Possible Strategic Innovation in Tobacco?
Do you truly know how your customers want to consume your product?
Cigarettes are of course typically sold by the pack or by the carton. These have been the standards for a long time, and you start to take for granted that these are the only way to purchase them.
But, lo and behold I was in 7-eleven the other day and a woman in front of me ordered a single cigarette. The price for the convenience of buying an individually-wrapped generic cigarette in either regular, menthol, or light? – $1.00 + tax
At first this seemed rather unusual and then I started to remember being somewhere like the Philippines and seeing enterprising individuals selling single cigarettes in their shops or on the streets. Not being a smoker, I hadn’t seen this in the United States before and my recent experience got me thinking about two things:
- Why aren’t the major labels going after this niche?
- Why are some customers willing to pay the equivalent of $20 per pack buying cigarettes one at a time when they can buy a pack of 20 cigarettes for $5?
I have no idea why the customer only had generic choices at 7-eleven and no branded choices like Marlboro, Kool, etc. Maybe the market is too small for the major cigaretter manufacturers to be interested, but if market size alone is the reason that there are no branded options, then that is a mistake.
The decision by the majors on whether to sell individually-packaged branded cigarettes should be based on why customers are choosing to purchase single cigarettes. If the reason is that people trying to quit don’t want a whole pack around because they would smoke them all, then the majors probably don’t need to be in this market.
But, if the reason is that customers, particularly younger customers don’t always have money for a whole pack, then the majors should be there. And, if people want to buy a single cigarette for any reason other than trying to quit, then any brand trying to increase their current position should be in this market, subsidizing it down to zero cost if necessary and promoting it at point of purchase. If customers are buying them for a reason other than quitting then it opens up the opportunity for trial and possibly brand switching.
With zero personal interest in promoting tobacco, I won’t be doing this research, but I still am curious what the main reason for single cigarette purchases might be. What do you think it is?
Braden Kelley is a Social Business Architect and the author of Stoking Your Innovation Bonfire from John Wiley & Sons. Braden is also a popular innovation speaker and trainer, and advises companies on embedding innovation across the organization and how to attract and engage customers, partners, and employees.