Acknowledgements

My debts for assistance in making this report are more numerous than can be put down in
pen and paper. This whole effort is the result of the guidance, assistance, and inspiration of
several people who helped me throughout my stay at MICA and in the preparation of the
report. Words will always fall short to express my deep sense of gratitude and thanks
towards all of them.
I feel greatly honored to show my profound indebtedness and gratitude to Mr. Arijit
Sengupta, (Materials Manager, IOC), Mr. Bhuvnesh Chawla (Partner Associate,
GenesisPR), Mr. Sailesh Yagnik (librarian, MICA) and Professor Rajneesha Krishna (Head
faculty, MR), and Ms. Shubhra Gaud (Faculty, MR), who lent their precious time for
accomplishment of this project, and under whose guidance this study was undertaken.
Their assistance, encouragement, inspiration and various suggestions right from the
conception of the project to its accomplishment has helped me prepare a realistic and
pragmatic report in a limited period, that would have been otherwise impossible.
No word can adequately express my debt and gratitude for my fellow friends, especially
Ipshita Chaudhury, Rakesh Chakroborty, Pankaj Chaudhry and each and everyone at MICA
who have so very readily extended their help whenever I needed them.
Finally, I would like to express my gratitude for my parents who gave their invaluable
encouragement and help during this whole training programme.

-Sudipta Bhakta

Executive Summary:
Cigarette industry has long been stifled by subsequent laws and resistance from a handful
of social groups, which have almost killed the growth of this industry. In this thesis,
therefore, we have looked at the problems that are slowly drying up this industry, and have
tried to come up with solutions to revitalise the industry. We have sought to do so by
looking at the possibility of fulfilling need gaps, if there be any.
Therefore, our prime concern had been to find out whether there is any feasibility of
introducing new varieties of cigarettes in Indian market.
With this objective in mind, we had done a two stage research, the first being an in-depth
interview of 30 respondents from Ahmedabad comprising of 5 respondents from SEC A, B,
C, D, E, R1, R2, R3. This was done in order to find out the need gaps and existing
perception of both cigarette and bidi in as much depth and breadth as possible.
In the second stage attributes were boiled down to statistically manipulable levels, and
pointed questions were asked so that statistical tools such as cluster analysis, factor
analysis, discriminant analysis, and cross tabs to find out a few results that might indicate a
feasibility of introducing new varieties of cigarettes.
However, though a comprehensive questionnaire has been designed, in order to help in
further research if required, we have restricted ourselves solely to the objectives during the
analysis, that is, only those calculations that would help us in attaining the immediate
objectives.
In the course of our study we have found out a concept product, a packaging proposition,
and quite a few more interesting insights.
In short, we really found out that there ia a distinct possibility of introduction of new
variety of cigarettes not necessarily in the form of product manipulation only, but also at
promotional and packaging levels.
It is not a grim situation after all. There is a still lot of hope about the cigarette industry.

(BROAD) Area of Interest

2

Proposal:
1. The title:
Feasibility of introduction of new variety of cigarettes in Indian market with a special
emphasis on rural India, the floater population, (and the youngsters *.)
(*Classified)
2. Survey of literature:
Tobacco was first brought to India by Portuguese merchants 400 years ago. Although
there were already some strains of locally-grown tobacco in India these were outclassed
by the new imported varieties from Brazil.
The trade boomed and tobacco quickly established itself as the most important
commodity passing through Goa in the seventeenth century.
Virtually every household in the Portuguese colony took up the new fashion of smoking
or chewing tobacco.
Later on the British introduced modern commercially produced cigarettes.
HOW NICOTINE WORKS
Nicotine enters through the body with smoke. Several studies show that nicotine, which
can act as either a stimulant or depressant depending on dose and history of use, launches a
number of surprisingly different brain mechanisms. And some are beneficial.
Nicotine's two-faced qualities range from boosting memory to promoting the addiction
process.
The new understanding is leading to:

Potent compounds that potentially could bypass the chemical's negative qualities
and aid in the treatment of health problems.

A clearer picture of why it is so difficult to stop smoking.

Nicotine activates a multitude of brain mechanisms by attaching to specific proteins,

known as receptors, which are found on the surface of nerve cells. This interaction leads to
the transmission of a chemical message. Nicotine receptors flourish in many areas of the
central nervous system and diverse structural variations exist between different nicotine
receptor types. Nicotine can exert dramatically different actions depending on the location

and

type

of

receptor

it

sticks

to.

Today scientists are conducting research to track the function of each receptor group and
type. Some say that a better understanding of nicotine's effects may explain why those who
find it hardest to stop smoking often have other ailments such as depression or
schizophrenia. These patients may be rebalancing their chemical system by treating
themselves with nicotine. Other insights are helping researchers to design new drugs that
may

mimic

specific

benefits

offered

by

this

chemical.

Some scientists already are testing synthetic new drugs that they believe side-step the
negative effects of nicotine and enhance its positive effects by acting only on specific
subtypes of nicotine receptors in the brain. One drug in early human trials is showing
promise as a pain medication. The compound appears to act as a more potent pain reliever
than current medications. Animal studies suggest that it may cause fewer side effects.
Two additional synthetic drugs that seem specifically to target different nicotine receptor
subtypes are being tested in patients with Parkinson's disease and Alzheimer's disease. The
hope is that the drugs will help to reverse deficits in motor function and attention, as well
as

memory.

Ongoing human studies show that administration of nicotine itself through a skin patch
improves attention in Parkinson's patients and, at a low dose, enhances memory in
Alzheimer's patients.

Cigarette as a form of nicotine intake:

In essence, a cigarette is a system for delivery of nicotine to the smoker in attractive,
useful form. At "normal" smoke pH, at or below about 6.0, essentially all of the smoke
nicotine is chemically combined with acidic substances hence is non-volatile and relatively
slowly absorbed by the smoker. As the smoke pH increases above about 6.0, an increasing
proportion of the total smoke nicotine occurs in "free" form, which is volatile, rapidly
absorbed by the smoker, and believed to be instantly perceived as a nicotine "kick."
Smoking is an outcome and not a cause of stress:
Global Trend In Tobacco Use:

ALTHOUGH people have used tobacco for centuries, cigarettes did not appear in
mass-manufactured form until the 19th century. Since then, the practice of cigarette
smoking has spread world-wide on a massive scale. Today, about one in three adults, or
1.1 billion people, smoke. Of these, about 80 percent live in low- and middle-income
countries. Partly because of growth in the adult population, and partly because of
increased consumption, the total number of smokers is expected to reach about 1.6
billion by 2025.
In the past, tobacco was often chewed, or smoked in various kinds of pipes. While
these practices persist, they are declining. Manufactured cigarettes and various types of
hand-rolled cigarette such as bidis-common in Southeast Asia and India-now account
for up to 85 percent of all tobacco consumed world-wide. Cigarette smoking appears to
pose much greater dangers to health than earlier forms of tobacco use. This report
therefore focuses on manufactured cigarettes and bidis.
Rising consumption in low-income and middle-income countries:
The populations of the low- and middle-income countries have been increasing their
cigarette consumption since about 1970 (see Figure 1.1). The per capita consumption
in these countries climbed steadily between 1970 and 1990, although the upward trend
may have slowed a little since the early 1990s.
While the practice of smoking has become more prevalent among men in low- and
middle-income countries, it has been in overall decline among men in the high-income
countries during the same period. For example, more than 55 percent of men in the
United States smoked at the peak of consumption in the mid-20th century, but the
proportion had fallen to 28 percent by the mid-1990s. Per capita consumption for the
populations of the high-income countries as a whole also has dropped. However,
among certain groups in these countries, such as teenagers and young women, the
proportion who smoke has grown in the 1990s. Overall, then, the smoking epidemic is
spreading from its original focus, among men in high-income countries, to women in
high-in-come countries and men in low-income regions.

