more addictive a new nicotine rich, harder to kick tobacco and finally developed a genetically altered variety with

the code name Y-1. The history of development of nicotine rich tobacco varieties of today in the world thus can be attributed to British American Tobacco (BAT) industries. BAT also did research on harmful effects of Tobacco.

WORLD PRODUCTION OF TOBACCO The world production of tobacco increased from 5.61 million tones in 1994 to 7.72 million tones in 1997 registering a compound annual growth rate of 11.24% during the period. Nearly 62% of the Tobacco produced in the world is Virginia Tobacco. The world average yield of Tobacco for all varieties is around 1.5 Tones per hectare. The productivity for Virginia tobacco is higher at about 1.760 Tones per hectare.

HISTORY OF TOBACCO IN INDIA In 1906, the first cigarette factory of the Peninsular Tobacco Company (later known as Imperial Tobacco Company and now known as ITC Limited) was established in Monghyr (Bihar). The history of ILTD, the research subsidiary of ITC can be said to be the history of cigarette

tobacco in India. By 1928, ILTD obtained definite results and considerable expansion of area under Virginia Tobacco took place. This in fact revolutionized the Virginia tobacco cultivation in the country and placed India on the World Tobacco Map. However, the average yield of VFC Tobacco in India is 973 Kg/ha, one of the lowest in the word. Indian Central Tobacco Committee (Later the Developmental Functions of ICTCA were Transferred to Directorate of Tobacco Development and CTRI was Transferred to ICAR) was set up by the government in 1945 to oversee the activity of Agriculture Research, Tobacco processing technology development and Market development activities. At present tobacco is facing an anti-smoking campaign situation through out the world. Still tobacco, in almost all the important

producing countries including India is the most remunerative crop to the farmers. Most of the current development is aimed at utilizing the tobacco waste generated at farm level and during processing of tobacco.

PRODUCTION OF TOBACCO IN INDIA There has been considerable fluctuation in the production of Tobacco during the last two decades even thought the area under the crop showed only slight fluctuation as per data of Directorate of Economics

and Statistics, Government of India. Endowed with various agro-climatic zones, India grows all types of tobacco (except oriental), which are broadly classified as flue cured Virginia (cigarette tobacco) and nonVirginia types. Gujarat, Andhra Pradesh and Karnataka between them account for 82.4% of the area under tobacco crop. The production of tobacco in the country has been stagnant at around 6 lakhs tonnes during the last two decades. Kheda District in Gujarat tops in terms of area under tobacco as well as production of tobacco in the country. The presence of nicotine in tobacco products makes them addictive Chewing tobacco is injurious for health. This message known to everyone, but they are not able to leave it, because this is a habit for them.

WHY DO PEOPLE USE TOBACCO? Knowing why a person uses tobacco helps identify what method will help them quit. Some of the reasons are: Peer pressure: This seems to be one of the first reasons that kids especially start using tobacco. They usually first get it from a friend Who urges them to try it and be like the big kids By the time the child goes to the store to try to purchase tobacco, many might have already been using it for several days or even weeks. Some of these kids say they need

to display the ring on their rear in order to be accepted with some of their peers. In others, the circle on the back pocket is a coming-of-age or emancipation symbol, marking the passage to adulthood and

independent thinking. Social pressure and Association: Being in an environment that condones tobacco use (sports, bars, outings or any place they are around others who use it) can be a great motivator. Users are often to quit for a significant length of time but begin again when theyre around others who dip or smoke. Behaviour: Some chewers have been dipping so long that they miss the ritual of opening the chew can, getting the dip and putting it in their mouth. The most common statement heard from these users in I just miss something in my mouth (i.e. oral gratification). Here they have a choice of either quitting cold turkey or dealing with the loss of the behaviour or using an oral alternative while they cut down. Mint Snuff products are great for these people because it allows them to yield to the cravings of the behaviour yet do so with a harmless product. Nicotine Addiction: There is a significant amount of nicotine in smokeless tobacco. Although many young users might not be addicted, yet others get that very rather quickly. You might ask a user how long they have been using smokeless tobacco and how many cans a week they

use to get an idea of possible levels of addition (the range is one to three cans per week). Many of the questions asked of smokers apply to chewers to determine addition levels. Many health professionals use the nicotine patch or nicotine pills with non-tobacco chew to help their nicotinedependant patients. Salt Carvings: A typical can of smokeless tobacco contains over 1100 mg of salt. Some people not only suffer from nicotine withdrawal but also from salt carvings once they have quit using smokeless tobacco. These cravings might be confused with nicotine withdrawal.

