SgLEM B$AN ..D REVI EW *
20-YEAR MARKETING HISTORY
0 UCTION
A. PURPOSE
l. REVIEW THE HISTORY OF SALEM AND MENTHOL
CATEGORY COMPETITION TO PROVIDE AN
U1EDEnSTAND I NG OF CURRENT MARKET
PERFORMANCE .
2 . Focus ON PROBLEMS/OPPORTUNITIES IDENTIFIED
FOR SALEM IN MID-70'S TO ESTABLISH
FOUNDATION FOR BRAND'S CURRENT MARKETING
, STRATEGY .
0
-,
,
INTRODUCTION
B. FORMAT
I . SALEM 'S INTRODUCTION IN 1956II . THE EARLY YEARS : 1956 - 1963
III . KOOL'S GROWTH : 1964 - 1970IV. THE POST BROADCAST BAN YEARS : 1971 - 1974V . A NEW STRATEGY : 1975 - 1976
VI . 1977 AND THE FUTURE -
1 . SALEM 'S INTRODUCTION
A . STATE OF THE BUSINESS IN 1956B . SALEM 'S INTRODUCTION6 PRODUCT ~
0 POSITIONINGAREATIVE STRATEGY
6 ADVERTISING
SPENDING
STATE OF THE BUS I idESS I N 1956
0 INDUSTRY VOLUME HAD REACHED 382 BILLION UNITS IN 1955
® FILTERS HAD EMERGED AS THE NEW GROWTH CATEGORY BY 1956
o LENGTH PREFERENCES WERE CHANGING FRON 70MM TO 85MP1 .
0 MENTHOL CATEGORY (NON-FILTERS) SOM FLAT AT 3 .1%
CATEGORY TRENDS
CATEGORY
NON-FILTER.
-NFFMENTHOL (NON-FILTER)
LFFOTHER
TOTAL
STATE OF THE BIIS H-JESS i N 195 6
MENTHOL CATEGOR
Y 0 MENTHOL CATEGORY COMPOSED OF ONLY ONE BRAND (KOOL NON-
FILTER )
o KOOL REGULAR IN THE MARKET SINCE 1933 (70MM NON-FILTER) .
KOOL KING SIZE (85MM NON-FILTER) INTRODUCED IN 195 4
o KOOL ADVERTISED AS A "SPECIAL PURPOSE"/THERAPEUTIC/
MEDICINAL PRODUCT ("THROAT HOT? SMOKE KOOL!" )
0 MENTHOL ATTRIBUTE HAD NO BROAD, GENERAL APPEAL{
.
. O
St] LE!J ~_LiLL1OD Ststl_i__tZl1
THE SALEM PRODUCT
THE SALEM PRODUCT WAS UNIQUE ; A SIGNIFICANT DEPARTURE FROM
THE KOOL PRODUCT .C•
PHYSICAL CHARACTERISTICS.
. . . . . .~,HARACTER I STI C SALEM ` KQo-LLENGTH H5MM $5MM
FILTER YES NO •
MENTHOL LEVEL .Z9% (MILD) .37% ( STRONG)
TIPPING WHITE CORK .
SALEM'S INTRODUCTION
IH.F SALEM PRODUCT_
0 .THE SALEM PRODUCT INCORPORATED AN EXPENSIVE, HIGH-QUALITY
TOBACCO BLEND AND WAS BETTER CONSTRUCTED THAN THE KOOL
PRODUCT .
TYPEToBACCo,BURLEY
FLUE-CURED
TURKI SH
RECONSTITUTED
STEMS
0 PERCEPTIONS
BLEND COMPARISON
SALEM
f
S~ wu~
27% 21%34 % 46'14% 5%25% 12%0% 16%
K94L0 SMOOTHi MI LD 0 HARSHj STROPJG ;
O SLOWER BURNING i FASTER BURNING ;
O-BALANCE OF MENTHOL 0 STRONG MENTHOL
AND TOBACCO TASTE TASTE
.
r
_ .,
. SALEM' S INTRODUCT i O;I
IHE SALEM PRODUCT
I
THE SQLE~'~ PRODUCT WAS DES I GPIED TO OFFER SMOKERS A NEW,
MORE REFRESHING, ENJOYABLE EXPERIENCE IN SMOKING
0"LI GHT AND MI LD't BLEND
0 MILD MENTHOL LEVEL
0 WHITE FILTER TIP
rx
.
S LA EM's INTRODUCTIONSALEM vs KooL1956 SPENDING
D NSPENDING
SHARE OF CATEGORY $
SHARE OF INDUSTRY $
SALEM K~.aL$4,4MM $4 .5MM49% 51%3.1% 3.2%
I
.
, ALEM's I.PJTRODUCT ION
COMPETITIVE ACTIVITY
~~
KOOL RESPONDED TO SALEM 'S INTRODUCTION BY LAUNCHING ANg5MM FILTER VERSION IN .JULY, 1956 .
i
.SUMMARY : 1956
M ENTHOL CATEGORY SOM ONLY -') . 1I IN 195 5
® KOOL ONLY MENTHOL BRAN D
o SALEM INTRODUCED IN APRI L
o SALEM PRODUCT DIFFERS FROM KOO L
e SALEM POSITIONING/CREATIVE STRATEGY IS UNIQUE
o SALEM INTRODUCTORY SPENDING LEVEL EQUALS KOOL ' S
0 K40L FILTER INTRODUCED IN JULY
,x,
0
THE EARLY YEARS : 1956 - 1963
STATE OF THE BUSINESS
MARKETING MIX
0 SPENDING
® CREATIVE STRATEGY
C . CONSUMER DYNAMICS
1/~~
4)
STATE OF THE BUS I NESS
MAJOR EVENTS
1956 - 1963
1 . INTRODUCTION OF COMPETING MENTHOL BRANDS
2. MENTHOL CATEGORY UNDERGOES DRAMATIC GROWTH
3. SALEM LEADS GROWTH AND DOMINATES CATEGORY
LEVELING IN SALEM's GROWTH FIRST APPEARS LATE IN PERIOD
_,!
