Marketing Strategy for ECIG (Electronic Cigarettes International Group)
Dan O’Neill took over as CEO of ECIG on January 9, 2015, replacing outgoing Brent Willis, who founded the company but who has also been viewed as the main reason for the plummet in share price. Dan O’Neill’s record of experience as CEO of Molson’s and top leadership positions at Heinz and Star-Kist suggests that ECIG may finally be in more capable hands. With the reduction of debt and the one-time write-off of losses, the company has pivoted for better years (Hoogervorst, 2012). However, restructuring its debt and distribution channels are main points that need to be addressed before any reversal in the company’s fortunes can be expected. The three main reasons customers will be attracted to ECIG are: 1) sustainability: the vaporizer market is growing as a result of smokers looking for healthier alternatives; 2) Dan O’Neill is providing the kind of corporate governance that draws consumers; 3) ECIG is situated expansively throughout the UK in high-foot traffic areas with easy access for consumers.
Product/service concept:
ECIG is a real electronic cigarette and vaping company with retail shops and kiosks in the UK and USA as well as an online store for each of its various brands, ranging from the popular VIP brand to the FIN and Vapestick brands. The benefits of using e-cigs and vaporizers is that they significantly reduce the health risks normally associated with smoking, according to a health study recently released by the UK, which stated that e-cigarettes are 95% less harmful than tobacco products (Public Health England, 2015). The design of ECIG’s various brands is simple, consisting of both disposables and refillables. VIP is a major seller in UK, with more than 100 kiosks established in high traffic locations, including in and around major metropolitan areas like London. FIN has recently been launched in America and has quickly expanded to more than 5000 locations nationwide. The products do not come with warranties or have significant life cycles. New product development consists of identifying the latest advancements in vaping technology and utilizing this to appeal to individuals looking to quit smoking.
Buyer Utility Map:
Purchase: The customer may choose from a variety of retailers, online and physical to select a product that appeals to his individual tastes. If the customer has some knowledge of vaping then the process is simple, if not there are tutorials on the web and assistants at kiosks and shops to help. The kiosks in UK are conveniently located to bring in the maximum amount of foot traffic. The risk in the purchase is that the customer will not enjoy the experience of vaping or using an e-cig. The image of vaping is seen first-hand in social settings as among the UK populace it is very popular and in the shops there are signs that show how to do it.
Delivery: The customer can purchase online and receive in mail or purchase in person from kiosk or shop. There is no risk involved in either purchase setting other than in mail delivery being held up by slow days. Convenience is guaranteed and the fun of being catered to in person or online is tangible.
Use: The customer receives the product and uses the e-cig or vaporizer as an alternative to smoking. The person can vape anywhere in public as there is no second-hand smoke.
Supplements: The customer can purchase e-liquids and mix and match flavors for his own personal taste. There is also vaping equipment that can be purchased to heighten the experience.
Maintenance: There is no maintenance required, as some or disposables and others simply need to swap out the e-liquid cartridges. Other than that, battery power is required so there will need to be a recharge plug and outlet.
Disposal: Disposables can be thrown away in the trash and there is no cost for disposing of the product
Product Classification:
This is a specialty product, considering it is relatively new to the market with a specific consumer base and an alternative method of achieving the smoking sensation without polluting the lungs.
Product Features/Benefits:
Vaping acvessories that promote a healthy lifestyle
E-cigarettes that allow smokers to kick the tobacco habit
Vape lounges/shops that allow customers to customize e-liquids
Online stores that allow ease of access shopping from home
Sales promotions online and at kiosks/retailers
Product Life Cycle
Products are constantly in a mature state, as the industry develops. FDA prescriptions and guidelines in the U.S.A. need to be met to ensure the highest quality of e-liquid product and accessories, and therefore staying abreast of these latest guidelines will be pivotal in the U.S. market.
Target Market:
“Places in Trouble” (Kotler, 1993) are to be avoided and places where non-traditional venues can be utilized, such as kiosks in UK. In America, the kiosk has less traction but will be utilized if deemed cost efficient. For now, products are stocked in 7-11s, Walmarts and other traditional vendors, but the non-traditional route may be taken as traditional vendors show less traction and trouble. ECIG is an international company, with shops in UK, Africa, Europe, and the U.S.A. It expects to expand to other countries in the coming months and years, such as Egypt and in Asia, too.
Distribution strategy:
Non-traditional, via the use of kiosks, which are inexpensive and easy to maintain. This non-traditional strategy allows the company to overcome barriers of capturing market share by providing easier access to consumers on the street where presence can be seen in daily life.
Market Exposure:
Selective — highlighting that portion of smokers who are health conscious and interested in quitting or transitioning to a vaping experience.
Promotion:
Customers will be told and sold based on government studies and health studies published in the UK that show why vaping is a healthy way to quit smoking. How to vape classes will be conducted in vape lounges that are also already established in the UK.
Promotional Objectives:
Will provide information through direct-to-consumer consultations, increase demand through showing how effective the product is, and differentiate the product by showing how the product is the best brand on the market for vaping customers. Sales will be stabilized by reducing SKUs and relying on fundamental pillars of organization.