In recent years, international trade agreements have liberalised global trade in many
goods and services. Cigarettes are no exception. The removal of trade barriers tends to
introduce greater competition that results in lower prices, greater advertising and
promotion, and other activities that stimulate demand. One study concluded that, in
four Asian economies that opened their markets in response to U.S. trade pressure
during the 1980s-Japan, South Korea, Tai-wan, and Thailand-consumption of
cigarettes per person was almost 10 per-cent higher in 1991 than it would have been if
these markets had remained closed. An econometric model developed for this report
concludes that increased trade liberalisation contributed significantly to increases in
cigarette consumption, particularly in the low- and middle-income countries.
Regional patterns in smoking:
Data on the number of smokers in each region have been compiled by the World
Health Organization using more than 80 separate studies. For the purpose of this
report, these data have been used to estimate the prevalence of smoking in each of the
seven World Bank country groupings.1 As the Table shows, there are wide variations
between regions and, in particular, in the prevalence of smoking among women in
different regions. For example, in Eastern Europe and Central Asia (mainly the former
socialist economies), 59 percent of men and 26 percent of women smoked in 1995,
more than in any other region. Yet in East Asia and the Pacific, where the prevalence
of male smoking is equally high, at 59 percent, just 4 percent of women were smokers.
Smoking and socio-economic status:
Historically, as incomes rose within populations, the number of people who smoked
rose too. In the earlier decades of the smoking epidemic in high-in-come countries,
smokers were more likely to be affluent than poor. But in the past three to four
decades, this pattern appears to have been reversed, at least among men, for whom
data are widely available.2 Affluent men in the high-income countries have increasingly
abandoned tobacco, whereas poorer men have not done so. For example, in Norway,
the percentage of men with high incomes who smoked fell from 75 percent in 1955 to
28 percent in 1990. Over the same period, the proportion of men on low incomes who
smoked declined much less steeply, from 60 percent in 1955 to 48 percent in 1990.

Today, in most high-income countries, there are significant differences in the

prevalence of smoking between different socio-economic groups. In the United
Kingdom, for instance, only 10 percent of women and 12 percent of men in the highest
socio-economic group are smokers; in the lowest socio-economic groups the
corresponding figures are threefold greater: 35 percent and 40 percent. The same
inverse relationship is found between education levels-a marker for socio-economic
status-and smoking. In general, individuals who have received little or no education are
more likely to smoke than those who are more educated.

Regional Patterns of smoking

Estimated smoking prevalence by gender and number of smokers in population aged 15 or
more, by World Bank region, 1995
World Bank Region

Smoking prevalence (%)

Total smokers

Males

Females

Overall

(millions)

(% of all smokers)

59

32

401

35

26

41

148

13

Latin America & Caribbean 40

21

30

95

Middle East & North Africa 44

25

40

South Asia (cigarettes)

20

11

86

South Asia (bidis)

20

12

96

Sub-Saharan Africa

33

10

21

67

Low/Middle Income

49

29

933

82

High Income

39

22

30

209

18

World

47

12

29

1,142

100

East Asia and Pacific

Eastern Europe & Central 59

Asia

Note:

Numbers

have

been

rounded.

Source: Author's calculations based on World Health Organization. 1997. Tobacco or health: a
Global Status Report. Geneva, Switzerland
Until recently, it was thought that the situation in low- and middle-income countries
was different. However, the most recent research concludes that here too, men of low
socio-economic status are more likely to smoke than those of high socio-economic

status. Educational level is a clear determinant of smoking in Chennai, India (Figure

1.2). Studies in Brazil, China, South Africa, Vietnam, and several Central American
nations confirm this pattern.
While it is thus clear that the prevalence of smoking is higher among the poor and less
educated world-wide, there are fewer data on the number of cigarettes smoked daily by
different socio-economic groups. In high-income countries, with some exceptions, poor
and less educated men smoke more cigarettes per day than richer, more educated men.
While it might have been expected that poor men in low- and middle-income countries
would smoke fewer cigarettes than affluent men, the available data indicate that, in
general, smokers with low levels of education consume equal or slightly larger numbers
of cigarettes than those with high levels of education. An important exception is India,
where, not surprisingly, smokers with college-level education status tend to consume
more cigarettes, which are relatively more expensive, while smokers with low levels of
education status consume larger numbers of the inexpensive bidis.

Age and the uptake of smoking

It is unlikely that individuals who avoid starting to smoke in adolescence or young
adulthood will ever become smokers. Nowadays, the overwhelming majority of
smokers start before age 25, often in childhood or adolescence (see Box 1.1 and Figure
1.3); in the high-income countries, eight out of 10 begin in their teens. In middleincome and low-income countries for which data are available, it appears that most
smokers start by the early twenties, but the trend is toward younger ages. For example,
in China between 1984 and 1996, there was a significant increase in the number of
young men aged between 15 and 19 years who took up smoking. A similar decline in
the age of starting has been observed in the high-income countries.

IN DEFENCE OF CIGARETTE: (not a source of cancer):

Country

Consumption

Hungary

2515

Japan

2510

USA

2020

South Africa

1950

UK

1700

France

1690

USSR

1650

Brazil

1200

Philipines

1150

Venezuela

950

Zaire

150

India

100

To draw any conclusions concerning the influence of smoking upon lung cancer in these
countries, we need figures on lung cancer death rates (LCDR's). Fortunately, the World
Bank puts out a book which gives statistics for a number of countries which give disease
statistics in a form known as "45Q15". The "45Q15" number represents the percentage
risk of someone who is 15 years old dying from a particular disease by the time he or she is
60. Figures are not available for all countries; such important ones as the former USSR and
India either don't report at all or don't break down deaths from cancer into different types
of cancer. Never the less, we do have LCDR's for some of the countries for which we have
smoking consumption figures. All of the following statistics are in 45Q15 format, which
means they are risk figures in percentages.
In the United States, the male LCDR is 1.4%, the female risk is 0.7%. Hungary, with the
highest rate of cigarette consumption of any country, has a male LCDR of 2.4; female
0.5%. Hungary shares the highest rates with its neighbour, Czechoslovakia, where the male
rate is 2.4% and the female rate is 0.3%. Prima facie, these figures indicate that a high
smoking rate is associated with a high LCDR. Or do they?

Let's look at Japan. As we have seen, Japan is practically tied with Hungary for the highest
rate of cigarette consumption in the world. It turns out, however, that the male LCDR in
Japan is 0.5%. That's approximately one-fifth the rate in Hungary; approximately one-third
the U.S. rate. The LCDR for females in Japan is also astonishingly low, 0.2%.
Furthermore, although they have the highest smoking rate of any major nation, the
Japanese are remarkably healthy! At birth, a Japanese male has a whopping life expectancy
of 75 years (as opposed to 72 in the U.S.A.). Japanese girls, at birth, have a life expectancy
of 80 years. Those are the highest life expectancies in the entire world.
Another heavy smoking nation is China. The authors of the World Bank book tell us so,
and a recent PBS special concentrated on the "alarming" rate of smoking in China. In fact,
in China, the government grows tobacco and receives much of its revenue from cigarette
sales. In China, however, the LCDR is about the same as in Japan: 0.56% for men; 0.39%
for women, in 1988, the last year for which we have World Bank information.
Interestingly, some nations in the tropical and sub-tropical belts have very low LCDR's,
notwithstanding evidence suggesting that smoking is widespread in these countries. In
Mauritius, an island in the Indian Ocean where tobacco is an important crop, the LCDR for
males is only 0.4; for females it is 0.1. In Barbados, the male LCDR is 0.5; the female rate
is zero. In the Seychelles, an island paradise in the Indian Ocean, the male LCDR is 0.4;
the female LCDR is 1.0, making that nation the only one in the entire world, where the
female rate exceeds the male rate.
At least one researcher has suggested that the low LCDR's in the tropical and sub-tropical
countries are attributable to the exposure of the residents to sunshine, which raises vitamin
D levels. That theory, however, fails to explain the very low LCDR's in China and Japan
which are not tropical or sub-tropical countries.
One possible explanation may relate to the diagnosis of lung cancer. Sri Lanka (formerly)
Ceylon) has the lowest male LCDR of any country in the world (0.1%), and a female rate
of zero. So, if you're worried about lung cancer, you should catch the next plane to Sri
Lanka. Before you do, however, you should be aware there is a disease category called
"Senile and ill defined". The male death rate from "ill defined" illness in Sri Lanka is 3.4%;
the female rate is 2.2%. These figures are many times greater than those for another
country (for example, the male rate in the U.S. is 0.3%; in Hungary, it is zero). Clearly, the
doctors in Sri Lanka are not doing a very good job of diagnosing causes of death. By

10

comparison, in Hungary (which has the largest number of doctors per capita of any country
in the world), every death is accounted for, positively. There are no deaths attributed to "ill
defined" causes.
Diagnosis, alone, however, cannot be the whole answer. Japan has an excellent medical
system, and cases of lung cancer are surely and accurately diagnosed. The death rate from
"ill defined" illnesses in Japan is only 0.1% for males; zero per cent for females. In China,
also, there is a rigorous effort to pin-point causes of death; the rates of death for males and
females from "ill defined" causes are less than 0.1%. Yet, as we have seen, the LCDR's in
China and Japan are very low, despite very high rates of smoking. Moreover, the LCDR
figures cannot be dismissed as resulting from poor diagnosis, since the low rate of "ill
defined" illness in each country proves that a vigorous effort is being made to accurately
pin point exact causes of death.
Possibly, genetic factors are at work. Hungary and Czechoslovakia, each with high
LCDR's, are contiguous countries, inhabited largely by fair skinned, blue eyed people.
Japan and China, which have very low LCDR's, are separated only by the narrow Sea of
Japan, and populated by people with relatively similar racial characteristics. Few figures are
available on LCDR's in the developing nations in the tropical and sub-tropical zones, but
the available figures suggest that lung cancer rates are small in these countries, which are
largely inhabited by Blacks. Can it be that certain races of the world are genetically more
susceptible to lung cancer than others?
I don't know. I can, however, say with certainty that smoking doesn't cause lung cancer in
Japan and China. If it did, the LCDR's in these countries, which are populated by heavy
smokers, could not possibly be so low!

