Philip Morris Companies, Inc.

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 company uses the same distributors as its competitors, and does not sell directly to retailers as a general rule. Marlboro is marketed on a global basis, and dominates the global cigarette market. Although the company cannot control the price that retailers charge customers, its pricing strategy with regard to its distributors directly affects the price that consumers ultimately pay for the cigarettes.

Marlboro is the number one cigarette product in the world, and the company follows essentially the same distribution strategy regardless of the market in which the cigarette is sold. Philip Morris does not sell its cigarettes directly to retailers; instead, the company sells to wholesalers, who in tu

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ttracted female consumers. The Marlboro Man image is popular with women, and also with homosexual men, both of whom are drawn to the cowboy image, according to analysts (Ramirez, 1992, p. 17). That value came about because the mere image of the Marlboro man is enough to sell cigarettes in this country and abroad. After cigarette advertisements were banned from television, Philip Morris continued to use the effective Marlboro Man, and now regularly purchases full-page advertisements in major magazines that show a picture of the cowboy, the brand name and a pack of Marlboro cigarettes. During 1992, sales of Marlboro declined 5.6 percent but still contributed to 58 percent of the company's total tobacco volume. During the first quarter of 1993, sales dropped again at the annual rate of eight percent. Discount cigarettes, which were not on the market in 1985, gained a 38 percent market share during the same quarter. At the time the price reduction went into effect, consumers could purchase discount cigarettes for exactly one-half the price of Marlboros (Morris, 1993, p. 43). The company could have accepted that the cigarette market is a mature market and accepted Marlboro as providing the classic "cash cow" product that would
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Approximate Word count = 1573
Approximate Pages = 6 (250 words per page)

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