Brand Strategy About ShenZhen Cigarette Factory

Cigarette products not only meet the demands of consumers, but also is an important source of state financial revenue. It is significant for the enterprise development as well state financial to improve the competition of cigarette brand and consequently, the competition of enterprise .As a developing enterprise in order to strengthening the brand competition, Shenzhen cigarette factory require urgently to investigate and establish a reasonable strategic planning. Therefor ,in the light of sales principle and brand strategy planning , following will analyse step by step the outside and inside management condition of the factory and the market situation of it's production, also make out the general competition strategy for band and improve the brand strategy planning accordingly . China is the biggest cigarette production country in the world but its cigarette market started a little late. As China's accession into the WTO, multinational cigarette companies will gradually form a pressure on China's cigarette industry. At present, features of the development trend of China's cigarette industry are: (1) The cigarette market is in its gradual growing stage, the total sales volume is basically stabilized, and the level of consumption is raising; (2) Supervising authority has formed a policy to support famous brands, regional market block is becoming weaker; (3) centralization of production and brands is enhanced to certain extent but the centralization level is not high. Such circumstance is an advantage for the development of brands. With such a macro environment, market pressure and industrial policy, it is a core object for cigarette companies to study how to retain their own brands and on this basis to achieve the overall development of enterprise. Shenzhen Cigarette factory is in a good operation condition, and each economic index is growing rapidly. At the end of 2003, its assets to liability ratio was 17.22%. In 2004, its sales volume reached 346,300 cartons (1 case = 50000 pcs) and paid income taxes totaling 1.12 billion yuan. At present, Shenzhen Cigarette Factory produces products in 20 types and 6 brands, i.e. Temeisi, Haorizi, Xili, Ruziniu, Wutongshan and Apollo. Out of which Temeisi has a good market foundation and Haorizi expands rapidly. From 2003, the Factory launched the technology upgrade, in 2006 after the completion of the technology upgrade, the designed production capacity of the Factory will be 500,000 cartons, and actual production capacity can be expanded to 1 million cartons. It makes a good platform for the development of the factory. However, the Factory faces the following problems, one is that the local protectionism exists in the industry causes a narrow market space; the second is that the production limit made by the supervising authorities build a bottleneck on the production; the third is that the profit rate needs to be increased; the fourth is that the expansion of production scale brings pressures on marketing; the fifth is that the low volume of single individual brand. Practical resolution methods for such problems are: (1) through increasing the added value of unit products, to maximize the enterprise benefit under the circumstance that the production volume is limited; (2) to drive the end consumers, to press the monopolists and break through the market protection through the purchasing behavior of end consumers; (3) to increase the capability of the brand to expand. To implement the above methods, Shenzhen Cigarette Factory shall build a strong brand, and break through the difficulty of homogeneity of brands. Therefore, brand strategy will be the development strategy of the Factory. From the market research on the popularity and market feedback of the brands of Shenzhen Cigarette Factory, we can see the brands Haorizi and Temeisi already have certain market basis, while the brands Ruziniu, Wutongshan, Xili and Apollo had been introduced into the market for a long time but their popularity are low and lack of potentials or worthiness or is hard to develop. The brand Haorizi was introduced as a functional products for festivals or happy events and its consumers are white-collar. The brand Haorizi shares 69% of the total sales of the Factory. White-collar recognize the taste and price of Haorize but are not satisfactory to the package and brand name. In China's cigarette market, price is a key index for market segmentation. As the price of Haorizi meet the requirements of white-collar for price, taste and price, the brand is accepted by white-collar consumer group. However, they do not recognize the core value and other elements of the brand. The brand Temeisi aims at the blue-collar consumer group in price and taste and is recognized by the market. The brand Xili is not satisfactory in sales, but the low-tar and blend type cigarette is in line with the future development orientation. Analyzing the competition environment of the brands of Shenzhen Cigarette Factory in SWOT analytical method, we can see the Factory's advantage in brand is not obvious, and is small in production scale, however, the Factory has advantages in product quality and operation capacity, therefore the Factory can adopt the basis competition strategy of "difference centralization"to achieve the target of building the brand. According to the results of market research and the Factory's development strategy, the basic principle of the brand strategy of the Factory shall be keeping three brands while abandoning three, i.e. to enhance the brand Temeisi, to expand Haorizi, to reserve New Xili and to abandon Wutongshan, Ruziniu and Apollo.