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Company Introduction, Market Segmentation, and Product Positioning

By kvpierso Oct 07, 2014 1815 Words


Company Introduction, Market Segmentation, and Product Positioning Keenan Pierson
Dr. Steven Englehart
Marketing
October 28, 2013
A. The Company
Smart Option e-cigarette is a metal rechargeable electric cigarette brand, giving smokers an alternative smoking option to conventional tobacco products. Smart Option takes pride in putting an emphasis on making its e-cigarette as close as possible to the weight, size, feel, flavor and inhalation of real cigarettes. Targeting seasoned smokers, Smart Option e-cigarettes produce non-disposable smoking products. The Smart Option e-cigarette kit comes with an atomizer plus a cartridge with a flavor enhancer. Consumers enjoy the brand’s option of varied flavor enhancers but is popular, more so, because Smart Option is known for its longer-lasting batteries. Popular, trendy and well-established, the Smart Option brand desires to expand to include the Smart™ compatible rechargeable cartridges and chargers. Smart Option was established in 2010 and is headquartered in Atlanta. Keenan Pierson is the SVP of Product Development, spearheading the brand’s technological advance. Smart Option’s strategic mission statement is “To provide a great price for the sophisticated smoker, focusing on quality and increased accessibility.” Foreign Market

Cigarette use is the largest segment of the tobacco market in Russia, accounting for 98 percent of the market’s total value (Russia, 2013). E-cigarette use in Russia is a means for controlling smoking (“Popularity,” 2011), and its popularity is growing there as well. Smart Option consumers primarily are based in the United States, but Smart Option sees an opportunity to expand the brand as it prepares to launch the Smart™ component. Currently, the majority of electric cigarettes enter the Russian market from China (Research and Markets, 2012). Increasing exports will help grow the brand. With Smart™ compatible rechargeable cartridges and chargers, the goal is to pioneer and capture significant market share through a sense of necessity from consumers in the U.S. and abroad, creating brand loyalty. B. Marketing Plan

