Question 1

The Innokin iClear 30 electronic cigarette (also known as E-cigarette) is an innovative way of smoking without all the risks attached to it. It is a cylindrical-shaped tube that has a red tip as well as a filter. The device operates with a battery. It is filled with liquid nicotine that is dissolved in water and propylene glycol. The E-cigarette works in such a way that when one takes a puff, the nicotine heats up thus creating vapour that is inhaled in the lungs of those smoking it. The device is portable and can be smoked anywhere as it does not have a smell.

The product is a unique alternative to a regular cigarette, it does no harm to human lungs and the environment, as no secondary smoke is emitted. The iClear 30 e- cigarette contains no tobacco. The need that the product addresses, is that it aims to offer users an enjoyable, convenient and relaxed way of smoking. The iClear 30 also aims to reduce sicknesses or diseases (such as lung cancer and respiratory problems) caused by regular cigarettes. This device is designed for people who wish to quit smoking as well as for those who are always open to new, fun filled experiences. Electronic cigarettes is a foundation of quitting smoking, a number of smokers find it absolutely difficult to stop the habit of regularly smoking but it is proven that if you familiarise yourself with this device, you will find it easier to stop smoking. The iClear 30 is not only purchased to reduce smoking, but many consumers are also inquisitive and choose to smoke it as a recreational activity, similar to hookah. This does not imply that the person smokes cigarettes (with tobacco).

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As the product is new to the market therefore it aims to be highly profitable. Innokin iClear 30 electronic-cigarettes use the following pricing strategies:

1. Product line pricing – this is basically pricing various products within the same product range at different price points. This means the more features that e-cigarette has, the higher the price.

2. Premium pricing – the exclusiveness of the iClear e-cigarette reflects the high price set. The more unique the product is the higher the price.

Question 2

Market segmentation refers to the division of segments into smaller, manageable parts with similar characteristics, needs and behaviours in order to reach a common ground with the target market. Marketers usually use three ways in which to segment their market. This is known as the three Broad Market Segmentation approach. It consists of:

1. Concentrated targeting:

This market offers a specific segment which can result in greater knowledge in manufacturing and marketing processes. Any business using concentrated targeting is likely to be successful because it only focuses on one segment and it would therefore be more manageable, but it could act as a threat due to the risk involved in the product failing or consumers who do not accept the product. This could lead to a dramatic decrease in sales.

2. Differentiated targeting:

Businesses that are using this target strategies, targets two or more market segments using two or more different marketing strategies. It involves high costs when businesses are trying to improve manufacturing processes and increasing production. This will cause various other costs to increase.

3. Undifferentiated targeting:

This targeting strategy is chosen when businesses avoid differences in the market. Businesses offer one specific marketing offering by focusing on the similarities found in the market segment, as opposed to focusing on the differences. The disadvantage of this target approach is that standardized products can cause economies of scale to be achieved.

The broad market segmentation approach our product, Innokin iClear 30 e-cigarette uses is concentrated targeting by focusing on one specific target market and that includes everyone between the ages of 16- 55+ years old. This target market has commonalities, in that it caters for smokers who would like to quit the habit as well as for people who appreciate the uniqueness of the product, as well as the benefits and satisfaction this product offers. It is evident that Innokin achieves greater satisfaction by marketing their product at one specific segment.

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Various aspects can be taken into consideration when choosing to segment the market. The four dimensions for market segmentation are:

1. Geographic Segmentation

The iClear 30 e-cigarette is a well-known product all around the world. It can be used in any country, nation, state, region, city or neighbourhood without people from different places wondering or asking what the is. They might enquire about the nearest place to get one but not about what the actual product is.

2. Demographic Segmentation

Age: Users of the e-cigarette comes in different age groups ranging from 16-25, 26-35, 36-45, 46-55 and the 55+ category. The consumers ranging from age 16 to 25 are more likely to go after the different flavours that are on offer for as it is similar to the hookah pipe they tend to be smoking. The age groups from 26 up are more likely to stick to the tobacco or mint flavoured liquid refill as the cigarette satisfaction is what they’re after and you won’t always get that from the other flavours because they taste like sweets and fruit.

Gender: The e-cigarette is vaporized by both male and female. It does not create a stigma that it’s a male only or female only product. The e-cigarette is completely unisex.

Family: E-cigarettes are family friendly as it does not produce harmful smoke but rather vapour.

Education: The fact that cigarettes are so harmful to the human body due to the tar and burning of tobacco, we are taught that we shouldn’t smoke. With all that said and done, even from a young age, most of us still experiment and eventually end up with smoking as a habit. The e-cigarette was invented to be the non-harmful alternative to smoking as all you inhale and exhale is vapour -which after several tests- has not been found to be harmful to our bodies.

Income: People from all different incomes may use the electronic cigarette as the different brands of the device comes in a variety of prices ranging from R200 right up to R1000. Even though the different brands have different prices, they are all the same product and can all use the same liquid refills.

3. Psychographic Segmentation

Lifestyle and Social Class: The e-cigarette was invented to create an idea that people who own the device is of a higher social class as those who do not own one. Many smokers are switching from cigarettes to e-cigarettes to improve their lifestyles.

4. Behavioral Segmentation

User status: Many people of high statuses are switching from cigarettes to the TWISP electronic cigarettes as this is the most expensive brand. The TWISP is of a higher quality than the other brands and also has five generations of the e-cigarettes.

