BRITISH AMERICAN TOBACCO STRATEGYand Pepsi, where all employees share a common goal. In the case of Disney it's "To keep the dream alive" and in Pepsi "To refresh the world" whether

THE LIVING JOURNEY

STRATEGY

training and development. do more.

11

2

33

44

55

66

77

88

99

BRITISH AMERICAN TOBACCO

BAT Strategy Participant Booklet 1

Contents 1.2.1 - 1.2.7 BAT Strategy .............................................................. 2

Introduction to strategy .................................................................. 3

The seven elements of BAT strategy ........................................... 4

1.2.1 BAT Strategy and Goals ........................................................ 6

1.2.1 BAT Strategy and Goals ........................................................ 6

1.2.2 Products and Brands ........................................................... 23

1.2.3 Consumer Segmentation and Prioritisation .................. 49

1.2.4. Supply Chain & Distribution Model ................................ 58

1.2.5 Retail Universe Classification and Coverage .................. 69

1.2.6 Customer Segmentation & Prioritisation ........................ 86

1.2.7. Organised Trade ............................................................... 101

The Living Journey Participant Booklet 2

1.2.1 - 1.2.7 BAT Strategy Strategy and Goals – Understands British

American Tobacco strategy and role of own

market in global performance and is aware

of how end market objectives translate into

territory plans


Introduction to strategy (Understands where to play and how to

win)

All TMRs must to succeed. Consider first

that they are generals who create a strategy

to win their wars long before the first battle

begins. The successful military leader

painstakingly plans how and where he will

attack in accordance with the troops and

weapons at his disposal. When the fighting

starts, the victorious commander achieves

his objective through battlefield

manoeuvres to gain the advantage and

counter tactics to neutralise his enemy’s

advance.

Let's talk about the strategy. A lot of

companies place emphasis on tactics and

execution, and not enough really determine

their overall strategy; the impact on

spending enough time at the strategic level,

in reality influences the global growth,

accelerates their market leadership and in

fact has the power to increase sales. If you

look at companies, which play very well

usually, they have a focus on their strategic

objectives and are clear in their strategic

plans.

Many companies that formalise strategic

planning well and run it at regular intervals

ensure that their strategy is constantly

updated and adapted to market changes,

changes that go with their competitors,

changes that occur with their clients in

relation to the specific needs, preferences

and general requirements. So companies

that have a good working strategy know …

Strategy is the foundation for

understanding how to succeed in a market

and how to win.

“Every trade marketing rep is a piece of the

strategy jigsaw”. Mantra


The seven elements of BAT strategy 1.2.1 BAT strategy and goals

We gain an understanding here of ‘Why

strategy is important?’ To provide an

introduction answer to that question … the

business strategy of a company provides

the big picture that shows how all the

individual activities are coordinated to

achieve a desired end result. We will explore

British American Tobacco’s organisational

view of how we intend to operate and win

within environment.

1.2.2 Products and brands

We explore the British American Tobacco

brand portfolio here, how our brands help

us be a winning business and how we align

our brands with different consuming groups

for success

1.2.3 Consumer segmentation and prioritisation

Here we examine the different types of

consuming groups we communicate with,

why we segment and the considerations

and benefits of segmenting our consumers.

1.2.4 Supply chain and distribution model

In supply chain and distribution we aim to

give you an introduction into the engine

that drives our products into our customers

and in turn our consumers' hands.

1.2.5 Retail universe classification and coverage

The retail universe is wide and the numbers

of different types of outlets are many that

we supply to. In retail we explore how we

classify these different retail groups for ease

of communication and also to tailor and

unify our approach to the retailing

community as a global business.


1.2.6 Customer segmentation and prioritisation

Our business has many different types of

customer, retail being one but there are

many more. In customer segmentation we

gain an appreciation of the main customer

segmented groups and how our approach

differs accordingly against their specific

need set.

1.2.7 Organised trade

Here we examine trade as an industry, what

it is to be in the trade, other businesses that

also operate in this sector together with the

key trends and developments effecting

trade performance for the sector as a whole.


1.2.1 BAT Strategy and Goals It is through the strategy process that the

overall direction of the company is set. This

is based on the opportunities and threats in

the outside world and the internal strengths

and weaknesses of the business.

If you are clear on your vision as a business,

if you have a well thought out strategy, if

your people have a ‘line of sight’ into how

their day to day activities feed into the

businesses achieving its objectives and

ultimately it’s success - you are strategically

organised, so when the inevitable day

comes and the external environment

changes, then as a business you are more

likely to be able to take advantage of

opportunities that present themselves. This

way of working will be the key element to

our success. Other equally large FMCGs that

also embrace this philosophy are Disney

and Pepsi, where all employees share a

common goal. In the case of Disney it's "To

keep the dream alive" and in Pepsi "To

refresh the world" whether they are

sweeping the streets, loading the trucks or

sit at board level.

As the external environment changes,

perhaps due to changes in customers or

competitors or perhaps due to the wider

forces - political, economic, social,

technological, environmental or legislation

based - it is important each year to come

back and ask some fundamental questions.

Even if the basic environment is stable,

competitive actions change and our

business needs to review what is

happening, prepare for any real or potential

competitive manoeuvres and find new

insights into ways to create value for

customers.

In order to understand BAT strategy there

are 6 areas for consideration:

1.2.1.1 What is our strategic vision?

What is our strategic vision?

Who we need to achieve our strategic

vision / our organisation structure

1.2.1.2 What is our strategy?

Where do we commit our focus as a

business?

What are our guiding principles?

What are our business principles?

What is our way of winning?


1.2.1.3 How we implement our strategy

What is line of sight?

How we use line of sight in the way we

work

1.2.1.4 How do we create strategy, what is our process?

The types of strategic plan we use?

Our hierarchy of planning?

1.2.1.5 What strategic tools can we use in the field?

Ask the big strategic questions

SWOT analysis

SMART goal setting

1.2.1.6 What activities can I as a TMR do in order to contribute?

The three Line of Sight activities

1.2.1.7 How does this affect you?

How the business strategy links to the

TMR

1.2.1.8 References / contributors


1.2.1.1 What is our strategic vision (what we need to achieve)?

Defining the actions that will achieve our

vision

As a company, we know where we are

heading – we have a vision. But how are we

going to achieve it? This is what strategies

are all about - they define the actions that

we need to take to achieve a common goal.

They answer the question “How?”. Our

corporate strategy has been developed to

help us achieve our vision of:

“Achieving leadership of the global tobacco

industry, in both a quantitative and

qualitative sense."

Our vision is a collective goal. This vision

gives direction to our day to day activities. It

is what we strive to achieve. Everything we

do as a company flows from this strategy.

1.2.1.1 Who we need to achieve our strategic vision/ our organisation structure

(Who we need and where in our business)

Our Organisation Structure is how we're set

up as a company to deliver our Vision. It

defines processes, as well as the roles and

responsibilities of all our people. In addition,

it is the way we integrate and co-ordinate all

of these people, resources and systems so

that they can go out and get the job done.

You will see these translated into your

critical key performance indicators (CKPI),

these CKPIs provide you with line of sight

into how day to day, through your activities,

you contribute to our business goals,

ensuring we have a transparent way of

working (WOW) and we are all focussed

towards achieving our success as a business

every day.

Organisational structure is something that

can be adapted over time to respond to the

changing environment in which we work.

So, for example, if restrictions are placed on

how we advertise to our consumers, we

adapt our organisational structure and

introduce new functions to accommodate

the restrictions or changes.


1.2.1.2 What is our strategy (how we will achieve it)?

Strategy refers to a plan of action designed

to achieve a particular goal. The word is of

military origin, deriving from the Greek word

'strategos', which roughly translates as

general.

We discussed earlier the successful military

leader… ‘In this case the British American

Tobacco Business’, painstakingly plans how

and where he will attack ‘Our 4 areas of

focus’ in accordance with the troops and

weapons at his disposal ‘In line with British

American Tobacco guiding and business

principles and our way of winning’. So

when the fighting starts, the victorious

commander ‘BAT’ achieves his objective

through battlefield manoeuvres ‘Our TMR’s’

to gain the advantage and counter tactics to

neutralise his enemy’s advance. “Our

Competitors”

1.2.1.2 Where do we commit our focus as a business? (how we achieve our vision)

Our strategic focus is broken into four areas

which support our vision: “Achieving

leadership of the global tobacco industry, in

both a quantitative and qualitative sense"

and they are listed below:

These include:

1. Growth

2. Productivity

3. Responsibility

4. Winning organisation

1. What is our Growth Focus?

Increase our volume and value share of the

tobacco market through organic growth

and Mergers and Acquisitions (M&A).

To compete vigorously, especially with

PMI & JTI

To enhance the quality of market

leadership by offering our consumers

first choice in all key segments

To implement a strategy of other

tobacco product (OTP) consumption in a

declining market

To protect our volume base and the

equity of our brands by limiting illicit

trade


2. What is the Productivity Focus?

Effectively deploy our global resources to

increase profits and generate funds to

reinvest in our business.

To drive towards an efficient and

effective customer and consumer-

focused supply chain

To drive continuous improvements in

productivity without compromising

quality through better use of resources

3. What are our Responsibilities?

Continue to balance our commercial

objectives with the expectations of broad

range stakeholders, thus ensuring a

sustainable business.

To engage with the stakeholders to

achieve a sensible way forward on

tobacco regulation, litigation and excise

To strengthen our corporate reputation

as a responsible company

To make a difference through our

support of social transformation in South

Africa

To implement harm reduction initiatives

4. What do we Mean by a Winning Organisation?

Ensure we have the right people and the

right working environment to deliver our

vision.

To create a future-fit winning

organisation which thrives on our

passion and talent

To deliver on One Future

1.2.1.2 What are our guiding principles? (what approach will we take?)

Guiding principles are a statement that

articulates shared business values; it

underlies the strategic vision and mission,

and serves as a basis for integrated decision

making.

Our behaviour is driven by four Guiding

Principles. They are how we operate.

1. Freedom through responsibility

2. Open minded

3. Enterprising spirit

4. Strength from diversity

What do we Mean by our Four Guiding Principles?

1. Freedom through responsibility

We provide pleasure to adults who choose

to smoke. We’re honest about the risks and

behave as a responsible company should.


2. Open minded

We seek new ways to solve problems. We

see trying and failing as a learning

opportunity. We listen to reasoned

arguments, no matter where in the

organisation they come from.

3. Enterprising spirit

We are opening new markets. We value

agents of change. We are confident we can

beat our competitors. We lead the industry.

4. Strength from diversity

The differences between our people are a

competitive advantage. We respect

everyone as equal. We value ability above all

else. Wherever we are, we are “of that

culture”, not imposing our culture on it.

1.2.1.2 What are our business principles?

These are statements of management

preferences, regarding the way the British

American Tobacco business will conduct its

affairs in the performance of its mission and

the pursuit of its strategic vision. We have

three business principles:

1. Mutual benefit

2. Responsible product stewardship

3. Good corporate conduct

What do we mean by our three business principles?

1. Mutual Benefit

Creating long-term shareholder value

Engaging constructively with our

stakeholders

Creating inspiring working environments

for our people

Contributing to the social transformation

of South Africa

Ensuring that suppliers and business

partners benefit from their relationship

with us

2. Responsible Product Stewardship

Accurate, clear health messages should

be provided

Reducing the health impact, while

respecting consumers' preferences

Relevant and meaningful information

about our products should continue to

be available

Under-age people should not consume

tobacco products

Marketing our products and brands

responsibly

Appropriate taxation and elimination of

illicit trade

Balanced regulation that considers

tobacco consumers and the tobacco

industry


Public smoking that considers the

interests of smokers and non-smokers.

We choose to be a responsible company

operating in an industry seen as

controversial. To this end, our Corporate

and Regulatory Affairs department

(CORA) provides us with a set of

international and local guidelines and

standards to which we adhere

3. Good Corporate Conduct

Upholding high standards of behaviour

and integrity

Corporate social responsibility should be

promoted in the tobacco industry

Universal human rights should be

respected

Tobacco industry should have a voice in

government policies affecting it

Achieving world-class standards of

environmental performance

1.2.1.2 What is our way of winning (our four ethical questions?)

Our behaviour is defined by our ethics.

Ethics are not something we are forced to

adhere to. Rather, we choose to behave

ethically and responsibly because it makes

us a better company. Before we take any

decision or execute any action, we ask

ourselves four ethical questions:

1. Is it legal?

2. Is it balanced?

3. How will others perceive it?

4. How will it make me feel about myself?

Characteristics of ethical behaviour are:

Honesty and trustworthiness

Reliability

Truth and accuracy

Co-operation and being constructive

Fair and considerate

Law-abiding

Correct use of company resource

Efficient and effective accomplishment of

tasks

Unethical behaviour has a cost. It could be

legal, public opinion or societal. Ultimately,

it is a personal cost.


1.2.1.3 How we implement our strategy

How do we make our plan a reality?

Implementation is the process of moving

from our vision to our new reality.

1.2.1.3 What is line of sight?

The unobstructed view from the TMR of

how every day through each activity (KPI)

they contribute to the business being

successful. How delivering upon these KPIs

feed into the area, the region and ultimately

the global vision and strategy of our

business.

Line of Sight is the practice of keeping all

British American Tobacco employees

aligned with, in tune with and in touch with

strategy. This is because we believe that the

greater the awareness we create of strategy,

amongst employees – the greater the ability

of the employee, to then react, make a

decision, act and behave in a way which

supports the business’s strategy.

It sounds simple, but in a complex global

organisation it requires real diligence, care

and attention.

In a small business, creating Line of Sight of

Strategy is simple. The business owner has

regular face to face contact with members

of staff every day, they can easily brief the

strategy to staff and as changes occur in the

marketplace the business owner is able to

discuss these changes with members of

staff and create suitable adjustments to

their thinking.

In a fast moving multi-national business

which is affected by numerous different

changes in the world economy,

marketplaces and regulations – it is less

easy to create continuous Line of Sight of

the Strategy.

Two of the best ways to create strong Line

of Sight of Strategy is through training and

development and linking KPIs, ultimately, to

strategy. It is for this reason that we have

included strategy and Line of Sight of

strategy within the development for TMRs.

The intention is to give a clear,

comprehensive view of our strategy, making

TMRs aware of our strategic goals, the

global ones and the regional ones – to assist

you in local thinking, local behaviours and

local decision making.

By creating clear Line of Sight – we help you

to put your time in the right place, to make

the right decisions, and to ensure that you


do not make the wrong ones. Within this

training module you will discover more

about the British American Tobacco

strategic planning process. You will learn

how our strategic review enables us to

create a base plan which links to the

strategic plan, operational plan, cycle and

territory plans.

We want you to take a keen interest in all of

this. We believe that you should know this

strategic information because Line of Sight

of Strategy helps you to understand the part

that you play within it.

Updates and Briefings

Whilst the strategic plan does not change

greatly thorough out the year, there are

many smaller updates, tweaks and changes

that you need to be aware of. For this

reason British American Tobacco carries out

frequent briefings and uses a myriad of

different communication systems including

the intranet.

All of these different tools exist in order to

build and enhance your Line of Sight.

Keeping yourself abreast of company

developments therefore empowers you to

make the right local decisions, use the right

behaviours, put your time in the right place

and prioritise to achieve the right results.


1.2.1.4 How do we create strategy (what is our process?

The types of strategic plan we use

Strategic planning is British American

Tobacco’s process of defining its strategy,

or direction, and making decisions on

allocating its resources to pursue this

strategy, including its capital and people.

Strategic planning determines the general

direction and goals of British American

Tobacco in both the short and long term.

We consider the resources of the business,

the likely behaviour of competitors, the

direction and pace of technological change,

and the projected demands of the

marketplace.

The marketplace we are primarily

concerned with is our customer and

consumer through our planning, we aim to

build awareness and deliver goods and

services to customers and consumers.

This we have two distinct functional aims:

1. Creating and building awareness of

products

2. Delivering these products to the right

people

These responsibilities all fall under the

Marketing Department, which is divided

into specialised teams.

Strategic Brand Planning: responsible for

"creating and building awareness" of our

brands; determines a brand's strategic

direction and focuses on the consumer.

“This is what and how we intend to speak to

the consumer”.

Strategic Trade Planning: responsible for

"delivering these products and services to

customers"; looks at the retail environment

and ensures the correct brands are

available. “This is what we will say and do

with the trade”.

Creating a consumer-led culture: Our

consumers are our most important assets -

they drive everything we do. To help ensure

that we get the right products to the right

consumers in the right places, we develop a

Strategic Marketing Plan, which is critical to

our success. The Strategic Brand Plan and

Strategic Trade Plan is how we satisfy

consumer needs in a more successful way

than our competitors, while still making a

profit.


1.2.1.4 Our hierarchy of planning? (how we create our strategy)

1.2.1.5 What strategic tools can we use in the field?

1.2.1.5 Ask the big strategic questions

“You read a book from beginning to end.

