ITC’s evolution from a tobacco-selling brand to a conglomerate over 100 years

Key takeaways:

  • The revolutionary journey of evolution of the ITC brand has been possible through tremendous marketing strategies and an understanding of customer perceived value.
  • The brand has strategically implemented fast forward and backward integration to expand its business portfolio and use this to leverage its position in the industry.
  • ITC is gaining a strong foothold in the FMCG sector through rapid expansion and increasing its rapid share rapidly particularly by adapting to the ever-changing consumer needs.

Introduction:

In recent years, ITC brands have taken a tremendous leap through strategic interventions that include product-mix enrichment, bringing in back-end efficiencies, increasing focus on value-added segments, and leveraging digital. ITC’s journey has taken a giant leap under the umbrella of brands.

How did it all start?

The company’s beginnings were humble. Establishes in 1910 under the name Imperial Tobacco Company of India Ltd, who would have had the instinctual imagination to note what the history had in store for the company? As the Company’s ownership progressively Indianized, the name of the Company was changed to India Tobacco Company Limited in 1970. Though the first six decades of the Company’s existence were primarily devoted to the growth and consolidation of the Cigarettes and Leaf Tobacco businesses, ITC’s Packaging & Printing Business was set up in 1925 as a strategic backward integration for ITC’s Cigarettes business and from there on ITC brand ventured into being a diversified conglomerate with businesses spanning in hospitality sector followed by paperboards, agribusiness, stationery products, lifestyle retailing, information technology to branded packaged products and FMCG sector. Over a century has passed by, and we are relishing ITC’s brand to success.

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ITC Brand Identity:

What is to be noted here is how a tobacco company that became a household name today survived a tenure of more than 100 years.

The answer lies in the plethora of brands that ITC has created. Each ITC brand has its own individual identity. ITC backs up the individual brand with the brand value of the ITC conglomerate but avoids painting it over in a monotonous shade of ITC. It is no less of a challenge for a company to diversify and create brand value with its own brand identity. In the tobacco and cigarette business with a market share of 80 to 85 % ITC cigarettes have a strong positioning in the markets. ITC Brands like classic, gold flake, and navy cut are well known among generations and have often been used to refer to the product. When the ITC brand took a leap in the hospitality sector in 1979 for its potential to earn high levels of foreign exchange, create tourism infrastructure and generate large-scale direct and indirect employment it created an uproar. With over 100 owned and managed properties spread across India under four brands namely, ITC Hotels – Luxury Collection with premium pricing policy, WelcomHotels and Fortune Hotels with reasonable pricing strategies, and WelcomHeritage hotels to enrich the value and heritage of the country.

To tap into the potential of the FMCG sector, ITC Brands are designed and customized to delight the diverse tastes, needs, and lifestyles of the customers. With quality and innovation at the core along with contemporary packaging, customer insights, and a formidable nationwide distribution network, ITC brands leave no stone unturned to shine in the FMCG sector. Brands like Sunfeast, bingo, and classmate cater to the mass market and are strategically priced to cater to the mid-market segment and attract the young generation with their bright packaging and widespread advertising.

The pandemic crisis across the world gave ITC Brand Savlon an opportunity to create its dominant market position in the healthcare sector and also become a household name with its wide range of sanitizers and disinfectants introduced in the market. The brand’s unwavering commitment to striving with changing times and the ideation of evolving constantly led the company to diversify into ready-to-eat packaging food in 2001 under the brand Kitchens of India and then followed by its entry into frozen food segments with ITC Master Chef Frozen Snacks in 2017.

The company has managed to carve out its own brand identity and niche in each individual category of products with more than 25 brands under its umbrella. And in recognition of the ITC’s multi-business portfolio encompassing a wide range of businesses, the company went as far as removing the full stops from ITC Limited with effect from September 18, 2001. The Company now stands rechristened ‘ITC Limited,’ where ‘ITC’ is today no longer an acronym or an initialized form.

