Executive Summary
Marlboro is one of the most recognizable brands in the tobacco industry due to its strong attributes which have managed to attract large numbers of consumers in different markets. As a result, this has enabled the Philip Morris Corporation to set up manufacturing operations in more than 50 countries. The popularity of the brand has made it a household name in more than 150 countries where it is sold and consumed by millions of people.
The product has managed to appeal to customers in different parts of the world by using cowboy characters in its adverts who serve as symbols of power, vitality, independence and masculine charm. However, strict laws that regulate cigarette advertising have compelled the firm to look for alternative forms of advertising to continue to serve its customers. Therefore, the firm has opted to use alternative promotional and pricing strategies to maintain its competitive edge in a market that experiences rapid changes.
Introduction
Marlboro is one of the most popular cigarette brands known for its brand qualities and loyal customers. The cigarette which is manufactured by Philip Morris Corporation has been sold in the market for close to 100 years and it is one of the most popular consumer goods. It serves as the Philip Morris’ flagship product in the market due to its longevity, strong customer base and its ability to reinvent itself to attract new consumers.
For a long time, the Marlboro cigarette has been known for its power, vitality, and adventurous attributes as shown by American cowboy characters in its adverts. This has encouraged customers to associate it with attributes of strength, power and vitality and this has helped it to register a lot of success in different markets where it is sold.
This report will serve as a market audit of Marlboro which will focus on its current performance and will also further recommendations that Philip Morris needs to implement to help the firm to maintain its competitive edge in the industry.
Environmental Context Analysis of U.A.E
The U.A.E. has a population of about 5.5 million people, a majority of whom are Arabs. However, the country hosts a large number of foreigners who live there for different purposes. It is estimated that foreigners make up more than 70% of people residing in the country. The country has favorable taxation policies which encourage many firms to establish their operations there. The main language spoken by a large majority of the population is Arabic and Islam is considered a way of life which permeates all important segments of the society.
In addition, Emiratis are deeply conservative even though they have embraced different aspects of modernity to help their country move forward. Cigarette smoking and consumption is not highly restricted but manufacturers are required to provide labels that show the real contents of their products. There are several multinationals and local firms which manufacture and sell different tobacco products in the market.
The UAE practices a federal system of governance consisting of seven emirates whose capital is Abu Dhabi. Abu Dhabi is the main oil-producing emirate while Dubai serves as the center of tourism, transport, banking and hospitality. However, the country is ruled by a president who heads the Supreme Council that adopts and implements policies after consultations with monarchs of other emirates.
The heads of the seven emirates elect one of their own to act as president after every five years.UAE has experienced rapid rates of modernization in the last three decades which has increased the rate at which technology is used by the country’s citizens.
Dubain, Mattoo, Asia King, and British American Tobacco products are some of the most common cigarette brands which are popular with local consumers. However popular international brands such as Winston, Camel, Marlboro and Mild Seven command a significant portion of the market share. Lastly, the cigars market has been experiencing positive growth and the largest firm that dominates this segment is Imperial Tobacco.
Competitor Analysis
The main competitors of the brand include: Winston cigarette brand manufactured by RJ Reynolds and Mild Seven which is manufactured by Japan Tobacco. However, the brand has a large share of the global cigarettes market which is estimated at more than 40%. In UAE, Marlboro has a large loyal clientele and this enables Philip Morris to attain good profits from its operations.
On the other hand, British American Tobacco has a significant portion of the cigars and cigarettes market share. It has a strong cross-generational and cross–gender appeal which makes it attractive to people of all age groups in different markets where it is sold (Prahalad, & Ramaswamy, 2013, p. 61). Marlboro’s uses high-impact branding techniques which evoke positive emotional reactions from customers.
The firm’s competitive strategy focuses on unique packaging, strong brand themes and an effective market differentiation strategy that helps the firm to stay ahead of its competitors. The firm’s market plans are responsive to prevailing consumer needs in the market and this has helped it to reinforce its unique selling proposition to different customers. It has an elaborate distribution network that ensures most of its products are sold in various retail outlets in Dubai and Abu Dhabi making them easily accessible to consumers.
It appeals to middle-class and upper income clients in the UAE who identify with its brand message of freedom, individual expression and adventure (Prahalad, & Ramaswamy, 2013, p. 64). As a result, this approach has helped the Philip Morris to adopt more flexible pricing strategies for the product to satisfy consumers’ expectations in different markets where it is sold.