You run a business the opposite way. You

start with the end, and then you do

everything you must to reach it.”

Harold S. Geneen, CEO of ITT 1959-77

1. Where do we want to be, what are the key activities to be addressed from the regional and cycle plan?

2. Where are we now? 3. How are we going to get there? 4. How will we know we have arrived? 5. Why are we doing this?

The starting point is to ask: Where do we want to be? This can result in the creating of a vision and a definition of a

mission. A mission defines the core business of the organisation - what it is and is not; the key priorities and direction: its goals. The next stage is to take a step back and ask: Where are we now? This establishes the current state and how that state is measured in terms of profit, turnover, market share, service provision, quality or any other relevant measures. The link question is next: So how are we going to get there? This provides the opportunity to explore the actions required to move towards the goals. SMART objectives can provide a practical series of steps towards the goal and enable the fourth question to be addressed: How will we know we have arrived?

1.2.1.5 SWOT analysis (where are we now?)

SWOT is an acronym standing for Strengths, Weaknesses, Opportunities and Threats. A SWOT is usually used to analyse a company’s position in relation to its competitors, which is how we will be using it in strategy. But bear in mind, it can also be used to analyse the position of any group, brand or even an individual. Once you have a picture of the strengths, weaknesses, opportunities and threats, you can use the information to develop strategies for improving British American Tobacco’s position to meet its goals.

Appendix 1.

Please see back of workbook for full diagram.


Creating a SWOT

Stage 1 – Create the Ideas

Define the scope of a SWOT

Define the competitors

Write in the strengths

Write in the weaknesses

Write in the opportunities

Write in the threats

Stage 2 – Identify Actions

Brainstorm

Link any strength with any opportunity

to create a list of possible offensive

strategies and develop action to build on

advantages

Link any weakness with any threat to

create a list of possible defensive

strategies and develop ways to reduce

the risks

List all reasonable actions that come out

of the linking process and prioritise those

that give the most benefit


Let’s look at an example of a SWOT Analysis

that may be applicable to you as a TM&D

Representative: 90% of a particular outlet’s

sales stem from the purchasing of our

brands, yet our facing share on the outlet’s

shelves is only 80%.


1.2.1.5 SMART goal setting (how are we going to get there?)

Identify SMART Goals

A goal is a declaration of a desired end

state. It specifies where you want to be at a

specific point in the future. Effective goals

should be written using the SMART goal

method. SMART is an acronym that

describes the five characteristics of a well-

written goal: specific, measurable,

achievable, relevant, and time-bound.

Specific: The goal is concise and stated in

performance terms

Measurable: It is easy to determine if the

goal has been met

Achievable: The goal is set high, but is

also attainable

Relevant: The goal is tied to

organisational performance needs

Time-Bound: The goal has a specific

timeframe for completion

Using the SMART goal method provides

two benefits. First, it helps all British

American Tobacco employees concur

when it comes to the direction of the

organisation. Because SMART goals are so

clear-cut it reduces the chance of confusion

about goals and objectives on the part of

the organisation’s stakeholders. Secondly,

because SMART goals are clear and concise,

determining whether they have been

accomplished is easy, making it easier to

assess progress toward goal achievement

on an ongoing basis.

Once you have identified your SMART

goals, your next step is to create plans that

describe how these goals will be

accomplished. However, before you develop

action plans, it is helpful to analyse your

goals to identify any potential barriers you

may encounter. Force Field Analysis (FFA) is

a relatively simple but highly effective way

to do this.


FFA was developed by the renowned social

psychologist Dr. Kurt Lewin. Dr. Lewin

offered a very basic idea. He suggested that

any problem situation could be seen as a

“sea of forces in motion”. Some of these

forces are favourable to goal achievement,

while some are unfavourable. FFA is a

process that involves identifying a current

problem or goal (such as your SMART

goals), identifying the restraining forces that

can prevent the goal from being achieved,

identifying the driving forces that are

pushing for goal accomplishment.

How do we know we have arrived?

Is the percentage completion or

achievement of the intended goal? An

important step to ensure we are fully

aligned is to review the

results.


The three line of sight activities

1. Analyse your current territory and

formulate a ‘State of Play’ document for

the Region. Provide key summary points,

highlighting any issues, opportunities

and key impacting factors with particular

attention to specific brand and channel

trends. Review with your line manager

and deliver key recommendations to the

NSC Team. Request feedback on the

viability of your plan.


Gain insights into brand and share trends

within your territory by working with

WFP and your line manager. Align these

findings with your ‘State of Play’

document and present your objectives to

your line manager and team.

2. Develop a plan to specifically target profit

and growth within your territory, where

we are not achieving. Implement your

plan, monitor and review over a six

month period. Identify when you have

had to amend your plan and discuss with

your line manager and peers what

influenced these changes.

Obtain the profit, margin and loss report

from an AM within your territory. Work

with your line manager to analyse share

of business verses share of profit across

all channels. Determine what information

you can use to enhance your own

territory plan.

3. Track, map and analyse opposition

promotions within the CI channel in your

territory and build your own promotional

campaign to respond to competitor

activity in your territory. Present your

plan to your line manager for review.

Implement your plan, monitor and

review over a 3 month period

Analyse the BATA Trade Marketing

strategy document and provide a

synopsis and discuss with your peer

group. Map the content to the overall

NSC Strategy document and identify

areas of combined support and share

this with your line manager and relevant

AM / TMR.


How the business strategy links to the TMR

“Every trade marketing rep is a piece of the

strategy jigsaw”. Mantra.

The targets which are agreed and set with

you all feed in to the targets for the region

which ultimately feed into the targets and

goals for the world. Everyone is important.

Achievement of all end market objectives is

always relevant. Therefore when looking at

the way that you plan for and develop your

territory – consider that you will have an

important impact and role to play in the

delivery of the overall strategy for the

business.


1.2.1.8 References/ contributors

Australia Sales Centre Playbook - TL

activities.pdf

South Africa SIC_Specific

Induction_FullText.doc

MXS_Brand Module_Operationalising the

Brand Strategy_15_Part 1.ppt

TM&D Excellence 2010.ppt

Aligning employees through line of sight

Wendy R. Boswell a,*, John B. Bingham b,

Alexander J.S. Colvin

The Apex Learning library


1.2.2 Products and Brands

Introduction

Branding is so complex and often

misunderstood. The traditional view is that

branding is something done by the

marketing department or ad agency to

position the brand in consumers' minds,

usually through advertising. A famous book

called ‘Positioning’ written by Al Ries and

Jack Trout that outlines this theory was the

bible for the industry. It was written back in

the days when products were generally

well-made, customer service hadn't yet

been outsourced, there were half the

number of products on the shelves, and the

pattern of releasing software too early had

not yet become commonplace.

Then life started speeding up; competition

got faster and fiercer; outsourcing was

discovered; quality started declining ... but

the perception was that "we can still win if

we do positioning and advertising." The

dotcom boom exemplified this phase:

companies with no real product or business

plan were spending millions on advertising.

They were first in their categories and

followed all the right steps as outlined by

traditional marketers. But they thought they

could buy their reputations instead of

earning them.

But the emphasis on marketing and being

first unfortunately does not address the

core need we have today, of getting back to

basics and creating something worth

talking about.

However the emphasis on building a strong

brand is correct ... because brands are not

the domain of marketing departments or

just of executive teams.

A brand strategy is, in essence, a focused

strategic platform that guides every aspect

of the business. If a brand is a house, then

the various departments are the rooms, and

the brand platform (the brand mantra) is

the foundation.

Ideally the foundation sums up the purpose

of the company in five words or less. In

other words, why should people care about

you?

The full brand strategy fills in the details; it's

the blueprint for the house and guidelines

for interior design. The blueprint outlines

the type of customers who will visit the

house, how it will be used, and how the

experience should differ from the other


houses on the street. If the blueprint and

execution are done right, marketing is

simply an open-house sign in the front yard.

Starbucks created a powerful brand with no

advertising; Google is another great case in

point. They both created a new and/or

better experience for people to talk about.

There is an importance on being first;

however, especially in the technology arena

as a single strategy this is dangerous for

effective long term brand building.

Someone can come up with a great idea

(Newton) but another company can quickly

figure out how to do it better (Palm).

So marketing is partly the job of everyone in

the company, not just the people who call

themselves marketers. Building strong

brands is the key to success ... and it

involves aligning great products and great

people with a great purpose to meet

customers' unmet needs.

“If a brand is a house, then the various

departments are the rooms, and the brand

platform (the brand mantra) is the

foundation” Mantra Al Ries and Jack Trout

‘Positioning’

"Building strong brands are the key to

success, in our opinion, not better products

or better people." Mantra “Al Ries and Jack

Trout ‘Positioning’

1.2.2.1 What is our product?

What is our Product Introduction?

Why we focus on developing our

products

What Roles are involved in product

development?

What is Brand Management?

What is Product Management?

Where is tobacco grown & how tobacco

is cured

How tobacco is prepared for primary &

secondary production.

The anatomy of a cigarette.

The importance of product quality.

Different product testing methods

1.2.2.2 What is a brand?

What is a brand?

What is brand positioning?

What is brand authorship and

personality?

What is brand expression?

What is the flow on benefits of a

successful brand?

1.2.2.3 Why different people choose a particular brand?

Why different people choose a particular

brand.

What the smoking experience is

What gives the consumer smoking

satisfaction?


1.2.2.4 How our brands connect with our consumers

How we connect the consumer to the

brand

What is segmentation?

Giving our consumers a choice – The

Brand Portfolio

The Drive-Priority and Non strategic

Brands

How we communicate our brands to

consumers

1.2.2.5 What tools are available to me to use?

The Brand Map

Boston Matrix


Building your Brand Map

Understanding the portfolio

1.2.2.7 How does this affect me?

The Strategy Jigsaw

1.2.2.8 References/ Contributors


1.2.2.1 What is our product?

1.2.2.1 What is our product introduction?

A product is an item that ideally satisfies a

market's want or need

To be an effective marketer and seller of our

brands, an in-depth knowledge of all

aspects of our products is essential. We

refer to this as a knowledge of “from seed to

store”. This knowledge will allow you to

speak confidently about our brands to adult

consumers.

1.2.2.1 Why we focus on developing our products

Consumer perception of products changes

with time. Product opportunities are often

identified through research, and

development projects may be initiated to:

Improve your current product

Rectify a deficiency in your product

Utilise technical innovations that may

give a unique selling point, or other

advantage to your product

Develop a new segment in the market,

eg. menthol

1.2.2.1 What roles are involved in product development?

The product team manages the product

development process. The team includes

various people, such as:

Brand Management

Product Management

Blender

Flavourist

1.2.2.1 What is brand management?

Brand Management is responsible for the

strategy of your brand and drives the

product development process. The goal of

this process is to ensure that our products

meet consumers' wants. Brand

Management is responsible for product and

quality requirements, development of new

brands or line extensions and initiating new

product concepts. The role of Brand

Management requires an overall

understanding of product development in

order to achieve the product strategies of

our brands.

1.2.2.1 What is product management?

Product Management is responsible for

managing the product's technical function,

and co-ordinates the activities associated


with all aspects of the products. These

include defining product specification and

quality requirements, carrying out the

development of new brands or line

extensions as required by brand marketing,

developing solutions for new product

concepts and ensuring that the product

meets local legislation requirements.

The Blender

The Blender has comprehensive knowledge

of the smoking characteristics and knows all

the relevant grades and tobacco styles that

may be needed for our products. The

blender's skill lies in formulating a mix of

tobacco types and styles, in order to deliver

smoking characteristics that meet

marketing requirements.

The Flavourist

This is a highly specialised function in the

product development process. Flavourists,

through their understanding of casings and

flavours, contribute to the sensory

characteristics of the blend.

Summary: Consumer perception of

products changes with time. We need to be

able to assess forthcoming market shifts in

order to develop products that meet the

needs of our consumers. Product

opportunities are often identified through

research. BATSA has a product team that

manages the product development process.

1.2.2.1 Where is tobacco grown and how tobacco is cured?

Where is tobacco grown?

All the tobacco in the world comes mainly

from five growing areas: North America,

South America, Asia, Africa and the Middle

East. In these growing areas there are three

types of tobacco: Virginia, Burley and

Oriental.

How is tobacco cured?

A tobacco plant is highly perishable, as 90

percent of its leaf weight is made up of

water. The only way to preserve the leaf

after harvesting is to dry it by a method

known as curing.

There are four types of curing:

1. Flue-curing

2. Air-curing

3. Sun-curing

4. Fire-curing

1. Flue-Curing

The leaf is dried in barns heated by

outside fires

Moisture escapes through vents

This takes five to eight days


2. Air-Curing

Open-sided barns control the flow of air

Colour and flavour are determined by the

curing time

This results in light, medium or dark air-

cured tobacco

This takes six to twelve weeks

3. Sun-Curing

The leaf is first stored in dark, cool sheds

until yellow.

It is then hung on drying racks in the sun.

This takes four to six weeks.

4. Fire-Curing

The leaf is dried over open fires of

specially selected wood or sawdust

The cured crop is then sorted according

to the length of leaf, colour quality and

grade

This takes four to eight weeks

What is a Grade?

Grade is a leaf quality defined by three

criteria:

1. The leaf position on the plant

2. The leaf colour

3. The leaf body and structure

1.2.2.1 How tobacco is prepared for primary and secondary production

What is the Purpose and Process of Primary Production?

The purpose of primary processing/

production is to produce a blend of cut

tobacco from a range of leaf and stem

tobacco, in a form suitable for cigarette

manufacture.

The tobacco is first cured

It then arrives at a factory in a brittle

state

It is humidified and moistened

The lamina and the stems are then

separated

The stems are rolled, flattened and cut

The lamina is also cut

All the elements are then brought

together again in preparation for the

secondary production phase of cigarette

manufacture

Aroma

To create a special aroma (smell), additional

ingredients may be added to the tobacco.

These are called casings or flavourings. This

stage in Primary Processing is sometimes

referred to as Top Dressing.


Casings

These are confectionery-type ingredients

such as cocoa, liquorice and sugar. These

are applied to achieve particular tastes.

Flavourings

Flavourings consist mostly of natural oils

from flowers or fruits. A popular method of

adding flavour is the addition of menthol to

the foil inside the packet.

Summary

The primary phase of production consists of

processing and preparation. Tobacco leaves

are graded and preserved by a process

known as curing. The tobacco is prepared

for secondary production using numerous

processing techniques. Tobacco must be

maintained at certain temperatures and

moisture levels and must not exceed

specific maximum temperatures and

moistures.

What is the Purpose and Process of Secondary Production?

Secondary production is the process

whereby the cut tobacco is transformed

into the final product.

The following 8 steps are involved:

1. Blend is selected

2. Continuous rod of tobacco is formed

3. Branded cigarette paper is formed

4. Individual lengths are cut

5. Double length filters are produced then

cut into two filter tipped cigarettes

6. Foil and packet are formed

7. Packets are put into cartons

8. Cartons are put into cases

The Cigarette-Making Machine

Current developments in cigarette-making

machines have produced units that can

manufacture up to 20,000 cigarettes per

minute (cpm).

High-speed machines operate between

9,000 – 14,000 cpm, mid-speed machines

operate between 6,000 – 18,000 cpm, and

slow speed machines operate between

2,000 – 5,000 cpm.

The modern cigarette-making machine

consists of four major parts:

1. The hopper tobacco feed

2. The rod maker and print section

3. The plug assembler (for filter cigarettes)

4. The tray filler/cigarette transfer/reservoir

system

Moisture Control

After cigarettes are made they are packed to

keep them in optimum condition for the

consumer. To ensure a long shelf life the


cigarettes must be at the correct moisture

before packing. A moisture content target

of 12.5 to 13.5% is common. At this

moisture level the tobacco will give a

satisfactory smoke. Higher moisture levels

lead to deterioration, including moulding

and spotting in hot climates. In addition,

the smoke quality degrades and draw

resistance also increases. If the tobacco is

too dry, ends fall out and the smoke

becomes harsher and more irritating.

Summary

Secondary Production is the process

whereby the cut tobacco is transformed

into the final product. Cigarettes are

produced via an 8-Step Process that begins

with the selection of certain blends and

ends with cartons filled with cigarette

packets put into cases. By the time

Secondary Production is completed, the

tobacco product is ready for delivery and,

ultimately, consumption.

1.2.2.1 The anatomy of a cigarette

A cigarette has various components:

Tobacco (rod)

Paper

Filter

Tipping Paper

Tobacco

Tobacco is blended in a particular way to

make it either a full-flavour or a light blend.

Casings or flavourings can be added.

Paper

Cigarette paper has characteristics that

affect how fast it burns, or how much air it

lets in. These factors influence the tar and

nicotine delivery of the cigarette.

Filter

A filter can be cellulose acetate (standard),

crepe paper, dual or charcoal. The filter

reduces the amount of tar delivered.

Tipping Paper

This joins the tobacco rod and the filter. It

covers the filter and can also be perforated

to reduce the amount of tar delivered.

