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The Philip Morris Heat Stick
The Philip Morris Heat Stick can be classified as a specialty product and is considered as a new product line under the different types of new products category (Richardson and Gosnay 55). The heat stick is the company’s attempt at staying relevant in a changing market environment where the use of e-cigarettes has gained a considerable level of popularity among U.S. based tobacco smokers (Felberbaum 1).
The heat stick is different than its other e-cigarette counterparts since, instead of vaporizing a flavored liquid that contains trace amounts of nicotine, the heat stick instead heats dry tobacco which creates a flavored vapor (Mulier, Chambers and Liefgreen 22). This alternative variant to the “classic” e-cigarette is supposedly “healthier” than its actual cigarette counterpart since the smoke that is produced has no tar. As a result, it is supposedly a better alternative to other e-cigarettes since it allows the user to get a fuller tobacco flavor without cancer-causing additives.
Product Life Cycles
Traditional cigarettes are currently in the declining stage of the product lifecycle. While this may not seem as apparent due to the sheer amount of smokers, studies such as those by Murray have indicated a 35 percent decline in the number of cigarette smokers compared to a decade ago. This is in part due to a wide variety of different education and health campaigns sponsored by numerous global governments aimed at limiting the number of smokers (Murray 341).
E-cigarettes, on the other hand, can be classified as being in the introduction stage and mid-way towards the growth stage of their product lifecycle (Paley 153). Yes, they have grown in popularity over the past six years, but they are still isolated to a relatively small niche market due to the inherent expense of having to buy an e-cigarette kit (Schneider and Diehl 651). The long term implications this has on the marketing strategy of Philip Morris is that the company should start investing in developing marketing campaigns centered on its e-cigarette brand. Due to their status as a niche market product, e-cigarettes marketing campaigns focus on traditional methods such as signboards and leaflets as well as non-traditional methods such as online banner ads and promotions (Mackey, Miner, and Cuomo 98).
Marketing methodologies that center on the use of television ads, which have a greater scope, have yet to gain popularity among e-cigarette sellers. One of the main reasons behind this is the fact that the current e-cigarette market is composed of an amalgamation of small to medium scale companies. On their own, they are unable to match the marketing budgets of major companies like Philip Morris.
Not only that, attempting a joint television marketing strategy by these SMEs (Small to Medium Enterprises) is not possible since each has developed its brand name which makes a joint television advertisement through a major network unlikely to occur. It is due to this that Philip Morris has a considerable market advantage since it is capable of leveraging its financial resources and experienced marketing department to produce television advertisements that would enable it to target larger audiences and, as a result, bring more attention to its heat sticks compared to these smaller companies.
Stages of Product Development
The most important stage in the product testing process of the heat stick is the marketability tests that the firm will utilize. The problem with introducing the heat stick into the present market is that many present-day e-cigarette users are used to using liquids in their e-cigarettes. Heating tobacco may not be as appealing since it is limited to just one flavor compared to the hundreds if not thousands of liquid e-cigarette flavors currently available on the market today.
The company needs to determine if sufficient appeal can be generated to justify commercializing the product on a large scale in multiple markets. If it fails to do so, it could likely release a product that has little in the way of mass appeal and could cost the company billions of dollars in unsold merchandise. Another factor to take note of is that not all markets will respond well to the e-cigarette and, as such, multiple markets need to be tested for their viability.
Impression on the potential success of the heat stick
Based on the work of Branston and Sweanor, it was noted that the popularity of e-cigarettes was, in part, due to a lack of sufficient legislation and regulation. They had fewer regulations imposed by the government since they were considered as a relatively new product being introduced into the American market and insufficient studies were conducted that indicated that they were harmful (Branston and Sweanor 14).
This allowed suppliers to openly sell them to high school students and young adults. One of the main contributing factors to their rise in America was their popularity among high school students which translated into continued product patronage when they graduated and started college or entered into various career paths.
The study of Kim showed that nearly 90 percent of individuals addicted to tobacco started young and, as such, the use of e-cigarettes during an individual’s high school years results in a greater likelihood of them continuing to utilize the product well into the future. From this perspective, it would seem that the Heat Stick of Philip Morris has a considerable amount of potential since it is a well-known brand and the ability to draw young consumers early enough could result in long-term product patronage. However, the problem with the introduction of this product is in its timing (Kim 1).
On May 5, 2016, the Federal government made a ruling indicating that new regulations are now being put in place to keep e-cigarettes out of the hands of children. Within 90 days of the judgment, the sale of e-cigarettes to anyone under 18 will be banned, and adults who are under the age of 26 need to be able to show proper identification. This landmark ruling could have a devastating impact on the ability of e-cigarette liquid and set producers to develop long-term patronage of their products. Due to their unique ability to produce a lot of vapor, their technological nature, and their stylish designs, e-cigarettes appealed to young consumers who wanted to appear “cool” (Perkins, Karelitz, and Michael 106).
This ruling by the FDA constrains the targetable market resulting in the need to develop new marketing concepts that target consumers in their early to mid-20s or even in their 30s. This casts a considerable amount of doubt on the long-term viability of the Heat Stick considering the currently overly saturated market and the new limitations that have been put in place. Yes, the heat stick is not a traditional e-cigarette but it is still likely to fall under the same legislation.
Branston, J. Robert, and David Sweanor. “Big Tobacco, E-Cigarettes, And A Road To The Smoking Endgame.” International Journal Of Drug Policy 29.(2016): 14-18. Print.
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Felberbaum, Michael. “Philip Morris Int’l to Sell Marlboro HeatSticks.” Washington Times. The Washington Times, 2014. Web.
Kim, Annice E. “Using Twitter Data To Gain Insights Into E-Cigarette Marketing And Locations Of Use: An Infoveillance Study.” Journal Of Medical Internet Research 17.11 (2015): 1. Print.
Mackey, Tim K., Angela Miner, and Raphael E. Cuomo. “Exploring The E-Cigarette E- Commerce Marketplace: Identifying Internet E-Cigarette Marketing Characteristics And Regulatory Gaps.” Drug & Alcohol Dependence 156.(2015): 97-103. Print.
Mulier, Thomas, Sam Chambers, and Dan Liefgreen. “Marlboro Kicks Some Ash.” Bloomberg Businessweek 4469 (2016): 24-26. Print.
Murray, Conor. “Western Australian Cigarette Smokers Have Fewer Small Lung Nodules Than North Americans On CT Screening For Lung Cancer.” Journal Of Medical Imaging & Radiation Oncology 53.4 (2009): 339-344. Print.
Paley, Narton. The Marketing Strategy. Crest House, 2007. Print.
Perkins, Kenneth A., Joshua L. Karelitz, and Valerie C. Michael. “Reinforcement Enhancing Effects Of Acute Nicotine Via Electronic Cigarettes.” Drug & Alcohol Dependence 153.(2015): 104-108. Print.
Richardson, Neil, and Ruth Gosnay. Develop Your Marketing Skills (Creating Success Series). Kogan Page, 2010. Print.
Schneider, Sven, and Katharina Diehl. “Vaping As A Catalyst For Smoking? An Initial Model On The Initiation Of Electronic Cigarette Use And The Transition To Tobacco Smoking Among Adolescents.” Nicotine & Tobacco Research 18.5 (2016): 647-653. Print.