Marlboro Friday

What Is Marlboro Friday?

The term Marlboro Friday refers to a significant day in the history of cigarette and tobacco company Philip Morris. On April 2, 1993, the company announced a drastic cut in the price of Marlboro cigarettes to fight off the generic brands that were eating into its market share.

As a result, the company's stock tanked, wiping out billions from its market capitalization in a single day. Despite the setback, Philip Morris' stock fully recovered two years later.

Key Takeaways

  • Marlboro Friday is a significant day in the history of Philip Morris, the maker of Marlboro cigarettes.
  • On April 2, 1993, Philip Morris slashed the price of Marlboro cigarettes to compete with generic brands.
  • The announcement wiped $10 billion off Philip Morris' market cap as analysts called an end to the era where big-name brands can name their price.
  • Wall Street's lack of faith in iconic U.S. brands proved unfounded as the call to slash prices eventually helped it to price competitors out of the market.
  • The announcement and the ensuing aftermath served as a lesson for corporations, which began moving their emphasis from advertising to branding.
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Marlboro Friday

Understanding Marlboro Friday

The recession of the early 1990s led consumers to become more price-conscious. Generic versions of goods soared in popularity while expensive big-name brands began to lose momentum. Cigarette and tobacco manufacturer Philip Morris took a drastic step. On April 2, 1993, it announced it was cutting the price of a pack of Marlboro, the world's best-selling and most iconic cigarette brand, by nearly 20%. The move aimed to gain back market share from deep discount cigarettes, which cost half the price of Marlboro.

This day became known as Marlboro Friday. Investors panicked. Money managers began dumping holdings in branded consumer goods that relied heavily on advertising, preferring instead to increase their exposure to technology stocks and generic consumer goods producers. The company's stock plummeted 26%, wiping $10 billion off its market cap.

Analysts believed this was a sign that household names could no longer slap premium prices on their products, describing the company's desperate attempt as the beginning of the end for big-name brands. But Philip Morris was not the only victim of this shift in sentiment. In fact, share prices of other big-name brands, such as Coca-Cola (KO), Walt Disney (DIS), Proctor & Gamble (PG), and Tambrands (the former maker of Tampax tampons) also got caught in the crossfire.

In the end, Wall Street's lack of faith in iconic U.S. brands proved unfounded. Bucking expectations, Philip Morris' bold call to slash its prices turned out to be a shrewd one. Two years after Marlboro Friday wiped $10 billion off its market value, the stock fully recovered as rival tobacco companies steadily got priced out of the market.

In 1992, Philip Morris generated profit margins that far exceeded those of its peers, suggesting ample wiggle room to slash prices while still remaining highly profitable.

Special Considerations

Pundits credit Philip Morris' revival to the strength of its brands and customers' loyalty. The Marlboro Man was, after all, one of the most iconic symbols of American marketing. So it should come as no surprise that Wall Street was convinced that the Marlboro man fell off his horse on Marlboro Friday. In the end, they appeared to underestimate the long-term power of advertising.

At the time, marketing expert Watts Wacker of Yankelovich Partners reflected that the importance of brands could grow over time if they demonstrated value through quality and price. Without this, he suggested, would pit it against smaller players in the market. According to Wacker, consumers tend to have strong relationships with the products they buy, purchasing certain name brands without even thinking about it.

Keep in mind that tobacco companies can no longer advertise their products. But Marlboro's macho cowboy, however, still appears to be entrenched in smokers' minds. To this day, it is still the most popular cigarette brand in the U.S. and most of the world.

Philip Morris USA is a subsidiary of Altria Group (MO), which owns its brands in the United States. Philip Morris International (PM), which was spun off from Altria, is a holding company headquartered in New York.

Branding, Advertising, and Lessons Learned

As noted above, it took about two years for the company to recover from the shock of Marlboro Friday. But it wasn't without merit. Although it was a costly move in the short term, Philip Morris' announcement ended up being a very valuable lesson for the corporate world.

The economic conditions in the 1990s led to the rise in generic brands, including those from big-box retailers. The recession led consumers to tighten their pursestrings and swap out brand names for generics. Corporations began to feel the pinch and fell prey to eroding market share, leading experts to believe this would be a doom-and-gloom situation for them. But that wasn't the case.

Major brands continue to dominate the market, selling their wares along with their generic counterparts thanks, in part, to a move from advertising to branding. When you think of ibuprofen, it's only natural to think of the Advil brand. Many companies are following the example of Marlboro's iconic image by creating successful brands that sit in consumers' minds.

Through strategic planning, companies are able to create brand images that resonate with people, ensuring consumers will want to buy their products. Apple (AAPL) is a great example. Its iconic logo is easily recognizable and is synonymous with its unique and innovative line of computers, digital devices, and smartphones.

How Many Cigarettes Does Philip Morris Make in a Year?

Philip Morris produces 700 billion cigarettes each year in 38 different facilities around the world. The company states that its machines are able to produce as many as 20,000 cigarettes each minute.

What Are the Most Expensive Cigarettes in the World?

The world's most expensive cigarette brand in the world is Treasurer Luxury Black. Manufactured by The Chancellor Tobacco Company in the United Kingdom, a pack of 20 cigarettes costs about $67.

When Was Marlboro Friday?

Marlboro Friday occurred on April 2, 1993.

Does Marlboro Still Use the Marlboro Man in Advertising?

Cigarette companies can no longer advertise in print, on television, or on the radio in the United States, which means Marlboro had to stop using the Marlboro Man. Although the last time he appeared in any advertisements in the United States was in 1999, he remains one of the most iconic images in marketing.

Article Sources
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  1. History.com. "Marlboro Friday: The Stock Market Shock That Nearly Tanked an Iconic Brand." Accessed Feb. 2, 2022.

  2. Harvard Business School. "Philip Morris: Marlboro Friday (A)." Accessed Feb. 2, 2022.

  3. The New York Times. "THE MEDIA BUSINESS: Advertising; If prices exceed perceived value, big brands may be at risk." Accessed Feb. 2, 2022.

  4. Philip Morris International. "Making cigarettes." Accessed Feb. 2, 2022.

  5. Money Inc. "The 10 Most Expensive Cigarettes in the World." Accessed Feb. 2, 2022.

  6. Mel Magazine. "AN UNFILTERED ORAL HISTORY OF THE MARLBORO MAN." Accessed Feb. 2, 2022.

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