BRAND:

MARLBORO

Name: Deepak Shukla

Roll no. 17030120137

STRATEGIC BRAND
MANAGEMENT
Branding Challenges in Emerging Market
INTRODUCTION:
Tobacco is one of the most addictive substances on the planet.

It is an American native plant that has historically been one of the most significant
crops for American farmers.

Tobacco is basically a plant whose leaves are dried and fermented before being
used to make tobacco products. Tobacco includes nicotine, a substance that may
lead to addiction, which is why so many people struggle to quit smoking. Many
other potentially dangerous compounds can be present in tobacco or are formed
when it is burned.

Tobacco can be smoked, chewed, or sniffed. Cigarettes, cigars, bidis, and kreteks
are examples of smoked tobacco products. Some individuals also use a pipe or
hookah to smoke loose tobacco. Chewing tobacco, snuff, dip, and snus are all
chewed tobacco products; snuff can also be smelled.

Global tobacco market value from 2012-2025 (in million USD)

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Although tobacco contributes to the agricultural, fiscal, manufacturing, and
exporting sectors of the economy, conclusive medical proof of the lethal effects of
tobacco usage has resulted in a rapid drop in state support for tobacco growers and
manufacturers.

China National Tobacco company has become the largest tobacco company in the
world by volume.

Following 4 firms dominate the international market:

1. British American Tobacco

2. Imperial Tobacco
3. Japan Tobacco
4. Philip Morris International

Law and policy restricting smoking of tobacco has significantly increased, about 6
trillion cigarettes are still produced each year, an increase of more than 12% since
2000. Tobacco is sometimes substantially taxed in order to raise cash for
governments and to encourage people not to smoke.

Lung cancer, chronic bronchitis, and emphysema can all be caused by smoking
tobacco. It raises the risk of cardiovascular disease, which can lead to a stroke or a
heart attack. Other malignancies, such as leukaemia, cataracts, and pneumonia,
have been related to smoking. Tobacco that isn't smoked increases the risk of
cancer, particularly cancers of the mouth.

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TOBACCO MARKET IN INDIA
Tobacco was first brought to India by the Portuguese during the Mughal Empire,
only 400 years ago. Tobacco quickly became a part of the sociocultural milieu in
numerous areas, notably in the eastern, north eastern, and southern portions of
the country.

India is the world's second-largest tobacco producer and third-largest exporter. A

total of 46 million individuals are employed in the tobacco sector. The market
registered a total export of INR 60.84 billion in FY 2018 thanks to the Tobacco
Board of India's expanding facilities.

Tobacco usage is prevalent among adults (15 years and older) at a rate of 35%. Male
consumes tobacco at a rate of 48%, while female consumes it at a rate of 20%.
Tobacco is used by nearly two-fifths (40%) of people in rural regions and one-
fourth (25%) of adults in urban areas in some manner.

In India, tobacco is harvested in 2 forms:

- Cigarette tobacco and

- Non-Cigarette tobacco

 Non-cigarette tobacco had a market share of around 69% in the year 2017-
2018. Due to the significant reduction in the manufacture of cigarette
tobacco, non-cigarette tobacco sales increased drastically.

 On the basis of consumption, cigarettes and beedis had a market share of

around 8% whereas khaini accounts for 11%.

 Despite the fact that smokeless tobacco has the greatest rate of usage, legal
cigarettes generate more revenue. Despite the fact that nicotine causes
addiction and intoxication, Indians use a substantial amount of it,
particularly in the form of smokeless tobacco.

 ITC Ltd. now has the biggest market share of 84.27% among India's top
cigarette manufacturers, based on sales. Minor firms such as Kothari
Products Ltd., Godfrey Phillips India Ltd., VST Industries Ltd., and others
get the rest of the stake.

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Market Challenges of Tobacco industry:

 India has some of the highest cigarette taxes in the world (64% excise duty,
28 percent GST). Therefore, high tax rates make cigarettes expensive for a
broad segment of the population. As a result, people are increasingly
turning to beedi and other smokeless tobaccos. Hence, the entire tobacco
market is growing slowly.