STATE OF THE R[1VJ l l"+ E J~,
NEW BRAND INTRODUCTIONS
1956 - 1963 .
EMERGENCE OF A NEW CATEGORY : FILTER-TIPPED MENTHOL
NEWPORT KING
OASIS
SPRING
ALPINE
BELAIR KING
PAXTON
MONTCLAIR
1957195719591959196019631963
. . . .'• , .
50310 6547
\T.. -7' ~ -7
.0~
-r T 7"7--T ..~.
- • -• ': - - - -....» .. ----.. . . .._ ....... ..L .. . . .,...~1..r-,,.. .~... . .~ rP.~.:.+r+•,, ~wrn...". ow^ t""'.*.'!...".. 84 - ~
. . • ~.
I
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. .•., .,r ...f
. . .. .. ~.*,S . .. ~
~'~,iJ~~.~~~~~"""'.,tt ~ . .Tvjoll'`- ,
T
®
i
4
1
STATE OF THE BI!SINESSCATEGORY TRENDS
CATEGORY
1956som
1963__Sam
SHARE PT,
NON-FILTER 67 .8% 41,0% -26 .8
NFF 24 .2 . 30 .4 + 6 .2
MENTHOL FILTER 1 . 5 15 .6 +14 . 1MENTHOL NON-F I LTER _2A .6 - 2,2
TOTAL MENTHOL 4,3 16 .2 +11 .9
LFF 2 .8 12 .0 + 9 .2
OTHER ~~ .l{ - .5
TOTAL 100.0% 100,0%
s
STATE OF THE BUSINESSSALEM i vs KoOL
BY BRAND STYLE
1956 1963 SHARE PT .BRAND STYLE --sm sm Af1'GECHANGE
TOTAL SALEM 1 .0% :
_
8 .7% +7 .7
,KOOL REGULAR 1 .7 .6 -1 .1
KOOL KING 1,1 : - -1 .1KOOL FILTER __,4 _ 2 .6 +2,2
TOTAL KooL 3 .2% 3 .2% NC
TOTAL MENTHOL 4 .37 16 .2% +11 .9
o SALEM SOC IN 1963 REACHES 54%
© SALEM & KOOL (COh1BINED) SOC is 73%
STATE OF THE BUS I PdESSSUMMARY
o SALEM STIMULATES GROWTH OF MENTHOL CATEGORY :
4 .3% SOM IN 1956 To 16 .2% SOM IN 1963 .
® SALEM CAPTURES 54% OF MENTHOL CATEGORY
(ALL-TIME HIGH) W ITH 8 .7% SOM,
KOOL SOM REMAINS FLAT,
® SALEM AND KOOL, COMBINED, ACCOUNT FOR 73%
OF CATEGORY .
4)
SALEM'S INTRODUCTION
POSITIONING/CREATIVE STRATEGY
ADVERTISING AGENCY
WILLIAM ESTY COMPANY
POSITIONING/STRATEGY
A NEW, UNIQUE .CIGARETTE THAT ALL SMOKERS CAN ENJOY . . A
CIGARETTE THAT MAKES SMOKING MORE REFRESHING AND MORE
PLEASURABLE . UNIQUENESS : MENTHOL BLEND AND FILTER TIP,
CBMPAiGN
© HEADLINES - "A NEW IDEA IN SMOKINGf"
"SALEM REFRESHES YOUR TASTE"
0 COPY POINTS
- MENTHOL FRESH
- RICH TOBACCO TASTE
- MODERN FILTER
s
.
N
a~. ~W
r
01
MARKETING MIXCREATIVE STRATEGY
® , TRATESY
0 SPECIAL, THERAPEUTIC APPEAL
0 APPEAL ONLY TO SMOKERS WITH A't PROBLEM"
0 ADVERTISING CAMPAIGN
0"THROAT HOT? SWITCH FROM 'HOTS' TO KOOLS "(1956 - 1963)
0 COPY POINTS; -
8"BREAK THE HOT C IGARETTE H/',BIT"
0 rOR A COLD
0"EXTRA COOLNESS IN YOUR 1'HROAT"
y
-ti
s
MARKET I NG M IXCREATIVE STRATEGIES
OTHER BRANDS
BRAND YEAR STRATEGY ADVERTISING CAMPAIGN
.NEWPORT 1957 DIFFERENT MENTHOL TASTE "HINT OF MINT"
1959 ADOPTS REFRESHMENT
POSITIONING
"REFRESHES WHILE YOU SMOKE
OASIS 1957 SMOOTH NEW TASTE "SOOTHING MENTHOL MIST,
FRESHEST NEW TASTE"
BELAIR 1959 A DIFFERENT CIGARETTE "BREATH EASY . . . SMOKE CLEAi :
1960 A DIFFERENT CIGARETTE "SMOKE TWICE AS REFRESHED"
ALPINE 1959 POSITIONED FOR MEN "WHO PUT THE i iEN I N MENTHO :
SMOKING"
SPR I NG 1959 Low TAR/H I GH MENTHOL "SPRING . .,THE AIR-CONDITIO :
CIGARETTE"
MONTCLA I R 1963 MENTHOL S'I I TH CHARCOAL
FILTER
"CHAR-COOL FILTER"
PAXTON 1963 DOUBLE FILTER (BACK-TO_
BACK) HUMIFLEX PACK
"PAXTON .,,FOR TODAY'S
SMOKING NEEDS"~0WJ
LAN
MARKETING f1IX
MEDIA SPE'JD I NG
1956 - 1963
o SALEM SPENDING INCREASES RAPIDLY, REACHES $20[1i1 LEVEL IN 1963 .
