I
M- T Industries document for Province of British
Columbia 23 April I--, M"


June 1983
THIS IS A CONFIDENTIAL PUBLICATION
FOR USE WITHIN THE ORGANISATION ONLY
co
All correspondence and contributions should be
addressed to the
Marketing Communications Manager, London
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BAT Industries document for Province of British
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Foreword
by M. A. Mustafa
Managing Director of
MTC*s Tobacco Division
The
perennial debate r, Profit maximisation and
increased volume or
e
~etw
,
:
mar share has alwa be n the bugbear of many
organisations particularly
Y
:t
in r
e It years.
l
s--ippos
it is always
& source cf
pride and satisfaction, particularly to a
a
,
.
m r *-'etin man, if hi company h s the largest
volume and market share
;
beca u'et~h a subject is easily unders t o0d by
the man-in- the-9 t reet, and is
oft en disc u3sed and talked about in casua I
conversation in the pubs and at
coc tail partie.. Profit has not been too often
talked about: as if it is
dirty ~ordl Unfortunately, non-marXeting men have
also fallen into thi
trap, forg -tting the fact that the primary goal
of the business is to en-re
that the return on shareholders' funds is
satifactory in the short and long
t - r.-n - Few ha ve realised that increased
volume and market share is only a
.,leans to achieving this primary goal.
MTC's general pattern of annually increasing
market share until 1978 had a
sqLieezing effect on our competitors, but
fortunately for them in 1979 there
was a boycott of MTC's largest selling brands -
BENSON I HEDGES and 555
FIL TER KINGS hich resulted in the market share of
MTC dropping to Sal at
tlie height of the boycott. The main beneficiary
was Rothmans. No one, to
this day, can say for certain who started the
boycott. The recovery of
MTC's volume and market share following the
boycott was initially wry
diffi cult but, Subsequently, MTC managed to
achieve a market share of 651 in
141 9.
1
Soon -fter, RJR decided to price cut t1heir
leading international brand
WINSTON el Ibelow the prices of other U.S. brands.
This move illustrated
their strategy to gain volume and market share at
the expense of profit.
ju4-ging by their accumulated losses of SM32
millions up to the end of
December 1981 (1962 figures are not yet
available). They have mde trading
losses every year since they started their
operation in Malaysia in 1973.
Ho,-er. their 1982 volume and mark
t
shar - amounted to 1.4 billion and 8.0%
:
,:
re3pe cti velY- Othe r me.ber. of th nd u str y di
d not respond tactically to
th1s p ricing strategy until mid-1962.
I.
there was a spontaneous move by Industry to adjust
prices so that
198%
.
u
th pro ction cost ~f the medium and small packings
- reflected in the r1l)
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BAT Industries document for Province of British
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per stick retail price. Despite the realisation of
a possible loss in
volume and market share to MTC due to the
inability of the company to
implement the rational isation programe as swiftly
as Rothmans, the decision
was made to go ahead. Here is the classic example
of a company being
prepared to lose some volume and market share in
order to improve further
its profitability ;ind return on investment. The
data which follow speak for
themselves:-
Trading Market Trading Profit on
Year Profit Share Shareholders' Funds
T$mns) (1) (1)
L9811 70 65 54
L"l 90 64 61
19'32 100 63 62
However, in the first quarter of 1983 MTC had a
market share of 64-21,
Rothmans 25-41, RJR 6.01 and Philip Morris 3.7%.
MTC's return on investment
has also been satisfactory.
With the recent high duty increases and,
consequently, a few price
adjustments, the anti-smoking attitude of the
government restricting the
freedom of the smokers (where and when they can
smoke) - I foresee f.ttir.
volume growth being very minimal. Competition in
the market place will
continue to intensify particularly as Philip
Morris has entered the
Malaysian mrket in a big way following their
arrangement with Rothmans to
handle the manufacturing, marketing and
distribution of their brands. But
we are confident that with the co-operation of the
brand owners,
particularly B&W International Tobacco which is so
vital in view of the
swing to U.S. brands, we shall be able to increase
our market share and, at
the same time. be able to provide a satisfactory
return on shareholders'
funds in the future.
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BAT Industries document for Province of British
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3
Malaysia: an international country
There are few countrie 8 whose character is as
tota 11y international as
M. 11"sia. Its population is made up from many
races. In language and
ve
cul t'Ial tradition it is di .r3e and rich. Even
some of its major
industries rubber, palm oil, and more recently
tobacco leaf growing - are
not indigen ous to the country, but have found a
fertile footing in
Malaysia'. soil, and the industry of its people.
In addition to the many products which are solely
Malaysian, there is a
gr ea t demand for branded goods from around the
world - both imported, and
" nufa ctured loca lly under licence. There is in
the Malaysian character, no
m.itter of what racial origin, a driving need to
rise (and to be seen to
ri se) up the social scal e. T~ia has given rise
to a general uptrading in
a1 1prod ct spheres. This is particularly evident
in clothing, where
international names such as Pierre Cardin can
command and readily obtain
prices Ear higher than for lesser-prestige goods.
In the cigarette market, the demand too is for
internationally known brand
names - BENSON & HEDGES, KENT, DUNHILL, WINSTON
and MA-RLBORO and so on. It
iIs thic mpetitive market environment that
Malaysian Tobacco Company Berhad
t:~ o
opera I
The country and the people
M;laysia is a young country, just two decades old.
Its population is made
u of three main racial groups - Malays, Chinese
and Indiana - each distinct
in history and culture. From this diversity, the
Malaysian Government is
seeking to create unity through a national
language (Bahasa Malaysia) and
through cultural integration. English, however,
remains an a major language
of commerce.
Despite conflicting ideologies, with nationalism
in the forefront, the
influences of internationalism are strong, and in
the cigarette industry
this has .ant a definite trend towards imported
brands. and an unswerving
acceptance of Caucasian imagery projections.
The country's economy is healthy. Growth is
evident in all sectors, and the
consumer's requirements and expectations are on
the rise. With it comes the
wish to uptrad*, and this accounts for the
significance of premium priced
cigarettes, despite the many price increases of
recent years.
Inevitably the geography of Malaysia exerts its
influence - The population
of 14 million is spread ever close on 34 million
hectares over two separated
land masse 5 -the Malay Peninsula and the areas of
Sarawak and Sabah in the
nor th of the island of Borneo* Communications and
transportation have long
presented problems, bu t great strides are being
made to improve the
situation.
Much in Malaysia is a dichotomy between
traditional values and the pull of
international modern standards.
Diversity and tradition: national cohesion and the
pull of modern r11J
international standards. This is Malaysia.
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BAT Industries document for Province of British
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4
Malaysia: an international market
In 1982 the tot al Malays ian cigarette market was
estimated at over 1,340
mi 11ions . .0. th - representing an average
annual volume growth of 4 percent
over the past five years.
About one in four of Malaysia's adult (15-t-)
population is a smoker. Of
h e is estimated that three out of four are
regular smokers of branded
t Teite., th a others being only occasional
smokers, or smokers of
c
i!-prtt.d ro
lo ic 11-your-own cigarettes.
International brands bearing UK or American names
dominate the market, with
s a11 sales of purely local competitors and a
small and rather speciali.ed
.a ctor of cl ove-flavoured Kret.ks.
MTC (Malaysian Tobacco Company Berhad) has a proud
record in a highly
co-pe t itive marke t in which there is aggressive
and high-spending
n f
competitio rom Rothman S. R.J. Reynolds and Philip
Morris.
MTC ha 5 a dominant position with an approximate
631 share of the total
market. Rothmans - our traditional competitor in
the Virginia sector - has
about 251 - Roth Reynolds and Philip Morris are
now well-established on the
market r e for U.S. blend cigarettes is growing
steadily. In
t~cwh e th taste
1978 . total U.S. blend sector represented about 5
percent of the market-
by the end of 1982 this had grown to over 16
percent - and the trend
continues.
12720 1341 2
",3:,
/ F3111Z, 28
1979 19n '9W
1329.3
A
1981
MARKET SHARE BY COMPANIES
1389'k
77,777
m7 c 12
ROTHMANS
RJR
WIN
.26
Is
PHILIP MORR
OTHERS
1"2
This growth is inevitably at the expense of the UK
full-flavour sector which
has do' inated the market for many years. Despite
considerable anti-smoking
publicity through the media, the Malaysian smoker
has so far shown limited
interest in a "mild" or lower-delivery cigarettes,
whatever the blend
category.
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BAT Industries document for Province of British
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5
So far as cigarette length is concerned, King Size
are by far the most
popular, with a share of about 881 of all
cigarette smoked. This applies
generally both to UK Virginia and to US blend
products. Long size (ie. +
BOmm) have virtually disappeared though they were
once fairly substantial,
and the Regular size sector, gradually declining,
tends to be confined to a
few non-filter product. and to various bottom-
of-the-market brand..
However, there is an -rgirig taste for 95, 100 or
120 mm. brands in both
the UK Virginia and US sectors, reflecting the
appeal of products which
carry an obvious status appeal.
13412
1173:
39,
g
Eat
TOTAL
13295 13892 MARKET SHARE BY PRICE CATEGORIES
PREMIUM
A
WE
~7 =~ C
1) & BELOW
VOLUME IN MNS. PER MONTH.
This wish to be seen to be a consumer of prestige
products is reflected in
the share of market enjoyed by brands in the
higher price brackets. The
price chart is an interesting one in that it
demonstrates graphically how
the premium (embracing the US brands and
extra-length Virginia) and A Class
(including up-market King Size Virginias such as
BENSON & HEDGES and DUNHILL
KSF) categories have grown from around 48% of the
market in 1978 to a
remarkable 791 in 1982. It is remarkable that this
trend to uptrading
'hou 1d be so evident, despite a sharp upswing in
the frequency and scale of
price i.Lnereases over the past two or three
year.. Just how this factor fits
into the longer-term pattern can readily be seen
from this chart showing the
retail pricing of the market leader since 1974.
PRICE INCREASES
Benson & Hedges Special Filter
I SI-90
S1-80
31 150
S1.20
S1.00
'74. '75. 76. '77. '78. '79. '80. '81. '82. 'al
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BAT Industries document for Province of British
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0
Full Flavour Virginia Vs. U.S. Blends By Premium
Pricing Categories.
(March 1983)
MTC Brands M$ Competitive Brands
2.40
2.20
2.10
2.00
1.90
2.30
2.20
2.10 C- 77.
2.00
rQ
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BAT Industries document for Province of British
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Despite considerable anti-smoking media comment in
the country the Malaysian
cigarette smoker has generally shown a preference
for full-flavoured
products. There is still a persisting (though
declining) taste in some
quarters for the old US blend plain brands such as
LUCKY STRIKE, CAMEL and
CHESTERFIELD. In the full-flavour Virginia sector
(23-28 mg PMWNF) ROTHMANS
100s continue to be popular.
One other characteristic of the Malaysian market
is the 'mini' and 'medium'
pack. This is the terminology for small-unit
packings which merged as a
tactical pricing weapon. These smaller packings
began in the early '70. hen
Rothmans, rapidly losing market share, turned to
their strategy of offering
the consumer value-for-money through smaller
packings. This led to a
proliferation of 5s, 6s, 7a, 10s, 129 and 14s.
Over the past five years the
6 s and 12s have given way to 7s and 149 to keep
abreast of pricing changes.
Left: some -i-smoking medio co-ent.
6 Below: sr~dard 20s ~d 'mini packings'.
11-7
Le.." *0001P
.0
-rx
F00""
UOL
.0 do, .,)0?1
The 'mini packings' (ie. the 6s and 7s) have
represented a fairly steady
4-61 of volume, and are represented in all the
leading Virginia brands
including BENSON & HEDGES and DUNHILL XSP. This
low-cost packing has
provided an effective alternative to the once
popular 'stick sales', and a
useful solution to the new or light smoker as well
as to the less affluent.
Th:admedi,um packs' (ie. Jos, 12s and 14s) have on
the other hand declined
3 t ily ver the past 5 years. They represented
some 62% of total volume
Tn 1976, but this proportion has declined steadily
to a current figure of
around 341.
This decline is due to a change in pricing policy
an these packings.
Whereas they were once sold an a straight pro
rats. basis or cheaper, the
-r packings are now subject to a higher 'per
cigarette' price. The
re u1
sm:11t is clear to see. The 14a a.re declining as
it becomes more sense to
buy a 20a pack, whilst the 7s unit resists a
decline more stubbornly because
it still enables a pack of cigarettes to be bought
cheaply by those with
less ready money. MTC foresee a continuing decline
in these off-beat
packings.
Perhaps the simplest way to convey an impression
of the Malaysian market is
to,ramine how the 'Top Ten' brands have changed
over the period 1978-82.
Th will enable us to demonstrate some of the
points already outlined,
giving them a perspective. First, we give a graph
wbich includes all those
brands which have ranked among the "Top Ton' in
that period, and then we
r
.hall comment brief ly on the individ ual brands.
BAT Industries document for Province of British
Columbia 23 April 1999


