Draft of Marketing Plan (1992-1996). Gives positioning, demographics, trade class (pack, carton), and strategy for each Philip Morris brand. Plans tactics with an emphasis on price and added-value considerations, including testing of Marlboro Express, a shorter cigarette for "value sensitive" smokers. Notes increasing importance of Black, Hispanic, and Asian populations, and retains Marlboro strategy to attract young adult male smokers and hold them as they age.
Original document code was 4140.
- Philip Morris Cos., Inc.
- Marketing Type
- Minor Subject
- Advertising and Marketing -billboard
- Advertising and Marketing -coupon
- Advertising and Marketing -pricing
- Advertising and Marketing -print advertisement
- Advertising and Marketing -research
- Advertising and Marketing -strategy
- Advertising and Marketing -target market --minority
- Advertising and Marketing -target market --YAM
- Brand -loyalty
- Cigarette -advertising and marketing
- Target Market
- African American
- Asian American
- Young adult
- Major Subject
- Advertising and Marketing
- Benson & Hedges (PM)
- Cambridge (PM)
- Carlton (ATC)
- Marlboro (PM)
- Merit (PM)
- Parliament (PM)
- Virginia Slims (PM)
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o Use higher perceived value incentives to reinforce Marlboro's
leadershipiposition while rewarding Marlboro smokers and
generating competitive trial. (1992)
o Build promotion elements to create large, themed events.
Major 1992 themes will be Racing and Adventure Team. (1992))
o Leverage Marlboro Menthol's growth among young adult male smokers
using,targeted'menthol promotions as well as direct mail. (1992)
o Raise top-of-mind awareness among young adult males by executing
multi-dimensional blitz marketing programs in "problem" markets
where Marlboro's share is in decline and Camel remains a threat.
Four markets will be blitzed with Mini-Grand Prix auto racing,
retail extensions and local sponsorships. (1992)
J o Expand the proprietary Adventure Tream program to diimensionalize
the Marlboro "experience" against YAMs followingithe successful
Conduct monthly co-promoted themed events tied to national
professional sporting activities in 8 large sports clubs in
metro markets. ('1!992)
-/o Launch Marlboro! Medium, 100's, a low tar 100''s entry for adult
male smokers, with cork tipping/red package. (1992)
LZO Introduce:fiv+e pack carton. Deliver a value package for young
adult male smokers. (1992)
Test Marlboro Express, a shorter cigarette for value sensitive
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Marlboro's ability to retain and grow share among current
smokers while limiting alternative purchase is a crucial element
in achieving the brand's unit volume, and share forecast.
Marlboro has historically growniby increasing its share of new
smokers entering the marketplace, while maintaining and"growing
share among current smokers as they age. Marlboro's performance.
initerms of smokers share retention has been impressive; the
Brand has grown smoker share amnong,all age groups over the last
decade despite the emergence of' price as a dynamic in some
consumer minds. However, ate brand purc ~y Marlboro
smokers has increased fro x rcent in 1985 p,~rcent in
1990. Basedion current p ation and inciden ~rends, Marlboro
will need to accelerate:retention/growth of smoker shares among
its current smokers above historical levels while minimizing
alternate purchase behavior to attain forecasted volume levels in,
the five year plan.
The aging of MarIboro's prime smoker base has several strategic
impliications for the brand. For example, older smokers tend to
be more price sensitive:, purchase more in supermarkets/mass
merchandisers, are carton buyers and are more susceptible to
switch to lower tar. Currently, 25!-441 year olids represent 57.4%
of'Marlboro!s total estimated smokers with a large concentration
in:the 25,34 age bracket (!x million smokers representing of
Marlboro's total smokers). Marlboro has an 3'7.4'% share of'
smokers in the 25-34 age category and'an 23.3% share in the 35-44
age group. A key challenge for Marlboro is develop aa
merchandising, promotion and new prodbct strategy which keeps.
these smokers in the franchise.
Inladdition, MarIboro's lower share in this age group allows
the brandlthe opportunity to attract competitive smokers, either
through outright conversion or alternate buying.
Maintaining share among Marlboro's large base of smokers
currently between 25 and 44 years old is critical to achievingi
Marliboro!s volume forecast over the next five years. To achieve
this, Marlboro must successfully respond to changing diemographics
and buying patterns for these smokers.
