ip Morris, it assumes a leadership role both in funding and in shaping the direction of industry efforts.
In its cigarette segment, Philip Morris confounded industry analysts and shareholders alike when it chose to reduce the cost of Marlboro by 40 cents per pack on April 2, 1993. The immediate result was a 26 percent decrease in the company's stock due to the estimated loss of $2 billion in profits for 1993 (Morris, 1993, p. 42). The strategy of cutting the price of a premium product in order to gain market share has worked successfully for the company in the past, however. Kraft cheese was losing market share to private label brands during 1990 and 1991, and the company responded by cutting the price of its products. During subsequent quarters, the company has regained and even expanded market share. This is the result that the company hopes to achieve with its domestic cigarette market.
In the international tobacco market, earnings and market share are both increasing for Philip Morris. Here, unlike in the United States, consumption is increasing and Philip Morris share in that market is increasing at an even faster rate: up 19 percent for 1992 and 18 percent during the first quarter of 1993 (Morris, 1993, p. 42).
The Marlboro brand is positioned as a premium brand in the cigarette market, meaning that it is perceived as a high-quality cigarette available at a premium price. The target audience for the Marlboro brand is primarily male smokers, which explains the long-standing success of the "Marlboro Man" image (a cowboy on a horse in the middle of the open range). The Marlboro Man suggests rugged independence and plays on the images of the Old West both domestically and in the international market. Originally targeted at males, an extension of the Marlboro line, Marlboro Lights, have successfully attracted female consumers. The Marlboro Man image is popular with women, and also with homosexual men, both of whom a...