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Philip Morris International Product

To deliver a smoke-free future by leading the transformation of the tobacco industry with better alternatives for adult smokers

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To deliver a smoke-free future by leading the transformation of the tobacco industry with better alternatives for adult smokers

Strengths

  • INNOVATION: Strong R&D capabilities with $495M investment (2023)
  • PORTFOLIO: Market-leading IQOS platform with 28.6M users globally
  • SCALE: Robust global distribution network across 75+ markets
  • SCIENCE: Comprehensive research program with 465+ publications
  • TALENT: Deep expertise in product development and commercialization

Weaknesses

  • CONCENTRATION: Heavy dependency on single IQOS platform success
  • PRICE: Higher entry costs creating adoption barriers for RRPs
  • COMPLEXITY: Regulatory approval processes slowing market expansion
  • EDUCATION: Consumer awareness/understanding gaps about RRPs
  • LEGACY: Organizational resistance to transformational changes

Opportunities

  • EXPANSION: 1B smokers globally represent massive conversion potential
  • DIVERSIFICATION: Expand beyond tobacco into wellness categories
  • REGULATION: Science-based policy frameworks enabling alternatives
  • PARTNERSHIPS: Strategic alliances to accelerate innovation pipeline
  • PERSONALIZATION: Tailored product experiences via digital ecosystem

Threats

  • COMPETITION: Increasing RRP market entrants and imitation products
  • REGULATION: Potential restrictive policies limiting market access
  • PERCEPTION: Negative public sentiment affecting innovation adoption
  • TECHNOLOGY: Disruptive innovations from non-traditional players
  • MISINFORMATION: Confusion about relative risks of different products

Key Priorities

  • ACCELERATION: Diversify smoke-free portfolio beyond core IQOS
  • ACCESSIBILITY: Reduce adoption barriers through innovation design
  • EDUCATION: Enhance consumer understanding of RRP benefits
  • ECOSYSTEM: Develop integrated digital experience across portfolio
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To deliver a smoke-free future by leading the transformation of the tobacco industry with better alternatives for adult smokers

DIVERSIFY FUTURE

Expand our smoke-free portfolio beyond core offerings

  • INNOVATION: Launch 2 new platform prototypes with distinct value propositions by Q3, reaching 1.5K test users
  • ACCESSIBILITY: Develop 3 new entry-level device options at 30% lower price point than current offerings by Q2
  • ECOSYSTEM: Establish integrated cross-device digital platform with 85% of features available across platforms
  • SEGMENTS: Create product roadmap addressing 3 distinct consumer segments with 90% coverage of adult smokers
ACCELERATE ADOPTION

Lower barriers to smoke-free product conversion

  • EXPERIENCE: Reduce new user onboarding time by 40% through simplified setup process by end of quarter
  • TRIALS: Increase trial-to-adoption conversion rate from 22% to 30% through improved first use experience
  • DISTRIBUTION: Expand smoke-free product access points by 25% in priority markets through new channels
  • RETENTION: Implement cohort-based retention tracking system with target of 85% 6-month retention rate
EDUCATE CONSUMERS

Build understanding of smoke-free benefits

  • MESSAGING: Develop science-based communication framework with 90% user comprehension in testing
  • CONTENT: Create educational content library covering 100% of top user questions with 8M views target
  • COMMUNITY: Launch peer-to-peer support program in 5 key markets with 25K active participants
  • PERSONALIZATION: Deploy AI-driven content targeting with 30% improvement in engagement metrics
UNIFY PLATFORMS

