Shop Till You Drop: New Strategies

The news that Philip Morris International, the cigarette people, was trying to buy Vectura, a company that makes equipment to relive sufferers with asthma, COPD and so on, aroused some controversy: “If PMI were to acquire Vectura, PMI could then profit from treating the very illnesses that its products cause.” The sale has now been finalised.

Well, it’s a matter of recognising the linkages at the consumer level. It’s an approach that has already been taken by the makers of a herbicide, who also sold the seeds for crops that were resistant to it. So if you used it to get rid of your weeds, you would also kill your crop, unless it had been grown with the seeds from the same people. And they didn’t miss a trick: they patented those pesticide-resistant seeds. If you bought those seeds, it was with the condition that you were not to use any of the crop as seed for next year: you had to buy new seeds. It was a way of doubling up on the investment.

One man’s conflict of interest is another man’s synergy. The concepts of vertical integration and horizontal integration are well known, but the type of strategy we’re talking about breaks new ground. It catches out the consumer at every stage while ensuring that every stage occurs. We could call it life-cycle integration.
Apparently Philip Morris plan to have more than half their revenues arising from no-tobacco activity. Perhaps they’re going to make another logical investment. The prospects look good for the funeral industry.