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Market Change and the Growth of Marlboro and Marlboro Lights

Excerpts from Kent Review
Prepared by Kent Brand Group
December 7, 1981

No review of the factors affecting Kent?????s current circumstances would be complete without touching on the change in market composition and the growth of Marlboro.

Brown & Williamson International Tobacco has seen increased competition from export and locally manufactured U.S. type/U.S. blended products in many markets which, in effect, are every bit as good an offer as Kent. At one time, U. S. international brands were clearly different in taste, superior in quality and able to command a higher selling price. Those differences have now been eroded. Local foreign manufacturers have raised quality standards, improved smoking characteristics and closed the price gap. The result has been fierce competition and, to a large degree, the elimination of the special status of imported brands.

By far, the most significant competitive force internationally has been the growth of Marlboro, Reasons for its success are complex and varied over time and markets. Perhaps the key factors have been the following:

Long Term Investment ????? Philip Morris has been prepared to invest in Marlboro over a long period of time. Success did not come overnight but was built over a twenty year period.

Central Direction ?????Marlboro has benefitted from the strong central control exercised by the parent company. A clear worldwide strategy exists for Marlboro and this has been followed religiously throughout virtually every region of the world, with little concession being made for local variances in market characteristics.

Flexibility ????? Having stressed the significance of a worldwide strategy, Philip Morris has demonstrated an element of flexibility, particularly with regard to packings and blend, but neither is incompatible with their overall strategy. The soft cup and hinge lid alternatives have enabled its appeal to be extended, while blend modifications in such markets as Australia and the U. K. have had a similar impact.

U.S. Base ????? The growing significance of Marlboro in the U. S. domestic market has undoubtedly contributed to its worldwide growth, particularly in terms of giving it an association with the USA.

Advertising ????? A consistent international theme, backed up by a willingness to spend heavily over long periods of time, often unprofitably for up to five years, has proved to be a key element in the brand's success.

Licenses ????? The utilization of license agreements has "been an important growth element not only as a last resort means of entry into a market but also as a deliberate attempt to prepare the way for acquisition of companies at a later date, and as a means of cover for transit sales e. g., Colombia and Italy.

The most recent event in the development of Marlboro, which may, over time, play a key role in maintaining the growth of its franchise, is the increased emphasis being given to Marlboro Lights.

The following review of Brown & Williamson International Tobacco's latest research in the Middle East sheds light on consumers' perceptions of the brand and the threat it poses to Kent and Kent Golden Lights. Marlboro Lights KS was introduced in Saudi Arabia in April, 1979, one month after the introduction of Kent Golden Lights. By July, 1980, both brands had introduced 100s. The Lights category has grown since 1980 from 8% of the U. S. imported brands segment to 21% of that segment. In that same period, Kent Golden Lights moved from a 1% share to a 6% share, while Marlboro Lights went from a 5% share to a 10% share.

Marlboro Parent is positively perceived, and it appears that Marlboro Lights is similarly perceived, although slightly less so, in the following attributes:
T/N Deliveries

Kent Parent is perceived very much like Winston Lights and Merit. Relative to Marlboro and Marlboro Lights, these brands are perceived as less strong, less satisfying, less irritating, less tasteful and lower in T/N deliveries. Kent Golden Lights is perceived as significantly different from Kent Parent, with even less strength, satisfaction, irritation, taste and lower deliveries. Based on these perceptions, Kent Parent is, in effect, competing against Marlboro Lights, Winston Lights and Merit. Marlboro Parent stands without a competitor in its full flavor segment. Kent Golden Lights is not a competitor in the Lights Category because it is perceived as lighter than the present lights brands.

Marlboro Lights, then, has all the positive aspects of Marlboro Parent, but it is perceived as a solid member of the lights category and Kent Golden Lights, at the moment, is superfluous.

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