The brand’s ability to reinvent itself and to appeal to wider consumer segments has given it a higher competitive advantage in the industry. Since it has been in operation for about ninety years, Philip Morris has benefited a lot from its positioning strategy of Marlboro as a global brand. More importantly, the product is manufactured in more than 50 countries and this has allowed Philip Morris to establish joint ventures with other firms for easy market penetration.
Marlboro and other Philip Morris brands sold in UAE are manufactured in China and other Asian countries due to low labor and manufacturing costs (Prahalad, & Ramaswamy, 2013, p. 68). The firm has strong relationships with local suppliers who sell the product on its behalf in the local market. In addition, the firm’s use of standardized operations has helped it to maintain high levels of product quality and this has helped it to maintain the loyalty of customers in Marlboro.
Porter’s Five Forces Analysis of Marlboro’s Industry Environment
New Entrants
The UAE tobacco industry has a lot of barriers for new firms that seek to operate on a national and an international level. Manufacturing, distribution, marketing and product development costs are very high. Legal restrictions on cigarette advertising and strong customer loyalty to specific brands are additional barriers which new firms are likely to face.
Suppliers’ Bargaining Power
The power of suppliers in the UAE is low due to low tobacco prices. Since the firm can access cheap tobacco raw materials from different parts of the world, this has reduced the bargaining power of tobacco farmers in the industry.
Buyers’ Bargaining Power
The bargaining power of buyers is moderate and depends heavily on economic performance and personal incomes. In the early 1990s, Philip Morris was forced to reduce prices it charged on Marlboro cigarettes to protect its market share. However, in the last twenty years, industry trends have shown that many Marlboro buyers in UAE are not easily swayed by low prices charged on substitutes.
Power of Substitutes
The inelasticity of the market encourages consumers to opt for alternative lifestyle choices which may cause them to stop smoking. As a result, these alternative choices may impact on their purchasing decisions and this is likely to weaken Marlboro’s competitive position in the industry. Since consumers are easily tempted to try out other tobacco products, this affects the competitive position of major firms in the market.
Power of Competitors’
The main competitors of the company do not pose a serious challenge on its market share due to Philip Morris’ strong brands that have a large market share. Many companies have clearly defined markets and they use economies of scale to maximize returns in their specific target markets.
Market Research
The firm’s market research techniques focus on demographic traits, lifestyle patterns, consumers’ purchasing behavior, and other important factors that contribute to performance. The firm uses data gathered from its marketing research studies to find out effective advertising methods it can use to attract more consumers in different markets where it operates (Prahalad, & Ramaswamy, 2013, p. 71).
Consequently, this allows the firm to come up with effective strategies that enable the product to penetrate different global markets easily to increase its long-term revenues. This has helped the firm to choose more effective distribution channels and promotional strategies which have given it more leverage as it competes with other firms in the industry.
In addition, the firm has also improved its relationships with retailers and this has helped it to find out what consumers look out for before purchasing a particular product. Consequently, this has helped the firm to understand specific profiles of consumers who purchase its products in the market.
The firm needs to use technological approaches to build and maintain good relationships with its customers located in different markets. This will help the firm to understand generational changes that are likely to affect how Marlboro is looked at by consumers in the market and the long-term implications of these changes. In addition, generational changes will help the firm to understand how it was perceived in the past and how it can build on that to improve its current image.
Since many customers in Dubai and Abu Dhabi are exposed to modern lifestyles, they are more interested in being associated with a product that is known for its strong appeal. Therefore, Philip Morris needs to use effective strategies to make such customers appreciate the value they are going to obtain by consuming its products (Prahalad, & Ramaswamy, 2013, p. 75).
Consequently, the firm will be in a better position to use information gathered from its external stakeholders to improve its internal operations to safeguard the quality of its products in the market.
The company needs to find out specific government policies that have a direct impact on its operations in various markets where it operates. This will enable it to set short and long-term advertising strategies that conform to legal conditions enforced in countries where its operations are based. More importantly, the firm needs to evaluate other strategies it can use to reach out to customers in markets where promotional activities by cigarette manufacturers are outlawed.