 The Cigarettes and Other Tobacco Products Act of 2003 (COTPA, 2003)
prohibits tobacco advertising in all forms. Companies are unable to directly
advertise their products. As a result, it becomes more difficult for
manufacturers to advertise their brands, restricting the domestic market's
growth.

National Tobacco Control Program:

Following are the main components of NTCP:

District level

o Health and social worker training, as well as SHGs, NGOs, and school
instructors.
o Setting up tobacco cessation facilities.
o Local IEC activities.
o Monitoring tobacco control laws.
o School Programme.

State level

o Tobacco control cells with specialized personnel for the successful

implementation and monitoring of anti-tobacco legislation and activities.

National level

o Public awareness/mass media initiatives to raise public awareness and alter

behavior.
o Under the National Rural Health Mission framework, the program
components are being integrated into the health care delivery system.
o Tobacco product testing facilities must be established in order to improve
regulatory capacity, as stipulated by the COTPA of 2003.
o In partnership with other nodal Ministries, mainstreaming the research and
training on alternative crops and livelihoods.

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MARLBORO
Marlboro is an American brand of cigarettes, currently owned and manufactured
by Philip Morris USA (a branch of Altria) within the United States, and by Philip
Morris International outside the United States.

Richmond, Virginia, is the location of the largest Marlboro cigarette

manufacturing plant. It has 300 billion units sold in 180 countries. Marlboro has
been the best-selling cigarette brand in the world since 1972. It is considered as the
world’s most profitable non-durable consumer good. As of 2017, Marlboro had
40% market share in the United States, more than the next seven brands
combined.

Since 1972, Marlboro has been the world's best-known trademark among all
consumer items, and it has been the world's best-selling cigarette brand.

The following are the brand available in India in the following variants:

o Marlboro Red,
o Marlboro Gold Original,
o Marlboro Gold Advance,
o Marlboro Fuse Beyond,
o Marlboro Fine touch,
o Marlboro Clove Mix and
o the all new Marlboro Compact range.

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Affluent urban adult smokers who want high-quality multinational brands and
products are particularly fond of Marlboro.

Philip Morris, had begun utilising ammonia to "freebase" the nicotine in cigarette
smoke by the early 1960s, resulting in low-yield (reduced-tar or -nicotine)
cigarettes with enough nicotine to keep customers "happy" (i.e., addicted).

Philip Morris found the benefits of freebasing while researching the effects of the
ammoniated recon in Marlboro cigarettes.

It was 18th most valuable brand in the world by Interbrand ranking 2011 with a net
value of $20 billion.

The objective of the cigarette firms is to

maximize profits in the long run. The
doubling of the federal excise tax on
cigarettes and rise in other taxes since 1983
resulted in sharp increase in cigarette
price and thereby the consumption
decreased.

“Marlboro man and Marlboro Country”

was the most recognized and most
appealing brand image of the 20th century.

Marlboro man was the symbol of True

American spirit and American way of life.

Marlboro man was a cowboy who has

perfectly built up body and the
commercial showed him as the ultimate architype of manhood. He was tough,
affectionate and stylish and overall stood as the icon of freedom and manliness.

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SOME OF THE CHALLENGES IN EMERGING MARKET

“Smoke Free” Transformation:

Tobacco giant Philip Morris International plans to stop selling cigarettes in the
United Kingdom within the next decade — including the company's iconic
Marlboro brand.

The company CEO said that the brand will disappear from UK. The CEO of the
company believes that the first choice of consumers is they should stop smoking. If
they don't, the next best option is to allow them to switch to better options.

Philip Morris International is

reinventing itself as it moves
away from traditional cigarette
products.

Olczak plans to lead the

company's "smoke-free"
transformation. The company's
new aim, he added, is to identify
and deliver "less dangerous
alternatives to cigarettes" to the
millions of individuals who
would otherwise continue to
smoke.

