SALES AND DISTRIBUTION

PROJECT WORK REPORT

TOPIC OF STUDY- SALES AND DISTRIBUTION OF

MARLBORO CIGARETTES

Under the guidance of and submitted to: Prof. Rahul

Gupta Choudhury, IMI Bhubaneswar.

Submitted by:
Shreya Jain
21PGDM-BHU097
 EXECUTIVE SUMMARY

World’s best-selling cigarette brand and most profitable non-durable consumer good
flagship brand of Philip Morris, the world’s largest cigarette manufacturer. Most
Valuable Brand in the World and recognized and appealing brand image of the 20th
century.
The brand was founded by Philip Morris in 1924 initially meant for women. Over the
period of time, it has been repositioned as a masculine brand in 1950 which helped the
brand in increasing its sales. Marlboro distributes its cigarettes through its common
distribution channel which has a wide and deep reach in the markets and is a key strength
of the company. It sells its products in more than 180 around the world via different
channel of distribution such as retail outlets, e-commerce sites, distributors, Pops & mum
stores etc.
Marlboro is brand of Phillip Morris International, PMI and in India, it is manufactured by
Godfrey Phillips India (they have tie up).

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METHODOLOGY

Business Sector:

In order to study the sales and distribution effectiveness of two organizations, we decided
to take the ‘TOBACCO INDUSTRY’.

Organizations identified for the study:

Under the ‘TOBACCO INDUSTRY’, the organizations which we are going to study
are:
❖ MARLBORO CIGARETTES

Objectives
The main objective of the study can be divided into the following heads:
• To compare the Sales and Distribution Effectiveness (Quantitative research).
• To carry out a detailed study of ‘Logistics Network’: Mode/s, Costs and
Monitoring Systems.
• To design a comprehensive sales reporting system for the chosen business
sector.

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COMPANY BACKGROUND
Marlboro
History of the “Marlboro” brand of cigarettes
Marlboro is the largest-selling brand of cigarettes in the world. It is made by Philip
Morris USA (a branch of Altria) within the US, and by Philip Morris International
outside the US. It is famous for the “Marlboro Man” advertisements.
The brand is named after Great Marlborough Street, the location of its original London
factory. Richmond, Virginia is now the location of the largest Marlboro cigarette
manufacturing plant.
Philip Morris launched the Marlboro brand in 1924 as a woman’s cigarette, based on the
slogan “Mild as May”. In the 1920s, advertising for cigarettes was primarily based on
how ladies liked cigarette. To this end, the filter had a printed red band around it to hide
lipstick stains, calling it “Beauty Tips to Keep the Paper from Your Lips”. It faced
trouble in the 1930s and attempted to rejuvenate itself with a clever advertising gimmick,
changing the ivory tip to red in order not to smear ladies' lipstick.
The brand was sold in this capacity until World War II when the brand faltered and was
temporarily removed from the market. At the end of the war, three brands emerged that
would establish a firm
hold on the cigarette market: Camel, Lucy Strike, and Chesterfield. These brands were
supplied to US soldiers during the war, creating an instant market upon their return.
After scientists published a major study linking smoking to lung cancer in the 1950s,
Philip Morris repositioned Marlboro as a men’s cigarette in order to fit a market niche
of men who were concerned about lung cancer, but not wanting to admit it. At the time,
filtered cigarettes were considered safer than unfiltered cigarettes, but had been until that
time only marketed to women. Men at the time indicated that while they would consider
switching to a filtered cigarette, they were concerned about being seen smoking a
cigarette marketed to women.

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 Marlboro cigarettes packs

Varieties of Marlboro Cigarettes:

• Marlboro Reds (Full Flavor): Kings, 100s and 72 mm box

• Marlboro Medium: Kings and 100s
• Marlboro Lights: Kings, 100s, and 72 mm box
• Marlboro Ultra Lights: Kings and 100s
• Marlboro Menthol: Kings,100s, and 72 mm box
• Marlboro Menthol Lights: Kings and 100s
• Marlboro Menthol Ultra Lights: Kings and 100s
• Marlboro Menthol Milds: Kings,100s, and 72 mm box
• Marlboro Blend 29
• Marlboro Wides
• Marlboro Filter Plus

Marlboro Reds
• Marlboro Full Flavored cigarettes, or Marlboro Reds as they are commonly
known because of the red crest on the white pack, are the original Marlboro cigarette and

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 still the most recognizable. They are available in king size (the standard cigarette size)
and in 100s (a slightly thinner, longer cigarette).
Marlboro Mediums
• Marlboro Medium cigarettes were created to form a middle ground between
Marlboro Reds and Marlboro Lights. They have the same signature Marlboro tobacco
blend but with slightly less tar and nicotine than the Reds. They are marketed in a white
pack with a smaller red Marlboro crest than Reds. They are available in king size and
100s.
Marlboro Lights
• Marlboro Lights feature the same tobacco blend as Marlboro Reds but with less
concentration of tar and nicotine. Marlboro Lights come in a white pack with a gold
Marlboro crest. Lights are available in king size and 100s.
Marlboro Ultra Light
• As a concession to rising health concerns, Marlboro developed an Ultra Light
brand. Just like the Light cigarette, it features the same blend of tobacco as the Full-
Flavored Marlboros but with even less tar and nicotine. Ultra Lights come in a white pack
with a silver Marlboro crest. Ultra Lights are available in king size and 100s.