*****

COMPANY PROFILE AND NEED FOR STUDY AT M/S CHAITANYA SAHU & CO. The company started to operate in 1955 under the name ARJUNA SAHU & SONS, named after the founder Mr. Arjuna Sahu. That company first produced pan Masala named Haridakhandi Ketaki Khara Masala. The company created a monopoly market for its brand from thereafter until 1983. IN 1985, it split into two companies named ARJUN SAHU & SONS and ARJUN SAHU & CO. Arjuna Sahu & Sons was headed by elder son of Mr. Arjuna Sahu and Arjuna Sahu & Co. was headed by second and third son of Mr. Arjuna Sahu. Arjuna Sahu & Co. was running under partnership until August 2003. The company was then divided into two more companies, M/s Chaitanya Sahu & Co. and Arjuna Sahu & Products. During this period, in 1998, a super cyclone hit entire Orissa and as a result, they produced the same product but with some other brand name. They came into the market with pouch, which was entirely a new concept. However, these two companies could not supply an unexpected market demand that was increasing rapidly. The supply chain at that time was not at all ready to face this sudden growth. New machineries were required immediately without allowing any timeframe, which pushed the

company for a huge financial requirement. Though the company was able to arrange everything, yet it could not suppress the growing rival company of Gopalji. The parent company failed to trace the growing new rival and did not concentrate on the new competitor. Gradually, the new company grabbed a market share ahead of HARIDAKHANDI. Since, M/s Chaitanya Sahu & Co. is still occupying a good market share in the masala market, it requires information with regard to consumer behaviour in purchasing or consuming tobacco. Therefore, this study has been done for M/s Chaitanya sahu & Co.

PROJECT DESIGN What is project design? A body of knowledge assembled by a small team dedicated fulltime to the creation of the product in question, research design is used as the foundation for Creating models (such as personnel and representative workflows) that are used during the design phase. Obtaining an objective, understanding of technical

development, constraints and opportunities. Articulating business goals that may affect future product deployment strategies. A project design phase consists of three main activities; stakeholder interviews, domain research, and user interviews. Some

combination of all three makes for a successful phase. The length of each activity depends on the complexity of the product. More is always better, but effective design research can be gathered in a relatively short amount. An intimate understanding of user research is fundamental for designers. In order to gain such an understanding of the project,

designers must lead-or at least participate in user interviews. Simply handling them a report generated by someone else is not nearly as

effective. If the design team is truly immersed in the project and models that come out of that research, it will be much easier for them to design a product that meets the needs of the users rather than themselves.

IMPORTANCE OF STUDY Just production of goods cannot meet the objective of the organization. The main thing is to place the product at right time, at right place and to the right target group. Therefore, an organization should have target oriented distribution channel, which only can lead the organization to the path of success. In India, people use tobacco as a means of relaxation from their routine works and due to habits. However, it is the responsibility of the tobacco manufacturers to distribute and sale their product at right place and at right time. The first function of every tobacco company is to make available its products to the farmers and the other labour classes for creating efficient supply chain when and where needed. Therefore, an attempt has been taken to study the marketing network of M/s Chaitanya Sahu & co. The research has been done through market survey with a view to study the distribution system required for chewing tobacco.

OBJECTIVE OF THE STUDY The following points can be summarized as the main objectives of the study. 1. Investigation of dealers and retailers, to know the problem in procuring, transporting and selling the product. 2. To determine the effectiveness of the existing distribution system of M/s Chaitanya Sahu & co for contributing towards increase in sales turnover and to face the present marketing competition. 3. To identify the problems and its effects on the distribution channel of the company and to suggest further improvement in sales. FEATURES It is a plan that specifies the sources and types of information relevant to the research problem. It is a strategy specifying which approach will be used for gathering and analyzing the data. It also includes the time and cost budgets since most studies are done under these two constraints.

Project design must contain: A clear statement of the research problem. Procedures and techniques to be used for gathering information. The population to be studies. Methods to be used in processing and analyzing data.