This will help it to maintain a strong relationship with some consumers who do not know where they can purchase its products (Sivulka, 2012, p. 40). In addition, the firm needs to find out specific standards which are enforced in different emirates, to come up with more effective strategies that respond to existing market conditions. This will help it to improve its product development processes to come up with appropriate products for different markets.
Customer Analysis
Consumers are more interested in fulfilling emotional, symbolic, and social needs whenever they consume Marlboro cigarettes. Some of the branding concepts used to market Marlboro appeal to male customers in UAE because they are interested in the masculine perceptions which are associated with its marketing messages. As a result, this allows Philip Morris to develop closer relationships with its customers to make them understand the unique value they are likely to obtain from Marlboro.
Therefore, customers are attracted to the brand because they want to increase their self-esteem to help them relate better with other people in societies where they live. As a result, this has motivated more customers to participate in different promotional activities such as the Marlboro country where lucky winners are allowed to tour the firm’s ranch in Montana. Consequently, this has reinforced positive long-term attitudes towards the product in UAE (Sivulka, 2012, p. 43).
The Sheth and Howard’s model can be used to address specific inputs that influence customers to make different decisions before they choose to purchase the product in the market. Strong packaging and branding designs which are used to market Marlboro encourage consumers to have positive feelings towards the brand and they serve as significative stimulus (Sivulka, 2012, p. 47).
Cowboy characters that are associated with Marlboro have helped to maintain a strong visual appeal and they increase consumers’ confidence towards the brand. Therefore, they are symbolic stimuli which enable customers to internalize important values that are related to Marlboro. The self-awareness that customers have whenever they consume the product makes them associate it with other powerful influences in their lives.
As a result, feelings of adventure, freedom, and inner vitality which encourage customers to purchase the brand influence the manner in which they view social systems around them. Therefore, this helps them to engage with their peers in different social gatherings more effectively.
Some of the variables that influence customers’ purchasing decisions include: purchase intentions, internalization of brand message and the extent to which the problem serves their peculiar needs. More importantly, the ability of consumers to interpret various messages released by Philip Morris regarding Marlboro helps them to understand the value they are likely to get from consuming the product (Sivulka, 2012, p. 47).
This shapes consumers’ understanding making them more prepared to accept improvements that are made on the product to improve their overall usage experiences. Therefore, this approach has influenced the long-term behavior of consumers towards Marlboro in different cities in UAE where the cigarette brand is sold. Consequently, this enables Philip Morris to forecast future patterns of consumer behavior that are likely to have a bearing on the long-term performance of Marlboro in the market.
Segmentation and Targeting
The firm mostly focuses on attributes such as gender, lifestyles, demographics, and spending patterns to guide its segmentation processes in the market. Since the tobacco market is highly homogenous, Philip Morris uses compelling branding concepts to give Marlboro a higher appeal in the market. Other factors like marketing restrictions, health warnings, and negative perceptions make it difficult for new cigarette manufacturers to enter and remain competitive in the industry.
Therefore, the firm relies on focus strategies to increase its growth in the UAE and to penetrate other underserved markets in the Middle East (Sivulka, 2012, p. 51). Consequently, this allows Marlboro to take advantage of its easily recognizable brand to increase the value attached to it by consumers in the market. Since its production processes are highly standardized, the firm constantly comes up with innovations that reinforce the value attached to the Marlboro cigarette brand in different global markets.
The main segments within the market are structured according to gender, lifestyle, social status, age, and demographics. The main segmentation dimensions which are used by Marlboro include product innovations that differentiate it between light and ultra light variants. The ultra-light variant serves customers who are sensitive to the health implications of smoking and it does not contain any tar.
On the other hand, light cigarettes have less tar than normal cigarettes and they target consumers who are not highly sensitive to the negative effects of smoking (Sivulka, 2012, p. 63).
Another dimension that influences the segmentation strategy adopted is cost. However, since many customers are attracted to particular brands, they are not easily dissuaded from purchasing their favorite brands due to a reduction in substitutes’ prices. Lastly, the product also appeals to different gender and lifestyle patterns in different countries where it is sold.
When Marlboro introduced filtered cigarettes in the 1950s, many male consumers felt that they were feminine and they were discouraged from purchasing them. However, it integrated a lifestyle aspect to the brand using powerful advertising that showed men who smoked filtered cigarettes were outgoing, respectable and ambitious.