Marlboro Menthol
• Marlboro also markets cigarettes flavored with menthol. These are marketed in
white packs with green detailing and are available in Full Flavored and Light variations.
Marlboro Smooth
• Marlboro also markets a second brand of nicotine cigarette with a different flavor
blend. They are marketed in a pack with a blue Marlboro crest. Full Flavor king size
cigarettes are on the market

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DISTRIBUTION SYSTEM MARLBORO
DISTRIBUTION SYSTEM
A proper distribution system is very important for every company because nowadays the
customer wants full service without any pain. Marlboro has a deep penetration in the
market due to its availability and it has provided them an advantage in the market. I have
also seen in the market the happy faces of customers and retailers of Marlboro because of
the easy availability of Marlboro cigarettes.

BENEFITS OF A GOOD DISTRIBUTION SYSTEM

1. Easy availability
2. Satisfied customers
3. Competitive advantage
4. Better market reputation
5. Saves time

DISTRIBUTION SYSTEM OF MARLBORO

1. Organisation (C&FA's)
2. Distributor
3. Retailer
4. Customer

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 Organization
C & FA

DISTRIBUTOR

Different retailers Different retailers Different retailers

CUSTOMER

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Channel Structure:

MARLBORO CIGARETTES

Manufacturing unit

Warehouses

Distributors

Product Area Distributor

Dealer

Retailer

Customer

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 2. The Marlboro Distribution Network
Intensive Distribution
Intensive Distribution for Marlboro. This is the ideal strategy for the market leader as
intensive distribution has the following advantages:
• Increases coverage and sales
• Increases product availability
• Encourages retailers to compete aggressive. Higher competition leads to
narrower margins for the retails hence, increases the ultimate margin for
the manufacturer.

The Channel Members of the Distribution Network of Marlboro

The Marlboro distribution network for biscuits has essentially four levels as enlisted
below:
• Wholesalers and Distributers
• Carry Forward Agents (if required)
• Retailers

The Channel Members and Logistics

Marlboro has nearly 1500 wholesalers, catering to 425000 retail outlets directly
or indirectly. A two hundred strong dedicated field force services these
wholesalers and retailers. Additionally, there are 31 depots and Carry and
Forward agents supplying goods to the wide distribution network.

The Retailers
• Trade schemes: Company raises the margins by 2%, also schemes like good
packaging incase of butter and cheese is undertaken by the company.
However, this is only a short-term initiative to push the products of the
company.
• Glow boards: the company puts up glow boards at the retailer and pays the
major portion of the cost.
• Schedule of the salesmen: they provide the retails with this schedule so the
retailers can pre estimate the quantities of the various products needed.
• Infrastructure facilitation: the company facilitates the retailers to buy
beautiful stalls by formulating an easy payment program and a commitment
to buy back the equipment at a reasonable price when the value of the
equipment has depreciated.

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 Evaluation of the Channel Members
MARLBORO has a three pronged process to evaluate its channel members.
These are the Beat Plan, the Cumulative Performance plan and Target versus
Achievement Plan.

• Beat plan: this plan is generated for the various product categories. A
weekly schedule is prepared for various markets and the retailers the
turnover for each of the product is calculated for the wholesale dealers.

• Cumulative performance: the performance of the dealers is averaged out

over a period of three years where a comparison is made of the present
performance vis-à-vis the previous ones.

• Target versus achievement: the performance and the targets are

compared and therefore the gaps are identified which help in evaluating
the wholesalers and the distributors and planning for the next year as well.
This is done for each of the product category.

• Other criteria: these need to be fulfilled by the channel members of

MARLBORO.
• Details of the bank guaranty
• Photographs of the offices
• Details of the wholesalers and the distributors‟ salesmen and the
product lines they deal in.
• The computerization facility available.
• The storage spaces.
• Stall facility with photograph.
• Details of the delivery vehicle with photograph.
• Summary of the monthly potential sales of markets.
• Summary of the product wise monthly sales potential of institutions.

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 CONFLICTS AND CO-OPERATION
• Ownership of assets: Previously the company used to give the products
on lease to the retailers, when the company wanted the stuff back; the
retailer disagreed to comply and created issues of ownership.
• Stocking issues: The company doesn’t want the retailers to stock the
competing brand in the company leased stall, which at times s hard to
manage as retailers tend to do it often.

• Replacement of products: The deterioration in the product calls for fail

in replacement by the company this major issue of vertical conflict.

• Credit policy: Compared to the market, the company’s credit period is

less that specially incase of institutional sales is very important.

Margins: The Company provides least margins to all the channel

members. For e.g. The retailer’s margin in case of MARLBORO is
1.45%

Recommendations

1. MARLBORO should focus more on their promotional activities in more innovative

manner so that they can provide more competition to their competitors.
2. As ITC (GOLD FLAKE AND NAVY CUT) is targeting a niche market, it should
make its products like Provogue more widely available in the market.
3. The availability of MARLBORO is still lacking in the rural.

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