G KoOL SPENDING REMAINS FLAT, CONSISTENT WITH NO SOM GROWTH
o No MAJOR DIFFERENCES IN SALEM/K00L MEDIA MIX~t
SALEM KooL$ ~p $ % IND
1956 4 .4 3 .1 4 .5 3 .21957 6 .6 3 .9 5 .9 3 .51958 9 .3 4 .6 7 .3 3 .61959 17 .1 7 .9 . 5 .1 2 .31960 15 .2 6 .9 4 .9 2 .21961 18 .0 8 .3 7 .3 3 .31962 18 .3 8 .2 6 .5 2 .91963 20 .8 8 .4 6 .7 2 .7
MARKETING MIX
SUMMARY
1956 - 1963
SALEM ENTERS PERIOD OF HEAVY MEDIA SPENDING AS
BRAND GROWS . SALEM SPENDING DOMINATES KOOL SPENDIPJG .
~ CREATIVE STRATEGY EXTENDS BRAND'S MENTHOL REFRESHMENT
BENEFIT BEYOND KOOL'S LIMITED, THERAPEUTIC POSITIONING
TO APPEAL TO ALL SMOKERS .
o NEW BRANDS ADOPT SIMILAR "REFRESHING" COPY CLAIMS
CO'VSUMER DYNAM I CS
BRAND DEM G APHIC PROFILES
1956 - 1963
e SALEM, KOOL AND OTHER MENTHOL BRANDS DEVELOPFEMALE PROFILE .
COtJSUMER PROF I LE
DEMOGRAPHY SALEM KQOj„ TOTAL MENTHOL
ul
MALE
FEMALE
47% 44745%
[5iTl55
CONSUMER DYNAMI CSBRAND DEMOGRAPHIC PROFILES
1956 - 1963
.
o KOOL FRANCHISE SLIGHTLY OLDER (50+) THAN SALEPI FRANCHISE .
CONSUMER PROFILE
DEMOGRAPHY SALEM KooL
kE18 - 24 6%25 - 34 2835-49 41. 50+ 25
2638
I 31 I
10TAL MENTHOL
6%284026
0
~O~ .
• .r
CONSUMER DYNAM I CS
BRAND DEMOGRAPHIC PF,OFILES
1956 - 1963
o ALL MENTHOL BRAND SMOKERS TEND TOWARD LIGHTER CONSUMPTION .
CONSUMER PROFILE
DEMOGRAPHY
SMOKING EREQUENCY
HEAVY
AVERAGE
LIGHT
SALEM 00 TOTAL flENTHOL
18% 19% 18%28 36 3054 45 52
SUMMARY
1956 - 1963
~ IN EIGHT YEAR PERIOD, MENTHOL CATEGORY BECOMES MAJOR
MARKET SEGMENT WITH 16 .2% SOM .
© SALEM ATTAINS 8 . 7 % SOM WITH KOOL AS ONLY SIGNIFICANT
COMPETITIVE BRAND AT 3 .2% SOM .
o BY 1963, SALEM GROWTH LEVELING, KOOL SOM SHOWS NO GROWTH .
o SALEM's CREATIVE POSITIONING APPEALS TOALL SMOKERS .
o NEW BRAND ENTRIES ADOPT SALEM's REFRESHMENT STRATEGY .
© SALEM MEDIA SPENDING INCREASES, DOMINATING KOOL AND
CATEGORY .
0 MENTHO_ CATEGORY SKEWS TO OLDER FEMALES/LIGHT SMOKERS .
r
_ ~ .
0
III, KooL's GROVrTH : 1964 - 1970
A. STATE OF THE BUSINESS
MARKETING MIX
0 POSITIONINGAREATIVE STRATEGY
0 SPENDING/MEDIA MIX
C . CONSUMER DYNAMICS : REASONS FOR KOOL'S
GROWTH AND SALEM'S FLAT SOM
t
Lol. o
aN
v+r
STATE OF THE BUS I PIESS
MAJOR EVENTS
1964 - 1970
0 INDUSTRY GROWTH DROPS IN 1964 (SURGEON GENERAL'S REPORT)
AND REMAINS FLAT THROUGH LATE 60's
0 PERIOD CHARACTERIZED BY HEAVY SEGMENTATION OF MARKET
© IOOMM LINE EXTENSIONS LAUNCHED WITH INTRODUCTION OF SALEM
LONGS, KOOL LONGS, AND NEWPORT 100'S
0 . NEW 1OOMM BRANDS INTRODUCED
o NON-MENTHOL BRANDS INTRODUCE MENTHOL BRAND EXTENSIONS TO
ENTER .THE GROWING CATEGORY
© WOMEN'S CIGARETTES INTRODUCED
® Low TAR BRANDS EMERGE
0 GROWTH OF FILTERS, MENTHOL AND IOOMM CATEGORIES
0 KCOL BEGINS GROWING. GROWTH ACCELERATES DRAMATICALLY .
SALEM FLAT .
STATE OF THE BUS INESS -NEW BRAND INTRODUCTIONS
1964 - 1970 - .