SAMPLING METHODS It is incumbent on the research to clearly define the target population. There are no strict rules to follow, and the researcher must rely on logic and judgment. The sample reflects the characteristics of the population from which it is drawn. Sampling methods are classified as either probability or no probability. In probability sample, each member of the population has a known non-zero probability of being selected. Probability methods

include random sampling, systematic sampling, and stratified sampling. In no probability sampling, members are selected from the population in some nonrandom manner. These include convenience sampling, judgment sampling, quota sampling, and snowball sampling error is the degree to which a sample might differ from the population. When

inferring to the population, results are reported plus or minus the sampling error. In no probability sampling, the degree to which the sample differs from the population remains unknown. Random sampling is the purest form of probability sampling. Each member of the population has an equal and known choice of being selected. When there are very large populations, it is often difficult o identify every member of the population, so the pool of available subjects become biased. Systematic sampling is often used instead of Random sampling. It is also called an Nth name selection technique. After the required sample size has been calculated, every Nth record is selected from a list of population members. As long as the list does not contain any hidden order, this sampling method is as good as the random sampling method. Its only advantage over the random sampling technique is simplicity. Systematic sampling is frequently used to select a specified number of records from a computer file. Stratified sampling is commonly used probability method that is superior to random sampling because it reduces sampling error. A

stratum is a subset of the population that shares at least one common characteristic. Examples of stratums might be males and females, or

managers and non-managers. The researcher first identifies the relevant stratums and their actual representation in the population. Random

sampling is then used to select a sufficient number of subjects from each stratum. Sufficient refers to a sample size large enough for us to be reasonably confident that the stratum represents the population. Stratified sampling is often used when one or more of the stratums in the population have a low incidence relative to the other stratums. Convenience sampling is used in exploratory research where the researcher is interested in getting an inexpensive approximation of the truth. As the name implies, the sample is selected because they are convenient. This no probability method is often used during preliminary research efforts to get a gross estimate of the results, without incurring the cost or time required to select a random sample. Judgment sampling is a common no probability method. The researcher selects the sample based on judgment. This is usually and extension of convenience sampling. For example, a researcher may

decide to draw the entire sample from one representative city, even though the population includes all cities, When using this method, the researcher must be confident that the chosen sample is truly representative of the entire population.

Quota sampling is the no probability equivalent of stratified sampling. Like stratified sampling, the researcher first identifies the stratums and their proportions as they are represented in the population: Then convenience or judgment sampling is used to select the required number of subjects from each stratum. This differs from stratified sampling, where random sampling fills the stratums. Snowball sampling is a special no probability method used when the desired sample characteristic is rare. It may be extremely difficult or cost prohibitive to locate respondents in these situations. Snowball sampling relies on referrals from initial subjects to generate additional subjects. While this technique can dramatically lower search costs, it comes at the expense of introducing bias because the technique itself reduces the likelihood that the sample will represent a good cross section from the population. OBJECTIVES Sampling theory is designed to attain the following objectives Statistical estimation Testing of hypothesis Statistical inference

MEHTODS OF DATA COLLECTION The task of data collection begins after research problem has been defined and research design or plan chalked out. While deciding about the method of data collection to the used for the study, the researcher should keeping mind two types of data. 1. Primary data 2. Secondary data

The methods of collecting primary and secondary data differ since primary data are to be originally collected, while in case of secondary data the nature of data collection work is merely that of compilation. Primary Data The primary data are those, which are collected afresh and for the first time, and for the first time, and thus happen to be original in character. There are several methods of collecting primary data. They are Observation method Interview method Questionnaires Warranty cards Distributors audits

Secondary Data The Secondary data are those which have already been collected by someone else and which have already been passed through the statistical process. The different methods of collecting secondary data are Various publications of the central, state and local Govt. Various publications of the foreign Govt. or of international bodies and their subsidiary organizations. Technical and trade journals. Books, magazines and newspapers. Reports prepared by research scholars, universities, economists. Public records and statistics, historical documents and other sources if published information.

RESEARCH METHODOLOGY Investigation methodology is a way to analyse different aspects systematically to reach a definite solution. Effective methodology and methods of data collection are quite necessary for the fulfillment of the objectives of the study. In methodology, various steps are adopted for problem identification and to find out appropriate remedial measures.

