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Philip Morris Companies Inc Essay

The Altria Group, formerly known as Philip Morris Companies Inc. , is the parent company of Phillip Morris USA, US Smokeless Tobacco Co. , John Middleton, Ste. Michelle Wine Estates and Philip Morris Capital Corporation (Altria, 2010). The group has quite a colourful history but for the purposes of this paper, the Phillip Morris USA subsidiary, with particular emphasis on the Marlboro brand, shall be discussed. Marlboro is a world-wide-recognized emblem for cigarettes and cigarette smoking.

Between 2004-2007, Marlboro is the top selling cigarette brand in the world (ChartsBin, 2010). Marketing is defined by the business dictionary as the “management process through which goods and services move from concept to the customer. As a philosophy, it is based on thinking about the business in terms of customer needs and their satisfaction. ” From this definition, it appears that marketing is the driver for sales. Given Marlboro’s popularity, Marlboro’s marketing strategies are considered to be effective within the industry it belongs to.

However, from Phillip Morris USA’s website, the company claims that over the last decade, cigarette smoking has declined by 2% a year and to remain competitive, Phillip Morris focuses on brand loyalty amongst its adult customers. The word, “adult” is considerably

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used in the marketing of Phillip Morris cigarettes because cigarette smoking is considered to be dangerous to a person’s health. Phillip Morris is responsibly reminding its consumers about the dangers of cigarette smoking and this is considered to be a marketing strategy also.

Philip Morris claims that they want adult smokers to continuously purchase from their brands, make non-Philip-Morris-brand smoker switch to their brands and they emphasized that they do not want non-smokers to start smoking or for kids to try smoking just so their brands will grow (Philip Morris USA, 2010). Currently, Phillip Morris markets their products through retail stores, strategically placing their products at various “temptation-places” in the stores and via direct mail, providing promotions and asking for feedback.

4 P’s Product – Marlboro continuously evolves its lines of products available. Since cigarette smoking is all about the nicotine, that base is retained in Marlboro products and what is continuously updated is the taste. To appeal to various groups of appeal, Marlboro can just launch a new line of cigarette with a different flavour, with several twists in blends that only a cigarette smoker can determine. It is up to the consumer to pick his preferred taste; the important thing is for Marlboro to give options.

Price – is another consideration in marketing mostly because of the capacity of the customers to afford cigarettes. Given that cigarette smoking is essentially about nicotine consumption, smoking any cigarette should be fine as long as it has nicotine in it. For many people, they go with the cheapest brand. As such, Marlboro prices it products according to the needs of its target market. Those with strong taste of mint are essentially more expensive to the Classic Marlboro cigarettes. Promotion – this is the way Marlboro gets the word out to the customers about its products.

TV advertisements are always there for Marlboro; one that was popularized around the world is that of a beautiful, picturesque place complete with rolling green hills, wild horses and cowboys. According to their website, Philip Morris, including Marlboro, advertises via direct mail, sending promotions to their loyal consumers and via retail stores, putting up posters where necessary to get word out there that Marlboro is a good brand. Place – Marlboro has to have a lot of channels to distribute the cigarettes to consumers.

Retail stores are the best distributors for Marlboro given that this is the place where consumers acquire the goods. Marlboro has to have strong relations with its best distributors, ensuring that the products are strategically placed amongst the supermarkets so that the customer can just reach in and buy it. For instance: around the counter where people are waiting in line to pay for the goods. Methods of Market Research Survey – should Marlboro want to expand to new lines of products, survey can help them a lot.

Marlboro can survey a group of people, eligible to smoke, on what the new taste they want their cigarettes to be. The answers from the surveys should be matched by feasibility studies, on whether the cost to produce that particular taste has enough demand to justify production and market introduction. In addition, surveys can also help Marlboro to improve on currently existing products. The survey questionnaire can be designed as form of feedback on the existing products in the market. Based on the consumers’ responses, Marlboro can improve what is being offered to the market.

Field Trials – Marlboro can test the success of new line of products by strategically placing samples for free on selected retail stores that is proven to have a loyal brand preference to Marlboro. The success of the trial (fastly going out of stock) can induce Marlboro to make the product available for sale at a wider location. PEST Analysis Political – cigarette smoking is a major issue in many economies. In fact, excise taxes are usually levied to the importers of cigarettes because cigarette smoking is considered to be a luxury in many nations.

The imposition of tax alone can decrease Marlboro’s sales because that tax will drive the retail price of the product higher, making the end consumer dissatisfied with the purchase. Economic – Marlboro is recognized worldwide. According to the World Health Organization (2002), one-third of the male population of the world smokes. In order to reach these consumers, Marlboro must do business with every nation of the world, subjecting it to a lot of economies, inflation and exchange rate fluctuations. Social – “Every eight seconds, someone dies from tobacco use (World Health Organization, 2002).