This enabled the company to appeal to both male and female segments of the market. Later on, Marlboro’s advertising concepts that featured the cowboy as the main character helped to strengthen the product’s masculine appeal making it attractive to male smokers.
The flip-top packet helped to attract smokers of different ages and genders because it gave them a positive smoking experience whenever they used the product (Sivulka, 2012, p. 71). As a result, the product’s branding has been designed to appeal to customers who are conscious about their self-image. This approach helps Marlboro to attract both male and female consumers in the UAE who are ambitious and willing to try out new lifestyles.
The market also used its strong performance in the U.S. to help it to extend its operations into other countries in the world. This enabled the firm to use a geographic and cultural targeting strategy to increase its appeal in foreign markets. The firm took advantage of international customers’ preference towards American cowboy characters in movies to attract both male and female consumers in different parts of the world.
Similarly, the firm uses localized marketing strategies to attract cigarette consumers in the country by making them aware about how it conforms to their lifestyle patterns (Egan & Thomas, 2010, p. 31). Therefore, this has allowed the firm to make Marlboro attractive to consumers who prefer to socialize in closed circles in UAE where they can consume it as they discuss different issues.
Positioning Strategy
The positioning strategy which is used by Marlboro focuses on taking advantage of efficient processes in its value chain to give it the desired competitive edge over other substitute products in the market. Therefore, the product is mainly sold in retail stores, discount retail zones, bars and fuel stations. The product’s positioning strategy seeks to maximize revenues from consumers’ social perceptions towards smoking by making the product easily available in places where they hang out (Egan & Thomas, 2010, p. 36).
As a result, this approach has helped the firm to use its point of sale locations as advertising centers and this has helped it to increase its visibility in an industry with strict advertising policies. More importantly, the firm has strong partnerships with its retailers who inform it of changing consumption patterns that are likely to impact on its performance in the industry. This approach helps the firm to carry out constant improvements in its value chain processes to increase its appeal in the market.
The positioning strategy adopted by the firm is also closely related to consumption patterns which customers have in different markets. This has helped the firm to offer rewards to retailers to encourage them to give favorable displays of its products in various stores where they are sold. Therefore, the firm is able to gain more shelf space in specific retailing zones where its customers prefer to shop.
This approach has helped the firm to increase the demand for Marlboro cigarettes in different retail centers where they are sold (Egan & Thomas, 2010, p. 39). In addition, the strong promotional edge the firm has over its competitors has helped it to attract more retailers to establish viable partnerships. Since strict advertising laws have been enacted in different countries, Philip Morris relies on close relationships it has with distributors and retailers to maintain Marlboro’s good performance.
The perceptual map below will highlight different factors which firms in the tobacco industry must be aware about to strengthen their long-term business strategies. This will be used to describe the overall position Marlboro has in the market and how it has helped the firm to maintain a strong lead over other cigarette brands (Egan & Thomas, 2010, p. 41).
More importantly, the perceptual map will be used to describe factors that have helped Marlboro to maintain high levels of consumer loyalty in the market to give it a larger share of the market.
Strong Brands / Weak Brands
Product Strategy
The cigarette industry is in a mature life cycle and Marlboro needs to use its leverage as the market leader to attract new consumers to help it reinforce its position in the global market. High levels of awareness in the market and health strategies used by the government to discourage young people from taking up the habit have affected the performance of many tobacco companies. The product targets consumers who are willing to pay premium prices to obtain higher levels of satisfaction after consuming it.
Philip Morris uses a standardized approach by maintaining specific attributes the product is known for in the market to maintain its performance. In addition, some product features are designed to suit customers’ expectations in specific markets where Marlboro is sold to increase consumer appeal (Egan & Thomas, 2010, p. 46). For instance, the firm has developed flavored products such as the ice mint and menthol variations to appeal more to Asian consumers.
The company has also been forced to use alternative channels of distribution to overcome legal restrictions that are being enforced by various governments all over the world on cigarette consumption. As a result, this strategy has helped it to use other forms of marketing to appeal to its customers. In addition, the innovative packaging design and other accessories that are sold together with the product have helped the firm to improve perceptions which customers have towards its products (Egan & Thomas, 2010, p. 50).
For instance, the flip-top packet, attractive filter design, and different product variations have improved customers’ overall consumption experiences. Therefore, this has made more customers to be satisfied with the quality of products sold to them in different retail locations.