8
Top Ten Brands By Volume Growffi
6-- & 11.dgm
S,aW FJ1.
D..hJ Qq S-
W_
_SE sm
PRO"- I
___-Ckw "Oke
L-kl S".
Modb-
1. BENSON & HEDGES Special Filter (MTC) 'A' Price
category
The clear market leader is BENSON L HEDGES SPECIAL
FILTER with an
approximate 431 share of the total market, and it
is still progressive. The
growth of the brand is the more notable in that it
was the major victim of
an anti-KTC boycott which began in February 1979
and which lasted until late
1980. This was one of those unfounded and
Illogical phenomena which
occa i.nally appear. It began first with a rumour
that KrC had refused to
contribute towards a Chinese hospital near Penang,
and secondly that MTC had
similarly refused to donate a contribution towards
a Chinese university. In
fact, MTC had never boon approached by either
body, and in the time it took
for both to 'clear' MTC. a good name, a good deal
of damage had been done.
While the boycott was on, strong-arm methods were
widely used to dissuade
Chinese smokers from buying BENSON & HEDGES. To
what extent the boycott has
had a longer-term effect is uncerta In, but the
consumer profile of B&H has
changed from 1978 when it was smoked by slightly
more Malays than Chinese,
to today hen Malay smokers of B&H outnumber
Chinese smokers by almost 3 to
1.
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BAT Industries document for Province of British
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9
BENSON & HEDGES SPECIAL FILTER has an appeal which
spread a across the age
spectr um, though half of the brand , S 'Smokers
are 30 or unde r. Its app ea1
5 nd economic range, with its strength in the
mid-range
0 s0an5 the socia
area mi ht be ex _,ed in such a dominant market
leader.
2111 g P!r
The B-nson & Hedges na me hears a strong
reputation for prestige and quality,
an dHTC ha ve devel oped (in cooperation with
International Brand Management)
a new premium-priced brand under the B&H house
name - HERITAGE.
2. DUNHILL KSF (Rothmans) 'A' price category
This br:nd exhibits the other side of the boycott
coin. Its Chinese smokers
out numb r Malays by 2 to 1, though in most other
respects the consumer
profile i .not too dissimilar to that of B&H.
H-ver, it has a
significantly lower proportion Of smokers under
30.
The growth of the brand reflects a big increase in
the 1979 MTC boycott
year, but volume has remained virtually static
since then.
3. WINSTON (R.J.Roynolds) Premium price category
WINSTON is the brand which has spearheaded the
growth of US blend in
Malays ia. RJR h~a ve gi van the brand substantial
support in the media and at
point of sale, but as from October 1982 (when the
price went up more steeply
than, th.~ of MARLBORO) the brand has peaked and
declined somewhat. The
prof Is is young (under 30).
4. STATE EXPRESS 555 KSF (MTC) 'B' price category
As a glance at the 'Top Ton' graph shows, the
decline in 555 sales to a
considerabl e extent mirrors in reverse the climb
of B&H. This one-time
ma rket leader (until overtaken by B&H) has lost
out in prestige term., and
the socially aspiring Malaysian Virginia filter
smoker has defected to the
more prestigious B&H. In the longer term, this
echoes an earlier event in
the market when STATE EXPRESS 555, then seen as
the cigarette for
up-trading, displaced in it. turn the previous
market leader PLAYERS GOLD
LEAF which has continued to lose ground.
Nonethele as' 55 remains a brand of substance.
though its older age profile
and rural bia: do not bode well for its longer
term fu ture
5. ROTHMANS INTERNATIONAL 100S Premium price
category
Also biassed towards older smokers is ROTHMANS
100s, but here the majority
of smokers are urban Chinese.
The brand appeals on two major counts:
value-for-money - an extra long
cigarette at only 10 cents more than Category A
brands: and its appeal to
its smokers as a fairly 'strong' smoke.
6. PETER STUYVESANT (Rothmans) 'A' price category
The growth of this brand from small volume in 1978
to the number 6 position
in 1982 owes much to the MTC boycott among the
Chinese community. it
appear. that the 'American Cigarette Company' name
on Lt. soft cup pack has
given this Virginia type product an American
identity. In volume terms, the
brand has held steady over the past three years.
7. GOLD FLAKE (MTC) 'C' price category
GOLDJLAKE in a red pack has been positioned
towards the lower price end of
the irgInia King Size Filter sector to offer an
acceptable alternative to
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BAT Industries document for Province of British
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10
Top Ten Brands By Posifion
1978 1979 1980 1981 1982
PQ
kA
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BAT Industries document for Province of British
Columbia 23 April 1999


