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Godfrey Philips to slash ad budget

01-June-2004
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Godfrey Philips to slash ad budget

The blanket ban on the advertising of tobacco products is seeing cigarette-makers like Godfrey Philips to relook its advertising plans. With less compulsion to outspend the competition, every penny rescued from huge advertising and promotion (A&P) budget could either add to the bottomline or will be put to some other developmental work.

Godfrey Philips’ A&P budget will shrink to Rs 60 crore in 2004-05 from Rs 80 crore in 2003-04.

Says company’s spokesperson: ‘‘We had taken a conscious decision to reduce our A&P expenditure. Our A&P spending decreased from Rs 97 crore in 2000-01 to Rs 88 crore in 2002-03 to Rs 80 crore in 2003-04.’’ He adds: ‘‘With no options left to advertise now, we would deploy the available fund for other developmental work. Around 20 per cent of our A&P was accounted for by print and outdoor advertising.’’

‘‘With no options left to advertise now, we would deploy the available fund for other developmental work. Around 20 per cent of our A&P was accounted for by print and outdoor advertising.’’

As a percentage of sales (net of excise), Godfrey Philip’s A&P spending came down from 18.48 per cent in 2000-01 to 12.94 per cent in 2003-04. At the same time, the company’s PAT jumped from Rs 46.56 crore in 2000-01 to Rs 52.04 crore in 2003-04.

Godfrey Philips adheres to Philip Morris global guidelines which stipulate that the company’s brands can not be extended to non-tobacco product categories. This has clearly prevented the company from exploiting the fuzzy logic that surrounds surrogate ads in the country. Earlier, the health ministry had proposed to set up a committee to look into the issue of surrogate ads, including definition of ads for liquor and tobacco industries.

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