Market Strategies Undertaken By ITC:

Product -

Quality is paramount, and in two decades, the company that was once synonymous with cigarettes has evolved into a major player in India’s fast-growing fast-moving consumer goods (FMCG) market. ITC brand has a dynamic portfolio in its marketing mix with businesses spanning FMCG, Agri-business, Hotels, Information technology, paperboards, and packaging. The product lines have great product length and depth. The FMCG sector has been reinvented in order to be future-ready, address emerging trends, and develop future categories. The synergy of ITC’s institutional strengths is indeed unique. The foods business derives a competitive advantage from the sourcing strengths of the agribusiness, the cuisine expertise of ITC Hotels, the innovation capacity of the packaging business as well as the extensive distribution network. The Classmate stationery brand gains from the paperboards and specialty paper business. The Fabelle chocolates were developed by master chocolatiers from the hotel business. Likewise, the Agarbatti brand, Mangaldeep, is also leveraging plantation expertise. ITC has created a diverse range of personal care products. ITC’s brands such as Fiama, Vivel, Essenza Di Wills, Engage, and Superia have received a very positive response based on extensive consumer research and product development. Shower to Shower and Savlon are already well-known. ITC hotels are the greenest luxury hotels in the world because of their sustainable and responsible policies. Hotels Business has launched a plethora of curated offerings aimed at leveraging and sweating existing assets while also supplementing new revenue streams. These include the launch of novel staycation packages and in-home dining concepts such as ‘Gourmet Couch’ and ‘Flavours’. ITC continuously endeavors to provide its consumers with products that are benchmarked to international quality.

Price -

ITC brands have products in all price ranges, but as margins increase, more and more new products are on the premium side. Pricing a product is determined by several factors, including the pricing objective, the market in which one operates, the purchasing power of the consumers, the market condition, the product’s market position, and so on. For example, when Bingo first entered the market, it used a very clever aggressive pricing strategy to gain market share. They kept their prices the same as the market leader, but offered more quantity and margin to retailers, giving them a competitive advantage. ITC brands use a different marketing mix pricing strategy for each product. Their economy brands are priced accordingly. Marketing and manufacturing expenses are kept to a minimum. The brand was quick to identify the demand for premium products in coffee and chocolates which adds value along with giving customers a homegrown brand experience, Thus ITC introduced Sunbean and Fabelle with unique points of differentiation at the premium price range in the FMCG sector.

Place -

ITC has a distribution network that is unrivaled. Its products are sold in over 4 million retail outlets in India. A strong distribution demonstrates its marketing mix and location strategy. ITC is constantly working to reduce lead times and get products to retailers as soon as possible. ITC, as an environmentally conscious organization, is carbon-positive, solid waste-positive, and water positive. Over 47% of the total energy consumed comes from renewable sources. E-choupals ensure that high-quality raw materials are delivered on time. ITC brand has well-integrated manufacturing and logistics facilities, as well as a broad and extensive distribution network. ITC has distinct Agri-sourcing capabilities, with farm connections in over 17 states that supply it with high-quality wheat, soya, potato, coffee, and other commodities. For commodity customers, it has an effective CRM program. In India, ITC’s Paperboards and Specialty Papers Division has four manufacturing plants, eight regional sales offices, and more than 60 dealers. ITC operates over 100 hotels in 70 destinations. Food products from ITC are exported to North America, the Middle East, Africa, and Australia. The distributed manufacturing footprint enables economies of scale and scope, optimizes costs, and ensures superior market servicing and freshness.

