Product Research: Philip Morris's IQOS Market Analysis Report

This report provides a comprehensive market analysis of Philip Morris International's IQOS, a heated tobacco product. The report begins with a product and service description, followed by an outline of the market analysis, including key market trends, competitor analysis, and consumer attitudes. It then delves into segmentation, targeting, and positioning strategies, highlighting the unique selling proposition of IQOS. The report concludes with a recommended marketing mix, covering product, pricing, promotion, and place strategies. The analysis includes discussions on market dynamics, consumer behavior, and strategic recommendations for the successful launch and market penetration of IQOS, with references to relevant academic and industry sources.

PRODUCT RESEARCH

Table of Contents
INTRODUCTION...........................................................................................................................1
1. Product and service description .............................................................................................1
2. Outlining market analysis.......................................................................................................1
3. Segmentation, Targetting and Positioning..............................................................................3
Unique Selling Proposition.........................................................................................................3
4. Recommended Marketing Mix...............................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES ...............................................................................................................................5

INTRODUCTION
Market analysis is can be simply defined as a qualitative and quantitative assessment of a
market (van Wijngaarden, Scholten and van Wijk, 2012). It focusses into the properties of
marketplace both in value as well as in volume, the different segments of consumers, their
purchasing patterns, the rivalry and the economical environment regarding barriers to entry and
regulations. The current report is completely based on Philip Morris International where in its
product named as IQOS is being discussed.
1. Product and service description
IQOS – Heat Not Burn Tobacco Products. It is also known as heated tobacco products. The
beauty of this commodity is that tobacco is heated here to a very low temperature in comparison
to a conventional cigarette (Tijssen, 2012). This in turn gives rise to smoke that comprises of
nicotine and various other chemicals. Such type of heated tobacco goods were firstly introduced
in the year of 1998 by R. J. Reynolds Premier and were popular as smokeless cigarettes.
2. Outlining market analysis
The launching of IQOS ("I quit ordinary smoking") was declared legally on 26 June
2014. This product was marketed by Philip Morris International Inc. under the branding of
Parliament and Marlboro. This was at the start launched in the year 2014 in Japan and Italy,
after that it is being step by step rolled out to different other nations (Laudon and Traver, 2013).
The IQOS smoking device comprises of a charger close to the size of a mobile phone as well as a
holder whose facet is similar to a pen. It is to be noted that IQOS is going to be introduced in
United Kingdom in order to seek attention of large number of consumers. This section consist of
various topics which is described below :
Key market trends
This has been noticed that Philip Morris' heat – not – burn – tobacco merchandise , iQOS
has gained phenomenal growth in the marketing location after its launch. It has been in different
key towns along with 31 markets internationally. It is having four million adult users. The
market share has seen reaching upwards nearly 13. 3 percent in the moth of October 2017. As
per the current information which is provided by venture, the sharing of market has already
enhanced to 4. 5 % which is fantastic or marvellous achievement considering this merchandise
was presented in the second quarter. Large number of people are shifted away from conventional
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combustible cigarettes to iQOS. According to the reports of mintel, Philip Morris are hoping to
have manufacturing capabilities in other locations such as Europe for producing 100 million
Heets, the tobacco goods utilised in the iQOS device, by the ending of 2018. in addition to this,
they have also proposed an application to FDA for the approving of its product as a changed or
modified deliverable in the United Kingdom.
key rivals and their positioning
There are different competitors of Philip Morris International that are Reynolds
American, Japan Tobacco, Altria Group, British American Tobacco, etc. Their positioning is
described below :
Reynolds
American
Japan Tobacco Altria Group British American
Tobacco
Founding date 2004 1999 1985 1902
Locations Winston – Salem,
US
Geneve, CH Richmond, US London, GB
Workers 5500 26000 8300 85335
Twitter followers 2.7 K 3.4 K 6.3 K 11.7 K
Net income $6.1b in 2016 $4.2b in 2012 $10.3b in 2016 £4.5b in 2015
Attitudes of present consumers in this market
As per the report of survey, it has been seen that consumers of ordinary cigarettes has
been decreasing rapidly. Still there are large number of users of taboo products. People are
having positive behaviours in context to iQOS products since this is a unique and innovative
