marlboro's price drop

FRIDAY1993

Price Drop

World’s largest selling brand of cigarettes

◈ Made by PHILIP MORRIS

Company

◈ Woman’s cigarette in 1924

◈ FILTERED - Protect the Lips

◈ "Mild as May”

1950 REPOSITIONING - MEN’S CIGARETTE

SWITCHING TO FILTERED CIGARETTE??? –

WOMEN THING

4

RE-MASCULINE: MARLBORO MAN• EMBODIMENT OF MEN

OF BRAVE PROFESSIONS

COWBOY

BUILDING BRAND VALUE

• FORMULA ONE

• GRAND PRIX MOTORCYCLING

• WORLD RALLY CHAMPIONSHIP

Sponsor of motor racing since 1972

6

• SLUGGISH ECONOMY

1993

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PRIVATE LABEL BRANDS :

• QUALITY PERCEPTION

• 80 CENTS - $1 DIFFERENCE FROM MARLBORO

DISCOUNT BRANDS ASSOCIATING TO “VALUE”

MARLBORO’S MARKET SHARE

REDUCED TO 22%

LOOSING MARKET SHARE

10FAILED

11

VARIANTS

FAILED

12FAILED

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MARLBORO PRICE PER

PACK

TRIPLED !!!

OVER 1980-1992

PRICEQ

UA

LITY- MARLBORO

- DISCOUNT CIGARETTES

PRICE BANDS• Range of acceptable prices

- MARLBORO

- DISCOUNT CIGARETTES

CURRENT PRICE PERCEPTION

VALUE-BASED PRICING STRATEGYRIGHT BLEND OF…

…to meet Consumer NEEDS& Firm TARGETS

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LEGENDARY PRICE CUT – MARLBORO FRIDAY, 1993• REDUCTION BY 40-50 CENTS/PACK (20%)• EARNINGS DECREASE BY 40%• MARKET SHARE INCREASED BY 4% IN TEST MARKET

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BIGGEST MARKETING ICON – MARLBORO MAN FELL FROM HIS HORSE

WAS THAT THE DEATH OF BRAND?

STOOD STILL SINCE 1954

23% DECREASE IN STOCK PRICE

SHAREHOLDER LOST $5 BILLION

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LONG TERM RESULTSMARKET SHARE

• 9 MONTHS: 27%

YEARS LATER: 42%

• PRICED AT $5.7 A PACK

Vs

• AVERAGE $4.21 A PACK OF DISCOUNT BRAND

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LEARNINGS:STRONG BRANDS can command

But, NOT

1.

2.

3. INVESTMENTNeed to increase

SUMMARY

DISCLAIMERThis deck was created by Ateev Gupta

(PGP31195), IIM Lucknow under Brand Management Course, taught by

Prof. Sameer Mathur.• B.Tech IIT

(BHU) Varanasi

• PGPM, IIM Lucknow

• Marketing Professor

- IIM Lucknow-McGill University

• Ph.D in Marketing-Carnegie

Mellon University