It is a brand brief - Marlboro's Price Drop, focusing on Value Price concept

1. BRAND BRIEF – MARLBORO’S PRICE DROP
Presented by ; Ravi Manjul (01015)

2. ISSUE
•Losing market share to discounters

3. CURRENT SCENARIO
• Shift in corporate
strategy(2ND April,93)
• Decrease in price
(40 to 50 cents)

4. WHY ?
• To align long time
profitability in high valued
and price sensitive market
• Prolonged economy
• Recession
• Poor consumer confidence
• Price tripled between
1980 – 1992

5. BLACK FRIDAY
• Stock price declined $64.12
to $49.37
• One-day loss of $13 billion in
shareholder equity
• Coco-cola lost $5 billion

6. HISTORY
Launched as women’s cigarette
Relaunched it as men’s cigarette
Philip Morris US and Philip Morris International
The world’s #1 selling cigarette
Sales volume tops 400 billion units
1924
1950
1955
1972
1991

7. POSITIONING
• Market – US
• Premium quality
product
• Customer – Young men
above 18 yrs, ‘live life
on edge’ and ‘quality
smoking’

8. BEFORE 1950

10. BRAND BUILDING

11. BRAND BUILDING

12. BRAND BUILDING

13. BRAND BUILDING

14. COMPETITORS
• Private label brands
• Perceived to be high
quality
• 80 cents to $1 price
difference

15. VALUE PRICE CONCEPT
• Discount label cigarettes associating themselves
with ‘value’

16. MARKET TESTING
• A month-long test in Portland
• With pack price decreased by 40 cents
MARKET REACTION
• Market share increased by 4% in
test market
• Within 9 months, 27%

17. • Strong Brands can command a price
premium BUT within the
customer’s perceived price limit
• As Marlboro decreased it’s price
within acceptable consumer range,
sales of the brand started to
increase
LEARNINGS

18. • Prices hike should be justified by
the increase in the value
LEARNINGS

19. • For effective value-pricing strategy
a balance must be there between
• Product Design and Delivery
• Product cost
• Product Prices
• All the above factors can enhance
the perceived value for which
consumer are willing to pay a
premium
LEARNINGS

20. • Brands must price their product in
the consumers price reference band
LEARNINGS

21. CURRENT MARKET SHARE

22. THANK YOU

23. DISCLAIMER
• This presentation was created by Ravi Manjul
(PGP01015), IIM Sirmaur under Brand Management
Course, taught By Prof. Sameer Mathur.
Prof Sameer Mathur
• Marketing Professor
- IIM Lucknow
- McGill University
• Ph.D in Marketing
- Carnegie Mellon University