Lanka Monthly Digest (LMD)
As indicated in the Corporate Profile (2010) LMD has been operating for 15 years in Sri Lanka, covering all aspects of business issues and establishing as the only magazine with a super brand status. The Monthly average readership of the magazine is around 20,000 which compromise of business leaders, senior managers and professionals within the nation.
Business Today is published by BT Options publishing organization which has been publishing 3 industry leading magazines in Sri Lanka for over two decades. As indicated by BT Options in their Company Profile (2009) Business Today is one of the premier business magazines of the Corporate World catering to the business community from CEO level to the marketing student. As a valuable source of knowledge, Business Today features articles and case studies from Harvard Business Review and New York Times Syndicate; regular features such as 'Winning' by Jack & Suzy Welch, Global Business Perspectives, Opec and FTSE Data are some of the popular features among the business community. It also presents key influencers in the local business community in an interview style that has become the trademark of Business Today.
Daily News Sri Lanka
Daily News is the Leading Sri Lankan News Paper published by the Associated Newspapers of Ceylon Limited also known as Lake House Publications. They have been Operating in Sri Lanka since 1918. They have the Largest Newspaper Company in South East Asia and publish 3 daily, 3 week end, 5 weekly, 2 monthly and 3 annual publications in Sinhala, English and Tamil languages as indicated by Daily News in their online article Associated Newspapers of Ceylon (2010). Their news papers are distributed almost everywhere around the country so Publishing an article in this newspaper would almost guarantee a large viewer base.
The Chartered Marketer is a magazine published by the Chartered Institute of Marketing in the Sri Lanka Region. It is an annual magazine which began as the profile-maker for Sri Lankan Chartered Marketers and is a part of the overall strategy of the Chartered Marketer Task Force to showcase the thinking of Sri Lanka's professional marketers and leverage the maxim that Marketing plays a pivotal role in business decision making. The Chartered Marketer includes global perspectives and local applications from CIM's sharpest shooters plus the secret of success stories and is essential reading for corporate management and marketers as indicated by the Chartered Institute of Marketing in the Sri Lanka Region in their online article The Chartered Marketer Magazines (2008).
Selected Potential Publication
Lanka Monthly Digest (LMD) could be selected as the best suited magazine to publish "Is the Tobacco Industry ending up in smoke?" As the consumption of Tobacco and its consequences is an emerging critical issue arising in Sri Lanka's corporate landscape LMD would be the ideal publication to contain the article, as the magazine specifically has the "Business Forum" for such a critique.
The magazine has been in the Industry for over a decade now and has been setting the benchmarks as far as business magazines are concerned. LMD's focus is, uniquely, on the big picture of Sri Lanka's business landscape. This encompasses most of the burning issues which confront the nation - war and peace, bribery and corruption, professionalism and ethics, politicization, law and order, infrastructure, technology, productivity and poverty, amongst others as indicated by LMD in their online article Business Agenda (2010).
When publishing an article what is most researched is the Readership of that particular magazine. LMD enjoys a monthly readership of around 20,000 (a print run of 5,000 copies on average, read by about four people per copy). The target readership comprises business and opinion leaders, and senior managers and professionals, corporate leaders, managers, executives and directors - as well as to anyone who is interested in both Sri Lankan and international corporate current affairs. It is increasingly read by the academic and diplomatic communities, and civil-society organizations as indicated by LMD in their online article Readership (2010). Since LMD magazine has a large Readership and also is the Best Selling Business Magazine in Sri Lanka, it will be the most potential publication for the particular article. Through the publication in this magazine it would result in this article being viewed by many and also could receive many feedbacks through the LMD Online portal. Therefore in conclusion LMD is selected as the Suitable Potential Publication.
Is the Tobacco Industry ending up in smoke?
The upcoming trend of the anti smoking lobby is due to affect the performance of the Tobacco Industry threatening top line and bottom line performance in the near future.
