Philip Morris USA and Marlboro Friday (A)

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Compact case

Condensed version

Reference no. UVA-M-0657

Subject category: Marketing

Authors: Richard R Johnson (Darden School of Business, University of Virginia); Lauren Killgallon (Darden School of Business, University of Virginia); Paul W Farris (Darden School of Business, University of Virginia); Yoshinobu Sato (University of Marketing and Distribution Sciences)

Published by: Darden Business Publishing

Originally published in: 2001

Version: 2 March 2016

Revision date: 17-Mar-2016

Length: 4 pages

Data source: Published sources

Topics: Brand management; Pricing; Marketing strategy & planning

Share a link: https://casecent.re/p/1453

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Abstract

This case is a condensed version of 'Philip Morris USA and Marlboro Friday (A)'. In July 1993, Philip Morris executives met to consider second-quarter data on US tobacco sales. Three months earlier, the company had announced a 40-cent-per-pack promotion for Marlboro cigarettes, the number-one-selling cigarette in the world. On the day of the announcement, April 4, Philip Morris stock fell $14.75, to $49.375, while the Dow Jones Industrial Average fell 68.63 points. On June 4, the company announced an extension of the promotion through August 8. After eight months of consecutive share declines, Marlboro's share had rebounded by three points. Philip Morris executives now faced several important decisions: Should the Marlboro promotion be extended beyond August 8? Should the promotion be replaced with a permanent cut in wholesale prices? Should the prices of other Philip Morris premium brands be lowered? Finally, should the prices of the company's discount brands be altered in any way?

Location:

Industry:

Food, beverage

Other setting(s):

1993