Smart Option e-cigarettes are the best and perfect choice for the sophisticated smoker. It has the look of classic cigarettes with an excellent nicotine delivery system. Consumers enjoy its variety of forms, its battery life and ease of use. The Smart Option e-cigarette brand is the solution for the long-term consumer seeking a premium product. While priced slightly higher than competitors selling disposable products, the Smart Option e-cigarette kit is equivalent to receiving up to three packs of conventional cigarettes above the standard two. Smart™ compatible rechargeable cartridges and chargers will be for consumers looking for the longer investment in the e-cigarette. Smart™ will provide the best and most technologically-advanced electronic cartridges and compatible chargers in the industry. All e-cigarette brands are battery operated. Presently, consumers of e-cigarettes have to be loyal to their brand because rechargeable cartridges and chargers are not versatile, meaning that rechargeable cartridges are not compatible with each other. There are so many electric cigarettes available that it may be difficult – and expensive – for the consumer to determine which brand satisfies their tastes. The consumer also must find the store that sells their preferred brand. With Smart Option’s Smart™ compatible rechargeable cartridges and chargers, consumers no longer have to commit. The product and the service component of the Smart™ compatible rechargeable cartridges and chargers will drive sales. Smart™ will be bundled with the existing Smart Option products and sold separately to attract users of competing eCigs. Like most cartridges, the Smart™ compatible rechargeable cartridges include miniature lithium batteries. Smart™ is unique because its 4.2-volts also contain a small universal adapter for compatibility with other brands, creating an “android” mechanism for use across all brands of e-cigarettes. A unique feature of the Smart™ compatible rechargeable cartridges includes longer-life batteries, which has made Smart Option popular among consumers. As an enhancement, the Smart™ battery will automatically go into standby mode when not in use to preserve its life. The product and the Smart™ compatible rechargeable cartridges and chargers will be dispensed through vending machines and will be widely available at gas stations and convenience stores. Consumers will see the cost savings over time, enjoying the versatility of the Smart ™ compatible rechargeable cartridges and chargers, making the overall product and its service even more attractive. A report from the Centers of Disease Control and Prevention finds that one-fifth of Americans – about 46 million – are still smoking (“The Electric Cigarette,” 2010). Tobacco use is responsible for nearly 1 in 5 deaths in the United States (“SS Choice,” 2010). Users of conventional cigarette smoke are responding to the rise in health risk awareness, using e-cigarettes as a healthier alternative. Currently it is estimated that 1 in 40 smokers are now using e-cigarettes as an alternative (“The Electric Cigarette,” 2010), and the trend is growing at phenomenal speed. E-cigarettes have three basic components: a battery, an atomizer and a mouthpiece cartridge. E-cigarettes deliver nicotine without the harmful toxins found in tobacco smoke yet creates the same hand-to-mouth experience. Instead of lighting up, an electric cigarette has a cartridge that resembles a filter that heats nicotine into a vapor. An LED light glows at the tip during the inhale, simulating the glowing tip of a regular cigarette. It is a safer alternative to smoking, and reduces secondhand smoke exposure since they do not produce smoke. E-cigarettes are odorless, do not ruin breath nor does it yellow teeth unlike conventional cigarettes. In sum, e-cigarettes are a smarter smoking solution. E-cigarette users are “vaping” rather than smoking. The sale of e-cigarettes is a niche business that is a growing segment of the tobacco industry, although no tobacco exists in eCigs. Created in 2003 by a Chinese pharmacist, the segment is emerging, and it is estimated that about a million people used electric cigarettes (Seltzer, 2011). Word about the product is spreading as consumers are becoming educated about the dangers of tobacco use and about the availability of smoke-free alternatives. Increased accessibility and universality will help the industry continue to grow. The Smart Option e-cigarette tastes like a real cigarette and offers a variety of cigarette flavor enhancers, including a nicotine-free version. Smart Option focus groups revealed that consumers are attracted to the brand’s Smart LED and the option of purchasing higher capacity batteries but expressed frustration over their inability to use e-cigarettes interchangeably. Smart Option’s answer is a universal battery-operated rechargeable atomized cartridge and charger. Smart™ compatible rechargeable cartridges and chargers will offer various charging options such as car chargers. Consumers have found problems with the taste and reliability in their search for the preferred e-cigarette. Neither cartridges nor chargers are interchangeable, making it difficult – and expensive – for the consumer to determine which brand satisfies their tastes. Smart™ compatible rechargeable cartridges and chargers will provide consumers with a plethora of options and alternatives to enjoy the brand of their choice. No other brand or innovation currently exists to cater to e-cigarette users who want that versatility. There are different sizes of batteries in varying brands of e-cigarettes. The convenience and instant gratification of purchasing the Smart Option e-cigarette and/or purchasing the Smart™ compatible rechargeable cartridges and charger is effective to drive growth and will strengthen market share. The Smart™ compatible rechargeable cartridges and charger will come with a universal adapter, creating an “android” mechanism for use across all brands of e-cigarettes. Consumers also will enjoy the system’s longer-life rechargeable cartridges, eliminating the hassle of purchasing several devices in search of the desired taste and nicotine strength. Getting buy-in from the skeptical consumer will be a challenge to overcome since a weakness from competitors is weaker battery performances. The widespread smoking prohibition, not to mention the increase in taxes, and growing social stigma of conventional cigarette smoke creates opportunities for the e-cigarette market. Convenience stores have seen a reduction in retail sales, resulting in lower profit margins from selling conventional cigarettes. Unlike conventional cigarettes, tobacco taxes do not exist because there is not tobacco in the product, making it an affordable alternative for consumers. Electric cigarettes offer convenience stores lower taxes and much higher profit margins. Imposing additional cigarette-specific taxes on the sale of e-cigarette products would be a threat as it would lessen the number of consumers willing to buy the products. Smart Option e-cigarette brand is plentiful and diverse, and the goal is for the Smart™ compatible rechargeable cartridges and chargers to be as well. Consumers experience a relaxing and pleasurable feeling with each Smart Option smoke that they perceive as positive and satisfying. The aim is to position the product and service as more than an e-cigarette brand but as a top-of-the-line smart brand with smart devices. Marketing efforts for this push will come in the form of heavy promotional spending. New technologically-savvy vending machines will be Smart Option’s way to sell the product, making it a standout brand. Each vending machine will have an online hub with up-to-date e-cigarette Smart Option brand information as an example of such marketing. Apps accessible from smart mobile phones will support consumers’ need to get the latest product information, including GPS capability to provide nearest locations. The Smart Option e-cigarette brand has a reliable website with an easy-to-use menu for online transactions by credit or debit. This will provide the best possible option for delivery for the Smart™ compatible rechargeable cartridge and charger. Wide accessibility in brick-and-mortar stores such as gas stations, convenience stores, grocery stores, drug stores and big box retailers, will help diversify and increase sales distribution. Smart Option e-cigarette and the Smart™ compatible rechargeable cartridges will be the best option for the lowest price possible. The brand and supporting devices will deliver more enriched quality and versatility to consumers. Retail margins for Smart Option e-cigarettes are in the high 30 percent range, and it is anticipated that Smart™ compatible rechargeable cartridges and chargers will – at the very least – generate the same margins. The goal is for this segment to grow exponentially, achieving triple-digit sales growth, and for Smart™ to become a market-changing innovation.

References

“Popularity of electronic cigarettes in Russia has increased twice for one quarter.” (2011). Synovate Comcon. Retrieved from http://eng.synovate.ru/default.asp?artID=1442

SS choice Llc; combat E-cigarette in demand by civilians. (2010). Life Science Weekly, 4169. Retrieved from http://search.proquest.com/docview/196291272?accountid=35812

Russia: Electronic cigarette market - analysis and forecast to 2017 - also features global, UK and US reports. (2012, Nov 26). M2 Presswire. Retrieved from http://search.proquest.com/docview/1197458456?accountid=35812

The electric cigarette gains approval in many hospitals as debate continues. (2010, Mar 02). PR Newswire. Retrieved from http://search.proquest.com/docview/450136362?accountid=35812

Tobacco Industry Profile: Russia. (2013). Tobacco Industry Profile: Russia, 1-36.

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