anas ahmad pgp01001 iim_sirmaur
TRANSCRIPT
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MARBOLORO’SPRICE DROP
BYAnas AhmadPGP01001
IIM Sirmaur
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World’s largest cigarette selling brand
By Philip Morris
Women's Cigarette in 1924 Repositioned in 1950s
As a cigarette for men
Brand Equity of $21.9billionIn 2016(Forbes)
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Positioning of the Brand
Market: USAProduct: Premium quality tobacco
Customers: Young and Middle aged smokers who want to live
life on the edge. People who want to experience quality smoking
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WHAT HAPPENED in 1993?
MARLBORO FRIDAY
Or ‘THE BLACK
FRIDAY’
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Management DecisionReduce the prices by 40-50 cents
Earnings decreased by 40%
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Market Reaction
23% drop in share price !!!$13 billion LOSS in shareholder equity
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WHY?
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Sluggish Economy
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Stiff Competition
Private Labels
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Hefty Price Increase
80cents to 1$ Price Premiums
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Strategy testing Conducted in
Portland40 % decrease in pack
priceIncrease in market share
by 4 points
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RESULTS
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Market Share Increase
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Price Premium
35% premium
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Discount Brands Marlboro
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PRICE
QUA
LITY
Marlboro’s Price BandMarlboro’s Current Price Perception
Discount brand’s Price BandDiscount Brand’s Current Price Perception
Price Tiers in the year 1993
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Can Strong Brands charge excessive Price Premiums?
Question?
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Learning for BrandsStrong Brands can command Price Premiums but not Excessive Price Premiums
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Summary
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Disclaimer !Created by
Anas AhmadPGP01001IM Sirmaurduring the
Brand Managementcourse, under the guidance of
Prof, Sameer Mathur,IIM Lucknow