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. Market Capitalization

    The total dollar market value of all of a company's outstanding ...
  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. Socially Responsible Investment ...

    An investment that is considered socially responsible because ...
Related Articles
  1. Measuring Company Efficiency
    Fundamental Analysis

    Measuring Company Efficiency

  2. Warren Buffett: How He Does It
    Active Trading

    Warren Buffett: How He Does It

  3. Socially (Ir)responsible Mutual Funds
    Mutual Funds & ETFs

    Socially (Ir)responsible Mutual Funds

  4. Advertising, Crocodiles And Moats
    Professionals

    Advertising, Crocodiles And Moats

comments powered by Disqus
Hot Definitions
  1. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  2. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  3. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
Trading Center