Table of Contents
- Purpose / Objective
Case Analysis: - Financial Status
- The Industry:
To most, Philip Morris (PM), is only known as a dominant force in the manufacturing and marketing of cigarettes. However, over the past thirty years, as a result of numerous acquisitions and diversification strategies, PM has become a highly respectable participant in many markets. These markets not only include the tobacco industry but also the beer brewing, food processing, and financial services industries. In fact, PM has become the largest
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PM US 's cigarette shipment volume decreased 187.1 billion units, however it achieved a retail share gain of more than a full share point, driven by Marlboro. In the International tobacco business, Phillip Morris International (PMI) increased 3.5% to 761.4 billion units. PMI 's share of the international cigarette market (excluding the U.S. and world-wide duty-free) was an estimated 14.5% in 2004. Operating companies income rose 4.5% to $6.6 billion. PMI faced difficulties in 2004 due to changing consumption patterns, driven primarily by national tax policies in Western Europe. PMI took aggressive action to address those challenges, and its situation has stabilized in France and Italy. However, significant challenges remain in Germany, where cigarette consumption is declining as consumers are trading down to lower-priced tobacco products, particularly tobacco portions, which are taxed at much lower rates than cigarettes under the current tax policy. The cigarette market in Germany was down 15.5%in 2004, while tobacco portions volume more than doubled for the year.
In order for an organization to gain strong market share, it is critical for managers to implement market segmentation for their products. Market segmentation is one of the most important concepts of marketing because selecting the appropriate target is key to developing successful marketing programs. Philip