Over the years the Tobacco Industry in Sri Lanka has been a lightning rod for criticism and is always faced with pressure. But the fact that one should keep in mind is that as long as the business is in accordance with the government rules and regulations and is operating in a socially responsible manner it is still a legalized business within the country.
Today the industry is getting a jump from a major socio cultural shift away from mass consumption. The change is imminent, and business if it do not understand and plan it may suffer in the long run. To put it simply, cigarettes are to lose its shine among the markets, most consumers is reducing the consumption of cigarettes and is moving towards other related products such as beetle.
Why major shift in consumption?
The change is all about the evolving macro changes within the society. The health consciousness, behavioral patterns in workplaces and rules and regulations imposed by the government has affected the declining rate of consumption.
Tobacco's damage to quality of life is well chronicled. For instance, National Authority on Tobacco and Alcohol (2007) reported that tobacco use is the second largest cause of all deaths and disabilities within the country where 5.1% of the youth smoke cigarettes, 39.5% of them smoked cigarettes before age 10, 8.6% are current users of other tobacco products, and 65.9% are exposed to secondhand smoke in public places. Against these values the Government and many non- governmental organizations have refocused its health priorities to address the issues of noncommunicable diseases (NCDs), including effective control of tobacco use.Due to the Health Consciousness factor it is reported that over 7 in 10 current smoker school students and health professional students want to quit, where the youth is not in favor of this death causing habit. This is one of the main markets that could hugely affect the tobacco industry's downturn in the future.
There is a trend of making work places smoke free which has being one of the major causes for declining rate of smoking within the nation. Employers protect the health of their employees and reduce smoking-related costs by making workplaces smoke-free, and implementing programs to encourage and help smokers to quit. Smoke-free workplaces reduce not only employees' daily tobacco consumption but also increase quit rates, and reduce cleaning costs and fire risk. (Smoke free workplaces, 2002)
In year 2006 Parliament of Sri Lanka, on a proposal by the Government, passed a new law with the purpose of eliminating tobacco and alcohol related harm and, by that, to protect the public health. The law is named "National Authority on Tobacco and Alcohol". The important provisions of the NATA Act were that Sales and promotion of tobacco products to minors is prohibited (minor defined as below 21 years of age). Advertising, promotions and sponsorship prohibited, Vending machines prohibited, Health warnings made compulsory and Smoking prohibited in enclosed public places. (Ministry of Health, Government of Sri Lanka, 2009)
All the mentioned macro level changes have affected the rate of consumption of Tobacco which could ultimately have a negative impact on the Tobacco industry where the sales and profits would decline. Taking a look at the local scene, according to statistics of the spot survey of Alcohol and Drug Information Centre ADIC (2008) tobacco use of the sample was assessed according to the responses of the sample population; it was found that 42.5% used tobacco, while 57.5% did not use tobacco.
The impact of global consumption patterns has also affected the local tobacco industry to a certain extent. Global trends show that currently smoking rates are at the peak but it is definitely declining. (World Health organization, 2009) The graph would explain the male smoking trend existing in some of the major countries in the world. (Appendix 1)
Most of the consumers today are much more knowledgeable than the people who used to live in the past; in general an educated man gives up the habit first. Therefore according to the article Youth Say No For Tobacco (2009) smoking is becoming a habit of poorer less educated people mostly in rural areas such as in Anuradhapura, Kegalle etc. people within these areas would go for much low price products that would not generate higher profits for the organization, which would once again generate a negative impact on tobacco industry.
Impact on the Network
The emerging theme of declining consumption of tobacco would create an impact on the relational network within the industry. It will give birth to Meso level changes, which are those that lie between the macro and the micro level. (Kotler and Keller, 2006) Therefore all the following stakeholders within the Meso environment would be affected through the emerging macro theme.
Government is one of the important stakeholders of the business depending majorly from duties and taxes. At 31st December 2009 the business has contributed a total of Rs.52.4 billion, which is 7.6% of the country's total tax revenue. It is important to note that this comprised approximately 2.2% of GDP. (Sunday Island, 2009) through the declining rate of consumption in the near future it is a obvious fact that the government would be hit by declining volumes of revenue.
