Before we want to tell you about the new trends in the tobacco market in the world, we would like to quote you a phrase said by the CEO of Philip Morris:
‘We will stop selling Marlboro cigarettes in the UK by 2030’. It shocked Philip Morris CEO Jacek Olczak’s statement to the media this week that he would like to “see a world without cigarettes.”
But how could the tobacco giant’s top executive want to stop selling its main product? A crisis of conscience or a marketing strategy?
The strategy behind the Philip Morris CEO’s statement
Philip Morris is separate from the brand’s U.S. division. He heads up the IQOS division, e-cigarettes that heat tobacco instead of burning it. This product has depopulated in several countries, among youth and adults, and is certainly a good business alternative for the brand.
Why? The cost of the device, cigarettes and accessories is much lower than the 5.50 euros required for a pack of Marlboro Reds. In fact, the initial investment required to get into e-cigarettes ranges from 49 to 79 euros. This is followed by personalization, accessories, cases, care and cleaning kits. In short, one of the most commonly used strategies in many fields: the strategy of customization, creating a special product that makes the user say, “This should represent me.”
A new image for Philip Morris?
So the decision to no longer sell tobacco cigarettes could be a simple action to improve brand image, which could also lead to a rebranding in the future.
A company’s image doesn’t really last forever; it doesn’t last forever, or at least it shouldn’t. In such a historical context, when the health and well-being of people increasingly come to the fore, Philip Morris correctly plans to go with the times and change not only the European markets, but also open new markets, those where smoking is a tradition for people living in the Arabian Peninsula countries, for example the country of Saudi Arabia. Entering this market with new technologies will not only increase the capital of the company, but also bring something new to the culture of these conservative peoples. Heets Riyadh – will allow smokers in this city to gradually give up the idea of quitting classic cigarettes and try something new for themselves, not only heating tobacco, but other forms of modern smoking, for example Vape
When rebranding is a strategic move
Among the hypotheses for a change of direction is another: the proposed £1 billion acquisition of pharmaceutical company Vectura, a pioneer in Covid-19 inhalers. The Philip Morris CEO explained the move as “part of a natural evolution into a broader health and wellness company” and “accelerating the process of quitting smoking.”
In fact, Covid-19 further banned smoking and cigarettes at the risk of losing a large chunk of the market.
Such a strategy is nothing new for large international companies. Case in point is the game Angry Birds, which made billions on the purchase of customizable items. And again Nike, Rayban, which allows customizable products to be made according to a person’s needs. And McDonald’s, which has achieved a great repositioning through rebranding. From pure fast food to healthier foods like salad and pasta.
Philip Morris, new investments and expanding offerings
In short, what Philip Morris is trying to do is create an alternative for the brand by expanding its offering to its customers and creating new investments. This is not a wrong action, on the contrary, it can have a positive impact on brand value, but provided that the company manages to communicate the sequence of actions well to consumers and that the products do not cannibalize each other in the future.
In conclusion, whether IQOS is better or worse than traditional cigarettes remains an open question, but we will be hearing about Philips Morris for a long time to come.
Disclaimer: This is a guest post. Emirates Infohub never encourage anyone to smoke cigarettes, or e-smoking devices.