BIG TOBACCO HAS CANCER. IS INNOVATION THE CURE? Marketing innovation in the context of regulation: A case study of the tobacco industry
Sammanfattning: Objectives: The tobacco industry has faced increasing marketing regulations since the danger of smoking was widely acknowledged in the 1960s. Critics have pointed out that the "big tobacco" have unlimited resources to circumvent regulations. The author aims at determining if such claims are justified and if the spectrum of regulations has pushed marketers to show a higher level of innovation.Methods: The author builds on case methods, establishing an industry-specific innovation measurement framework. Four measurement units were used in three distinct markets based on recent marketing mix activities. Markets with different degrees of marketing regulations were selected, namely Indonesia, Canada and Norway.Results: Although marketing mix innovation is resourceful to counteract some of the effects of regulations, Norway, a highly regulated market presents a scarce level of innovations. Canada, which is slightly less regulated, has designed a pricing strategy enabling to survive on the short term but remains conservative in other marketing fields. Indonesia, on the other hand, show a high level of innovation in all aspects of the marketing mix studied. Overall, regulations did not foster innovation in the market scrutinized. Additionally, the author emphasizes that promotion regulations are decisive, and amend product innovation.Discussion: The author analysed the case of three isolated markets at a time where the tobacco marketing and tobacco regulations become globally integrated, other factors must be accounted for. However, the findings suggest that profitability and innovation are not immediately correlated due to the peculiar and addictive aspect of cigarette. Besides, while strict regulations have been in place for only a few years, cigarettes have been in the cultural landscape for decades and the current ban does not remove previous brand and category knowledge. The industry can remain profitable by leveraging on the high price elasticity up to a certain point. It will unlikely be able to grow indeterminately on a very long term. Finally, the author discusses sustaining innovation, while the industry may soon respond more by introducing disruptive innovations and reinvent their activity.
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