An Analysis of Sustainable Marketing for British American Tobacco

This report provides a detailed analysis of the sustainable marketing practices of British American Tobacco (BAT). It begins with an executive summary outlining the report's objectives, which include examining BAT's target markets, sustainability management principles (social, environmental, and economic), and the implementation of Corporate Social Responsibility (CSR). The report delves into a company analysis, assessing BAT's sustainability efforts through the lens of the triple bottom line and analyzing its ecological, water, and carbon footprints. It then explores BAT's marketing strategies, focusing on the 4Ps (Product, Place, Price, and Promotion) and examines sustainable marketing campaigns. A SWOT analysis is conducted to evaluate BAT's sustainability efforts in comparison to its competitors. The report also addresses critical issues such as child labor in Malawi and BAT's next-generation products. Finally, the report offers recommendations to reduce illegal smuggling, improve child labor conditions, and ensure the sustainability of next-generation products. This report is available on Desklib for students.

Running head: SUSTAINALE MARKETING
Sustainable Marketing
Name of the Student
Name of the University
Author Note

1SUSTAINABLE MARKETING
Executive Summary:
The purpose of the report is to provide a deep understanding on the business operations of British
American Tobacco Company which is a multinational company having its headquarters at
London. The report seeks to provide an analysis of the targeted markets of the British American
Tobacco Company as well as the principles of sustainability management adopted by the
company in order to create a positive impact on the organization. Emphasis has been made on
the concepts of social, environmental and economic sustainability. The report investigates the
fact that with the implementation of CSR policy how the market performance will be improved
by providing value to its stakeholders and major shareholders. The intention of the report is to
provide an understanding on the 4P’s of marketing mix which would be beneficial in evaluating
the product, place, price and promotion applied by the British America Tobacco Company. The
truth behind the successful implementation and operation of sustainable marketing of the
company has been emphasized in detail. In this regard the report was commissioned to examine
the marketing strategies applied by the British American Tobacco Company. The report provides
an analysis consisting of the strengths, weaknesses, opportunities and threats in relation to the
method of sustainability adopted by the company. Finally the report seeks to draw attention by
providing three appropriate recommendations in order to help the company to overcome the
weaknesses and improve the current situation faced by the British American Tobacco Company.

2SUSTAINABLE MARKETING
Table of Contents
Introduction....................................................................................................................................4
4.Company Analysis (1,846)..........................................................................................................5
4.1 Sustainability Efforts...........................................................................................................5
4.2 Sustainability according to Triple Bottom Line...............................................................5
4.2.1 Social Sustainability......................................................................................................5
4.2.2 Environmental Sustainability......................................................................................5
4.2.3 Economic Sustainability...............................................................................................5
4.3 Footprints.............................................................................................................................6
4.3.1 Ecological Footprint.....................................................................................................6
4.3.2 Water Footprint............................................................................................................6
4.3.3 Carbon Footprint..........................................................................................................6
4.4 Marketing Strategies...........................................................................................................6
4.4.1 Product...........................................................................................................................6
4.4.2 Place...............................................................................................................................7
4.4.3 Price...............................................................................................................................7
4.4.4 Promotion......................................................................................................................7
4.5 Sustainable Marketing Campaigns....................................................................................7
4.6 SWOT Analysis of BAT Sustainability and Its Comparison with Competitors............8
4.6.1 The Strength of BAT....................................................................................................8

3SUSTAINABLE MARKETING
4.6.2 The Weakness and Opportunity of BAT....................................................................8
4.6.3 The Threat of BAT.......................................................................................................9
4.7 The Truth behind the "Success" of BAT Sustainability Marketing Efforts..................9
4.7.1 BAT and Malawi’s Child Labour...............................................................................9
4.7.2 Under the Iceberg of BAT’s Next Generation Product.............................................9
5. Recommendations and Conclusion: (1000)...........................................................................10
5.1 The Suggestions to Reduce Illegal Smuggling in Bangladesh........................................10
5.2 The Methods to Improve Child Labour’s Situation in Malawi.....................................11
5.3 The Approaches ensure Next Generation Products to be More Sustainable...............11
References:...................................................................................................................................13