Create seamless digital product ecosystem

  • ARCHITECTURE: Complete unified data platform design with implementation roadmap by end of quarter
  • INSIGHTS: Deploy analytics dashboard capturing 95% of key user journey metrics across all products
  • PERSONALIZATION: Launch algorithm-based personalization engine improving engagement by 35%
  • INTEGRATION: Achieve 90% API coverage across product portfolio enabling ecosystem interoperability
METRICS
  • SMOKE-FREE REVENUE: 45% of total revenue by Q4
  • USER ACQUISITION: 4.5M new users in fiscal year
  • RETENTION RATE: 80% six-month retention across platforms
VALUES
  • Excellence in innovation and product development
  • Scientific rigor and evidence-based approach
  • Consumer-centricity in design and experience
  • Responsible market conversion strategies
  • Operational agility and continuous improvement
Philip Morris International logo
Align the learnings

Philip Morris International Product Retrospective

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To deliver a smoke-free future by leading the transformation of the tobacco industry with better alternatives for adult smokers

What Went Well

  • GROWTH: IQOS user acquisition exceeded targets with 28.6M users (+3.1M YOY)
  • EXPANSION: Successful market entries in key strategic regions above plan rate
  • REVENUE: Smoke-free products reached 36.4% of total revenue (+4.8 pts YOY)
  • MARGINS: Improved gross margins on RRPs demonstrating premium positioning
  • INNOVATION: On-time launch of next-generation IQOS ILUMA platform globally

Not So Well

  • ADOPTION: Conversion rates in specific markets below forecasted targets
  • COMPETITION: Market share erosion in key regions from emerging competitors
  • PRODUCTION: Supply chain constraints limiting full potential of new releases
  • REGULATORY: Unexpected policy changes delayed planned market expansions
  • COMBUSTIBLES: Faster than expected decline in traditional product volumes

Learnings

  • PRICING: Price sensitivity varies significantly across different user segments
  • RETENTION: Ecosystem advantages dramatically improve user retention rates
  • MESSAGING: Scientific claims require simplified communication frameworks
  • CHANNELS: Digital-first engagement strategies outperform traditional paths
  • SUPPORT: User support quality directly correlates with conversion success

Action Items

  • ECOSYSTEM: Accelerate development of comprehensive digital user experience
  • PORTFOLIO: Expand entry-level smoke-free options to reduce adoption barriers
  • EDUCATION: Enhance science communication through simplified user messaging
  • EXPANSION: Prioritize resources on highest growth potential market segments
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To deliver a smoke-free future by leading the transformation of the tobacco industry with better alternatives for adult smokers

Strengths

  • DATA: Extensive user behavior data from 28.6M IQOS users globally
  • INFRASTRUCTURE: Established digital platforms for AI integration
  • RESEARCH: Advanced scientific capabilities supportive of AI models
  • INVESTMENT: Strong financial resources for AI technology adoption
  • TALENT: Growing digital/data science capabilities across organization

Weaknesses

  • FRAGMENTATION: Disconnected data systems limiting AI capabilities
  • ADOPTION: Varying digital maturity across global market operations
  • SKILLS: Talent gaps in specialized AI/ML engineering expertise
  • GOVERNANCE: Underdeveloped AI ethics and governance frameworks
  • LEGACY: Technical debt in existing product technology stacks

Opportunities

  • PERSONALIZATION: AI-driven customized user experiences
  • FORECASTING: Predictive analytics for supply chain optimization
  • DEVELOPMENT: Accelerated R&D cycles through simulation models
  • ENGAGEMENT: Enhanced user retention via intelligent interventions
  • COMPLIANCE: Automated regulatory monitoring and response systems

Threats

  • PRIVACY: Increasing global data protection regulations
  • ETHICS: Scrutiny around responsible AI use in sensitive categories
  • COMPETITION: Fast-moving tech companies entering wellness space
  • SECURITY: Growing sophisticated cybersecurity threats to user data
  • PERCEPTION: Public concerns about AI-powered behavior targeting

Key Priorities

  • INTEGRATION: Build unified data platform across product ecosystem
  • EXPERIENCE: Develop AI-powered personalization capabilities
  • ACCELERATION: Apply AI to compress product development cycles
  • COMPLIANCE: Create responsible AI framework for sensitive industry