MAJOR MENTHOL SPIN-OFFS
SALEM LON GSKooL LoNG SNEWPORT 1OO'S
SPRING 100'S
BELAIR 100'S
NEW BRANDS
TRUE
BENSON & HEDGES
VIRGINIA SLIMS
SILVA .THINS
DORAL. EVE
NFF MENTHOL SPIN-OFFS
MARLBORo
BENSON & HEDGES.
WINSTONNINE OTHERS
19671967196719671968
196619651968196819691971
19661966
1967 -
0o+~
~
4
a]
~TATE OF THE BUS I NESS
CATEGORY TRENDS
1964 - 1970
NON-FILTER
NFFMENTHOL FILTER
LFFOTHER
TOTAL
95 - 101h1M
1963 1970 SHARE PO I rJT0 m 31m CHANGE
41,6% 20.5% -21 .1.30.4 41,6 +11 .215.6 23.3 +7,712,0 14.4 +2.4
.y .2 - ,2
100, 07 100, 07
18 .0% +18 .0
0
c
~r:r; c
, . :~.
r:~' ~.~.~ ~
.. ., . .K .~ . ._.~..~, . . . .. ..~.~~ .W .;., .. .:.. . :.~.. . . ., . . .~.: ....+ _~'' "'"
~-41z~----•-c~r.'r ---c( r,
'r -
:~ ~,: -- - -
OLS9 OL
SIATF OF THE RI1S I P1F~S-
SALEM vs KOOL/«EWPORT
By BRAND STYLE
BRAND STYL E,
1963__sz
1970SOM
SHARE POINTCHANGE
SALEM KINGSALEM LONGS
8 .7%•
6 .9%1 .8
-1 .8+1 .8
TOTAL SALEM 8 .7% ~ 8 .7% 0 .0
KoOL REGULAR .6% .4% - .2
KooL KING 2'.6 6,8 +4 .2KooL LONGS - 1, 0- +1, 0
TOTAL KooL 3,2% 8 .2% +5 .0
NEWPORT KING 1 .7% 6 -1 .1NEI`rPOR7 Box - .1 +0 .1NEWPORT 100 'S - +0,1
TOTAL NEwPORT . 1 .7% .8% -0 . 9 .
CREATIVE STRATEGY
SALEM : 1956-1963
0 STRATEGY
c REFRESHING, GOOD TASTING CIGARETTE
0 APPEAL TO ALL SMOKERS
6 ADVERTISING CAMPAIGN
® "SALEM REFRESHES YOUR TASTE" (1956-1963)0 COPY POINTS :
0 THREE-POINT REASON-WHY : MENTHOL FRESH,
FILTER, RICH TOBACCO TASTE
MODERN
0 SPRINGTIME FRESH (VISUAL EMPHASIS)
0 "HIGH POROSITY PAPER AIR-SOFTENS EVERY PUFF "
(1958 - 1963) .
:
r
POSITIONING/CREATIVE STRATEGY
SALEM: 1964-1967I
•
0 POSITIONING : REFRESHING, GOOD TASTING CIGARETTE
0 APPEAL TO ALL SMOKERS
o ADVERTISING CAMPAIGNS
0"SALEM SOFTNESS FRESHENS YOUR TASTE" (1964)0 COPY POINTS :
0 MODERN FILTER
© RICH TOBACCO
0 SMOOTHEST MENTHOL
©"TURN TO SALEt°1, FOR A TASTE THAT'S SPRINGTIME FRESH"(1965)
0 COPY POINTS :
0 RICH TOBACCO
0 MENTHOL SOFT FLAVOR
(AOrO
O+~vr
'POSITIONING/CREATIVE STRATEGY
SALEM : 1968
8 STRATEGY
0 GREATER IMPACT/MEMORABILITY
® MORE SPIRITED/CONTEMPORARY ADVERTISING
® POSITIONING : SALEM's "COUNTRY-FRESH" TASTE
0 ADVERTISING CAMPAIGN
®'YOU CAN TAKE SALEM OUT OF THE COUNTRY . . .
BUT YOU CAN'T TAKE THE COUNTRY OUT OF SALEhI ."(1968)
0 COPY POINTS :
.© RICH TOBACCO
0 MENTHOL SOFT FLAVOR
MARKET ING MI X
POSITIONING/CREATIVE STRATEGY
KooL : 1964 - 1970 ~
8 STRATEGY
6 MORE/MOST MENTHOL TASTE
© MORE COMPETITIVE POSITIONING AGAINST SALEM, OTHER
MENTHOLS
® BROADER/LESS MEDICINAL BENEFIT
® ADVERTISING CAMPAIGNS
® "TASTE EXTRA COOLNESS AS YOU SMOKE"
O "COME ALL THE WAY UP TO K00L"
0 SLICE-OF-LIFE TECHNIQUE
0 MALE EMPHASIS
® COPY POINTS :
"MOST REFRESHING COOLNESS IN ANY
CIGARETTE"
MARKETING MIX
MEDIA SPENDING
1964-197J
o SALEM SPENDING REMAINS BASICALLY FLAT . KOOL'-S SPENDING
DOUBLES AND EQUALS SALEM BY END OF 1970,0 SPENDING LEVELS REFLECT SOM LEVELS .
SALEM KooL$ ~ I ND $ Z IND
1964 20 .6 7 .9 9,7 3 .7
1965 21 .3 8 .2 12,2 4 .71966 21 .8 7 .4 13 .7 4 .7
1967 22 .0 7,4 16 .5 5 .61968 26 .0 9 .1 15 .8 5 .51969* 22 .6 7 .8 16 .9 5 .81970 22,3 7 .3 20,5 6 .7
dARKETUNG MIXSALEM vs . Ko.ol .
