Marlboro Friday

AAA

DEFINITION of 'Marlboro Friday'

A reference to Friday, April 2, 1993, when Philip Morris, the maker of Marlboro cigarettes, announced that it would be cutting the price of Marlboros to compete with generic cigarette makers. The company's stock tanked 26% following the announcement, losing about $10 billion off its market cap in a single day.

The day is remembered as a landmark moment in the 1990s consumer movement away from name brand products in favor of cheaper generic products with prices 50% lower than their branded competitors. In its wake, money managers moved cash from name brand consumer goods makers such as Coca-Cola and Tambrands (the former maker of Tampax tampons) to technology stocks and generic consumer goods producers.

INVESTOPEDIA EXPLAINS 'Marlboro Friday'

Even though Philip Morris's announcement caused the company to initially lose $10 billion in market cap, the event marked the end of a price war. Competitors were priced out of the market, and only two years later, Philip Morris' stock had fully recovered from Marlboro Friday's loss. One analyst (James A. Taylor) was quoted in the New York Times as saying, "I believe the 1990s officially began with Marlboro's inability to sustain its price."

RELATED TERMS
  1. Sin Stock

    A stock of a company that is either involved in or associated ...
  2. Value Added

    The enhancement a company gives its product or service before ...
  3. Socially Responsible Investment ...

    An investment that is considered socially responsible because ...
  4. Pricing Power

    An economic term referring to the effect that a change in a firm's ...
  5. Brand Equity

    The value premium that a company realizes from a product with ...
  6. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, ...
RELATED FAQS
  1. What does it mean when advertisers say that "financing is available"? Should I trust ...

    When an advertisement says "financing", it means that the seller is going to give you a loan on an item that you purchase. ... Read Full Answer >>
Related Articles
  1. Fundamental Analysis

    Measuring Company Efficiency

    Three useful indicators for measuring a retail company's efficiency are its inventory turnaround times, its receivables and its collection period.
  2. Active Trading

    Warren Buffett: How He Does It

    We look at the Sage of Omaha's methodology for evaluating value stocks.
  3. Mutual Funds & ETFs

    Socially (Ir)responsible Mutual Funds

    Not concerned about being an ethical investor? Maybe "sinful stocks" have a place in your portfolio.
  4. Investing

    What are Preference Shares?

    Preference shares, also referred to as preferred shares, are equity shares that give the shareholders certain rights ahead of common shareholders. For instance, when the corporation declares ...
  5. Stock Analysis

    5 Reasons Sirius XM Haters Are Gone

    Bears continue to clear out of Sirius XM Holdings. There were fewer than 146 million of its shares sold short by the end of February.
  6. Stock Analysis

    How Is SandRidge Energy Really Looking To Grow?

    SandRidge Energy is following the playbook of almost every other oil and gas company in the country: cutting spending and delivering meager growth.
  7. Stock Analysis

    How Will Chesapeake Energy Create Value?

    A few years ago, Chesapeake Energy's bloated balance sheet forced it to sell off assets at fire-sale prices and fund its aggressive capital spending plan.
  8. Stock Analysis

    Did J.C. Penney’s Turnaround Plan Work Out?

    J.C. Penney has wrapped up another year of its turnaround plan: ultimately, to make money in a stock, the underlying business has to make money, too.
  9. Investing Basics

    How a Stock Buyback Works: MasterCard

    Stock buyback refers to publicly traded companies buying back their shares from shareholders. This reduces the amount of outstanding shares in the market and typically, based on simple market ...
  10. Investing

    Corporate Governance

    Corporate governance refers to the formally established guidelines that determine how a company is run. The company’s board of directors approves and periodically reviews the guidelines, which ...

You May Also Like

Hot Definitions
  1. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  2. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  3. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  4. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  5. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  6. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
Trading Center