4SUSTAINABLE MARKETING
Introduction
The British American Tobacco is a multinational and multipurpose operating tobacco
company that has its headquarters present in London, United Kingdom. It is a public traded
business organization in UK, which has managed to operate in Singapore and in other places for
delivering extensive products and services to meet the demands and expectations of the
customers in the different market segments. British American Tobacco holds a leading market
position and has managed its operations worldwide by selling its most popular brands like
Dunhill, Kent, Lucky Strike and Pall Mall. There are few other brands as well including Kool,
Rothmans and Benson & Hedges. It is listed in the London Stock Exchange and is considered as
a major portion of the FTSE 100 Index. The tobacco company was introduced in the year 1902
and American Tobacco company and Imperial Tobacco company work in partnership to form
this company(Bat.com, 2017). The chairman of the company was James Buchanan Duke and the
organisation managed its operations all over China, Canada, Germany, Australia and New
Zealand.They are featured in Dow Jones Sustainability Indices for 16 consecutive years till today
. Launched in 1999, the Dow Jones Sustainability Indices (DJSI) track the corporate
sustainability performance of the world’s largest companies("British American Tobacco - Dow
Jones Sustainability Indices," n.d.)
Sustainability is maintained to create a better future of the company and deliver shared
value to the consumers, shareholders and other stakeholders too like the suppliers, consumers,
etc. It is needed to manage the business operations in a sustainable manner and at the same time,
maintain consistency in preserving the ecological balance in nature. The company wants to grow
and expand its business worldwide and to do so sustainable approaches are being followed such
as the introduction of light cigarettes consisting of lesser nicotine. Though tobacco consumption
is harmful, still with the introduction of light cigarettes, the demands have increased from
women and girls. This increased the customer base and sales revenue too. To remain socially
responsible within the socio-economic environment, the company has put label on the packets to
make people avoid the smoking habits (Chan, He & Wang, 2012). Taxes are put to increase the
prices of the products so that the customers do not buy those. It could be understood that the
products and services were being sold and at the same time making consumers know about the
harmful effects caused by consumption of tobacco.
The target markets of BAT are the Philippines and Indonesia’s market segments because
these countries are considered as developing countries with 30 percent of the population
habituated to smoking habits. The level of education is poor as well, which makes it a tobacco
friendly market to enter for BAT. With the introduction of smokeless and light cigarettes, the
company has managed to target other market segments with female customers too. The
sustainability management principles are managed to follow the rules and regulations to create a
sustainable environment and at the same time, create a positive impact on the organisation
(Cherian & Jacob, 2012). The principles include not misleading the consumers about the risks
associated with the tobacco consumption, selling the products only to the adult smokers, not
forcing the consumers to smoke or not to smoke and making a clear statement about the
promoting of sales of tobacco products.

5SUSTAINABLE MARKETING
4.Company Analysis (1,846)
4.1 Sustainability Efforts
To manage sustainable business, BAT has been focusing on implementation of Corporate
Social Responsibility (CSR) through the enhancement of market performance and value
delivering to its stakeholders and major shareholders (Responding to A Changing World, 2016).
Further analysis on the triple bottom line and footprints of BAT are stated below.
4.2 Sustainability according to Triple Bottom Line
4.2.1 Social Sustainability
In terms of social sustainability, BAT has benefited the society by introducing e-cigarette.
In 2013, it was the first international tobacco company to launch a Vapour Product—Vype— in
the UK ("E-cigarettes and NGPs," 2017). They call it Next Generation Products (NGPs). BAT
has invested more than US$1 billion over five years in developing a world-leading portfolio of
products in the NGP category. BAT stated that it has clear benefits for society in potentially
helping reduce smoking-related disease ("E-cigarettes and NGPs," 2017).
4.2.2 Environmental Sustainability
BAT has used the environmentally friendly resources to produce the products that can
create lesser harmful impact on the environment (Kim et al., 2012). Many programs are
launched, such as deforestation is prevented, and a clean environment is created for making sure
that environmentally friendly approaches are undertaken during the production of tobacco
products at BAT. In Bangladesh, BAT has distributed around 91.5 million saplings to the
country’s afforestation including 4 million saplings alone in the year 2016 (Annual Report,
2016). More importantly, that is the positive actions that can reduce the carbon emission
(Responding to A Changing World, 2016).
4.2.3 Economic Sustainability
Economically sustainable is crucially important for any business, including BAT. If they
are successful in developing and bringing to market a range of products that meet the needs of
adult smokers seeking potentially less risky alternatives to cigarettes, it will benefit the society,
as well, it will make commercial business sense to them and their shareholders ("E-cigarettes and
NGPs," 2017). On the other hand, BAT also meeting the needs of farmers by economically
paying them fair wages, which enable them to live better ("Sustainable agriculture and farmer
livelihoods," 2017). This is economically sustainable for both BAT and their farmers.