TOBACCO USE INDIA:

11

In assessing the tobacco habits in India, indigenous forms of smoking, as well as chewing,
which are characteristic of certain regions, have to be accounted even though smoking is
the predominant type of nicotine intake in this country.
Bidi
Indian cigarette, which ranges in length from 5 to 8 cms, made up of 0.25 to 0.5 gm of
locally grown tobacco, usually sun dried and cured and then flaked and hand-rolled in a
rectangular piece of dried temburni leaf. This traditional form of smoking is practised in
many countries (e.g., India,Bangladesh,Nepal) and a similar smoking material is used in
other countries (e.g., Indonesia, Thailand).In India, bidis have been shown to deliver high
tar

(more

than

23

mg)

and

Chutta

high

nicotine

levels

(1.7

or

mg).

Cheroot

This is a coarsely prepared medium-sized cigar made from cured tobacco leaves rolled and
wrapped in a dried tobacco or a jackfruit leaf. It is frequently smoked with the burning end
inside the mouth. Its use is common in some parts of India (Andhra Pradesh) and Latin
America

(e.g.,

Peru).

Chillum
Chillum is a clay pipe in which tobacco is smoked. Chillum is a conical clay pipe about 10
cms long with a pebble near the mouthpiece to keep the tobacco from falling out. A wet
cloth is wrapped around the smoking end to act as a filter and to reduce heat. Chillum
smoking

is

Hookah,

practised

in
and

parts

of

India.

hubble-bubble

A small amount of tobacco, seasoned with molasses and at times with narcotics, is placed
in a bowl and topped with pieces of burning charcoal. Before being inhaled, the smoke is
passed through water, which acts as a filter. The hubble-bubble apparatus is usually passed
around from person to person in a form of group smoking. Hookah smoking is prevalent in
Nepal, Bangladesh, India,
Betel

quid

It is prepared usually by applying slaked lime and catechu to a betel leaf, to which small

12

pieces of areca nut are added. Crushed leaves of cured tobacco maybe added. The
ingredient are folded in the betel leaf and chewed. Also known as pan.
Catechu
In Burma and India, a substance extracted from the heart-wood of the tree Acacia catechu
or A. suma by boiling in water. On cooling, catechin crystallizes out, leaving the more
soluble catechutamic acid in solution. In Malaysia, catechu is prepared as a liquid extract of
the twigs and leaves of the shrub Uncaria gambir, also known as katha.
Gudakhu
A paste consisting of powdered tobacco, molasses and other substances used for cleaning
teeth in certain States of India. Since 1986, it is machine-manufactured and sold in tooth
paste-like tubes.
Khaini
A mixture of tobacco and lime prepared in the palm, formed into a ball and placed in the
mouth, usually in the groove between the cheek and gums.
Kiwam(zarda)
A paste prepared from processed tobacco leaves (from which the stalks and stems have
been removed) that have been boiled and soaked in water with flavourings and spices, and
then mashed and strained. The paste is chewed.
Loose-leaf tobacco
An American chewing tobacco usually made of strips of Pennsylvania and Wisconsin cured
cigar leaf; recently flue-cured tobacco has also been used. It is find in some restricted urban
areas.

Mainpuri tobacco
A mixture of tobacco with slaked lime, areca nut, camphor and cloves chewed in northeast
India.

13

Mawa
A mixture of small pieces of raw areca nut, tobacco and limewater, wrapped in a piece of
cellophane paper, and rubbed against the palm.
Mishri
Roasted or half-burnt tobacco prepared by baking on a hot metal plate, powdered and used
primarily for cleaning teeth; sometimes placed in the mouth as an alternative for chewing
tobacco. Also known as masheri or misheri.
Pati
Finely crushed dried tobacco leaves, usually eaten with betel quid.
Nass
A mixture of tobacco, lime, wood-ash and cottonseed oil, chewed in Parts of Kashmir.
Naswar
A mixture of sun and heat dried tobacco leaves, slaked lime, ashes of tree barks, some
flavouring agents and sometimes colouring agents such as indigo. Some amount of water is
added and the material is rolled into balls which are placed in the labial groove behind the
lower lip. The material is spat out after it has been chewed for 10-15 minutes. It is used in
Kashmir.
Plug tobacco
Stripped burley tobacco leaves, which have been cured and fermented as cakes, flat bars or
rolls (firm plug, less than 15% moisture; moist plug, more than 15% moisture).

Shammah
A mixture of powdered tobacco leaves and calcium or sodium carbonate and other
substances, including ash, placed in the buccal or lower labial groove of the mouth; used in
some coastal areas with dominance of Muslim population.

14

Twist or roll tobacco

Stripped tobacco leaves rolled or twisted into the form of a rope.
Sniffing
Insertion of finely powdered snuff into the nose.
Snuff
Moist snuff (upto 50% moisture) consists of finely cut tobacco, mostly cured and
fermented burley tobacco, which is often treated with flavouring agents and used for
dipping. Dry snuff (moisture < 10%) is powdered tobacco with or without flavouring
agents and is used either for sniffing or dipping.
Cigarette
The most popular form of smoking after bidi is the cigarette. Many brands are available,
but being very expensive, they are confined mainly to urban, upper income groups. In
recent years there has been a rise in cigarette consumption. Cigarettes made in China and
India have been shown to have high tar (20-30 mg and 20-27 mg per cigarette
respectively), and high nicotine (0.7 - 1.2 mg and 1.0 - 1.4 mg, respectively) yields. A study
in India has shown that a filter gives no protection to Indian smokers.
.

THE HARD STORY: VICTIMISED INDUSTRY:

1. Need for the study:

15

The cigarette industry has always been at the receiving end of any policy that has been
passed by the law making bodies.
Anti tobacco activities:
There are government regulations on almost every aspect of the cigarette industry in India.
Warning labels are required on all cigarette packs, advertising is prohibited on radio and
television, and smoking is banned in government and state-run buildings. Cigarettes are
now also banned in train stations and public transport buses. Eight states also impose
additional restrictions, including bans on the sale of tobacco to minors and sales or storage
within 100 meters of educational institutions. Some states have banned all forms of
cigarette advertisement and have outlawed smoking in public places. Tobacco executives
blame this legislation for contributing to the decrease in cigarette sales in recent years.
Any legislation restricting sales always has some impact on overall sales and consumption
of the product, says Singh.
The anti-tobacco lobby continues to grow in India. The World Health Organization
(WHO) has its South East Asia Regional office in India, spearheading the anti-tobacco
activities in the region. The main activities of WHO recently have been organising the
Global Conference on Law and Tobacco in Delhi in January 2000 and massive coverage of
the World No-Tobacco Day on May 31, 2000, says Sarkar.
There has also been quite a bit of tobacco litigation lately in India. Seventeen cases have
been filed through Public Interest Litigation (PIL) by non-governmental organisations and
others, mainly on the issue of public smoking, but also on seeking more restrictions.
Amongst them are also cases seeking for tobacco to be classified as a drug, and a fund to
be raised, from contributions by cigarette manufacturers, for public awareness campaigns
against tobacco and compensation for alleged tobacco-related diseases. In one state, the
High Court has prohibited smoking even on walkways and highways, says Sarkar
THE Supreme Court, for example, has come up with a recent directive to all States and
Union Territories immediately to issue orders banning smoking in public places. (As
reported, public places include "bus stops, trains, public transport, hospitals, health
institutes, public offices, court buildings, educational institutions, libraries and
auditoriums''.) A research says that the restrictions have the effect of "(reducing) some
smokers' consumption of cigarettes and induce some to quit''. It cites the example of