1.2.2.1 The importance of product quality

Maintaining consistent quality and reacting

to quality deviations is important. It may

seem like a small thing to you if one stick in

a packet is defective, but it could mean the

loss of a consumer and their circle of

acquaintances. We are committed to

succeeding in the global market by


providing our consumers with superior

quality products.

While the manufacturer builds in quality

control procedures at each stage in the

production process, errors or defects can

occasionally creep in.

Ultimately, it is the consumer's experience

of the product that determines quality.

The Benefits of Quality

The consumer's perception of quality is an

important factor in making the purchase

decision. Each pack bought and each

cigarette smoked could lead to potential

consumer dissatisfaction if consistent

quality is not ensured. Achieving and

maintaining the required quality is one of

the basic elements in generating repeat

purchases and creating brand loyalty.

How Do Consumers Assess Product Quality?

Consumers' perceptions of quality can be

seen in relation to branding, pricing,

availability, the product itself, and the

product-related service. Product quality

relates to all aspects of the product. These

include packaging, cigarettes, smoking

pleasure and satisfaction. Each pack,

cigarette, and puff of smoke are assessment

points in terms of quality. Consumers assess

product quality using their sight, touch,

smell, hearing and taste. They often

compare the quality of our brands with

those of our competitors.

How Do We Categorise Consumer Perception?

There are three broad categories on which

product quality is based. These are:

1. Functionality - Does It Work?

Functionality relates to the pack, the

cigarette and the smoking experience. Is the

pack film sealed and not wrinkled? Does the

pack open and close effectively? Are the

filters attached to the tobacco rod correctly?

Are there large pieces of stem in the

tobacco?

2. Aesthetic Value - Does It Look and Feel

Right?

Visual and touch sensations are important

indicators of quality for our consumers. Is

the pack dirty or damaged? Are the

cigarette filters dirty? Is the cigarette paper

yellow or spotted and is tobacco loose in

the pack?

3. Smoke Quality - Does It Satisfy and

Taste Right?

Consumers expect a consistent taste and

flavour. They expect satisfaction from every

cigarette. Smoking Mechanics must also be


consistent and must meet consumer

satisfaction (How hard is it to draw on the

cigarette? How much smoke is obtained

during each puff?).

Other Factors

There are many other factors that can

influence the smoking quality of the

cigarette:

Blend type/character

Pack seal

Cigarette and filter dimensions

Cigarette and paper characteristics

Incorrect storage

Why is Consumer Feedback so important for Quality?

It is important to obtain adequate feedback

in order to get a clear understanding of the

issues that are important. These issues can

be discovered by generally responding to

consumers' queries and complaints, and by

acting on their quality needs. Our

consumers expect the best and most

consistent product quality. We need to be

aware of how our products are tested and

the processes employed to maintain quality.

Ensuring Consistent Quality

These quality assurance procedures cover

three broad areas:

1. Materials

There are tests available to evaluate

cigarette paper and all other raw materials

used in manufacturing.

2. Manufacturing Process

British American Tobacco is responsible for

the production process, including the

storage and distribution of the finished

product.

3. Finished Product

Testing continues on the finished product to

ensure consistent quality and the meeting

of government requirements.

1.2.2.1 Different product testing methods

A number of instruments are used to

measure and compare the quality of our

product from a consumer's perspective.

Smoke yield, function and aesthetics are the

principle concerns.

Finished Product Inspection (FPI)

FPI is used to assess the quality and

consistency of product presentation,

physical properties, and measured smoke

yield.


Retail Quality Index (RQI)

RQI is used to assess the impact of

transport and storage on the product prior

to consumer purchase.

Internal Sensory Evaluation (Smoke Panels)

Smoke Panels focus on the smoking quality

of the product. The panel is comprised of

people from within our organisation. The

panel members have been trained to use a

commonly understood language for

describing tastes and sensations.

Consumer Product Testing (CPT)

This method involves assembling a target

group of consumers and giving them

cigarettes in order to assess physical and

smoke qualities. Consumer Feedback can be

actively sought or it can be given

spontaneous. It is often in response to

quality deviations. Quality deviations are a

part of any business. Despite our efforts to

manufacture faultless products, there is a

chance that consumers will occasionally

receive products with which they are

dissatisfied with. Quality deviations are an

opportunity to increase consumer

confidence in our organisation's ability to

provide high-class products. They are a

valuable source to identify issues and to

take appropriate action, but it is critical that

they are handled quickly and effectively.

Poor product quality means an unhappy

consumer, which could be a lost consumer.

1.2.2.2 What is a brand?

It is time for you to now examine our

company structuring of these products into

a brand.

A product is a good or service that fulfil a

functional or physiological need. A brand is

a product that fulfils more than a

psychological need.

A brand has:

An identity – name

Special features – smoothness, flavour,

strength, etc.

Emotional appeal – prestige, honesty, etc.

1.2.2.2 What is brand positioning?

(Establishing a brand's identity) Brand

positioning is how we place our brands in

the consumer's mind. It is the way we want

the consumer to think about the brand and

defines the way the brand will compete in

the market. Each one of our brands has a

unique brand positioning, which enables us

to fulfil the needs of our targeted consumer

segments.


Brand Positioning is about how you want

consumers to think about a brand as well as

how you want consumers to think about

themselves when using that brand. Brand

Positioning establishes the brand's reason

for being and defines the way it will

compete in the market. Brand Positioning

serves as the blueprint for marketing

activities. It consists of a number of

elements.

The Brand Positioning is reflected in two

elements, namely Brand Authorship and

Brand Expression.

Brand Authorship: defines the Brand

Personality.

Brand Expression: defines the Brand

Proposition and the various ways in which

we communicate the Brand Personality to

the consumer.

There is an interaction and an exchange of

information between Brand Authorship and

Brand Expression.

1.2.2.2 What is brand authorship and personality?

Brand Authorship defines the Brand

Personality. It is comprised of consumer

values and needs, the Brand Assets and the

Brand Benefits. These components dictate

the Brand Personality.

Consumer Values and Needs

The consumer's needs or values are the

factors they look for when choosing a

brand. Defining the consumer need and

value is the first step in the Brand

Authorship process. These are saved as a

‘check’ that the right Brand is being targeted

as a specific segment (ie. The Brand Asset

must satisfy the consumer need in order to

yield a Benefit).

The Brand Assets

These are the brand's key Assets and

Capabilities. It defines what the brand does

and what its key Assets and Capabilities are.

An individual brand must have unique

selling points that differentiate it, not only

from competitor brands, but also from other

British American Tobacco brands.

The Brand Benefits

This is what the brand can do for the

consumer. The benefits together with the

asset will deliver against the consumer

need.

Brand Authorship ensures:

Brand consistency and integrity across all

touchpoints and markets


An integrated approach across all

touchpoints

Alignment within the relationship stages

in Consumer Dialogue through retail

The End Result is the Brand Personality

The Brand Personality is defined by the

consumer's needs as discussed above, the

Brand Assets and the Brand Benefits. A

brand, like a person, must have a

personality. For example, Lucky Strike is the

original, flavourful, premium-quality

American blended cigarette. It is a cultural

icon that reflects the American dream of

individualism and self-determination.

1.2.2.2 What is brand expression?

Brand Expression defines the Brand

Positioning in the outlet and the eyes of the

consumer. Brand Expression defines the

various ways in which we communicate the

Brand Personality and Assets to the

consumer across all possible touchpoints.

Brand Expression is made up of:

1. The Brand Template

2. The Brand Architecture

3. The Brand Authorship/Personality

1. What is the Brand Template?

The Brand Template is made up:

Brand Muscles

Brand Essence

What are Brand Muscles?

Every brand has its own unique ‘muscles’

which are attractive to certain consumers.

The muscles are part of the built-in Brand

Essence or ‘personality’. Brand Muscles

make a statement about who or what the

brand stands for. A brand can have one or

more muscles that form its image. The

Brand Muscles comprise of the Brand

Assets and the Brand Personality.

What is the Brand Essence?

Brand Essence is the core and all-

encompassing statement about the Brand.

All communication developed for a Brand

must deliver against the Brand Essence.

Brand Essence is often referred to as the

‘brand equity’. It is the element that is

always distinctive within the market.

2. What is Brand Architecture?

Brand Architecture is a conceptual

framework intended to maintain

consistency in communicating and

presenting the brand to the consumer. This

framework consists of a set of principles,


philosophies and guidelines intrinsic to the

brand. Brand Architecture is based on two

main concepts: Design Philosophy and

Design Language.

Design Philosophy

This is a set of guidelines concerned with:

1. How branded products are conceived,

designed, manufactured and delivered.

2. How branded products reflect and

enhance the Brand World.

3. What benefits the consumer should

derive from the use of Branded

Products.

Design Language

This is a visual approach to the presentation

of branded products that ensures all brand

elements combine to form a unified look

and feel. It covers a wide variety of

elements, such as:

Forms and shapes

Graphic styles

Brand identity application

Materials and finishes

Colour, smell, tone etc.

In this way, individual brands are given

exposure and enhanced by carefully

tailoring various aspects of presentation.

Copy Strategy

Our copy strategy uses the Brand Muscles

and Brand Architecture to communicate the

Brand Essence to the consumer. Consumer

values and needs, Brand Benefits, Brand

Assets and Personality all provide input to

ensure the brand expresses itself

consistently across all touchpoints.

Brand Proposition

By defining the Brand Template, Brand

Architecture and Brand Authorship we

communicate a consistent Brand

Proposition to the consumer.

Design Summary

The consistent way in which we express our

brands in the market is based on a process

which considers the following:

Our Brand Value Segmentation

The Brand Authorship which is based on

consumer values and needs, Brand

Assets and Brand Benefits. This gives us

a unique Brand Personality for all our

brands.

The Brand Expression which uses a

specific Brand Template, Brand

Architecture and Brand Authorship to

communicate a consistent message

about the specific brand to our

consumers.


In order to arrive at all of these, thorough

research is conducted, using various

methodologies.

The communication of the Brand's

Expression is guided by Brand Authorship/

Personality, a Brand Template and Brand

Architecture.

3. A Reminder of the Brand Authorship/ Personality

As discussed earlier the Brand Personality is

defined by the consumer's needs as

discussed above, the Brand Assets and the

Brand Benefits. A brand, like a person, must

have a personality. For example, Lucky

Strike is the original, flavourful, premium-

quality American blended cigarette. It is a

cultural icon that reflects the American

dream of individualism and self-

determination.

In Summary

So to answer the question “What is Brand

Expression?”, we discussed that the

expression of a brand defines the Brand

Positioning in the outlet and the eyes of the

consumer. That the Brand Expression

defines the various ways in which we

communicate the Authorship/Brand

Personality and Assets to the consumer

across all the possible touchpoints and that

the Brand Expression is made up of:

1. The Brand Template

2. The Brand Architecture

3. The Brand Authorship/Personality

1.2.2.2 What is the flow on benefits of a successful brand?

A successful brand name such as: The light,

ultra light and hundreds of versions of

Benson & Hedges or the Honda name used

for motor cars, or Google for internet search

or Sony in the field of electronics … create a

host of advantages for the brand owner etc.

The major advantages of this include:

The manufacturer saves on the time and

cost involved in creating a new brand

name for product

The product reinforces the emotional

appeal of the product

In markets where advertising is

restricted, it becomes even harder to

create awareness for a trial brand.


1.2.2.3 Why different people choose a particular brand? (the importance of developing consumer satisfaction)

Without satisfied consumers there is no

business. However, from a small base of

satisfied consumers it is possible to build a

sustainable business. Recognising what

factors create consumer satisfaction and

contribute to repeat purchases and brand

loyalty is extremely important.

Different people have different reasons for

choosing a particular brand. We call these

Brand Choice Drivers. For example, they

may choose a brand for its image, quality

(smoking and physical), packaging, price or

availability.

A clear understanding of this will assist you

when talking to different consumers.

1.2.2.3 What the smoking experience is

The smoking experience is the actual value

that consumers attach to the brand. Their

pleasure and satisfaction with the brand's

character and flavour is the reward they

seek from the brand. The smoking

experience starts when a pack is opened. It

continues through the cigarette being held

and lit, and ends when the cigarette is put

out. It is smoking the cigarette itself that is

central to achieving satisfaction from the

product.

1.2.2.3 What gives the consumer smoking satisfaction?

There is a standard routine in the laboratory

to determine tar and nicotine levels. This is

an SABS- accepted way of ranking products

across product type and market.

Influencing factors include:

Draw effort

Mouthful of smoke

Initial satisfaction

Amount of taste and taste quality

Bitter/sweet tobacco flavour

Amount of aftertaste and aftertaste

quality.

People smoke a cigarette for different

reasons:

As a self-reward

To relax after a good meal

To enjoy a comforting feeling


These circumstances affect the way the

cigarette is smoked and the perceptions

experienced.

Being aware of the factors that create

consumer satisfaction and contribute to

repeat purchases and brand loyalty is

extremely important.

Satisfied consumers are the foundation of a

good quality product and, thus, a

sustainable business. Designing products

with sensory properties that meet consumer

requirements is the goal of consumer

satisfaction.

1.2.2.4 How our brands connect with our consumers

1.2.2.4 How we connect the consumer to the brand

Through our Strategic Brand Plan we focus

on our brands in relation to our consumers:

We consider our Brand Portfolio, how we

position the brands in the portfolio in the

minds of our consumers and who these

consumers are likely to be through a

process of segmentation.

1.2.2.4 What is segmentation?

Segmentation is the action of grouping

consumers with similar characteristics, like

brand usage, behaviours and attitudes. We

use this information to segment the market

so that we can focus our brand portfolio

and communications to best meet the

needs of our target consumers.

1.2.2.4 Giving our consumers a choice - the brand portfolio

Our Brand Portfolio consists of a range of

international and local brands. We choose a

portfolio approach over ‘one size fits all’ so

that we can offer consumers a range of

choices. Our unrivalled portfolio is one of

our key strengths and it is made up of

strategic brands and tactical brands. Our

brand portfolio consists of what we refer to

as drive brands, priority brands and non-

strategic brands. These are then further

categorised into different price bands: super

premium, premium, popular, mid and low

price.


1.2.2.4 The drive-priority and non strategic brands

Drive brands

Drive brands are long-term strategic brands.

We concentrate our company's resources

on these brands to ensure that they perform

as we want them to, as they provide long-

term growth and profitability, eg. Dunhill,

Peter Stuyvesant and Rothmans.

Priority brands

These are brands that play an important

role in our portfolio because of their volume

and/or margin contribution, e.g. Lucky

Strike and Courtleigh Gold Brand.

Non-strategic brands

These are all the other brands we have in

our portfolio, eg. Rembrandt van Rijn, John

Rolfe, Winfield and Gunston.

One of the Strategic Imperatives that

Consumer Marketing aims to achieve is an

‘Industry-leading product portfolio,

designed to address consumer needs and

societal expectations’. By developing all of

these brands, both locally and

internationally, we're able to focus on

brands, segments and markets with

maximum potential return on investment.

1.2.2.4 How we communicate our brands to consumers

The Four Phases of Brand Communication

1. Methods creation led by brand team

with agency

2. Developing plans for message

dissemination led by brand and

business development team with

agency

3. Execution message – led by account

management and national field line

4. Measurement – led by SP and I


1.2.2.5 The brand Map

Our Brands have many hours of time and

research invested, as part of exploring our

own brands’ positioning, we also explore

the positioning of our competitors, this

analysis takes into consideration all of the

aspects of brand discussed earlier. As a

TMR you need tools that are simple and

easy to apply in the field, when the retailer


compares our brands to the nearest

competitor and starts the discussion in

relation to our brands merit, in comparison

to theirs. ‘Usually when we are trying to

defend a brand’s right to shelf space or

expand our portfolio in store’. We need tools

that help you analyse the key differences or

value or both, FAST as the fight for shelf

space will be an ongoing conversation with

your retailers during your TMR life.

The Tool we use is Called The Brand Map

To really understand a brand it is necessary

to examine the brand attributes, brand

image and the overall brand essence as

discussed earlier. Good analysis can get us

to an understanding of the brand's core, or

essence.

It is worth examining most closely core

values and associations; attributes; brand

benefits and ideas which form the character

of a brand in the eyes of its users. However,

measurement and exploration of these

elements is not enough. Labels are essential

for brand building and are integral

components of the brand image - yet are

only components and not the whole.

The Brand Core Model

The image of a brand can be depicted

graphically using three elements: the brand

shell, the brand space, and the brand core.

The Brand Map

The Brand Shell consists of the surface

characteristics of a brand, including labels

such as name, logo, symbols, design,

packaging, slogans, jingles etc. These

elements are normally explored under the

catchword Brand Awareness and the

contributions they may make to it.

The Brand Space establishes the image of a

brand. Here the relevant questions include:

How does the brand differentiate itself from

others? Which attributes, benefits and ideas

are associated with the brand?

Of less relevance are recall and recognition

of the brand; instead, associations are key.