The firm’s product development requirements depend mainly on the needs of its clients in different markets. Philip Morris is also required to conform to FDA tobacco legislation to ensure all manufactured products satisfy health and safety precautions before they are sold to consumers. All internal quality procedures are strongly coordinated to ensure they conform to quality checks which are enforced by different market regulators in various countries where the firm operates.
The firm is also driven by technological trends in its product improvement processes to come up with innovative concepts that attract new consumers in different locations. The firm’s research and development teams are working on electronic cigarettes to determine its long-term viability.
This product will target customers who are put off by the smoke emitted from conventional cigarette products (Egan & Thomas, 2010, p. 53). As a result, Philip Morris seeks to create new demand for e-cigarettes in the market to help it maintain its competitive advantage.
The development of electronic product has been touted by the firm as a way of overcoming some legal barriers which it faces in the global tobacco industry. Electronic cigarettes allow users to inhale vapor which comes from liquid nicotine heated by battery-powered cigarette sticks. This shows that the firm has decided to take the health and safety of its manufacturing processes seriously to ensure it conforms to standards which have been established by tobacco industry regulators (Sheth, 2011, p. 103).
However, even though technological advances are likely to create a new shift in the manner in which cigarettes are smoked, the firm intends to identify new growth areas that can be exploited to increase its performance in the market. Therefore, the product development and innovation strategies that have been implemented by the firm are intended to help it overcome various challenges that have restricted its growth in the industry.
Pricing Strategy
Customers in developed countries have long-term attachments to specific brands and as a result, they are not sensitive to prices adopted by various firms that seek to gain new ground over their rivals in the market. However, some generic brands which have been introduced by other firms in the industry use price leadership strategies to appeal to consumers in low income markets.
These brands threatened Marlboro’s market share forcing the firm to adopt a competitive pricing approach to maintain its competitiveness in the industry, in the early 1990’s.
Since then, the firm uses a flexible pricing structure for its products in both local and foreign markets to sustain long-term relationships it has built with its customers over the years (Sheth, 2011, p. 106). Marlboro cigarettes have a high demand in different market segments and this advantage enables the firm to set prices that enable the product to sustain its long-term growth projections.
The price-setting strategy is mainly influenced by taxation, consumers’ income, competitive environment, and the positioning strategy that is used to sell the product in the market. Marlboro has mainly used these factors to set prices that address the needs of its customers in different market environments.
Competition from other market players in the industry has made the firm to use its economies of scale to come up with market prices which maintain Marlboro’s value in the market. As a result, this strategy has helped the company to maintain high levels of satisfaction which its customers get after consuming its cigarettes (Sheth, 2011, p. 109). Consequently, the firm has managed to increase the value perceptions which customers have towards the product in the market.
Philip Morris uses a value based pricing strategy to maintain the overall brand qualities of Marlboro in various markets where it is sold. This enables the company to establish long term relationships with new customers that are interested in sampling the product in different markets. Therefore, the price structure is forward looking because it helps to maintain customers’ attention to the strengths of Marlboro and this encourages them to lose interest in other similar products that are sold in the market.
In addition, flexible pricing strategies used by the firm help it to deal with uncertain trends in the market which are likely to reduce sales volumes (Sheth, 2011, p. 112). Therefore, a reduction in prices helps Marlboro to attract demand from new customers who are willing to switch from other brands to try out the unique taste of the cigarette.
Since Marlboro is an easily recognizable global brand, it relies on flexible pricing to attract consumers in different market segments across the world. This approach helps the firm to adopt localized marketing and distribution solutions that conform to specific conditions which exist in the industry.
As a result, this approach has enabled the firm to reduce the pricing gap which exists between its products and other generic cigarette brands in the market (Sheth, 2011, p. 114). This has helped it to maintain the long-term positive performance of the brand to increase its growth in various target markets. Consequently, this allows the firm to come up with additional strategies to increase its market dominance.
Distribution Strategy
Phillip Morris relies on bars, supermarkets, small and medium retail stores, and fuel stations to sell Marlboro products to consumers in various markets. The firm has agreements with all other smaller firms to display its products openly as a means of making them more visible in specific points of sale locations. In some instances, the firm relies on specific distribution channels which are able to access high and middle-income consumers in high-end establishments.
