ITC targets the

schoolbag!
Sathyanarayanan Chakrapani
Foray of ITC into the paper, notebooks and school
accessories segments; tremendous growth potential; a case
analysis

ITC Ltd

09AB32
 ITC Limited is a public conglomerate company headquartered in Kolkata, West Bengal,
India. It has a turnover of $6 billion and a market capitalization of over $30 Billion. The company
has its registered office in Kolkata. It started off as the Imperial Tobacco Company, but was
rechristened to Indian Tobacco Company in 1970 and then to I.T.C. Limited in 1974

The company is currently headed by Yogesh Chandra Deveshwar. It employs over 26,000
people at more than 60 locations across India. ITC Limited completed 100 years on 24 August
2010.

ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers,
Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded
Apparel, Personal Care, Stationery, Safety Matches and other FMCG products. While ITC is an
outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards,
Packaging and Agri-Exports, it is rapidly gaining market share even in its nascent businesses of
Packaged Foods & Confectionery, Branded Apparel, Personal Care and Stationery.

ITC's aspiration to be an exemplar in sustainability practices is manifest in its status as

the only company in the world of its size and diversity to be 'carbon positive', 'water positive'
and 'solid waste recycling positive.' In addition, ITC's businesses have created sustainable
livelihoods for more than 5 million people, a majority of whom represent the poorest in rural
India.

The following are the group companies of ITC Ltd:

• ITC InfoTech
• Surya Nepal private limited
• King maker marketing Inc.
• Russell credit limited
• Technico Pvt limited, Australia
 • Landbase

Here is a snapshot of some of ITC’s flagship brands.

ITC is now planning a full-fledged assault on the paper products industry with special
focus on school products and also industry purpose stationery is confident of a 4 fold increase
in revenue in this sector. It has plans to deploy the following brands as means towards
achieving this end:

Classmate
Paperkraft

A SWOT analysis of ITC’s foray into this sector:

Strengths Weaknesses

Brand Unorganized
name,established market,no recognition
distribution network of brand

Size of the Indian

stationery market :
10,000-crore,School Fierce price
books alone competitiveness
contribute : 4,000 Expensive distribution
crore,Only 25 % of it is network
Opportunities covered by branded Threats
players
Strategies employed by ITC:
ITC employs multi-pronged strategies in its pursuit of market leader status in this foray into the
education sector.

 Pricing
The strategy used here could be titled as defensive. Stationery products business in
India is fiercely price competitive and therefore ITC’s products are just up to 5 per cent more
expensive than its nearest competitors.

Camel is the market leader in geometry boxes and ITC’s product offering matches its
price at Rs.75.

Similarly, the industry average for gel pens is Rs.5 and that is the price at which ITC’s
offering is pegged.

 Segmentation/Brand Positioning

Classmate is mainly aimed at students. ITC has launched ballpoint and gel pens under
this brand. PaperKraft is targeted at executives and ITC leverages this particular brand for
markers and highlighters.

 Enhanced Product Range

ITC expects 80 per cent of its stationery products revenues to come from the Classmate
brand which is being aggressively promoted through school contact programs, point-of-sale
promotions, and the Classmate Young Author Contest.

The Classmate range has over 300 variants: notebooks, graph books, drawing books,
practical notebooks, reminder pads and more. Classmate even provides personalised stationery
with school emblems.

ITC has plans on further expanding its product offerings like introducing a range of
pencils — from 2B to 8H versions — and similar expansion in stock keeping units (SKUs) of
geometry boxes for school children.
  Distribution Network

This is an “Expensive factor” that acts as a major deterrent and the key reason for the
low number of branded players in this sector.

ITC, with its sound distribution network in place enjoys a tremendous lead over other
players and wannabe players in this nascent industry and this qualifies as a “Sustainable
Competitive Advantage”. ITC is thus, in a position to leverage its back-end capacities i.e. paper,
and also its front-end capacities i.e. sales and distribution.

Currently ITC has 900 distributors and 70,000 outlets available across India with plans on
the anvil to double this in the next couple of years.

Aces in the hole

 Cause Related Marketing

Cause marketing or cause-related marketing refers to a type of marketing involving the

cooperative efforts of a "for profit" business and a non-profit organization for mutual benefit.
The term is sometimes used more broadly and generally to refer to any type of marketing effort
for social and other charitable causes, including in-house marketing efforts by non-profit
organizations.

Cause marketing differs from corporate giving (philanthropy) as the latter generally
involves a specific donation that is tax deductible, while cause marketing is a marketing
relationship generally not based on a donation.

The notebooks also serve to send out the message that ITC is an environment-conscious
company as it manufactures elemental chlorine-free (ECF) paper and carry information on its
corporate social responsibility programs. For every four Classmate notebooks sold, the
company contributes Re 1 to its rural development initiative that supports, among other things,
primary education in villages.
  Green Technology

ITC has the following achievements that enhance its standing in the industry:

 Performance Beyond Compliance

 Carbon Positive Footprint
 Water Positive Footprint
 Zero Solid Waste (reduction, reuse and 100% recycling of all solid wastes)

ITC is talking to companies with its promise of green technology backing its paper. It is
now providing the entire office stationery requirements of groups such as the Tatas, Wipro,
IBM, HSBC and ICICI Prudential and is looking to step up such institutional sales.

 Conclusion

ITC will be able to achieve its goal of a 4 fold increase in revenue within the next 3-5
years for the reasons enunciated above viz. Pricing, Distribution Network, Segmentation,
Enhanced Product Range and its Aces in the hole. Through its focused efforts and tunnel vision,
ITC will not only have the cake in hand but will also get to eat it.