MEIZIA~SPEtI 1DING MIX
1964 - 1970
a N0 SIGNIFICANT DIFFERENCES IN SALEM/KooL MEDIAMIX DURING THE PERIQD :
6 * SALEP'1 BEG I NS US I NG ETHN I C MED I A I N 1967 : KoOL FOLLOWS ,
MEDIUM SALEM Ko-aLNETWORK TV 61% 62%SPORT TV 15 19RADIO 6 1
MAGAZINES 13 12 -
NEWSPAPERS 1 1
SUPPLEMENTS I -
OOH 2 4ETHN I C -j` _~
100~TOTAL 100 cior
0
MARKETING MIXSUMMAR Y
1964 - 1970
0 SALEM LONGS, KOOL LONGS INTRODUCED IN 1967 .
o KOOL CHANGES CREATIVE STRATEGY IN 1964 ( "EXTRACOOLNESS") . SALEM CAMPAIGN CHANGES TO "YOU CAN
TAKE SALEM OUT OF THE COUNTRY" IN 1968 AND TO
"SPRINGTIME . . .IT HAPPENS EVERY,SALEM" IN 1970 .~
o SALEM SPENDING REMAINS FLAT . KOOL'S SPENDING
DOUBLES . By 1971 KOOL SPENDING EQUALS SALEt9 SPENDING .
SPENDING LEVELS REFLECT S0 MI LEVELS .
o BOTH BRANDS PLACE HEAVY EMPHASIS ON TV.(75-80% ) . NO MAJOR DIFFERENCES IN MEDIA MIX .
CONSUMER DYNAMICSREASONS FOR KOOL'S GROWTH AND SALEM'S FLAT SOM
CHANGING CONSUMER PREFERENCES
0 GROWING DEMAND FOR MENTHOL BENEFIT
0 ADVERTISING CO"1MUNICATES BROADER
. BENEFITS THAN RESPIRATORY PROBLEM-SOLUTION .
® ACCEPTANCE/PENETRATION BROADENS INTO NEW
DEMOGRAPHIC GROUPS,
® SURGEON GENERAL'S REPORT PRECIPITATES
TREND TOWARD "SAFER" CIGARETTES . C00LING/
SOOTHING PROPERTIES OF MENTHOL CARRY
"HEALTHFUL" PERCEPTIONS .
o GROWING DEMAND FOR KOOL'S UNIQUE PRODUCT :
STRONG FLAVOR/EXTRA COOL/HIGH LEVEL MENTHOL .
CONSUMER DYNAMICS
REASONS FOR KOOL'S GROWTH
2 . K00L BENEFITS FROM COMPOUNDING EFFECTS OF FOUR
IMPORTANT TRENDS :
8 TREND #1 : GROWING DEMAND/ACCEPTANCEISOM
FOR KOOL AMONG POPULATION SEGMENTS :
BLAC K MAR KET
TOTAL SALEMTOTAL KOOL
1 . BLAC KS:
SOM'1966 19709.1% ; 9, 3%8.7 17 .9
% INCREASE
2 .3%105,7
2 . YOUNG ADULTS
AGE IEN- , CAT.
18-24 6% 51 6%25-34 28 26 2835-49 41 38 4050 & OVER 25 31 26
SALEM Vs . K00L SMOKER DISTRIBUTION
1967
Z?
.
SA OOL MEN. CAT .
8% 8X 10%28 31 2736 35 3628 26 27
CONSUMER DYNAMICSASONS FOR KooL's GROWTH
C TREND #2 : GROWTH IN SIZE OF THESE SEGMENTS
(YOUNG ADULTS, BLACK AND WHITE) RESULTING FROM
POST I*1 I I BABY BOOM :
U .S . POPULATION
GM NT
TOTAL 18-24
BLAC K 18-2425-3435-4950+
% CHG, : 1965-1970+ 22%+ 30%
18-24 AGE GROUP GROWING SIGNIFICANTLY AND
DRAMATICALLY FASTER THAN ANY OTHER AGE SEGMENT .
CONS UMER DYNAMI CSREASONS FOR KOOL'S GROWTH
TREND #3 : GROWING INCIDENCE OF SMOKING AMONG
YOUNGER SMOKERS (14-17 YEARS), BLACK AND WHITE .
E
CONSUMER DYNAMICS
REASONS FOR KOOL' S GRO vFT H
o TREND #4 : GROWING ACCEPTANCE/SOM FOR' KOOL
AMONG MALES (WHO TEND TO BE HEAVIER SMOKERS) :
SALEM Vs . KooL
SMOKER DISTRIBUTION By SEX
SEX
MALE
FEMALE
197SALEM 1967 OOL SALEM ~
47 1 53 48 1 57
53 . 47 52 43
CONSUMER DYNAMI CS
KOOL ' S GROVJTH : ftoMETR I C EFFECT
GROWING SOP'I AMONG BLACKS/YOUNG ADULTS
xGROWTH IN SIZE OF THESE SEGMENTS
x ;r
GROWTH IN SMOKING INCIDENC I E AMONG THESE,;
SEGMENTS !
