Navigating Sales and
Distribution in the Tobacco
Industry:
A DEEP DIVE INTO
INDIA'S
CIGARETTE MARKET
Meet The Team
GROUP 5
Aakarshita Sinha Md. Aman Nawab Naba Nazneen Dibya Sarkar Shubham Sethi Atulya Aman
23PGDM181 23PGDM210 23PGDM093 23PGDM194 23PGDM231 23PGDM191
OBJECTIVES
Study Real-Life Sales & Distribution
Functions
• Investigate ITC’s cigarette sales channels for both premium and mass-market brands.
Gain Deeper Understanding of ITC’s Sales
Operations
• Understand the core mechanisms of ITC's sales and distribution strategies, including
relationships with distributors, retailers, and local vendors.
Conduct Marketing Audits
• Evaluate the organizational and management structure of ITC's cigarette sales
channels.
• Identify product-market dimensions and nuances specific to the cigarette
market.
CHANNEL FLOW CHART FOR
Channel Type ITC
Sub-
Channels
Flow Steps Details
Overall Retail 1. Manufacturing → 2. Warehousing → 3. ITC's products are sold through third-party
Sales Distribution (logistics) → 4. End Consumer retail platforms.
DIRECT D2W (Direct-to- 1. Manufacturing → 2. Warehousing → 3. Wholesaler
ITC sells to the retailers via wholesalers.
CHANNE Wholesaler) → 4. Retailers
Paanwalas 1. Manufacturing → 2. Warehousing → 3. Paanwalas ITC meets the end consumer through local
L → 4. End Consumer small paanwalas.
Traditional 1. Manufacturing → 2. Warehousing → 3. Local kirana stores are a major channel,
Retail (Kirana Distributors/Wholesalers → 4. Retailers (Kirana especially in rural areas, with distribution
Stores) Stores) → 5. End Consumer through wholesalers.
1. Manufacturing → 2. Warehousing → 3. Distributors
Modern Trade ITC's products are sold in large urban retail
INDIREC (Supermarkets)
→ 4. Supermarkets/Hypermarkets (e.g., D-Mart,
Airports) → 5. End Consumer
chains offering dedicated product placement.
T Dedicated
Platforms
1. Manufacturing → 2. Warehousing → 3. Distributors ITC sells its products in dedicated stores with
→ 4. Dedicated Cigarette Shops→ 5. End Consumer other similar imported products.
CHANNE Regional 1. Manufacturing → 2. Warehousing → 3. Regional Regional distributors help ITC's reach rural
Distributors Distributors/Stockists → 4. Local Retailers → 5. End
L (Multi-level) Consumer
markets, particularly in North and West India.
Secondary findings
MARKET OVERVIEW
• REVENUE: $12.73 BILLION (2023), WITH A
CAGR OF 4.72% (2023-2027).
• VOLUME GROWTH: EXPECTED TO REACH 87.47
B I L L I O N P I E C E S BY 2 0 2 7 .
• CONSUMER INSIGHTS: CONSUMPTION SPREAD
A C R O SS VA R I O U S A G E A N D I N C O M E G R O U P S , VOLUME IN THE CIGARETTES SEGMENT OF THE TOBACCO
PRODUCTS MARKET INDIA FROM 2019 TO 2029 (IN BILLION
W I T H P R E M I U M A N D M A SS M A R K E T S E G M E N T S . PIECES)
• K E Y P L AY E R S : I T C LT D . , G O D F R E Y P H I L L I P S
INDIA, VST INDUSTRIES.
• CHALLENGES:
1.G O V E R N M E N T R E G U L A T I O N S : S T R I N G E N T
P O L I C I E S O N A D V E R T I S I N G , PA C K A G I N G , A N D
H I G H TA X AT I O N .
2.I L L I C I T T R A D E : H I G H T A X A T I O N L E A D S T O A N
INCREASED PRESENCE OF COUNTERFEIT
PRODUCTS.
Secondary findings
DISTRIBUTION MODEL
ITC WHOLESALERS RETAILERS
DISTRIBUTORS CONSUMERS
MANUFACTURI (PANWALAS,
NG SHOPS)
COMPREHENSIVE REACH: EXTENSIVE DISTRIBUTION ACROSS URBAN AND RURAL AREAS.
TECHNOLOGICAL INTEGRATION: ITC UTILIZES DATA ANALYTICS FOR INVENTORY AND
SALES MANAGEMENT.
KEY FINDINGS
• COMPLEX DISTRIBUTION NETWORKS: MULTI-TIERED, ENSURING BROAD MARKET ACCESS.
• REGULATORY CHALLENGES: HIGH TAXES AND STRICT PACKAGING LAWS ARE MAJOR OPERATIONAL HURDLES.
