1. Porters Five Force ModelAnalysis ForIndian Cigarette IndustryAuthor: Angshu www.tnmg4u.com. All rights reserved.

2. Threats of New Entrants=LOW New Product differentiation Very Tough already cigarettes at different price points, flavors, brand images Access to distribution channel is tough big & established players are present (e.g. ITC) Capital requirement is very high for a pan India launching; Local launch can not catch up scale Cant use Economies of scale Government policy high tax, no TV/Radio Ads 3. Bargaining Power of Suppliers=LOW Many inputs are required but in small amount paper, tobacco, filter There are many small scale, unorganized suppliers Cigarette companies are big and have direct access to distribution channel and addicted buyers. Suppliers dont have much control over smokers. 4. Bargaining Power of Buyers=LOW Addicted customers - even after knowing harms people cant leave it Smoking has lot of symbolic and emotional values attached with it Product quality not much important to smokers Research shows most people cannot differentiate among the brands in a blind taste Low switching costs in terms of price 5. Threat of Substitute Product=LOW Herbal Cigarettes (e.g. Nirdosh) were launched but did not become popular (no emotional value) Nicotine patch is another substitute but again no comparison with cigarettes in terms of popularity and usage 6. Competitive Rivalry in the Industry=HIGH Many competing players: ITC, Godfrey Philips, VST, GTC etc - see chart below Price competition continues Advertisement for cigarettes is now prohibited in India Replacement for ads event sponsorships and sales promotions All making new product launches 7. Thank You Author: Angshu www.tnmg4u.com. All rights reserved.