6SUSTAINABLE MARKETING
4.3 Footprints
4.3.1 Ecological Footprint
In terms of ecological footprint, BAT has been focusing on retain most of the
resources they consume and recycle most of the waste they generate to fulfil the goal of
maintaining “appropriated carrying capacity” ("Environmental and supply chain management,"
2017). BAT targeted that by 2025, to reduce the energy use by 25%, and reduce the waste to
landfill by 80% against year 2000 baseline (Responding to A Changing World, 2016). It so far
has reduced 16% of energy use and 67% of waste to landfill (see Appendix 2).
4.3.2 Water Footprint
From Appendix 2, clearly, BAT also focuses on water footprint. As its goal is to reduce
35% of water withdrawn by 2050. It is getting the positive result by reducing 29% in the end of
2016 (Responding to A Changing World, 2016).
4.3.3 Carbon Footprint
BAT also continue to work towards its long-term target to cut 80% of carbon dioxide
equivalent (CO2e) emissions by 2050 and have so far achieved a 47% reduction from their 2000
baseline (Responding to A Changing World, 2016).
4.4 Marketing Strategies
The marketing mix 4P strategy is used by evaluating the product, place, price and
promotion done by BAT tobacco company.
4.4.1 Product
In November 2016, BAT announced the launch of glo (e-cigarettes) in Sendai, Japan (see
Appendix 3). The company stated that the product is similar to the cigarette, but with reduced
risk potential, glo heats rather than burns tobacco, producing around 90% less toxicants than a
conventional cigarette ("E-cigarettes and NGPs," 2017). This means BAT is keep on innovating
for its product to be sustainable. Which can better meet the needs of smokers who are seeking
potentially less risky alternatives to cigarettes, and will help to meet the objectives of a number
of leading public health professionals ("E-cigarettes and NGPs," 2017).

7SUSTAINABLE MARKETING
4.4.2 Place
BAT sells its products to the wholesalers and it has been established in a proper location
so that the targeted market segments consisting of the consumers are aware of its existence and
the products and services delivered (Chan, He & Wang, 2012). On the other hand, the
distribution places of the products are provided with “No Cigarette sells to Minors” and other
slogans, to sustain its last link of product value chain (see Appendix 4).
4.4.3 Price
BAT's product prices have increased due to the use of a variety of environmentally
friendly components and resources such as tobacco leaf. Emphasis on environmental protection,
providing customers with a rich mouthfeel of premium tobacco that can cause less harm to them
while balancing ecosystems("Environmental and supply chain management," 2017). Another
reason for the price increased is BAT does caring its original sources of supply chain, farmers, to
ensure they are paid reasonably according to the raw materials supplied ("Sustainable agriculture
and farmer livelihoods," 2017). It has further encouraged them to provide the best quality raw
materials. Therefore, the approaches are sustaining its business.
4.4.4 Promotion
BAT promotions are done through advertisements, event sponsorship and by using direct
mail advertisements so that they can have a better control of the audience (BAT, 2016). The
tobacco items are promoted in bars and restaurant, nightclubs where people are often found to
smoke. Their brand image is also boosted by doing a lot of charity event such as donation to the
community ("Campaigning and engagement," 2017). This has also caused controversy over the
tobacco industry. All walks of life believe that the CSR conducted by the tobacco companies will
have the more negative impact on society than the positive contribution.
4.5 Sustainable Marketing Campaigns
In 2016, BAT launched “Thrive”, their sustainable agriculture and farmer livelihoods
programme to all BAT-owned and strategic third-party suppliers worldwide ("Enhancing
livelihoods," 2017). Thrive is focused on the farm and farming communities by satisfying the
needs and requirements of the farmers, which were considered as source of tobacco leaf needed
to produce their products. This has created long-term relationships with the suppliers and
engaged them within the business operations for maintaining openness and transparency all
throughout too ("Enhancing livelihoods," 2017).