11
smokers of Rothman 's WHITE HORSE in 1976 in East
Malaysia. Besides
fu1fil 1, ng this role ve ry eff,ciently. it has
grown to occupy the No. 2 slot
in the East Malaysian market.
B. LUCKY STRIKE RSPIain (MTC) Premium price
category
A long-time favourite in this part of the world.
which is holding its volume
steady despite the growth of US filters.
LUCKY STRIKE enjoys a reputation for plenty of
taste and satisfaction. To
date, filter version. of the brand have not met
with any success.
9. MARLBORO (Philip Morris) Premium price category
MARLBORO is no. making headway in the fast-gro.ing
US full-fla~our sector,
much of it recently at the expense of WINSTON
which pioneered the growth of
the sector.
While distribution was solely in the hands of
Philip Morris, progress was
slow, but a 1982 price reduction coupled with
distribution being switched to
the Rothmans Organisation 'has brought rapid
progress. In some urban market
ar-eas MARLBORO is among the top 3 brands.
10. SIGNAL (MTC) -D' Price category
SIGNAL is a domestic MTC brand sold only in
peninsular Malaysia, and priced
in the lowest category. Competition in this area
is keen, a.nd SIGNAL has
performed particularly well in 1982.
Brands in this category are placed to benefit from
the results of economic
ups and downs. When cash is short. they can profit
from temporary
down-trading. In affluent spells they stand to
benefit from roLl-your-own
Smokers of cheap local tobacco who graduate to
branded cigarettes whenever
they can afford it.
KENT and the battle for the US sector
The graph of the 'Top Ten' brands has shown how
WINSTON and MARLBORO are
battling it out for dominance in the growing US
blend sector. But there are
other brands with which MTC is competing in this
sector, with varying
degrees of success.
The BAT Group is generally weak in its
international US blended full-flavour
brands. and this is evident in Malaysia too.
VICEROY KSFT has been
introduced with substantial publicity, but without
any worthwhile consumer
response. PALL MALL KSF too 'has achieved only
limited acceptance.
Despite a decline in its share of the US blend
sector, MTC has been much
more successful with KENT in both King size and De
Luxe (100mm) lengths.
Although both KENT versions are in the lower
delivery categories, it is not
this factor which appears to exert the greatest
appeal to smokers. KENT,
primarily in De Luxe length, is clearly regarded
as a prestige product. its
growth in popularity (in most areas it outsells
MARLBORO) is positioning it
-ell to -at the trend to lower-delivery cigarettes
which is anticipated in
the longer term.
MTC is active in giving KENT strong image-building
support as a high
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BAT Industries document for Province of British
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12
1.1.2, -1- -, t i "'l. Ih-nd : I I t~ rL- Ole
f1roject irin of -joyment in in
rkL-t Ii fpstyle hy thp so?% im seen -
ippropri,,te symbol ism that the
)r MAR1.110110 or Lli4c! c--lle 31 tit~is,roN.
The low-delivery scene
in-,,,,i ror low-ilpl ivory c:L,la-tte-.3 nmerqe-
the 10 -3 1,il below
'In-1 1 1 'fairly st-Itic *It lenn Llian 0.05% of
the toLal -rket. This
or rc
r-races b~tI7 irqillia and US blend. At pr-ilt,
the only 10.g. or le-
V
fle, are MTC br,,ind.- nFNSON F. HEDGES LUXURY
MILD nd SPECIAL
MI,;;,ls,5"n S'PECIAL MILD, KENT GOLDEN LIGHTS and
13ARCLAY. 1. the 11-16 ,g.
h-1, the "I parent KENT brands it ' VICEROY, KOOL
(KSF ,nd 100.). JPS and
fill -aI I frlltn MTC - are (acetl wi~h'SAILEM,
MORE: and SARATOGA.
The great ~ss of leading bran d5 fall within the
17-22 mg. hand. Higher
t1,anth" t,i nthe 23-28 liq. band ROTHMANS 100s is
the Ta in brand. Other
hritids Roth.ans DUKES nil CAM , Plain , -d t the
Cew El a
-tre- (2 ~ jrq and over)end re CHESTERFIELD P ,
ain, GAULOISES and GITANES,
nd an array of -flavoured Kretek brands.
clove
,%4TC kre leAding the way in offerinq low-delivery
products with a virtual
b,c",e I,", the high,,-lelLv.ry br-I., in
readine-s for Pin anticipated
L" r... ,re
MTC: Opportunities, not problems
MTC (Malaysia Tobacco Coinpany Berharl ) has evo I
veil From earlier BAT
.rq.ni.,tio ns in Malaysia. The first of these was
nritish-American Tobaccr)
Co.pany(Straits) Ltd., which had its headquarters
in Singapore, and which
was set up in 1911.0ffices were established the
following year in Kuala
Liim pur, and a year later in Ipoh.
Local manufacture of cigarettes was commenced in
Singapore in 1926, and
three years later'in 1929, at MTC*s present site
in Jalan Sungai Be.i.
Kuala Lumpur.At this time, the low duties on
imported cigarettes made the
operation uneconomical, and manufacture at Kuala
Lumpur ceased in 1933.
In ' "'anew (,o"'p.ny, MaLayan Tobacco
Distributors Ltd.. had been
.stabl ihed. It. ob jective was to distribute BAT
Group brands throughout
the wides pre.,id ar.1 0f South Ea. t Asia now
comprising Singapore and
Malaysia. both East and Peninsular. After the war,
MTD resumed its
operations, and in 1953 a small factory was
re-estahlished at Kuala Lumpur.
In 1956 it), Merdek. (Tndepenclence) in sight, it
was thought proper to
place t~e'bu.,ness in the hands of a Malayan
company. And so Malayan
Tobacco Co.pa ny Limited (the first MTC) was
incorporated, and began trading
in December that year. MTC acquired the Jalan
Sungai Besi factory. with
plans to expand it in order to manufacture locally
the more popular brands
whichwere then being imported.
The Company flame was officially changed to
Malaysian Tobacco Company Berhad
in March t977.Singapore ceased to come within
MTC's orbit in 1978.
MTC has traditionally "rketed the ELAT Group's
internationally known brands,
including the last three market leaders - PLAYERS
GOLD LEAF, STATE EXPRESS
555 KSF and BENSON & HEDGES SPECIAL FILTER. Nj
lt.A
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BAT Industries document for Province of British
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One of MTC's major operations over the past 14
years has been that of
pioneering a Malaysian tobacco leaf growing
industry. From a 20 acre trial
site in Kelantan in 1959. the leaf growing
operation has grown to provide
the greater part of MTC's leaf needs. By 1978 some
40,000 farmers' families
were registered tobacco growers in the state of
Kelantan alone, where
tobacco curing licences had been issued to
approximately 165 curing
companies, operating more than 2.000 barns and
employing over 14,000
workers. MTC estimate that about a quarter of a
million Malaysians
currently derive a significant portion of their
livelihood from tobacco
cultivation and curing in the States of Kelant;in,
Trengganu, Pahang,
Malacca, Negri Sembilan, Kedah and Perlis.
MTC has been a public company since 1962. Under
the Chairmanship of A.R.J.
Christodolo, MTC today operates two divisions -
Investment Division, set up
in 1982 under its Managing Director, Mohamed Ghaus
Zam,an to seek new
opportunities so that MTC can widen its base in
Malaysia - and the Tobacco
Division with which this issue of "Marketing News"
is concerned.
The Tobacco Division of MTC
Tobacco is what MTC's past growth has been built
upon, and will be its
mainstay for many years to co~me.
The MTC philosophy is positive. "There are no
problems, only opportunities"
sums up the company's attitude. Throughout the
years since the advent of
large-scale international competition, coupled
with all those environmental
factors which beset a young nation, and those
which specifically affect our
industry worldwide. MTC has maintained and
developed its positive stance.
What could easily have been a period of market
survival has become a dynamic
story of market leadership.
MTC has maintained its leading position in the
market, including the top
brand and a regular 4 or more of Malaysia's 'Top
Ten', over many years. Its
policy and programme for the future is one of
meeting challenge positively,
both through careful planning in the long-term,
and flexible response to
constant changing influences.
Managing Director of MTC's Tobacco Division is
M.A. Mustafa who took over
this responsibility on his return to Malaysia
following a 2 to 3 year ter.
at BAT's Millbank headquarters. His team on the
MTC Tobacco Division Board
are Production Director Aloysius Low. Finance
Director D.A.M. Scott, Leaf
Director Nawawi Daud, Personnel Director Ong Hock
Chye, and Mohamed Ghau3
Zaman whose sphere embraces Economic Intelligence
and Public Affairs.
The Marketing Director is G. Gnanalingam. The
chart reproduced here shows
how the Marketing and Sale. functions are
organised within MTC. The
Marketing Services under tJieir manager, Ting Seh
Kay, embrace the Product
Development function. Marketing Research
&Development, Advertising and (a
rather unusual grouping) a Field Merchandising
Executive.
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436
BAT Industries document for Province of British
Columbia 23 April 1999