The idea of the brand and the


characteristics related back to the brand are

seen from the point of view of the brand

user. The user determines the meaning of

the brand. At the brand core certain

characteristics are consolidated to form an

overall impression of the brand which is

usually emotionally deep-seated.

Here is where those core values and

associations lie which are most closely

associated with the brand and which

determine the brand image. Recognising

these associations is of prime importance,

as these core values and core associations

are used to formulate the brand's promise

to the consumer.

Brands create expectations and a brand is

essentially a promise to consumers.

Consumers have motivations - they are

needing, wanting and desiring certain

things. They look to brands to deliver on

these motivations. The promise is made by

the brand and the promise is delivered by

the product and/or experience of using

and/or buying the product.

A brand is made up of Brand Values, just

like a person is made up of values. When the

values of the consumers are in line with the

values of the brand, you have a relationship.

And when the brand delivers consistently

on its promise, you have a deeper

relationship and a loyal consumer.

Therefore to analyse a brand we can

examine three things:

1. Consumer Motivations: It is important

to understand the consumer’s key

needs, wants and desires

2. Brand values: There are different types

of brand values worth exploring:

Rational - what the brand does

Emotional - how the brand makes me

feel Sensory, how the brand

feels/tastes/smells/ (remember this

isn't product, this is brand)

Societal - what the brand says about

me the user to the world and to myself

3. Product Attributes: What the product

is:

Benefits - what the product does for

the consumer

Experiences- the experience of buying

and using the product

1.2.2.5 Boston Matrix

(Also called the BCG Matrix, the Growth-

Share Matrix and Portfolio Analysis)

Focusing effort to give the greatest returns.

If you enjoy vivid visual metaphors for

TMRs, that is simple to understand and easy

to apply!


It provides a useful way of screening the

opportunities open to you, and helps you

think about where you can best allocate

your resources to maximise profit from your

portfolio of products now and in the future.

Understanding the Model

The business portfolio is the collection of

businesses and products that make up the

company. The best business portfolio is one

that fits the company's strengths and helps

exploit the most attractive opportunities.

The company must:

Analyse its current business portfolio and

decide which businesses or products

should receive more or less investment;

and

Develop growth strategies for adding

new products and businesses to the

portfolio, whilst at the same time

deciding when products and businesses

should no longer be retained.

Methods of Portfolio Planning

The two best-known portfolio planning

methods are from the Boston Consulting

Group and by General Electric/Shell. In each

method, the first step is to identify the

various Strategic Business Units (SBUs) in a

company portfolio. An SBU is a unit of the

company that has a separate mission and

objectives and that can be planned

independently from the other businesses.

An SBU can be a company division, a

product line or even individual brands - it all

depends on how the company is organised.

At British American Tobacco we have both.

The Boston Consulting Group Matrix (The BCG Matrix)

Using the BCG Matrix (an example is

illustrated above) a company classifies all its

SBUs according to two dimensions:

1. On the horizontal axis: Relative market

share - this serves as a measure of SBU

strength in the market


2. On the vertical axis: Market growth rate

- this provides a measure of market

attractiveness

By dividing the matrix into four areas, four

types of SBU can be distinguished:

Stars

Stars are high growth businesses or

products competing in markets where they

are relatively strong compared with the

competition. Often they need heavy

investment to sustain their growth.

Eventually their growth will slow and,

assuming they maintain their relative

market share, will become cash cows.

Here you are well-established, and growth is

exciting! These are fantastic opportunities,

and you should work hard to realise them.

Cash Cows

Cash cows are low-growth businesses or

products with a relatively high market share.

These are mature, successful businesses

with relatively little need for investment.

They need to be managed for continued

profit - so that they continue to generate

the strong cash flows that the company

needs for its Stars.

Here, we are well-established, so it is easy to

get attention and exploit new opportunities.

However it is only worth expending a

certain amount of effort, because the

market is not growing and your

opportunities are limited.

Question Marks/ Problem Child

Question marks or sometimes referred to

as problem children are businesses or

products with low market share but which

operate in higher growth markets. This

suggests that they have potential, but may

require substantial investment in order to

grow market share at the expense of more

powerful competitors. British American

Tobacco have to think hard about ‘question

marks’ - which ones should they invest in?

Which ones should they allow to fail or

shrink?

These are the opportunities no one knows

what to do with. They are not generating

much revenue right now because you do

not have a large market share. But, they are

in high growth markets so the potential to

make money is there .. .choices choices?

Question Marks might become Stars and

eventual Cash Cows, but they could just as

easily absorb effort with little return. These

opportunities need serious thought as to

whether increased investment is warranted.


Dogs

Unsurprisingly, the term ‘Dogs’ refers to

businesses or products that have low

relative share in unattractive, low-growth

markets. Dogs may generate enough cash

to break-even, but they are rarely, if ever,

worth investing in.

In these areas, your market presence is

weak, so It is going to take a lot of hard

work to get noticed. You will not enjoy the

scale economies of the larger players, so it is

going to be difficult to make a profit. And

because market growth is low, it is going to

take a lot of hard work to improve the

situation.

Using the BCG Matrix to Determine strategy

Once a company has classified its SBUs, it

must decide what to do with them. In the

diagram above, the company has one large

Cash Cow (the size of the circle is

proportional to the SBU's sales), a large Dog

and two smaller Stars and Question Marks.

Conventional strategic thinking suggests

there are four possible strategies for each

SBU:

1. Build Share: here the company can

invest to increase market share (for

example, turning a Question Mark into

a Star)

2. Hold: here the company invests just

enough to keep the SBU in its present

position

3. Harvest: here the company reduces the

amount of investment in order to

maximise the short-term cash flows

and profits from the SBU. This may

have the effect of turning Stars into

Cash Cows.

4. Divest: the company can divest the SBU

by phasing it out or selling it - in order

to use the resources elsewhere (eg.

investing in the more promising

Question Marks).

Key Points

The Boston Matrix is an effective tool for

quickly assessing the options open to you,

both on a corporate and personal basis.

With its easily understood classification into

‘Dogs’, ‘Cash Cows’, ‘Question Marks’ and

‘Stars’, it helps you quickly and simply

screen the opportunities open to you, and

helps you think about how you can make

the most of them.


1.2.2.6. What activities can I as a TMR do in order to contribute?

1.2.2.6 Building your brand map

Using the Brand Map select four products

where we face increased competition for

shelf space and create a Brand Map for each

of our own products and each of the most

tightly aligned competitors competing

products. List out at least three arguments

that will help us win the war for shelf space

or new product portfolio introduction.

Discuss with your line manager and ensure

these arguments have line of sight into the

British American Tobacco strategy of the

way we win.

1.2.2.6 Understanding the portfolio

Use the Boston Matrix to look at your

opportunities, use the worksheet and the

following steps:

Step One: Plot your products on the

worksheet according to their market share

and market growth.

Step Two: Classify them into one of the four

categories. If a product seems to fall right

on one of the lines, take a hard look at the

situation and rely on past performance to

help you decide which side you will place it.

Tip : There is nothing ‘magical’ about the

position of the lines between the quadrants.

There may be very little real difference, for


example, between a Question Mark with a

market share of 49%, and a Star with a

market share of 51%. It is also not

necessarily true that the line should run

through the 50% position. As ever, use your

common sense.

Step Three: Determine what you will do

with each product/product line. There are

typically four different strategies to apply:

1. Build Market Share: Make further

investments (for example, to maintain

Star status, or to turn a Question Mark

into a Star.)

2. Hold: Maintain the status quo (do

nothing)

3. Harvest: Reduce the investment (enjoy

positive cash flow and maximise profits

from a Star or a Cash Cow)

4. Divest: For example, get rid of the Dogs,

and use the capital you receive to invest

in Stars and Question Marks.

Step Four: Repeat the same process with

competitors’ products most tightly aligned

to your own and discuss with your line

manager your in-store product portfolio

competitive strategy. Discuss with your

manager how your strategy has line of sight

into the overall marketing strategy.


The Strategy Jigsaw

You are the brand ambassador. Your

knowledge of British American Tobacco

brands is essential. It must be excellent. You

need to know where each of our brands are

positioned and why; you need to

understand the identity, special features and

emotional appeal of all British American

Tobacco brands. You need to remember

about space, core and shell. By being a

strong brand ambassador you breathe

confidence into the customer and become

better at helping the customer to plan

effectively with our brands in mind.

1.2.2.8 References/ contributors

SIC_Skills Range3_FullText.doc proposal

presentations.doc

SIC_Skills Range3_FullText.doc proposal

presentations.doc Brand.doc

BAT_MXS_Brand

Module_Operationalising the Brand

Strategy_15_Part 2.ppt


Developing Trade Marketing.pdf

CES Trade Marketing page 95, 96,97 98

Australia Brand Communication

Framework (Communication Vehicles)

Marketing Strategy

BATMXS Strategic Brand Management

15 Part 2


Al Ries and Jack Trout “Positioning”


1.2.3 Consumer Segmentation and Prioritisation

Introduction

Consumers are the most important people

for any organisation. They are the resource

upon which the success of the business

depends. When thinking about the

importance of consumers it is useful to

remember the following points:

1. Repeat business is the backbone of

selling. It helps to provide revenue and

certainty for the business.

2. Organisations are dependent upon their

customers/consumers. If they do not

develop customer loyalty and

satisfaction, they could lose both.

3. Without consumers the organisation

would not exist.

4. The purpose of the business is to fulfill

the needs of the customers and

consumers alike.

5. The consumer makes it possible to

achieve our business aims.

Consumer satisfaction

Consumer satisfaction is at the heart of the

selling process. One estimate is that it costs

five times as much to attract new

customers as it does to keep an existing

one. The relationship between the

consumer and our business is, therefore, an

important one.

Building consumer relationships can be

seen as moving up a ladder. At the top rung

of the ladder are your loyal customers

(advocates).

The ladder consists of four main rungs (with

4 being the highest):

4 - Advocates

3 - Regular customers

2 - Occasional users

1 - One-off purchasers

The extent to which consumers move up

the ladder depends on how well they are

treated by our business.

Well focused sales methods and attention to

individual detail is likely to encourage

consumers to move up the ladder.

Businesses which illustrate excellence in

building relationships with customers over


time such as Argos, Nestlé and Cadbury

Schweppes, spends a lot of energy and time

on finding out what consumers want, place

great store on building strong links with all

their stakeholder groupings and with their

consumers alike through extensive market

research.

“Our Business begins with and ends without

the consumer” Mantra.


What is segmentation?

1.2.3.2 What methods of segmentation do we use?

What is geographic segmentation?

What is demographic segmentation?

What is psychographic segmentation?

What is behavioural segmentation?

1.2.3.3 Who is our target market?

What does channel-tailored support do?

What are the issues to consider?

What is the purpose of target marketing?

1.2.3.4 Who are the core consuming groups?

The 6 segments of consumers


Mood board

1.2.3.6 What activities can I as a TMR do?

Developing a consumer mood board

Making consumer groups come alive in

the mind of the retailer


How consumer segmentation is aligned

to category development




Market segmentation is the process of

classifying consumers into groups

according to their different needs,

characteristics or behaviours. A market

segment is a group of consumers who

respond in a similar way to a given set of

marketing stimuli.

1.2.3.2 What methods of segmentation do we use?

Our company has to evaluate the various

segments and decide which segments to

target and then serve. As a Trade Marketing

Representative you can use your knowledge

of market segmentation to develop our

company's business

There are four general ways to segment a

market:

Geographic

Demographic

Psychographic

Behavioural

1.2.3.2 What is geographic segmentation?

Geographic segmentation divides the

market into different geographical units

such as nations, states, villages, regions,

towns, cities, suburbs or neighbourhoods or

territories.

1.2.3.2 What is demographic segmentation?

Demographic segmentation divides the

market into groups based on such variables

as age, sex, family size, income, occupation,

education, religion, race or nationality.

1.2.3.2 What is psychographic segmentation?

Psychographic segmentation divides the

market into different groups based on social

class, lifestyle or personality characteristics-

for example, upper class, middle class and

lower class. People in the same

demographic group can have very different

psychographic profiles.


1.2.3.2 What is behavioural segmentation?

Behavioural segmentation divides the

market into groups based on their

knowledge, attitude or responses to a

product. This category can be further

divided into different purchasing

behaviours: occasional segmentation

includes when people buy, consume or use

the product; benefit segmentation focuses

on the kinds of people who are attracted by

the product's benefits; user status identifies

non-users, potential users , first time users ,

occasional users or regular users; usage-

rate markets identify such groups as light,

medium and heavy users (for example - 20,

40, 60 cigarettes per day consumers) loyalty

status includes consumer loyalty or brand

loyalty, evident when a person will buy only

one brand of a product and if it is not

available will go without; and attitude where

consumers display positive, indifferent,

negative, hostile or enthusiastic attitudes

toward a product.

1.2.3.3 Who is our target market?

1.2.3.3 What does channel-tailored support do?

Channel-tailored support classifies

customers for our organisation to provide

specific activities suited to these similar

groups. Market segmenting of consumers

enables provision of specific activities to

reach specific consumers.

Our company's total market is its existing

and potential consumers of tobacco

products. Target markets define groups of

existing and potential consumers of tobacco

products according to their needs, wants

and demands.

Marketers develop the right product for

each target market and then adjust pricing,

distribution channels, advertising and

merchandising to reach the target market

effectively.


1.2.3.3 What are the issues to consider?

There are a number of issues to consider

when identifying target markets. For

example:

Where people buy

What type of people they are

How they purchase our product

Why they buy a particular brand

How much they buy

Consumers differ in their needs, wants,

resources, locations, buying attitudes and

buying practices. Each consumer is

therefore a potential target market, targeted

because of individual differences

1.2.3.3 What is the purpose of target marketing?

Many companies are moving away from

mass marketing towards target marketing.

Target marketing better helps our company

find greater marketing opportunities. Our

company expends a great deal of effort to

identify its target market so it can better

focus and target its resources where they

are most effective. Market segmentation is

the most effective way to group our

companies target market

1.2.3.4 Who are the core consuming groups?

Consumers having similar Specific needs are

grouped together to form Brand Values

Segments.

1.2.3.4 The 6 segments of consumers

Segment 1

The choice of Segment 1 is driven by

‘Economy’ as he/ she sees little significance

in value-adds like a flat box, added flavour,

lights etc. Segment 1 smokers are heavy,

but not very quality conscious.

As an example: In South Africa, Segment 1

is characteristic of predominately white,

older smokers and individuals under

significant economic stress (without a

steady source of personal income).

Segment 2

Segment 2 smokers seek a brand, which is

popular and has a high degree of ‘mass-

appeal’. Wide availability and a large brand

franchise are considered to be evident of

‘mass appeal’.


Segment 2 smokers do not value

‘dynamism’, ‘overt energy’ or ‘flamboyance’.

Their brand choice is driven by a need to

‘conform’ to the mass action and is not a

way of demonstrating affluence or social

stature.

The Brand Choice of Segment 2 underlines

the ‘comfort in numbers’ attitude which

drives this choice.

Segment 3

Segment 3 smokers seek to convey the

image of conservative, serious people with

stable, mature values and strong

determination levels. Their brand of choice

has to give a strong, full bodied and

flavourful smoke. For example - a number

of international, American brands in the

South African markets and those of the UAE

are seen to fulfil this desire.

The Brand Choice of Segment 3 reveals their

desire for a strong smoke with

conservative/ traditional values.

Segment 4

Segment 4 smokers are primarily driven by

a need to demonstrate their individuality

though their brand choice. This

demonstration of ‘uniqueness/

distinctiveness’ satisfies their deeper need

for adventure, freedom and independent

thought. Added flavours (menthol), unique

packaging formats (flat box) and distinctive

stick design (gold ring) are means to

achieve the desired ‘uniqueness’.

The Brand Choice of Segment 4 is largely

determined by the presence of unique

‘value-adds’.

Segment 5

Segment 5 smokers seek a brand that is

unequivocally premium and exudes class

and high status. The persona they try to

portray is of a sophisticated smoker who

has no qualms about expressing his/ her

status.

The Brand Choice of Segment 5 is in line

with their desire for top-end, lights brands.

Segment 6

Segment 6 smokers desire a brand that is

youthful and is a clear leader in the market.

The brand must exude values of

independence and facilitate youthful

bonding. It must be readily available in

congregation points for the modern youth

(in pubs/ discos) and have a friendly and

sociable image.

Segment 6 mainly smokes the leading

brands with established ‘youthfulness’.


1.2.3.5 What tools are available for me to use?

Mood board

Mood boards create a visual guide, a clear

vision if you like. Mood boards can also be

called inspiration boards and we use them

in a variety of ways. We use them to convey

a new brand, when we want to demonstrate

to the client who the consuming group is

we are targeting with a brand. It brings the

consumer to life in the mind of the retailer.

Simple and effective, it is the simplicity of

the mood boards that makes them work so

well. You look at them, and you just get it.

When we introduced clients to the world of

mood boards, we have found that they are

immediately energised and engaged.

