Businessweek

Vapor Corp. designs, markets, and distributes electronic cigarettes and accessories under the Fifty-One (also known as Smoke 51), Krave, VaporX, EZ Smoker, Green Puffer, Americig, Fumré, Hookah Stix, and Smoke Star brands. The company’s electronic cigarettes or e-cigarettes are battery-powered products that enable users to inhale nicotine vapor without smoke, tar, ash, or carbon monoxide. The company offers rechargeable and disposable electronic cigarettes in two varieties, including a two-piece unit, which it markets under its DUO product line; and a three-piece unit, which it markets under its TRIO product line. The DUO The DUO’s 2-part construction (battery component and cartridge) features a disposable all-in-one atomized cartridge (also known as a ‘cartomizer’). This cartomizer is replaced when the nicotine or nicotine free solution is depleted from use. The TRIO The TRIO’s 3-part construction (battery component, atomizer, and filter cartridge) features a separate atomizer from the cartridge, the atomizer is reused and requires separate maintenance through its useful life. Replacement atomizers are available for sale and are serviceable by the user. In the TRIO, the component that needs to be replaced is the refill cartridge (either with or without nicotine). Kits and Accessories The company’s electronic cigarettes are sold in kits that contain everything a user needs to begin enjoying their ‘smoking' experience. In addition to kits, it sells replacement batteries, replacement mouthpieces that contain the liquid solution, and atomizer, for its two-piece configurations, as well as mouthpieces with the liquid solution and separate atomizers for its three-piece units. It also offers electronic cigarettes with different LED configurations and embellished LEDs that resemble crystals. In addition to the company’s electronic cigarette products, it sells an assortment of accessories, including chargers, and simple and fashionable cases. The company also offers refill cartridges and accessories for its electronic cigarettes. Its refill cartridges consist of assorted flavors and nicotine levels (including cartridges without nicotine). Its accessories include USB, home and car charging devices, carrying cases, and replacement parts. The company has developed an universal fit mouthpiece that could be used in conjunction with the battery section of various other electronic cigarette brands. The company markets its electronic cigarettes as an alternative to traditional tobacco cigarettes. Distribution and Sales The company offers its electronic cigarettes and related products through its online stores and direct response television marketing efforts; to retail channels through its direct sales force; and through third party wholesalers, retailers, and value-added resellers. Retailers of its products include big box retailers, drug stores, convenience stores, tobacco shops, and kiosk locations in shopping malls throughout the United States. Its cigarettes are sold in approximately 150,000 retail locations. Business Strategy The company’s business strategy utilizes its ability to design market and develop multiple e-cigarette brands, and to bring those brands to market through its multiple distribution channels. Through its multi-brand strategy, the company develops products, packaging, accessories, and electronic cigarette models that appeal to multiple demographic segments. The company’s strategy consists of various primary elements, such as developing new brands and engineering new product offerings; investing in and utilizing its new and existing brands through marketing and advertising; increasing its presence in national and regional retailers; expanding its brand awareness through its Web presence; introducing its products to the consumer through increased infomercial broadcasts; developing continuity programs for its end user customers; scaling its distribution through strategic resale partnerships; and aligning its product offerings and costing with market demand. Government Regulation The company’s electronic cigarettes are subject to being classified as ‘tobacco products’ under the Family Smoking Prevention and Tobacco Control Act of 2009. Competition The company’s primary competitors include Altria Group, Inc. and Reynolds American Inc.