Marliborolmust increase its retention of smokers~as they age
into and within the well developed and vulinerable.competitive
25-44 year old segment. Marlboro will support smokers with
MarliborolCountry advertising and reward brandiloyalty with value
addled promotions. Marlboro will use offensive promotions to
attain incremental volume by attracting competitive smokers.
The brandiwill use defensive price promotion only where necessary
to reverse declining share trends. In addition, Marlbora wiU:
investigate new packaging and' product optjo~s to further- TS~~$~en :
r~ohra.~~~c annPwl aroncr, older smokers. ,/ ~Z'
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Extend all mainstream~carton promotions to mega-volume outlets
(800+CPW) where opportunities for incremental volume are
r o Insert two:blind"value-added continuity programs in select
carton packings to reward price sensitive Marlboro smokers as
a defense against alternate buying. (1992)
./ o Extend all retail carton promotions to military outlets andd
maintain couponing at competitive levels. (1992)
DIRECT M ',ARKE'PING
,/o Use offensive direct mail programs (quarterly, Medium 100's,.
Menthol) to target competitive smokers with high value, image
building offers to generate volume andigain conversion. (19,92)
o Test defensive price promotion that protects the brand without
Launch Marlboro Medium,100''s, a low tar 100's entry for adult
male smokers, with cork tipping/red package. (1992:)
_'*'o Launch 5-pack carton as value alternative for price sensitive
Launch Marlboro U1!tra Lights as a Lights line extension. (1991)
--l"o' Test Marlboro Express as a shorter cigarette:for value
sensitive smokers. (1993)
Launch Marlboro ExtralLigihts as a Red line extension.
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initiative from branda such as Camel and Winston, which have
promoted heavily in convenience stores. In addition, pricee
value continues to grow, increasing 12.3% share points to 23.4%
compared'to 11.1% in 1988.
a 6MM versus the previous six month period. To maintain i
momentum, Marlboro~must continue to:fend off competitive
Convenience outlets represent Marlboro's most important and
best developed trade class. These outlets represent
approximately 38% of Marlboro's volume and Marlboro maintains a
leadership positionwith 29.6% share. It is imthese outlets
that young adult smokers, an important Marlboro demographic
group, purchase cigarettes. Marlboro has recently returne © a
share growth trend in~convenience stores, increasing shar<-X%on
Marlboro's competitive position in convenience stores has been
challenged by both ful!l marg,in, and price value products. To
maintain Marlboro's current momentum in the trade class, Marlboro
must set itself apart from increasing:retail clutter and
heightened price competition.
Marlboro will continue its retail promotional support behind
pack outlets nationally, with a primary emphasis on convenience
outlets. Marlboro must improve its visibility and presence to
achieve a "big brand'" status commensurate:with its share.
Promotional support will be managed to provide Marlboro
sufficient volume opportunities without conditioning smokers
to deals, reducing inherent value and committinq to increasing
support levels to achieve volume targets. Marlboro's level ofl
promoted volume for 19,92 is anticipatediat on below 1991.
In addition, Marlboro will also encourage retailer driven
special pricing, including two and three pack specials.
o Evaluate and~impl'ement use of alternate packaging and consumer
payment vehicles (i.e., half-carton, credit cards) to
encourage Marlboro versus Price Value/deal purchases..
~~ o Capitalize on increasing use of' retail driven special multi-
pack pricing withia permanent 5-pack carton SKU. (1992)
~~ f Develop pack promotion, distribution for non-cycled outlets
(less than 100: CPW): which can~be placed by distributors.
Expand promotian opportunities into non-traditional outl'ets.
such as video stores and home/auto centers. (1992-1:993)
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~ Execute 7 national pack promotions consisting of 5 value-added
and 2 product offers. (1992)
~ f Provide heavy base level of display, quantities to achieve 80%
penetration of 100+ CPW pack outlets versus 50$ in,'91. Reserve
display quantities will increase promotion breadth and depth;
in key opportunity markets. (1992).
