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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"How can you explain Marlboro's success except through the cowboy image?"¹

- Philip Kotler in his book "According to Kotler" in 2005.

"Anti-smoking advocates may find it ironic that Philip Morris has become a more deft and efficient marketer as a result of the legal settlement that sought to hobble the cigarette makers."²

- BusinessWeek in 2005 commenting on Philip Morris'marketing strategies for Marlboro after the implementation of the Master Settlement Agreement.³

"At Philip Morris USA (PM USA), we demonstrate our commitment to responsibly marketing our products to adult smokers by developing and implementing programs that comply with both the letter and the spirit of the laws, rules, policies and agreements that govern our business practices."⁴

- Philip Morris in 2005.

Introduction

In August 2005, BusinessWeek ranked Altria Group Inc's (Altria) cigarette brand, Marlboro at number 10 among the top 100 global brands for the year 2005. Marlboro was valued at $ 22,128 million. Marlboro was originally launched in the US during early 1900s. However, the brand was withdrawn from the market for a brief period and was later reintroduced during 1950s. When Marlboro was re-launched during the 1950s it occupied around 1% of the total market share in the US. With a view to improving the brand's image, Philip Morris Inc. (Philip Morris) (Altria was then known as Philip Morris Inc.) hired the advertising agency, Leo Burnett Company to promote the brand Marlboro.

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Initially, the ad agency introduced the 'tattooed man'campaign which helped in repositioning Marlboro as a product targeted at men. During the 1960s, the ads began featuring cowboys,⁵ popularly known as 'the Marlboro man'. These ads went on to become a huge success in the US. By the end of 1960s, Marlboro became one of top selling brands in the US cigarette market.

In 1970, Marlboro was ranked third among the top selling brands in the US with sales of $ 51.37 billion. During the 1970s, the 'Marlboro Country'campaign was introduced. It helped strengthen the brand's image in the US. In 1972, Philip Morris brought out Marlboro Lights in addition to the regular Marlboro. Over the years, the company offered various line extensions of Marlboro. By 1979, Marlboro became the top selling brand in the US. Marlboro's sales in the year 1979 accounted for $ 103.6 billion. Marlboro continued its successful innings through out the 1980s. In 1991 and 1992, Marlboro was ranked as the most 'valuable brand'in the world consecutively for two years by Financial World⁶.

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1] "The World of Marketing According to Kotler," www.amanet.org, 2005.

2] "Leader of the Packs," BusinessWeek, October 31, 2005.

3] In 1998, the US government and the American tobacco companies entered into an agreement which is known as the Master Settlement Agreement. As a result of this agreement, the government imposed severe restrictions on advertising, promotion and marketing of tobacco products.

4] www.philipmorrisusa.com.

5] A cowboy tends cattle and horses on cattle ranches in North and South America. The cowboy is in charge of the horses, as is the wrangler. In addition to ranch work, some cowboys work in and participate in rodeos, and many cowboys work only in the rodeo. (Source: www.answers.com.)

6] Financial World is a management magazine published in the UK by Institute of Financial Services, a leading provider of financial education in the UK. It is a monthly magazine that publishes articles related to financial services.