x !GROWTH AMONG HEAVIER-SMOKING MALES
e
SIGNIFICANT VOLUME INCREASES FOR KOOL
r
r
,
I
A
f
CONSUf'IER DYNAt'I I CS
REASONS FOR KOOL'S GROWTH
3 . NEW SOCIOLOGICAL PHENOMENA :
0 KOOL BECOMES ADOPTED BY BLACKS AS
THE "BLACK MARKET BRAND"
O BLACK TREND-SETTING INFLUENCE
MOTIVATES ACCEPTANCE AMONG YOUNG
WHITE MALES
0 P'OLARIZATION OF SOCIETY AND VALUES/
LIFESTYLES CAUSED BY
VI ETNAM WARBLACK MOVEMENTCHANGING VALUESMUSIC, CLOTHINGDRUGS, MARIJUANA
6 SALEM'S ADVERTISING AND SMOKER PRO-
FILE PERCEIVED AS FEMALE, MIDDLE CLASS
AND "ESTABLISHMENT" ; KOOL'S SMOKER
PROFILE/BRAND IMAGE BECOMES MALE/MACHOI
"COUNTER CULTURE . "
STRONG C IGARETTES (KOOL, MARLBORO) WITH
INDEPENDENT/MACHO/CONTEMPORARY USER IMAGERY
BECOME ADMISSION CARD TO PEER GROUP ACCEPTANCE
AMONG YOUNG AMERICANS .
4
SU.MMARY : 1964 - 1970
Q INDUSTRY VOLUME IS LEVEL
6 MENTHOL CATEGORY SOM GROWS DRAMATICALLY
o SALEM SOM IS FLAT . „
o KOOL'S SOM NEARLY TRIPLES
o SALEM KING DECLINES, KOOL KING GROWTH ACCELERATES
Ot. 100MM LENGTH APPEARS, KOOL LONGSISALFJ'l LONGS
INTRODUCED
0 CAMPAIGN CHANGES OCCUR
0 NON-MENTHOL BRANDS INTRODUCE MENTHOL LINE EXTENSIONS
O NEW BRANDS INTRODUCED (DORAUWOP'fEN'S CIGARETTES)
® K00L'S SPENDING INCREASES TO SALEM 's LEVEL
(REFLECTING SOM)
® NO REAL DIFFERENCES IN SPENDING MIX
0 FACTORS PRECIPITATING K00L'S GROWTH ARE IDENTIFIED :
ti CHANGING CONSUMER PREFERENCES
O COMPOUNDING EFFECT OF FOUR TRENDS
0 NEW SOCIOLOGICAL PHENOPIENA
IV, POST-BROADCAST-BAN YEARS : 1971 - 1974
A . STATE OF THE BUSINESS
B. CONSUMER DYNAMICS
C. MARKETING MIX
PRODUCT TESTING
© CREATIVE : STRATEGIES & PERFORMANCE
6 SPENDING
6 MEDIA MIX
0 RETAIL DISTRIBUTION/AVAILABILITY
0 MERCHANDISING/PROMOTION
0 SPIN-OFFS : SALEM BOX AND SALEM EXTRA
STATE OF THE BUSINESS
MAJOR EVENT S
1971 - 1974
-•0 BROADCAST BAN BEGINS (1971) . CIGARETTE
ADVERTISING MEDIA SHIFT TO PRINTIOOH .
INDUSTRY GROWTH RESUMES (BROADCAST BAN
ENDS ANTI-CIGARETTE TV ADVERTISING) . •
e FTC TO NUMBERS APPEAR IN ADVERTISING (1971) .
0 SURGEON GENERAL ' S WARNING APPEARS IN
ADVERTISING (1972) .
0 NEW HI-FI BRANDS INTRODUCED (VANTAGE , CARLTON) .
0 HI-Fl SPIN-OFFS LAUNCHED (MARLBORO LIGHTS ,
KOOL MILDS, WINSTON LIGHTS) .
STATE OF THE BUSINESS;
NEW BRAND INTRODUCTIONS
1971 - 1974 .
MENTHO(_ SP I N-OFFS
KOOL MILDS (1972)SALEM BOX (1974KooL Box (1974)ALPINE 100'S
NEW BRANDS
VANTAGECARLTON
ICEBERG 10'S
LEMON TWIST
MORE
NFF M ENTHOL SP I N-OFFS
PALL MALL 100 's Boxf'QARLB0R0 BoxTRUE IOO'S
BENSON & 'HEDGES Box
STATE OF THE BUS I NESS
CATEGORY TRENDS
5r1i.LEGOF3Y 1970 JVI-1 12 / `t ,'& S,HARF . P()1 NT rHAN_CiE_
NON-FILTERS 20, 5% 14,1' -6 .4NFF 41,6 43,5 +1,9MENTHOL FILTER 23 .3 27 .0 +3,9
LFF 14,4 15 .2 + ,8OTHE R .2 1 ? --
TOTAL_
100,0%_i
100 .0% --
95-101 MM 18 .0 23 .2 +5 .2Hi-FI 5 .7 9 .4 +3,7
STATE OF T_RE BUS I_NESS
SALEM ys . KooL/IdcwPORT
BY BRAtI~ STYLE
BRAND STYLE
SALEM KINGLONGS
Box
TOTAL SALEM
KoOL REGULAR
KING
BoxLONGS
MILDS
TOTAL KooL
NEWPORT KI NG
Box100's
TOTAL «EWPORT
SHARE1970, SQM 1q.74 SOM eo1NL CHti~IGE
6 .9% 5 .9%'1 .8 2 .6--- __a8 .7 8 .8
.4% .2%6 .8 8 .3--- .11 .0 1 .7--- .58 .2 10 .8
.6%", .6'
.1 .2
.8 .9
'-1 .0%+ .8± -3+ .1
+ .1
r
STATE OF THE BUSI['ESS : 1971 - 1974
SUMMARY
® BROADCAST BAN BEGINS JANUARY 1971
0 INDUSTRY GROWTH RESUMES '
0 MENTHOL CATEGORY CONTINUES GROWTH
o Box STYLES INTRODUCED
o HI-FI BRANDS INTRODUCED
0 SALEM FLAT, KOOL GROWTH CONTINUES
® SALEM LONGS OUTPERFORMS KOOL LONGS
0 NEWPORT REVERSES DECLINE, BEGINS TO GROW
?it
7
9
CONSUMER DYNAMICS
c
0 KOOL'S VOLUMEISOM CONTINUE TO ADVANCE SHARPLY .
SALEM SOM REMAINS FLAT .
o BRANDS CONTINUE ON DIVERGENT PATHS :
0 DEMOGRAPHIC PROFILE
® SEX
0 AGE
8 C I TY S-I ZE
o BLACK VS . WHITE
0 GEOGRAPHIC REGION
A PSYCHOGRAPHIC PROFILE
.8 PERCEPTIONS OF PRODUCT/TASTE
© PERCEPTIONS OF BRAND USER.