14
Marketing Services
la) Product Development
This -tion is responsible for all those physical
properties of the product
related to markt-ting and consumer needs, present
and foreseen. Through its
own laboratories, MTC regularly 'monitors
deliveries of its own and
competitive cigarettes.
The Section's work, therefore, covers, as well as
MTC's existing
products/brands, product/brand planning for the
future. Whilst the
Malaysian consumer has not yet shown ~y great
interest in the low-delivery
sector, MTC are determined to be prepared for an
anticipated future demand.
Running parallel with the delivery-monitoring
programe is MTC's other major
product-related goal of increasing the use of
Malaysian-grown leaf in its
products. Over the years there has been a gradual
modification of blend. to
this end, and there is now a substantial use of
Malaysian flue-cured
Virginia in MTC products, and a few MTC brands are
now made wholly with
domestically-grown tobacco.
MTC also monitor existing and proposed products
through Taste & Flavour
panels, using the Woodrose methodology.
lb) Marketing Research & Development
The Marketing Research & Development organisation
in MTC embraces all the
activities normally found within a tobacco company
operating in a
sophisticated and competitive market. To the
expertise of its own people is
added that of Survey Research Malaysia, one of a
group of affiliates
operating in six South East Asian countries.
Among the regularly conducted MTC research
projects are a number of indices.
The Consumer Index is based on a minimum of 2,000
interviews a year in
Peninsular Malaysia, covering both urban and rural
areas. Its purpose is to
monitor broad market and consumer trends,
incidence of smoking, buying
behaviour and consumption patterns. In addition,
it helps to provide
consumer profiles for the major brands. Fieldwork
takes place for 3 months
in the year, and reports are produced annually.
From the profile studies, defined by racial group,
age, and urban/rural, it
is possible to draw conclusions which are of
practical value in shaping
consumer com,munications. By doing these checks
annually, one is able to
become aware of shifts which can take place. For
example. wbereas B&H has
more Malays in its racial division among its
smokers, ROTHMANS 1003 and
PETER STUYVESANT now have a far less dominant
proportion of Chinese smokers,
indicating a settlement towards normality
following the MTC boycott days
when these brands won large numbers of Chinese
'converts'.
The Brand Index supplements the profile data, but
more importantly it
monitors the images of major brands in Peninsular
Malaysia. Thi a too is
done for 3 months in a year with a published
report.
The Smoking Issues Index, also carried out in
Peninsular Malaysia, is
self-explanatory. It is conducted an an annual
basis.
In view of the fact that these indices relate
solely to Peninsular Malaysia
which is so dominant in cigarette-sales terms, a
separate Sabah/Sarawak
index is run to monitor broad mar%et trends in
East Malaysia. This is
carried out on alternate years.
in addition to these regular projects, KrC's
Marketing Research people are
involved in a number of qualitative surveys
concerned with projected brands
- covering name and pack tests, total offer tests,
concept and advertising
tests and so m. And the department is also closely
involved in any KrC
test marketing operations, and in a great
diversity of ad hoc projects.
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-4
BAT Industries document for Province of British
Columbia 23 April 1999