According to the Sunday Island (2009) Tobacco company has been handsomely rewarding its shareholders during the past years, In the year 2009 dividend payment was of Rs.21.90 per share, up from Rs.14.68 the previous year with the company's share price closing at Rs.185 against Rs.66 at the end of the previous year, but it could be foreseen that changes would arise in regard of rewards due to the declining rate of consumption.
Tobacco has become a commercial crop in Sri Lanka. Farmers in some parts of the country are growing tobacco instead of food crops. The figure gives a total understanding to growing of tobacco in Sri Lanka, (Tobacco Profile,2007) therefore with declining consumption patterns suppliers of Tobacco leaf would be affected.
Traders are the biggest customer's within the industry, there are millions of customers from the largest retails cooperation's to small independent shop owners in Sri Lanka. It is a notable factor that the tobacco company put a strong emphasis on being a high quality supplier to the trade, therefore with the declining consumption rate traders would be affected as cigarette selling gives them the highest income out from all the consumer goods.
Well tobacco as an industry is probably going to face its toughest challenges and obstacles in the near future. Mainly due to the Trend in Non Smokers across the nation and as well as Government Regulations as discussed above. Because the product pose risk to health it is important for the industry to manage the products responsibly. Tobacco products are legal, no government or serious campaigners seek prohibition for about billion adults globally choosing to smoke, a real world view suggests that many millions of adults, balancing pleasure and risk, will go on consuming tobacco products and expect to buy the brands they prefer at good quality and fair prices. Therefore what the tobacco industry, has going for them is the Quality and the Uniqueness of their product. They can easily make use of the Quality aspect of their product to sell it to the Consumers. (BAT about Us, 2009)
But with the large reduction of smokers it is bound to take its toll on the industry sooner rather than later. So it's a must that they come up with a thorough Business Strategy to overcome this. In a lot of countries around the world the Tobacco industry is a Monopoly, which is the same in Sri Lanka. One large company is covering the Distribution, Production and imports and exports. Therefore when coming up with a business strategy the industry could take advantage from this monopoly which they could use to increase value in their product to obtain the necessary profits. This could quickly result in an increase of profit and might enable the industry to recover.
But since the industry faces many challenges it is not easy to come up with one strategy to avoid future setbacks. Good Cost Management together with a good Marketing and Sales strategies would also help. For example in the future the tobacco industry could implement a combined caf and tobacco stores which will create more volume and greater client loyalty. As every patron is critical in a shrinking market the tobacco industry should be very keen on creating a long term Salesperson-to-customer relationship as indicated by the BPlans in their online article Tobacco Retail Business Plan (2010).
One of the most critical legislations passed recently has been the various restrictions on tobacco advertising. Since the tobacco industry is quite limited in the types of marketing it can do they have to carefully put thought to come up with an effective marketing strategy. For Example they could create partnerships with other internet firms to create internet links to their existing informational website. Can maybe introduce an online ordering web system which would intensify those efforts. Not just a good marketing strategy but a good Sales Strategy is also of need.
By creating a good Salesperson to customer relationship it would result in an increase of repeat sales that will sustain the business. Promotions, Benefits and other such standards can also be used whenever possible. A critical necessity of a good Sales Strategy is a good Sales Forecast. Through this the industry would be able to identify the potential problems. Sales forecasts are based on conservative estimates. The tobacco products industry is fortunate in that sales are not seasonal and remain steady throughout the year as indicated by the BPlans in their online article Sales Forecast (2010).
So as an industry response, by using these strategies the Tobacco industry could face the future with confidence and could gain a competitive advantage to recover from the losses and to obtain their higher standards.
