CORPORATE CASE STUDY: How the former Philip Morris faced its image issues

When Philip Morris replaced its highly recognized company name with a made-up word, a major marketing effort was in order. But as Matthew Creamer reports, Altria's communications work is far from complete.

When Philip Morris replaced its highly recognized company name with a made-up word, a major marketing effort was in order. But as Matthew Creamer reports, Altria's communications work is far from complete.

Across the street from New York City's Grand Central Station stands a skyscraper distinguished from its towering neighbors mainly by the corporate logo emblazoned near its entrance. That logo, a polychromatic grid of squares, suggests a calmer version of the work of the painter Piet Mondrian, whose primary-colored rectangles portray a feeling of undulating movement meant to evoke the vibrancy of city life. The logo in question has nothing to do with the long-dead Dutch painter, of course, but everything to do with the possibilities of movement and change. As the symbol for Altria Group, the holding company for Kraft Foods' and Philip Morris' American and international operations, the design is just one sign of a remarkable metamorphosis that has taken place over recent years. What was known as Philip Morris Companies (PMC), a collection of food and tobacco conglomerates that own some of the world's best-known brands, was last year rechristened Altria. That move, according to company executives, was intended to capture the evolution of a parent company that has changed dramatically over the course of a life that's short compared to the pedigree of some of its properties, which reach back to the 18th and 19th centuries. Time for a change PMC was formed in 1985 as a holding company for operating properties that included not only tobacco companies that manufacture and market brands like Marlboro and Virginia Slims, but also beverage giants Miller Brewing and 7-Up Co. In quick succession, it snapped up Kraft and General Foods, combining them into the world's largest food company, into which it would soon fold Nabisco. In 1992, operating companies of PMC had income that topped $10 billion. And by that point, the name of the London tobacconist that prospered in the mid-1800s was already ill-suited to represent a global company whose varied line of brands ran from Chesterfield and Basic to Oreo, Oscar Mayer, and Tang. By the end of the decade, as tobacco litigation became regular front-page news, the name had become a liability. In January 2003, with the support of its shareholders, Philip Morris Companies officially became Altria Group. One year later, after a major advertising and communications effort to spell out to the media and investment community the rationale behind replacing one of the best-known business names with a made-up word, the work is far from done, but the reasoning is still clear. "The name change was about better defining the corporate structure to reflect the evolution of the corporation and really look ahead to the future and how we can better define ourselves," says Michael Pfeil, Altria's VP for corporate communications. Self-definition may not seem like such a challenging goal for a company with such vast resources and marketing prowess. After all, it would appear that any company possessing even a fraction of the sway and savvy needed to make a chalky-tasting orange drink made from jarred granules a household word should be able to create its own public image. For a long time, however, the opposite was true, at least at the level of the parent company - and much of that had to do with PR. This wasn't only a function of the complicated corporate structure or the diversity of its properties, but the clamped-down nature of its relationship with the media. Years of negative stories on the health effects of tobacco, congressional hearings with Big Tobacco executives and, of course, massive lawsuits filed by states and individuals had led the company to hunker down when reporters came calling. And that allowed the company to be defined by its antagonists - antismoking activists, cancer victims, and public health experts. "For a long period of time," says Pfeil, "'no comment' was a fairly standard media response for us. One of the things we learned is that 'no comment' says a lot. If you look at ways to ensure our operating companies had permission by society to continue to operate, it was important that we opened ourselves up and began to listen and began to engage." Pfeil can talk about this attitude in the past tense because what amounts to a sea change has swept over the company's communications philosophy. Speaking recently about this, in a conference room on the 25th floor of the Altria building, the company's PR executives, who lead a communication department of 24 employees and ensure that messaging for all of the operating companies is coordinated, are blunt. Rather than blame the media for the perception of the company, they offer a self-account that is in effect an object lesson on the perils of a corporation choosing not to communicate during a time of crisis. But as importantly, it's a lesson on how communications efforts can be rehabilitated. Action over words In Altria's case, the rehabilitation began four or five years ago when the board of directors, frustrated by the company's image, ordered a change. Says Pfeil, "We went from being one of the most respected corporations in America to being reviled, particularly because of the tobacco business. There was a tremendous amount of news regarding the industry that over time had this effect on the reputation of the corporation. There was a strategic decision that we needed to find a seat at the table." That meant, in addition to answering reporters' questions and building relationships with them, taking advantage of other basic ways of communicating, such as launching corporate websites, putting company executives in front of the public at speaking engagements, and launching a corporate advertising campaign. More than just showing that Altria is a more engaged company, these efforts highlight concrete steps taken to make its companies more responsible. "Public relations is only as good as the behavior behind it," says David Sylvia, Altria's director of external communications. "There needs to be the action to back it up." In particular, Pfeil points to Philip Morris USA's support for Congress giving the FDA authority to regulate tobacco products. Stories like this, which fly in the face of the company's historical position, grab the media's attention, but they also have an impact on an important slice of the public: Altria's almost 170,000 employees worldwide, a group that was most certainly put off by the closed-mouth PR approach. "We didn't realize at the time the impact it had on our employees or their morale," says Janine Rosen, Altria's director of internal communications. "They felt the good story the company had to tell wasn't being told. They would go to cocktail parties and hear things like, 'How could you work for that company?' They were frustrated that people didn't know all the good things the company did." The opened-up communications philosophy, combined with the name change, has had a positive effect on public perceptions of the company, according to Tim Robinson, managing director at CoreBrand, a branding firm that does some work for Altria. What made the process of changing the name stand out, he says, is that it didn't mean that Altria was backing away from the tobacco business as it tried to better represent the makeup of the company as a whole. "The effect of the stand they've taken has to improve the reputation of the company a bit," Robinson says. "Philip Morris Companies as a business had a lot of weight and momentum, and a lot of that momentum was headed downhill. Changing the name has allowed them to create new perceptions about the holding company that separates that business from the tobacco legislation issues." While Altria's rank and file can be more comfortable with the profile their employer cuts, the company's communicators are far from complacent about its future communications needs. "It's just like building any brand," says Sylvia. "The name change was a project; we had to get new business cards out there and change the signage. But just as Kraft talks about building the Oreo brand, we're building the Altria brand. One never stops managing a brand. If you do, it dies." ----- PR contacts VP of corporate communications Michael Pfeil Director of external communications David Sylvia Director of internal communications Janine Rosen

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