Marketing Plan –‘Marlboro Switch’1Introduction Marlboro cigarette is a brand owned by the Altria Group in USA and by Philip Morris International outside USA. The brand emerged at England in 1847 and targeted women. Later in 1920, it emerged in US markets targeting predominantly female smokers. During 1950‟s it targeted the health conscious people by introducing filtered cigarette and also started targeting men. The brand is famous for its advertisements like „Marlboro man‟, slogans like „Mild as Ma y‟ and for sponsoring various motor-sports events. During 1972 it became one of the most popular brands in the world (Marlboro Cigarettes). In 2012, Marlboro brand was ranked 53 amongst the top 500 global firms of the world with a brand value of $15,171 million and an enterprise value of $180,739 million (Marlboro, 2011). Executive Summary The company plans to launch a new reformed cigarette in the markets of Singapore where they already enjoy a market share of 50%. The product will be called „Marlboro Switch‟. This cigarette will contain less harmful ingredients which will reduce odor and smoke. It will give a distinct experience to smokers by providing them three distinct flavors. Along with this it will give the smokers leisure of enjoying two flavors in one cigarette by pressing a switch and changing the flavor. The product will be sold in an attractive and convenient packaging which will have a slot for keeping the lighter. It will give the consumers luxury of carrying the lighter along with the packaging thereby making the product unique, stylish and have less harmful effects. The company wants to release this product by the year end and gain a competitive edge over their competitors. The product will not be overpriced but will be competitive with other brands. By providing less harmful cigarette it will target the health conscious people and thereby tend to increase its market share by 10% by 2015.
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This analysis was done to understand the company‟s position in the industry with respect
to other existing industries in its sector. The analysis was conducted by using the Porter‟s five
forces framework.
Threat of Substitute Products:
In Singapore market our closest competitors like Dunhill and Winston have „Switch‟
available with only one flavor Ice-blast and Menthol respectively. Our company has decided to
come up with three distinct flavors which are not available in any other brand. Du nhill‟s Switch
cigarette has a higher cost than our product and is limited to one flavor. Winston brand provides
„Switch‟ with also one flavor at slightly lesser cost . However, both these brands are more
harmful than our cigarettes. So in our product consumers get more variety of flavors at
reasonable cost along with a lighter slot in the packaging. It also has less harmful contents, thus,
making it is superior to other products in the market. All these factors will make the consumers
to stick with our product and not switch to other brands. Therefore the threat of substitutes for
our product is low and so market will be more attractive and profit oriented.
Threat of New Entrants:
Singapore markets have strong brands available in the markets like Dunhill (BAT) which
has 30% market share and Japan Tobacco international (Winston) which has 20% market share.In spite of the strong brands certain smaller brands have gained entry like 235 by Natuzzi
Trading Pte Ltd, which can pose a threat to us (Euromonitor, 2011). The presence of strong
brands will make it not easy for any new company to enter the market but will definitely hamper
their growth because it will not be easy for smaller companies to gain brand awareness due to
existing loyalty for major brands. Government regulations of Singapore are another significant
factor because it has banned advertisements, promotion and sponsorship. By implementation of
Tobacco (Control of Advertisements and Sale) Act new entrants will find it very difficult to
compete with the strong brands (tobaccocontrollaws, 2011). Hence, the threat of new entrants
posing problems is low. Therefore our new product will not face any obstacles from new entry as
Marlboro is well established and has loyalty from Singaporeans.
It is Japan tobacco international company's key growth power and its sales in
growing worldwide with a growth rate of 13.8%. Currently Winston is at 3 rd
position in Singapore with a market share of 20%.
Winston‟s cigarettes are cheaper in comparison to Marlboro. Price strategy is
the main strategy of the company to fetch more customers and market share.
Dunhill
Although Dunhill is world‟s 9th biggest cigarette brand but it has strong
presence in Singapore market with 30% market share and grabbing 2 nd
position.
Dunhill for the customer launched new and innovative products for the
customers. That is the reason its sales is growing in Singapore and young
consumers like this brand.
Product/Service Offering
Our new "Marlboro Switch" contains less tar and nicotine, than other competitors. This
will greatly reduce the odor and smoke emission. It has three different flavors. Through the
"switch", switch cigarette taste into clove, cinnamon or ice blast. These flavors from natural
extract composition. Available in Full flavor (Black) and Lights (Silver)(7 mg Tar, 0.6 mgNicotine). All those above reasons make us have the leading position in Singapore market, and
have more opportunity to expand the market share. Singapore consumers have a high level
education, like new things and new products. Our new concept Marlboro switch will be widely
The main strength of Marlboro is that it has strong roots in Singapore and enjoys the
status of market leader. Singaporeans show a brand loyalty towards Marlboro and making it a
leader in cigarette industry with 50% of the market share. Marlboro‟s main aim is to give unique
products to the customers. That‟s why innovations are the main focus area for the company since
its inception in Singapore.
