D. Environmental Scan
Opportunities
With Philip Morris's determination to become the number one global cigarette, the company has engaged in various strategies that are geared toward international strength. Marlboro, being Philip Morris most popular cigarette brand, has been taking several markets as additions to its expanding market share. As much as Philip Morris aims to become the number one in the industry, timing becomes an important factor. As much, there are several market opportunities that can be tapped by Marlboro to advance its objectives and goals.
- Philip Morris inked a partnership deal with various distributors and tobacco product companies. These partnerships open an opportunity for Philip Morris to move forward in conquering other major markets other than its current geographic markets. This will provide an advantage for the company to deliver what their consumers wanted without going away from the basic or fundamental principles of the brand.
- The appreciation of women toward tobacco smoking has grown over the past few years. With this change of the behavior of women, Marlboro gains another promising market that can be tapped (Gleason, 2006). Professional women are always looking for cigarettes that they can use whenever they are and Marlboro is the best option they have. The core competency of being used by men can be spread out to include the demographic market of women.
- Appreciation for more advanced tobacco products has grown as another behavior of the market. More and more people are looking for products that are healthier. Philip Morris has a very massive research and development department and expense that ensure provision for such new products. With the growing market of green and healthy products, Marlboro can more forward to the same direction.
Threats
Aside from the growing opportunities that can be tapped by Philip Morris to strengthen its Marlboro brand, the organization needs to consider also the risks and threats that may endanger the realization of these market opportunities that Marlboro brand has. For the guidance of the company, the following threats are determined.
- Philip Morris and the Marlboro brand have great share in the market of Western Europe and Latin America; however, they don't have enough strength in the Asia Pacific. It must be noted that the Asia Pacific market is the largest of all, in terms of population. As such, without enough penetration in the Asia Pacific region, what Marlboro misses is competing with its competitors who are already gaining much from the Asia Pacific market.
- Another threat to the strength of Marlboro is the restrictions and regulations of the government over their products (Cunningham, 1996). With large taxation, it would be hard for Marlboro to complete in terms of price resulting to poor customer engagement of Marlboro. In the same manner, there are countries that don’t allow importation of foreign products or the quota of importation. This means that Marlboro had to deal with these issues directly.
- The global awareness of the harm of smoking is another problem that stops Philip Morris in moving forward. The declining number of smokers is a threat to the market share, revenue, and financial success of the Marlboro brand. As such, the same is akin to the effort of the government to stop people from smoking; the high taxation being raised on these types of products is a commitment or the statement of the government to stop smoking. This trend leads to the decline and loss of several market share of Philip Morris and the Marlboro brand.
E. Internal Scan
Strengths
Philip Morris and its brand Marlboro have great strengths that can help to achieve its market goals and objectives. The following are some of the brands strengths:
1. High Research and Development. Over the past year, Philip Morris invested on its research and development department to ensure the company's innovative direction in the industry. This is an important part of the organization’s forward direction to ensure that it can respond to the demands and needs of the changing market environment.
2. Loyalty of Customers. Marlboro is the number one cigarette of almost all states of America (Miler & Muir, 2005). This means that Marlboro has a tremendous following all over the region. The brand has fostered loyalty among its customers, which strengthened Philip Morris market share and reputation. The loyalty of customers of Marlboro is a good point to ensure that they can benefit from the closed ecosystem. This means the company can employ market strategies using this core competency across all other platforms.
3. Price Determination. As the leader of the tobacco or cigarette industry, Philip Morris' Marlboro is the ceiling of the pricing strategy. This means that all other competitors are looking at Marlboro as the standard. This provides Marlboro an influence over the market, which is a good point when the organization wants to dictate the pricing of the industry.
4. Vast Market Demographics. Philip Morris operates and has good influence in several major markets. This means that Marlboro is not just sold in the United States, but it is also sold in other regions, thereby increasing the market of the company (Rutherford, 1994). Currently, Philip Morris has major operations in the European Union region, the Eastern Europe region, Middle East and Africa region, and Latin America Canada region. As such, the vastness of PMI’s reach is a good point for their penetration in major markets.
5. Distribution Channels. With a long experience in the tobacco industry and a very rich experience in handling distribution, PMI already has developed a good partnership with major distribution channels throughout the globe. This means that the company can easily reach its target audience and maintain a good customer engagement.
5. Distribution Channels. With a long experience in the tobacco industry and a very rich experience in handling distribution, PMI already has developed a good partnership with major distribution channels throughout the globe. This means that the company can easily reach its target audience and maintain a good customer engagement.
Weaknesses
Aside from the strengths of the company, there are also weaknesses that should be considered. It is necessary for Marlboro to consider these weaknesses and address them proactively to avoid endangering the company’s direction. By acknowledging these weaknesses, it will be easy for Marlboro what must be done to ensure that all its strategies and actions will focus on the organization’s strength, rather on the following weaknesses:
1. Philip Morris on a market segment penetration that does not have much impact on other demographics. The sense of exlusivity and elitism of Marlboro is a problem that hinders the company to expand and reach to other markets. As a result, Marlboro sees a declining market growth as its market segment starts to use other alternatives with the advent of the concept of healthy smoking.
2. Loss of women market. Another problem that should be considered by PMI for its Marlboro brand is the loss of women market. The brand focuses only on men market and it disregards the impact and importance of the women market. The women market is a very promising and big one as many women also smoke. Without a proper strategy to reach them, PMI gives them to other competitors who have solid strategies for the women market.
3. Price differentiation. It is a big wonder why there are regions that Marlboro cigarettes are sold at lower price, while for other regions, Marlboro is priced higher. This disparity of the price of the same product leads to low trust of consumers. It makes market consumer think that there is a problem of discrimination with PMI and Marlboro. As a result, consumers would just buy cigarettes that are sold of the same value across geography.
Recommendations
In order for Philip Morris and the Marlboro brand to move forward and keep its reputation as the leading cigarette brand of the world, it has to do the following:
1. It is necessary for Philip Morris to extend its strategies to penetrate the Asia Pacific region. As a global brand, Marlboro cannot just leave the Asia Pacific region. I am recommending expanding the advertising and promotion of Marlboro in the region. The problem why most people in Asia Pacific don’t know much about Marlboro is due to the lack of information drive and advertising strength. Marlboro should push for tremendous market penetration and introduction while it builds its strength in its current markets.
2. Instituting sale representative who will conduct the evaluation of Marlboro's performance in each country is important. Marlboro is a global brand and it is necessary for a global brand to have a local root. It is important for Marlboro to create a sale representative to see how each country or market works. It is impossible to follow and determine the strength of Marlboro by just generalizing everything. It has to be in the local roots of the organization and should be expanded to the holistic approach of evaluation.
3. Marlboro should consider producing healthier products and mixes. Marlboro’s resistance to change will mean its decline. With the growing demand for healthier products, it is time for Marlboro to rethink and reshape its decisions. It is important for Marlboro to leave the traditional way of product development. By incorporating health into the Marlboro cigarette, the brand can still reach out those who already leave the closed ecosystem of the brand and the company.
References:
Cunningham, R. (1996). Smoke & Mirrors: The Canadian Tobacco War. IDRC.
Gleason, C. (2006). The Biography of Tobacco: How did that get here?Crabtree Publishing Company.
Miller, J. & Muir, D. (2005). The Business of Brands. John Wiley & Sons.
Rutherford, P. (1994). The new icons?: the art of television advertising. University of Toronto Press.