CONSUMER UYNAMI CS
MOGRAPHIC P^nQFI1-ES :
KOOL ' S STRONG PERFORMANCE AMONG MALE SMOKERS GROWS EVEN
STRONGER (1967 - 1973) . KooL INCREASINGLY BECOMES THE
MENTHOL BRAND ACCEPTED AMONG MEN :
SALEM vs KooL
DISTRIBUTION OF SMOKERS BY SEX
SALEM KQ& TML. MENTHOL
sEX 1 961 . 1 -04 73 MZ IQZ3 1967 IM_MALE 47% 4c° % 53% 60% 44% 45%
FEMALE 53% 52% 47% 40% 56% . 55%
CONSUMER DYNAMI CS -
DENOGRAPHIC PROFILES : AGE
KOOL'S PERFORMANCE AMONG YOUNG SMOKERS (18-24) ADVANCES
SHARPLY . VOLUME CONTRIBUTION BY THIS AGE GROUP DOUBLES
(1967-1973) :
SALEM vs KooL
D)ISTRIBUTION OF SMOKERS BY AGEI
SALEM ~QQl, IOTAj~MENTHOLi~
kG E 1q 2 m lNZ m m 1m.18-24 8% 7% 8% 15% 10% 9%25-34 28% 30% 31% 33% 27% 32%35-49 36% 35% 35% 29% 36% 32%50+ 28% 28% 26% 23% 27% 27%
CONSUMER DYPJAMI CS
DEMOGRAPHIC PROFILE : CITY SI7-E
KOOL'S STRONG URBAN PERFORMANCE (CITIES 2 MM+)
CONTINUES TO INCREASE (1967-1973)l ADVANTAGE OVER
SALEM AMONG URBAN SMOKERS CONT I NUES :
SALEM vs KooL
DISTRIBUTIONSF SMOKERS BY CITY SIZE
SALEh1 KQQL IQ]'A(,~ MENTHOL
CITY S lqEZ lm 195Z ~-~ Iuiz m.
2 MM+ 22% 29% 3[p% 367. 27% 31%500M -2hiP'1 25% 25% 25% 25% 27% 27%50h1=500M 19% 16% 15% 15% 17% 17%25M-50M 14% 13% 13% 12% 13% 12%RURAL 20% 17% .17% 12% 16% 13%
CONSUMER DYNAM I CSDEMOGRAPHIC PROFILE
BLACK MARKET : ITS S I Gi1 I F I CANCE
o BLACK MOVEMENT IN MID-60'S DEVELOPS
0 BLACK "UNITY" REFLECTED IN LIFESTYLES,
PURCHASE PATTERNS, BRAND SELECTION
0 YOUNG BLACK POPULATION GROWS FASTER THAN
YOUNG WHITE POPULAT,ION
BLACKS REPRESENT 11% OF U .S . IN 1970 AND
GROWING
B MENTHOL CATEGORY SHARE AMONG BLACKS REACHES
45% IN 1973 VERSUS 23% IN NON-BLACK MARKET
i
CONSUMER MIAMI CS
QEN1Q RAPHIC PRO H ACK
KoOL ' S DRAMATIC SOM GROWTH IN BLACK MARKET (B EGINNING IN
1966) CONTINUES UNTIL 1973 . SALEM REMAINS ESSENTIALLY
FLAT :
SALEM vs, KooL;BLACK MARKET . SHARE
I
Z9A0
OP
. .
SALENI
8 . 7$
1965 1970
Tc%~:.~.~-9 .9% 10 .3%
1975
C .
CONSUMER nYNAMI CS
L}E''OGRAPHIC PROFILE
BLACK MARKFT : IIS S I GP! I F I CANCE
kACK MARKET
% OF U .S . POPULATION
X OF 1973 VOLUMESHARE OF MENTHOLCATEGORY
~OTAL U .S . VOLUMERCWTH : 66-7s
BLACK VOLUME GROWTH
BLACK MARKETCONTRIBUTION TO GROWTH
SAl'E.MK4s~~11% 11%13% 31%
25% - 55%
+3 .$ BIL . UNITS +23 .3 BIL, UNITS
+1 .2-BIL . UNITS 111 .0 BIL . UNITS
32% -477
r
,
CONSUMER DYPJAf 1 I CS
GEOGRAPHIC PERFORMANCE
o SALEM's STRENGTH SKEWS TO SOUTHEAST/SOUTH
CENTRAL MARKETS .
.
