Introduction to British American Tobacco
Discuss about the Strategic Marketing of British American Tobacco.
British American Tobacco is one of the largest publically traded tobacco firms in the world. It is headquartered in London, United Kingdom. It provides nicotine and tobacco products to millions of adult customers across the world. The fact that had so far supported the company is its efficiency to meet the demands of smokers in terms of blends. The company was able to establish its name as the market leading firm due to its leading innovations in production process (Bat.com, 2018).
They claimed to have travelled decades in meeting the preferences of adults. The company claims to have used innovative strategies in order to produce the reduced-risk nicotine and tobacco products (Bat.com, 2018). The company claims to have transformed and is engaged in transforming the tobacco experience with its reduced-risk products. The company has reportedly acquired the Reynolds American Inc. (RAI) in 2017. The acquisition claims to have transformed both the geographic reach and scale of the business. Claims are also made like the company is now in better positions to fulfil its ambition to master the production of reduced-risk tobacco and nicotine products (Bat.com, 2018).
Currently, the company has its presence in many global locations and is identified as different brands in different countries it now operates in. Few of its country of operations are New Zealand, India, Germany, Bangladesh, Russia, Kenya, Vietnam, Jamaica, Uzbekistan and others. The presence is identified in the name of range of brands such as Benson & Hedges, Wills, Xon, Black Allen and more (Bat.com, 2018).
The study is purposefully aimed at analysing the marketing strategies of the company. This is worth a study because of a fact that Tobacco companies are historically known as to hide the information from public (Gilmore, Fooks, Drope, Bialous & Jackson, 2015). Hence, the study identifies whether BAT is in the same line with its marketing strategies or has gone an unconventional way to prove the difference in them.
Mission: The mission statement in regards to marketing strategies is to target the adult smokers only while keeping the children away from it (Bat.com, 2018). In this way, the mission statement suggests the company’s concerns for the society as it is not willing to enter a market or target the audience if not being allowed to. However, the commitment looks unjustified in Somalia due to its violation of Sharia Law. In the late 2008 and the early 2009, a Sharia Law was imposed against the use of cigarettes in Somalia. Al-Shabaab had banned the sales of cigarettes in Somalia; however, British American Tobacco (BAT) claimed to have violated the ban and had accused of distributing the cartons of cigarettes to Somalia traders (Journalnow, 2018).
Analysis of Marketing Strategies
Vision: The vision of BAT is to satisfy its consumers by taking care of their preferences, behaviour and concerns (Bat.com, 2018). It means that the company is aligned to the concerns of people. However, this is not at all true. This can be understood from the fact submitted in the “International Journal of Tobacco Control” which states that adolescent becomes a quick addict of nicotine. Once they are addict of nicotine and tobacco it becomes a difficult for adolescents to quit the habit (Tobaccofreekids.org, 2018). It is undeniable that the adolescents do not have BAT as the one option for cigarettes; however, this is also true that they are the leading publically traded tobacco brands in the world and hence, the adolescents may also be using the cigarettes from BAT in some parts of world.
Goals: The goal of British American Tobacco (BAT) is to “not mislead the people about the risks of using tobacco and nicotine” (Bat.com, 2018). However, the tobacco industry has a long history of hiding the entire facts related to the contents. Additionally, useful marketing stuffs are used to make a wrong publication (Symons, 2015). In such circumstances, it is very difficult to consider that BAT is being genuine in marketing the nicotine and tobacco products. According to Armstrong, Adam, Denize & Kotler (2014), harmful products are sometime marketed as to contain the less harmful thing or have considered reducing the risks of using it. It is therefore attempted to misguide the perception of the target customer segment.
Objectives: British American Tobacco (BAT) has the following objectives (Coombs, 2017):
- To ‘not mislead people on the risks of using nicotine and tobacco products’
- To target only the adult smokers
- To ‘not influence the behavior of customers that means they will not be forced to consume’
- To promote the sale of tobacco brands and making the customers aware of it as well
The fact that BAT does not influence the behavior of smokers appears wrong as evidenced from a number of studies which says the advertising and promotional activities can be the probable agents stimulating the demands for cigarettes in adolescents (Cranwell et al., 2015). The effectiveness of marketing and promotional activities in the last 10 years has boosted an increment in the adolescent smoking behavior (Cranwell et al., 2015). Hence, the fact that BAT does not target other than the adult groups and also that consumer behavior for smoking is not influenced, appear as the fake commitments.
The two selected countries for this section of study are New Zealand and India.
