Without smoke, theres no real fire. So when ITC recently launched yet another milds variant under the Classic umbrella branded as Classic Ultra Milds it did catch the market by surprise. After all, the mild cigarettes market in India all the while had a very limited presence. The only Indian brand that had managed to gain a beachhead in the milds market had been Classic Milds. So what was ITC upto by launching yet another line extension with the same variant?
To be sure, the milds segment internationally is almost 30 per cent of the total cigarette market. But in India, (even in the premium segment) it is no more than 5 per cent. But with more and more smokers across the world shifting their allegiance to lighter cigarettes, the hue of the smoke is changing fast. Instead of jettisoning the habit, even the die-hard smoker is opting for a smoke that is low on tar and nicotine.
The trend is catching up in India too. Anticipating the changing consumer preferences, ITC is overworking overnight to realign his product portfolio by introducing a line of lighter variants across the price band. Yet, except the milder versions of Classic, the others have bombed in the market.
Clearly, the launch of Classic Ultra Milds late last year is meant to cash in on this market trend. But the question is: is the market for milder cigarettes big enough to accommodate yet another brand? Will ITC be been able to differentiate the extended brand so that it gains an identity that is distinct and is at the same time, synergistic with the mother brand? Will the extended brand widen Classics franchise? Says a market expert, The success of the exercise weighs heavy on the future of Classic, undisputably, the most successful brand launch in the last 25 years.
Although there is no official word on how the brand extension has fared, the initial retail response has been far from enthusiastic. There is every indication to suggest that the overall sales of Classic havent shown much indication of going over the 60 million sticks per month mark.
But the managers in Virginia House are not at all worried. Explains, L B Singh, brand manager, Classic, The Classic Ultra Milds consumers are actually Classics own consumers who are looking for a milder smoke. The hypothesis is that the Classic smoker will move onto Classic Ultra Milds in line with his smoking preferences.
Strategically, Classic is trying to offer as wide a range as possible. So that if there is any switch in consumer tastes and preferences (which is an euphemism for increased health consciousness), the smoker continues to stay within the Classic fold.
On the face of it, the logic is impeccable. First, the smoker in this segment is more discerning. He has exposure to the international trends, where it is increasingly becoming fashionable to opt for a lighter variety.
Second, if sales of transit brands are any indication, then there is a huge potential market for the lighter cigarettes at least in the premium segment. As one industry expert says, Out of 18 million sticks of Marlboro sold in Mumbai every month, Marlboro Lights constitutes around 10 million sticks.
Broadening the product horizon is also important because a number of big players are lumbering up to enter the Indian market. These brands will be offering a whole range, including their ultramild varieties, designed to take away share from the Classic
franchise. And in a intensified competitive atmosphere, ITC is taking pre-emptive action to ward away any inroads into its franchise.
That the market for the extended brand will be limited to begin with is obvious. Thats because even today Indians have a strong inclination to smoke stronger cigarettes, due to their rich and spicy food habits. For instance, out of the total Classic franchise of 60 million sticks, the regular Classic sells around 42 million sticks, while Classic Milds is around 10 million
sticks and Menthol is around 8 million sticks.
What ITC is doing is use the line extension to freshen up Classics brand identity. Deviating from earlier trend, ITC is using a totally new set of campaigns for Ultra Milds.
If so far, the polo players have formed an integral part of the brand identity, this time the
company is using a separate sport, golf, which is perceived to be more sophisticated and trendy, in the Ultra Milds ad campaigns. This shift, it hopes, will rub-off on the mother brand and give it a more sophisticated image.
The elements of the marketing mix are designed to appeal to the sophisticated senior executive. Also, the packaging is more than just a mere cosmetic change. The fawn colour with the name of the brand embossed in gold, is designed to give the brand a distinctive, elegant look.
ITC anticipates the demand for light cigarettes will go only one direction: upward. And this is actually plausible, given the fact that awareness about the effects have started sinking in with the Indian consumer. And as one market expert puts it, Because of Classic's strong and spicy flavour it could offer two milder versions to manage the transition from regular to mild cigarettes smoothly.
And Singh exudes confidence when he says, We are actually following the classical model of attacking our own brand to grow in long term. Appropriately, Classic is closely watching the changes in the tastes and preferences and grooming the sub-brand as the future segment leader.
Will ITC turn out to be as prescient as it turned out earlier?n The new line extension is being used to freshen up Classics brand identity. The advertsing and packaging will give the mother brand a distinctive and elegant look.