16

the US where "such restrictions have reduced tobacco consumption by between 4 and 10
per cent, according to various estimates''. However, the study also says that, for such
restrictions to work, "it appears that there must be a general level of social support for
them, and an awareness of the health consequences of exposure to environmental tobacco
smoke''. The study adds that "outside the United States, there are comparatively few data
on the effectiveness of indoor smoking restrictions''. To quote the study once again, "For
example, policymakers might note that winners, such as non-smokers, may be a
scattered and dispersed group, while losers, such as tobacco farmers, may have a
powerful political and emotional voice''. Given the prevailing tobacco consumption
scenario in India, it would appear that that homework has not been done at all. Briefly, the
target of the Government's current campaign against tobacco consumption appears to be
the cigarette-manufacturing industry which, however, is accountable for just 16 per cent of
total tobacco consumption in the country, a proportion that has been declining in recent
years. The question is: What have the authorities done to curb tobacco consumption of the
other types, namely, the "bidi-smoking''and chewing varieties?In fact, in India at least, the
principal threat to the population's health generated by tobacco consumption is to be found
in "bidi-smoking'', which accounts for 32 per cent of total tobacco consumption, and
chewing-tobacco, which covers as much as 48 per cent of such consumption. In recent
years, the consumption of chewing-tobacco has shot up from just 27 per cent to its present
level while bidis and cigarettes have declined from as high a level as 52 per cent and
19 per cent, respectively. Certainly,a beginning should be made to curb the menace of
tobacco consumption in the country. But, in the process, the Government should not be
seen to be discriminatory in its approach, which, in this specific case at least, would be
tantamount to disfiguring a worthy campaign, both at the national and international levels.

Indian

cigarette

sales

set

to

fall

9pc

due

to

higher

taxes

India's leading tobacco trade body has forecast the volume of Indian cigarettes sold in this
financial

year

will

dive

per

cent

due

to

higher

taxes.

"Cigarette (stick) consumption is expected to decline by about 9 per cent in the current

17

year to March 2002," Tobacco Institute of India Director Amit C. Sarkar said on the
sidelines of an industry seminar in the southern Indian town of

Guntur.

He blamed the sharp fall on a 15 per cent across-the-board increase in excise duties on
cigarettes in last February's budget. "This is unlike previous years when duty rises were
more nominal and usually on premium segments" such as filter and kingsize brands, he said
in

an

interview

earlier

this

week.

India, the world's third-largest producer of tobacco in volume terms, has steadily raised
taxes on cigarettes on the back of health concerns about smoking. Last February, it banned
tobacco

advertising

at

sporting

and

cultural

events.

Cigarette consumption has declined steadily over the last three years since 1998/99, falling
a cumulative seven percent to 95 billion sticks in the year ended March 2001, Sarkar said.
The domestic tobacco industry's key players include ITC Ltd, 31.7 per cent owned by
British American Tobacco, Godfrey Philips Ltd and VST Ltd. India also faces a fall in
exports that has combined with lower domestic cigarette consumption to hurt farmers and
traders. Tobacco exports fell to 90 million kg in the year to March from 100.54 million kg a
year

earlier,

estimates

indicate.

"Though we are a major producer, our share of the global tobacco trade today is just 0.70
per

cent,"

Sarkar

said.

He said high and "discriminatory" taxes on cigarettes compared with those on traditional
tobacco products such as beedis - the Indian equivalent of cigarettes rolled in a dried leaf had led to a fall in cigarettes' share of the total Indian tobacco basket.
Duty rates vary in accordance with the type and size of cigarettes. The rates, which are
levied per thousand cigarettes manufactured, range from inr115 for non-filter cigarettes less
than 60 mm to inr 1, 545 for filter cigarettes longer than 85 mm. Because of the high taxes
on long cigarettes, a majority of smokers opt for shorter sticks.

18

In addition to these taxes, some Indian states have an added entry or luxury tax on
cigarettes. According to A.C. Sarkar, director of the Tobacco Institute of India, there are
currently 13 states levying entry or luxury taxes on cigarettes, and the rate of tax ranges
from 1.5 percent to 10 percent. Sarkar doubts that there is much hope for these taxes to be
lifted or reduced any time soon. With increasing pressure on the states to augment their
resources, it is likely that the trend of increases in rates of taxes will continue, says Sarkar.
There is also a heavy tax on unmanufactured tobacco imported into India. The importing
company must pay an import duty as well as another duty, which is equivalent to the
domestic excise tax. This hefty tax burden forces cigarette manufacturers to further
increase

cigarette

prices.

"Cigarettes' share of total tobacco consumed worldwide has risen since the 1940s at the
expense of traditional products," he said. "But in India the share of cigarettes fell to 16 per
cent last year (2000/01) from 23 per cent in 1971 and this is because cigarettes have been
taxed

at

disproportionately

high

levels."

Sarkar said cigarette-makers now paid as much as 680 rupees a kg in various federal levies.
On the other hand, beedis and chewing tobacco were taxed at rates 17 to 20 times lower.
"Out of over 80 billion rupees in tobacco-related tax revenues ... cigarette
manufacturers contributed 85 per cent or 65 billion rupees in taxes," he said.
Cheap contraband cigarettes from India's eastern neighbours of Myanmar and
Bangladesh were also hitting the local cigarette trade. They had cornered 5.0 per cent
of the market and sales were growing at about 20 per cent annually, he said.
Contraband cigarettes were being sold at prices often more than 50 per cent below Indian
retail

prices,

he

said.

"A smuggled kingsize cigarette stick is available for about one rupee while the excise duty
we pay for kingsize local cigarettes is 1.45 rupees per stick.

19

Outside products:
While China stalks shoppers India, lesser industrial nations like Bangladesh, Myanmar
and Pakistan are out for their share of smokers India. A massive seizure of smuggled
cigarettes in Mumbai on Tuesday confirms the fact that the contraband is steadily
eating into the Indian tobacco market, even as the unwritten statutory warning for the
countrys smokers becomes more portentous.
Very recently excise staff, along with Department of Revenue Intelligence officials,
raided shops in Nullbazar near J.J. Hospital, Burma Market near Crawford Market,
Mulund, Goregaon and Vile Parle and recovered illegally procured foreign cigarettes,
mainly from Bangladesh, worth about Rs.40 lakh.
Bangladeshi brands like Aziz Gold, Good Leaf and Banani Gold were part of the
cache, apart from upmarket brands like Marlboro and Benson & Hedges.
The raid is perhaps an indicator of the desperation of the tobacco industry, which
registered a 25 per cent slump last year, and is now lobbying hard for crackdown on
contraband cigarettes.
Industry insiders attribute both the slide in the market as well as the spurt in smuggling
to the steep taxation policy of the government.
"The longer the cigarette, the higher the tax. Therefore, while the cheapest branded
kingsize cigarettes in India come for Rs.25 for a tens pack, a smuggled pack of kingsize
cigarettes is sold for Rs.10 per pack in the open market because of duty evasion. The
consumers can get a pack of kingsize foreign cigarettes for even less than the price of a
pack of mini cigarettes manufactured in India," says Arun Joshi, general manager sales,
Godfrey Philips India.
The countervailing duty alone on such kingsize cigarette imports would amount to
Rs.1,450 per 1,000 cigarettes, which translates into Rs.1.45 per cigarette, without even
taking into account the manufacturing cost, freight and customs duty. However, most
of these brands are being sold to Indian consumers at Rs.1 per cigarette.

20

"Thats where the Indian tobacco industry is losing out", says Joshi, adding that the
industry that pays the Indian government close to Rs.10,000 crore in duty deserves
better.

Bidi Competition:
On the Indian market, cigarettes must compete with bidis, which are small, hand-rolled
sticks that use a different form of tobacco than cigarettes. Bidis are usually rolled by
individuals who work alone and are not affiliated with any tobacco manufacturing
company. It is estimated that more than 5 million people roll bidis throughout India. Since
bidis are manufactured in the unorganized sector and are not produced by major tobacco
companies, there are no reliable records to document exactly how many are sold each year.
Estimates suggest that seven to 12 times more bidis than cigarettes are sold.
Bidis are smaller and much cheaper than cigarettes, which appeals to the many poor people
in India. Some sell for as little as inr2 (us$0.04) for 25 sticks. This is less than one-fifth of
the average price for cigarettes. Although there is now a tax on bidis, they are not subject
to the same heavy duties and taxes as cigarettes. Bidis are taxed only inr7 per thousand
sticks, which is significantly lower than the cigarette tax.