As the core objective of the study is to know the problems of distribution channel of M/s Chaitanya Sahu & co in the Orissa market. The study should be oriented towards different wholesalers, dealers and farmers. Methodology followed in this study is based on both primary and secondary data.

PRIMARY DATA Primary data are collected directly from 400 chewing tobacco consumers in the city of Berhampur, Bhubaneswar, Chatrapur, Cuttack, Titlagarh, Kesinga, and Rayagada by observation method. SECONDARY DATA Secondary data are collected from the Internet. Research instruments A structured questionnaire is prepared and it contains both openend and close-end questions and administered to the respondents. Sampling Plan Sampling plan calls for four decisions. Sampling unit: the sampling unit is defined with customer. Sampling size: 400 respondents.

 Sampling procedure: Non-probabilistic convenience sampling technique issued. Statistical Tools: the Statistical Tools used are percentages and averages.

SCOPE AND LIMITATION In the field of marketing, distribution channel plays a vital role for companies in having a competitive advantage over other competitors. It wont be wrong to say that distribution system is the heart of the marketing activities. Without well-organized distribution channel an organisation cannot be successful in this competitive market. It wont be able to compete with other companies without a proper distribution channel. As we know, India is a traditional country; the old rituals and customs define tobacco as a part of every household. Its demand increases with the increase in population. So to control the increased market, organization urgently required increasing its marketing network by changing or expanding its marketing network to make the consumers more convenient to get the products.

Therefore, a well-organized and efficient distribution channel will not only improve the sales turnover but also enhance the profit. Hence, in the world of cutthroat competition, to survive in the market, the selection of suitable distribution channel is essential. In this universe, nothing is escaped from limitation. Every act has some limitation and so this investigative study has some limitations. They are: 1. The sample size of the study is very small. Hence, it is very difficult to get exact picture. 2. It is very difficult to project exhaustive picture within such a short time. 3. Company is reluctant to provide some confidential data that is important for researcher.

PRODUCT LINE Haridakhandi Ketaki Khara masala. Haridakhandi Mawa masala (Red) Haridakhandi Mawa masala (Blue) Haridakhandi Zarda Mix Haridakhandi Fresh N Kool Mouthfreshner

KEY PEOPLE Mr. Chaitanya Sahu Chairman cum Managing Director, & Head Purchase Mr. Sunil Kumar Sahu Mr. Sibram Panda Mr. A.S.N. Achary Mr. L.N. Sahu Head Sales & Distribution Head Marketing & Customer Care Head Finance Head Factory Operations & warehouses.

DEVELOPMENT OF NEW PRODUCT TOPIC INTRODUCTION The term marketing has been derived from the word market. The term market originates from the Latin noun Marcatus, which means, a place where business is conducted. Market is generally understood as the place of geographical area, where buyers and sellers meet and enter into transaction involving transfer of ownership of goods, services, securities etc. Marketing as a total system of business activities is designed to plan, price, promote and distribute want satisfying goods and services to potential customers.

MARKETING

Price Place Product

Promotion

PRODUCT The key element of the market program is the product. Before making decisions about pricing, promotion, and distribution a firm has to determine what product, it will present in the market. In the absence of a product, no marketing strategies could be shaped. Any firm that markets produced services has to aim to achieve: Consumer Satisfaction Profit Maximization A product consists of a bundle of utilities involving various products, features and accompanying services. The utilities created by set tangible, physical and chemical attributers assembled, in an easier identifiable form. People want products because they want the experience bringing services which they hope the products will render. A product is anything that can be offered to a market for attention, acquisition, use or consumption. It includes physical object, services, personalities, place, organization and ideas.

NEW PRODUCT DEVELOMENT PRODUCT A product is central to the marketing operation. The term product concept was used by Theodore Levitt. According to him, it refers to the augmented product of the aggregate of satisfaction that user obtains. Thus, he explains the concept: When an industrial marketing sells a major item of machinery it may augment the production several ways. A diesel engine manufacturer might: Provide long term financing Assure constant supply of maintenance and replacement. Guarantee performance of engine for a specific period. Market techniques available to advise the customer Train the customers how will operate the engine.

ADOPTION PROCESS The Diffusion process reflects the process called the adoption process when a new product is launched. It can be highly successful if the

management identifies the nature and extent of adoption process of that product.

