Merger of tobacco predators: for more rational competition
On June 27, 2003, R. J. Reynolds, the second largest tobacco company in the United States, and Brown, the third largest tobacco company in the United States. Williamson Company (Brown &; Williamson) officially announced that the two companies will merge all their tobacco businesses in the United States to form a new listed company. Reynolds American Inc Renault will pay $2.6 billion to acquire 58% of the shares of the new company, and the remaining 42% will be owned by British American Tobacco through its wholly-owned subsidiary Brown? Williamson will take over. Experts predict that the merger will be completed in mid-2004, and the further integration after the merger may last until mid-2005.
Tobacco predators and tobacco predators, from competition to holding hands, still aim at competition, but the competition after holding hands seems more rational.
Expand the market field
After the merger, the new Renault USA will become the second largest tobacco enterprise in the United States. Although its market share is still not as good as that of Philip, the industry leader who occupies half of the country? Philip Morris (hereinafter referred to as Philip Morris), but for every three cigarettes Americans smoke, there will be a new Renault American company. Like Andrew, president of Renault? Andrew Schindler said, "With Brown? Williamson's merger will greatly enhance our competitiveness in the American market.
Many economic analysts believe that this merger is unlikely to shake Philip Morris's market position in the United States. On the contrary, the market chaos caused by the merger is likely to make Philip Morris seize more territory in the next two years. But the author believes that Renault and Brown? Williamson's joint efforts will also pose an unprecedented threat to Philip Morris. Let's make a simple analogy. Let two weak tigers kill each other, one strong tiger fights, and neither weak tiger can win the strong tiger. But if two weak tigers who live in peace join hands against a strong tiger, the life of the strong tiger will be hard.
Is this the same as Murphy, Renault and Brown? Williamson has been facing competition from cheap cigarette manufacturers, forcing them to cut prices and increase promotional expenses. However, unlike Philip Morris, both companies lack the economic strength to fight back effectively. In 2002, when Philip Morris with deep pockets began to increase investment in brand promotion, Renault and Brown? Williamson can hardly compete with it. In order to resist the crazy invasion of cheap discount cigarette manufacturers, Renault and Brown? Williamson chose to get married in order to solve the problem of relatively insufficient economic strength.
With the growing tobacco control movement, the marketing model of American tobacco industry has undergone tremendous changes, and the traditional "pull" marketing based on media advertising has gradually been replaced by "push" marketing based on retail terminal promotion. Statistics show that since 1985, the promotion cost of retail terminals has gradually become the largest expenditure of American tobacco companies, and the Master Settlement Agreement (MSA) of 1998 has intensified the battle for retail terminals. The settlement agreement stipulates that tobacco companies cannot use outdoor billboards and cartoon characters to promote their products, and sponsorship and promotion activities are also restricted. In this harsh marketing environment, Philip Morris launched the "Retailer Leader Program" on 1998 with its strong economic strength, and achieved the initial victory in the battle for retail terminals, which made other tobacco companies gnash their teeth, so that Renault teamed up with Brown? Williamson and Lorillard, another tobacco company, sued Philip Morris for monopolizing the market. Taking Philip Morris to court explained two points: first, Renault was very helpless in the face of strong competitors; Second, Renault is unwilling to bow to their powerful competitors. So, Renault and Brown? The purpose of Williamson's merger is also clear: unite to challenge Philip Morris, hold the territory in the battle for retail terminals, recover lost ground and expand the territory.
Adjust brand strategy
The following are the market performances of the top ten cigarette brands in the United States in 2002:
1, Marlboro by Philip Morris, with a market share of 39.0%;
Second place, Newport of Lorillard, with a market share of 7.8%;
Third place, Renault's camel, with a market share of 6.1%;
Fourth place, Daulard of Renault, market share.
5.9%;
Fifth place, Philip Morris's Basic, with a market share of 5.0%;
Sixth place, Winston of Renault, with a market share of 4.7%;
Number 7, Brown? Williamson's GPC market share is 3.2%;
Eighth place, Brown? Kool of Williamson, with a market share of 2.8%;
Ninth place, Salem of Renault, with a market share of 2.4%;
10, Slims, Virginia, Fimo, with a market share of 2.3%.
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