” Given this fact, a lot of activists and health conscious groups are against the smoking of cigarettes. This again has negative impact on Marlboro given that even Philip Morris acknowledges that cigarette smoking is dangerous to one’s health. In the United States alone, cigarette smoking has declined from 43% to 20% from 1965 to 2005 (Centres for Disease Control and Prevention, 2006) because of these health issues. As such, Marlboro is forced to focus its marketing strategies outside of its home country; to developing nations where cigarette smoking has risen by 3.

4% per year (World Health Organization, 2002). Technological- the advancement in technology is helping everyone with means. Today, online shopping is a must and Marlboro can reach out to more consumers because of online retailing. Ansoff Matrix Market Penetration – because Marlboro is an established brand known world-wide, we can say that Marlboro has already thoroughly penetrated the market. The goal would be to increase the market share and to maintain the existing ones. This is rather hard to do given the inherent limitations on the tobacco industry and even the social acceptance for cigarettes.

Marlboro, hence, must continuously improve upon its products being offered to the consumers combined with competitive pricing strategies, advertising and promotion (tutor2u. net, n. d. ). Market development – Marlboro can develop its market by expanding to new locations. There must be one nation in the world where Marlboro has not yet penetrated and they can always try and launch their products there. Product development – Marlboro can introduce new products but as previously mentioned in this paper, cigarette smoking is about nicotine consumption.

Marlboro can simply improve the taste of its existing products and launch it under a new label. Diversification – Marlboro can introduce new products in countries it has not before been penetrated (tutor2u. net, n. d. ). Branding *e-commerce*segmentation*advertising Branding is one of the most important decisions a company must make in order to be successful in the business. The brand provides the awareness of the consumers of the products available for sale and it is necessary to be remembered and grab loyal customers.

In this day and age, e-commerce proves to be necessary, especially for established companies wanting to reach out to more consumers and therefore increase demand. However, having a website or an online retail store is simply not enough to be successful. Advertising is a tool to help the company promote its . com store. The word must get out to the people that the company can also be accessed through the internet and a good TV promotion can do just that. Added to advertising, market segmentation also provides a tool wherein it subdivides the consumers into groups for the company to effectively and efficiently launch its marketing plans on.

Promotions *marketing plan “place” The online business dictionary defines marketing plan as the “product specific, market specific, or company-wide plan that describes activities involved in achieving specific marketing objectives with a set timeframe. ” This plan is necessary to achieve the target promotions. Place is very important in this marketing plan because the place is where the customers acquire the product the business has for sale. Strategic locations must be planned in order to achieve the biggest sale.

Considerations must be made on the logistics, the inventory capacity of the place, not just the demand. The company must choose which places to make available the product where it can reach the demands and have no problems with the storage. The important thing is to create a point of equilibrium within the market where the supply meets the demand at the least cost to the company. Bibliography: Altria. (2010). At-A-Glance. Available from: http://www. altria. com/en/cms/About_Altria/At_A_Glance/default. aspx? src=top_nav [Accessed: 18th May 2010] Ansoff Matrix. (n. d.

). tutor2u. Available from: http://tutor2u. net/business/strategy/ansoff_matrix. htm [Accessed: 18th May 2010] Centers for Disease Control and Prevention. (2006). Cigarette Smoking Among Adults – United States, 2006. Available from: http://www. cdc. gov/mmwr/preview/mmwrhtml/mm5644a2. htm#fig [Accessed: 18th May 2010] marketing. definition. (n. d. ). BusinessDictionary. com. Available from: http://www. businessdictionary. com/definition/marketing. html [Accessed: 18th May 2010] marketing plan. definition. (n. d. ). BusinessDictionary. com. Available from: http://www.

businessdictionary. com/definition/marketing-plan. html [Accessed: 18th May 2010] Phillip Morris USA. (2010). Marketing Our Cigarettes. Available from http://www. pmusa. com/en/cms/Products/Cigarettes/Marketing_Sales/default. aspx? src=top_nav [Accessed: 18th May 2010] World Health Organization (2002). Smoking Statistics. Available from http://www. wpro. who. int/media_centre/fact_sheets/fs_20020528. htm [Accessed: 18th May 2010] World’s Top Ten Best Selling Cigarette Brands. (2004-2007). ChartsBin. (2010). Available from: http://chartsbin. com/view/hd3 [Accessed: 18th May 2010]

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