1 c) Advertising
The Advertising Manager of KTC works in close
co-operation with the KHK
Ne.dh.. agency. As so much of this work is
directly influenced by the
communications restrictions scene, we shall
comment under a separate
he.di~g-
ld) Merchandising
The tasks of the MTC Merchandising organisation
cover the development,
creation, production and supply of merchandising
materials to the field
force. 7he advent of restrictions in the
above-the-line media has added a
new dimension of importance to the Merchandising
area, %thich to date has
been free Erom restrictions.
Because the actual placing and implementation of
MTC's merchandising
programmes must inevitably involve both the
Company's own, and its
Distributors' field staff, training is another
vital role of the head office
merchandising Department.
Merchandising policy is set from the centre, and
so too is the planning and
design of materials to met the needs of the
outlets, according to their
status and volume turnover.
As this area is essentially one of consumer
communications, we shall
describe its operation, together with advertising.
under that heading.
Marketing Operations
Also reporting to the Marketing Director is the
Marketing operation.
function under its Manager, Lau Cheok Leong. Under
him come three speciEic
areas. The Sales Services Manager provides a Head
Office back-up service to
the Sales Managers. The Distribution Manager is
the essential link between
Production and deliveries to the depots, -d, in
fact, 'over-manages, MTC's
entire distribution channels from factory to
retailer. Serving these
functions under him are two Sales Operations
Executives, responsible for
Peninsular Malaysia and for Sabah/Sarawak.
Also within the Marketing operations Manager's
sphere is the Marketing/P.R.
function. Most of the work in this area is related
to KrC's busy programme
of brand-linked sponsorships, mostly
sport-connected, but one executive is
primarily concerned with Smoking Issues, and works
in close co-operation
with the industry body concerned.
SALES ORGANISATION
Three Regional Sales Managers - North, South. and
Sabah/Sarawak - report
direct to the Marketing Director. Each heads up a
team of Area Sales
Managers - 11 in all, under Whom come 16 sales
supervisors and 173 sales
representatives. The sales force operates in close
co-operation with MTC-9
Distributor. whose network is described in the
next section.
MTC's Distribution network
MTC has a network of 66 Distributors in Peninsular
Malaysia, and 12
Distributors in East Malaysia. Each Distributor
has the sole, franchise to
sell MTC products within his defined area. Terms
throughout are strictly
cash.
Many of MTC's Distributors have long associations
with the co,mpany, not
infrequently going back to pre-war years. In
general, the relationship
between MTC and its Distributors is exceptionally
good, the latter being so N)
closely integrated with MTC that they tend to act
as an extension of the
company's activities rather than as a separate
commercial link. C=)
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BAT Industries document for Province of British
Columbia 23 April 1999


