Dynamic Marketing Communiqué

All it took was change and 1 campaign – How this brand became #1 in an intensely crowded industry [Monday Marketing Marvels]

June 8, 2020

“Trendy.”

“Cool.”

“Controversial.”

Cigarettes are one of the most divisive products known to man.

Amidst all the health concerns and negative press cigarettes have, the demand remains high.

Multiple brands. Multiple variants to choose from.

Is it possible to break through an already saturated industry?

PHILIP MORRIS defied the odds.

In 1924, Philip Morris launched Marlboro—their own brand of filtered cigarettes.

“America’s luxury cigarette” = Marlboro was first sold in resorts and hotels.

In the 1930s, the brand was advertised as the “ladies’ favorite.”

Filtered cigarettes were considered a product for women back then.

Despite all of Philip Morris’ early marketing efforts, the brand struggled to increase sales.

Once the 1940s came, they had less than 1% of the total market share in the US.

With brands like Camel, Lucky Strike, and Chesterfield leading the market, Philip Morris had to do something to succeed in the industry.

The Marlboro Man

The 1950s was a turning point for Marlboro.

Consumers were more aware of the health risks of tobacco consumption. Other cigarette brands scrambled to find ways to prevent sales from declining.

Philip Morris had the ultimate plan.

A new brand positioning and a wider target market.

  1. Filtered cigarettes as the safer alternative
  2. Target the men too (not just women)

With the help of ad agency Leo Burnett, they thought of the perfect campaign: Marlboro Man

To best represent masculinity, they used the image of a cowboy.

Rugged and independent—the cowboy represented Marlboro’s shift towards appealing to the male market.

Some of the earlier ads also featured men with military tattoos doing “manly” activities like playing chess, preparing a gun, and playing other sports.

Marlboro wasn’t just a product, it also represented a lifestyle.

The new brand identity was independent, masculine, and adventurous.

Ads that featured the Marlboro Man were everywhere (magazines, billboards, TV commercials, and even motorsport sponsorships!).

It was a marketing win for Philip Morris.

Sales went up to USD 5 billion by 1955. A 3,241% increase from the previous year!

Two years later, that amount quadrupled (USD 20 billion).

Marlboro went from having 1% of the market share to being one of the best-selling tobacco brands in the industry.

Talk about the hunger to succeed!

By 1972, Marlboro was the most purchased cigarette brand in the United States and remains to be in the top spot until today. As of 2017, they have 40% of the total market share in the country.

Philip Morris’s Earning Power: Valens Research vs. As-reported numbers

Philip Morris makes for a great case study that we come back to regularly. One great reason?

The company has proven itself to be a phenomenal earning power generator.

So, how well has Philip Morris been growing its business in the past years?

The research doesn’t lie—nor do the results. Earning power (the blue bars) continues to show results much higher than what traditional databases show.

The blue bars in the chart above represent Philip Morris’s earning power (Uniform Return On Assets). These numbers have been positive, going over 45% thirteen times for the past fifteen years.

The global ROA average is just 6%

The orange bars are the company’s as-reported financial information. If you relied on these numbers, you won’t see the 56% Uniform ROA (return on assets, a measure of earning power) for 2019. You’d just see the company report less than that, at 16% as-reported ROA.

That’s what you’ll see in Yahoo Finance, Google Finance, and most other databases.

The company’s stock price also performed better than the rest of the stock market over the decade, which we can see in the blue line in the chart below. Their returns have been well above the market.

The numbers show that they have been doing well and making a profit.

Many great marketing campaigns were made during the 20th century…

… but only a select few have reached the same success.

By changing the brand identity to reflect an independent and masculine lifestyle, Philip Morris expanded its target market and turned Marlboro into the number one cigarette brand in the US.

Marlboro and the Marlboro Man definitely made a mark in the history of marketing greats.

About The Dynamic Marketing Communiqué’s
“Monday Marketing Marvels”

Too often, industry experts and the marketing press sing the praises of some company’s marketing strategy.

…Only for the audience to later find out that their product was a flop, or worse, that the company went bankrupt.

The true ROI in marketing can’t be separated from the business as a whole.

What good is a marketing case study if one can’t prove that the company’s efforts actually paid off?

At the end of the day, either the entire business is successful or it isn’t. And the role of marketing is always paramount to that success.

Every Monday, we publish a case study that highlights the world’s greatest marketing strategies.

However, the difference between our case studies and the numerous ones out there, is that we will always make certain that the firm really did generate and demonstrate earning power worthy of study in the first place (compliments of Valens Research’s finance group).

By looking at the true earnings of a company, we can now rely on those successful businesses to get tips and insights on what they did right.

We’ll also study the greatest marketing fails and analyze what they did wrong, or what they needed to improve on. We all make our mistakes, but better we learn from others’ mistakes—and earlier, rather than later.

Hope you found this week’s marketing marvel interesting and helpful.

Stay tuned for next week’s Monday Marketing Marvels!

Cheers,

Kyle Yu
Head of Marketing
Valens Dynamic Marketing Capabilities
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www.valens-research.com