MARKET TRENDS
The most successful cigarette manufacturer in India is, by far, India Tobacco Company
(ITC), which is affiliated with British American Tobacco. ITC controls about 65 percent of
the entire cigarette market in India. It manufactures many of Indias most popular cigarette
brands, including Bristol, Scissors, Wills, Gold Flake and Capstan. Vizar Sultan Tobacco
(VST), whose brands include Charminar, Charms and Vijay, is the second largest player in
Indian tobacco. The third largest manufacturer is Godfrey Phillips, which produces the
21

brands Red & White and Cavenders. These three companies account for over 90 percent of
all cigarettes sold in India.
It is doubtful that any major changes to the makeup of this playing field will occur any time
soon. The Indian government recently passed a law that prohibits 100 percent foreign
investment in cigarette sectors in India. This law was designed to discourage foreign-owned
multinational companies from trying to stake their claim independently in the Indian
cigarette market. This will allow ITC, VST and Godfrey Phillips, the three multinationals
that already have equity participation, to carry on in the Indian market with their current
shareholdings. These companies have invested vast sums of money in updating technology
and manufacturing high-quality products of several varieties, in keeping with international
trends, for the Indian consumer. They have supported tobacco farmers and continuously
worked to enhance exports. The ruling prohibiting 100 percent foreign investment will
permit them to continue these activities, without disruption or diversion, and with full
benefits to the Indian economy.
These three players already face the challenge of maintaining sales in a market that is in
decline. Cigarette sales have continued to fall over the past few years, largely due to
increasing taxes. Overall consumption has decreased from an estimated 102 billion in 1996
to about 98 billion in 1999, as cigarette taxes have increased more than 10 percent over the
same time period.
Cigarette smuggling also remains a major problem in India. L.B. Singh, general manager of
sales at ITC, says, The rapidly growing contraband market, estimated to be about 3
percent of the total industry volume and 6 percent of consumer spending, is restricting
ITCs share growth. He also adds that one of the biggest challenges facing the tobacco
industry in India today is to seek government intervention in curbing the growth of
contraband cigarette volume.

22

MARKET SCENARIO:POST BUDGET :

Overall the budget is good. However, the across-the-board surcharge of 10% on
corporate tax and all other categories of assessees is a little of damper to both industry and
individuals.
The tobacco industry welcomes the retention of the excise duty structures. Although the
micro-cigarette segment has seen an increase on duty from Rs. 100 to Rs. 110 per
thousand. This is an increase that will hurt the rural and urban poor smokers and who then
would be compelled to shift the non-revenue earning tobacco products.

23

Most tobacco products including filter, paper, board have also seen a marginal increase in
excise duty from 15% to 16%. This will be a burden to manufacturing units. In addition,
the increase of freight rates and diesel rates by 5 % will add to the increased cost of
production of cigarettes in India.
Mr.Poddar is considered an authority on the tobacco industry and intrinsically understands
the various issues related to the industry. As an industry spokesperson he actively speaks
on issues of prohibition, advertising, excise and taxes at various public platforms.
Tobacco Institute of India is a representative body of tobacco farmers, tobacco exporters,
cigarette manufacturers, trade and ancillary industries associated with the cigarette
tobaccos sector of the tobacco industry in India. The members of the Institute contribute
95% of excise revenue from cigarettes, as also over 80% of the exports of cigarette
tobaccos and cigarettes.

Given the problem the cigarette industry is facing we believe there is a need for research to
find out if there is any possibility for expanding the market.

PRIMARY INFORMATION:

24

Tobacco
smoking
Non
cigarettes

Cigarette
s
Premi
um

Mini

Regul
ar

Bidi

Macr
o

Non
bidi

Never smokes bidi

Never smokes bidi

Never smokes bidi

Never smokes
cigarettes

Smokes bidi

Smokes bidi

Interchangeable with
bidi

Smokes cigarettes

Exclusive bidi smokers /first timers

Micros
Minis

CORE
(regular & premium)

According to secondary research, a few trends come to light:

BROAD INFORMATION AREAS OBTAINED:

25

The core customers do not switch to other varieties.

The mini customers have a relatively greater propensity to use micros

Micros are fringe population who shift between bidis and micros

First time smokers will jump to any one of the sets, except premium as a starting point.

On the basis of this we shall further probe through research techniques to test the
statement Feasibility of introduction of new varieties of cigarettes in Indian Market
Given my hypothesis, I try to elucidate the following broad questions:
a. What are the type of smokers?(bidi, cigarette, both, any other, multiple, all)
b. What are the factors that drive them to smoke particular form of smoking, multiple
form of smoking?
c. What are the shortcomings of the form of smoking that they resort to?
d. (For non cigarette smokers)Perception about cigarette?(advantages, disadvantages,
shortfalls)
e. (For NCS)Reasons for not smoking cigarettes?
f. (For exclusive cigarette smokers)Reasons for using cigarettes only?
g. (do)Any further additions required?
h. (for bidi smokers)any shortcomings of bidis?
i.

(for cigarette smokers)Perception about bidis

j.

Effect of price on the choice of smoking medium.

k. Is there a market for the proposed products?

l.

(For cigarette smokers & non cigarette smokers) What does a cigarette stand
for/personify? How do you identify or not identify with the product?

m. (For bidi smokers & non smokers) What does a cigarette stand for/personify? How
do you identify or not identify with the product?

26

METHODOLOGY:
a. Sample design:
30 from each of SECA, SECB, SECC, SECD, SECE, R1, R2, R3
b. Data collection method:
Since it is exploratory in nature, as well as the personal involvement with the
product, we will conduct in-depth interview, which will mostly be open ended in
nature, with a few pointed question in order to test the varieties possible and the
possible identification of the products in the eyes of the consumers and potential
consumers.. This will be the first stage of my research, which will throw up ideas and
need gaps about the possible varieties. This will be followed by a questionnaire that
will give us a quantitative basis of proving the hypothesis.
c. Data analysis method:
We will try to find the attributes missing in the present scenario and also that of the
attributes present so as to club them into homogeneous groups so as to find the
feasible varieties.

INSTRUMENTATION:

27

In depth interview for the first stage:

The in-depth interview had the following guidelines:
Good Morning Sir,
I am a management student from a reputed institute, doing my thesis on cigarettes. Please
give me your valuavle feedback through this form. Your feedback is priceless.
1. Name
2. Age
3. Education
4. Occupation
5. Are you a smoker? (If not, terminate the interview)
6. How long have you been smoking?
7. What are all the forms of tobacco you consume?
8. Why did you take up tobacco consumption?

9. When do you take tobacco? (Specify time occasion)

10. Have you ever thought of quitting tobacco consumption? Why?

11. (If multiple user) What are the reasons for multiple usages?

12. (If multiple user) What are all the pros and cons of different forms of tobacco?

13. Is there a problem with packaging with the product that you use/do not use? What are
they?

28

14. If you are to attribute a characteristic/characteristics to different forms of tobacco,

whom will you identify with? (Like macho, feminine, fickle etc.)

15. What are the reasons for smoking?

16. While buying a cigarette/bidi, what do you look for in it?

17. Is there any shortcoming(s) in the present smoking form(s) that you use?

18. (For non multiple users) Why do you not smoke a cigarette/bidi?

19. Do you ever think of changing from one form to another?

20. Why would shift/not shift from one smoking form to another?
21. Of late, has your smoking gone up/down? If yes, then why?

22. What, according to you, does the society think of smokers?

29

23. What do you believe of people who smoke?

24. Is there any difference between cigarette smokers and bidi smokers?

25. What is the image of a bidi smoker according to you?

26. Can you think of personalities that will best repersent bidi/cigarette smokers?

27. Can you think of products that might replace smoking?

28. If you ever give up smoking, what can be the reasons for that?

29. Do you see a feasibility of the trend of smoking going down? Why?

30. Can you comment on the ethicality of smoking?

31. What is your feeling about the present bans on smoking?

30

32. What do you think about the cigarette making companies?

33. Can you sir, recommend anything that you would like to, to the smoking industry, to
the smokers, or anything else that comes to your mind and you feel like talking about
it/them?

Thank You sir for you valuable inputs and time. We are highly indebted to you.

