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17.1 PRODUCT LIFECYCLE CASE OF SCISSORS

This is the story of a brand that is successfully completing a century of
life. It is the story of Scissors cigarette, the breadwinner of ITC. It is the
story of ITCs struggle to save its breadwinner brand from near
extinction on account of competition. It is the story of how the firm
handled its dilemma to revive the brand & avert the decline or exit -& how it opted in favor of reviving brand & succeeding in its mission.
The ITC- Scissors case is essentially a story of effective product
management. From 1912 to date, Scissors has had a long product life. It
has seen many ups & downs but every time, it has risen to new peaks of
excellence & growth. The case vividly portrays how the firm evolved an
appropriate product-market strategy, how it handled the inescapable
product decline with care & caution, how it retrieved the product to
normalcy & prolonged limitlessly its mature & profitable phase of life.

A Business Marked by Intense competition

One of the interesting & important features of the cigarette business is
the presence of a wide array of brands. Though there are only 4 large
manufacturers ITC, GTC, Godfrey Philips & Duncan in the field,
they produce & market > 150 brands. And, the same firms products
compete fiercely in the marketplace. Out of 150 brands, nearly 40 come
from ITC.

Scissors, the Pioneering Brand of ITC

Of the 40 brands, scissors is the oldest in terms of chronology & the
milch cow in terms of income & profit. And the test for ITC came with
regard to the PLC of Scissors. In fact, whenever the fortunes of Scissors
dwindled, the mettle of ITC was tested; & every time the best in ITC
came to the fore.
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17.2 PRODUCT LIFECYCLE CASE OF SCISSORS
THE LAUNCH STAGE
ITC launched scissors in 1912. In launching Scissors, ITC was
introducing not just a brand of cigarette, but an altogether new product
in the market. In fact, the firm was launching smoking habit for
Indians. The smoking habits till then consisted of Hookah, chillum,
cigar & beedi.
The firm decided to open up the vast Indian market for a new
experience in smoking or for a new form of smoking pleasure as ITC
preferred to call it. The firms main rationale behind the introduction of
this product was that a new & sophisticated form of smoking would
appeal to Indians, who were for years used to tobacco consumption in
various other forms. There was also the percolation of influence of the
sizeable British population then living in India.

THE GROWTH STAGE

During the 1920s, 1930s & the major part of the 1940s, Scissors was in
the growth stage of its lifecycle. During this stage, cigarette as a new
smoking form was getting accepted. The sales of Scissors started
climbing up substantially.
A large chunk of early innovators continued their cigarette smoking
habit & large # of conventional non-cigarette smokers were shifting to
cigarettes. ITC kept a close watch on the price-demand patterns &
increased the price in small doses. By & large, the low-price strategy
continued as a part of the penetration strategy.
The demand for Scissors grew rapidly. The efforts & investments
already made on promotion yielded good results. Even though the
tempo of promotion was maintained, the ratio of promotion cost to sales
declined & ITC started earning handsome profits from Scissors.

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17.3 PRODUCT LIFECYCLE CASE OF SCISSORS
THE MATURITY STAGE
Scissors reached the maturity stage by the end of 1940s. To understand
the vibrations through which scissors passed during its maturity stage 7
how it slid into a big decline, it is essential to trace the attack on Scissors
by the competition, the counts on which Scissors suffered & the areas in
which scissors was vulnerable to competition & susceptible setbacks.
National Tobacco Company (Presently Duncan Agro) launched Panama
in the early 1940s. The company positioned Panama directly against
Scissors. Panama had the support of distinctive marketing strategy. It
was a new & a more modern offer. It provided a new flavor. Its modern
soft-cup pack design was an attraction. It was priced cheaper than
Scissors. Panamas ad-campaign tried to exploit the swadeshi mood, a
strong national sentiment, prevalent at that time. Poised against ITC,
then the Imperial Tobacco of Britain, this was a cash-in point for
panama, which became a distinct brand in the market.

THE DECLINE STAGE

Scissors volume of sales became totally stagnant & all the new growth
that was happening in the industry was gobbled up by the competition.
Its downfall in volume is exemplified hereunder & by 1961-62, the
decline & fall of Scissors looked total & irreversible.
1948-49 (234 million sticks)
1948-49 --- 16.6 % market share

1961-62--- 6.5 % market share

1949-50

213 million sticks

1951-52
1952-53
1953-54
1958-59
1959-60
1960-61
1961-62

208 million sticks

193 million sticks
240 million sticks
232 million sticks
217 million sticks
215 million sticks
206 million sticks
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17.4 PRODUCT LIFECYCLE CASE OF SCISSORS
Conclusions of the study on the decline of Scissors were that Scissors
Had a poor image rating
Was smoked by hardcore smokers
Had low solitary smokers count
Was not attracting new smokers
Had a blue collar smokers profile
Had an older, less educated smokers profile
Pack was outdated/traditional
Ads did not have a distinct position
Promotions were oriented towards trade
Promotions did not ensure smokers participation
Promotions were not news-creating AND
Product suffered from quality complaints

