Marketing Plan for DuMaurier Cigarette Brand - Imperial Tobacco Canada
Du Maurier Marketing Plan
Demographic Situation in Canada
Socio - Cultural Situation
Opportunities and Issues Analysis
Strengths and Weaknesses
Opportunities and Threats
The following pages will focus on providing a detailed outlook on Imperial Tobacco Canada's Du Maurier cigarette brand in relation to the Canadian tobacco market. The Canadian tobacco market is flourishing, and this can be observed in the revenues of cigarette manufacturers and retailers. Also, this industry employs more and more people each year.
Imperial Tobacco Canada is the most prosperous cigarette manufacturer in Canada, and Du Maurier is the most popular brand. The key aspects that allow Du Maurier to have such a privileged position on the market will be discussed in this paper. Also, strategic marketing recommendations will be discussed.
The Canadian tobacco market comprises tobacco growers, intermediate tobacco marketers, cigarette manufacturers, wholesalers, retailers, and importers. The main competitors on this market are:
Imperial Tobacco Canada - 70% market share, 2002 revenue of $1,926 million
Rothmans, Benson, and Hedges - 17% market share, 2002 revenues of $563 million
JTI Macdonald - 12% market share
Grand River Enterprises
Currently, there are approximately 40,000 retailers on the Canadian tobacco market. Their yearly revenues reach $700 million. Cigarette imports account for less than 1% of the market.
The number of people employed in the cigarette manufacturing industry in Canada is increasing each year. However, the increase is significantly higher in the administrative sector than in the production one.
1.2.1. Demographic Situation in Canada
In July 2007, Canada's population reached 33,390,141. The age structure is the following: 0-14 years - 17.3%; 15-64 years - 69.2%; 65 years and over - 13.5%. The median age is 39.1 years, as estimated a year ago. Canada's birth rate is of 10.75/1,000 population, while the death rate is of 7.86/1,000 population, leading to a population growth rate of 0.869%.
The migration rate reaches 5.79/1,000 population. The sex ratio structure is the following: at birth - 1.05 male/female; under 15 years - 1.051 male/female; 15-64 years - 1.01 male/female; 65 years and over - 0.748 male/female; total population - 0.977 male/female. Life expectancy at birth is 80.34 years for the total population.
1.2.2. Economic Situation
Related to its economic situation, Canada is regarded as "an affluent, high-tech industrial society in the trillion-dollar class, resembling the U.S. In its market-oriented economic system, pattern of production, and affluent living standards" (CIA, 2008). Canada's outstanding economic growth started after the World War II. The economic sectors that reported the highest growth are: manufacturing, mining, and services. Previous to this economic development, Canada was merely a rural economy. In the past decades, trade with the United States has significantly increased, due to the 1989 U.S. - Canada Free Trade Agreement (FTA), and to the 1994 North American Free Trade Agreement (NAFTA).
Canada's consistent and continuous economic growth is mainly due to its great natural resources, skilled labor force, and modern capital plant. Over the past decade, Canada has reported balanced budgets, due to suitable fiscal management. Also, Canada benefits from great trade surplus with the United States.
Canada's prosperous economy is revealed by the following data: GDP - $1.274 trillion; GDP real growth rate - 2.7%; GDP per capita - $38,200; GDP composition by sector - agriculture 2.1%, industry 28.8%, services 69.1%; labor force - 17.9 million; labor force by occupation - agriculture 2%, manufacturing 13%, construction 6%, services 76%, other 3%; unemployment rate - 5.9%; budget - revenues: $565.8 billion, expenditures: $551.2 billion; public debt - 64% of GDP; industrial production growth rate - 1.6%; exports - $440.1 billion; imports - $394.4 billion; current account balance - $28.46 billion (CIA, 2008).
1.2.3. Political-Legal Situation
In the present, on political ground, Canada is facing a series of challenges regarding public demands for quality improvements in health care and education services, on the one hand, and separatist concerns in predominantly francophone region of Quebec. Canada is a constitutional monarchy, a parliamentary democracy, and a federation. Canada's administrative divisions are consisted of 10 provinces and 3 territories. The legal system is based on English common law. In Quebec, the civil law system is mostly based on French common law.
