Business Case Studies & Business Publications

Philip Morris U.S.A.: The 2003 Wholesale...

Parry, Mark E., Sa...

Case

Philip Morris U.S.A.: The 2003 Wholesale Price Promotion

Parry, Mark E.; Sato, Yoshinobu

M-0709 | Published January 27, 2005 | 12 pages Case

Collection: Darden School of Business

Product Details

In January 2003, Philip Morris USA announced a wholesale price promotion of $0.65 per pack on Marlboro cigarettes. As a result, the company's first-quarter U.S. cigarette shipments fell 16.1% relative to the first quarter of 2002. Relative to the fourth quarter of 2002, however, Philip Morris's share of industry shipments rose from 48.3% to 49.7%. Several important decisions must be made. Should the promotion be extended? Should the promotion be replaced with a permanent cut in wholesale prices? Should the prices of the company's discount brands be altered in any way?