QUESTIONNAIRE for the second stage:

1. Name:
2b. Age Group:
a) 18-24
b) 25-40

31

c) 41-50
d) 51 and above
3. Educational Qualification:
a) Illiterate
b) Up to 12th standard
c) Under graduate
d) Graduate
e) Post graduate
4. Occupation:
a) Businessman
b) Professional
c) Serviceman
d) Student
e) Others (specify)
If answer is student , what is your source of income ?
Amt. in Rs.
a) Pocket-money __________
b) Part/Full time job __________
c) Both a) and b) __________
5. Income group [ If respondent is dependent, then income of his family will be
considered.] :
a) 3000 & Below
b) 3001-6000
c) 6001-12000
d) 12001-16000
e) 16001 and above
6. How often do you smoke?
a) Regularly (Daily)

32

b) Occasionally
7. How many cigarettes/bidis on an average do you smoke?
Per day

Per week

Per month

Regularly
Occasionally
8. If answer to Question No. 6 is occasionally, do you smoke the same brand(s) every time?
Bidi:
Cigarette:
9. (If you smoke cigarettes) which single brand of cigarette do you smoke more often than
others? __________________________________________
10. Since how long have you been smoking? (Mention Regular Brand) _________Years
___________________________________(no need for brand for bidis)
11. Which brand of the cigarettes have you tried so far?
a) Wills Natural Light
b) Wills Classic
c) Wills Classic Mild
d) Wills Classic Menthol
f) Wills Filter Tripped
e) Bristol
f) Four Square Special Filter
g) Four Square King
h) Gold Flake
i) Benson & Hedges
j) 555
k) Rothmans
g) Cavanders

33

l) India King
h) Marcopolo Prince Filter s
m) Gudang Garam
n) Holly Wood
o) President
p) GLOBE
q) London Filter
r) Sunlight
s) Assos
t) Others

12. What factors do you consider important in buying any brand of cigarette. Please give
points to attributes(1 to 7, 1=least important.7=most important)
Attributes

Price

Taste

Filter

Packaging Advertisement

Aroma

Fragrance Colour Tobacco

Points
Attributes

Habit

Points

13. How much do you buy at a time?

a) One or two pieces
b) Whole pack
c) Others
14. What price do you pay for buying (individual piece/pack )of
(Mention Regular Brand = MRB)?
Rs.__________________

34

15. If the price of _________ (MRB) is increased by following percentages, with the price
of
other brands remaining the same, what would be your reaction ?
Increase in price by
Reaction

Not at all

10%

15%

20%

25%

Start smoking less Qty. of same

brand.
(to what extent specify in %)
Shift to other brand
No change in buying pattern
16. How much do you spend on cigarettes monthly? Rs__________________
17. If your income increases by following percentages, what would be your reaction?
Increase in income by
Reaction

Not at all

5%

10%

20%

30%

Start smoking more Qty. of

same brand.(specify in %)
Shift to some high value
brand
Shift to cigarettes
No

change

in

buying

pattern

18. If you find a new brand at a shop what will you do?

35

If the price of new brand is

No.

Reaction

Equal to MRB

More

than Less than MRB

MRB

1.

Try it

2.

Ask and inquire for it

3.

Ignore it

19. If you dont find the _______(MRB) at a particular Shop, what would you do?
a) Go to another shop and buy same brand
b) Postpone buying at that time
c) Smoke bidi
d) Buy another brand of cigarette
20. If the brand other than ____________(MRB) introduces the scheme of free lighter
(Worth Rs.25) in return of 10 empty packets of that brand, what will be your reaction ?
a) Shift to that brand
b) No change in current buying pattern
21a. If a cigarette comes with a coupon scheme (you get a coupon with each pack of
cigarette and you will get a free health check-up on producing x numbers of that coupon)
what will be your reaction?
a) Favourable
b) Unfavourable
c) Neutral

21b. If a cigarette company introduces a coupon scheme (you get a coupon with each pack
of cigarette and you will get a free health check-up on producing x numbers of that
coupon) what will be your reaction?
a) Shift to brands of that company
b) No change in buying pattern

36

c) Feel more confident in smoking

22. What is your opinion if a product is introduced that will look like a cigarette but will
contain beedi leaves inside (show product)
a) Good
b) Bad
c) Neutral
23. How would you like to try/procure the product?
a) Buy it out
b) Prefer to try it out only if a friend supplies it to you
c) Will not try the product at all
24. What is your reaction to this product (Explain Pseudo filter)?
a) Interesting
b) Nothing Special
c) Feel cheated
25. Will you try this product out?
a) Yes, will buy it to try it out
b) Yes, if a friend offers
c) No way
26. What is the image that you associate with a cigarette smoker?
a) Bold
b) Macho
c) Mature
d) Sophisticated
e) Rich
f) Gravity
27.What image willyou attach to a beedi smoker?
a) Uncouth
b) Rural

37

c) Poor
d) Illiterate

ADVERTISEMENT
28. What did you make start smoking? (Please tick)
a) Friend circle
b) Relieve of tension
c) To show off (for status)
d) Advertisement
e) Out of curiosity
f) Time pass
g) Continuity between work to kill idleness
29. What might be the possible reasons, which can force you to quit smoking?
a) Ailments
b) Any close friends suffering from a tobacco related disease
c) Advertisements
d) Religion
30. If a bidi comes out that looks like a cigarette, what will be your reaction?
a) Try it out
b) Since it is cheap I will make it my regular brand
c) Make it a more frequent smoking option
31. How did you come to know about _________________________________(MRB)?
Through,
a) Friends
b) Advertisement
c) Shop owner

38

32. Are you aware of the advertisements of brands other than ___________(MRB)?
(Various Advertisements from magazine will be shown)
Yes
No
33. What influences you in the advertisement?
a) Models
b) Content like punch line, Logo etc.
c) Features of the product
d) Overall presentation of Advertisement
e) No influence
34. If you come across an advertisement of new brand which has you choice in Que. 33,
would you
a) Try it
b) Ask/inquire for it
c) Ignore it
Thus, we, in this thesis, would try to find out if at all there is a possibility of introduction
of new varieties of cigarettes, and if there is one, then what are the possible varieties of
cigarettes and what will be the different populations that will accept these new varieties.

ANALYSIS:
The first stage of the research comprised of an in-depth interview whose purpose was to
probe into question areas like:
39

1. The perception of cigarettes and bidis amongst smokers of both kind

2. The benefits/ shortfalls of the two products
3. The potential causes that will induce shifts from one product to another
4. Smoking habits
Apart from the attributes that were sought to be found out, a few interesting findings also
came to the forefront that need to be discussed in details:
1. Concept product (akin to Cigarillo): This is a product that is packaged like a
cigarette but will contain bidi leaves. This cannot be termed as a cigarillo, as cigarillo
contains cheroot leaves. Thus it will be a product different from the cigarillo and a
direct threat to the bidi industry. This will mean that there will be considerable
resistance in terms of lobbying from the bidi industry, which enjoys government
patronage.
2. Loyalty program: This is a very interesting outcome from the interviews where people
proposed the following- The cigarette packets can be provided with coupons. A certain
number of coupons can later be exchanged for some health program or health related
benefits.
3. Shape of the bidi: The shape of the bidi is a problem for the bidi smokers, and the bidi
smokers are very open to the idea of having a bidi that has the shape of a cigarette, i.e.
cylindrical.
4. Packaging: This is another interesting finding during the first stage of research. People
said that if there be a pseudo filter in the non-filter cigarette (i.e. the lower part of the
cigarette paper will be colored like a filter but the inside of that part will still contain
nicotine and no filter.
5. Free lighter scheme: A section of the sample suggested that a lighter or a cigarette
related product with every 7/8 packets of the brand that they purchase.

40

6. Imageries associated to cigarettes and bidis: People attach distinctly different

images with cigarettes and bidis, as well as people who smoke them.
7. Shift: We have also tried to find out possible inter-product and intra-product shift for a
change of

Income

Change in price

FINDINGS:

41

Cross tabs themselves give a very comprehensive picture of the findings and hence we would talk in details
about the findings through cross tabs first and then go to some specific analysis such as cluster analysis,

40

30

20

Percent

10

0
1 .0 0

2 .0 0

3 .0 0

4 .0 0

AG E

factor analysis, and discriminant analysis.

Code- 1: 18-25

2: 26-35

3: 36-45

4: 46-55.

During the age profiling of the respondents, the majority respondents turned out to be 1835. This is because, these people are easily accessible as compared to elder population who
are in senior positions. However, the scene was a bit different in rural and semi rural areas,
where elder people were easy to interview.
We will now talk about the findings per se.