ITC initiates corrective measures

Revamping of ad campaigns
Bazaar focused sales promotion (gift coupons)
Trying for price parity with competition

The Debate To Revive or to Exit

There was sharp debate & analysis within ITC & it was confronted
with the 2 choices:
a) Milch the brand & exit AND
b) Go all out with aggressive marketing strategies & inputs and revive
the brand

ITC THEN TOOK ONE OF THE MOST MOMENTOUS

DECISIONS IN ITS HISTORY TO REVIVE SCISSORS
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17.5 PRODUCT LIFECYCLE CASE OF SCISSORS
ITC Meticulously Plans the Revival Campaign

To reassure existing consumers & strengthen their loyalty to the brand

To generate re-trial by ex-consumers of Scissors
To attract possible new business accruing at this segment
To convert smokers from competition

A Multifaceted Strategy

Product quality was demonstratively improved

Blend was improved
Pack was modernized, incorporating a contemporary design. The pack was testmarketed before the final launch
The ad-campaign was revamped

Action-Satisfaction Theme in Advertising

The new ad campaign ran with a +ve note: For men of action-Satisfaction,
defining a lifestyle position for smokers of the brand. The Action was the
image dimension; the word Satisfaction was intended to underscore the
physical product promise. Extending the idea to promotion, Action-oriented
promotional contests & rallies like national games, scooter rallies etc., were
organized.

Scissors Comes Back to Life

All these inputs not only lifted the image of Scissors but also reversed the
declining volume trend. Scissors finally overtook the main competition &
became the largest selling brand & an improved market share such as:
1961-62
1962-63
1967-68
1968-69
1970-71

6.5%
7.5%
9.5%
12%
12.8%

In short, Scissors was most stunningly brought back to a grow path. The volume
had trebled from the 1948-49 level & the market share @ 12.8% matched the
1950-51 position, which denoted a peak stage in the life cycle of Scissors.

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17.6 RODUCT LIFECYCLE CASE OF SCISSORS

THE SECOND DECLINE

Like a fairy tale, Scissors experienced a second decline over the next
decade. A peculiar phenomenon was happening in the cigarette market
between 1971 & 1973. Both Scissors & its main competitor were losing
their sales & market share! Both had to repeatedly increase their prices
& customers were turning away from both these brands, switching over
to brands in the lower price categories.
It was a hard lesson for ITC. After all, the price played a very crucial
role in this segment. With all manufacturers pursuing price-led
strategies, the price focus became the paramount factor in brand choice,
particularly in the non-premium segments. Scissors obviously had not
yet attained an image & status to breakaway from the price barrier.
The consumer did not perceive the brand as adequate value at the
enhanced price. The brand had not been prepared for a price increase

A LESSON ITC LEARNT THE HARD WAY

THE SECOND REVIVAL
The brand had to be retrieved & revamped again. The first decision
ITC took now was on the price front. In 1977, ITC took the difficult
decision of reducing the price; it reverted back to the original price level
of 10 paise per stick. The sales & the market share were gradually
regained. In 1980, despite a major strike, which hampered production,
Scissors managed to capture the all-time high of 17% market share & a
volume of 1133 million sticks. But, this revival was at the cost of profits.
While volume & market share continued to grow, the profitability of the
brand continued to decline due to the inability of ITC to increase the
prices in the face of the competitors holding their prices. Also, galloping
inflation & excide duty hikes deeply eroded Scissors profits.

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17.7 PRODUCT LIFECYCLE CASE OF SCISSORS
THE POST-REVIVAL STORY
Scissors continues to hold its own against the onslaught of all the brands
& sustains its top position in the cigarette market. Over the years, the
goodwill of the prestigious brand was used to strengthen ITCs overall
hold in the cigarette-industry. The continuous inputs in product &
advertising have reflected in improved consumer ratings on the
following counts:
Quality of manufacture/Value for money
Flavor/Taste/Satisfaction
Modernity/Youthfulness/Pack
In particular, ITC ensured that the ASP of scissors continuously
underwent modernization. The basic theme of Action-Satisfaction still
remains an element of continuum but the man of action is now more
sophisticated like from scooter rallies of yesteryears to present car
rallies.

THE LESSON
The revival of Scissors undertaken by ITC is one of the best examples of
successful management of the PLC of a brand. The decline here was so
steep & devastating that the brand would have easily glided into
extinction. ITC correctly identified the problems associated with each of
the stages of the brands PLC. And it solved the problems through
appropriate changes in its marketing strategies.
Scissors was brought back to its earlier trend of ascendancy & was
repositioned as the patriarch of the entire family of ITC brands. As a
result, scissors, the 95-year-old brand, continues its march, preparing to
celebrate its centenary. During this period ITC put out in the market a
multitude of brands. Practically, all of them thrived on the shoulders of
SCISSORS.
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