16
One of Malaysia's national policies, which has a
particularly direct effect
upon Distributors, is that whereby the Bumiputra -
literally the people' of
the soil (ie. the Malays in Peninsular Malaysia or
indigenous peoples in
Sabah/Sarawak) should have a certain share in
coinmercial areas. This arises
from Malaysia's large Chinese population who have
traditionally dominated
the commercial scene. In terms of MTC's
distribution organisation, this
means that a target has been set of 30% Bumiputra
participation by 1990.
This target applies not only to the number of
Distributorships, but also in
terms of volume/turnover.
To put such a policy into effect has naturally
called for a substantial
revision of Distributors' areas, and a general
reduction in previous
Distributor spheres in order to allow for the
total business to be
appropriately allocated - MTC 's Distributors have
accepted the Company's
position. and have pragaticall y adjusted to the
changing circ u mstances.
Reduced areas have, in fact, acted as a spur
towards greater effort., in
order to redress any loss of business.
MTC have not waited for the target date, but have
acted well in advance.
The result is that the 301 proportion of Bumiputra
Distributors has been
Pa ssed, and progress is being made towards
achieving the same percentage in
turnover terms.
Each MTC Distributor operates from his
headquarters shop, with a cigarette
manager to oversee his entire cigarette business.
No competitive brands are
handled. There are at the present time, some 66
MTC Distributors in
Peninsular Malaysia, and 9 more in Sabah/Sarawak.
There are also a number
0 f stockists. but these will become fewer as the
Distributor network
revision is fully operational.
Each Distributors's headquarters shop is designed
and decorated to an MrC
standard. There are handsomely framed display
windows on both sides of the
open-fronted shop, in which there are displays for
all MTC's major brands.
The aim is to project both to the trade and to
consumers a corporate %frC
identity which, with that of its Distributors, is
that of a modern,
progressive and efficient organisation. At the
same time, the design
standard provides a back-up means of' projecting
the advertising themes of
MTC's main brands.
In practical terms too, the layout is efficient.
Customers calling for
small quantities of cigarettes are served quickly
and efficiently. The
stock rooms lie directly behind the shop itself
which is clean and
uncluttered. The Distributors* delivery vans and
tricycle. can readily be
loaded from the shop.
i1
outlet a of Malaysia, served through the KrC
Distributor network,
Th
ret
:
f
ar c a si ied both by type and by turnover.
:
Prestige (46 outlets, about 0.11 of MTC volume)
These are, as the name shows, top-of-the-market
retail outlets which include
5-star hotels, golf clubs, private clubs, those
high-class supermarkets and
emporium/department stores which have their own
cigarette departments.
Sundries (more than 28,000 outlets, more than 341
of HrC volume)
This group embraces Malaysia*s many general stores
in which cigarettes and
tobacco products are just one of very many items
on sale. They can range
from fairly large self-service outlets, to small
family shops.
Refreshment outlets (more than 20,000 outlets,
nearly 50% of HTC volume)
The title defines this group which includes
restaurants, cafes and the
inn umerable outlets which serve cooked 'fast
food' of all kinds, /hether
Malay, Chinese, Indian or the ubiquitous hamburger
(Macdonald's are no.
operating in Malaysia),
BAT Industries document for Province of British
Columbia 23 April 1999


Stalls/Hawkers (approximately 8,000 outlets, about
141 of MTC volume)
This category includes all the small street
outlets which trade in
Malaysia's towns and villages.
Others (more than 1,300 outlets, over 21 of 14TC
volume)
rn this group art- included canteens of offices
and industrial firms, as well
as military Naafi/relda outlets.
.M., 'T', 'C', and 'L' classifications
These groupings (which derive from the initials of
Malaysian Tobacco Company
Limited) are additionally applied to all the
ag-ove outlel definrtions,
'ixcept for Prestige.
.M. outlets (as with Prestige) apply to
status-defined criteria rather than
turnover. Within this classification are included
a range of outlets -hich
are important in terms of MTC's premium brands.
They include
air-conditioned self-service mini-markets,
air-conditioned restaurants, pubs
and coffee-houses, and kiosks operating within
5-star hotel premises and
international airports.
'T' outlets (of whichever general type) must have
a turnover of more than SM
300 a e.k.
'C' outlets are defined as having a turnover of $M
150-300 per week.
-L' outlets are those with less than a $M 150
weekly turn-over.
The benefits of this classification system not
only enable MTC to monitor
sales selectively, but through it MTC can more
effectively plan its
brand-launch efforts. channel field force
activity, and implement
merchandising progra-s.
Consumer communications:
a challenge to creativity
The restrictions noose tightens
Until 1977 cigarette advertising in Malaysia was
virtually free from any
restrictions ' Following a call by the Deputy
Prime Minister to the industry
t0 degLorify' cigarette advertising ' and to limit
its exposure to adult
audiences, the industry voluntarily agreed not to
screen TV commercials
before 8 pm * .. far :as conte nt wa:,concerned,
the general British code of
practice was followed e. no endo ement by
sportsmen, no models under 25,
no messages to the young, no health claims. etc.
That same year saw the advent of warnings on
cigarette packs. And
restriction. submitted by the industry - whereby
commercials would avoid
close-up smoking situations. sport in any form,
and the use in copy of
various words such as 'inspiration', 'success' and
'celebrate' - were to be
put into effect, under the watchful eye of the
Ministry of Home Affairs.
Industry members submitted re-edited commercials
for approval, and a ruling
was made that only 'pack' subjects would be
approved, and a new set of
government -imposed guidelines was issued for use
in all the mass media.
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BAT Industries document for Province of British
Columbia 23 April 1999


18
In *79 came a ruling that health warnings had to
be carried in press,
.a gazine, TV and cinema ads. In June '80 there
followed a rule that print
and TV/cinema ads were to be limited to showing
the cigarette, pack and/or
carton. The grip was tightening.
By December 1980 it we-% decreed that brand
graphic elements could not be
'lifted out' of the pack, but shown only as on the
pack. And plain
backgrounds were also enforced.
In 1981 came two more warning clause rulings: a
full-frame warning at the
end of TV commercials, and the introduction of
warnings in radio
com,mercials. 1982 began with a TV advertising ban
on imported brands, and
local brands were only allowed to be advertised on
TV and radio after 10 pm.
By March this developed into a totaL TV and radio
ban for cigarette
advertising.
Today cigarette advertisements in the print media
must confine themselves
visually to pack and product: in words to factual
cowent regarding the
product, its characteristics, its quantified
popularity, and its price. At
special festive seasons (eg. Christmas and Chinese
New Year) greetings
messages are permitted.
Whilst these constraints do not apply at
point-of-sale, it is clear that the
opportunities to project an image of any kind are
severely limited.
Consumer promotions my not be advertised other
than at point-of-s.10, and
outdoor advertising (hoardings and the like) are
increasingly under
restrictions by local authorities.
However, point-of-sale advertising is not
restricted in word. and content as
are the main media, and the cigarette
manufacturers naturally take advantage
of this opportunity to project images. In general,
p-o-s tend. to continue
the pre-restriction theme campaigns, whilst the
constrained media ads major
on the pack and product with what verbal
creativity is still possible within
the limits imposed.
There is still some scope for the inventive
copywriter. Whil.t
'superlatives' may not be used, this still leaves
room for statements
relating to product quality, provided that they
are suitably worded.
Among other verbal constraints is a bar on the use
of copy association., eg.
the use of the 'gold' for BENSON & HEDGES: but the
words 'gold pack' are
permitted.
The outdoor media are governed by the rulings of
individual municipal
authorities, and as such there is enormous
variation an what is permitted -
ranging from 'pack only' codes to others where
there is no constraint on
full image advertising.
This apart, the projection of images in cigarette
advertising is virtually
restricted to the advertising of sponsored events.
MTC have succeeded in dominating the outdoor
opportunities in billboards and
lighted signs.
The Sponsorship scene
It is not surprising that Malaysian cigarette
advertisers have become
enthusiastic sponsors of all manner of sporting
and other events. In fact,
many of these sponsorships predate the
restrictions, but the tightening
communications situation has created a position in
which sponsorship
advertising is one of the few ways left through
which cigarette names can
be publicised in an interesting way. Naturally the
willingness of cigarette
(and many other) manufacturers to undertake
sponsorship, has given a boost
to apart in Malaysia, and brought top-line players
to the country who would
otherwise have been unlikely to have competed
there. NJ
CD
C)
--4
BAT Industries document for Province of British
Columbia 23 April 1999


