Introduction of value proposition
This paper aims to analyze the value proposition of India Tobacco Company (ITC) Ltd and compare it with the value of proposition of its competitor, Azadbidi. Overall, such term as value proposition includes such components as quantitative and qualitative benefits that the organization offers to the buyers and the advantages that the company’s products have over others (Andersen, Narus & Rossum, 2006).
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In other words, the main objective of value proposition is to persuade the customer to purchase goods and services. There are several theories and models that help to examine the value proposition of an enterprise.
I would like to take the approach suggested by Nigel Piercy (2001) who argues that value proposition consists of such elements as market mission, competitive differentiation and positioning, and marketing assets (2001, p 437).
Furthermore, it will be necessary to adopt the model, formulated by James Anderson James Narus, and Wouter van Rossum (2006). This analysis will help to assess the positioning of these companies in the market and their ability to meet customer’s expectations.
Value proposition of the chose company
If we apply the model, suggested by Nigel Piercy (2001), we must first pay attention to such issue as competitive differentiation and positioning or how the company tries to make their products superior to those ones of its competitors. First, ITS sets cheaper prices for their cigarettes and manages to meet high quality standards, established in the company.
Secondly, they reduce the level of nicotine in their tobacco products in effort to address health concerns of the buyers. Finally, their make their products more available to the customer, people are not forced to purchase cigarettes in packs, they can buy them in number (ITC, 2010, unpaged). The second element of value proposition, according to Piercy is marketing assets and brands.
In this case, we need to speak primarily about such brand as Gold Flake. It is known in India and throughout the world for its excellent price-quality ratio. It is famous for the purity of tobacco. Apart from that one should not overlook such intangible assets of ITC as experience, reputation, and public image.
This firm operates for almost one hundred years and since that time, it has received numerous awards for excellent performance and responsible corporate behavior (ITC, 2010, unpaged).
The market mission of this organization is to retain the status of India’s leading tobacco company that manufactures only high-quality products and increase its market share in foreign markets. This is the impression which the company wants to produce.
The model, mapped out by James Anderson, James Narus, and Wouter van Rossum is similar to that one of Nigel Piercy. If focuses on three important criteria: the benefits of the product, favorable points of difference and resonating focus.
The first two criteria explain why the product is superior to others in terms of price, quality, and availability. In turn, such notion as resonating focus is the way the company compares and contrasts itself with its competitors. Normally, it is done to attract customer’s attention to a certain quality of the product (Anderson et al, 2006, p 94).
Judging from the information, available at their website, we can argue that they try to emphasize their good corporate citizenship, willingness to meet ethical, professional and environmental standards. Moreover, they also put much stress on their contribution to India’s economy (ITC, 2010). This is how they attempt to show their advantages over others.
Value Proposition of the competitor
While discussion the value proposition of Azadbidi, we are going to use the same methods as in the previous section of the paper. The competitive differentiation and positioning of this enterprise lies in the following: they lay stress on the fact that their cigarettes contain only natural ingredients and that they have a “unique lingering taste”.
Furthermore, they emphasize an idea that they do not use paper while producing cigarettes (Azadbidi, 2010, unpaged). Their major marketing asset is the unique production process that completely excludes any use of chemicals.
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By emphasizing this distinguishing feature of the company, the management wants to create a resonating focus, in other words, they want to attract the buyers’ attention to this particular detail as it distinguishes their brands from others. Finally, the market mission of this enterprise is to become a company that offers only excellent products and occupies a leading position in the Indian market.
Comparison of two companies
In order to compare these companies, we have applied the analytical model, developed by Michael Porter (1980). It is particularly helpful for analyzing the strategies of several enterprises. First, it should be noted that their goals are similar to one another. Both of them want to occupy the leading position in India’s tobacco industry.
The only difference is that ITC has already achieved this status, while Azadbidi only tries to increase the market share. The strategic positions of these organizations differ significantly. ITC wants to create an image of manufacture that offers products with the best price-quality ratio, while Azadbidi lays stress on the eco-friendliness of their production process and that their cigarettes are less harmful for a person’s health.
It should be pointed out that the management of both organizations makes similar assumptions about the market, namely they realize that customers throughout the world are very concerned by the health risks, associated with smoking.
This is why they do the utmost to minimize the quantities of nicotine and other harmful substances. Overall, they both admit the fact that the level of expectations, set for tobacco companies has been raised.
Speaking about the strengths and weaknesses of these organizations, we need to say that ITC has a better capacity to launch a mass production of cigarettes, and it can dictate the pricing policies to other competitors, including Azadbidi. Moreover, their brand Gold Flake is better known in India and all over the world. However, Azadbidi is more eco-friendly and this feature may appeal to the customers very much.
This analysis indicates that the value proposition of ITC is based on the fact that they offer the best ratio of price. Furthermore, they emphasize an idea that they genuinely tried to address customers’ health concerns. In contrast, Azadbidi attach importance to the fact that their production process is much better from environmental point of view and that it eventually reduces health risks, associated with smoking.
Still, it is rather unlikely that they will be able to compete with ITC on equal terms because ITC can dictate the pricing policies at least in India, and this will ensure their competitive advantage.
Anderson J C. Narus, A.J. & van Rossum W. 2006 Customer Value Propositions in Business Markets. Harvard Business Review. March, pp 91-99.
Azadbidi. 2010. The corporate website.
Indian Tobacco Company. (2010). The corporate website.
Piercy N. 2001. Market-led strategic change: a guide to transforming the process of going to market. Oxford: Butterworth-Heinemann.
Porter. M. (1980). Competitive Strategy. NY: Free Press.