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Phillip Morris: Changing Marketing Strategies As A Result Of New Governmental Laws And Regulation Regarding Smoking

3050 words - 12 pages

Introduction
By the middle of 20th century being a smoker was a synonym of being cool, modern and chic, and a cigarette became a symbol of a good and successful life, largely promoted through movies and advertising. As the time passed, the negative health effects associated with cigarettes had become apparent, the society became aware of harmful effects of smoking, it's addictiveness, the toxicity of tar; Western governments have shifted away from undisguised support of the tobacco industry towards an emphasis on population health interests, and in the 1990's, the future of the largest tobacco company in the world, Philip Morris was put under a question. The company desperately needed a new image and a new business strategy.
The year 2013 became one of the most challenging in company's history in the terms of revenue, with a negative growth rate of 1.32%.
Could that be the sign that after more than a century of success, the business needs some major changes to be able to stay in the game?

Background
The history of the company traces back to 1847, when Mr. Philip Morris had opened a single shop on Bond Street in London for selling tobacco and ready-made cigarettes. After his death the business was taken over his wife wife and his brother, therefore the company continued operation as a family business. In 1881 the company went public and in 1894 it left the control of Morris family. In 1902 it incorporated in New York and the ownership was split 50-50 between the British and American partners.
The year 1919 became a critical point in the history of the company: first Philip Morris logo was introduced, through the acquisition the company was now owned by American shareholders and incorporated in the state of Virginia under the name of Philip Morris & Co., Ltd., Inc. In a few years, the company already had the manufacturing plant in Richmond, and in 1924, Marlboro - today's most popular cigarette brand was introduced.


Tobacco industry must be one of the most profitable businesses in the world: in 2010 the combined profits of six leading tobacco companies was $35 billion, with equaled to the profits of such multinational giants as Coca-Cola, Microsoft and McDonald's put all together. Philip Morris International is an American global cigarette and tobacco company with products sold in over 180 countries with 15.6% of the international cigarette market outside the United States. It owns seven of the top 15 brands in the world including Marlboro, L&M, Bond Street, Philip Morris, Chesterfield, Virginia Slims, and Benson & Hedges. In 2008 PM had reported $63,640 million in net revenue; that number was 15,2% greater then the result of the previous year. In 2012 net revenues reached $77,393 million, and the latest figure for 2013 is $80,029 million.
The headquarters of the company are in New York and its Operation Center in Lausanne. It employs over 78,000 people worldwide.

External Environment
New Rules
The first...

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