CONCEPT PRODUCT:

42

92% of the respondents said that they liked the idea "very much".
7% of the respondents said that they liked the idea "somewhat"
1% of the respondents remained "neutral"
No respondent had unfavorable attitude towards the concept product

However when it came to trial of the product, the higher SECs were very unsure and
skeptic.
85% of the SEC A said that they would not buy this product from a shop in public.
All of them said that they would like to test the product if some friend made it available.
All of them said that they would not shift to bidis from cigarettes, even if they look like
cigarettes.
All of them said that the taste and smell of the bidi is very acrid and pungent.
Of the 7% SEC A who are open to the idea of purchasing the product from the shops, 99%
said that it will be a "once in a lifetime" occasion.
The rest 1% said that they might take it up as a more frequent smoking option.

LOYALTY PROGRAMME:

43

Loyalty program was a huge hit among the smokers, both fresh and seasoned. 100% of the
respondents endorsed the idea.
They said either they will shift to the brands of company that introduces this scheme, or
they will feel confident about cigarette smoking.
The first case will be good from the company point of view.
The second one is very promising for cigarette industry as such.
One thing can be safely assumed here. This scheme has very promising fallout for the
industry.
184 out of 240 residents (77%) of the sample said that there would be a feel good factor
about cigarette smoking.
Thus the industry will be able to achieve a very positive image which otherwise have taken
a severe beating at the hands of many world civic bodies carrying continuous anti tobacco
campaigns.

44

PSEUDO FILTER: However, one must think twice before introducing this concept as it
has been taken with a pinch of salt by the respondents. In fact many had felt cheated at the
concept of having a cigarette which is in fact not a cigarette.
A1

A2

A3

B1

B2

B3

C1

C2

C3

R1

R2

R3

Tot
al

Ne

18

21

11

62

19

25

79

utr
al
Go

19

od
inn
ova
tio
n
Fee 5

10

10

10

10

12

99

l
Ch
eat
ed
Thus, the organizations must keep in mind that this product should be introduced as a
bidiand not a cigarette. But existing tobacco laws will not allow the present tobacco
giants to get into bidi production. Also the fear on the part of the cigarette giants that going
into bidi business will dilute the premium image of their existing product will stop them
from going into this business. There is a legal issue as well. Since the product contains bidi
leaves, it should be exempted of the tax structure levied on the cigarettes, but at the same
time, since it looks like a cigarette, there will be considerable resistance from the
conventional bidi makers.
However, this can be looked upon as a very good money prospect, more so, within the
rural community, as per the cross tab suggests.

45

SHAPE OF THE BIDI: 60% (148) of the total sample believed that the shape of the
bidi was a big barrier to enjoy smoking.
Out of these 71 respondents were from SEC A, B and C. 57 were from SEC C, D, and E.
Interestingly enough, only 20 were from SEC R1, R2, and R3.
This is interesting as it clearly suggests that this problem about the shape of bidi is more of
a problem of perception and that too of a category, which does not even indulge in bidi
smoking. In fact the people who are predominant smokers of bidi have no such problems.
Here I would like to revert back to the findings from the first stage of research where the
rural people had indicated their liking for holding the bidi in the way they do. In fact, they
like to hold the cigarette in the same way. They also said that most of them really find it
very distant the way advertisements promote cigarettes. To them, smoking is a very
friendly and casual affair, and it gives a very fond and caring image. In this context, I would
like to talk about the bare papa image that one of the respondents threw up during the
in-depth interview. Though this factor was not subsequently incorporated, as it was a one
apart response. But the body languages of others also stressed on this idea that smoking
gives a bade papa image to many of the rural community.
The point thus should be taken into consideration by advertisers and marketing
communicators is the truth that advertisements should be targeted to the rural community
in a more novel way. Rather than showing a cowboy jumping off the cliff, defying all rules
of physics clinging on to a dangling cable car, defying all rules of biology, making a
preposterous somersault to bring a perilously hanging bat woman inside the car, and finally
showing everyone dancing and the cowboy smoking is perhaps not the advertisement that
would strike instant chord with the rural population.. When we deal with the imageries as
associated to bidi smokers by the rural population itself, we will find that they really do not
feel that a bidi smoker is poor. In fact they are very open to smoking a cigarette, and yes
they have the money to buy premium cigarettes as well. But they cannot identify with the
present imagery of cigarettes as portrayed in mass media.

FREE LIGHTER SCHEME:

46

SEC wise split

Like

Neutral

Dislike

A1

A2

A3

B1

10

B2

10

B3

10

C1

10

C2

10

C3

10

30

27

R1

28

R2

27

R3

28

Though not a runaway success like the promotion scheme, the idea of giving a free lighter
also proved out to be a hit among the smokers. Of course, one should keep it in mind that
the response captures only perception.

IMAGERIES ASSOCIATED WITH CIGARETTES AND BIDIS:

47

At an overall level the image of bidi smokers is that of rural. We must keep it in mind that
the word rural does not imply an negative connotations, and it is distinctly different from
the connotation of being uncouth. Thus the image of a bidi smoker is not that of a fool, but
of a farmers life.
On the other hand, the primary image as portrayed of a cigarette smoker is that of
sophistication. And it is this attribute that becomes an aspirational value for smokers to
take up a cigarette. Atleast, during the research, no other factor was evident to be
considerable for taking as a factor for taking up cigarettes over bidis.

30

ImageB
140
120
100
80
60
40
20
0

Count

20

Percent

Ru
ra
l
Illi
te
ra
Un te
co
ut
h
Po
or

10

Count

Image

Bold G
ravity Macho M
ature Rich Sophisti

IM
AGEC

IMAGE

of Illiterate

Poor

Rural

Uncouth

48

bidis

(age

wise)
18-25

21

19

33

26-35

18

35

13

36-45

17

29

46-55

12

20

IMAGE of Cigarettes Bold

Gravity

Macho

Mature

Rich

Sophisticate

(age wise)
18-25

17

22

19

26-35

15

11

10

11

20

36-45

15

46-55

13

Starters however looks up at a macho image in case of cigarettes. This is because the
starters are in a lower age group, and for them being macho seems to impart them a feeling
of being manly. There is however, a similar feeling about bidi smokers, as that of the
overall perception of respondents.
IMAGE of Cigarettes Bold

Gravity

Macho

Mature

Rich

Sophisticate

(Starters)
Long time smokers

35

24

23

20

26

55

Starters

12

18

12

IMAGE

of Illiterate

Poor

Rural

Uncouth

time 54

19

90

20

14

11

27

bidis (starters)
Long
smokers
Starters

49

Image
Cigarettes

of Bold

Gravity

Macho

Mature

Rich

Sophisticate

(SEC

wise)
A1

A2

A3

B1

B2

B3

C1

C2

C3

10

R1

10

R2

11

R3

13

50

Image

of

bidi (SEC Illiterate

Poor

Rural

Uncouth

wise)
A1

A2

A3

B1

B2

B3

C1

C2

C3

21

11

11

R1

12

R2

12

18

R3

30

When we look at the SEC wise perception matrix about bidis, we find that the upper SECs
(i.e. A, B and C1, C2 perceive bidi smokers as illiterate. But the other SECs, as well as the
bidi smoking population look at bidi smokers in a far neutral light. The image that they
associate with him is that of a rural personality. By rural, we mean that of a simple farmer.

51

Across the SECs it is very evident that cigarette smoking can be associated prominently
with two imageries, i.e. one that of being Bold and the other being Sophisticated

The advertiser will do very well to keep these two attributes in mind while developing a
communication..

52

SHIFT:
Brand Switch

18-25

26-35

36-45

46-55

No switch

25

30

21

14

5%

17

17

15

11

10%

18

17

10

20%

14

30%

( Age)

Across the ages there is a common trend. Either they will not switch, or they will switch at
the lowest possible price hike. This is because of the two distinct cluster that we shall be
talking about based on relative position in the society. 26-35 age group are usually
experimentive and a bit price conscious given their financial constraints at the onset of
their respective careers.

Product Switch 18-25

26-35

36-45

46-55

(Age)
No switch

46

41

31

17

10%

26

18

21

16

15%

20%

30%

53

The product switching also follows the same trends as that of brand switch. As will be
discussed later, the switch is more within the lower strata of the respective Urban and rural
societies.

