REPORT on Philip Morris

Subject:
Marketing Management
Submitted To:
Sir Noman Abbasi
Submitted By:

Farwa Arooj
Munaza Mushtaq
Gul-e-zahra
Anum Ikram
Waqas Malik
Ahmad Hameed

BB-12-01
BB-12-02
BB-12-10
BB-12-55
BB-12-61
BB-12-67

[BBA (Morning)-5thSemester]
[Session 2012-2016]

INSTITUTE OF MANAGEMENT SCIENCE

BAHAUDDIN ZAKARIYA UNIVERSITY, MULTAN

ACKNOWLEDGMENT

Philip Morris Pakistan

(PMPKL)

It is not possible to prepare a project report without the assistance & encouragement of other
people. This one is certainly no exception. On the very outset of this report, I would like to
extend my sincere & heartfelt obligation towards all the personages who have helped me in this
endeavor.
Without their active guidance, help, cooperation & encouragement, I would not have made
headway in the project. I am ineffably indebted to Sir. Nouman Javaid for conscientious
guidance and encouragement to accomplish this assignment.
I am extremely thankful and pay my gratitude to my faculty Sir. Nouman Abbasi for his
valuable guidance and support on completion of this project in its presently. I extend my
gratitude to IMS, for giving me this opportunity.
I also acknowledge with a deep sense of reverence, my gratitude towards my Parents and
member of my family, who has always supported me morally as well as economically. At last but
not least gratitude goes to all of my friends who directly or indirectly helped me to complete this
project report.
Any omission in this brief acknowledgement does not mean lack of gratitude.

Thanking You

DEDICATION
2

Philip Morris Pakistan

(PMPKL)

I dedicate my each and every effort to,

Almighty ALLAH
The Lord of lords
And provided us all the sources for living in this universe,
And who blessed the mankind with all the raw materials for cement
And
Holy Prophet Muhammad (PBUH)
The cause of the creation of the universe
And
To all the persons involved in the production of cement,
A source for strengthening the nations foundations
And
My affectionate and loving parents
Whose guidance and prayers proved a beam of light
In the darkness of life at every moment.

TABLE OF CONTENT
3

Philip Morris Pakistan

(PMPKL)

Executive summary

05

Company background

06

Hierarchy

06

Vision and mission statement

06

Market analysis

07

Marketing information system

08

SWOT analysis

08

Supply chain

09

Product Development Forecasting

Marketing Research
4Ps

09
09
10

Internal branding
Marketing Strategies
BCG Matrix
Product Classification
Brand Names
Brand extensions

11
12
13
13
13
14

Executive Summary:
4

Philip Morris Pakistan

(PMPKL)

Philip Morris Pakistan Limited affiliated with Philip Morris International Incorporation (Inc.)
having its Head Office at Karachi is currently working in Pakistan with its 3 manufacturing units.
That is only due to its wide channels of distribution, one of the most consumed cigarettes in
Pakistan; Marlboro is also a brand of Phillip Morris Pakistan Limited.
Now, the company is working on Networking Strategies to build wide distribution networks
all over Pakistan.
Philip Morris owns about 15 International brands of the world, which include different brand
extensions.

Company Background:
5

Philip Morris Pakistan

(PMPKL)

In 1969, Lackson Tobacco Company Pakistan Limited came across a Public Limited
Company incorporated in Pakistan with its manufacturing unit at Sahiwal. Philip Morris
International Inc. owned by Altria Group, USA acquired 70% shares of Lackson Tobacco
Company Pakistan Limited.
In 2011, Philip Morris (Pakistan) Limited is affiliated with Philip Morris International Inc.
(Owned by Altria Group of USA), is a 33 public limited company listed on the Karachi and
Lahore Stock Exchanges.
Philip Morris International acquired a majority stake in a local business in 2007. Currently,
PMPKL has a tobacco-leaf threshing plant, three cigarette manufacturing factories, and sales
offices across the country, and employs around 2,500 people.
Philip Morris Pakistan Limited has half yearly sales revenue of Aprox. Rs. 21,984Million,
that is only due to their expertise and brand establishment.

BOARD OF DIRECTORS:
ARP
AD KONYE (Chairman & Chief Executive)
(until January 31, 2014)
ALEJANDRO PASCHALIDES (Chairman & Chief Executive)
(with effect from February 1, 2014)
NICOLAS FLOROS
ANDREAS FRANZ KURALI
JOSEPH ZIOMEK
CHARLES BENDOTTI
MUJTABA HUSSAIN
ASMER NAIM

COMPANY SECRETARY:
MUJTABA HUSSAIN

AUDIT COMMITTEE
ASMER NAIM (Chairman)
ANDREAS FRANZ KURALI
CHARLES BENDOTTI
MUJTABA HUSSAIN

HUMAN RESOURCE & REMUNERATION COMMITTEE

CHARLES BENDOTTI (Chairman)
ARPAD KONYE
(until January 31, 2014)
ALEJANDRO PASCHALIDES
(with effect from February 1, 2014)
ANDREAS FRANZ KURALI
DION LESWARA (Secretary)
6

Philip Morris Pakistan

(PMPKL)

AUDITORS
A. F. FERGUSON & CO.
Chartered Accountants
Website : www.philipmorrispakistan.com.pk
Email:pmpk.info@pmi.com

VISION AND MISSION:

Philip Morris (Pakistan) Limited aims to:

meet the expectations of adult smokers by offering innovative tobacco products of the
highest quality available in their preferred price category;

generate superior returns to our stockholders;

be a responsible corporate citizen and to conduct our business with the highest degree
of integrity.

