Product Extension to kill your own Product

Reynolds, maker of Camel cigarette, is also producing & marketing an array of smokeless alternatives – including Camel strips, lozenges and snuff. These are in fact nicotine candies to offer smokers a mechanism to maintain their addiction when they need to be in a smokeless environment. This seems a natural product extension for a cigarette producer to ensure that they retain in business even when smoking is being discouraged world-wide. Industry statistics demonstrate that sales volumes of smokeless tobacco are rising 6% a year while cigarettes are falling 4%. This estimates the US smokeless tobacco market at USD6.5Bn in 2010.

Smokeless tobacco has been criticized as a worse alternative to cigarette as it decreases the incentive to quit. To carry their product extension one step further, Reynolds is now getting into offering smoking-cessation products. It bought Niconovum last December, a Swedish maker of nicotine gums. This product is to compete with products such as Nicorette gum and Commit lozenges sold by pharmaceutical giant GlaxoSmith-Kline, a quit-smoke aid. Quit-smoke products are an annual USD2.1Bn market in the US.

In offering a “Total tobacco” solution, from consuming it to stop consuming it, Reynolds is perhaps a pioneer in product marketing that actually offer consumers a complete choice and a total solution.

Reynolds American commands 28.3% market share in US while Philip Morris tops the market with a 49.9% share.

1 in 5 Americans smoke today compare to 1 in 3 in 1980.