merchandise (Theißen and Spinler, 2014). They are getting attracted towards this and are
showing their eagerness to use its goods and services. Thus, it is suitable as well as beneficial for
Philip Morris International Inc. could introduce this in UK.
Issues and opportunities
Some of the issues are faced by venture are listed below :
 As company is going to start business in United Kingdom, there are various challengers
that are giving rise to great competition. This may act as a threat for corporation.
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 Civilians are getting aware regarding their health and are leaving the habit of smoking.
Thus, in turn reducing overall sales rate of firm.
 Tax rates are increasing drastically in tobacco products.
Besides this, there are several opportunities as well which is explained below :
 A great chance to expand this business in UK.
 This is a powerful brand thus, faces less problems in making new consumer base at such
a new place.
3. Segmentation, Targetting and Positioning
Consumer segmentation is very important aspect while attempting to convey message to
a targeted market. Company could be done in various ways which is stated below :
 Geographic : It is a practice of dividing a potential group on the basis of location. It
could be done on a broader ground that is nation or a region to a narrow level as a city of
state (Dutta and Jackson, 2013).
 Demographic : It is an action of segmenting purchasers by examining their personalised
attributes like income, education, age, social class, occupation, religion, etc.
 Psychographic : This is some how similar to demographics segmentation. This includes
division of market on the basis of various personality traits, interests, living style,
attitudes and behaviours of civilians.
Profile
According to the current scenario of this world, cited firm should use Demographic
segmentation process (Büyüközkan and Çifçi, 2012). In accordance to that, they should target
adult people who are willing to smoke.
Unique Selling Proposition
iQOS is a totally modern product that is offering a unique way to smoke. This is very
attracting in terms of physical appearance. Besides this, corporation is providing best flavoured
merchandises and its quality is also good in comparison to any other traditional cigarettes. It is
being sold at affordable prices too so that every one may use it.
4. Recommended Marketing Mix
 Product : Philip Morris International inc. is one of most popular brand that is offering
special kind of tobacco products in the form of iQOS. This is nothing but a smoking
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device having a charger and tobacco stick and a holder. It consist of an attractive
packaging which is drawing attention of numerous of citizens as they found it different.
 Pricing strategy : Company should apply an impressive pricing strategies in order to
seek attention of large number of users. They need to provide their goods and services at
minimum prices in order to increase their selling rate.
 Promotional strategy including digital media : They can take use of various digital
media for doing advertisement such as Facebook, What's app, Twitter, YouTube, Email,
and many more (Barney and Hesterly, 2015).
 Place : The cited venture are offering their goods and services in New York, Chiba,
Cairo, U.S., etc. Philip Morris International is going to start their business in United
Kingdom. In order to supply products in UK, they can take help of distribution or
channels strategies.
CONCLUSION
From the above based report, it can be summarised that marketing analysis is a good
technique of evaluating or searching for a new market where any firm should introduce their
products and services. Philip Morris International should choose this tool in selecting a new
market location for launching its newer merchandise IQOS. In order to do the same, they need to
use different strategies such as marketing mix, segmentation, targetting and positioning.
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REFERENCES
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analysis of electronic service quality in healthcare industry. Expert Systems with
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Dutta, B. and Jackson, M.O. eds., 2013. Networks and groups: Models of strategic formation.
Springer Science & Business Media.
Laudon, K .C. and Traver, C. G., 2013. E-commerce. Pearson.
Theißen, S. and Spinler, S., 2014. Strategic analysis of manufacturer-supplier partnerships: An
ANP model for collaborative CO2 reduction management. European Journal of
Operational Research, 233(2), pp.383-397.
Tijssen, R. J., 2012. Co-authored research publications and strategic analysis of public–private
collaboration. Research Evaluation, 21(3), pp.204-215.
van Wijngaarden, J. D., Scholten, G. R. and van Wijk, K. P., 2012. Strategic analysis for health
care organizations: the suitability of the SWOT‐analysis. The International journal of
health planning and management. 27(1). pp.34-49.
Walker, R.V. and et. al., 2014. The energy-water-food nexus: Strategic analysis of technologies
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Xu, H., Liu, Z. Z. and Zhang, S. H., 2012. A strategic analysis of dual-channel supply chain
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Zott, C. and Amit, R., 2013. The business model: A theoretically anchored robust construct for
strategic analysis. Strategic Organization. 11(4). pp.403-411.
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