Phillip Morris International Distribution Strategy Research Paper

Phillip Morris International Inc. (PMI) is a global tobacco and cigarette company based in the US. Its products are distributed to more than 200 countries. It has 12 products in the market and thus offers massive employment for about 80,000 people in both sales and production. It owns about 50 manufacturing facilities. It also maintains a manufacturing relationship across 23 markets with 23 third-party manufacturers. The international cigarette marketsituated away from the US receives 15.5% of the company’s products(Penny, 2016). The company’s largest manufacturing factories are in Philippines, Russia, Mexico, Turkey, Argentine and Germany. Among all its products, the best-selling product is Marlboro which was imported to the country in 1975.

PMI was an operating company of Altria Group before the spin-off in 2008. The company now has it’s headquarter in Lausanne, Switzerland. The company boasts of owning the 7 among the 15 best tobacco brands in the world(Bialous, & Peeters, 2012).

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PMI uses several distribution channels which areapplied globally. It also has several distributors in different countries. Its products are distributed in retail chains, gas stations and supermarkets as well.The distribution channels include direct distribution and sales, distribution of their products through the single and independent distributors, the distribution through the regional and national wholesalers and an exclusive zonified distribution(Penny, 2016).This is so because it has a very wide market and very high demand.This range of distribution as well enables the company to make distribution directly to the retailers in the single market.This also enables PMI to attain a suitable return in their investments.

This company uses an exclusive distribution strategy(Penny, 2016). This is an extreme form of selective distribution where one retailer, distributor or distributor is used in a specific geographic area (Trivedi, 1998). The firm distributes its brand to either one or two major outlets in the regional markets who deal exclusively in their products and not the other competing products. This is thus an exclusive distribution strategy. This form of distribution is common in brands they have a high prestigious image (Trivedi, 1998). In Serbia for example, a company by the name Nelt is the exclusive distributor of the Philip Morris brands which was effective from 16th July 2016. It thus became the official distributor of Marlboro and other products owned by the company.

The company hopes that by granting the exclusive distribution rights, they will have control over the promotion, intermediaries’ price, service policies and credit inventory. It is clear that the company is selective about the types of partnerships it makes with its distributors. Like for the case of Nelt in Serbia, they became an exclusive distributor for PMI after 2-year successful partnership in different areas.

The managing director for PMI in Serbia stated that the introduction of the exclusive distributor was a very important business initiative carried out by PMI ever since it started business in the country. He believes that this partnership will grant the company more flexibility and also will enable them enhance their competitiveness in the environment which is now very dynamic(Bialous, & Peeters, 2012). The reason why Nelt was selected was not only because of the trust they gained in the two-year partnership but also because Nelt was a leader in the region in terms of logistics and distribution.

In 1993 up to 1999, PMI has set up a contract with Michael Pepper who was to be responsible for carrying out the company’s distribution of its products. He operated a logistics and vehicle fleet company which was operating in Russia, Poland, Hungary, Israel, Kazakhstan, Almaty, Slovak Republic, Czech Republic, Ukraine, Belarus and Romania. In 2001 however, PMI requested him to move to Asian Region so as to focus on their fleet distribution in this region as well. Up to this date, he has undertaken the distribution in Taiwan, Malaysia and Philippines. (Bialous, & Peeters, 2012).

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