campaign for curbing
    the growing menace of smuggling of foreign
    cigarettes into the local market. And since NWFP
    has the notorious reputation for being the hub of
    smuggled and contra banned goods in the country
    as most of smuggled brands sneak into the country
    through Afghan border therefore, it is incumbent


                                                       86
    on officials at the Area Sales Office to go out
    of the way in a bid to put an end to this trade.


   For this the company should collaborate with the
    retailers and custom officials to pin point such
    elements who are engaged in this trade and
    through Concerted efforts uproot them.


   PTC is also confronted by the mushrooming of
    industries engaged in the production of
    counterfeit cigarettes in the names of PTC‟s
    brands. And again this trade too is rife and
    flourishing in NWFP. PTC must press the
    government for stringent measures against
    counterfeit brands as they tarnish the company‟s
    image in the market.


   Likewise, a large number of non-tax paying
    cigarette manufacturers are into the business in
    the province who must be taken to task and their
    operations be halted and confiscated forthwith.


   PTC being a major contributor to the national
    revenue must safeguard its interests in the face
    of the threats posed by the aforementioned
    factors.


    In this regard the company must advocate a strong
    case against all those entities engaged in the
    same trade but operating through illicit means.
                                                       87
   The transporter supplying the stock to
    distributors located along the “Route” must be
    accompanied by a guard.


   Usually PTC places more emphasis on its retailers
    wherase, the small time sellers of tobacco
    products such as the vendors who have no settled
    outlets but who constitute a reasonable market in
    NWFP are mostly ignored.


   If the company instructs its sales force to cover
    these sellers with mobile shops on the foot path
    and elsewhere on the streets too in terms of
    communicating company‟s schemes and offers on
    certain brands then they too can make up a good
    market.




                                                       88
REFRENCES

 www.bat.com
 www.goliath.ecnext.com
 www.business.com
 www.connect2web.com
 Interviews of different officers of different
  departments.
  Khushal Khan Khattak (BTL executive)
  Aimal Khattak (quality assurance officer)




                                                  89
Questions about “PTC”
Q: 1) History, founder and starting date of PTC?
Q: 2) What are the objective and goal of PTC?
Q: 3) How much profit do you earn in a year?
Q: 4) How much area and cities do you cover?
Q: 5) What about the sales and subscriptions of PTC?
Q: 6) Do you provide some facilities to your
customers?
Q: 7) What about price of your brands?
Q: 8) How many departments do you have?
Q: 9) How many substitutes you have and what about
your position in market?
Q: 10) what type of quality you mostly focus on?
Q: 11) Does your brand are about all age groups?
Q: 12) Do you give subscription and other facilities
to your consumers?
Q: 13) Do you use and adopt the latest technologies in
printing and other department?
Q: 14) What is your head office and regional office?
Q: 15) What is your most selling product or brand?
Q: 16) what type of advertisement you like for your
promotion of products?

                                                       90
Q: 17) Do you have bench marked some other
organization?




     Survey Questionnaire

     Pakistan Tobacco Company

Name: __________________________

Occupation: ______________________

Q1: What is your age?
    Under 16 years.
    16 to 25.
    25 to 35.
    35 to 50.
    50 and above.
Q2: What is your occupation?
     _________________________
     _________________________
     _________________________
Q3. Are you smoker?
    Yes.
    No.


Q4: Which brand of PTC do you use?
    Benson.
    Gold leaf.
    Capstan.
    Gold flak.
    Embassy.
Q5. Are you satisfied with the tobacco quality of it?
    Yes.
                                                        91
    No.
Q6. Are you satisfied with price of it?
    Yes.
    No.
Q7. Are the prices of brands of Pakistan Tobacco
Company is better then the Competitors?
    Yes.
    No.
Q8: How did you come to know about the PTC?
    From friend.
    By seeing it somewhere.
    Through net.
    Through advertisement.
    Other ____________________________________.

Q9. Are you a regular user of these brands?
    Yes.
    No.
Q10. Are you satisfied with the quality of these
brands?
    Full satisfied.
    Some what satisfied?
Q11: Do you think that PTC provides better brands as
compared to others?
    Yes.
    No.
Q12: Which brand of PTC u use a lot?
    Benson.
    Gold leaf.
    Capstan.
    Gold flak.
    Embassy.
Q13. Are you satisfied with the marketing promotion of
PTC?
    Yes.
    No
Q14. What do you think cigarettes are properly packed
and prevented from the external environment?
    Yes.
    No.
Q15: What do you think about the price of these
brands?
    Cheap.

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    Expensive.
Q16: Do you use the brands of PTC if yes then which
one?
    Benson.
    Gold leaf.
    Capstan.
    Gold flak.
    Embassy.
Q17: What do you think about the material use in these
brands .Is it hard to smoking?
    Yes.
    No.
Q18: Does PTC have any Political impact?
    Yes.
    No.
Q19. Is PTC contributing socially in country?
    Yes.
    No.
Q20: Do you use other brands then PTC brands?
    Yes.
    No.
 Q21: If you use other brands then what is the main
difference between PTC brands and other‟s
         _________________________
         _________________________
Q22: Which department you think should be improved in
order to better the quality of     PTC brands?
    Marketing department.
    Sales department.
    Management department.
    IT department.
    Cora department
Q23: Do you think PTC provides change taste than
others?
    Yes.
    No.

Q24: What do you think how PTC can be improved
______________________________________________________
__________________
______________________________________________________
__________________
Q25: Any comments:

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______________________________________________________
__________________
______________________________________________________
__________________


                           Signature _________________

           Thanks for your kind cooperation




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