The tobacco industry expected to face difficulties in future sales due to the increase health regulations and decrease in the number of American smokers. Sales started to decline as older smokers started to quit and fewer younger people picked up the habit of smoking. The number of sales of cigarettes fell by 37% from 2001 to 2016.
Although less people were buying, cigarette companies were able to avoid greater losses and even bankruptcy by raising the prices. The average cost for a pack of cigarettes went from $3.73 in 2001, to $6.42 in 2016, increasing the revenue by 32% and an estimate of $93.4 billion. Operating profits of tobacco manufactuers increased by 77% since 2006. Tobacco companies' price-to-earning ratios are roughly 10% higher than it was in 2000.
The tobacco industries were able to avoid great losses in revenue due to decreasing sales by changing the price element of their companies' marketing mix without interfering or changing the actual product. With the understanding of the tarket market, their change in prices were necessary due to the changes and regulations over the years.
https://www.wsj.com/articles/u-s-tobacco-industry-rebounds-from-its-near-death-experience-1492968698
Alan Nguyen
MKTG 3343
In my personal opinion, I think it's good that the sales have decreased due to the health regulations and fewer younger people have people have picked up the habit of smoking.
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