ECIG Electronic Cigarettes Marketing Strategy Analysis

Introduction and Company Overview

Dan O'Neill took over as CEO of ECIG (Electronic Cigarettes International Group) on January 9, 2015, replacing outgoing Brent Willis, who founded the company but who had also been widely viewed as the main reason for its plummeting share price. Dan O'Neill's record of experience as CEO of Molson's and in top leadership positions at Heinz and Star-Kist suggests that ECIG may finally be in more capable hands. With the reduction of debt and the one-time write-off of losses, the company has pivoted toward better years (Hoogervorst, 2012). However, restructuring its debt and distribution channels are key issues that must be addressed before any reversal in the company's fortunes can be expected.

The three main reasons customers will be attracted to ECIG are: (1) sustainability — the vaporizer market is growing as smokers look for healthier alternatives; (2) Dan O'Neill is providing the kind of corporate governance that draws consumer confidence; and (3) ECIG is situated expansively throughout the UK in high-foot-traffic areas with easy access for consumers.

Product Concept and Buyer Utility Map

ECIG is a real electronic cigarette and vaping company with retail shops and kiosks in both the UK and USA, as well as an online store for each of its various brands, ranging from the popular VIP brand to the FIN and Vapestick brands. According to a landmark health study released by Public Health England, e-cigarettes are approximately 95% less harmful than tobacco products (Public Health England, 2015). This finding significantly supports the core value proposition of ECIG's product line.

The design of ECIG's various brands is straightforward, consisting of both disposables and refillables. VIP is a major seller in the UK, with more than 100 kiosks established in high-traffic locations, including in and around major metropolitan areas such as London. FIN has recently been launched in America and has quickly expanded to more than 5,000 locations nationwide. The products do not come with warranties or carry significant life cycles. New product development consists of identifying the latest advancements in vaping technology and applying these to appeal to individuals looking to quit smoking.

Buyer Utility Map

Purchase: The customer may choose from a variety of retailers — both online and physical — to select a product that appeals to individual tastes. If the customer has prior knowledge of vaping, the process is straightforward; if not, tutorials are available on the web and assistants are present at kiosks and shops to assist. The kiosks in the UK are conveniently located to maximize foot traffic. The primary risk at the point of purchase is that the customer may not enjoy the vaping or e-cigarette experience. The image of vaping is observed firsthand in social settings, where it is highly popular among the UK populace, and signage in shops demonstrates proper usage.

Delivery: The customer can purchase online and receive the product by mail, or purchase in person at a kiosk or shop. There is minimal risk in either purchase setting, aside from potential delays in mail delivery. Convenience is guaranteed, and the experience of being catered to — whether in person or online — is a tangible benefit.

Use: The customer receives the product and uses the e-cigarette or vaporizer as an alternative to smoking. Vaping can be done anywhere in public, as there is no second-hand smoke produced.

Supplements: The customer can purchase e-liquids and mix and match flavors to suit personal taste. Additional vaping equipment is also available to enhance the experience.

Maintenance: Minimal maintenance is required, as some products are disposables and others simply require swapping out the e-liquid cartridges. Battery-powered devices will need periodic recharging.

Disposal: Disposable products can be discarded in ordinary trash, and there is no special cost associated with disposing of the product.

Product Classification and Features

ECIG's offerings constitute a specialty product, given that the category is relatively new to the market, serves a specific consumer base, and provides an alternative method of achieving the smoking sensation without the associated lung damage.

Key product features and benefits include:

Vaping accessories that promote a healthy lifestyle; e-cigarettes that allow smokers to break the tobacco habit; vape lounges and shops that allow customers to customize e-liquids; online stores that enable convenient home shopping; and sales promotions available both online and at kiosks and retail partners.

Products are continuously in a mature development state as the industry evolves. FDA guidelines in the USA must be met to ensure the highest quality of e-liquid products and accessories, and remaining current with these regulations will be pivotal for success in the U.S. market.

Distribution, Target Market, and Promotion

In terms of target market geography, so-called "Places in Trouble" (Kotler, 1993) are to be avoided in favor of non-traditional venues such as kiosks in the UK. In America, the kiosk model has less established traction but will be utilized where deemed cost-efficient. Currently, products are stocked in retailers such as 7-Eleven and Walmart, though non-traditional routes may be pursued if traditional vendors underperform. ECIG is an international company with shops in the UK, Africa, Europe, and the USA, and it expects to expand to additional countries — including Egypt and various Asian markets — in the coming months and years.

Distribution Strategy: ECIG employs a non-traditional distribution model centered on kiosks, which are inexpensive and easy to maintain. This strategy helps the company overcome market-share barriers by providing street-level consumer access and daily brand visibility.

Market Exposure: The company takes a selective approach, targeting that segment of smokers who are health-conscious and interested in quitting or transitioning to a vaping experience.

Promotion: Customers are informed and persuaded based on government and health studies published in the UK demonstrating why vaping is a healthier way to reduce tobacco dependence. "How to Vape" sessions are conducted in vape lounges already established across the UK.

Promotional Objectives: ECIG aims to provide information through direct-to-consumer consultations, increase demand by demonstrating product effectiveness, and differentiate its offerings by positioning them as the best vaping brands on the market. Sales will be stabilized by reducing SKUs and relying on the fundamental pillars of organizational discipline.

The electronic cigarette and vaping market is heating up rapidly. Wells Fargo analyst Bernie Herzog has suggested the industry could reach tens of billions of dollars in revenue by 2017. Between 2012 and 2013, e-cigarette sales exceeded $600 million (Giovenco, Hammond, Corey, Ambrose, & Delnevo, 2014, p. 14). Bloomberg has predicted that e-cigarette sales will match or "exceed those of traditional cigarettes by 2047" (Goodman, 2013). ECIG, as a publicly traded company with products ranking in the top ten of this growing sector, is well-positioned to benefit from this momentum.

ECIG faces competition from Blu Cigs as well as UK brands such as V2 and Apollo. However, ECIG's Vapestick consistently ranks among the top ten starter kits in the UK and was recently voted best starter kit by an independent reviewer (Vapestick Ranked the UK's No. 1 E-Cigarette Brand, 2015). This recognition is actively promoted in stores and online.