We are committed towards the continuous betterment of our employees by providing

professional training emphasizing teamwork, a clean and safe working environment and
leadership
imbued
with
humility.
In addition to this, the Company is actively engaged in undertaking various corporate social
initiatives in the education, environmental sustainability and disaster relief sectors in order to
contribute towards the welfare of the communities in which it operates.

BRANDS:
Our main brands are

Morven Gold
Marlboro
Diplomat
K2
Red & White.
Bond Street.

AWARDS:
Philip Morris (Pakistan) Limited is the second largest tobacco company in Pakistan by
market share and has been the recipient of a number of awards including being listed as a top
25 Company at the Karachi and Lahore Stock Exchanges between 2003 and 2008.
7

Philip Morris Pakistan

(PMPKL)

Philip Morris Pakistan

(PMPKL)

CEO
Vice President
Strategy

Executive Vice President Corporate

& Regulatory Affairs

Vice President
Human Capital
Division

Legal Affairs

Public &
Government Affairs

People Excellence &

Business Process
Improvement

Chief Finance Officer

/ Vice President
Finance Division

Business Planning &

Finance

Treasury and
Financial Operations

Audit and Internal

Control

Accounts

Chief Information
Officer / Vice
President IT Division

Chief Marketing
Officer / Vice
President
Commercial Division

Business Support
System

Sales &
Distribution

IT Operations

Customer Relations

IT Security

Segments &
Pricing

Revenue Assurance
& Fraud
Management

Credit Control

Products &
Platforms

Philip Morris Pakistan

(PMPKL)

 Market Analysis (PESTL Analysis):

Political:
The company faces problems due to political issues currently occurring in Pakistan. The
processions conducted by the aggressive youth of the country cause damage to the property of
the company such as at the death of Benazir Bhutto Shaheed the companys office in Karachi
was set to fire by the extremists.

Economical:
Due to the less purchasing power of the consumers in Pakistan, low price products generate
more sales and contribute more in profit. Besides products of company, some products are
smuggled and consumers buy them more frequently due to low price, thats why our sales effect
greatly.

Social:
As it is the company of health hazardous product having negative image in the minds of
people and Pakistani society doesnt accept it, it is considered against our norms so it cannot be
advertised openly as compared to other countries.

Technological:
The product is harmful for the user as well as its surrounding, so with the advancement in
technology the company is trying to use such material (filters) in their product which produces
less smoke. In addition to this, company is also introducing electric cigarette for convenience of
customers, whose pilot testing is being done in Germany.

Legal:
According to laws and legislations in Pakistan, open advertisement of such products is not
allowed. As happens to the Philip Morris, about a decade ago there was aggressive advertisement
of cigarettes being run on our National television channel but now its advertisement is
completely banned. There are some laws; the companies selling such type of products in Pakistan
must bear some restrictions regarding packaging.

Marketing Information System (MIS):

There is no specific marketing intelligence system in Philip Morris but there is a Consumer
Insight Department/ Consumer Engagement department which conducts interviews with the
users of the product. In this way they get feedback about the product.
Microsoft outlook is used by the company workers to send and receive e-mails. Whos
screening and checking is done by head office, but there is also a private folder for workers so
that they may keep any personal data.
10

Philip Morris Pakistan

(PMPKL)

Company does not conduct any type of marketing campaign on social networking sites. MIS
is not good enough.
As many of the customers do not use product openly in Pakistan, and feedback is taken from
some of the customers through interviews so their customers know that they are under
observation.

SWOT analysis
Strengths

Well known and established brands

Diversified workforce and skill
Barriers of new entry
Global market

Weaknesses

Ethics become weakness for the company due to market implementation policies such as
company pay taxes properly.
Company gets the loan at high rates

Opportunities

Pakistan has a large number of youngsters so there is a great potential for smokers

Threats

Company has to do the dark marketing because of their health injurious products
No ATL activities.
They cannot use mass media for promotion of their products and cannot do any
advertisement
Increased amount of legislations.
External business risks
One-to-one marketing
Due to illicit segment i.e. non-tax payers, consumers buy less original product
Purchasing power of consumers is low

Supply chain:
Fields

GLT

Final
Consumer
11

Factories

Ware
houses

Distributor
Ware House
Retailers
Philip Morris Pakistan

(PMPKL)

Retailer

W. Sellers

Customer Retailer
W. seller

Product Development Forecasting:

On the basis of sales generated in previous year they forecast their demand.
They use bottom to top approach, by collecting data regionally they move towards collecting
data in different areas then further from towns. In this way they get national sales. By this they
forecast for the next year.
Prices also affect the sales of their product. So they must consider the prices for forecasting
the sales.
Basically forecasting is done on annual basis but sometimes they do forecast within the year
also.