Some establishments offer specific smoking zones for consumers who are interested in smoking in a more relaxed environment where they can interact freely with their peers (Sheth, 2011, p. 119). As a result, this allows bars and other business firms that are part of the firm’s distribution channels to offer additional services which increase customers’ satisfaction. This approach has allowed Marlboro to maintain the value associated with its products in the industry.
Since the main distribution channels are those that are closely linked to customers, the firm focuses on ways of increasing its sales volumes in the market. Retailers are encouraged to offer incentives to customers to make them purchase more packets of Marlboro. The firm also has a strong liaison team that monitors the existing demand in the market and makes recommendations on specific amounts of products to be supplied to different retailers.
Therefore, this allows it to anticipate different changes in consumer demand that are likely to affect the volumes of products sold within specific periods of time (Sheth, 2011, p. 121). Moreover, this approach allows the firm to develop effective communication strategies that resonate with the needs of customers in specific target markets where its products are sold.
Since it has manufacturing operations in different countries in the world, Marlboro has developed closer links with other firms that have attained strong performance in specific market segments. This has enabled the firm to integrate important marketing communications with its supply chain processes to increase efficiency in its operations (Stone & Desmond, 2007, p. 53).
As a result, all important sections of the value chain perform their responsibilities as single entities, thereby reducing the amount of time it takes before products are sold to target customers. This approach allows the firm to be in control of its operations to understand how its value chain processes impact on the performance of its products in the market.
Promotional Strategy
The main objectives that influence Marlboro’s promotional strategies include: customer loyalty, sales targets, competition, prices, overcoming legal barriers that restrict tobacco advertising and creating new demand for the product. Philip Morris has used different promotional tactics to ensure Marlboro sustains its positive performance in different markets (Stone & Desmond, 2007, p. 55). As a result, this has enabled the product to be promoted in a manner that encourages customers to make positive purchasing decisions.
More importantly, the firm uses specific strategies that make customers aware about the values that shape the product development process to increase their attachments to it. Therefore, this strategy enables the firm to take note of its competitors’ activities in the market and how they affect its long-term growth plans. Consequently, the firm uses alternative promotional channels to engage with its customers to make them more interested in consuming its products.
The product uses different types of messages and creative strategies to make an impact on its customers in different locations. One of its memorable creative strategies is the Marlboro Country which was started in the 1960’s. This strategy attracts lucky consumers to go to the company’s ranch based in Montana where they get to experience various attractions which are closely associated with the firm’s brand. For a long time, the firm used cowboys in their real life settings to display some of its powerful attributes to consumers.
This enabled it to develop close relationships with consumers in different markets to make them aware about its core values. More importantly, this has allowed customers to want to be associated with the firm’s strong heritage that reflects the lifestyles of middle-class Americans (Stone & Desmond, 2007, p. 58). Promotional messages for the product make consumers aware about self-confidence, freedom, a sense of adventure, and the attractive social status associated with consuming the product.
The legal environment in many countries places a lot of restrictions on cigarette advertising due to health problems associated with smoking. Therefore, the firm mainly uses personalized selling and point-of-sale promotions to market its products to consumers. The product also benefits from dominant display on shelves of various retail outlets to make it more visible to customers who are interested in consuming it.
As a result, this allows customers to make quick purchasing decisions after recognizing the product being displayed in a particular retail zone (Stone & Desmond, 2007, p. 61). Customers are offered additional incentives to make them see the value they are likely to obtain from consuming the brand compared to other competing brands in the market. As a result, coupons, temporary reductions and additional products are offered to encourage consumers to have more positive attitudes towards Marlboro as a product.
The firm is also involved in sponsorship campaigns but on a smaller scale compared to two decades ago. In the past, the firm was involved in the sponsorship of sports events such as motor racing, Ferrari Formula 1 Team and other entertainment events in different parts of the world. In addition, the firm is also famous for giving prizes to customers who participate in various competitions to encourage them to be more loyal towards its brands (Stone & Desmond, 2007, p. 65).
One of the most popular methods is annual sweepstakes that are done to increase the sales of Marlboro in different markets where lucky winners get to win free holiday tickets, land, and other monetary awards. This approach has helped the firm to increase the performance of the Marlboro brand in different markets. All these strategies are used to pull customers to be more loyal to the brand to increase its sales in different markets where it is sold.
