E-Cigarettes

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Technology appears to be at a halt, the fast paced innovation cycle seem to have ceased. Local electronic cigarette stores and manufacturers in the USA are waging a battle for their very survival with the new federal and state regulations that could snuff out their business with rising taxation and fees. The cost of submitting the required documentation for approval is expensive and the wait time for getting product to market (only after approval) is detrimental to small companies without the resources to act quickly. Companies may need to even redesign their products to adhere to the FDA's strict requirements. Under the new regulations, companies with little cash on hand with find it difficult to survive.

Taking all these factors under consideration, these undoubtedly pose the greatest threat to the future of the e-cigarette industry. And yet, in spite of all this, e-cigarettes are becoming more and more commonplace, with its rising popularity; “it’s all the hype now”. This generation that grew up with the Internet and saw the birth of smartphones, view e-cigarettes as the digital counterpart to the analog cigarettes. “It is popular because it’s cool and new and electronic.” Paul Taskashi of the Herald sun rightly states. The future is uncertain but I believe e-cigarettes are a thing of the future, even with government regulations and increased cost, the market will continue to expand due to its high demand.

Health Effects of E-Cigarettes

Many critics view e-cigarettes as yet another harmful trend, others share the view that the device can provide an opportunity to help a meaningful number of smokers finally quit smoking.

Key risks (what we know):

- E-cigarettes use nicotine, which can harm a developing fetus and create risks to individuals with cardiovascular disease. Michael Siegel, MD, professor of community health sciences, Boston University School of Public Health states, “Nicotine is addictive and nicotine also has some cardiovascular effects. It is a cardiovascular stimulant and also it has detrimental effects on pregnancy” (Jun 2015). Siegel went on to further explain, “that for individuals with severe coronary artery disease, nicotine may exacerbate the condition”

- E-cigarette vapor contains more than a dozen of the carcinogens found in cigarette smoke, though at a lower level.

- Additional possible risk is nicotine exposure to adolescents that can affect brain development in young people. Tom Frieden, MD, CDC (Center for Disease Control) director explained in a CDC press release “Adolescence is a critical time for brain development. Nicotine exposure at a young age may cause lasting harm to brain development, promote addiction, and lead to sustained tobacco use”

- Siegel (2015) also added, that the liquid in e-cigarettes may also present a health risk to children. He explains “the liquids are so heavily concentrated with nicotine that they may be poisonous to children, particular toddlers and infants".

- In January 2015 The New England Journal of Medicine published an article that states, “ high-powered vaporizer could produce a study that evidenced toxic levels of formaldehyde”.

Benefits (perceptions):

- Lower health risk: Are E-cigarettes a healthy alternative to cigarettes and other tobacco related products? The jury is still out on that as the FDA is still testing the product. It is however a “cleaner alternative”

- Flavours: the variety of interesting e-liquid flavours (over 50) makes vaping more enjoyable.

- Aesthetics: E-cigarettes do not produce the smell and residue like cigarette smoke, no yellow fingers and stained teeth. E-cigarettes produces vapor instead of ash or smoke, which thanks to the e-liquid flavours its smell is said to be quite pleasant.

- Convenience: It is socially acceptable in places where smoking is not allowed. Being able to smoke is bar and not having to step outside a restaurant especially in the blistering cold during the winter months is a huge motivation to many smokers switching to e-cigarettes

- “Survey after survey shows [that] when you ask people who have tried e-cigarettes what [they tried] for, one big chunk says to quit smoking and another big chunk says to reduce smoking,” said Jonathan Foulds, PhD, professor of public health sciences and psychiatry at Penn State College of Medicine’s Cancer Institute. E-cigarettes have become very popular among tobacco smokers who are trying to quit or reduce the harm.

- Cost/Saving: By switching to e-cigarettes smokers save an average of $600 per month

Market

The electronic cigarette market is a fast growing industry with substantial revenue opportunities. The industry appeals to many business leaders as its generates a high profit margin, increase growth potential and repeated business from lifelong customers. Tobacco industry can look to enter new markets such as India, Russia and Africa.

Chapter 3

Segmentation

Market segmentation defines your specific market. It is the process of dividing a larger market into smaller division of consumer or specific group based on their needs and wants. The E-cigarette segment is primarily based on demographics, behaviour and physchographic.

Demographics (Forbes 2013)

- 60.5% Female audience

- 39.5% Male audience

Geographic

- North America

- Europe

- Asia-Pacific

Target Market

The target consumer of the e-cigarette industry is male and female, 18 years and older, living within the mid-class scale community. Primarily retirees, business professionals, low level employees and college students who have a taste for cigarette and are active smokers, smokers trying to quit and potential smokers.

Statistics (Forbes 2013):

- 99% of E-Cig users are previous or current tobacco users

- 79% of E-Cig users are repeat buyers

- 70% of E-Cig users were looking for an alternative to tobacco before they found e-cigarettes

- 49.5% of E-Cig users purchased

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