He mentioned their aim is to get more than half of their net revenues from smoke-
free products by 2025.

Using Cigarette alternatives:

Despite its pledge, Philip Morris International did not completely eliminate goods
aimed towards smokers.

It's concentrating on tobacco heating devices, such as electronic cigarettes, which

still "produce a nicotine-containing tobacco vapour," according to the business.

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The CEO even went on to say that the company's new goal is to find and supply
"less harmful alternatives to cigarettes" to the millions of people who would
otherwise smoke.

"Smoke-free goods" are not

"risk free," according to the
tobacco company's website,
but "are a significantly better
choice than cigarette
smoking".

Mass Marketing to New Age Promotions:

To mark the 50th birthday bash of Marlboro, a crowd of few hundred people
gathered in cities of US. Marlboro was the cigarette market leader in the U.S. with
more than 40% share.

Despite the
advertisement
restrictions agreed by
the cigarette
marketers in 1998,
Marlboro was ahead of
its competitors. The
brand has reached the
top with traditional
mass marketing
techniques and
continued to hold on
to its position by
adopting a mix of new

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age tactics like marketing at live events and bars, sign-ups for promotional offers
from customers, promoting internet chat, price promotions and direct mail.

On the contrary, the supporters of the anti-smoking campaigns raised concern

that cigarette advertising was done in a camouflaged manner and required more
vigilance and stringent restrictions.

Industry observers were unsure if Marlboro, with its new advertising approach,
would be able to maintain its market dominance in the United States if future
regulations were tightened.

Price Wars and Heavy Competition:

Usually in cigarette
industry, the generic
brands have more
market share
comparatively to that of
branded ones. To
sometimes fight the
prices of the local
brands, branded
companies have to cut
their product prices
drastically.

Philip Morris, for example, slashed the price of Marlboro cigarettes and other
premium brands by 20%. The similar price reduction method was used by RJR
Nabisco.

Competition, on the other hand, is nothing new in the industry, and it has
frequently taken on toxic implications. Companies have been known to propagate
false information regarding competitors' products, such as "X brand causes
tuberculosis" and "Y brand will quickly give you cancer." The poster battles have
begun.

In addition, leaflets and booklets suggesting unethical marketing techniques have

made their way into the hands of journalists, indicating a clear attempt to sway
media coverage. Even today, allegations of bribes through wholesale brokers are

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widely circulated, with one estimate claiming that the Rs 850 crore business earns
black money worth at least Rs 100 crore.

On a different dimension, the fight has frequently been over brand names. When
National Tobacco debuted Regent Tabac (in the magic price bracket of Re 1 for a
package of 10) in February 1980, ITC quickly responded with a Tabac Filter. Both
brands collapsed as a result of the consequent market misunderstanding.

Anti-Smoking Campaigns:
Philip Morris had begun a campaign in the United Kingdom to encourage people
to quit smoking, including advertisements in many publications.

The "Hold My Light"

ad from Marlboro
claims to be a "new
approach to stop
cigarettes," and it
includes a link to a
website where
smokers may create a
profile and ask friends
to pledge to help them
quit. Those who sign
up agree to be
contacted by Philip Morris about its Smoke Free Future initiative.

Cancer Research UK, a charity, slammed the move. In an emailed statement, the
charity's Tobacco Policy Manager George Butterworth stated that this is a breath-
taking hypocrisy from a tobacco firm to sell its own smoking cessation medicines
in the UK while continuing to market tobacco cigarettes around the world.

“The best way Philip Morris could help people to stop smoking is to stop making
cigarettes,” he added. Philip Morris International (PMI) makes 800 billion
cigarettes each year, according to its website.

The manager also said that the greatest way Philip Morris could assist people quit
smoking is to stop manufacturing cigarettes. According to their website, Philip
Morris International (PMI) produces 800 billion cigarettes each year.

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In the United Kingdom, most cigarette advertising is banned, and as of May 2017,
cigarettes had to be supplied in plain packaging with health warnings.

