In January 2003, Philip Morris USA announced a wholesale price promotion of $0.65 per pack on Marlboro cigarettes. As a result, the company's first-quarter U.S. cigarette shipments fell 16.1% relative to the first quarter of 2002. Relative to the fourth quarter of 2002, however, Philip Morris's share of industry shipments rose from 48.3% to 49.7%. Several important decisions must be made. Should the promotion be extended? Should the promotion be replaced with a permanent cut in wholesale prices? Should the prices of the company's discount brands be altered in any way?
