2. Philip Morris & Marlboro
Philip Morris launched Marlboro as a filter cigarette brand for women
Publication of a study that linked smoking to lung cancer
Philip Morris repositioned Marlboro as a men’s cigarette
Launched ad campaigns with a lineup of manly figures. The Marlboro Man was born
1924
1950
1952
3.
4.
5. Philip Morris & Marlboro
Philip Morris Overseas is established as an international division
Marlboro becomes the world’s #1 selling cigarette
Cigarette sales volume tops 400 billion units1991
1972
1955
6.
7. Marlboro’s Price Drop in 1993
Philip Morris USA
announced a dramatic shift
in its corporate strategy
Concerned about
prolonged economic
conditions and depressed
consumer confidence
Focused towards building
long term profitability given
the highly valuable and
price sensitive market
Resorted to “value based
pricing” and announced a
price cut of 40 cents a pack
which was expected to
decrease earnings by 40%
8. Rationale for Value based pricing
• Value based pricing is a pricing strategy in which prices are set
according to the perceived value of the product to customers
• Marlboro realized that low priced discount brands and private labels
were providing better value to consumers
Customers Value Cost Price Product
9. 1) Short term bloodbath
• Share price dropped 23% in 1 day
• $13 billion loss in shareholder equity
Share
Price
• Stock price declines for all major
consumer goods companies
• April 2 1993 was termed “Black Friday”
Ripple
Effect
30. 3) Long term benefits
• Currently owns 42% of the market, up
from 22% in 1993
Market
Share
• Currently priced at $5.7 a pack
• Cheapest competitor brands are
priced at $4.21 (35% price premium)
Price
Premium
33. Disclaimer
These slides have been created by Tanmay Sah, a final
year PGP student at IIM Lucknow during the course
Brand Management taught by Professor Sameer
Mathur
Thank You!