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Robert answered on
Dec 26 2021
Running Head: E-CIGARETTES: MARKETING VERSUS PUBLIC HEALTH 1
Part 1 - E-Cigarettes: Marketing Versus Public Health
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E-CIGARETTES: MARKETING VERSUS PUBLIC HEALTH 2
Table of Contents
Marketing Convention .................................................................................................................... 3
Background Analysis ...................................................................................................................... 4
Market Evaluation ........................................................................................................................... 6
Marketing Strategy........................................................................................................................ 15
Product ...................................................................................................................................... 16
Place .......................................................................................................................................... 17
Promotion .................................................................................................................................. 18
Price .......................................................................................................................................... 19
SWOT Analysis ............................................................................................................................ 20
Strength ..................................................................................................................................... 20
Weakness .................................................................................................................................. 21
Opportunities............................................................................................................................. 21
Threats....................................................................................................................................... 22
Global Market ............................................................................................................................... 22
Limitation ...................................................................................................................................... 22
Appendices .................................................................................................................................... 24
Appendix 1 ................................................................................................................................ 24
Appendix 2 ................................................................................................................................ 24
Appendix 3 ................................................................................................................................ 25
References ..................................................................................................................................... 26
E-CIGARETTES: MARKETING VERSUS PUBLIC HEALTH 3
Marketing Convention
The growth and demand for the electronic cigarette were dramatic in the past. But there
are possibilities for the industry to face a decline in their demand for the electronic cigarette. The
main reason to face a decline in the performance is the competitive rivalry in the industry. There
are similar products available in the market that is creating more pressure on the company in
getting a strong foothold in the industry (Hitt, Ireland, & Hoskisson, 2017, p. 145). Similarly,
there is no switching cost associated with the electronic cigarettes for the customers that are
posing a great challenge to the company in holding their market share. Competitors in the
industry focus on either developing their e-cigarette or they involve in an acquisition of
companies that are involved in the e-cigarette manufacturing.
In the year 2013, NJOY obtained about 48% of the market share, and it is the company in
the industry to have a higher market share at that time. Cu
ently, the market share of the
company is below 7% that is resulting in the company to lose their competitive position.
Regarding the income, the company is not being ranked in the top five positions. There is a
considerable increase in the cigarette smoking among people, and they are expected to increase
in the future. The increase in the smoking habit is beneficial for the company as it will boost
their revenue. NJOYS market share is expected to increase with the increase in the smoking
habits. There is a higher probability for a boost in the market share of the company and in
egaining their market position.
Various health consciousness programs are increasing across the globe. It is causing
some influence over the idea of using the tobacco. If people are reluctant to use tobacco, then
there will be more challenge for the company to obtain the desired market share. The cu
ent
FDA (Food and Drug Association) categories e-cigarette as a tobacco product and the rules and
E-CIGARETTES: MARKETING VERSUS PUBLIC HEALTH 4
egulations related to the tobacco products apply to NJOYS. The segregation of the product as
tobacco product will create more challenge to the business especially in logistics and operations.
The categorization will demand exclusive advertisement and packaging similar to the tobacco
products that will create more challenges in marketing the product. As there is increasing anti-
tobacco marketing, it will be difficult to pull the investor crowd to invest in this segment, and it
will reduce the number of a customer making use of their products.
The best strategy for NJOY to market their products is to create a smoking trend in the
market using the alternatives to the regular cigarettes using e-cigarettes to increase the demand
for the product. It will enable them to capture the market share. There will be an increase in the
demand for production of e-cigarettes when there is an increase in the request for the product. It
will result in increasing the alternatives for cigarettes and to stop smoking. It will provide a
market advantage to the business. NJOY should establish a relationship with a company like
CVS as they are not cu
ently selling e-cigarettes similar to the other tobacco related products. It
is essential to create a market havoc over the alternative smoking techniques that require other
participants to participate in the market.
Background Analysis
E-cigarettes are in the market is about eight years, and it is present in the United States
for about six years. It indicates that it is not a new product in the region. There is a boost in the
quality of technology that is being used for manufacturing e-cigarettes that result in improvement
in the overall end product. Creating a marketing technique that will motivate people to quit
normal cigarettes is a challenge for the company. It is essential for them to promote their product
in the industry. Nicotine is a great addition to the people, and it is the reason for people not to
quit smoking.
E-CIGARETTES: MARKETING VERSUS PUBLIC HEALTH 5
At the same time, people are seeking for alternative smoking due to their fear of cancer.
There are more opportunities for the companies that are in a position to manufacture an
alternative through the cartridges vaporizing of chemicals. In a case of the e-cigarettes, there is a
lower level of toxins, and the tobacco has no second-hand production of smoke at the time of
combustion process. There are chances where e-cigarettes will produce no nicotine and thus will
e less harmful to the people. First e-cigarettes were introduced during 2006 in Europe, and later
it was introduced in the US during 2007. During 2012, the sales revenue from e-cigarettes is
$1.7 billion.
