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The heat is on

Philip Morris International changes marketing approach, shifts to B-to-C
By: - Assistant Business Editor / @CNarismaINQ
/ 04:10 AM February 21, 2020

Nuno Fazenda, PMI scientific engagement manager, discusses the process of developing evidence to back claims of risk reduction. —PHOTOS BY CORRIE SALIENTES-NARISMA

Unsmoke: If you don’t smoke, don’t start; if you smoke, quit; if you can’t quit, change.

That is what tobacco giant Philip Morris International (PMI) is advocating, now that it has been taking steps to veer away from what used to be its sole source of revenue—cigarette making—and transform its business into one that will provide “less harmful” alternatives to cigarettes.

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The company is convinced it has so far the best “smoke-free” product that smokers who can’t quit can turn to when craving for a smoke becomes too strong. It is called IQOS, a battery-powered tobacco heating system, and the heat sticks that go with it (called HEETS)—the concept that came to fruition after almost two decades of research, clinical and technical studies and product development.

PMI now has several factories converted or new ones built to produce the IQOS heat sticks, and equipment contract manufacturers tapped to produce the heating device.

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The big challenge now, however, is in reaching its target markets, as it limits its target users to adult smokers only, while making the product virtually invisible to minors, nonsmokers and the quitters.

IQOS is classified as a tobacco product in the Philippines and elsewhere in the world. As such, rigid marketing and advertising restrictions apply.In the Philippines, where IQOS will be officially launched in the second quarter of the year, traditional advertising (such as in TV, radio, newspapers, magazines, pamphlets and flyers, billboards and posters) is not allowed for tobacco or cigarettes.

To address issues like this and in line with its business transformation, PMI is also changing its marketing approach from the business-to-business model of cigarette sales to a business-to-consumer commercial approach. While in the past, the producer dealt only with its distributors/wholesalers who took care of the retailers, the business-to-consumer approach calls for direct marketing to the users.

For smoking adults only

Now available in 52 markets and used so far by 12.4 million consumers, IQOS is being promoted and sold in special boutiques. Officials said the device is exclusively sold in the IQOS boutiques, which also sell the heat sticks. The heat sticks can be made available in traditional tobacco stores, as done in other countries now.

The boutiques screen their clientele guided by PMI’s “Good Conversion Practices,” to ensure that only existing smo­kers can get hold of the heating device and that they are made well aware of the facts that IQOS, although less harmful than cigarettes, still contains nicotine and is not risk-free.

The boutiques also provide the opportunity for the company to explain the product and demonstrate how it is used since IQOS is a new product that requires introduction and a lot of explanation.

Other markets make use of one-on-one and group meetings such as launch parties and other after-hour events to introduce and promote the product. There are membership services such as access to IQOS website, customer support, map of retail location and product catalogue for those who acquired the device.

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Serge Maeder, global head of PMI product research, shows how a lab equipment for IQOS testing works.

Electronic testing system that shows the amount of smoke emitted while burning a cigarette compared to what is produced while using IQOS. It is used for demos in some of the IQOS boutiques

Since IQOS has yet to be launched in the country, the Philippine unit of PMI—Philip Morris Fortune Tobacco Corp. or PMFTC—still cannot move to promote the product. It has, however, started in July last year an awareness campaign on its Unsmoke advocacy via focus group meetings and discussions.

PMFTC initially focused on business process outsourcing companies (BPOs) and has so far done, in coordination with the companies involved, at least 10 meetings with BPO workers. The campaign is still ongoing.

PMFTC manager for communications Christian Obmerga stresses these meetings are geared toward creating awareness on the campaign and not toward promoting the product yet. He says “commercialization” can be done later when the governing rules for the sale of IQOS are out and the go signal is given.

Like its peers in other countries, the local PMI unit intends to put up IQOS boutiques/stores in strategic areas. Promotion of the products will likely be done at points of sale, including traditional tobacco stores. It may also make use of its existing products to promote conversion to IQOS among smokers of PMI cigarettes.

The Internet may serve as another avenue that the company may use in reaching out to its target markets.

Heat not burn

PMI claims IQOS is less harmful than cigarettes because it just heats and not burns the tobacco. Quoting results of studies and researches, the company says the primary cause of smoking-related diseases is not nicotine but the inhalation of harmful and potentially harmful elements formed as a result of burning tobacco.

Because the sticks are heated, the company claims IQOS contains 95 percent less chemicals compared to the level found in cigarettes. Scientific studies, it also says, shows that it doesn’t impact on the environment, even in closed rooms. Whatever smoke it emits dissipates easily.

With IQOS and, perhaps the other products PMI is currently developing, the company dreams of eventually stopping selling cigarettes one day although, as PMI senior global communications manager Mario Barreto says, no one can still say when.

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