Philip Morris Cos., New York City, will offer buydowns to more retailers this month to compete with low-price competitors. The tobacco company last week told analysts that competition from low-priced imports, higher taxes, and the bad economy may keep it from reaching earnings targets for next year. PM boosted promotion spending for the fourth quarter, and will offer promotional pricing to more stores this month, reports the Associated Press. PM is expected to use coupons and other offers to compete on price, rather than an across-the-board cut. (Its 1987 price cuts triggered spiraling prices-and profits-across the industry.)
Some analysts told AP that Philip Morris may have trouble introducing price increases next year; as market-share leader, it traditionally is the first to raise prices, and competitors follow up with their own price hikes. But cheap imports make that tack difficult.
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