The electronic cigarette and vaping market is heating up with Bernie Herzog, a Wells Fargo analyst, suggesting that it could reach in the tens of billions of dollars in revenue by 2017. Between 2012 and 2013, e-cig sales reached more than $600 million (Giovenco, Hammond, Corey, Ambrose, Delnevo, 2014, p. 14). Bloomberg predicts that ecig sales will match or “exceed those of traditional cigarettes by 2047” (Goodman, 2013). For this reason, we are looking at ECIG, a publicly traded company with products that rank in the Top 10 of this growing sector. Customers should be aware of ECIG’s unique position for growth and product delivery.
ECIG faces competition from Blu Cigs as well as UK brands like V2 and Apollo. But ECIG’s Vapestick consistently ranks in the UK as a top ten starter kit and recently was voted best starter kit by an independent reviewer (Vapestick Ranked the UK’s No. 1 E-Cigarette Brand, 2015). This ranking is promoted in shops and online.
Price:
Pricing is competitive and ranges in products from a few dollars to higher ranges of twenty or more dollars. Kits can range from $50 to $200 depending on how comprehensive they are. This pricing is competitive with other brands in the market. Because ECIG is already well-established in the UK it looks for more penetrative pricing in the U.S.A. and establishing value-based pricing guidelines.
ECIG looks to compete with other brands through non-traditional channels as well as by supplying the best vaping experience to become the number one brand in the world.
Competitive Positioning Strategy:
As Michael Treacy and Fred Wierseman’s (1993) theories of competitive positioning state, ECIG wants to become a “Master of Two” — that is, offering two value propositions to consumers. In this case, it is a superior product, and ease of access through non-traditional retail venues such as kiosks in highly-foot trafficked areas (plus the online stores).
Environmental factors:
SWOT Analysis:
Strengths: Great e-cigs, vaporizers; easy access for customers; educational material. Weaknesses: No significant penetration in U.S. market to date. Opportunities: More people looking to quit tobacco; industry is booming. Threats: Big tobacco may have the funds to develop vape products to monopolize market share; ECIG must act fast to secure market.
Ethical Framework:
Economic: ECIG is a leader in non-traditional sales of vape products in UK. Legal: ECIG adheres to FDA codes and UK guidelines in manufacturing of products, all of which are locally made. Ethical: ECIG’s ethical conduct is based on building shareholder value through delivery of a superior product that pleases customers. Philanthropic: ECIG is dedicated to preserving health of public through providing a safe alternative to tobacco.
Conclusion:
ECIG is positioned to grow substantially and is well-connected to its consumer base. Recommendations: It needs to grow in the U.S. and penetrate the market by appealing to American tastes, which are different from European. Vaping needs to overcome the hurdle of not being manly and so a marketing strategy that embraces masculinity must be put in place.
References
Giovenco, D., Hammond, D., Corey, C., Ambrose, B., Delnevo, C. (2014). Oxford
Journals: Nicotine and Tobacco Research, 16(12): 14-15.
Goodman, A. (2013). E-Cigarettes Are Smoking Hot — Four Ways to Invest in Them.
Forbes. Retrieved from http://www.forbes.com/sites/agoodman/2013/12/05/e-cigarettes-are-smoking-hot-4-ways-to-approach-them/
Hoogervorst, H. (2012). FEE Conference on Corporate Reporting of the Future.
Brussels, Belgium. Retrieved from http://www.ifrs.org/Alerts/PressRelease/Documents/2012/Concept%20of%20Prudence%20speech.pdf
Kotler, P., Haider, DH and Rein, I. (1993). Marketing of Places. Free Press, New York.
Public Health England. (2015). E-cigarettes around 95% less harmful than tobacco estimates landmark review. Gov.uk. Retrieved from https://www.gov.uk/government/news/e-cigarettes-around-95-less-harmful-than-tobacco-estimates-landmark-review
Treacy, M., Wierseman, F. (1993). Customer Intimacy and Other Value Disciplines.
Harvard Business Review. Retrieved from https://hbr.org/1993/01/customer-intimacy-and-other-value-disciplines
Vapestick Ranked the UK’s No. 1 E-Cigarette Brand. (2015). Vapestick. Retrieved from http://www.vapestick.co.uk/e-cigarette-blog/vapestick-ranked-uks-1-ecigarette-brand
Type of competitive positioning strategy being pursued or that should be pursued (draw from Michael Porter
(pp. 23-26) and/or Michael Treacy and Fred Wiersema’s theories of competitive positioning).
Provide a lucid example or two of each of the other environmental factors, showing its potential impact on the marketing strategy (try to identify opportunities and threats). Also provide some recommendations for improving marketing performance.
Social/Cultural
Economic
Technological
Legal/Political
(Hint: Maybe organize and present a brief SWOT analysis here or provide a pluses and minus analysis using two example of each of the four external factors)
Finally, discuss your product/service concept in relationship to the social/ethical frameworks discussed in
13
class and the readings, especially the four ethical justification theories (i.e., Economic, legal, ethic, and philanthropic). Also, look for any micro-macro dilemmas and/or possible violations of the AMA’s Code of Ethics. Finally, please conclude your assignment with a list of suggestions or recommendations for improving the company’s marketing program or strategy. You can use any product/service except for Apple, Under Armour, Starbucks, and Nike. pg. numbers correspond with
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