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E-Cigarette Industry Analysis

The proposed business will operate under the Smoking cessation Industry. The relevant NAICS code for the industry NAICS Code: 621999. This industry is an alternative industry to the normal cigarette industry, meant to assist in smoking cessation. Despite the emergence of this new market just recently, in the year 2004, the industry is growing significantly (Jason, 72.). The industry came up as a viable alternative towards achieving Smoking cessation. The Smoking cessation industry is currently growing, with the leading region globally being the North American region, followed by Europe and APAC region (Mintel Group Ltd., n.p.).  The smoking cessation industry is led by the USA in terms of the market size, which is the followed by UK, Germany and then Russia. Nevertheless, the smoke reduction industry has grown steadily in almost all developed countries and even in many other countries around the world. While the most known method for helping in smoking cessation traditionally has been nicotine replacement therapy (NRT), new methods products are now rising, which targets the smoking cessation industry (Wikinvest, n.p.).

The market is segmented into two broad categories of the cessation therapy consumer segment and the smoking cessation products/pills consumers segment. The therapy market segment consumer segment constitutes the consumers who are seeking the services of medical professionals to assist them in the cessation of their smoking habits, with such consumers having access to 17 different smoking cessation therapies, but one of the therapies, the nicotine replacement therapy (NRT), remains the most predominant therapy that many smokers are seeking (Wikinvest, n.p.). The market segment of smoking cessation products / pills includes the customer segment which buys goods manufactured by the smoking cessation industry, such as smoking cessation pills, which are commonly used to help smokers quit their habits. The use of the smoking cessation pills is highly adopted in the UK markets, with the product generating £720m in revenue in the year 2011 alone (Steele, n.p.).

E-Cigarette Industry Analysis

The smoking cessation industry is relatively small in size, considering that it is an industry that is relatively new in the market, and its products are yet to be known very well. However, the industry is poised to grow in the near future to a substantial market. While the current market share of the smoking cessation industry is estimated at between 3 and 4% of the overall, the growth rate of the industry is predicted to be significant in the coming months and years. The global smoking cessation industry was estimated to be an industry worth $1.9 billion in market value for the smoking cessation therapies only (Jason, 72.). This segment of the smoking cessation industry is poised to grow significantly, and reach a value of $3.0 billion by 2016. On the other hand, the smoking product/pill segment is also growing at a significant rate, with this segment of the smoking cessation industry hitting over $1 billion in 2012, and segment is poised to grow moderately over the next few years, with sales reaching $1.2 billion in sales by 2017 (Mintel Group Ltd., n.p.).

The industry is currently in the early growth stage of the product lifecycle, with the introduction stage having been between the years 2004 to 2008. Staring the year 2007, the industry entered the early growth stage of the product lifecycle, and is currently experiencing enormous boost in growth, not only in the USA market, but also across globally. Nevertheless, the danger associated with this stage of the product lifecycle the Smoking cessation industry currently in is that; there are higher chances that there will be new entrants seeking to enter the industry in their big numbers, which may make the competition stiffer.

The industry is less concentrated currently, with only few firms operating in the industry. The number of firms operating in this market is currently few, although their actual number cannot be accurately stated, considering that most of the firms offering these services and products also double as health facilities or patient support facilities (Mintel Group Ltd., n.p.). However, there are several giant companies that have venture into the .smoking cessation industry, with GlaxoSmithKline’s being the major player in this market, having introduced several smoking cessation products into the market, such as Zyban drug Chantix, both of which have been doing well in the smoking cessation industry (Wikinvest, n.p.).

Nevertheless, the key smoking cessation product in the USA market are the nicotine replacement therapy (NRT) as a product of the smoking cessation industry, which is currently being used by 20% of the market, and has several products that assist smokers to stop their smoking habits, such as gums and inhalers (Wikinvest, n.p.). On the other hand, the product that seems to be popular in the USA market is the Chantix, which is among the few branded anti-smoking drug offered in many European and the USA market, which has a market share of 67% in the USA smoking cessation industry (Wikinvest, n.p.).

The key trends in the industry is the evolution of a range of more smoking cessation products in the market, with most of them at the laboratory and testing stages, before they are approved and introduced into the market. It is estimated that there will be over 19 branded smoking cessation medicines in the global market by 2018, which will be worth over $20 billion in market value (PRNewswire, n.p.). Another trend is the smoking cessation industry is that; new therapies are being researched and developed every other year, and the trend is poised to continue in the future. Finally, there is the trend of giant companies both from the tobacco industry and the health industry, which are gaining interest in the smoking cessation industry, and the trend is poised to continue, while new small companies and individual business are also expected to venture into the market (Mintel Group Ltd., n.p.).

The key success factor in the smoking cessation industry is purely product differentiation. The winners in the industry are producing different brands all meant to offer the same solution; assisting smoking cessation, but in form of different brands. Thus, differentiation strategy is key in the industry, which then means that any venture seeking to enter the market must be creative and innovative enough to come up with a product that will be different from the existing ones (Steele, n.p.).  The Return on Investment Ratio (ROI) for the industry is relatively moderate, at 1.9 billion in revenues as returns, compared to close to $7billion investment in the industry that far, meaning that there a promising growth and future in this industry with relatively good returns. This means that a smoking cessation product is a competitive product for the venture to invest in.

Works Cited
  • Jason Wright (2013). “Knowing How to Quit Smoking.” Addiction 1 (1). p. 72.
  • Mintel Group Ltd. “Smoking cessation sales hit $1 billion as more Americans vow to put it out in 2013”, January 3rd, 2013. Mintel Reports. Retrieved February 16, 2014 from http://www.mintel.com/press-centre/social-and-lifestyle/smoking-cessation-sales-hit-1-billion-as-more-americans-vow-to-put-it-out-in-2013-reports-mintel
  • PRNewswire. “Medicines for Smoking Cessation: Global Markets”, Oct. 9, 2013. Retrieved February 16, 2014 from http://www.prnewswire.com/news-releases/medicines-for-smoking-cessation-global-markets-227039731.html
  • Steele, Tony. “Smoking cessation is a growing industry”. Doctor Fox online doctor clinic and pharmacy, July 21st, 2012 . Retrieved February 16, 2014 from http://www.doctorfox.co.uk/news/smoking-cessation-is-a-growing-industry/
  • Wikinvest. “Smoking cessation drug market”. Wiki Analysis, 2012. Retrieved February 16, 2014 from http://www.wikinvest.com/concept/Smoking_cessation_drug_market

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