Write And Analysis Three Solutions About The Case
In order to limit the impact of e-cigarettes on the sales of tobacco cigarettes, tobacco companies can lobby for additional regulation of this new product category. Increased regulation will help to “level the playing field” and reduce the advantages enjoyed by e-cigs as a consequence of their largely unrestricted marketing. Among the areas for increased regulation of e-cigarettes, the tobacco companies can lobby federal, state, and local governments to ban television and radio broadcasting of e-cig advertising, prohibit online sales of this product category, and proscribe e-cig use in public places. These changes will reduce some of the advantages of e-cigs over tobacco products, thereby presumably slowing the market acceptance of this product category.
The tobacco companies can also lobby the federal government to regulate e-cigarettes as an over-the-counter pharmaceutical. The Food and Drug Administration (FDA) would then regulate product approvals and monitor the distribution of e-cigs across the United States. Compliance, in the form of application submissions, clinical testing, and pre-market approvals, will be costly for applicants. This will likely limit the number of new entrants in this market, and will therefore help to reduce the intensity of market competition.
In order to further blunt the effect of new entrants in the marketplace, tobacco companies can acquire any promising e-cig brands in order to manage the marketing communications and distribution of these products – or perhaps to simply discontinue these lines. Lorillard acquired Blue eCigs and is seeking to grow this product without cannibalizing the sales of its tobacco cigarettes. Similarly, Altria and Reynolds American could acquire existing product lines in order to manage competition in the tobacco industry.
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