Weaknesses:
Singaporeans haven‟t tried or tested such types of cigarettes so company doesn‟t have the
real idea how successful its products will be. Company wants to sell its new „Marlboro Switch‟
at the almost same price as of the existing price of its cigarettes. So it‟ll have to spend moremoney on these innovations and can‟t make huge profits in the initial launch of these cigarettes.
Opportunities:
Smoking industry has a continuous growth in Singapore. As surveys show, young
Singaporeans are getting more addicted to cigarettes. So company has lots of opportunities to
increase its sales and get growth in its market share. Our new product is different from existing
products and less harmful. So it will have great demand among people of all age groups.
Threats:
Government is making rules stricter against smokers. Not showing any cigarette ads on
TV, radio, newspaper make people unaware of new products. Singapore government is
promoting “Tobacco free Singapore” and raising high taxes on cigarettes in order to discourage
smoking. Packaging must have scary and horrible picture to make people aware of harmful
effects of smoking and encouraging them to quit it.
To implement the objective of 4% and 10% market share in first year and 2015 respectively
we need to achieve
Targeting our product to younger generation by promotional strategies and retain 90% of
our existing customers and attract 15% new customers by October 2013.
Collaborating with our existing and finding new retailers for selling our product before
launching our product on 1st
November 2012.
To make our product visible at maximum places by 28 th February 2013 and attract
people due to its stylish packaging and the option of cigarette slot. By this strategy we
target to reach breakeven point in just three months of launch.
Financial Objectives:
Revenues:
The company intends to sell 12,000 packets of cigarette by October 2013 and gain revenues of
SGD 138,000.
Costs:
The selling cost of one packet of cigarette will be SGD 11.50. This price will be inclusive
of manufacturing costs and taxes imposed by government.
Advertising:
As cigarette advertising is banned there won‟t be much funds allocated for it. However
funds of SGD 50,000 will be needed to collaborate with new retail outlets to make product
visible. Also we will target the Malaysian channels for advertising which will be around SGD
10000.
Profit:
The company in order to achieve more market share will try to reduce the price to SGD11.20 after five months of launch. Government taxes imposed on industry during the coming
times will also impact the cost of cigarette packs. Depending on the success of product in first
five months company will increase the cost to SGD 11.80 to gain more profit.
We should give full attention to the customer purchasing process of convenience so our
retailers are close to region choice, location choice and other factors, especially should consider
"consumer accessible". These factors, make easy access for customer to stores
Price:
„Marlboro Switch‟ will be priced between our two main competitors. When Dunhill and
Winston customers purchase our brand, they will pay less and more than their respective brands
and enjoy better flavors sold by us. The pricing has been shown below:
Brand Price (in SGD)
Dunhill 12.30
Marlboro Switch 11.00
Winston 10.50
When we maintain the same price for all our products, the customers can try our product
without thinking twice. Moreover, Dunhill customers will not look at „Marlboro Switch‟ as a
cheap brand, due our high brand equity.
Promotion:
Promotional strategy will be to advertise our new product in Malaysian television and
radio channels which are viewed in Singapore. By this way we can spread awareness of the
product. Other strategy is to advertise our product in Singaporean Grand Prix. This can be done
in Singapore as Marlboro has always been associated with racing. We will make our product
more visible to the potential customers by selling our product across multiple retail outlets like
Cheers etc. at the selling counters.
Financial:
There will be many marketing activities to launch the new product. So Budget financialoverview consists of sales forecast, expanse budget, break even analysis and the overall analysis
of the marketing plan. Marlboro‟s business activities are categorized on the basis of two years
data - current year and next year (the year after launching new product).
Contingency plan is designed to protect the critical strategies of our plan from the associated
risks that we have identified in the "Threats" section. Contingency plan minimizes risk by
addressing the following issues:
1) Setup Monitoring Operations:
By monitoring operations the risks, difficulties and problems like unexpected costs in the
warehousing and distribution of goods and an entry into the closeout market by an already
existing wholesaler will be revealed more quickly.
Firstly, if our advertising plan cannot implement and obstacles appear, at this time we will
consider Personal selling, Promotional offers (for example: buy 1 get 1 free), Sales offers.
Secondly, if our new product cannot be accepted by customer and thus, cannot gain market
share more than competitors, then we need to get feedbacks from clients on the product toimprove it and do some surveys through online polls or even face to face interaction.
2) Define Alternative Plans of Action in advance:
The purpose of this plan is to solve the problems faster and better so that minimal time and
energy is spent on deciding what to do after the problem is recognized.
Firstly, Singapore government very strict with regards to control of cigarettes, which is the
greatest disruption of current activities and plans in all aspects of the marketing in cigarettes.
We have heavy restrictions on taxes, promotion and even packing. In this case, only through
the positive development of innovative products, strengthening consumer relationship and
pricing, we can achieve greater profit.
Secondly, if our costs of the plan are excessive, we will try to readjust and re-plan
production, marketing and other financial aspects.
Third, if any delay occurs and we have to postpone the launch of the product, we have to
maintain active vigilance on our competitors‟ move.