Tobacco Asia

Volume 20, Number 4

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Page 80 of 87

tobaccoasia 81 The reverse transformation of cigarette marketing methods in China employs a "consumer-centric" concept growth in the medium-to-long term, following decades of double-digit rapid growth. Meanwhile, the economic situation both in China and abroad remains complicated and changing, as does the threat of a slowdown in economic growth. More- over, the approaches adopted by the government to launch public health campaigns with tax increas- es and price readjustment are taking effect, which means yet another blow to the already struggling tobacco industry. Recently, Euromonitor released data indicat- ing that cigarette sales volume in 2015 declined by 2.4%, or 60 billion cigarettes, from the previous year, which was the first annual decline registered in 20 years. And since the beginning of 2016, this trent continues with weak growth, year-on-year declines in sales volume, cigarette inventories re- main high, and the annual amount of taxes and profits down. The tobacco industry has entered an unprecedented downturn. Facing pressure internally and externally, the industry stepped up its process of systemic transformation, adopting what it calls "reverse thinking" in cigarette marketing. In launching the thematic marketing campaign, it focuses on consumers shifting from sales promotion to driv- ing sales through consumption stimulation. The campaign reflects the changing trend in the mar- ket, placing greater importance on consumer con- sumption to help balance the market supply. Most fundamental requirement of supply-side structural reform Supply-side structural reform is a priority for the industry. It is the combined efforts to powerfully promote, reform, and strengthen development potential by tobacco companies. The most funda- mental requirement of this supply-side structural reform is to firmly establish a "consumer-centric" modern marketing concept and to supply consum- ers with cigarette products that they really need on the basis of understanding their real demand. Only by fully respecting the market can the real demand of consumers be met. The thematic mar- keting campaign is ultimately intended to realize a reverse transformation, supplying consumers with the most marketable cigarette products. Effective strategic planning for thematic cigarette marketing In a keynote speech delivered at a teleconference on improvement of quality and efficiency by the tobacco industry on April 12, STMA director- general Ling Chengxing put forward a "three- step" approach for improvement, thereof leading to fulfillment of the annual production quotas. First step: stop the sales decline and realization of sales growth. Second step: institute control over cigarette supply to realize balanced growth in sales growth. Third step: give priority to fulfilling the annual production quotas for 2016. Accordingly, the thematic cigarette market- ing campaign requires all parts of the industry to earnestly implement STMA's plan to mobilize re- sources for innovation and reform, promote ex- ecution of the campaign and reform on a full scale, and sum up in a timely manner the decisions and plans adopted to fulfill the "three-step" approach. The theme of "We will be wherever there are con- sumers" will be running through the whole pro- cess of implementation of the cigarette marketing campaign. Specifically speaking, the campaign requires that leaders of all parts of the tobacco industry take the lead in the reform, from conducting surveys and studies to creating a favorable atmosphere that encourages cooperation and involvement. The campaign also requires the launch of a sys- tematic operation which optimizes marketing, as well as full-scale efforts to ensure that marketing methods shift to the new model. Tobacco manu- facturing enterprises need to place importance on strengthening their brand management and mar- keting capacity, while commercial enterprises need to give preference to strengthening their market development and marketing innovation, employ- ing reverse transformation.

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