Vertical Marketing Strategy. This strategy consists of independent firms at different levels of production and distribution who join together through contract to obtain economies of scale.This strategy shows that a distributor or retailer of a Premier Classic cannot sell Pakistan Tobacco Company's product and likewise a PTC distributor or retailer cannot sell LTC products.PRICINGBefore pricing the product, Lakson Tobacco Company considered its internal and external factors.Internal FactorsMarketing ObjectiveThe marketing strategy is to introduce a brand, which can compete with gold leaf. As their objective is to target middle and upper-middle class so the company priced the product directly to attract that class and positioned it as a medium priced product. Because of their medium price strategy they want to penetrate in the Gold Leaf market share so they have not created high price. They introduced the product in the price bracket of Capstan, which is a competitor of Gold Leaf, which is in the upper price bracket.They adopted the "Penetration" marketing strategy. They priced it medium to increase demand. In this case profits are less. They are adding value by giving gift packs to make it long term.Marketing Mix StrategyThe company adopted the pricing strategy of "Target Costing". As the objective is to fill the gap of Rs. 20-25/- price bracket. LTC controlled the expenditure as to make such cigarette, which fixes into this price bracket. They have not created much profit margin so as to establish a good position in the market because the cigarette which they are competing has a strong brand loyalty.CostThe cost of production in making Premier Classic is not too much as LTC is already a market leader in Tobacco industry and has the machinery and plants to manufacture a new product easily.Fixed CostThe fixed cost is low as the company has already a good market share in other products and earning profits. They are using the same plant and...
