Extensive Case Study on the Marketing Strategy of Gold Flake Cigarettes

About Gold Flake

ITC (Indian Tobacco Company) is the market leader for cigarettes in India and Gold Flake is one of its highly popular brands.

Originally, Gold Flake was a British brand by W.D & H.O Wills. Later, ITC launched the brand in India. Gold Flake today is one of the largest FMCG brands by sales. 

Let us begin this case study by understanding its target audience.

Gold Flake’s Target Audience 

A target market is the group of customers that a company wishes to market to. Age, gender, income, education, and location are all behavioral and demographic characteristics that can be used to characterize a target audience.

During the initial days of Gold Flake, their main target audience was the adult male. But as the company grew, its target audience expanded to include more segments.

The above graph shows Golf Flake’s customer base by age. We can see that their main audience is the group of 20-29 year-olds, although teenagers and older adults are not that far behind. This is put into perspective when read along with the fact that one in four of all adult Indians consumes tobacco in some form.

Let us understand how the company markets to this target audience by looking at its marketing mix.

Gold Flake’s Marketing Mix 

A marketing mix is a collection of tactics used by a business to increase demand for its brand or product. The 4Ps make up a typical marketing mix, which includes Product, Price, Place and Promotion. Let’s look at Gold Flake’s marketing mix.

Product

There are four broad categories of cigarettes sold under the Gold Flake brand and each of these serve as separate product lines. These are –

• Gold Flake Kings (84 mm)
• Gold Flake Kings Lights (84mm)
• Gold Flake Filter (tipped)
• Gold Flake (plain)

The product comes with two smoking accessories: a cigarette filter and a cigarette holder.

Price

• Currently, the company is following a competitive pricing strategy. This means the price depends upon the demand for its cigarettes and also upon the prices of other brands. 

• They also use the product bundle pricing method, where products are bundled together and sold at prices lower than the total of individual items. This is a proven sales tool.
• The prices also change as per the tax rate and government rules and regulations.

Place

• Gold Flake has an impeccable distribution strategy. The wholesalers buy from the distributors and sell the cigarettes to the retailers located all over the country. These retailers further appoint certain agents to deliver the product directly to even smaller retailers. And the cigarettes are then directly sold to the consumer.
• They cover a wide range of the retail spectrum, from premium outlets in the metros to small shops in the interiors of rural India. 
• They follow an intensive marketing strategy where they gather as many retailers as possible to ensure that their products are accessible to customers.

Promotion

Gold Flake promoted its products heavily before the ban on advertising for tobacco products. They used to market through the then-popular media channels such as television, radio, print ads, posters, etc. Cigarette brands today can engage in surrogate advertising but ITC, Gold Flake’s parent company does not practice it. So all of Gold Flake’s promotion today is by word of mouth.

The marketing mix has helped us understand that Gold Flake has impressive business and promotion strategies that have contributed to its leading position. But this spot is not without its set of challenges. In order to get an equal idea of the company’s pain points as well, we conducted a SWOT analysis.

Gold Flake’s SWOT Analysis

A SWOT Analysis is used by companies during strategic planning to gauge whether their product is doing well, where it can improve, and how it fits in the competitive landscape.

It helps an organization to identify the:

• Internal strategic factors- Strengths and Weaknesses
• External strategic factors- Opportunities and Threats

Gold Flake can use the SWOT results to exploit the opportunities and minimize its threats.

Following is the SWOT analysis of Gold Flake:

Gold Flake’s Strengths

• Despite a ban on advertising, the product was at the Number 1 position in FMCG products in 2019-2020 and The brand has built a reliable distribution network over the years that can cover the major potential market.
• Brand image is the company’s main strength.
• It has a high perceived quality that has helped the company to keep a steady margin.

Gold Flake’s Weaknesses

• Lengthy and time-consuming manufacturing process.
• Consumers focus on price and buy cheaper local cigarettes ignoring quality.
• Inability to advertise due to the legal ban 

Gold Flake’s Opportunities

• Capitalize on the increase in demand and popularity of less-harmful cigarettes by launching mild or tobacco-free cigarettes under the Gold Flake brand.
• New and cheaper products. They can offer new flavors, increasing their customer base.

Gold Flake’s Threats

• International players deliver low-cost, high-quality goods, increasing the competition for Gold Flake.
• The habits of consumers are continuously changing. They are becoming increasingly more careful about their health after the Covid-19 outbreak and quitting smoking due to its respiratory effects.

The main takeaways from the analysis are that Gold Flake needs to work on its price and positioning in order to continue on its upward growth path. Now we shall talk about the company’s blanket marketing strategy.

Gold Flake Marketing Strategy

In India, a tobacco and cigarette advertising ban has been in place since 2002, but companies continue to produce cigarettes because consumers’ smoking habits have not changed.

Despite the ill effects and health hazards, people continue to smoke cigarettes for their personal liking or out of habit. It’s a debated grey area, but as long as there is demand, companies will continue to supply their products. 

• Gold Flake tries to generate brand awareness and promote its products through sponsorships.
• The company advertises through movies and shows where celebrities are shown smoking their cigarettes. This helps the brand in sales promotion. 
• ITC collaborates with Indian tennis stars to endorse Gold Flake cigarettes.
• To ensure maximum exposure and encourage impulse purchases, most cigarettes and advertisements are strategically placed around checkout counters.

They also conducted campaigns through print before the ban. Let us see how these marketing campaigns have evolved over all the years.

Gold Flake’s Marketing Campaigns 

In this section, we shall briefly talk about Gold Flake’s initial campaigns and how they have continued to change ever since.

During its early days, the product was positioned to offer the user a sense of belonging to the upper class. For creating a favorable brand image, the advertisements of Gold Flake were as per the consumer’s taste and preference at the moment. 

• One of the very first and distinguished campaigns that the company conducted was the one titled “For the Gracious People”. These ads showed that Gold Flake cigarettes were a tribute to the gracious people of India. 
• Gold Flake had always been marketed as a high-end cigarette back then. It was supposed to be a cigarette for the highest and the richest- India’s gracious people.
• For the standard and demonstrated the purity of experience, the brand was compared to Gold. The company positioned the cigarettes for the premium class.
• But of course, as time passed, this campaign became outdated because the young smokers did not understand its positioning nor did they relate to it.
• To overcome this problem, the company followed a brand repositioning strategy. Gold Flake then targeted adults as well as young smokers.
• The campaign “for the Gracious People” was continued. With slogans added to it such as  “Celebrate the Feeling” to encourage and appeal to young smokers as a recreational product.
• But after the ban on advertisements, Gold Flake has not been able to conduct any campaigns. 

Conclusion

Gold Flake’s product portfolio is strong and targets the right consumers. The company’s distribution network is also a major plus point. While its brand name and image have been very effective so far in garnering sales, it could definitely benefit from developing an innovative marketing strategy that overcomes the advertising restrictions.

They will eventually have to find new ways to attract their consumers. This can also be achieved by expanding their product line to include tobacco alternatives in cigarettes to reach a wider audience. For the time being, their main strength continues to be word of mouth by loyal consumers.

The brand can also capitalize on online presence as its target audience is largely present online. If you wish to upskill yourself Digitally and help brands grow, IIDE conducts plenty of free-of-cost MasterClasses every week. 

Thank you for taking out the time to read our work. If you liked this case study and wish to read similar analyses of more interesting companies, be sure to check out other brands’ case studies. Lastly, kindly like and share this blog if you found it useful. Hope to see you back on our pages soon!