I’ve just read the latest market research findings published in The Jakarta Post, titled “Giant Cough as Poor Smokers Switch Brands.” (Source: http://www.thejakartapost.com/detailheadlines.asp?fileid=20041204.@04&irec=3)
Some of the findings are:
- Poverty has not stopped the poor from smoking, but they have just switched to cheaper non-branded cigarettes. [Note: They are the largest base for giants like PT Gudang Garam and PT Djarum Kudus, the nation’s largest and second-largest cigarette producers.]
- As the cigarette companies’ largest market declines, the fight now is for the buyers from the middle- and upper-income brackets . They lost their share to HM Sampoerna (the nation’s third-largest cigarette producer), international makers of “prestige” brands such as Philip Morris Indonesia and British American Tobacco, and to smaller producers of budget “no-name” cigarettes.
- The losing vs gaining market share: Gudang Garam + Djarum (56.3% Q3 2003 – 52.8% Q3 2004) vs Sampoerna (19.1% Q3 2003 – 21% Q3 2004) + PMI & BAT (24.1% Q3 2003 – 25.4% Q3 2004).
If you follow the numbers (it’s just simple mathematics!)… only 0.3% have switched to non-branded cigarettes! The 3.2% have switched to middle- to upper-income band of brands. And then you generally conclude that the poor have switched to cheaper non-branded cigarettes. Even, when you use the total declining data of both hand-rolled and machine-rolled tobacco output (196 billion sticks 2004 vs 198 billion sticks 1997), or Gudang Garam’s flat growth (50.6 billion sticks vs 50.3 billion sticks, in the first nine month of this year vs last year), you still haven’t supported your point in the above mentioned statement.
Probably some of the poor just reduce their cigarette consuming to feed their other more pressing needs? Or, else? So, where’s the logic guy to state that the poor have switched to cheaper non-branded cigarettes?
On the sideline… I recall my friends’ headache when they conduct focus group discussion among groups of smokers 🙂 I will never never dream of conducting one, and will never never be a good PR for tobacco companies 🙂