Probable reasons for “BAT” to select New Zealand: A case study being conducted by researchers at the Wellington Medical School of Otago University has found a dirty role played by the tobacco industry in New Zealand as people were not acknowledged of the harms of using tobacco (nzherald.co.nz, 2018). The study has also revealed that nearly every form of restrictive policies were tried to obscure in the past four decades (nzherald.co.nz, 2018). Hence, a favourable condition for tobacco trading was being created. This may have attracted BAT to the country. Such a freedom is always supportive for the extensive promotions of products while also hiding the harmful contents in the tobacco products. It can also be targeted to the young and the adolescents as well. Moreover, the entire four decades of dirty practices in the tobacco industry have had created the ample of opportunities for tobacco trading.
Corporate Strategy of British American Tobacco
New Zealand is one of four countries that have very tough government policies against the tobacco usage. The government is one of the very few governments in the world that has kept on working hard to make the country a Smokefree nation by 2025. The strict rules and regulations against the use of tobacco would have possibly discouraged the local business to take the advantage of the potential business (Li, Nelson, Newcombe & Walton, 2016). In other way, the move had encouraged the outsiders to enter the country. This is also one of the reasons why top tobacco companies such as BAT had entered New Zealand. In addition to it, such circumstances do also mean a less competition for foreign companies as circumstances are not favourable for local companies. Hence, it had just needed the effective promotion of tobacco, so that, it is presented as to have a less risk. This is what BAT is good at as they are an active promoter of their concerns for corporate social responsibility (CSR) (Coombs, 2017).
Reason to select India: The pattern of using tobacco is different in India as people have used it more in the form of non-cigarettes elements like bidis, khaini, chewing tobacco and others (Mini, Sarma & Thankappan, 2014). India is second only to China in terms of producing the tobacco which means the country will also have numerous giant local producers of tobacco and the related products. Hence, competition is bigger in the country which could never be a favourable condition for a foreign company. However, this is also true that the trend is now getting changed with more people especially the teenagers and youths are developing as addicts to cigarettes. Many of the educational institutions and the workplaces used to have separate zones for smoking (Goel, Khandelwal, Pandya & Kotwal, 2015).
The change might have been brought due to the habit of people to follow or copy the Western people. They also follow their favourite celebrities in all possible terms. Hence, Indian people in particular the youths are very susceptive to promotional stunts and the branded products. Such social trends are enough reasons for a foreign brand to enter the country (Singh, Vijayakumar, Priyadarshini & Jain, 2015). Additionally, there are policies to discourage the consumption of tobacco and cigarettes; however, the government does not seem like interested in banning it entirely the consumption of tobacco. This is because tobacco industry is one of the industries that support the Indian economy on a bigger note (Majmudar, Mishra, Kulkarni, Dusane & Shastri, 2015). Additionally, the national government of India get the high taxes from tobacco and related items (Majmudar, Mishra, Kulkarni, Dusane & Shastri, 2015). There are harm of using cigarettes is pasted on every boxes of varieties of cigarette brands as a notifying intimation of it. Still, people use it because they find this difficult to quit their temptation for tobacco and cigarettes. The young population in specific find this challenging to quit the addiction (Marshall, Lotfipour & Chakravarthy, 2016). Such behaviours might have attracted the interest of British American Tobacco towards India. People had been using tobacco but in different other forms which might have given a sense of its popularity in the country. The culture has changed now and lot of people specifically the youths have shown their potential desires for the consumption of cigarettes (Thakur et al., 2015). On top of all, the country now has the world’s largest population. In addition, the market for cigarettes was still growing. Hence, opportunities were higher and had only required the proper promotional strategies (Thakur et al., 2015).
Expansion into New Zealand
New Zealand: The government policies in New Zealand against the use of tobacco are one of the toughest in this world. Retailers find this difficult to sell the cigarettes. The various indoor places and also the few outdoor places such as the school ground and others are being prohibited for the doing smoking. BAT follows a few principles as their marketing objectives for international countries which are as follows (Coombs, 2017):
- People will not be mislead for smoking
- Products will only be targeted to adult smokers
- Consumer behaviour will not be influenced from attractive promotional stunts
- People should know this all the time that BAT is a tobacco producing company and it promotes cigarettes only
However, the principles look like as not being followed in New Zealand. The main places where tobacco is sold in the country are large supermarkets, convenience stores, service stations, dairies and some bars & cafes. Few of such places like Dairies and cafes are also visited by the youths. On the other hand, there is no promotion done to discourage the youths from smoking. Therefore, the promotional strategies contradict to its marketing principles for the international countries.
India: The British American Tobacco in India had used the kiosk advertising which means targeting areas that have very less advertisements. It helps to attract the attention of passersby and the travellers. The company had also taken the help of tobacco shop where they advertised the brand by displaying it through the advertisement banner. It also distributed for free to young people at bars and night clubs. People aged between a minimum 18 and 24 were being targeted (Mannocci, Colamesta & La Torre, 2016).