Usage Rate: Smokers who smoke a packet a day are likely to smoke a 200ml liquid refill in 3 to 4 days. These people are likely to be classified as rich as rich as a 200ml bottle of liquid refill costs R200.

Benefits sought: People switch from normal cigarettes to the e-cigarettes to get rid of the horrible smell that comes from smoking. Since its vapour coming from the e-cig, you do not get any lingering smells. The other benefit people look for from the e-cigarette is to eventually quit smoking. This is why there is a homeopathic range of liquid refills. The homeopathic range does not contain any nicotine so it helps users to slowly quit smoking.

Attitude: The attitude of the consumer toward smoking the e-cigarette is what will eventually help them to quit smoking. If they continue to smoke an entire bottle of liquid refill per day, they will never quit smoking unless they switch to the homeopathic range.

Question 3

Production- Consumption gaps refer to the place where the goods are manufactured is not necessarily the place in which the goods are consumed. The gaps that affect our product, Innokin iClear e-cigarette are:

Space gap: There is a factory in one specific area but the users of these e-cigarettes are located in different areas. This leaves a geographical barrier between the manufacturer and the consumer.

Information gap: First time, uninformed buyers might not have sufficient knowledge on this electronic cigarette. A cigarette smoker, who is reluctant on quitting, might decide not to buy an electronic cigarette because they are not very familiar with this product and the easier alternative would be to purchase cigarettes because it’s cheaper and easily accessible. An electronic cigarette also requires lots of effort and discipline when trying to kick the habit of tobacco, some people simply don’t have the time or patience and therefore return to smoking cigarettes.

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Value gap: The manufacturer and the consumer of the iClear e-cigarette must agree on the price of the e-cigarette. If consumer’s perception of the product is too expensive, consumers will purchase a cheaper alternative or a cheaper brand of e-cigarettes.

All these Production-Consumption gaps can seriously hamper sales for Innokin and this could lead to a drastic decline in production and market share for this company. There are ways in which these gaps can be closed by identifying the Marketing mix that Innokin uses for the iClear e-cigarette. The marketing mix entails the product, price, place and promotion.

Product: iClear e-cigarette

- It is of a great quality. - This product is not hazardous and does not produce secondary smoking because it is simply heated nicotine vapour. - This e-cigarette can be reused. - There are a variety of flavors to choose from and these appeals to users.

This will help close the value gap and increase sales. People will add greater value to the product because of all the advantages this product serves.

Instruction manuals are distributed when this e-cigarette is bought by consumers. This closes the information gap because more people will become informed as to how the product works as well as the benefits thereof. This will cause sales to increase due to word of mouth.

The internet also closes the information gap because if people want to find out more about the product, they can simply research it or they can log onto the company’s website.

Price: This refers to the price at which the e-cigarette is sold for, taking into consideration all input costs. The iClear e-cigarette retails at a price of R200- R1000. The price range is dependent in the type of e-cigarette consumers wish to purchase. Innokin has a competitive advantage because its competitors, Blu and other Chinese imitations usaully charge more for e-cigarettes which are of a lower standard and quality than Innokin.

This closes the value gap because consumers will agree that this is an acceptable price range that is charged for the iClear e-cigarette because of its outstanding quality that the consumer will derive from purchasing this product.

Place: This refers to where the product can be purchased. The Innokin, iClear e-cigarette can be found in most shopping centers and in malls. A wide variety of electronic cigarettes can also be found in high-tech, gadget shops as well as tobacco shops. iClear e-cigarettes can also be purchased online through OLX or Gumtree.

This closes the space gap because this product is easily accessible and it can be found in most malls.

Promotion: This normally refers to freebies consumers get when purchasing a specific product. With every iClear e-cigarette purchased, consumers get a free liquid nicotine refill. This will increase sales because more people will start buying products and they will save money by having to purchase additional refills. This is also closes the value gap.

Question 4

Due to the uniqueness of the product there is more than one type of positioning method used; one based on benefit positioning and another on competitor positioning.

Competitor positioning would point to the fact that the company can claim that the Innokin iClear 30 E-Cig is not only healthier but can be used as an alternatively cheaper and more helpful way of quitting or reducing ones intake of cigarettes. Since there is no tar sometimes less tar depending on the syrup one buys for the Innokin iClear it affects ones health on a lower scale than that of cigarettes. A packet of cigarettes on average cost between R22-R35 a packet, a bottle of syrup cost about R50 albeit the fact that it takes longer to smoke a bottle of syrup than a actual packet of cigarettes. The syrup that is smoked also comes in not only a variety of flavours but as well as strength of the syrup once it reaches ones lungs, to help curb or completely remove the need for a cigarette.

Benefit positioning would speak to the convenience of the actual product no lighters are needed to smoke, wind as a problem becomes reduce to zero percent(considering the wind can blow out a cigarette or make it difficult to light) and it can be smoked by a touch of a button meaning no pre-mature killing.

I suggest the company take up a user positioning strategy to capture a market share mostly ruled by cigarette companies. This would be best achieved by personalisation of the product to a particular shape, style, colour preference or engraving of a user’s name on the Innokin iClear 30 E-Cig. This allows the buyer of the product to have a sense of ownership and uniqueness about the product. This in combination with the other strategies would not only raise the profile of the company but position the Innokin iClear 30 E-Cig as a clear rival to any brand of cigarettes out on the market.

In conclusion, based on the above mentioned information, Innokin iClear 30, it is evident that the marketing strategies used, are working well with the product and it is inline with the objectives the product hopes to achieve. Success can be measured by the success achieved by Innokin and the turnover the company received since its inception.