~o Execute 2 customizedipromotions in 5 C-gas and 2 C-food
national accounts, linking additional merchandising programs
where applicable to strengthen presence/visibility in these
key chains. (1992)~
-"o' Include aHispanic version, of all '7' national pack promotions
to provide ongoing support. (1992)
_/0 Execute 2.Asian promotions around! key holidays and 2 Menthol
programs in 8 select geographies to leverage growth. (1992)
Create special programs to reverse Marlboro share: declines
among pack outlets in Texas/Cklahoma. (1992-1993)
./o Utilize self-shippers/distributor assembly for all retail
pack promotions tolminimize salesforce labor in execution.
o Provide fieldiwith catalog of customized promotions and P.O.S.
materials to better respondto local opportunities/threats.
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PHILIP MORRIS USA
PREMIUM BRANDS OVERVIEW
The full margin segment of the industry continues to
experience significant volume declines at an annualized rate
of 9.4%. Full Margin performance is a function of declining
incidence and consumption levels combined with a current
Price Value unit growth rate of 25%. During the plan period
the industry Full Margin decline is projected to be XA.
It must be pointed out that the challenges facing our MK-%
Premium Brands differ significantly from Marlboro. The
variances, beyond franchise rates of decline, can best be
explained by three major factors:
1) Unlike Marlboro, our other Premium Brands have been
unable to capture entry level smokers and are therefore
faced with rapidly aging franchises.
2) These brands are each positioned against a limited
industry segment (i.e. 100MM, low tar, female smokers),
whereas Marlboro can satisfy almost the entire range of
consumer requirements from a flavor, tar level and
3) Marlboro's industry leadership position and corporate
importance ensures significant retail presence, while
our other Premium Brands have limited opportunity/
resources to establish a substantial marketplace
During the plan period, PM USA's major task is not just to
slow the volume declines of our major Premium Brand
franchises (B&H, V.S., Merit and Parliament), but to
actually achieve both unit and share increases. By 1996,
these brands are targeted to have an aggregate share of X%,
equating to a unit increase of 3 versus 1991. This will be
accomplished through the Premium Brand Group focusing on
five strategic elements:
1) INTRODUCE LINE EXTENSIONS TO BROADEN THE APPEAL/
PARTICIPATION OF THESE BRANDS. Through an annualized
investment strategy commencing in 1992, major line
extensions will be introduced for our Premium Brands.
Neither Merit nor B&H has launched a significant new
product for a decade, and Parliament, a strong regional
brand, has been limited to three packings for 22 years.
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Supermarkets and mega-volume outlets represent a significant
opportunity for Marlboro. The brand~has been historically
under-represented!inithe supermarket environment, postingian.
19.7% share compared to Marlboro's 26% share overall.
Supermarkets will be increasingly important to Marlboro due to
anticipated demographic trends. Marlboro's largest demographic
group, 25-44 year alds will continue to grow, pushing more of thee
bran&'s franchise into the price driven cartonluniverse. older
competitive full margin franchises are more susceptible to price
d~iscounting, decreased brand loyalty, alternate purchase behavior,
and'switching to price value brands. 'Phus, while Marlboro must
defend its core business, the brand has aniopportunity for
incremental volume through offensive promotions aimed primarily
Carton outlets, an area of historic under-representation for
Marlboro should provide growthlopportunities. A key challenger for the brand is to!provide new,
unique means of'packaging,
product andipromotion to!differentiate the brand is an
environment which will continue to be price sensitive.
Leverage Marlboro's.strong heritage with offensive promotion
to attract new smokers in the carton environment. Marlboro
will investigate new means of packaging to address the price
issue while still allowing for multiple purchase options. Where
possible, these new configuration will serve as anientree into
new merchandising and visibility vehicles for the brand.
Defensive carton promotions will be used only where necessary to
rewitalize share trends. In addition, we must continue to
capture a significant share of smokers trading down from carton
purchasers by maintaining strong front-end~merchandisingi
RETAIL PRESENCE f AVAILALBILITY
f Capitalize on the supermarket trend toward non-self-service
cigarette merchandising by encouraging the placement of
Marlboro service centers to provide leadership visibility..
-1-o Merchandise a 5-pack carton in! supermarkets to capitalize on,
-/0 the trend toward increased front-end pack sales. (1992)1
Introduce a 15/20 pack carton in high volume carton outlets
where multiple carton purchase behavior i'.s the norm. (1993)
%~ . ~. _ ... . -~,a..
