Philip Morris International's global strategy: Comparative cases of French and Chinese market

Thèmes abordés

Phillip Morris International, Marché du tabac, Chine, Marketing International

Résumé du document

In 1954, the US Tobacco company Philip Morris started to develop its sales activities overseas by choosing an accessible market not so far from USA by creating an affiliate society in Australia. In 1955, PM Overseas was born and was established as an international division. Today, Philip Morris International is the leader on the traded tobacco industry thanks to its Marlboro brand, which is well-known worldwide.

Philip Morris International is the world's leading international tobacco company and the fourth most profitable international consumer goods company. Over the years, they have demonstrated strong performance through organic growth and new market entries, and by acquiring and integrating companies. Their strong infrastructure, strategic focus, resources, employees and brands position them to succeed today and in the future.

In 2008, PMI had net revenues excluding excise taxes, worth $25.7 billion, up $2.9 billion or 12.7% versus 2007 and up $1.3 billion or 5.6% on an organic basis, excluding acquisitions and currency, representing the high end of their long-term, constant currency target growth rate of between 4% and 6%.
The operating companies' income grew an impressive $1.5 billion or 16.7% and $O.9 billion or 9.9% on an organic basis.

Extraits

[...] Leader on the traded tobacco industry Own the most well-known cigarette brand i.e. Marlboro 7 on the top 15 cigarette brands in the world belong to PMI 2 Reactive motives Saturation of the domestic market because there are less and less smokers in the western countries (USA, Western Europe) Regulations concerning cigarettes are getting strengthened and PMI will have difficulties to sell its products Tobacco-related issues i.e. sicknesses linked to cigarettes consumption in western countries All national health institutions are against the cigarette consumption Counterfeiting is consumed by a important part of the smokers in emergent and under-developed countries, in fact PMI's brands appear as premium brands 3 The market expansion strategy Philip Morris International has clearly diversified its targets concerning both the customer segments and the countries. [...]

[...] In 2008 The volume increased by to 40.7 billion units. The Philip Morris is present in 40 markets and that make it the fifth largest brand of the company. Parliament is the 6th largest PMI brand, present in 50 markets. It is the 14th largest cigarette brand in the world. In 2008, Parliament's volume increased by 20% to 37.4 billion units in 2008. Local brands PMI owns local brands to maintain its market share like the acquisition of Interval, a French cigarette brand. [...]

[...] The areas where they feel they are particularly strong are their career development programs, their competitive salaries and benefits, and the challenging working environment they provide. This company is trying to encourage and celebrates success. They are broadening their employees' knowledge and skills through hands-on experience and by promoting many forms of training Technology-R&D Developing products that might reduce the health effects of smoking is one of their top priorities. They have been active in this field for a long time, and they have shared their findings with regulators and the public health community. [...]

[...] - The Chinese market is far to be saturated; it counts the largest numbers of smokers (320 millions _ of the world total) - Why not 5 for “very strong”? Counterfeiting is a real harmful for the professional of the tobacco industry; it catches an important market share. Threat of substitutes: 0 (nothingness) - Contrarily to France or other western countries, Chinese are not ready to give up smoking even so it is harm for their health. Legal environment: 4 (strong) - Impact of the legal environment in the tobacco market is also strong is China but in another way that health regulation. [...]

[...] Behavioralistic segmentation: The main features of segmentation are remembered previously. - Price sensibility: As a large number of the Chinese population live under the poverty line, the rate of smokers is significant. Contrarily to the French case, increasing prices do not involve a decrease of the consumption. The Chinese consumer prefers to let down legal brands for counterfeiting even so they are dangerous for health. - Brand loyalty It is important to remark that different features or criteria for segmenting the market are mixed in order to gather consumers and potential consumers into homogenous group for both the French and Chinese market. [...]