8SUSTAINABLE MARKETING
Aligned with the five Capitals (financial, natural, physical, human and social. Strength)
that will have a demonstrable positive impact for farmers and their communities. This will also
enable a more tangible way of measuring BAT contribution to the UN Sustainable Development
Goals, including those relating to poverty, hunger, decent work and economic growth, life on the
land and partnerships ("Enhancing livelihoods," 2017). This promoted the message of
responsibly using the tobacco products and even created a positive mindset among the
customers.
4.6 SWOT Analysis of BAT Sustainability and Its Comparison with Competitors
4.6.1 The Strength of BAT
One of the strength of BAT is the environmental program, it has always been one of the
company’s most crucial goals, especially in reducing carbon emissions (Responding to A
Changing World, 2016). In fact, at the end of 2016, 27 locations across all regions were certified
to the ISO 14001 environmental standard (Responding to A Changing World, 2016).
As mentioned above, they are as well continuing to work towards their long-term target
in cutting carbon dioxide equivalent (CO2e) emissions. On this point, according to World Health
Organization (2017), BAT has 795 thousand of metric tonnes CO2 equivalent, while Philip
Morris International has the similar amount at 627 thousand. Whereas, Japan Tobacco has the
anomalously high volume at 5,304 thousand of metric tonnes (Tobacco and its environmental
impact: an overview, 2017). It indicates the investment around £20 million each year in
environment and related areas has an effective response (Responding to A Changing World,
2016), and it can be one key strength of BAT due to its positive and responsible public image
given its commitment to the environment.
4.6.2 The Weakness and Opportunity of BAT
In terms of dealing with the smuggling, BAT still has the long way to go. Each year, one-
third of all legally exported cigarettes, end up illegally smuggled across international borders
(LeGresley&Lindblom, 2002). It has enable tobacco to enter markets cheaply and thus
stimulating consumption, consequently increasing the burden of ill health caused by its use
(Joossens& Raw, 2000). In Asia, 555, State Express and Benson & Hedges, which belongs to
BAT are the smugglers’ brands of choice, mainly in Bangladesh (LeGresley&Lindblom, 2002).
In this regard, EU Commission report states that PMI has effectively met its objective of
reducing the prevalence of PMI contraband on the illicit EU tobacco market in 2016. As
demonstrated by an 85% drop in the volume of genuine PMI cigarettes seized by member states
between 2006 and 2014 ("Illicit Trade in the EU," 2017). It has created a positive and reliable
brand image to the public. Thus, it can be seen as an opportunity aspect for BAT to enhance its
sustainability efforts on compacting illegal trading.

9SUSTAINABLE MARKETING
4.6.3 The Threat of BAT
The threat of BAT is that Article 13 of the Framework Convention on Tobacco Control
(FCTC) requires a complete ban on all forms of tobacco advertising promotion, and sponsorship,
including CSR (Organization, 2008). It harder the tobacco industry situation in terms of
conducting the marketing campaign or promoting corporate brand. However, it provides the
chance for BAT to put more sustainable efforts on their supply chain and tackle the
environmental issues ("Environmental and supply chain management," 2017).
4.7 The Truth behind the "Success" of BAT Sustainability Marketing Efforts
4.7.1 BAT and Malawi’s Child Labour
In 2000, BAT co-founded the Eliminating Child Labour in Tobacco Growing Foundation
(ECLT) and launched its pilot project in Malawi (Otañez, Muggli, Hurt, &Glantz, 2006). From
one perspective, the project helps 10,000 children have access to quality basic education and will
not be in child labour ("ECLT Foundation," 2011). In the short term, 10,000 children benefit
from it, in the future, society will benefit from these children. Secondly, they helped 3,000
households in using energy-saving stoves to reduce wood consumption ("ECLT Foundation,"
2011). Which as well reduced the carbon footprint for the environment. These aspects advocate
BAT’s sustainable marketing efforts are successful.
From another perspective, however, researchers found that, in stark contrast, BAT and
PMI together are estimated to make $10 million in profits from child labour each year in Malawi
alone via the use of unpaid child labour during the same time (Advertising, Promotion, and
Sponsorship: CSR, 2011). Factually, 10,000 of children affected by the ECLT are just part of 1.4
million child labour in Malawi (BBC, 2017). Besides, BAT has not changed its tobacco buying
practices. It pointed out BAT is just using child labour projects to enhance company reputations
and distract public attention from how they profit from low wages and cheap tobacco (Otañez et
al., 2006).
4.7.2 Under the Iceberg of BAT’s Next Generation Product
On the other side, BAT’s NGPs aims to become a next generation tobacco player
(Williams-Grut, 2017). From a public health standpoint, glo appears to be healthier than
smoking, especially for people who are using glo to quit. Still, for young people who have never
smoked, research from the US Centres for Disease Control and Prevention and the University of
Hawaii Cancer Centre suggests it could pose a substantial risk, as teens who try e-cigs are three
times more likely to take up smoking (Williams-Grut, 2017).