It is easy in a world full of products and

brands, where ideas/ concepts are loose

and not fine-tuned to sometimes not

communicate clearly what a new product or

brand is trying to say to a consumer and

which specific consumer will be the

audience for the product. Clients love

market visuals. For a customer it is the

involvement and excitement of grasping the

idea and imagining what it can do for their

business.

For all types of thinkers

Mood boards are great for all types of

customers. The big thinkers, strategic types

and the practically grounded. They can all

visualise how it fits together and plot out

the big picture. Customers who like the fine

detail use them as catalysts to start their

thinking. You can see their minds turning

over the idea and planning the finer details

of promotions in-store.

The boards you create depend on the

territory you are producing them for, again

another reason for them to be used they are

adaptable.

Typically, when designing mood boards for

products consider:

The brand personality

Architecture values and concepts

Photography style

Colour ways

Typography

Patterns and the overall look and feel - is

it modern or traditional? Dark or light?

Funky or safe?

A collection of colours, textures and

pictures is all it takes to evoke a specific

style or feeling.


Typically, when designing mood boards for

a consuming group consider: What type of

people they are, Geographic; Demographic;

Psychographic; and Behavioural

segmentation. Where people buy, how they

purchase our product, why they buy a

particular brand; and how much they buy.

As the mood board is intentionally visual

and casual, it lets the customer engage

quickly - assisting you in bringing the

concept to life.


1.2.3.6 Developing a consumer mood board

A visual tool that represents the habits

lifestyle and persona of a consumer or

product, usually made up of images and

items that a consumer would typically own

have or use

Develop a mood board of the 6 consuming

segments within your region and match to

brands, discuss with your line manager to

ensure you can see how territorial

segmentation has line of sight into the

regional and global marketing segmentation

of consumers.

1.2.3.6 Making consumer groups come alive in the mind of the retailer

Translate the mood board, created as a

project for your line manager, into a story of

each consuming group that brings the

consumer alive in the mind of the retailer.

Decide which retailers would be most

appropriate to discuss consumer/product

stories or mood boards with and present,

discuss findings with line manager.


How consumer segmentation is aligned to category development

Understanding the way that we categorise

and segment consumers gives you a greater

insight into the resulting decisions on

communicating and appealing to those

customer segments. So taking the time to

understand the way that we understand our

consumers from a product perspective will

ultimately aid you in discussing how to

market towards these consumer segments


whether this be through the retail channel

or any element of HORECA.

Consumer segmentation is aligned to

category, so the more you understand

about consumer segmentation, the better

able you are to drive category.


Developing Trade Marketing pdf

SIC Marketing Induction_FullText.doc

researching our consumers.doc

MXS Marketing Induction Consumer

Segmentation

BAT_MXS_Strategic_Brand_Managemen

t_15 Part 2

Strategic Marketing New Materials Part

One Svetlana 6- 39



1.2.4. Supply Chain & Distribution Model

Introduction

Trade Marketing and Distribution: ensuring

the right products get to the right retailers

so that they're available to consumers. In

Supply Chain and Distribution we aim to

give you an introduction into the engine

that drives our products into our customers

and in turn our consumers’ hands.

“Effective Distribution is the engine that

drives our product into our consumers’

hands” Mantra.

1.2.4.1 British American Tobacco's distribution objectives

What are British American Tobacco's

distribution objectives?

The 3 Objectives

The distribution chain

Managerial concerns

Types of marketing channel

1.2.4.2 Measuring distribution effectiveness

Why measure distribution effectiveness?

How do we measure distribution

effectiveness?

1.2.4.3 Pricing and distribution

What is the significance of indirect

taxation to price levels?

1.2.4.4 Partnership and logistics within British American Tobacco's supply chain

Developing partnerships in the supply

chain

Channel motivation

Monitoring and managing channels

1.2.4.5 Logistics within British American Tobacco’s supply chain

Product Flow

Information Flow

Financial Flow

1.2.4.6 The supply chain

The supply chain model


The channel value proposition


1.2.4.8 What activities can I do as a TMR?

Building a channel value proposition

Building a distribution map


Justifying the channel and providing

insight to retailers on distribution



1.2.4.1 What are British American Tobacco's distribution objectives?

British American Tobacco has a mission in

Trade Marketing and Distribution.

To reach our target consumer in the most

efficient and effective manner by becoming

the benchmark supplier to the trade within

strategic channels in every market where

we do business. To become the benchmark

supplier means that we are regarded as

setting the standards in our category (and

in FMCGs generally) for Trade Marketing

and Distribution Excellence. It also means

that our customers come to us for help and

advice on any issue related to the tobacco

category.

To achieve this position we have to be the

best in serving our customers' trade

marketing and distribution needs.

1.2.4.1 The 3 objectives

British American Tobacco has three

objectives in distribution which will help us

to attain benchmark supplier status.

These three objectives are:

1. Brands' availability

2. Product quality

3. Lowest cost

1. Brands' Availability

Constant availability of our brands to both

customers and consumers is fundamental

to our success. In order for our brands to

sell they must be continuously available to

customers and consumers. We must ensure

that the right brands are in the right outlets

in the right quantities.

2. Product quality

Our products will only sell if they are of high

quality in terms of product freshness,

smoking quality, packaging appearance and

physical product condition

3. Lowest cost

We need to guarantee brands' availability

and product quality n the most cost

effective way. This can be done by

increasing distribution efficiency and by

minimising product returns by supplying the

right brands, in the right outlets, in the right

quantities.

Brands that are market leaders and enjoy

high market share performance are greatly

influenced by consumer demand. These


brands are less affected by being distributed

in an indirect system or a passive

environment. Conversely, brands that have

small volume and less market share may

not survive in the same environment. In this

situation retailers are less likely to stock

medium and low volume brands. They will

concentrate on best sellers or high turnover

brands.

1.2.4.1 The distribution chain

The distribution channel is defined as a

chain of intermediaries; each passing the

product down the chain to the next

organisation, before it finally reaches the

customer or consumer.

This process is known as the 'distribution

chain' or the 'channel.' Each of the elements

in these chains will have their own specific

needs, which the producer must take into

account, along with those of the all-

important end-user.

Channels

A number of alternate 'channels' of

distribution may be available:

Distributor, who sells to retailers,

Retailer (also called dealer or reseller),

who sells to end customers

Distribution channels may not be restricted

to physical products alone. They may be

just as important for moving services from

producer to consumer in certain sectors, as

both direct and indirect channels may be

used.

Hotels, for example, may sell their services

(typically rooms) directly or through travel

agents, tour operators, airlines, tourist

boards, centralised reservation systems, etc.

or in-directly through event or care based

organisations: The grand prix and hospitals.

1.2.4.1 Managerial concerns

The channel decision is very important. In

theory at least, there is a form of trade-off:

the cost of using intermediaries to achieve

wider distribution is lower. Indeed, most

consumer goods manufacturers use this

approach

Many suppliers seem to assume that once

their product has been sold into the

channel, into the beginning of the

distribution chain, their job is finished. Yet

that distribution chain is merely assuming a

part of the supplier's responsibility; and, if

they have any aspirations to be market-

oriented, their job should really be extended

to managing all the processes involved in

that chain, until the product or service

arrives with the end-user. As discussed


earlier British American Tobacco believes in

becoming the benchmark supplier, we

regard ourselves as setting the standard in

our category (and in FMCGs generally) for

Distribution

1.2.4.1 Type of marketing channel

Intensive distribution - Where the

majority of resellers stock the 'product'

(with convenience products, for example,

and particularly the brand leaders in

consumer goods markets) price

competition may be evident.

Selective distribution - This is the

normal pattern (in both consumer and

industrial markets) where 'suitable'

resellers stock the product.

Exclusive distribution - Only specially

selected resellers or authorised dealers

(typically only one per geographical area)

are allowed to sell the 'product').

1.2.4.2 Measuring distribution effectiveness

1.2.4.2 Why measure distribution effectiveness?

For every input we provide in the market,

we expect an output. Outputs need to be

evaluated against set objectives to satisfy

ourselves that the inputs are right, or revise

our inputs to achieve set objectives.

Measuring distribution effectiveness also

provides us with the opportunity to review

our TMR’s performance and to guide them

to improve in specific areas.

Effective distribution has to deliver certain

core services to the trade for us to achieve

our business goals.

Some of these core services are:

Availability of our brands (width and

depth) by channel and type of outlets

Quality of our product when it gets into

the hands of our consumers - its

freshness and its appearance

Gaining the status of benchmark supplier

by working with the customer for mutual

benefit


1.2.4.2 How do we measure distribution effectiveness?

To measure distribution effectiveness we

must have clearly defined standards.

Measurable standards can be defined as

established through periodical retail audit.

They include:

Outlet coverage by classification against

target

Percentage outlet covered in total

universe within your Territory against

target

Call cycle

Call rate against target

Availability by brand against target

Availability of brand variants against

target;

Out of stock situation

1.2.4.3 Pricing and distribution

What is the significance of indirect taxation to price levels?

Adding all the indirect taxes together, they

account for the most significant element of

the final price paid by the smoker. Around

the world, indirect taxes range from 30%

(South Africa) to over 80% (Denmark) of

the retail price, and so can significantly

influence the price level of cigarettes in a

market.

1.2.4.4 Partnership and logistics within British American Tobacco’s supply chain

1.2.4.4 Developing partnerships in the supply chain

Effective Management in Distribution the

various people who play a role in the

Finished Product Supply Chain. The extent

to which you can develop a partnership with

these people will have a significant impact

on your ability to contribute to British American Tobacco 's three distribution

objectives.

There are two key elements to developing

distribution partnerships with distributors,

wholesalers and retailers:

1. Category education

2. Information exchange


By understanding their business we will be

in a position to act as an advisor to them on

the tobacco category. This will enable us to

educate them about the profit potential of

the tobacco category and how they might

maximise their opportunities.

The exchange of information and in

particular the provision by them of accurate

consumer off-take information will bring

significant benefits to both parties

1.2.4.4 Channel motivation

It is difficult enough to motivate direct

employees to provide the necessary sales

and service support. Motivating the owners

and employees of the independent

organisations in a distribution chain requires

even greater effort. There are many devices

for achieving such motivation. Perhaps the

most usual is `incentive': the supplier offers

a better margin, to tempt the owners in the

channel to push the product rather than its

competitors; or a compensation is offered

to the distributors' sales personnel, so that

they are tempted to push the product. Dent

defines this incentive as a Channel Value

Proposition or business case, with which the

supplier sells the channel member on the

commercial merits of doing business

together.

He describes this as selling business models

not products.

1.2.4.4 Monitoring and managing channels

In much the same way that the business’s

own sales and distribution activities need to

be monitored and managed, so will those of

the distribution chain.

1.2.4.5 Logistics within British American Tobacco’s supply chain

Logistics is the management of the flow of

goods, information and other resources in a

cycle between the point of origin and the

point of consumption in order to meet the

requirements of customers and consumer.

Logistics involves the integration of

information, transportation, inventory,

warehousing, material handling, and

packaging, and occasionally security.

Logistics management is that part of the

supply chain which plans, implements and

controls the efficient, effective forward and

reverse flow and storage of goods, services

and related information within legal


requirements from its origin to the end

consumer.

A professional working in the field of

logistics management is called a logistician.

Logistics management is known by many

names, the most common are as follows:

Materials Management

Channel Management

Distribution (or Physical Distribution)

Business or Logistics Management or

Supply Chain Management

Today the complexity of production

logistics can be modelled, analysed,

visualised and optimised by simulation

software, in order to help our business

optimise our logistical effectiveness.

1.2.4.5 Product Flow

The product flow in logistics consists of two

elements:

The flow of products down the supply

chain to the customer

The flow of products back from the

customer either as returned or damaged

goods, or total/partial recall of goods

1.2.4.5 Information Flow

There are five different information flows

within the logistics process:

1. Sales forecasting information

2. Master file information, Customer file

information, Product file information

3. Customer orders

4. Customer complaint

5. Product/promotional information.

1.2.4.5 Financial Flow

The two key financial flows are:

1. Trading terms and conditions; and

2. Billings


1.2.4.6 The supply chain

The Supply Chain Model

To ensure there are products available for

distribution and sales, our organisation

relies upon accurate information flowing up

from the consumer level to the production

level.

No aspect of information is more important

to the replenishment process than the sales

forecast, because it should reflect consumer

off-take. We must be able to predict

demand for our product, both long term

and short term, if our business is to survive

and grow. Poor forecasting can lead to

overly large inventories at one extreme and

lost sales due to out of stock conditions at

the other extreme.


The Channel Value Proposition

The Channel Value Proposition is the

business case made by a supplier to attract

members of its distribution (business)

channel. This is made up of many elements

depending upon the sophistication of the

supplier and channel members and the

intensity of competition for share of the

channel.

According to Julian Dent in his book

‘Distribution Channels’ the most important

elements are:

Growth - emphasising the level of

demand for the supplier's products or

services and the investment it will make

in stimulating demand.

Profitability - showing the margins,

contributions, utilisation of overheads

and net profitability that selling the

supplier's products or services will deliver

to the channel member. This can be


augmented by special funding and other

payments made by the supplier for

activities carried out by the channel

member (putting items on display or

emphasising them in marketing

materials, etc.) or for performance

(achieving volume thresholds, reaching a

specific segment of the market, etc.)

Return on capital - demonstrating the

productivity of the channel member's

investments in inventory, working capital

or fixed assets will be improved by

engaging with the supplier. For example,

a fast turning product will accelerate the

channel member's inventory turns,

increasing the productivity of its

warehouse, shelf space or website.

Brand - showing how the association

with the supplier will empower the

channel member's own brand, or allow it

to ‘borrow’ or leverage the supplier's

brand. For example, often seen when

small dealers and retailers post

‘authorised reseller’ or similar badges on

their letterhead and premises to

demonstrate credibility to the end

customer.

Skilled suppliers research their channel

members' needs to ensure that they tune

their channel value proposition to these

needs to gain more traction in winning

share of the channel and to minimise the

cost of so doing.


1.2.4.8 Building a channel proposition

Using the important elements of a channel

value proposition namely:

Growth

Profitability

Return on capital

Brand

Build a value proposition for a group of

retailers in your territory that are

carrying/stocking more of a competitive

brand than our own in either in volumes or

portfolio. Ensure you work with your line

manager to generate this and discuss with

your line manager how your channel value

proposition for local retailers has line of

sight into the marketing strategy globally

and for your region.

1.2.4.8 Building a distribution map

A distribution map tracks the route of

products from British American Tobacco to


our Territory Retailers, with your line

manager develop a map of the product flow

and generate ideas around timescales and

potential issues we may face in each stage

of distribution to our end market your

territory. Discuss with your line manager the

line of sight into the regional and global

trade and distribution strategy.

1.2.4.9 How this affects you

Justifying the channel and providing insight to retailers on distribution

By understanding the supply chain and

distribution model within your own market

you are able to provide a much clearer and

more definite approach towards the service

which your customer needs from you.

Effectively understanding how quickly or

slowly we can get the products to the

customer. Understanding supply chain and

distribution enables you to talk with

confidence about delivery timescales and

enables you to sit down and plan more

effectively with the customer – regardless of

whether or not the supply chain and

distribution in your area is fast or slow –

gaining an increased understanding of it

helps you to manage expectations and

needs of the customer more effectively. It

also helps you to problem solve with the

customer over matters of quality or things

like damaged packets.


TM&D Excellence 2010.ppt

The Distribution Edge - Distribution

Operations.pdf

Introduction to trade marketing PDF


Julian Dent in his book Distribution

Channels


1.2.5 Retail Universe Classification and Coverage

Introduction

Retail consists of the sale of goods or

merchandise from a fixed location, such as

a department store, boutique or kiosk, or by

mail, in small or individual lots for direct

consumption by the purchaser. Retailing

may include subordinated services, such as

delivery.

Purchasers may be individuals or

businesses. In commerce, a ‘retailer’ buys

goods or products in large quantities from

manufacturers or importers, either directly

or through a wholesaler, and then sells

smaller quantities to the end-user.

Retail establishments are often called shops

or stores. Retailers are at the end of the

supply chain. Manufacturing marketers see

the process of retailing as a necessary part

of their overall distribution strategy. The

term ‘retailer’ is also applied where a service

provider services the needs of a large

number of individuals, such as a public

utility, like electric power.

Shops may be on residential streets,

shopping streets with few or no houses or

in a shopping mall. Shopping streets may be

for pedestrians only. Sometimes a shopping

street has a partial or full roof to protect

customers from precipitation. Online

retailing, a type of electronic commerce

used for business-to-consumer (B2C)

transactions and mail order, are forms of

non-shop retailing.

Shopping generally refers to the act of

buying products. Sometimes this is done to

obtain necessities such as food and

clothing; sometimes it is done as a

recreational activity.

Recreational shopping often involves

window shopping (just looking, not buying)

and browsing and does not always result in

a purchase.

