Abstract

This case is about Philip Morris International (PMI), a leading global cigarette and tobacco company. It discusses the company’s strategy to venture into the ‘Heat but not burn’ (HnB) tobacco products category. PMI launched iQOS in 2014 in Nagoya, Japan, and Milan, Italy, as a pilot project. iQOS was a rechargeable electronic device that heated tubes of tobacco called HeatSticks, in contrast to conventional cigarettes in which tobacco was burned. The case highlights the dangers of tobacco consumption and its effect on human health. It describes in detail PMI’s strategy to develop and commercialize what it called Reduced Risk Products (RRPs). iQOS was the first of four platforms of RRPs developed by PMI. The case also examines the challenges faced by the company. It ends with a discussion on whether PMI would be able to stay ahead of its competitors or not.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Discuss and analyze the global tobacco industry
• Study and assess the issues and challenges for a cigarette company relying on traditional cigarette products
• Evaluate the importance of venturing into the ‘Heat but not burn’ (HnB) tobacco products category

Keywords

Product management; Strategic marketing; Industry analysis; Ansoff’s product market matrix; Brand portfolio; Product portfolio; Category-based marketing; Multi-category approach; Reduced-risk products; Strategic options; Corporate social responsibility; Marlboro