Promotion -

ITC develops its promotion strategy with its brand proposition and target audience in mind. As part of its marketing mix, it promotes its product through print, television, and radio. Brand ambassadors for ITC’s brand vary. Yuvraj Singh and Soha Ali Khan, for example, have endorsed classmates; Saina Nehwal has endorsed Savlon, and Shahrukh Khan has endorsed the entire Sunfeast snack line.  Classmate launched the largest student contact program, Ideas for India Challenge, as part of ITC’s centennial initiative. It provided a platform for Indian youth to brainstorm and address issues and challenges that our country faces, as well as contribute to the nation’s development. To ensure maximum participation, ITC also launches numerous digital campaigns. It also engages in cross-promotional marketing. YiPPee! Paytm launched a campaign offering recharge coupons equal to the price of YiPPee noodles. To support the campaign, the company launched an advertisement. As a result, the ITC marketing strategy and the marketing mix are in cohesion with the brand’s objectives and vision.

What is the current positioning of the company?

ITC InfoTech is a full-service global provider of IT consulting and outsourcing solutions focused on creating value for supply chain-based industries, among other things. Strong competition from companies such as Infosys, TCS, Accenture, HCL, and others has resulted in a decline in ITC InfoTech’s market share, making survival difficult in this difficult market scenario. Due to the lack of expected results, the product becomes a loss-maker for the company, prompting management to retract future investments in the business.

ITC’s carton and packaging business, agribusiness, and hotels are the company’s shining stars, with a large market share in a high-growth industry. They have not reached their full potential and are currently competing in an extremely appealing commercial hub with a lot of focused competition.

ITC Cigarettes has a very strong market position, with a market share of 80-85%. To maintain its market share and compete, the product requires very little investment. They have a significant relative piece of the pie in a low development advertise, where a large change in the industry is improbable. ITC’s significant cigarette brands incorporate Wills Navy Cut, Gold Flake Kings, Gold Flake Premium lights, Gold Flake Super Star, Insignia, India Kings, Classic Flake, and Duke and Royal.

The FMCG sector offers delight to a broad spectrum of families with a wide range of separate, value-included items created by leveraging ITC’s in-house R&D capacities, critical shopper bits of knowledge, a profound understanding of the Indian sense of taste acquired from its Hotels business, its agri-sourcing and bundling qualities, reinvigorating, imaginative correspondence, and an unrivaled appropriation organize. They have the capacity to rise in the industry and become the stars of the industry. These purposeful brands anchor large categories and have immense headroom to grow given the relatively lower household penetration currently, particularly with per capita incomes rising in the future.

Brand rationalization is a continuous process. ITC has exited businesses such as Wills Lifestyle, John Players, shampoos, and greeting cards as they were the laggards in the portfolio. Within the portfolio, it is a complete exit or one that is regional to achieve optimum utilization of available resources for the brand to flourish.

Way ahead for the Brand:

ITC’s brand is assertive that it will continue to deliver robust growth despite key concerns such as inflation. The company will also fortify and scale up new mega brands while investing in categories of the future. It is also ITC’s aspiration to take its FMCG brands to overseas markets while the company continues to invest in future-ready capabilities to develop new markets with strategic partnerships. The company has built integrated consumer goods manufacturing and logistics (ICML) facilities across the country to create structural advantages which will drive the brand to shape the next horizon of growth and competitiveness. Regarding the hotels and hospitality business, the company had adopted the asset-right strategy that provides greater thrust on management contracts. It will soon open a new property in Gujarat named ITC Narmada. As part of the next horizon vision, ITC is proactively exploring inorganic opportunities. This was manifest in the earlier acquisition of Savlon and Nimyle brands, followed by Sunrise Foods Pvt Ltd. The brand will continue to evaluate value lucrative inorganic opportunities as an additional pillar of growth. The idea is to build ITC with a portfolio of future-ready brands and a future tech enterprise with investments in purposeful consumer-centric innovation, technology, and a digitally-enriched smart ecosystem.

 

Isha Goel

Content writer

Angel Parekh

Graphic designer

Sonakshi Khurana

 Editor 

2 thoughts on “<strong>ITC’s evolution from a tobacco-selling brand to a conglomerate over 100 years</strong>”

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