NEW

PRODUCT

PLANNING

AND

DEVELOPMENTS

STRATEGY PRODUCT PLANNING The competitive pressure lead to the displacement of existing products and forces management to look around for alternative sources of income through the development of new products to replace existing products or through diversification and extension of the product line itself. Product planning is the starting point for entire marketing program in a firm. It embraces all activities, which enable producers and middlemen to determine what should constitute a companys line of products.

STEPS IN NEW PRODUCT DEVELOPMENT PROCESS Identifying and developing new product ideas and effective strategies to go with them is often key to a companys success and survival. To follow a systematic process or organized way of achieving a new product development exercise, which should be logically done on the following steps:

I. II. III. IV. V. VI.

Idea generation Screening Concept or idea development Business analysis Development of product Formulation of market mix and market testing

VII. National lunching and commercialization We shall now discuss the above stages or steps in new product development in more detail.

IDEA GENERATION For any development activity, the idea must be generated and explored in the search for new ideas irrespective of their soundness and perfection should be done. The sources for new ideas should be correctly done and generally following sources has proved good: I) Customers 2) Stockiest or distributors or dealer 3) Competitors 4) Own sales forces 5) Ad agencies 6) Suppliers or vendors 7) Fabricators 8) Top Management 9) Consultants or scientists or management advisers.

SCREENING Only some ideas generated during the idea screening will justify the expense of development work. So some mechanics is required. There are two essential features in the screening process. The establishment of set evaluation criterion i.e. a list of important factors that should be considered when making a chance.

CONCEPT OR IDEA DEVELOPMENT Those ideas, which survive in the second stage of product development that is the screening stage, must be evaluated further with emphasis on more careful facts. In this stage, no tangible products have yet been developed and this can face handicaps in getting feed back from customers. For health idea evaluation, firms use concept testing that is getting reaction from customers on how will new idea fit with their needs. Concept testing uses market research ranging from formal focus groups to formal service of potential customers. It is important to distinguish between a product, a product concept and a new product range. A product idea is a possible product described in its functional terms that the company would offer to the market.

BUSINESS ANALYSIS At this stage, new product ideas are carefully evaluated for their economic worth. Estimates of sales, costs and profits are important components of business analysis and forecasts of market penetration and market potential are essential. More precise estimates of environmental

and competitive changes that may influences the products life cycle, its replacement or repeat sales are also needed to develop and lunch a product. DEVELOPMENT OF PRODUCT Once the product concept has been developed, this should be briefed to the product development and research and develop department who will under take to design and develop few physical prototypes of the defined product concept. The design and the quality of the design are at the heart of achieving an effective and competitive mix. They are important to all product and services and as important to specially chemicals, restaurant and engineering products as to haute counter, each uses technology through design to create better looking, durable and value for money. FORMULATION OF MARKET MIX AND MARKET TESTING:

Throughout all the development phases, the main aim is to obtain fuller knowledge and more accurate understanding of each of these new data will be assimilated on all three and revised projection made at frequent intervals. Revenue projections will weigh heavily and that explains the pre-occupations will attempt to provide better and earlier sales.

FACTORS TO BE CONSIDERED BY MANUFACTURERS WHILE DEVELOPING NEW PRODUCTS Manufacturers of industrial products should pay more attention to the development and marketing of new products and to the failure rates of these products. Generally, they seek wage to minimize the risk of new product marketing by improving their programmes for new product planning, research and development. Mathematical models are used, PERT and CPM are two important tools usually used to add in planning and controlling programmes. TIME OF NEW PRODUCT Proper timing is of great importance in every stage connected with the introduction of new product. In planning to introduce a new product, management must forecast, plan and compete its product development

activities so that the product will be ready for marketing at that future time. DIFFUSION OF NEW PRODUCTS The development of markets of new products a some what predictable patterns, which it understand by the marketing man can provide some important clues for the development of effective marketing strategies, The diffusion process is the same as the product cycle concept.

