Porters analysis for ITC Cigarette Industry

THREAT of new entrant=LOW

New product differentiation very tough Access to distribution channel is tough Capital requirement is very high for a pan India launching Local launch cannot catch up scale Government policies

BARGAINING power of suppliers=LOW

Many inputs are required but in small quantity There are many small scale, unorganized suppliers Cigarette companies are big and have and have direct access to distribution channel and addicted buyer. Suppliers dont have much control over smokers

Bargaining power of buyers = low

Addicted customer Smoking has lot of symbolic and emotional values attached with it Product quality not much important to smokers Low switching cost in term of price

Threat of substitute product = low

Herbal cigarettes (eg. Nirdosh) were launched Nicotine patch is another substitute

Competitive rivalry in industry = High

Many competing player Price competition continues Advertisement for cigarette is now probhited in India Replacement for ads All making new product launches