Customer Service and Relationship Activities
Philip Morris uses strong branding concepts to make Marlboro maintain its competitive edge in the industry. This approach allows the firm to use integrated marketing communications strategies to stay in touch with its consumers in different locations across the world. The firm has established different variants of Marlboro to conform to specific cultural influences and lifestyles in different countries.
The company has a reliable sales team that works closely with retailers who are given rewards to encourage them to offer high-quality customer service (Stone & Desmond, 2007, p. 69). More importantly, retailers are encouraged to relay to the company any information that customers have regarding the quality of products sold to them to respond to key issues that arise. This approach allows the firm to address any concerns that customers have regarding its products quickly.
The main relationship activities which the firm organizes are visits to its ranch where lucky customers get to bond and share experiences they have regarding the product. Philip Morris organizes annual sweepstakes that allow lucky customers to get vacations, financial awards and a visit to Montana to help them find out more about Marlboro’s history and its corporate values. In addition, the firm also endears itself to customers and other stakeholders by sponsoring sports and other events which attract millions of people (Stone & Desmond, 2007, p. 72).
This helps it to improve its own reputation in public because it is able to show that it appreciates different events that have a lot of meaning to many people in different societies. Moreover, the firm also warns its customers about the dangers of smoking to allow them to make their own choices whenever they purchase and consume its products. Therefore, this allows the firm to participate in awareness programs that sensitize customers on the health risks they expose themselves to as a result of smoking.
All these customer service and relationship activities have been instrumental in the firm’s growth in the industry. They have helped it to sustain the value of its brand in the market thereby increasing its revenues.
More importantly, the firm has integrated modern lifestyles to become part of its main brand message allowing customers to have emotional connections with Marlboro in different locations where it is sold. In essence, this has allowed the firm to rely on its strong American roots and values to come up with a brand that conforms to middle-class lifestyles of its target customers across the globe.
Conclusion
Philip Morris needs to find ways of making the product more appealing to new customer segments. Since the global tobacco market’s life cycle has reached the maturity stage, the firm needs to look at other ways to develop the product to create new demand in different locations where it is sold. In addition, the firm also needs to use the strong brand loyalty Marlboro commands in the market to attract new customers who are interested in electronic cigarettes.
The electronic cigarettes segment has the potential to offer the firm a lot of returns in future because many consumers are willing to try out alternative tobacco products. This will help the firm to increase the amount of revenues it earns in the industry in the long run.
One of the most critical challenges facing the tobacco industry is the restrictive legal environment. This has created a lot of problems for various firms that are interested in establishing strong relationships with their customers. As a result, the firm needs to invest in strong risk management procedures to help it overcome different types of risks it is likely to face in its operations.
More importantly, the firm needs to find out specific avenues through which it can be able to establish stronger collaborations with its stakeholders to help it attain good results in the long run. Consequently, this will make it easy for the firm to identify new opportunities it can exploit to increase the value of its operations in the industry.
Recommendations
Improvements in research and development programs will enable the firm to come up with innovative products which can allow it to increase its sales revenues in the long term.
The firm needs to find out other distribution and marketing channels it can use to reach other customers who rarely visit different retail outlets.
Philip Morris needs to come up with ways of marketing the electronic cigarette aggressively to deal with problems that are likely to arise due to maturity of the market’s life cycle.
The firm also needs to use online distribution channels to cut on distribution to reach customers who are interested in consuming its products but cannot access various retail stores where its products are sold.
It also needs to find new ways of engaging with female consumers by introducing product variations that have sophisticated designs, tastes and attributes.
The use of technological processes will help the firm to streamline its manufacturing, product development and supply chain processes to improve its long term performance in the industry.
Lastly, Marlboro needs to avoid using price leadership strategies in various locations where it operates because this may have a negative impact on the quality of its brand in the long run.
References
Egan, C., & Thomas, M. (2010). CIM handbook of strategic marketing. New York, NY: Taylor and Francis.
Prahalad, C. K., & Ramaswamy, V. (2013).The future of competition: Co-creating unique value with customers. Boston, MA: Harvard Business Press.
Sheth, J. N. (2011). Winning back your market. New York, NY: Marketing Classics Press.
Sivulka, J. (2012). Soap, sex, and cigarettes: A cultural history of American advertising. Mason, OH: Cengage Learning.
Stone, M. A., & Desmond, J. (2007). Fundamentals of marketing. New York, NY: Routledge.