The retail universe is wide and the numbers

of different types of outlets are many that

we supply to. In retail we explore how we

classify these different retail groups for ease

of communication and also to tailor and

unify our approach to the retailing

community as a global business.


1.2.5.1 What is the retail classification system (RCS)

What are the objectives of RCS?

Why is it important to classify outlets?

Benefits derived from the accurate

classification of outlets include

Getting the right brands into the right

places

1.2.5.2 The basis of classification

On what basis is Classification made?

The 6 Classifications:

1. Classification by channel

2. Classification by authority

3. Classification by quality

4. Classification by volume

5. Classification by organised and

Independent outlets

6. Classification by status

1.2.5.3 Coverage by classification

Who, when and how often

1.2.5.4 Impact of the changing environment

The impact of the changing environment

on TM&D


SWOT analysis


Analysing retailer opportunities


Making a difference



1.2.5.1 What is the retail classification system (RCS?)

Consumers choose to purchase tobacco

products from many different types of

outlets for a variety of reasons. It is

important that our company classifies these

outlets into categories for the distribution

functions. One reason is that outlets within

a category have similar distribution needs

and characteristics.

1.2.5.1 What are the objectives of RCS?

To classify outlets to reflect their

importance to our business

To Better resource allocation to target

our consumers effectively

To gain an Understanding of retailer

capability and willingness to engage in

dialogue/advocacy initiatives

To Drive brand prioritisation and all other

TM&D activities.

RCS is the base data for many of our

marketing tools this includes:

Planning

TCP

Targeting Cycle Activities

BCTs

Trade programme investments, e.g.,

Vecta, HoReCa, LoIs.

Classification informs planning. Planning

determines activities. Activities enable brand

availability. And through availability, we are

able to maintain and grow our market

share.

1.2.5.1 Why is it important to classify outlets?

By classifying outlets based on set

standards, we are able to understand the

natures of our retailers and the consumers

who visit their outlets. We can then better

anticipate, identify and satisfy their needs.

This in turn enables us to communicate a

specific brand image to a particular outlet.

Classification forms the foundation of

targeting for all Operational and Cycle

activities. It is absolutely vital that

classification of an outlet is correct. If

information is recorded incorrectly we could

end up in a situation where incorrect

volumes or inappropriate brands are being

delivered to outlets. The owners of RCS data

are the Field Force. It is captured and

referred to DAILY against significant

decision-making processes, eg. strategic

planning. RCS data has an impact across the

organisation.


Benefits derived from the accurate classification of outlets

Better anticipation, identification and

satisfaction of consumer needs

Specialised knowledge of channels

enabling us to give retailers better advice

Improved identification of our company’s

strengths and weaknesses

Accurate targeting of our marketing

activities to channel needs

Identification of changes in trade

direction

Getting the right brands into the right places

Providing different tobacco brands to a

variety of retailers is complex. If British

American Tobacco does not know which

outlets to supply with a particular brand, in

order to reach a focused consumer,

resources are wasted and opportunities are

missed. Retailers will not be able to sell a

certain brand if the brand image and

positioning of their stock does not match

their outlet’s consumer profile. To avoid this

and other situations, we classify outlets into

groups according to predefined standards,

namely Channel, Quality, Volume and

Authority. This ensures that through diligent

planning we get the right product in the

right place at the right time.

1.2.5.2 The basis of classification

1.2.5.2 On what basis is classification made?

The key criteria upon which our company

classifies our customers' outlets are:

Classification by Channel

Classification by Authority

Classification by Quality

Classification by Volume

Classification by Organised and

Independent outlets

Classification by Status

1.2.5.2 The 6 classifications

1. Classification by Channel

A Trade Channel is a grouping of similar

retailers made on the basis of their core

business. By grouping retailers into trade

channels, we can focus on that particular

channel’s consumers.

We use defining features like store type,

store size, product range, pricing policy,

consumer base and specific objectives and

strategies. This determines how we


communicate with the consumers

purchasing tobacco products from these

outlets.

The differences may refer to the:

Outlet or account and or the nature of the

core business (for example - tobacconist,

petrol or drug store).

We then group retailers into the following

channels:

The five standard trade channels are:

1. Grocery

2. Convenience

3. HORECA

4. Global travel retail

5. Specialist

Channel/Outlet Types

Grocery outlets include the following:

Hypermarket

Supermarkets

Discounters

Grocery stores

Department stores

Hypermarkets:

Consist of Pick 'n Pay Hypermarkets,

Checkers Hypermarkets and department

stores (eg. Game, Dion's).

Key categories are groceries plus non-food

(for example - clothing, household goods);

self-service; selling area greater than 2,000

sq. metres; more than ten check-outs;

aggressive pricing is common; and common

names: Superstore, Hypermarche,

Hipermercado, SB-Warenhaus.

Supermarkets

Consist of bulk supermarkets (eg.

Superspar, Friendly Supermarkets, OK

Foods, Pick 'n Pay Supermarkets), top-up

supermarkets (eg Spar, Friendly Everyday,

OK Grocer, Pick 'n Pay Family Stores, Sentra,

Score, Boxer), pop-in supermarkets (eg.

Kwikspar, Friendly 7-11s, OK Mini Mark,

Pick 'n Pay Mini Market). Key categories are

dry groceries and fresh produce; self-

service; no fewer than five check-outs;

selling area less than 2,000 sq. metres; and

wide brand choice.

Discounters

Would usually be found in rural areas: (eg.

U-Save and other independent stores).

Key category is dry grocery (for example –

canned foods, salt, sugar, flour); limited

consumer choice: one or two brands per

product area;


- focus on lowest possible prices; and selling

space between 300 sq. metres and 2,000

sq.metres.

Grocery Stores

Key categories are dry grocery and fresh

produce; under 1,500 sq. metres selling

space; five or fewer check-outs; and counter

service or self service.

Department Stores

Key categories are consumer goods (for

example - clothing, cosmetics, electrical);

separate departments grouped together in

one building; and tobacco sales generally

through its own kiosk/tobacconist. If so, it

should be defined as such.

General Stores

Sell a wide variety of goods (for example

- food, household, hardware, electrical)

Smaller than department stores and thus

not divided into different departments;

and normally less than 300 sq. metres of

selling space.

People who visit grocery outlets usually

want to shop under one roof and usually

plan their purchases. They are generally

buying for themselves and others (their

family). Grocery outlets are extremely

important in terms of volume.

Channel/Outlet Types - Convenience

Convenience outlets include the following:

C-Stores: consist of bottle stores and

independent superettes/corner cafes.

Petrol Stations: consist of forecourt

kiosks, forecourt shops, forecourt

convenience shops (eg. BP Express, Shell

Select, Total La Boutique etc) and

forecourt solution stores (eg. including

Woolworths, BJs, Wimpy etc inside the

outlet).

Hawkers/Informal Sector: consist of

hawkers and house shops/ spazas/

kiosks.

Other convenience: consist of fast

food/take-aways and specialised.

Consumers look for convenience (long

opening hours, easy access, etc.), price is

less important. Purchase is usually made on

impulse to satisfy an immediate need and is

mainly for own use. Convenience stores are

important in volume terms and appeal to a

strategic target audience.

Channel/Outlet Types – HoReCa

HoReCa outlets include the following:

Drinking Establishments: consist of

pubs/bars and shebeens

Restaurants: consist of bistros, coffee

shops and restaurants


Canteens: consist of industry canteens

and student campus canteens

Hotels: consist of hotels, B&Bs, lodges

and backpackers

Recreational: consist of casinos, sports

clubs, social clubs and recreational other

(eg. holiday resorts, spas).

Nightclub/Disco

HoReCa Outlets

They appeal to our target consumers.

Consumers remain for a long period of time

experiencing and enjoying our product. It is

a captive audience with immediate

consumption.

Channel/Outlet Types - Global Travel

Retail

Global travel retail includes:

Airport Duty Free

Diplomatic

Ship Stores/Oil Rig Caterers

These outlets sell duty free goods, usually in

cartons. Communication is through large

displays in the outlet or in brochures.

Channel/Outlet Types - Specialist

Specialist Outlets Include:

1. Tobacconists

Non-appointed distributors: consist of

resellers and VMO's (direct suppliers to

vending machines).

Appointed distributors: consumers want

a smoker-friendly environment and a

wide range of products.

2. Classification by Authority

Outlets are further classified by the

decision-making authority of the outlet

management. The higher the authority of

the retailer, regarding the key areas of

distribution, ordering, pricing and

merchandising, the higher the authority

classification of that outlet.

Authority Types

Outlets are further classified via outlet

management’s decision-making authority.

The higher this authority, the more the

opportunity to impact on distribution,

ordering, pricing and merchandising.

Class A: There are opportunities to improve

distribution, ordering, merchandising and

pricing at store level. The decision-maker in-

store can influence all important elements

as he/she has the authority to decide in

each area.

Class B: The decision-maker in-store can

impact on distribution, price and/or


merchandising at store level, but certain

decisions are made at Head Office.

Class C: The decision-maker in-store can

influence ordering only. All important

decisions are made at the Head Office.

3. Classification by Quality

Classification by Quality is based on the

profile of the consumers in an outlet. If we

know which type of consumer frequents a

certain outlet, we can promote the right

brands in that outlet. The Quality

classifications are:

1. Normal Quality (Distribution Outlets)

Distribution Focus Outlets

These are outlets where we focus mainly on

distribution tasks to achieve Distribution

objectives. The majority of these outlets are

likely to be Normal Quality outlets.

2. High Quality (TM outlets)

Trade Marketing Focus Outlets

These sit within those distribution outlets

that achieve both Distribution and Trade

Marketing objectives. The majority of these

outlets are likely to be High Quality outlets

3. Superior Quality (HoReCa & Non-

HoReCa outlets).

Retail Engagement Outlets

These comprise a small proportion of

outlets highly frequented by our target

consumers where we strive for the

achievement of Retail Engagement as well

as Trade Marketing and Distribution

objectives. The majority of these outlets are

likely to be Superior Quality outlets.

We are referring here to quality

classifications, the quality classifications of:

(Normal Quality, High Quality, and Superior

Quality) are defined by the concentration of

ASU 30 consumers.

4. Classification by Volume

This is a numeric classification, ie. Volume is

measured in thousands of sticks per annum.

By classifying an outlet by total tobacco

volume sold, we can identify the potential

return of a particular outlet when allocating

resources. Based on this information, you’ll

know how often to call in an order to

provide the retailer with the right quantity of

stock. Total tobacco volume sold is the key

classification for Distribution

Representatives as it strongly influences call

frequency and call length.


The total of tobacco products of all

manufacturers sold annually determines the

classification by volume. Volumes are

measured by thousands of sticks per year.

Tobacco is converted to sticks on the basis

of one kilogramme of tobacco equals 1, 000

sticks. There are several classes of outlets

on the basis of volume.

The volume classes (in '000 sticks per

year) are:

Class 1 = 25,000 +

Class 2 = 7,501 to 25,000

Class 3 = 2,001 to 7,500

Class 4 = 501 to 2,000

Class 5 = 201 to 500

Class 6 = 101 to 200

Class 7 = 101 to 200

Less than 1 00

The purpose of classifying a customer by

total tobacco volume sold is to easily

identify its importance to our business. This

will help determine call frequency. For

example, it may not be economical to

service a Class 7 customer on a weekly

basis. By looking at a customer's total

tobacco sales you will also be able to

identify its potential for you to increase

sales.

5. Classification by Organised and Independent Outlets

In addition to these four classifications, we

make a distinction between Organised and

Independent outlets. This is determined by

the outlet’s management structure.

The way in which the outlet is organised

and its management structure will

determine whether it is organised or

independent.

What are the organised outlets?

An organised outlet - for example, an

organised supermarket or hypermarket has

a distinct corporate identity and has more

than two similar outlets. It normally

manages purchasing, warehousing and

supplies from a central location.

Co Co – Company-owned and

company-operated outlets

Co Do –Company-owned and dealer-

operated

Do Do – Dealer-owned and dealer-

operated outlets

What is an Independent outlet?

A single outlet that is family/owner-

operated.

Once we know an outlet’s classification, we

can allocate resources correctly. By having


the right brands in the right places at the

right time we can grow our business,

particularly as regulations governing

advertising and communication within our

industry become more restrictive. By

classifying outlets, we are able to

understand the natures of our retailers and

the consumers who visit their outlets. We

can thus anticipate, identify and satisfy their

needs better. This in turn enables us to

communicate a specific brand image at a

particular outlet. As discussed, our outlets

are classified according to Channel,

Authority, Quality and Volume to ensure

that the right products are available in the

right outlets at the right time. Classification

forms the foundation of targeting for all

Operational and Cycle activities.

6. Classification by Status

Classification is based on a combination of

retailer and consumer information. This

information includes criteria used to

determine an outlet’s status - we will

discuss in greater detail in customer

segmentation.

1.2.5.3 Coverage by classification

Who, When and How Often

Classification identifies where your Trade

Marketing efforts should be concentrated

and helps you to tailor your service to the

needs of our customers.

It is the basis of effective scheduling to

establish and maintain regular contact with

our customers. Classification is also

influenced by in-store sales and marketing

opportunities. Classification dictates

coverage and call frequency, so it plays an

important role in deciding the size and

structure of your territory.

In the case of exclusive distributors carrying

out Trade Marketing functions,

classification of outlets must be taken into

account when deciding on call frequencies.

Classification enables our business to decide

who will call on the outlet and how often.

Frequencies may vary depending on the

local market, without undermining the core

principle. The key factor in determining

classification structure is the organisation

and degree of development in the trade. The

call frequency and the seniority of the caller


must always reflect the importance and

level of the call.

Why is trade coverage needed?

Consumers purchase tobacco products

from a variety of different outlets for a

variety of different reasons, it is important

that our company categories these outlets

in order to:

Recognise that the consumers’

purchasing a specific outlet type have

similar needs and characteristics

Recognise that the outlets themselves

within a similar category have similar

unique needs and characteristics

Our overall objective is to increase sales and

market share of our brand by improving

availability and visibility through the regular

coverage of outlets which represents 75%

to 80% of total tobacco volume within each

channel.

The outlets are ranked in importance

relating to outlet type, volume, decision

making authority and shopper profile; the

ranking criteria will assist you in

determining the frequency of your visit.

As a result of this classification, you may

visit the important outlets more frequently.

How often you call, and who in our

company will call, is called Our Trade

Coverage Strategy. This strategy can be

described as:

To fish where the fish are … use the right

bait for the kind of fish you fish for.

The benefit of trade coverage for our

organisation is focused resources according

to buying consumer needs.

Focusing resources means more effective

use of people, merchandising materials,

displays and promotional activities.

The key criteria on which our company

uses to classify our customer outlets are:

Type of outlet

The total tobacco volume sold

Opportunities to build and impact our

business

Shopper profile

What is meant by outlet and account?

Our company differentiates our customers

according to the number of outlets they

control.

Outlets

Single points of sale selling directly to the

consumer.


Accounts

Customers who own or control more than

one outlet.

In each channel you can find both outlets

and accounts.

You and your customers: How do account teams operate?

Specialisation in the trade means that our

business partners will be professional

experts in the various aspects of running

their business. This will include product

knowledge, logistics, stock control and

finance.

As accounts have a significant impact on

our business, our company has to ensure it

is represented at each stage in account

decision making. Our company sets up

account teams to match the trade structure.

These account teams operate in each trade

channel wherever there are accounts.

Members of the team are set up to match

the position levels of the account personnel.

Account teams are co-ordinated by the

account manager who may be your area

manager, or your regional manager. Your

account manager reports to the channel

manager to ensure that each account

receives tailored support.

Who should call on the account / outlet?

It is the account manager who decides who

from the account team should meet the

different personnel from the account and

how often they should meet, depending on

the size and importance of the account

As you have already observed in retail

classifications, one of the ways we classify is

via outlet management’s decision-making

authority. The higher this authority, the

more the opportunity to impact on

distribution, ordering, pricing and

merchandising.

A reminder:

Class A: There are opportunities to improve

distribution, ordering, merchandising and

pricing at store level. The decision-maker in-

store can influence all important elements

as he/she has the authority to decide in

each area.

Class B: The decision-maker in-store can

impact on distribution, price and/or

merchandising at store level, but certain

decisions are made at Head Office.

Class C: The decision-maker in-store

influences ordering only. All important

decisions are made at the Head Office.


Class C outlets do not offer possibilities to

discuss distribution, price and

merchandising issues at the shop level

because these decisions are not made in the

outlet. This is why they do not need to be

visited by our highly trained TMRs. Part

timers call on Class C outlets. These part

timers who manage stock and orders and

have merchandising responsibilities, work

under your supervision and detailed

instruction.

Summary

In this section we have explored our role in

British American Tobacco classification,

understanding the key elements of

classification and trade coverage and the

importance of each for you.