WHO Regulations and guidelines on Tobacco products:

Despite the fact that tobacco use is a serious public health issue, tobacco products
are one of the only freely available commercial items in several nations that are
practically uncontrolled. They are also the only legally accessible drugs that kill up
to 50% of its regular users when used as directed by the producers.

Measures to restrict the composition of tobacco products and their disclosures are
included in the WHO Framework Convention on Tobacco Control (WHO FCTC).
WHO provides guidelines on regulating tobacco products to lower demand and
contribute to broader tobacco control objectives, ultimately saving lives, to assist
countries in implementing these policies.

PAGE 11
Court and Legal Lawsuits:
Cigarettes companies in 1998, paid $206 billion over 25 years to recoup public
heath cost linked to smoking.

Also in 1999, a tobacco

company was charged $25
billion for defrauding and
misleading the public
about health effects of
smoking and to recover
the spending on smoke
related illness.

In 2000, a Miami jury

ordered 5 US based
tobacco companies to pay
$145 billion.

In 2006, the Florida Supreme Court overturned a $145 billion class judgement,
stating that the plaintiffs' individual concerns were too many to continue as a
class. Plaintiffs may, however, make individual claims based on previous findings
that nicotine is addictive and that smoking causes a variety of illnesses, including
cancer, according to the court.

Thousands more lawsuits were filed in federal and state courts across Florida
following that decision. Liggett Group and its parent firm Vector Group paid $110
million in 2013 to settle over 5,000 smoking-related cases.

Tobacco companies became more vulnerable to private lawsuits and charged with
multimillion dollar for compensating the damages.

“Cigarettes causes cancer” - Official declaration by the US

Government:
On the historic date of 11th Jan 1964, it was officially declared by the US
government that smoking cigarettes cause cancer and within a day 8 billion
tobacco industry and the incomes of 7.5 lakhs families were at stake.

PAGE 12
Even after 1970 when cigarette advertising was completely banned from television,
Marlboro went on to become the largest manufacturer of cigarettes in the world. It
was then Marlboro adopted one of the iconic marketing styles that mankind has
ever witnessed which is called Lifestyle Marketing.

Some cigarette
brands retaliated by
justifying the
cigarettes while
some disapproved of
the very research
itself.

Marlboro was a
small firm that
solely manufactured
cigarettes for ladies
back then. But as
soon as this news
broke out, the parent company of Marlboro which is Philip Morris International
decided to shift its method of marketing and became the epitome of business
propaganda in the 20th century.

At this time what Marlboro did was that instead of justifying smoking cigarettes
and using complex statistics that would be difficult to understand, they came out
with the campaign called “Marlboro Man”. They introduced this character who
supposedly had everything a man wanted to be like. They named this character
Marlboro Man.

The Marlboro man was a nicely built-up cowboy who appeared in the commercial
as the ideal archetype of manhood. He was rugged, loving, and elegant, and he was
the epitome of manliness and independence. Men in the 1960s were so fascinated
with the Marlboro man that they began purchasing Marlboro cigarettes. As a
result, the ad was a huge game-changer for the company.

Within a year, Marlboro had risen from a market share of less than 1% to become
the world's 4th largest tobacco company.

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REFERENCES:

 https://www.businesswire.com/news/home/20190320005593/en/The-
Tobacco-Market-in-India-2018-2023-Leading-Players-are-ITC-Kothari-
Products-Godfrey-Phillips-India-VST-Industries-Golden-Tobacco-
Company-and-NTC-Industries---ResearchAndMarkets.com
 https://en.wikipedia.org/wiki/Marlboro
 https://www.npr.org/2021/07/26/1020571339/marlboro-maker-ceo-says-the-
company-plans-to-stop-selling-smokes-in-the-u-k
 https://www.youtube.com/watch?v=6-tS7-IhCbI
 https://en.wikipedia.org/wiki/Tobacco_industry
 https://www.cnbc.com/2018/10/22/tobacco-giant-philip-morris-launches-
anti-smoking-campaign.html

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