Profitless Price Competition

Normally, the competitive comes in the modern system do not permit the continuance, for a long time, of a firm if it does not produce new products or make improvements in markets for mature and dying products are highly competitive. Diversification of Risk With the passage of time, the existing product may not be likely at all the buyer, which means that they become obsolete. This has been result with the horse driven Tonga or the fountain pen. Other Factors Several other reasons for product innovations are:

1. A company may develop new products to utilize the basic materials it is already making or to utilize waste or scrape from present production 2. A company may add new products to even out sales fluctuations resulting from seasoned or cyclical factors. 3. It may seek new products to counteract the highly erratic buying behaviour.

ORGANISATION OF NEW PRODUCTION DEVELOPMENT Production innovation is a top management responsibility. Therefore, well-designed organization framework, within which the production planning and product development functions may be carried on, should be developed.. Friction at lower level is avoided but he is so preoccupied with other important matters that he cannot devote sufficient attention to product innovation. Some companies overcome this problem through appointing a staff assistance that helps him. Following are the structure of organization new product development. 1. Product planning committee 2. Separate staff department

THE BASIC REQUIREMENTS OF NEW PRODUCTS ARE 1. Consumer or customers acceptance 2. Satisfactory performance. 3. Economical production. 4. Adequate distribution in dept and breadth 5. Effective packaging and branding 6. Adequate after sales services and 7. Ultimate replacement.

PRODUCT INNOVATION A product or service, which is profitable today, cannot be so tomorrow or at some future time. Either another one replaces it or it degenerates into profitless price competition. The underlying reason is that it is highly dynamic. Innovation in product planning is newness; it is the process of doing something that has never been done before. For a firm, an innovative product is completely a differentiated product. Innovation has been deemed necessary due to following factors:
a)

Market Changes:

The market is dynamic and therefore existing products and product lines prove inadequate for meeting buyers demand. Sophisticate buyers buy products tailored to their generalized needs Market changes have been rendered possible with the development and growth of new media of communication, the case of reaching this media and the changes in fashion, therefore, to avoid their product going out of market the manufactures emphasize on production innovation.

b)

Change In Technology: Changes in technology have not only widened the existing

markets for the old products but have also brought entirely new market in existence through the creation of entirely new product functions that distinguishes it from other products or services, the related product features and the related product services such as delivery, installation, maintenance and repair warranty etc. since in marketing operations the product plays an important part.
c)

Consumer Dimension:

Consumers buy a product in hope that it will satisfy his needs and expectations; a product conveys a message indicating a bundle of expectations to a buyer, as in the case of toothpaste. If the expectations are fulfilled, its repeat demand is the result. d) Social Dimension It presumes that the society too is offered desirable or salutary product which brings not only an immediate satisfaction but also yield long run consumer welfare, such as tasty, nutrious, eatable, ready made products, conversation and best use of scanty resources, safety to users, quality of life, concern for a cleaner and better environment etc.

PRODUCT MIX STRATEGY Most companies whether large or small whether in manufacturing or retailing, generally handle a multitude of product and product varieties. In course of time, the companies may expand new lines of contract the old lines, after the existing product or develop a new use for the existing products. These activities involve managerial strategies and policy making with respect to the companys line of products or services. The proliferation of products within the company means the product, policy

discussion are made at three different of product aggregation i.e., product item, product line and product mix.

THE PRODUCT LIFE CYCLE (PLC) Products like people have a certain length at life, during which they pass through different stages. For sore the life style may be as short as a month, while for others it may last for quite a sufficiently long period. The example may be of a fashionable dress or an electrical appliance. From the time the products idea is born, during its development, and up to the time it is launched in the market, a product goes through the various phases of its development.

MANAGEMENT OF PRODUCT LIFE CYCLE The shape of a product sales and profit curve is inevitable in a company to a surprising extent. The shape can be controlled and managed by timely and effective implementation of specific marketing actions. The important key to life cycle management is to forecast the profile of the proposed products cycle even before it is introduced than at each stage. The management should anticipate the marketing requirements of the following stage.

NEW PRODUCTS Products whether they are delivered from an existing product concept of form latest demand, are the results of countless hours spent by management in market analysis and in decision-making. This may relate either to the production of the existing product or to entirely new product. A new product is one, which have several recognizable categories forecasts. Ideas about the must appropriate marketing plans will also be evolving during development with refined assumptions about the effect of alternative plans. Testing the market can take many forms ranging from informal discussions with potential buyers through more formal experiments with or without sales being made up to regional and national lunch with full-scale marketing activity.