Philip-Morris-Marlboro Essay Example for Free

Philip-Morris-Marlboro Essay The largest cigarette manufacturer in the United States is Philip Morris but there are also four major players in the industry. In 1998, due to a decrease in number of sales and customer feedback, Philip Morris resulted to cut prices among the four players and level the competition. It is evident that the other manufacturers are getting the edge of being cheap because more people buy their product. Philip Morris is a notch higher because of its quality and sensation hence smokers would prefer to smoke more and pay for less. Philip Morris consciously cut prices to avoid consumers to switch to cheaper cigarettes. When this was done, the shipments towards retail sellers dropped twice as fast meaning the move of Philip Morris to cut prices was effective. The Philip Morris was yet to be successful since the other players such as Marlboro and R.J. Reynolds Tobacco Holdings Corp, which is the second-biggest cigarette producer, panicked and had implemented the same changes to their prices but this time they have also intensified advertisements to attract more customers. With this economic trend, it shows that cigarette smokes are really particular when it terms of prices. Quality is the second thing that they look upon since they want to smoke more for less compensation. Since it was a good run for Philip Morris, there have been increased promotions that helped diminish the discrepancy among other competitors that have cheaper prices. The lower prices helped Philip Morris increase its share of cigarette sales. It would be wise for Philip Morris to be polymorphous and adaptive about the prices. To have cut prices would entail that they are elastic in nature and his highly sensitive to other cigarette manufactures. When it comes to health, the move of organization to intensify their opposition against smoking could really be a factor so to have cut prices means that they are want to keep their consumers regardless of the posing health risks. Back to the economic terms, to have cut prices is to maintain the competition among the other players in the cigarette industry. A simple trade of small sales with high prices or large sales with low prices, either way is good as long as the net income is still enough to break-even or be profitable. With the reputation and the prestige that Philip Morris already established. Changes in prices among rival players would only be minor and can be handled easily. To take into consideration, the people in the retailing department are the ones who really set the prices for their product. Since retailers buy them in wholesale, the tendency is that they get the product cheap and sell it high. Well, that is basic but the fact is they remain unaffected in terms of competition hence they are unaware of the rising conflict in the greater economy. If the market were in perfect monopoly then buying low and selling high would be very effective.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   To have cut prices is to level the competition for other players. It is not done unreasonably. Price hikes and cut prices depend on the economic trend being foreseen or predicted according to the sales and income a company gets. Given a chance, to decide if Philip Morris should have a cut price, I would agree because there are many new players in the cigarette industry that are cheap and quality too and besides being the number one producer does not necessarily mean that one is the number one seller. People have different preferences when it comes to smoking cigarette hence the posing threats to their health are neglected.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   To make the long story short, Philip Morris should only watch the trends before jumping into having cut prices. Discounts and price cuts does not necessarily mean greater sales. It comes along with timing and situation. Putting it into economics, the demand for the product is same at all levels, the supply is also the same, then the determining factor to a successful sales is that to have prices that will catch the attention of the consumers and would complicate the assets of the rival players. Pricing one’s product is a key to be successful in the industry. List of References Convience Store news. (2003). ‘Philip Morris Revamps Rebate Program’. [on-line] available from http://www.allbusiness.com/retail-trade/food-stores/4477294-1.html [February 8, 2008] Irish Examiner (2004.). ‘Philip Morris to cut cigarette prices to keep customers’ [on-line] available from http://archives.tcm.ie/irishexaminer/2004/01/01/story447418409.asp [February 8, 2008] Gleen Collins. (2003. ‘Philip Morris Sharply Cuts Prices’ [on-line] available from http://query.nytimes.com/gst/fullpage.html?res=9506E7DF1E39F935A25757C0A960958260 [February 8, 2008]