The Marlboro Story

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Case Details:

Case Code : MKTG117
Case Length : 17 Pages
Period : 1950 - 2005
Pub Date : 2006
Teaching Note : Not Available
Organization : Philip Morris Inc.
Industry : Tobacco
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

At this time, the ad campaign featuring the Marlboro man was considered as one of the most successful ad campaigns in the history of the US. In 1998, the US government implemented the Master Settlement Agreement which imposed severe restrictions on the advertising and promotion of tobacco products in the US.

This meant that Philip Morris could not freely advertise for its products as before. In spite of these restrictions, Marlboro continued to be a leading brand in the US market. After the implementation of the Master Settlement Agreement, Philip Morris concentrated more on point-of-sale advertising and direct mail advertising. The company changed its focus to establishing long-term relations and building customer loyalty. To achieve this, Philip Morris introduced a customer loyalty program called the ‘Marlboro miles'program. This program helped the company keep track of its loyal consumers. Promotional strategies such as sweepstakes, contests, etc. were used by the company to strengthen Marlboro's image.

It also entered into exclusive contracts with retailers in which retailers agreed to display the company's premium products like Marlboro cigarettes prominently. As of 2005, Philip Morris had exclusive contracts with 193,000 retailers of the total of 400,000 retailers in the US. In 2005, Marlboro was still at # 1 position among the top selling cigarette brands in the US.

Background Note

Altria's journey began in 1847 when Philip Morris (Morris), a British tobacconist, set up a shop in London's Bond Street and began selling imported cigars. By 1854, he began making and selling cigarettes. When Morris passed away in 1873, the business was taken over by his wife, Margaret Morris (Margaret) and his brother Leopold Morris (Leopold). In 1880, Leopold acquired full ownership of Morris'tobacco business by purchasing Margaret's share in the business. It became a public company in 1881. In 1885, Leopold entered into a brief partnership with Joseph Grunebaum to form Philip Morris & Company and Grunebaum.

However, this partnership ended in 1887 and the company became Philip Morris & Co (PMC). By the early 1890s, PMC was facing financial difficulties. In 1894, the company's creditors took over the company. One of the creditors, William Curtis Thomson and his family held a majority stake in the company...

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