In order for you to reflect upon what you

have learned in coverage and how it can be

used to help you in your job, please see the

below activity:

British American Tobacco classification of outlet exercise:

Consider the four outlets below,

Outlet One: The Hypermarket

The outlet manager can agree to

merchandising but decisions about price

and distribution can only be made at Head

Office. The store is expected to sell about

7,300,000 sticks as well as 400 kilograms of

tobacco annually. The impact of

merchandising exposure on consumers has

been a surplus high.

Outlet Two: The Discounter

You are calling on a new outlet which sells a

great variety of products and is open until

10.00pm each day. The outlet owner takes

some of our brands to increase their range.

You also agree that, especially during the

first month the price will be relatively low.

The owner is pleased to receive a branded

block for the outlet because the shop is

some distance away from high traffic areas.

The expected turnover is around three

350,000 sticks and 80 kilograms of tobacco

per year.

Outlet Three: The Nightclub

You call on a nightclub which is visited

mainly by young people. The turnover is

around 700 sticks per year. The outlet

manager owns the outlet.

Outlet Four: The Petrol Station

You call on a petrol station opened recently

in your area, you cannot discuss

distribution, price or merchandising

because these decisions are made at head

office. The turnover is planned to be at

1,800,000 sticks and 300 kilograms of

tobacco.


Exercise

Imagine that you have made the four outlet

calls/ visits above. Consider each outlet and

what we have learnt about their predicted

volumes and authority levels. Using what

we have learnt in retail classification and

trade coverage. Suggest a classification for

each, check your classifications with your

manager and discuss with your line

manager, what call frequency would

subsequently be developed for each based

on your agreement of the classification?

1.2.5.4 Impact of the changing environment

The impact of the changing environment on TM&D

TM&D is affected by the change. In the

retail environment there are new retail

formats and more convenience outlets;

forecourts are hubs of consumer spending;

HoReCa outlets are becoming more

important. The challenge? There is greater

competition for space and making efficient

use of the limited space available. On the

communication side, markets are becoming

more restricted. This means they are

becoming more regulated, as can be seen

by the elimination of traditional above-the-

line advertising. The challenge? With

reduced communication opportunities, we

have to look at new ways of interacting with

consumers. We choose to view the

changed environment as a challenge and

use it to push ourselves towards innovative

solutions.


SWOT Analysis

SWOT is an acronym standing for

Strengths, Weaknesses, Opportunities and

Threats. A SWOT is usually used to analyse

a company’s position in relation to its

competitors, which is how we used it in

strategy. However it can also be used to

analyse the position of a group of retailing

outlets, which is how we will apply SWOT

now. Once you have a picture of the

strengths, weaknesses, opportunities and

threats, you can use the information to

develop strategies for improving British

American Tobacco’s position with retailers

which help us meet our business goals.



Creating a SWOT

Stage 1 – Create the Ideas

Write in the Strengths.

Write in the Weaknesses.

Write in the Opportunities.

Write in the Threats.


Analysing retailer opportunities

Develop a SWOT analysis of the Retailer

classifications you work with in your

channel. Discuss with your line manager,

strategies that you develop by considering

and linking the following:

Link any Strength with any Opportunity

to create a list of possible Offensive

strategies and develop action to build

on advantages.

Link any Weakness with any Threat to

create a list of possible Defensive

strategies and develop ways to reduce

the risks.

List all reasonable actions that come

out of the linking process and prioritise

those that give the most benefit at the

least cost.

Discuss with your line manager how this

information could be fed into your territory

plan and ensure the list of actions and

strategies you agree to implement, have line

of sight into the British American Tobacco

global and regional strategy. Ensure you are

clear how your activities stemming from the


SWOT, with each retailing group

contributing to the overall business success.


Making a difference

The more you understand as a TMR about

the specific needs, wants and organisational

structure of different retailing

classifications, the more able you are to

have an informed view, of what you can do

in your territory to make a difference to our

market share within each of these outlet

types. This knowledge is essential to every

TMR as it provides the basis for credibility in

discussions about the Retailer environment

as a whole.


The Distribution Edge Series

Distribution operations management

Turkey My Retailer and Me

CES Trade Channels Trade marketing

overview

SIC Specific Induction_FullText.doc

changes to the retail environment.doc

SIC Skills Range

1TMDWork_FullText.doc Retail

Classification.doc

Trade Coverage. pdf



1.2.6 Customer Segmentation & Prioritisation

Introduction

Our business has many different types of

customer, retail being one but there are

many more. In Customer Segmentation we

gain an appreciation of how British

American Tobacco segments its customers

and what implications this has for customer

strategy. We will then turn around and look

at how customers segment suppliers and

where British American Tobacco might sit in

this segmentation because this might

influence the customer’s view of your selling

idea as well as how you present it.

1.2.6.1 What is customer segmentation?

Why is it important?

How does British American Tobacco

segment its customers

1.2.6.2 What is the customer relationship funnel?

What is the customer relationship

ladder and what are the reasons and

behaviours at each stage?

1.2.6.3 How are we segmented by customers?

Development opportunity

characteristics

Critical strategic fit characteristics

Exploit characteristics

Feel the pain characteristics

What is the real life parallel?

1.2.6.4 What are customer structures?

Exploring how power moves through

the organisation

1.2.6.5 The retailer lifecycle

How needs differ by stage

1.2.6.6 Typical cross-functional category structure

Who do we speak to?


The customer segmentation matrix


Planning for the segment



Influencing effectively



1.2.6.1 What is customer segmentation?

Knowledge featuring methods of prioritising

and treating business relationships … to

help develop strategies and ways of

cooperation

1.2.6.1 Why is it important?

Customer relationships are at the heart of

how we develop and sell commercial

propositions.

1.2.6.1 How does British American Tobacco Segment its customers?

The Considerations are as follows when

segmenting customers:

1. What is the British American Tobacco

strategy?

Where do we want to focus?

Population trends

Channel trends

Future projections

2. How big is the customer’s sales

opportunity?

How is the Customer performing in the

marketplace?

Size

Growth

Market Share

3. How aligned are they to the British

American Tobacco vision?

Are Customer and British American Tobacco

interests aligned?

Customer Profitability

Customer Range Stocked

Best Practices’ Evaluation

4. What is the cost of engaging the

customer?

What does the customer expect and what?

can we deliver?

Margin

People resources


To start developing a deeper understanding

of customer’s needs, now we have

considered how we segment our customers.

We use with the retailer disposition funnel

which is the way British American Tobacco

approaches customer segmentation. We

will then turn around and discuss supplier

segmentation, in order to consider how

British American Tobacco is regarded by

different customers.

1.2.6.2 What is the customer relationship funnel ?

Where the customer is located in the

Relationship Disposition Funnel (RDF) will

have an influence on who we seek to

engage on decisions. Consider where the

customer relationships from your territory

may fall is in this funnel.

1.2.6.2 What is the customer relationship ladder and what are the reasons and behaviours at each stage?

The RDF are a series of dispositions that are more commonly known and seen in the customer relationship ladder.

Where they are referred to as:


Commodity Broker

The client sees the sales person simply as a purveyor of a commodity, which they need. Loyalty is low, price is an important issue.

Service Provider

The client looks to the sales person to provide not only the product or service but to do so in a consistent manner. They come to rely on certain standards of service. Loyalty is likely to increase, price remains an issue but is less critical.

Value Adder

The client begins to rely on extra service from the sales person, they view meetings or conversations between each other as productive and an opportunity to learn new information, insights etc. Loyalty increases further; price is less of an issue. The client is open to ideas.

Business Partner

The client sees the sales person as a trusted confidante, they discuss problems and solutions openly and are extremely loyal, they expect the highest levels of service as a matter of course and are willing to pay a premium for the value they receive.

1.2.6.3 How are we segmented by customers?

Customers use many different models comparable with this supplier segmentation model, to determine with whom they want to do business with and how.

Typical axes used to plot suppliers are shown above, ie. degree of critical fit and value; top right is a favourable place to be plotted, as is top left, ‘development opportunity.’

It may be acceptable for us to be regarded as an ’exploit’ supplier, by those customers who represent high value to British American Tobacco, but we need to recognise honestly where we are seen.

Some suppliers, for example, mistake the characteristics of an ‘exploit’ relationship for those of a ‘critical strategic fit’ relationship. It is easy to think that simply because we have our supply chain personnel working inside the customer’s organisation, we are working in a collaborative partnership … but … in actual fact, we may be saving the customer wages that he/ she would otherwise have had to pay! THAT’S exploiting!


The typical characteristics of each relationship

Development Opportunity Characteristics:

Time given outweighs value of business

Trials

Data / knowledge sharing

Up-front commitments

New formats

Involve in development ideas/ plans

Involvement with category

management projects

Store visits

Factory visits

Socialising

Critical Strategic Fit characteristics

Multiple contact points

Blocking competitors

Regular meetings

All levels of communication

Sharing strategic plans

Joint projects

Joint business planning

Good relationships / social

Shared data

Exploit characteristics

Managed for profit

Pressure on terms and conditions

improvement

Refuse price increases

De-listings

Survival fees

Tendering/ auctioning

All elements of trading under constant

review

Portfolio management

Generating substitutes

Routine administration work

Limited meetings

Demands via email / phone

Feel the Pain Characteristics

Will not want to see you

Margin, margin, margin!

Aggressive

Limited information

Limited contact

Few Point of Purchase Initiatives …

unless fully funded

No opportunities

More and more investment to stand

still

Just do it

Loss of selective lines

Range rationalisation

What is the Real life Parallel?

Anecdotal evidence suggests that many

retailers require 70% of their supplier base

to be in the ‘exploit’ area at any one time …

because this is where cash is generated for

the customer. It is cash that will provide the

growth engine for the customer’s business


AND the customer’s ‘development

opportunity’ suppliers! Many retailers do

not want to regard suppliers as ‘critical

strategic fit’ for long periods of time, as this

can breed supplier complacency. In

addition, customers should recognise that

relentless ‘exploitation’ will eventually not

be tolerated by the exploited supplier.

The supplier segmentation model can be

compared with human relationships the

image below makes the point that business

relationships are not static.

The Transition between stages is influenced

by the behaviours of two parties. In

commercial reality, British American

Tobacco and the customer.

1.2.6.4 What are customer structures?

Exploring how power moves through the organisation

Knowledge of how a customer structures its

organisation helps to develop strategies and

ways of cooperation.

Effective organisations structure themselves

in line with their strategic priorities –

customers are no different. When

considering how you can influence a

customer it is important to consider how

they have structured themselves and why.

Additionally, the issues of the degrees of

centralisation/ decentralisation that exist

should be understood. Every organisation

will have policies and strategies that are

being driven down centrally, and others

being driven at a more local level.

Understanding the degree to which either

approach is being applied will reveal much

about the organisational model.

If we know what strategies have been

prioritised and who the owners, influencers

and evaluators of those strategies are, we

should be able to make sense of the

structural decisions within the Customer.


Our customers’ structures influence how

commercial decisions are made and we will

expand on this later.

This question sounds straightforward, until

we consider all the factors, such as:

What timeframe are we talking about?

At the customer’s financial year end,

the finance function becomes more

powerful

If, for example, the organisation is

under pressure to cut costs, HR could

become more powerful ie. headcount

rationalisation

Always Be Thinking

We must remember to always be thinking

about where the functional power lies

within a customer’s organisation – because

it can change.

Which function is likely to pick up extra

influence towards the end of the year?

Why would HR have a lot of power?

What type of retailer is likely to give a

lot of power to their Supply Chain

function?

Consider where the power lies -

Outlets, Finance, HR, Marketing,

Property, Buying, or Supply Chain.

Exploring how power moves through the

organisation


1.2.6.5 The retailer lifecycle

How needs differ by stage

Linking back to the Customer’s Life Cycle

there are different power bases at different

phases. Once again, understanding the

customer’s life cycle is important for you in

terms of knowing how to influence the

customer.

What are the distinct needs of

customers at each stage?

What are the implications for British

American Tobacco?

Typical evolution as they move through the

lifecycle.

In the Land Grab phase structures are

typically based on functions.

In the Consolidation phase structures

tend to become more cross functional.

In virtually all major customers the question

of the relationship between centralised and

local control remains controversial.

It may manifest itself in the debate between

central buying and regional buying

structures.

It will exist in discussions around the

relationship between outlets and the centre.

Critical to any developed understanding is

the nature of these internal relationships

and how much of the decision making


authority, over what issues sit in which

parts of the business.

Care needs to be undertaken in

distinguishing between power, authority

and influence

Power is an absolute issue which a

Customer may never choose to exercise

How far has decision making been

delegated through the organisation?

(Who has authority?)

Who are the key influencers and how

do they exercise this influence?


1.2.6.6 Typical cross-functional category structure

Who do we speak to?

Different customers have different

structures but this is a typical model. The

category team is headed by a category

manager who plays a general manager role.

This structure is focused on categories as

business units, ie. alcohol and pull together

key functions focused on the category.

In this set up the buyer is still important but

is no longer King.


Who is involved?

How many of these functions and roles we

are in contact with.



The Customer Segmentation Matrix


Planning for the Segment

Consider the four segments of customer

interaction and provide examples of at least

two customers in your territory, for each

segment. Provide supporting evidence that

positions each customer clearly into the

segment suggested.

1. Development Opportunity

2. Critical Strategic Fit

3. Feel the pain

4. Exploit

Using what we have learnt, develop a plan

to manage and improve the current

relationship through a series of actionable

ideas for the next meeting you will attend.

Also, profile where you believe the power to

currently lie within the organisation due to

the stage this business is in its

developmental lifecycle, again provide

supporting information to your line

manager. Discuss with your line manager

how these actions have line of sight into our

Global Trade and Marketing Strategy.


1.2.6.8 What are the KPIs by role?

Think about the functions and roles of KPIs of each organisation you listed in your previous task.

Complete the grid for each role within each customer you created a strategy for earlier. This will

start to develop our thinking on who we should be approaching.




It is imperative in any business relationship

as it is with a human relationship to ensure

that you make regular investments of your

time and energy in order to reap rewards.

Businesses change (focus shifts), Structure

changes, (the people in a position to say

‘Yes’). A TMR’s role is to have a finger on

the pulse of these changes, so they are in

the best position to not only defend

revenues but grow revenues in their

territory.


0550012g ABC - Module 3 - Customer

Knowledge - Segmentation.ppt

0550012h ABC - Module 4 - Customer

Knowledge - Life Cycles J.ppt

0550012i ABC - Module 5 - Customer

Knowledge - Structures Ja.ppt

CES Introduction into trade marketing

pages 16 -20

CES Developing Trade Marketing

Module 19

SIC_Specific Induction_FullText.doc

changes to the retail environment.doc

Introducing Trade Marketing (27

pages).pdf



1.2.7. Organised Trade

Introduction

Key Accounts are undergoing

unprecedented changes. As a result of

globalisation, moving out of the classic

channel boundaries (channel blurring) and

acquisition, Key Accounts are becoming

increasingly important for British American

Tobacco to deliver the overall marketing

strategy.

“Key Account Management has evolved to a

fundamental function within Trade

Marketing & Distribution (TM&D). It has

been recognised that, overall, Key Accounts

around the world contribute highly to our

marketing strategy in delivering growth in

mainly Premium and International segments

through a high proportion of ASU30

consumers at a faster rate than market and

channel development”

Joel Marin Head of Global Accounts

1.2.7.1 Purpose of documenting the Key account management strategy

1.2.7.2 The key account management goal and strategy

Key account management goal

Key account management strategy

The aim of key account management

Key account planning process

Above market key account planning

1.2.7.3 Key account planning tools

Key account prioritisation model

Key account opportunity analysis

Account investment model (aim)

Account planning tool (apti)

Account profile data system (apds)


Account Planning Tools




1.2.7.8 References / Contributors


1.2.7.1 Purpose of documenting the KAM strategy

In this final chapter of Strategy we will address

the top line Key Account Management

strategies and processes the information into

one location. It is meant to be a ‘pocket book

version’, to enable Key Account Managers to

always have the core principles of British

American Tobacco Key account management

with you.


1.2.7.2 The key account management goal and strategy

1.2.7.2 Key account management goal

Key Account Management is a fundamental

area within the overall TM&D function. To

deliver and maintain the TM&D vision of

being “the best TM&D organisation in the

world”, seven goals have been identified, of

which Key Account Management covers

one.

For Key Account Management the goal is:

To be the first choice partner for Global,

Regional and Local Key Accounts.

What does the Key Account Management goal truly mean?

We want to be seen through the eyes of

retail as the preferred partner for the entire

tobacco category. Key metric for this is for

the retail trade to recognise that British

American Tobacco is able to deliver

sustainable growth to the category through

added value and innovation, better than the

competition. All in the context of our Win-

Win-Win approach.

Win-Win-Win Approach

Win for the consumer

Win for the retailer

Win for British American Tobacco

Provide retail/ category solutions applied to

specific British American Tobacco brands.

Growth will come for British American

Tobacco and the category!

1.2.7.2 Key account management strategy

To achieve and maintain the position of first

choice partner and contribute to British

American Tobacco’s overall marketing

strategy, four strategic focus areas have

been identified. These four levers have been

developed to identify focus areas on which

we need to concentrate at global, regional

and local level.