10SUSTAINABLE MARKETING
In addition, in its release announcing the launch of glo in Canada, BAT says it "delivers a
cleaner experience," but admits in a footnote: "These qualities do not necessarily mean that this
product produces less adverse health effects than other tobacco products."(see Appendix 5 )
(CISION, 2017). Most importantly, BAT’s own internal tests suggest that, NGPs are less
harmful than cigarettes. However, there are fewer external studies verifying these findings and
internal testing by companies is largely seen as unreliable in the science community unless
verified by a third party such as the US Food and Drug Administration (Williams-Grut, 2017).
5. Recommendations and Conclusion: (1000)
The paragraph will discuss more about the current sustainable issues faced by
BAT, and then provide three appropriate recommendations to improve the sustainable situation
of tobacco smuggling, child labour in Malawi, and the NGPs of BAT.
5.1 The Suggestions to Reduce Illegal Smuggling in Bangladesh
Spain and Andorra Spain are one of the few countries in the world to have tackled
smuggling successfully (Joossens& Raw, 2000). From their past experiences, the only action to
control cigarette transit at international level will solve the smuggling problem. In 1997 there
was a close collaboration between the authorities in Spain, France, Britain, Ireland, and Andorra
and the European Anti-Fraud Office (OLAF) reduced the supply of smuggled cigarettes from
Andorra. As a result, contraband cigarettes, which had accounted for 12% of the Spanish market
in early 1997, held only 5% by mid-1999 (Joossens& Raw, 2000).Tax revenue collected from
legal cigarette increased by 25% in the same year.
The methods can also be implemented by Bangladesh. By reducing the supply into the
country at “container level” through intelligence, customs activity and cooperation, and
technology (Joossens& Raw, 2000), together with closer inspection of border goods and
strengthening of patrolling by police on major smuggling routes. On the other hand, SUTL, a
Singapore-based trading company, served as the primary middleman for the smuggling of BAT
brands into Bangladesh (Joossens& Raw, 2000). The Bangladesh government can pressure on
SULT’s subsidiary on local forcing it to stop the illegal smuggling. In this case, BAT has an
inevitable responsibility, hence, the company should actively cooperate with the Bangladesh
government and provide reliable information to improve the smuggling situations (Joossens&
Raw, 2000).

11SUSTAINABLE MARKETING
5.2 The Methods to Improve Child Labour’s Situation in Malawi
It is undeniable that transnational tobacco companies financially benefited from tobacco
produced by children as young as 5 years of age in Malawi and other tobacco-growing societies
(Otañez, Muggli, Hurt, &Glantz, 2006). While the ECLT and related projects they launched did
benefit several thousand children, they have had a negligible overall impact on the overall
problem of child labour and the number of child labourers in Malawi (Otañez et al., 2006).
In case BAT and other major transnational tobacco companies were genuinely committed
to improving the socio-economic conditions of child and adult tobacco farm workers, they
should rectify harmful business practices by implementing and enforcing a policy that they
would not purchase any tobacco grown using child labour (Otañez et al., 2006).
Besides, they should also conform with the core conventions of the United Nation’s
International Labour Organization (ILO) that cover not just child labour but the whole range of
labour rights concerns, such as right to organize, adopt a monitoring program that ensures that
third party monitors will visit the tobacco fields periodically to perform audits (Otañez et al.,
2006). Also, commit to public reporting of results of the monitoring and to revealing the names
of workplaces where BAT purchase tobacco as Nike did in April 2005 (BBC NEWS, 2005).
The actual cost of implementing these policies, which could substantially end or
potentially eradicate child labour, would be about US$10 million per year, the cost of replacing
child labourers with adults paid at minimum rural wage in Malawi (Otañez et al., 2006). While
modest compared to the $400 billion in revenues the tobacco industry generates annually
(Yach&Bettcher, 2000), this amount is more than the US$575 000 per year ($2.3 million over
four years to pay for activities such as constructing schools) the industry spends on “child labour
projects” in Malawi (Otañez et al., 2006). Thus, government intervention, public pressure and the
company consciousness are required to address child labour problems.
5.3 The Approaches ensure Next Generation Products to be More Sustainable
“E-cigarettes are a double-edged sword” ("The E-Cig Quandary," 2016). Despite they
could potentially advance smoking cessation, currently they are a disruptive product of unknown
safety and efficacy ("The E-Cig Quandary," 2016). Researchers indicated that if regulated
properly, e-cigs could bolster overall harm reduction by helping smokers quit tobacco cigarettes
or helping them smoke less. The trick will be regulation ("The E-Cig Quandary," 2016). For
teenagers who have never smoked, researchers suggest it could pose a substantial risk, as young
people who try e-cigs are three times more likely to take up smoking (Williams-Grut, 2017).
More, the NGPs product like glo has such a clean and fashion designs (see Appendix 3). It
undoubtedly results in teens perceive scant risk in e-cigs, which increases their chances of
smoking. Trends in youth e-cig use are especially worrisome, since they presage behaviours that
may be difficult to alter once young e-cig consumers become adults ("The E-Cig Quandary,"
2016).