Marketing Research
They conduct marketing research by consumer engagement department frequently on sales
trend, availability of the brands and stock shares.
AC NEILSON is a global research firm. Philips Morris also hires them for the marketing
research.

Brands of Philips Morris

Marlboro is an international brand

Red and White International brand
Morven Gold is a local brand
Diplomat is a local brand
K-2 is a local brand

4 Ps Of Philips Morris
Product:
SKUs: stock keeping units.
Product design: Cigarette
Product size: their legal product has 20 sticks per packet.
Product Packaging: Legal packaging has 40% area of warning and 60% area their brand elements

Price:
They have different prices for different brands. They set their prices according to the income
level of people.
Discounts: They give discounts to retailers and consumers who buy from them in bulk.
12

Philip Morris Pakistan

(PMPKL)

Promotion:
No advertisement according to the laws of the government. They have do one to one marketing.
They market their product through retailers. When sells at some retailer is high they give signage
to their retailers for the promotion of their products. They promote their product by giving
cigarette case and lighters to the consumers.

Place:
Retailers all over Pakistan
Tea Stalls
Drink Corners
Pan Shops
Stop Shops

4 Ps of MARL BORO:
Target Market: Global community of young adult smokers
USP: High-quality American style cigarettes
Focus: Growth segments of each market and new opportunities for growth
Advantages: Strong global brand image and high recognition despite restrictions on advertising.
Marlboro has a tradition of being industries innovators.

Internal branding
The employees of Philip Morris use their own brand to smoke to show the affiliation with
company. They are not allowed to use the brand of other company.

Marketing Strategies
Marketing is one of Philip Morris Internationals great strengths, and it remains a core pillar of
our competitive strategy.
Marketing practices are based on three fundamental principles:
1.

Do not market to children or use images that are aimed at or have particular appeal to
minors.
2.
Health warnings on all our marketing materials and packaging.
3.
Marketing respects global standards of decency as well as local cultures, traditions and
practices.
Below the line activities (BTL):
They use hidden marketing activities. It includes retail marketing.
Above the line activities (ATL): It includes billboards, electronic and print media. But these
activities are banned by the government.
Retail Marketing
13

Philip Morris Pakistan

(PMPKL)

Philip Morris Pakistan Limited practices retail marketing on root levels. This is the only mean
of marketing for the company as company cannot practice above the line activities due to
Tobacco regulations by the government.

BCG Matrix:

RED AND WHITE

MORVEN GOLD

MARLBORO

K-2

Product Classification:

High quality cigarettes

Low quality cigarettes
Low smell cigarettes

Brand Names:
There are five brands that company offers:
Marlboro
Bond street
K2
Diplomat
Morven gold
14

Philip Morris Pakistan

(PMPKL)

Brand extensions
Marlboro
Marlboro has been the worlds number one cigarette brand since 1972 and is one of the most
powerful trademarks among all consumer products. In 2013, Marlboros volume outside the
United States was 291.1 billion cigarettes [1], which make it bigger than the next two largest
brands combined.

In 2008, Philip Morris International (PMI) implemented new brand architecture for
Marlboro with three defined identities: Flavor, Gold, and Fresh. The Marlboro brand architecture
is a portfolio framework that allows us to unlock the potential of the brands equity and address
the preferences of adult smokers. The Marlboro Flavor family, representing quality and tobacco
expertise, leads the way in bringing adult smokers the most enjoyable tobacco flavor satisfaction.
The Marlboro Gold family delivers pleasurable smooth tastes and refined smoking experiences
that are progressive and contemporary. The Marlboro Fresh family offers new experiences,
innovations and differentiated refreshing tastes that go beyond the ordinary.
Our new introductions generated a combined volume of 35.9 billion units in 2013,
accounting for more than 12% of Marlboros total volume. Below are a few examples:

Marlboro Light: It is mild

Marlboro Red: It is hard

.

Target Market:
Marlboro:

It is for upper class

Morvin Gold:

It is for middle upper class

Diplomat:
It targets lower middle class

Red & white:

For middle class

K2:
For lower class

Product Positioning:

It is for the people who are quality conscious

15

Philip Morris Pakistan

(PMPKL)

Wide Range of Products & Brands

For Consumers avoiding smell

Conclusion:
Phillip Morris is currently at the second position in the market share in
Pakistan, first being the Pakistan Tobacco Company (PTC). It is considered to be at 25th position
in the Lahore and Karachi stock exchange. It is offering five products in Pakistan which have a
great potential to take Phillip Morris to the top position. It is offering quality products. Marketing
department is focusing on designing

16

Philip Morris Pakistan

(PMPKL)