On end-market level, the content behind the

four strategic levers will need to be tailored

to the local commercial and regulatory

environment.

“To be the first choice partner for Global,

Regional and Local Key Accounts”

The 4 Strategic Levers

1. Accelerate … British American

Tobacco Growth


2. Drive … Profitable Category Growth

3. Drive … Customer Engagement

4. Build … Key Account Management

Capability

Accelerate British American Tobacco Growth

Prioritise/ Focus and secure Must Win Key

Accounts with high strategic fit and

alignment

Drive above market ‘marketing’ agreements

when proven to be beneficial for both

parties and develop effective multi-level

engagement with all stakeholders

Deploy innovative retail solutions/

programme to best capture

communication opportunities targeting

Premium ASU30 consumers

Focus on Premium-value growth while

encouraging overall volume growth

Focused GDB +2 Initiatives

Develop with retailer (in selected

markets) tailor-made activities

What does it mean?

We must first decide which accounts will

deliver the biggest return for all our efforts

in both the short and long term based upon

both commercial and communication

values, ie. those accounts which will play

the biggest role in helping us deliver our

overall marketing strategy. This is done

through the Key Account prioritisation

exercise.

A key measure of success is the accelerated

growth of our GDB +2 portfolio within these

key strategic accounts with an emphasis on

Premium growth due to the consumer

profile. Additional focus on a Brand Value

Segmentation (BVS) overlay will help target

our in-store communication and overall

CDR engagement programmes to ensure

optimum impact on potential buying

behaviour.

Having identified the target audience it has

become vital that retail innovation and

specific programmes are created for these

accounts to optimise the opportunity. A key

measure of success will be if the mechanic

used in-store makes the shopper stop and

think about their tobacco-buying behaviour

and positively influences them to move to

the next stage of the disposition funnel.

Drive Profitably Category Growth

Focus on the category growth drivers

(consumer driven) and activate

programmes in accordance with the

Win-Win-Win philosophy

Drive best practice development and

implementation


What does it mean?

Whilst we must obviously focus on the

growth of our British American Tobacco

portfolio, there is increasing demand from

large accounts to help them drive category

growth first through Premium segments

implementing consumer-relevant activities.

If British American Tobacco executes the

right activities and ensures category growth

through its portfolio we can truly speak

about Win-Win-Win!

In order for retailers to differentiate

themselves from each other, they constantly

require retail innovation in-store. We should

only create something new if the innovation

is based on a clear indication that it will help

influence shopper behaviour.

By influencing shopper behaviour it will not

only impact the tobacco category but a

sufficient change in mood may have a

positive effect on other categories within

the store.

With a willing partner, it is very useful to

pilot new ideas and activities, build a case

study and drive the sharing of best practice

to other accounts/trade clusters and indeed

other markets.

Drive Customer Engagement

Engage and drive the business through

a clear contact matrix at all relevant

levels

Conduct regular business reviews at all

levels and steer accordingly

Through jointly developed objectives

and measurable targets

What does it mean?

In a large organisation there are many

people and departments which impact the

success or failure of an effective and

efficient account engagement strategy. By

building a strong contact matrix and

engagement model within the account it

will help the overall ability of British

American Tobacco to understand the key

stakeholders and indeed overcome potential

hurdles and barriers before they become

too great. For example, top-to-top

counterparts eg. British American Tobacco

General Manager meets account general

manager in that market, British American

Tobacco CORA/ legal meets account’s

legal/public affairs, British American

Tobacco brand team meet account’s brand

team, to finally a TM&D sales rep engages

with store clerk level.

Clear objectives and measurable targets

need to be set so that both internal and

external management can monitor whether


current strategies are delivering the required

result. Joint target setting is important to

ensure both parties are committed to

delivering a win for each other and

ultimately the consumer.

Above market opportunities normally

present themselves when a large regional or

global account decides they would like to

centralise in order to improve their leverage.

This presents both an opportunity and a

threat to British American Tobacco as it is

possible to either win big or lose big. This

does not necessarily mean more money but

most definitely means more support for the

account to grow their tobacco category

(and related basket) at a faster rate than

their competitive set.

British American Tobacco prides itself on

being the expert in the field of consumer

understanding and it is this area where we

must continue to outperform our

competitors if we hope to win these above

market agreements.

Build Key Account Management Capability

Drive Key Account planning through

British American Tobacco Way of

Marketing and TM&D Framework

Build understanding and drive

implementation of Key Account tools

Drive Key Account Management

Training Model

Ensure that Key Account Management

is involved in marketing talent pipeline

to ensure consistency and quality

What does it mean?

It is very important to ensure any plans you

have for your Key Accounts are embedded

within the new TM&D Framework and

British American Tobacco Way of

Marketing. The main reason is to ensure Key

Account strategies and resultant resource

requirements are fully exposed to the wider

marketing community in sufficient time to

enable a proper planning process.

As markets continue to restrict ATL activity,

winning Key Accounts will become an even

greater need for communication purposes.

A full process has been developed to ensure

you are able to optimise the opportunities

identified within your Key Accounts and it is

vital that timelines are kept and the

supporting tools and enablers are utilised to

drive uniformity of approach.

As retailers become more demanding, the

competencies required to manage and

exceed their expectations become even

more important. We have a suite of training

programmes to enhance capability and it is


critical all account related management and

executives attend these courses.

Continuity of approach is critical within Key

Accounts; therefore tenure in role,

succession planning and sufficient

handover period is essential.

1.2.7.2 The aim of key account management?

GROWTH (Volume & Value)

Faster GDB share growth in Key

Accounts vs. benchmark

Faster British American Tobacco share

growth in Key Accounts vs. benchmark

Growing Key Account Partner’s tobacco

category ahead of their selected

benchmark

Ensure the most efficient and effective

utilisation of communication space

focused on ASU30 audience

PRODUCTIVITY

Maximise return on British American

Tobacco marketing investment

British American Tobacco strategy and

implementation of marketing activities

exceed retailer’s productivity targets/

expectations

British American Tobacco Investments

at point of purchase (sales and

marketing) are driven by pay for

performance

RESPONSIBILITY

British American Tobacco recognised

as the industry leader in driving

responsible tobacco retailing

British American Tobacco and Key

Accounts proactively driving tobacco

category sustainability

Business ethics and principles applied

at all times and levels

Key Account Management capability and

reputation delivers a competitive advantage

for British American Tobacco which

provides us with a Healthy Key Account

Management talent pipeline.

1.2.7.2 Key account planning process

Planning is crucial for developing solid and

strategic account plans and ensuring

internal key stakeholders are fully

committed before engaging on accounts.

To support this, an account planning

process has been developed.

The main objectives of this process are:

Provide facilitation of tools and time to

deliver quality content


Increase the proactive involvement of

the Key Account teams in company

planning

Deliver better account plan content and

generate valuable input into other

functions

Create consistency within the

organisation/group regarding applied

process, tools and finally account plans

Ensure appropriate resources are

allocated

The account planning process is fully

aligned with the British American Tobacco

Way of Marketing and can be seen as an

integrated part of the TM&D Framework.

This means that the various steps within the

account planning process fulfil the input for

the TM&D Framework in the area of Key

Account Management.

Through this process, the account plan is

developed through different stages, which

means that it is built up during the year and

aligned with company planning.

The account planning process stages

provide an overall guide to Key Account

Management by outlining:

What needs to be done and when?

How should something be done, eg.

what is global best practice?

What tools, methodologies, templates

and examples are available to help?

The account planning process is to be seen

as a sub-set of the TM&D Framework

It highlights the areas where Key

Account Management plays a key role

It ensures alignment and integration

with marketing and the wider business

1.2.7.2 Above market key account planning

It is necessary to understand the

importance above market Key Accounts

have in achieving the Group’s Marketing

Strategy. This is done through a

consolidation of the end-market Key

Account prioritisation exercise (bottom-up).

The results of the end-market output are

consolidated to create a priority top-down

list at global or regional level.

The benefit of creating this picture is to

internally communicate with key

stakeholders above market on which

accounts British American Tobacco needs

to focus to drive our business, which

accounts we need to build and strengthen

our above market relationship and which

accounts to watch and monitor for the

future.


Once agreed internally, the decision can

drive the local Key Account agenda. Even if

locally it has been decided that an account

is less strategic, but above market through

the consolidation it has been decided that

an account is strategic for the Group, it will

be necessary to include resource allocation

(people and budget) in the end-market

trade marketing plans. The input for this will

be created through a clear (negotiation)

strategy, and end-market Key Account

teams will be closely involved in this

approach.

Note: For above market identified Key

Accounts, it may be that the investment

plan needs to be developed at an earlier

stage versus the local Key Account Planning

Process. This can be driven by the

negotiation timeframe of the account or by

the fact that the British American Tobacco

above market Key Account team needs

more time to prepare sign off internally

through multiple stakeholders before

engaging with the account.


1.2.7.3 Key account planning tools


Key Account prioritisation is the first step

within the account planning process and

the results of this ‘yearly’ exercise will

provide clear visibility of who are British

American Tobacco’s key customers

considering the entire retail universe from

an end-market, regional and global

perspective.

The attractiveness of the accounts is

measured through the commercial and

marketing criteria. Final prioritisation and

ranking follows after the implementation

criteria have also been considered.

To determine the priority of customers, the

British American Tobacco Key Account

Prioritisation Model uses five allocation

criteria with specific performance drivers

underneath each of the allocation criteria.

These performance drivers will highlight the

relative importance of each account in the

market and drive the ranking of those

accounts.

Commercial Attractiveness

Marketing Attractiveness

Implementation

The end result of this exercise is a top-down

list of Key Accounts prioritised against the

performance drivers. This list, backed up

with the fact and figures, will support the

Key Account team to recommend, to senior

management, which accounts to focus on

in market.

End-markets are applying the exact same

tool and methodology as the above market

approach. From an above market

perspective, the results of the end- market

output are consolidated to create a priority

top-down list at global or regional level. At

global and regional level this has created a

clear view on which accounts to focus on in

driving our business, which accounts we

need to build and strengthen our above

market relationship and which accounts to

watch and monitor for the future.



1.2.7.3 Key account prioritisation model

Key Account Prioritisation is the first step

within the account planning process and

the results of this ‘yearly’ exercise will

provide clear visibility of who are British

American Tobacco’s key customers

considering the entire retail universe from

an end-market, regional and global

perspective.

The results will be key input moving forward

for Key Account resource allocation and

individual customer strategies both in

market and above market.

The attractiveness of the accounts is

measured through the commercial and

marketing criteria. Final prioritisation and

ranking follows after the implementation

criteria have also been considered.

To determine the priority of customers, the

British American Tobacco Key Account

Prioritisation Model uses five allocation

criteria:

Future Category Size

Category Profitability

Strategic Segments

Communication Potential

Execution

It is the first step for Key Account

Management’s role in the market context

development phase. The priority accounts

identified will go through a thorough

opportunity analysis assessment in order to

create the Key Account input for the Market

Context Development (MCD) meeting.


1.2.7.3 Key account opportunity analysis

The Key Account Opportunity Analysis (OA)

is what we call the ‘engine’ for account plan

content development, creating a clear

picture of the business opportunities the

account can provide.

To guide the Key Account community

through this exercise a work package has

been developed with templates. These

templates will give guidance to the analysis

that needs to be done in order to create

meaningful insights.

What this means is that end-markets will

only take into consideration those templates

which will focus the exercise.

Once done correctly in the market and clear

opportunities develop (see Category

Management section on the Category

Drivers), the following years will become a

much more focused and efficient exercise.

These four areas are then consolidated into

the Key Account opportunities which will be

addressed by the HOT in the TM&D

planning process.

The account opportunity analysis can

provide highly valuable input into the MCD

stage of the annual planning process and

preparing the Key Account manager to start

working on the objective and strategy

development in close cooperation with

other marketing functions in a more

proactive way.

The template package has been designed to

highlight the overlap with the British

American Tobacco WOM templates to

avoid any overlap in analysis.

1.2.7.3 Account investment model (AIM)

• The Account Investment Model is a tool

that will deliver an investment rationale

for Key Accounts which will support

decision-making.

• The Account Investment Model should

capture both efficiency and effectiveness

measures:

• Efficiency is the cost/impression and,

importantly, should be benchmarked

against other alternatives available to

generate the same quality of cost


• Effectiveness is used for the financial

justification of investment in the account

which includes:

1. Additional cost of doing business

(eg. listing, assortment etc.)

2. Additional cost of communication

(eg. signage) as well as the cost of

marketing activities (BE investment

in the account), in order to quantify

the incremental margin through

target improvement of CDF, based

upon PEM principles

What are the benefits?

Creates transparency of the marketing

value of our Key Accounts

Key Account Management is enabled to

make better and faster fact based

decisions in preparation for negotiation

Supports more efficient and effective

stakeholder management

Supports consistent execution across

markets, regions and globally

Note: For today’s solution it is highly

recommended to consult Marketing,

Finance and CD&I for support in any

business case development. The Global &

Regional Account Teams can assist in

sharing any ‘current best approaches’

applied through the Regions and end-

markets.

1.2.7.3 Account planning tool (APTI)

The tool has been created to complement

the teachings of the ABC (Account Business

Competencies) and give Account Managers

the opportunity to consolidate their analysis

and action plan in one location.

The key benefits delivered by the software

supporting this process are:

Securely stored information in central

server

Link to APDS to reduce manual input

and avoid duplication

Comprehensive help menu by page to

assist completion

e-learning training manual to help

understand the objective of each page

‘Director view’ facility to allow line

management to view plans online

Although APTI is a software tool, the design

of standardised templates facilitates

structures in the development of a solid and

professional account plan. The content of

the plan will be driven by the output of the

various stages of the account planning

process, so it remains crucial to maintain a

high level of interaction with the entire

marketing community. As a result of the

above, completion of the plan should reflect

the various stages of the account planning


process and, in essence, is a live document

updated and reviewed on a regular basis.

1.2.7.3 Account profile data system (APDS)

APDS is the core system through which the

above market community captures and

analyses Key Account data from end-

markets for defined Global and Regional

accounts.

It is a vital tool used by the Regional and

Global Account Team to drive customer

engagement aimed at delivering the

marketing strategy and reporting on

accounts to British American Tobacco

internally.

APDS has been built by Account Managers

in order to specifically to provide:

A standardised system to consistently

store, manage, analyse, and deliver

quality information on a local, regional,

and global level, increasingly important

as both the Key Accounts and the Key

Competitors are moving to expanding

and operating at an above end-market

level.

Simple, secure, and controllable access

to the required information which is

retained within the British American

Tobacco organisation.

Standardised analysis and business

reports on British American Tobacco,

competitors, channels, markets, and

business financials (including detailed

chart sets) which can be created by the

end users at the touch of a button for

above as well as for local Key Account

Management.

An end-market, Regional and Global

Account Management system driving

consistency across the British American

Tobacco group.

What are the benefits?

Focused amount of data to conduct

customer performance reviews and for

internal reports against relevant KPIs.

Alignment with marketing strategy,

different departments, stakeholders

and key processes.

Provision of flexible outputs (Business

Review, Scorecard, Management

reports) thus enhancing its usage and

value to all users.

Reduced administration through

automation (for market data) and

higher interface with end-user.

Reduced complexity in terms of

changes in templates and data

requested.



Account planning tools

Key Account Prioritisation Model

Key Account Opportunity Analysis

Account Investment Model (AIM)

Account Planning Tool (APTI)

Account Profile Data System (APDS


With a wealth of resources at your fingertips

to plan effectively, take three retailers and

apply all planning tools. Discuss with your

line manager how using the tools has line of

sight into the Key Account Management

Strategy.



In order for you to plan effectively we need

to understand all the tools the business has

made available to you. With the planning

tools we can accurately measure the level of

investment and resource your territory

needs. The tools are there to help, they are

there to help British American Tobacco help

you, on the ground in your territory and for

you to better model and understand the

businesses you work with. Essentially, the

tools make your job easier, but if that wasn’t

reason enough as to why we invest our time

and energy in key account management.

Lets us emphasise the importance of Key

Accounts, and global accounts in particular,

the development of our Global Drive Brands

at above market accounts will accelerate

even more and it is forecast that within

Global Key Accounts (eg. Shell, BP and

ExxonMobil) 50% of the volume sold will be

through GDB’s by the end of 2007 vs. 25%

overall globally).

Joel Marin,

Head of Global Accounts


Joel Marin Head of Global Accounts


Jimmi Rembiszewski Global Marketing

Director

KAM Booklet A4.pdf

CES 01-03 01-04

Introducing Trade marketing.pdf


THE LIVING JOURNEY

11

STRATEGY

2

33

44

55

66

77

88

99

Documents

BRITISH AMERICAN TOBACCO STRATEGYand Pepsi, where all employees share a common goal. In the case of Disney it's "To keep the dream alive" and in Pepsi "To refresh the world" whether