KG Consultants
Philip Morris Case
Futurist Analysis
April 14, 2006
Glenn Kouri _Katie Lehane_ Kate Saul _Kim Truba_ Greg Williams
History
• Philip Morris
– Cigar importer
– First tobacco shop opened in London (1847)
• Over the next 50 years….
– The becoming of Philip Morris & Co,. Ltd
History
• Joseph F. Cullman and the Marlboro brand
– From last to first in the industry
• Profitable Acquisitions
– Miller Brewing Company, Kraft General Foods, Kraft
International Foods, and General Foods International
• Global Expansion
– Philip Morris International
Competition
• Reynolds
• Brown & Williamson
• Lorillard
– Camel, Winston, Salem, Doral, Newport,
and Kool
So how does Philip Morris
differentiate itself from its
competitors?
Tobacco Agreement
• The Master Settlement Agreement (MSA)
-Philip Morris
-state attorney generals in 46 states
-4 states
-other tobacco suppliers
Limitations
• Forbids and restrictions
-participation in targeting youth
-advertising, marketing, promoting programs and
activities
-cartoons
-transit vehicles
-outdoor advertising
Targeting the Youth
• state attorney generals
• responsibility in promoting to “adult-smokers”
-21 years of age with proper ID
-$600 million
Marketing in the media
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use of cartoons
billboards, signs, arcade games
advertising on public transportation
products in television shows and movies
selling of merchandise
Changes in Marketing
• magazine covers
• cut advertising by almost 100%
• direct mail
- verify age
- information regarding products and
merchandise
Subsidiaries: Cigarettes
• Leading manufacturer of cigarettes in the U.S.
• Owns $70 billion dollars of cigarette industry
• Cigarette Companies run by Philip Morris Ind.
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Marlboro
Virginia Slims
Benson & Hedges
Merit
Parliament
Beer Industry
Brands under Miller Brewing Company:
• Miller Lite
• Miller High Life
• Milwaukee’s Best
• Lowenbrau
• Sharps
Food Industry
Foods sold under Kraft general foods, Kraft
International & General Foods International
• Kraft Cheeses
• Maxwell house coffee
• Louis Rich turkey
• Oscar Mayor lunch meats, hot dogs, bacon
Food Industry Cont.
More food brands:
•Louis Kemp seafood Products
•Post cereal
•Jell-O
•Kool-Aid
•Sealtest dairy
•Breyers Dairy
Financial Services
Named Philip Morris Capital Corporation
•Offers services for major equipment
leasing programs for customers and
suppliers
To remain successful the CEO decided to set goals for new
products such as meeting consumer trends, expanding
geographically and manufacturing globally.
How has the company
developed?
Direction of Philip Morris
• Introduction of website in 1999
• Surgeon’s General Warning
Strategic Developments
• Company mission and goal
• Success measurements
– Align with society
– Exceed consumer expectations
– Create long term value
• Altria Group became parent company in 2003
– philosophy
Legal Issues
• 2003 lawsuit of Philip Morris defrauding “Light”
smokers
• 2005 decision due to the Federal Trade
Commission
Financials
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4th Quarter Market Share of 2005 was 50%
Altria’s stock price as of April 10,2006 was 70.04
Quarterly dividend of .80 per common share
2005 Earnings from continuing operations went
up 15%
What steps should be taken in
the future?
Recommendations
• In the past Philip Morris has primarily focused
on tobacco industry
• Integrate more business from other markets
-Promote other markets
• Restore company’s image and continue
cigarette awareness ads
Questions?