19
This is not to say that sponsorship provides a
'loophole' to cigarette
advertisers. The sponsorship ads themselves are
subject to stringent visual
and content controls. Highlighting of brand
references are not permitted,
nor brand graphics incorporated into the ad design
(such as the use of the
555 chevron shape). All the ads, whether straight
cigarette ads or
sponsorship advertising, have to obtain the
approval before publication of
the Cigarette Advertising Committee who then
allocate a number without which
the media should not accept the advertisement.
Consumer promotions
Although there is an industry agreement not to use
incentive promotions,
such as banded offers and the like, this has, in
practice given way to
sp~ismodic use of such tactics. Reynolds began by
banding WINSTON T-shirts
and lighters. Rothmans responded by a free banded
50s drum container, with
200 DUNHILL. MTC have recently successfully used
banded offers with cartons
of KENT and BENSON & HEDGES! the former with packs
of playing cards. the
latter with a free cassette of Chinese New Year
festive music.
The Ad Agency as an extension of MTC
Earlier in this issue, we described how the
Distributors were in effect
extensions of MTC's own Sales organisation. In the
same way, MTC's
advertising agency - KHK Needham - acts in
practice very much as an
extension of MTC*s own marketing department.
Their key executives are as much aware of market
information, trends,
brands, developments and research, as are some of
MTC's key Marketing
people. And from this base it is their task, with
MTC, to turn their
knowledge into effective creative communication
within the constraints which
govern them.
They are also directly brought in to MTC's
trademark diversification
programme which majors, at the present time, on
activities under the KENT
and Benson & Hedges HERITAGE names. These
activities are described briefly
later in this document.
Communicating at point-of-sale
The importance of good representation and
communication at point-of-sale has
been recognised by MTC long before the advent of
advertising restrictions.
Tightening restriction. have, however, served to
sharpen this recognition,
and to result in a comprehensive and colnesive
in-store merchandising
policy.
Rather than to dissipate its efforts by
fragmenting p-o-s activity among too
many brands, MTC concentrates on a few front-line
brands, allocated by the
position and nature of the outlets. An the market
leader BENSON L HEDGES
naturally dominates the in-store scene, though the
STATE EXPRESS 555
presence is still substantial in many -dry shops.
As MTC*. major weapon
in the growing US sector, KENT is receiving major
coverage. To a lesser
extent. JPS and VICEROY are receiving tactical
support.
'Tailor made' Dispensers
The.major item in MTC'9 range of merchandising
materials is the so-called
'tailor made dispenser'. This is a cigarette 'home
site' unit in Wfiich all
the outlet's cigarettes are displayed in a
standard-design unit which is
adapted to the individual site's space and
proportions. The construction is
of good quality timber, and incorporates a BENSON
& HEDGES built-in header
sign, and a cupboard on the door of which is a
poster frame. The frame is
an MTC solus site, and the poster is renewed or
replaced on a regular
basis.
Within the main part of the unit MTC major brand.
are displayed with full
facings - in a set sequence of BENSON & HEDGES,
STATE EXPRESS 555 and US
brands (notably KENT). Provision is made for other
brands to be shown, but CD
these display only the pack bottoms.
CD
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BAT Industries document for Province of British
Columbia 23 April 1999


20
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BAT Industries document for Province of British
Columbia 23 April 1999


21
These Tailor Made Dispensers have been evaluated
and modified over a period
of time, to improve their value. Among the
refinements are the siting where
possible adjacent to power sources, - well as in
prime po3iti,*,ns, so that
full advantage can be taken for illumination
opportunities. Where the pack.
are vertically ( ie. full facings) the she I f
slopes slightly
ckw:tacked
b. rds so that there is no tendency for packs to
fall over. Other
improvements include aluminium framing to protect
the units and to give .3
better visual impression, and the inclusion of
adjustable plastiT
'cornpartments . to cmter for -ill sizes of packs.
Every unit has a glass front - either fixed where
the cigarettes have rear
access, or as sliding doors where the unit is
sited against a wall'. This
-gives a good appearance, and protects the
cigarettes and keeps the packs
clean and free from dust.
As a point of upkeep, the units receive regular
attention, which involves
cleaning the glass and plastic brand sign as well
as a check that display is
correctly done.
'Shops within a shop' for prestige outlets
Within prestige supermarkets or dc?partment
stores, MTC's aim is to secure
the tobacco departm,ent, providing specially made
furniture and branded
display. S&H and KENT are the two brands to be
featured in these
pcsitions.
The same two brands receive window display
treatment in prestige locations,
as well as where there is a heavy passing traffic
flow.
Counter attaSk
Reynolds reps, finding the preferred sites in mny
outlets already occupied
by ~TTC's Tailor Made Dispensers, have been making
strong efforts to obtain
WINSTON display strips at counter level, often
providing the retailer with a
- counter as part of the deal. 4TC has been
pressing a 'counter attack'
65- providing better counter units in selected
outlets, and putting a brake
on Reynolds' efforts.
Other units
MTC also place large numbers of plastic fronted
dispensers for 'C' category
outlets, prestige and general poster frames for
30" x 20" posters, and an
adaptable display and cigarette rack system which,
using a variety of
fixings, can take advantage of the very limited
space opportunities in the
crowded open-front sundry shops which represent
something like 40% of
Malaysia's cigarette turnover.
To pay or not to pay7
To this knotty question, MTC generally follows a
policy of not paying
retailers for display facilities. And broadly
speaking the provision of
good quality display and stock furniture is Indeed
payment enough. However,
rather more flexibility is applied to important
new prestige outlets where
there may be a special cam^ for 'buying' prime
opportunities.
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BAT Industries document for Province of British
Columbia 23 April 1999