Bra A1

A2

A3

B1

B2

B3

C1

C2

C3

R1

R2

R3

30

30

30

nd
Swi
tch
(SE
C)
No
swi
tch
5%
10

10

16

30

11

%
20

%
30
%

When it comes to SEC wise split there is a strong retention factor. However, for 10% hike,
people will shift brands, across the SECs

54

Pro A1

A2

A3

B1

B2

10

10

10

B3

C1

C2

C3

R1

R2

R3

30

30

30

du
ct
Swi
tch
(SE
C)
No

10

swi
tch
10

10

10

10

30

30

%
15

%
20

%
30

Also, just as in the case of brands, there is a shift in case of product at 10% hike. Together
they make a very interesting observation. That the brand switching and product switching
have the same elasticity. This is because brand switching happens within cigarettes, and so
does the product switching at the lower SEC levels that is in the fringe population. While
going from one brand to higher brand involves shifting from a higher value cigarette to a
lower value cigarette, the same happens for a higher value product vis--vis a lower value
product.

55

Brand

3000

Switch

below

and 3001-6000

6001-12000

12001-16000

16001

and

above

(Earning)
No switch

73

13

5%

57

10%

31

11

20%

13

14

30%

Product

3000

6001-12000

12001-16000

16001

Switch

below

and 3001-6000

and

above

(Earning)
No switch

74

10%

91

15%

20%

30%

15

12

24

10

1
4

The lower SECs viz. SEC C, D, E, R3 comprise of an interesting target group as they show
the maximum activity in a price hike, though they are more stable in holding on to a brand,

56

than to a product. This simply means, that if a product switch is not induced, then brand
loyalty will be easier to achieve in this category.
TOOLS:
FACTOR ANALYSIS:
In the very first stage, through frequency distribution, factors have been drastically
reduced, as many factors were mentioned once or twice. In the second stage we selected 10
factors like

Price

Taste

Aroma

Fragrance

Filter

Colour

Packaging

Tobacco

Advertisement

Habit

These factors were calculated on a 7-point scale,

1= Strongly agree
7= Strongly disagree
Then we ran a factor analysis to find out the most prominent attributes from those 10
attributes that a smoker looks for in a cigarette or bidi.

57

The KMO test of sample adequacy was found out to be =0.682

The Significance level = 0.045
Thus implying that the factor analysis could be carried out at a factor loading of 0.5
After the factor analysis was run, it converged after ninth iteration, which mean that the
clusters were well defined and extracted five factors, viz.
Eigen value

Percent of Variance

Cumulative Variance

Advertisement

1.36298

18.6

18.6

Aroma

1.34633

18.2

36.8

Habit

1.13040

16.3

53.1

Filter

1.05986

15.8

68.9

Fragrance

1.01034

15.7

84.6

This means that the 5 factors account for defining almost 85% 0f all the reasons for which
a smokers chooses a certain smoking option.

58

DISCRIMINANT ANALYSIS:
To find the divide between the rural and the urban population on attributes such as
Product switch, Brand switch, Pseudo filter, Concept product, Lighter, and multiple
smoking we ran a discriminant analysis.
But in the discriminanat analysis, only one attribute was significant to discriminate
between the two populations.
Two variable viz. Concept and promotion failed the test.
The only equation left as a discriminant function had the following statistics:
Eigen value= 1.2331
Wilks Lambda= 0.234
Significance= 0.0000
The only variable that had a high correlation, was:
Brand switch: 0.7466
The other variable with some strength of association was:
Product switch: 0.4876
The two groups show group discriminant functions of:
Urban: 1.056
Rural: -1.056

This means that that the urban divide is more prone to brand switch, or product switch.

59

This is because the rural population are not very brand conscious even if there are brands
of bidis present. They chose products in terms of long cigarette, strong cigarette, or
Raju Chacha ke dukan ki bidi
The fact that the rural population is less prone to product switch stems from the fact that
the lower rural population is totally retaining their bidi smoking habit. On the other hand,
the lower SEC of urban population, who are predominantly bidi smokers, are most prone
to shift to the other product, i.. e, cigarette.

(Since Boxs M test failed, i.e., it was higher that 0.05 value, the discriminant analysis was
applicable)

60

CLUSTER ANALYSIS:
We ran a cluster analysis of the SECs based on the promotional activities listed:
We found two prominent clusters at the positive cluster centroids.

Group 1: SEC A1, A2, A3, B1, and R1 around lighter, packaging and free scheme.

Group 2: SEC B, C, D, E, R2, and R3 around pseudo filter and concept product and
free scheme.

This is because free scheme was a big hit amongst all the respondents.
The respective values of cluster centroids are:

Cluster1: 0.3550

Cluster2: 0.5306

The seemingly non-compatible cluster is because is of a very interesting finding in the first
stage during in-depth interviews. One thing was pretty clear, the psychology, thought
processes and tastes or preferences are alike, according to their status in their respective
society. And hence the R1 showing the same preferences as that of A1.

61

SOWHAT HAVE WE GOT?

Let us look at some trends
1. During the very first stage of research it was evident that the smokers across the SECs
that there is similarity of tastes, choices and preferences in the same hierarchical levels
of the urban and the rural divide. This is further corroborated by the findings of cluster
analysis and the various cross tabs. Thus, it makes sense to target Both SEC A1 as well
as R1 with the premium category cigarettes. But the communication must be different.
Whereas the urban premium smokers will identify themselves with big corporate, the
rural potential premium smoker will aspire to be a big, successful farmer who will be
mature enough in taking decision. The Bade papa image should come through in the
promotion. It might as well require introducing the same product in different pack.
While one can be promoted through the media, the rural version can be made available
through sales and distribution.
2. The younger age smokers and the starters associate two distinct imageries with
cigarette smoking: Macho, and sophisticated. So a good idea might be to incorporate a
packaging that will flaunt a colour which will convey both these images. In the Book
of Colours by American Management Association, White with a Red stripe has been
said to be the perfect combination to be having in a package that will convey both
these imageries.
3. Since there is a buffer at 5% increase in price, cigarette companies might look at
increasing the price. In return, they might look at increasing the diameter, thereby

62

providing more nicotine, at the same time keeping the length fixed so that it is not
over-taxed.
4. The promotion scheme was a runaway success with 100% of the respondents voting
for this option. However, this is easily replicable. So organisations better look at the
novelties they can introduce with their packaging. They might also find out how they
can minimise the number of packets with which they can offer the scheme.
5. Lighter is also a good option, but the trouble is, that a lighter is something that anybody
can do away with, since they can buy matchboxes at cheaper prices.
6. Pseudo filter, as suggested by the analyses, will be a disaster among learned people and
upper echelons of the society. This product should predominantly be targeted at the
lower class, workers, and should be advertised with a rough and tough image
7. Concept product has been found out to be perceived in a positive light among most
segments, expect SEC A1, A2, and a part of R1. So there is a huge market for it. But
before marketing the product, one should look at the legal aspects of the product. Even
after the legal aspects are cleared, it should better be marketed as a bidi. This will
portray a very negative image for a cigarette company. So it can actually look at setting
up a independent bidi manufacturing unit, with a certain amount of stake in it. The
deal should be clandestine, and the stake should not be a direct stake, but an
intermediary stake.

We, in this project have not used the whole data due to shortage of time, but in the
questionnaire itself, there is enough room for further probing, need there be any. But
whatever analysis could be done, they threw up many need gaps which we assume will act
as introducing points for cigarettes or cigarette like products, thereby successfully proving
the statement that there is:
Feasibility of introduction of new variety cigarettes in Indian market.

63

Bibliography:

Origin of statistical analysis- John D. Smith

Study of smoking patterns in South East Asia- Barbara Clandestine

Statistical tools- S. K. Mukherjee

Basic Econometrics- Damodar Gujrati

Marketing Research- Malhotra

Papers on global health trends- impact of tobacco on health of teenagers. Paper XIV,
world Health Organization Report

www.statistics.com

www.geocities.com

A study on the behaviour of urban smokers- Ajay Trehan

Trends and patterns in tobacco usage in North India- Tobacco Institute of India

www.indiainfoline.com

Differences in psychographic profile between male versus female tobacco users- Shashi
Ranganathan

Demographic break-up of the tobacco users in South East Asia- Asia monitor

64

Pathological effects of tobacco smoking on human brain- Scientific American, Vol xxv

Cigarette- a panacea to nothing- H.A David

Tension- A sociological perspective of smoking- American Tobacco Institute

Bidi- the new threat to American youth- World Health Organization Annual Bulletin1998

Cigarette: Is it all that bad?- Robert Francis Sr.

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Bulletin, Vol. XXV

The Indian Tobacco Industry, Business Week 2000, July edition

Cigarette- the victory of death- Anti Tobacco Campaign, South Asian chapter

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Handbook of Statistical model- Ranganathan

Indian Tobacco Market- CMIE

65