Analysis On Cigarette Brand Concentration Of Chinese Tobacco Based On Behavioral Economics

China is the world biggest country as the tobacco producer and cigarette market, simultaneously the weak country of tobacco scale and export. Before joining WTO, tobacco industrial concentration degree of is low in our country, and the domestic cigarette manufacturers formed the market competition pattern of administrative monopoly. But the international tobacco industry accelerated the process of globalization and monopolization. In recent years, the tendency is evident increasingly, which the global tobacco market is controlled by several multinational corporations.According to the legal documents with reference to joining WTO, China reduced the import tariff of the cigarette, the cigar and the shredded tobacco gradually, and cancelled the non-tariff measures gradually to open the cigarette market. Administrative monopoly is being broken gradually because international cigarette manufacturers participate in the competition, but regardless of the enterprise size and the brand scale, Chinese tobacco enterprises have difficulty in competing with international cigarette manufacturers.In our country, the general trend of cigarette marketing is internal market-oriented under the protection of administrative monopoly. "The big market, the big brand, the big enterprise" is the strategy decided by the National Bureau, so the National Bureau has formulated , which is the core of promoting the competitive power of tobacco industry. It is the key to realize the strategy decided by the National Bureau that how to carry on the brand cultivation through the market mechanism and how to simplify to improve the brand concentration degree. In this process, it has to be promoted by the hand of the market under the macroscopic intervention of the National Bureau.Under the background in the preceding text, Shandong Cigarette Marketing Center for Strategic Studies, Shandong Branch of China Tobacco Corporation and the Research Center of Brand Economics in Shandong University designed the project of "The research for market mechanism and the cultivation strategy of cigarette brand concentration in Shandong Province". This article is its gradual achievement.Firstly, this article introduced the concept of alternative cost in Brand Economics. Through improving and utilizing Hotelling Model, the analysis indicated that the overseas cigarette manufacturers have the brand superiority, which will raise their market share gradually. Afterwards this article improved Ultimatum Game Model in Behavior Economics, and its evolution is "Ultimatum Game—Four Participators Model". Then the article analyzed the importance of consumers to the success of brand concentration in tobacco industry after they had the power of the choice.The enhancement of brand concentration degree should be led by the market, and this requests us to take the market method as the way. The existing consumption pattern is formed historically, and the enhancement of brand concentration degree will change this kind of consumption habit inevitably. This needs cigarette manufacturers to understand that consumers' consumption habit and grasp the different brand in the consumers' psychology cognition. The critical influence to the cigarette market is cigarette consumers, which is the essence of market economy. The author managed the questionnaire survey and the "blind test" of consumers in the Tobacco Brand Concentration Project, therefore, through using Prospect Theory and Addiction Theory in Behavioral Economics to carry on the analysis to the obtained data particularly, and quoted the domestic and foreign related research results to summarize the cigarette consumers' part consumption habit. After the National Bureau promulgates , some parts of cigarette consumers will be in the time of choosing the favorite brand anew, so the influential factors of the process is one of the keys which this article analyzed.Finally, according to analysis in the preceding text, this article thought that in view of the different kinds of cigarette consumers, the weight of influential factors is very different, so the cigarette manufacturers should implement the strategy of "one trademark, more brands", and the system of brand manager should be implemented.