Impact upon Marketing Professional
The emerging trend of declining consumption of Tobacco will make an obvious impact on the role of a marketing professional. Therefore in order to combat the forthcoming changes the marketers should be talented to identify the effective marketing mechanisms. It is important that tobacco products should be marketed responsibly to adult tobacco consumers only. Successful marketing is the bedrock for growth for any fast moving consumer goods and tobacco is no exception. (Kotler and Keller, 2006) But it is important that Tobacco industry do not set out to "sell smoking" to boost the number of people who smoke or the amount they smoke, unless they should aim to grow the value of their share by setting out strict standards for how the companies should market.
Promotions and advertising of brands should ensure that the content of their marketing and advertising is not designed to appeal to the under age. Support programmes should be established to help prevent under-age smoking. Also supporting restrictions on smoking in indoor public places by taking initiatives such as building smoke free areas would be some of the creative ways to promote the message within restrictions. Moreover the declining trend requires innovative ways to increase value despite volume reduction where the local industry could meet up with the international marketing standards which could create a benchmark within the industry. Another important aspect is to understand consumer preferences and to deliver the most relevant brands to meet differing preferences market by market. Working in a responsible manner is another way to build customer credibility towards the business, which can be established by having a good cooperate conduct where the standards are not just compromised for the sake of results.
Despite the tight marketing restrictions for this risky and controversial product it is important that the modern tobacco marketing professionals to focus on building skills in the right marketing fundamentals.
As the tobacco consumption is Sri Lanka poses a declining trend towards the future due to the changes of socio cultural and political factors it would have a high impact on all the stakeholders within the industry including the government, suppliers, customers etc. Tobacco consumption posses real risks to health and it is agreeable that these products should be regulated in appropriate ways, therefore the industry now should take initial strategy to combat the future challenges by supporting and delivering balanced tobacco regulations and participating and supporting governments with advice on and compliance with effective future laws. In the profession of marketing within the business, initiatives should be taken place to match the preferences of consumers with the interest of the society establishing an open minded and objective approach to harm reduction as a public policy and to ensure that the business is a responsible part of the legitimate tobacco industry which can compete and prosper.
- Alcohol and Drug Information Center (2007) Tobacco Profile, pp 02-14.
- BAT about US (2009)
- BPlans (2010) Tobacco Retail Business Plan [online]. Available from: http://www.bplans.com/tobacco_retail_business_plan/strategy_and_implementation_summary_fc.cfm [Accessed 30th April 2010].
- BT Options (2009) Company Profile [online]. Available from: http://www.btoptions.com/profile.html [Accessed 10th April 2010].
- Government of Sri Lanka (2009) Ministry of Health [online]. Available from: http://www.priu.gov.lk/ [Accessed 4th April 2010].
- Kotler, P. and Keller, L. (2006) Marketing management. 12th Edition. India, Prentice-Hall.
- Lankapuvath (2009) Youth say No for Tobacco [online]. Available from: http://www.lankapuvath.lk/index.php?option=com_content&view=article&catid=29%3Afeatures&id=486%3Ayouth-say-no-for-tobacco&Itemid=87 [Accessed 9th May 2010].
- LMD The voice of Business (2010) corporate profile [online]. Available from: http://www.lmd.lk/2010/April/about.htm [Accessed 25th April 2010].
- National authority on Tobacco and Alcohol (2007) Welcome to NATA [online]. Available from: http://www.nata.gov.lk/ [Accessed 2nd May 2010].
- Smoke free workplaces (2002)
- Sunday Island (2009) Ceylon Tobacco grows profits despite shrinking sales [online]. Available from: http://www.island.lk/2010/03/07/business4.html [Accessed 19th may 2010].
- The Charted Marketer Magazines (2008) [online]. Available from: http://www.cim.lk/member_chartered_mkt_mag.htm [Accessed 10th April 2010].
- World Health Organization (2009) Smoking Trends [online]. Available from: http://search.who.int/search?q=tobacco+trends&btnG=Search&ie=utf8&site=default_collection&lr=lang_en&client=WHO&proxystylesheet=WHO&output=xml_no_dtd&oe=UTF-8&Search=Search&sitesearch=&sort=date%3AD%3AL%3Ad1&entqr=3&ud=1 [Accessed 10th March 2010].