Philip Morris: Marlboro Friday (A)

Alvin J. Silk; Bruce  Isaacson

Case | HBS Case Collection | September 1995 (Revised December 1997)

Philip Morris: Marlboro Friday (A)

by Alvin J. Silk and Bruce Isaacson

Abstract

On April 2, 1993 Philip Morris USA launched an elaborate integrated program of consumer and retail promotions of unspecified duration that effectively slashed the retail price of its flagship brand, Marlboro, by 20% in the U.S. market. This program represented a major shift in strategy designed by Philip Morris to reverse the alarming declines in Marlboro's market share, which had occurred in the face of severe price competition from discount brands. Given Marlboro's status as one of the world's premier brands and the changing environment of consumer marketing, the date these actions were announced was immediately labeled "Marlboro Friday" and heralded as a milestone in marketing history. This case describes the state of the cigarette industry in the early 1990s, reviews the history of Philip Morris and Marlboro, and sets forth the key elements of the radical defensive strategy launched on Marlboro Friday. Did Marlboro's actions represent incisive brand strategy and enlightened brand management? What were the long-term implications of Marlboro Friday?

Keywords: Competition; Price; Marketing Strategy; Market Participation; Brands and Branding; Consumer Products Industry; United States;

Format: Print

20 pages

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Citation:

Silk, Alvin J., and Bruce Isaacson. "Philip Morris: Marlboro Friday (A)." Harvard Business School Case 596-001, September 1995. (Revised December 1997.)

Market researchers generally, and survey experts specifically, study consumers to learn about their behavior: What are consumers’ opinions, attitudes, thoughts, and actions at the various stages of the buying process? Especially in litigation cases, these and other product purchase-related questions arise in the context of matters related to topics such as intellectual property, trademark infringement, false advertising, and antitrust and competition. Carefully crafted surveys are a powerful tool for assessing consumer behavior, preferences, and purchase intent, especially if real-life observations or purchase data are not readily available.

This is an abridged version of the 1992 case where American Airlines (AA) launched "Value Pricing" in an attempt to simplify the pricing structure of the airline industry. AA expected that this plan would benefit not only consumers, but also AA and the entire airline industry. However, there were uncertainties about how competitors would react to AA’s decision and whether or not this pricing policy would become the mainstay of the airline industry. Even though many things have changed in the airline industry in the last 30 years, the fundamental issues of price competition and competitive reactions remain critical today. These issues are likely to become even more important in the airline industry in the post-COVID era.

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Philip Morris: Marlboro Friday (A)

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