New Zealand: The advertisement or the promotional strategies can be challenging now considering a fact that the government policies are now much strict. This is so to support the vision of the New Zealand government to make the country a smoke free nation by 2025 (Grace, Kivell & Laugesen, 2015). The policies were always the tougher. Now, this has now become even tougher. Hence, it appears that advertisement policies will be challenging. Additionally, the advertisement of cigarettes and the related items of tobacco are monitored strictly, so that, no ethical violation is done. Advertisement will be a lot difficult in the country. It must now depend on the public responses which can help the cigarette brands in terms of sales (Grace, Kivell & Laugesen, 2015).
India: The advertisement of cigarettes has always remained a challenge for the cigarette brands. This is due to the legislative policies. However, the promotional strategy with the help of displaying the cigarette brands at the shops will remain as one of the most favourable marketing strategies for BAT. Newspapers are also used as advertisement strategy; however, the ever-increasing policy for cigarettes will make this difficult in the nearing future. Celebrities also influence the smoking behaviour and youths are in particular influenced from it (Sinha et al., 2015). Indian people strongly follow their favourite celebrities. They will try to follow their stars in terms of every possible ways. The population in the country is the largest in the world. The market is yet evolving and hence, reputed brands will find ways to promote the products. They pay high taxes to the national government and hence, possibilities for remaining safe from any strict action will be there (Sinha et al., 2015).
Expansion into India
This is the one way which has helped BAT so far in few countries. This will remain a saviour factor for the tobacco industry in future as well. The tobacco industry will need to prove that they put high cares on producing a reduced-risk tobacco. In doing so, they can come up with various different products like e-cigarettes and green cigarettes. These cigarettes are already in practice; however, there is a need for promoting these products even further (Arli, Rundle-Thiele & Lasmono, 2015). In addition to this, cigarettes and other tobacco products must be marketed with effective marketing strategies such as conveying the CSR related message to customers. This will just be the pulling strategies which is necessary as well in the rising challenges for cigarette consumption in few countries such as New Zealand. Ample of options must be provided to customers to select from. The list of products should have reduced-tobacco and normal cigarettes as well. Hence, BAT and other brands will be able to prove their practices as ethical due to a fact that these brands have provided the customers an ample list of products to select from. This also means that customers are not forced to use the cigarettes but, it is rather their decision only (Arli, Rundle-Thiele & Lasmono, 2015).
The product life cycle (PLC) is comprised of five stages such as the follows (Lee, Henriksen, Myers, Dauphinee & Ribisl, 2014):
- Development stage – As discussed earlier, in course of producing the CSR oriented tobacco products and stimulating the consumer behaviour, plans will be made for how to communicate the message the brand wish to deliver.
- Introduction stage – At the introduction stage, ample of efforts must be given to publicise the product. The British American Tobacco must work hard to reach to the maximum number of shops in India, so that, more people are aware of the innovative concept. It means the kiosk advertising. In New Zealand, BAT can target a free distribution of tobacco and cigarettes in specific places such as bars, cafes and others.
- Growth stage – Once customers are aware of the products, BAT must focus on communicating the differences in products to make customers feel the difference they are being called to. BAT can also promote its products by sponsoring a CSR related campaign. Such campaigns will help the company in stating its concerns for green and acquiring the significant number of customer loyalty.
- Maturity stage – At the maturity stage, the committed words during the development stage must be fulfilled using the brand awareness strategies, so that, customer loyalty is increased.
- Decline stage – In this stage, there are no further scopes for the increased sales. In this stage, the garnered reputation and the customer loyalty will help only to keep sales happening. Promotions can be done restating the values which the products had delivered to its customers.
The kiosk advertising which is suitable to India and for the introduction stage of the PLC is always doable for the British American Tobacco as they had already used such strategy before. In New Zealand, the company must focus on free distribution of cigarettes in social gathering places such as night clubs, cafes and others. In the growth stage, it is necessary to attain the increasing number of customer loyalty, so that, the maturity level is enjoyed based on the developed customer base. In course of this, BAT should sponsor to a number of CSR campaigns. This is because such campaigns will help BAT to communicate the message it had wanted to. Customer will also feel the changed business strategy in BAT.
Conclusion
Therefore, this can be concluded that the British American Tobacco have been very effective in both New Zealand and India in terms of identifying the market segment and the type of customers. The company has been found as unethical at some occasions with its marketing strategies as in Somalia it had continued to sell tobacco despite a ban on the sales. It is understood from the study that the landscape for tobacco and smoking will become a lot challenging in New Zealand as the government is intended to make the country, a smoke free zone. India unlike New Zealand offers potential customer base despite the bans on smoking. The effective marketing strategies will keep on doing well for tobacco industry in India.
References
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