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TARGET PROMOTIONAL/ADV'ERTISINIG DOLLARS AGAINST KEY
MARKETS. Beginning in 1992, a geographic spending
strategy will be the: core of the individual brand
plans. Specifically, we will allocate disproportionato
resources against key markets to slow our volume
declines and increase brand presence. In these
designated markets, we will leverage our consumer
popularity to gain Sales and Trade: support.
3) CAPITALIZE ON SHIFTING DEMOGRAPHIC TRENDS. By the year
2000, Blacks, Hispanics and Asians will represent
nearly 25% of the adult population. Increasing our
share among ethnic smokers will be!paramount in
reversing our current rate of decline. Targeted
promotions, improved'marketplace presence and, relevant
advertising, are all necessary to achieve these goals..
INTRODUCE: ALTERRATIVES' FOR AT LEAST TWO OF OIJRPREliIUM
FRANCHISES (B&H/V.S)~ WHICH BRING OUR PRRMIU'M~ TR;ADEI+LXRR.S,
TO COMPETE IN T'HE DISCOUNT SEGMErTT. To accomplish the
aggressive goals outlined in this plan it will be
necessary to, expand our packings that either carry
these trademarks (B&H, V/S) or are endorsed by them.
The operating ph~ilospphy will shift from, a pure brand
orientation to a focus on trademark management.
PROVIDE ADDED VALU'E' TO OUR CURRENT FRANCHISES. In
conj'unction with the introduction of' low price
alternatives, we must also add value to, the premiu¢m, end
of our franchises. We will utilize product/packag,ing'
innovations to encourage loyalty among!our existing
smoker base as well as to attract inswitchers. By
adding value to our brands, we will give smokers a,
reason to choose paying a premium price versus
selectingia low price alternative.
In addition to the above, it will be necessary to
utilize aggressive direct mail/continuity offers
against our current smokers to encourage loyalty within,
the premium end of these franchises. During, 1992, wewill implement a Brand name generation program
our own smokers to significantly increase our currentt
level of penetration (48%).
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BENSON &' HEDGES
o America's premium quality cigarette
o Focus spending in key markets: B&H is the most
geographically concentrated major brand (West, Southwest,
o White female skew, 40+
o Black and Hispanic, female skew, 30+
o B'&H King Size: male skew, 25-34, mainline and ethnic
Convenience Outlets - Pack Purchases
o increase inipro¢notional support
Supermarket Outlets - Carton Purchases
o Occasional couponing (FSI's, Direct Mail) in
conjiunction with "Signature Collection!' premium offers.
Urban - Pack
o Continue market penetration pack prograan
o Market to diverse target groups
o Build' on premium image
o Build'.ethnic franchise
o Line extend to Kiings smokers
o Compete inithe low price arena
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O'V E Pt'V I EW .
The Benson & Hedges franchise is experiencing disproportionate
volume decline versus the category as the result of younger
smoker inswitching being siphoned off by Marlboro, Camel and
Mewport coupled with increasedioutswitching due to sustained,
competitive activity by other Full Margin 100's andPrice Value.
In,addlition, Benson &' Hedges 100mm only lengthiproves a barrierr
tolentry for younger smokers; 100's are sDcewed'toward older,
female smokers and perceived as such.
The accelerated volume decline and the aging demographic profile
risks Benson & Hedges' long term viability. Benson & Hedges'
future rests on gaining and building share among adult smokers
under 35, while at the same time providing incentive for current
users to remain within the franchise.
S T RAT'EG'Y
Benson &.~Hed'ges is to be positi~oned to be more relevant to
smokers under 35 through the introduction of a King size line
extension. The Kings'' packaging, advertising and retail activity
shall be cpntemporary and relevant to younger smokers but
consistent with Benson &' Hedges positioning in ord~er to reinforce
the trademark's strengths. Pack trial, which focuses on the
purchasing patterns of young adult smokers, will be!initiatedivia
an extended reduced price offer. These programs are designed to
add new "news" to the franchise and provide significant
Direct marketingland media will deliver continuity programs
designed to retain smokers within the 10'01's franchise.
Product/packaging based benefits will be sought to provide a
sustainable point-of-difference for Full Margin smokers. Loww
price line extensions (flankers) will be introduced to stem the
flow of franchise outswitching and to recapture former B&H'
smokers who have switched to low price brands.