• RETAILER ENGAGEMENT: STRONG RELATIONSHIPS WITH RETAILERS THROUGH TRAINING AND INCENTIVES.
• FUTURE GROWTH:
1.DIGITAL SALES CHANNELS: POTENTIAL TO EXPAND SALES THROUGH E-COMMERCE PLATFORMS.
2.PRODUCT DIVERSIFICATION: MOVING TOWARDS REDUCED-RISK PRODUCTS TO ALIGN WITH SHIFTING
CONSUMER PREFERENCES.
Market Insights
ITC's strategic distribution and brand portfolio management have allowed it to
maintain a dominant position, contributing significantly to its market
leadership.
• Inventory Turnover Ratio: Average of 20-25 packs of ITC brands and 10-15
packs of Marlboro per retailer per day.
• Retailer Engagement: 90% of retailers prefer stocking ITC due to consistent
supply and high consumer demand
Market Share
Market Retailers Satisfaction
INSIGHTS
Marketing Techniques to Gain
Market Penetration
• Relationship-Building & Direct
Engagement: 80% of sales come from face-
to-face interactions, emphasizing personal
connections with retailers Challenges Faced in Sales &
Distribution
• Merchandising & In-store Promotions:
65% of stores utilize ITC-provided display racks
• Introduction of New Products: Only 20% success in launching new
and posters, leading to a 20% increase in sales
products due to consumer resistance.
visibility.
• Sampling Obstacles: Low acceptance rate (10%) when distributing
• Bundled Discounts & Bulk Orders: samples for new brands.
Effectiveness: 70% of retailers respond
positively to bundled offers, resulting in a 25% • Retailer Resistance: Over 30% of retailers display a lack of respect or
increase in overall sales. hesitation in engaging with cigarette sales representatives
SALESMAN DIARY DAILY ROUTE
LADO SARAI
OVERVIEW & OVERVIEW & RETAILER
DAILY ACTIVITIES DAILY ACTIVITIES ENGAGEMENT
• Salesman: Raj Kumar (ITC • Market Sensitivity: Promotions and Schemes: QUTUB HOTEL
& Marlboro Cigarettes) Monitors new • Updates retailers on ITC
• Retailer Names: Suraj, flavors/brands, especially and Marlboro promotions
Mayank mint and flavored (currently limited due to
• Working Days: Monday to cigarettes favored by restrictions). KATWARIA
Saturday female consumers. • Offers bulk order discounts SARAI
• Credit Policy: No credit; • Retailer Education: to boost engagement and
all payments upfront Provides trial packs and sales.
• Distributor: Sangam educates retailers to
BER SARAI
Vihar (ITC), Dhaula Kuan gather feedback on new Merchandising:
(Marlboro) launches. • Provides display racks,
banners, and posters for
better in-store visibility. IIT
• Ensures cigarette racks are
placed in high-visibility
areas.
MUNIRKA
Limited Acceptance of New Sampling Goals Difficult to
Products: Achieve:
• Retailers and consumers favor • Consumers often refuse new
established brands. product samples.
• New product lines face slow • Lack of engagement hampers
adoption due to brand loyalty. visibility and market success.
CHALLENGES
Expanding into New Markets: Disrespect from Retailers:
• Retailers prefer working with • Retailers often display
familiar sales reps. unprofessional behavior toward
• New reps struggle to establish sales reps.
partnerships in new regions. • Poor treatment affects
negotiations and work
environment.
CONSUMER FOCUS
Demographic Segmentation Behavioral Insights Product Preferences by
• BRAND LOYALTY: CUSTOMERS Region
SHOW STRONG LOYALTY,
Category Key Insights
ESPECIALLY TO WELL- Popular
ESTABLISHED BRANDS LIKE GOLD Region Segment
Brands
FLAKE AND CLASSIC.
• PRICE SENSITIVITY: HIGH,
Predominantly adults (ages 25-50). ESPECIALLY AMONG LOWER-
Age Group INCOME GROUPS DUE TO HEAVY
Strong brand loyalty.
TAXATION ON CIGARETTES. Gold Flake,
• HEALTH AWARENESS: GROWING Urban Premium
Classic
CONCERN, LEADING TO INTEREST
IN ALTERNATIVE PRODUCTS (E-
80% male, growing female customer CIGARETTES).
Gender
base.
Navy Cut,
Semi-Urban Mid-Range
Bristol
Broad range—Premium (Urban) and
Income Levels
Mass-market (Rural).
Scissors, Economy/
MOST USED TOBACCO PRODUCT IN Rural
Bristol Mass-Market
INDIA AS OF JUNE 2024
Geographic Urban areas dominate premium brands,
Spread rural areas prefer mass-market brands.
THANK YOU