The executive branch is consisted of: the chief of state, the head of government, and the cabinet. The legislative branch is represented by a bicameral Parliament consisting of the Senate and the House of Commons. The judicial branch is consisted of the Supreme Court of Canada, Federal Court of Canada, Federal Court of Appeal, Provincial Courts. The most important political parties are: Bloc Quebecois, Conservative Party of Canada, Green Party, Liberal Party, and Democratic Party.
1.2.4. Ecological Situation
The most significant environmental issues that currently affect Canada are represented by air pollution and resulting acid rain. As a consequence, acid rain affects Canada's lakes and forests. In addition to this, Canada is affected by consistent metal smelting, coal-burning utilities, and vehicle emissions that affect agricultural and forest productivity. Also, agricultural, industrial, mining and forestry activities significantly contaminate ocean waters.
In order to prove the government's commitment to counteract environmental issues, Canada has entered a series of international agreements, like: Air Pollution, Antarctic Environmental Protocol, Biodiversity, Climate Change Kyoto Protocol, Desertification, Endangered Species, Ozone Layer Protection, and others.
1.2.5. Socio - Cultural Situation
Canada's ethnic structure is the following: British Isles origin 28%, French origin 23%, other European 15%, Amerindian 2%, other, mostly Asian, African, Arab 6%, mixed background 26%. Languages used in Canada are: English (official) 59.3%, French (official) 23.2%, other 17.5%. Literacy level reaches 99% among the total population (CIA, 2008).
Main religions in Canada are: Roman Catholic 42.6%, Protestant 23.3% (including United Church 9.5%, Anglican 6.8%, Baptist 2.4%, Lutheran 2%), other Christian 4.4%, Muslim 1.9%, other and unspecified 11.8%, none 16%.
1.2.6. Technological Situation
After the World War II, Canada has significantly developed, especially regarding economic and technological environments. Developing in parallel with the United States, Canada has come a long way, from a predominantly rural region before World War II, to a prosperous high-tech society today. Technological developments are expected to continue over the future.
1.3. Competitive Situation
Canada's affluent economic and technological situation accounts for the country's competitiveness. Nowadays, Canada has become one of the most competitive jurisdictions, due to the quality of jobs, and increased level of investments in all areas (Hughes Anthony, 2007).
Imperial Tobacco is by far the most important cigarette manufacturer in Canada. Du Maurier is one of the most popular cigarette brands. However, Imperial Tobacco Canada must face tough competitors, like Rothmans, Benson and Hedges, JTI - Macdonald, and others.
2. Opportunities and Issues Analysis
2.1. Strengths and Weaknesses
The brand's greatest strength is Du Maurier's position on the market. Du Maurier is by far the most popular brand. However, there is still room for improvement.
Du Maurier cigarettes' quality is another strong point. In fact, the brand's popularity is due to the high quality it provides for its customers.
In relation to this, Du Maurier offers a very good balance between quality and price.
Also, the brand has the best distribution activity compared to other cigarette brands.
Among its weaknesses, one must take into consideration that Du Marier's prices may not be affordable for everyone.
Also, Du Maurier does not address all customer segments.
2.2. Opportunities and Threats
The most important threats to Imperial Tobacco Canada in general, and to Du Maurier in particular are: illicit trade and intellectual property, excise and sales tax, regulation, marketplace, financial risks, litigation risks, and information technology.
Illicit trade may take the form of counterfeit products, smuggled genuine products, or locally manufactured products with evaded taxes. Any of these forms can prove to be quite harmful for the brand. Such activities have direct effects on sales volume, and may also lead to restrictions regarding the ability to increase selling prices. This eventually leads to damaged brand equity.
The brand's sales volume could also be negatively affected by tobacco taxes increases, relative tax rates modifications, or excise structures changes. These increases could lead to increased prices, which may determine certain consumers to switch to illicit products.
The marketplace is one of the most important factors that threaten to affect the brand. The marketplace is characterized by a series of sudden changes that may not be counteracted in time (BAT, 2008).
Information technology can be both a threat and an opportunity. It can be regarded as a threat because of certain security matters that could affect the company.
The greatest opportunity for Du Maurier is the market's growth potential. There are certain customer segments that have not yet been exploited enough.
3.1. Financial Objectives
Du Maurier strategy must be integrated in the Imperial Tobacco Canada general strategy. But this happens…