As per the analysis of Goldman Sachs e-cigarettes were considered to be a disruptive
technology, and during 2020 the expected sales are about $10 billion (Domm, 2013). It would be
about 10% of tobacco company sales and 15% of tobacco companies profit. From the DCD
esearch, it is clear that about 6% of the Americans have only tried using e-cigarettes. From the
health point of view, people are ready to switch to alternatives of smoking, but it would take a
time to gain popularity among people for e-cigarettes. There is a requirement for strong market
penetration using the cele
ities and other famous personalities promoting these products. It
would motivate the young population to purchase and use them.
The main risk involved in intensified promotion is that it should make the nonsmokers to
make use of cigarettes that are hazardous to the people. The e-cigarettes look similar to the
egular tobacco cigarettes that might create more trouble as people might not be in a position to
distinguish between e-cigarettes and regular cigarettes in advertisement and promotion.
Intensified marketing might result in creating an impression that e-cigarettes are promoting
smoking habit among people. There is a difference between the traditional cigarettes and e-
cigarettes.
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E-cigarettes create more smoke using the vapor to give the real effect of smoking to the
people, but both have distinctive characters. Due to these close similarities, it might cause more
confusion to the people as they can distinguish between them during the advertisement or
promotion of the product. More regulations are governing the e-cigarettes market, and the
tobacco sellers are switching their business towards e-cigarettes. Investors and other stakeholders
are paying more attention to the public health and ethical practices of the company. As e-
cigarettes are comparatively less harmful to the people pulling the investor interest towards the
company will be advantageous.
Market Evaluation
E-cigarettes market has shown a significant market growth over the period, and there is
great opportunity to expand in the future. The e-cigarettes are considered to be the future
potential of the entire industry as they are not harmful to the people like nicotine. The product is
viewed as an alternative to the regular cigarettes and indicates about the concern over the health
of the people. It is viewed as a social responsibility as it will reduce the consumption of
cigarettes by the people. The primary reason for the growth in e-cigarettes market is their
improved quality, more advanced technology and techniques used in the product and
introduction of new flavors.
There is an increase in the people’s attention over the e-cigarettes in the market that is the
main driver of sales. Growth in direct competition is posing a great threat to the business, and
they should be effectively handled. In this industry, there are more substitutes available that is
causing more pressure on the company in obtaining the target market share. There are more
changes in rules and regulations that can create more pressure to the revenue generating a
capacity of the business.
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Within seven years, there are about 200 companies in the e-cigarettes industry that is
indicating about the growing competitive pressure. More people are interested in making more
investment in the industry mainly due to their growth and high profit margin. More new startup
companies are venturing into this segment as they are comparatively new and they are in a
growth phase. The best example for a startup in the industry is NJOY. Complies like eCig,
NJOY and Blu and Logic are significant players in the market in the e-cigarettes industry. The
existing tobacco players are targeting to acquire the new e-cigarettes companies so that they will
get a better foothold in the industry.
Lorillard is one of the players in the tobacco industry and was targeting to acquire Blu e-
cigarettes manufacturing company for $135 million during 2013. As Lorillard has a significant
foothold in the US cigarettes market introducing e-cigarettes in the market will be beneficial for
them. Well established players like Reynolds American, Altria, and BAT in tobacco industry are
focusing on expanding their venture in to e-cigarettes market. There are established players like
CN Creative and Mark Ten in e-cigarettes industry that is motivating other players to enter the
industry. The main prospect for the existing players who are entering late into the e-cigarettes
usiness is that they have more companies available for acquisition.
The main advantage of acquisition is that these companies have well-established
and
equity in the e-cigarettes segment and they have created customers for their products. Acquiring
them will provide better market penetration and will enable in obtaining a higher market share.
Vuse has a market share of 36.25%, Mark Ten has a market share of 18.25%, and Blu has a
market share of 16.63% in the e-cigarettes market (refer Appendix 1) (Statista, 2016). It is more
than 60% of the industrial market share. It indicates that these three companies are top players in
the industry.
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The urge for acquisition by the existing players is progressing as the e-cigarettes
companies are growing in the industry. British American Tobacco is key to acquire Reynolds-
American which has about 42% of the market share in the in the industry (Duprey, 2017). When
two large players merge, the competition gets intensified, and it adds more pressure to the small
and medium size players. There are more players in the e-cigarettes market with a minimum
market share in the industry. It indicates the higher level of fragmentation in the business. More
competitors in the industry are looking for various alternative methods using which they can
educe the cost of manufacturing and increase the profitability in the business. It is resulting in
huge profit margin, and they are lucrative for the players like NJOY.
NJOY has a comparatively lower budget when compared to the top three players that
would provide a competitive advantage to the...