22
14 KE-W
INTE 'NATCNAL
SEFLECTCN
ceflftr
141
JtERITAGE
IN GOLD
TRAVEL SM BM.
Trade Mark
diversification
MTC has examined Trade Mark Diversification
possibilities in Malayia for
.pp ~o priate areas of de velopment in non-tobacco
areas, using its major t-de
.-k..
In ' ie' of the attraction which prestige-name
products hold for the
Malaysians, such non-tobacco enterprises offer
interesting opportunities in
areas where the image is compatible with that of
the cigarettes wbich share
it. na...
Looking to the future
For the coming years ' MTC faces a period of
change and a period of
challenge. The US full-flavour segment is on a
progressive trend which is
t to continue. KENT is enjoying increasing sales
for reasons of prestige
8
r r than for its traditional image of mildness,
and MTC have had more
:the
with KENT tban
for
other Group US
brands such as VICEROY whose
uccess
d
t
ales, espite strong 9u por , have been disa
pointing.
:
p
p
The growth of lower-delivery cigarettes is
anticipated, slow though it has
been to date. Here KENT is well-placed for future
growth. I n the 10 mg -
and less category KENT GOLDEN LIGHTS and BARCLAY
are on the market - the
only cigarettes in Malaysia at the moment in this
category, positioned in
readiness.
The trading-up nature of the market has, in the
past, seen two market
nd
leaders (is. PLAYERS GOLD LEAP EXPRESS 555 ) lose
out to more
STATE
:
,
h gh y priced alternatives Acc pt ng that the
predominant taste for UK
type Virginia cigarettes is qoing to continue for
a considerable time. MTC
has been giving attention to positioning a premium
alternative to BENSON &
HEDGES. This brand, introduced in 1982, is
HERITAGE which also bears the
Benson & Hedges name. Priced at a substantial
initial premium price
(curr!ntly SM2 '00 a 3 agains t the SM1.80 of B&H
SPECIAL FILTER), HERITAGE is
positioned for fu ture growth rather than
immediate volume. Advertising
support has been very limited so far, but there
are plans to give the brand
a boost. Concurrent with the introduction has been
a travelling exhibition
- "Man's Heritage in Gold' - which has been to mat
major cities in
Malaysia.
H?w the brand was conceived and introduced, and
its further development,
w be the subject of a later -marketing News"
report.
C)
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C:)
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U 14
BAT industries document for Province of British
Columbia 23 April 1999


23
Postscript
from MTC's Marketing
Director, G. Gnanalingam
Thi
s
ecial issue on MTC Marketing will give some idea
of the various
:,t
p
a3 p s of marketing which visibly reflect the
problems, challenges and
opportunities in the Malaysian market.
There is however one aspect that is invisible and
normally taken for granted
by many marketing men. This is the role of the
field forre. The tobacco
industry has been confronted with several
pressures and problems viz:
anti-smoking lobby, taxation increases, recession
and increased competition.
Whilst every department in our organisation only
copes with one or more of
these environmental issues and responds
strategically, the sales force bears
the brunt of it all and has to produce sound
tactical responses daily. Very
often the sal so force Is over-looked and ignored
in the strategic planning
processes.
In the past few years, whilst we have been
uncomfortable with product and
imagery restrictions imposed by the industry and
the authorities, we have
had recour
e
to the sev
eral discussions and guidelines within the BAT
Group.
n .
I.4alaysi feel the a have been more changes in the
perception of the
:
,
r
field force than in the well discussed area. of
the product or advertising.
The field force in my opinion requires greater
attention of Marketing for
the following reasons.-
(1) Smoking issues affect the morale of the field
force more than other
employees. It is the field force as much an the
P.R. Department who
require a thorough understanding of the
controversies to enable them
to reply intelligently when confronted.
(2) Advertising Restrictions have meant that the
field force who are
responsible for Merchandising and P.O.S. materials
must now be
ible for
re spon
~he total imagery which is the inainstay of our
t
busine a. Addi ionally, the field force will have
to transform
:
themselves into the T.V.9 and Radios, portraying
the right imagery
r*q,i,,d communications for - brands. To this
extent how
and th:
C=)
do we uip them to undertake their jobs?
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BAT Industries document for Province of British
Columbia 23 April 1999


24
(3) The increasing work load of the field force
necessitates an increase
in numbers. But this increase would be futile
without any
improvement in their quality as well.
(4) Previous training of the field force could be
summarised as "your
job tarts with a No- response. Today their jobs
start with a
"don't" response. Uv-ercoming objections is easier
than overcoming
accusations.
(5) An often overlooked facet of a field force is
that they are meant to
be crack troops. Instead they often resemble
traffic wardens,
traffic policemen or highway patrolmen. We now
require not
poicemen but front-line troops. To achieve a force
with this
standard a sophistication depends a great deal on
their long term
development programme.
(6) Advertising and product development usually
have a visible set of
variables and target dates. It is not often that
we can sit back
and evaluate the development of a field force in a
similar fashion.
The field force requires long years of investment
in training and
development, and it is normally not until five
years later that you
can see the difference between a good field force
and an average
field force.
The above reasons alone should suffice to
highlight for us to pay greater
attention to the ultimate factor in the marketing
mix ie. our ability to
sell. However, there are still several other
problems when we have achieved
the above. This concerns the methods employed to
monitor, control, evaluate
and appraise their effectiveness. In MTC these
methods are particularly
important because the field force do not achieve
targeted sales but
complements the efforts of our distributors. Such
activities require
qualitative analysis besides mere quantitative
evaluations.
Lately, we have resorted to formalised incentive
schemes for distributors'
staff effectiveness and instituted control
mechanisms for consumer contact
and retail work. The ultimate purpose of these
activities is to ensure that
we are close to both the customers and the trade
and can hold the reins on
the switching and purchase patterns. This is not a
new development. In
fact, we in PITC feel that it is this closeness
with the trade and consumer.
that has helped us to maintain our domination.
What is renewed, however, is
the need to champion the role of the field force
which has been relegated in
the advent of sophisticated product development
and increasing
comunications restrictions.
In the last four years we have increased our field
force from 57 to 215. We
have developed a five year plan for their training
and developments. We
would like to feel that they are no longer
policemen but have become
soldiers. Our opportunity is to pursue their
continued development so that
they become crack troops. Hopefully we will
achieve this in the next two
years.
NJ
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BAT Industries document for Province of British
Columbia 23 April 1999


,< -114
Published monthly by Marketing Services, British
-American Tobacco Co. Ltd.
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