Philip Morris Kicks Off Marlboro Contract Option

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Philip Morris Kicks Off Marlboro Contract Option

By Melissa Kress, Convenience Store News - 04/05/2011

RICHMOND, Va. -- Philip Morris USA is rolling out a new promotional contract option for retailers this month. The Marlboro Leadership Price option will be available to retailers who have level three, four and five contracts with the cigarette manufacturer.

According to a spokesman for Altria Client Services, Philip Morris offers retailers five different options for merchandising agreements. Retailers choose which option is right for them depending on how they run their business and their cigarette category. Now, those retailers who have chosen levels three, four and five options have the added option of the new Marlboro Leadership Price, he added. Altria Group Inc. is the parent company of Philip Morris USA.

"On a yearly basis parts of that agreement may change depending on what we have found is working and what isn't, and feedback from the retailers on what is working and what isn't," he explained. "We continually try to make program more effective. In particular, this year we made changes to levels three, four and five based on lessons from economic factors and feedback.

"What we found is that the adult smokers are looking for the lowest price when choosing where to buy cigarettes because of economic conditions," he added.

As a result, one thing this promotion does is set a suggestive maximum single pack price on Marlboro cigarettes, according to the spokesman. If retailers agree to sell at that price or lower they will receive incremental promotional dollars to further reduce the cost of Marlboro single packs, he added.

However, he stressed the Marlboro Leadership Price is optional. "It is an optional promotional resource for retailers although only at levels three, four and five," he explained. "If retailers choose not to participate then it does not affect the contracts already in place."

The suggested price, the spokesman said, is based upon several factors, such as individual state excise taxes and state regulations, so it will vary. "Knowing that when adult smokers go into a store and purchase premium products they tend to buy more items, we thought it was important to retailers to keep Marlboro competitive in the market," the he said.

Retailers also have the ability to opt in or opt out anytime between now and September, he added.