Imperial Tobaco Group Report On

1.0 INTRODUCTION

This report is a marketing plan for the next three (3) years for Imperial Tobacco Group Public Limited Company. Imperial Tobacco is a multinational company specializing in tobacco and tobacco related products (mainly cigarettes, cigars and rolling paper) with the host company being located in the United Kingdom.

A marketing plan is a 'written document that summarizes what the marketer has learned about the marketplace, indicates how the firm plans to reach its marketing objectives, and helps direct and coordinate the marketing effort.' Kotler et. al. (2006) The marketing plan for Imperial Tobacco will include an overview of the company (strategy, values, financial situation, market share and management overview), PESTLE. Analysis, SWOT Analysis, Analysis of Sector Trends and Competitors, Objectives and Assumptions formulated and a forecast and budget for the three (3) years.

In preparing the report references were made to the Imperial Tobacco Company Website, Marketing Textbooks, Business Strategy Textbooks, Internet Articles/Libraries, Journals and Lecture Notes.

2.0 COMPANY OVERVIEW

Imperial Tobacco is the world's fourth largest international tobacco company. It manufactures markets and sells a comprehensive range of cigarettes, tobaccos, rolling papers and cigars. It achieves sales in over one hundred and thirty (130) countries; employs approximately fifteen thousand (15,000) employees; and has thirty three (32) factories worldwide.

2.1 Strategy

The strategy of Imperial Tobacco is "to create sustainable shareholder value by growing our international operations, both organically and through acquisition.' (www.Imperial Tobacco.com)

Since its international expansion in 1996 focus has been on international growth. This has been achieved through acquisitions in companies worldwide that has afforded Imperial Tobacco to achieve both horizontal and backward integration. This gives them an advantage of cost reduction, quality enhancement, corporate restructuring, innovation and speed of response capability.

2.2 Values

Imperial Tobacco values include: (1) working together for the good of the whole business; (2) value of individuality and hard work; (3) looking after our people; (4) putting shareholders first among our stakeholders; (5) being responsible; and (6) pursuing high standards of business ethics (see Appendix I).

2.3 Market Share

Their core markets (UK and Germany) have clear leadership in the UK and the number two (2) position in Germany. These markets are complemented internationally by a strong profit base in the Rest of Western Europe and a strong position in the Rest of the World. Figure 1.1 shows a graphical view of this summary.

Cigarette volumes by trading region FY 2005

Total 172.5 billion cigarettes

Cigarettes (bn) Regions

23.9 UK 1

20.9 Germany

17.7 Rest of Western Europe

112.7 Rest of World

Fine cut volumes by trading region FY 2005

Total 26,600 tonnes

Tonnes Regions

2,100 UK

7,100 Germany

15,600 Rest of Western Europe

1,800 Rest of World

FY = Full Year

1. Includes 4.3 billion (2004: 4.5 billion) PM brands

Figure 1.1 Source: Imperial Tobacco.com

2.4 Financial Situation

Overall, the Group increased sales, including duty by 2%, from Ј11,005m to Ј11,255m; operating profit up 18%, from Ј885m to Ј1,044m; pre-tax profits up 25%, from Ј688m to Ј862m; profit after tax up 25%, from Ј450m to Ј576m. Basic earnings per share, diluted earnings per share and dividend share up 29%, 28% and 12% respectively. (see Appendix II, pps. 19-25)

Increased profits were due largely to improvements in their core markets and increased turnover worldwide.

2.5 Management Overview

Core markets of UK and Germany delivered significant improvements in profits despite market declines. Increased cigarettes share in several markets across the world, namely Davidoff and West Brands. The Group continued drive for efficiencies and further cost and savings. The ongoing focus on enhancing productivity and improving operational efficiencies within our manufacturing operations has resulted in the closure of three (3) manufacturing sites.

(see Appendix II, p. 16)

3.0 PESTLE ANALYSIS

This can be described as the marketing environment which is defined as 'those external trading forces that directly or indirectly influence an organization's acquisitions of inputs and generation of outputs.' Dibb et. al. (2001). These include political, economic, social, technological, legal and environmental issues that may influence the company directly or indirectly.

3.1 Political

Governments are implementing bans in countries such as Ireland, Norway, Sweden, Bhutan, New Zealand, Italy and Scotland. Partial bans are reported in parts of the United States, Canada and Australia. There are also proposed bans in Botswana, Wales and Northern Ireland.

3.2 Economic

There