Philip Morris introduces price-marked variants of Marlboro cigarettes
One of the largest cigarette companies, Philip Morris, is to introduce price-marked variants of one of its premium cigarette brand in London and the South-East to be able to fight “overpricing” in some locations.
Martin Inkster, the new managing director of Philip Morris UK & Ireland, stated that starting with December 2012, wholesalers in London would be provided with price-marked Marlboro Gold cigarettes after study unveiled that the cigarette brand was being overpriced by certain sellers by an average of 24p per pack of 20.
It was found that one retailer in Central London asking £8.99 – £1.10 above the average retail price – for a pack of 20 Marlboro Red cigarettes. WH Smith as well regularly charges over £8 for Marlboro cigarettes, both at travel points and at its high street shops.
Inkster said “savvy smokers” were more and more buying around for the best prices and that overpricing could push smokers either to trade down or even into the arms illegal trade.
“The crucial devices in tobacco are availability, product pricing, and pricing is starting to be really important,” he said. “During economic crisis, it’s of vital importance that sellers price their products competitively”.
“Selling overpriced cigs compromises all of the related sales from other types – most remarkably magazines, bread, milk and soft drinks. This could lead to considerable earnings loss as analysis demonstrates adult tobacco customers visit shops more often than non-tobacco customers and have a much higher basket spend with the average basket spend of an adult tobacco customer being £9.02 compared to a non-smoking adult convenience customer’s spend of £5.77.”
Inkster said that sustaining well-stocked gantries of top brands along with competitive retail prices would profit the whole channel from wholesaler to buyer.
“Stocking PMPs provides adult smokers with assurance that they are not being over-charged, and giving independent retailers with a tool to completely overcome large multiple providers,” he added.
He explained to that PMPs were a method of helping retailers rather than trying to determine margins.
“I would encourage any retailer that is searching for long term success to think about stocking these PMPs. Retailers have to look past the short term margin and understand how important it is for their business that they can retain adult smokers in their shops – eventually it is consumer loyalty and footfall that will profit them in the long run.”
The new Marlboro Gold PMPs will be offered at £7.75 for 20 and £3.94 for 10. Non-price marked packages will be available as well. PMUKI said it had no current ideas to provide PMPs on Marlboro Red cigarettes.
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