Philip Morris International - Entry Strategy in India

Details

Case Code : CLMM024
Publication date : 2005
Subject : Marketing Management
Industry : Alcoholic beverages and tobacco
Length : 04 Pages
Price : Rs. 100

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Key words:

Philip Morris International, Marlboro, Godfrey Philips India (GPI), Barakat Foods and Tobacco Pvt. Ltd, High-end Customers, Import Route, Regulatory Framework, Foreign Investment Promotion Board (FIPB), Rothmans, Sampoorna, British American Tobacco, Philip Morris Services India Ltd (PMSI)., Open General License (OGL), Contraband Cigarettes, Bond Street

Note

1: This caselet is intended for use only in class discussions.
2: More comprehensive case studies are priced at Rs.200 to Rs.700 (US $5 to US $16) per copy.

 

Abstract:

Philip Morris International (PMI) tied up with the Barakat Foods and Tobacco Pvt. Ltd., to distribute cigarettes under a non-exclusive distribution agreement. The caselet describes in detail the company's cautious entry into India through the import route circumventing stringent Indian regulatory framework. It gives a brief mention of PMI's pricing policy. Finally, the caselet examines the implications of PMI's entry for the domestic tobacco industry.

Issues:    » Regulatory issues in cigarette market    » Pricing of cigarettes    » Impact of international tobacco companies on Indian players Introduction Philip Morris International's (PMI) plan to enter the Indian market with its flagship brand Marlboro (cigarettes) has surprised Indian manufacturers and consumers. It has tied up with the Barakat Foods and Tobacco Pvt. Ltd., to distribute cigarettes under a non-exclusive distribution agreement.

PMI has ignored its Indian partner Godfrey Philips India (GPI) in which it has a major stake of 35.9%. PMI plans to import cigarettes through its branch office in India and entrust the marketing to Barakat Foods and Tobacco Pvt. Ltd. The company plans to target high-end customers and hence their initial launch will be limited to few metros.

PMI had made a cautious entry into India through the import route. This entry strategy enabled it to circumvent the regulatory framework, which is stringent for foreign companies dealing with products like cigarettes...

Questions for Discussion:

1. What environmental factors influenced Philip Morris to enter India through the import route? What are the reasons that influenced Philip Morris to favor Barakat Foods over its local partner Godfrey Philips India, to distribute its products?

2. Smoking is habitual and consumers show high brand loyalty. In this context how can Philip Morris succeed in penetrating the market?