I
,
' O KOOL'S STRENGTH SKEWS TO UPPER MIDDLE VlEST
(DETROIT, CHICAGO, ETC .) AND SOUTH CENTRAL
MARKETS . STRENGTH GENERALLY FOLLOWS LARGE
URBAN MARKETS WITH LARGE BLAC K POPULATIONS1
SALEM vs . KooLSOM INDEX BY GEOGRAPHIC REGION '
_SgLEM_ KooLSALES AREA 1972 1974 1972 1974
NORTHEAST
EAST Cci:TRAL
NORTH CENTRAL
SOUTHEAST
SOUTH CENTRAL
WE3T COAST
811 0392
8310692
124 128116 113
86
85 82125114
124114 ~
102 106
0~. ~,0a
CONSUMER DYNAMICS .
PSYCHOGRAPHIC TRENDS/PROFILE S
x
~ YANKELOVICH MONITOR REVEf LS THAT NEW SOCIAL
VALUES REPLACING OLD SOCIAL VALUES $
o NEW VALUE SEGMENTS GROWING ;
DECLINING .
SEGMENT
OLD VALUES
NEW VALUES
OLD VALUE SEGMENT S
1970 1975
54ro 35%
46% 65%
SALEM`S DISTRIBUTION OF SMOKERS WEAK AMONG
GROWING It NEW VALUESI' GROUPS . KOOL STRONG AMON G
it NEW VALUESIt SEGMENTS :
SEGMEH'T
CONSERVATIVES
LIBERALS
OTHER
TOTAL
SALEN KooL
1 417 28%
42 1 58
17 14
100% 100%
POSITIONING/CREATIVE STRATEGY
SALEM: 1970
0 STRATEGY
4 BEGIN TRANSITION FROM BROADCAST TO PRINT/OOH
o DISTILL SALEM's HERITAGE, ESSENTIAL BENEFITS INTO
WORD/PHRASE NOT DEPENDENT ON AUDIO/MOTION
® POSITIONING : SPRINGTIME-FRESH TASTE .
~ ADVERTISING CAMPAIGN
0 "SPR I NGT IME ! IT HAPPEN3 EVERY SALEM" (1970)0 COPY POINTS
0 RICH TOBACCO
0 MENTHOL SO:=T FLAVOR .
0 NATURAL MENTHOL
r
:
1
MARKETING MIX
MAJOR MARKETING ACTIVITY : 1971 - 1974 : -
PRODUCT TESTING
0 CREATIVE CHANGES -
0 EVALUATION OF ADVERTISING (SALEM vs . KOOL)
0 SPENDINGAEDIA MIX
0 PROMOTIONAL ACTIVITY AND EVALUATION
0 EVALUATION OF RETAIL DISTRIBUTION
0 SPIN-OFF INTRODUCTIONS : SALEM Box, SALEM EXTRA
\
MARKETING MIXPRODUCT TESTING
o EXTENSIVE PRODUCT TESTING CONDUCTED IN
1972-1973 TO DETERM I N E I F SALEM' S
PRODUCT/BLEND WAS A PROBLEM
0JEST RESULTS INDICATED THAT SALEM KING
PRODUCT WAS PREFERRED OVER KoOL KING
AMONG ALL SMOKERS EXCEPT KOOL KING SMOKERS
TYPE SMOKERS
PREFER SALEM KING K00L KING OTHER 85Mm MENTHOL
SALEM KING 77% 35% 71%KooL KI NG 23% 65ro 29%
_
ON I
~ MARKETING MIXPRODUCT TESTING
. SAL.ECIKING VS, KOOL JS1NG
o REASONS FOR PREFERENCES WERE :
TYPE SMOKER PREFERENCE REASON
SALEM KING SALEM KING MILDNESS~KOOL KING KOOL+KING STRENGTH
OTHER 85MM MENTHOL SALEM KING MILDNESS
o DESCRIPTIVE COMMENTS TENDED TO CONFIRM SALEM'sSUPERIOR BLEND AND CONSTRUCTION
1 . KOOL BURNED MUCH TOO FAST
2 . KOOL PACKED MUCH TOO LOOSELY
3. KOOL SMOKED TOO ROUGH/HARSH
MARKETING MIX
PRODUCT JE ST I NG
, ALEM QuGS vs . K0o1. LoNGS .
0 SALEM LONGS PERFORMED EVEN BETTER RELATIVE TO
KOOL LONGS : SALEM LONGS PREFERRED BY ALL SMOKER
GROUPS INCLUDING KOOL LONGS SMOKERS$
MARKETING MIX
QROR,UCT TEST I NG
CONCJ ..US I OT!S
1. SALEM AND KOOL ARE DIFFERENT CIGARETTES
® SALEM HAS A MORE EXPENSIVE BLEND
© SALEM I S BETTER CONSTRUCTED
o KOOL HAS MORE MENTHOL
e SALEM IS RELATIVELY MILD/SMOOTH ; KOOL
IS RELATIVELY STRONG/HARSH
KOOL TENDS TO BE PREFERRED OVER SALEM ONLY
AMONG KOOL SMOKERS ; AMONG ALL OTHER GROUPS
SALEM IS PREFERRED,
3. NET : DO NOT CHANGE THE SALEM PRODUCT
CREATIVE STRATEGY
SALEM : 1971
0 STRATEGY
0 POSITIONING : THE MOST REFRESHING CIGARETTE
AVAILABLE
0 SUPPORT CLAIM BY ESTABLISHING UNIQUE PRODUCT
INGREDIENT VS . OTHER MENT HOLS ("NATURAL MENTHOL")
0 RETAIN REFRESHMENT IMAGERY OF OUTDOOR GREENERY
IN CHANGEOVER TO PRINT
A ADVERTISING CAMPAIGN
0 "IT 'S ONLY NATURAL" (1971)0 COPY POINTS :
0 NATURAL MENTHOL, NOT ARTIFICIAL,
GIVES SALEM A TASTE THAT IS NOT
HARSH, HOT .
0 TASTES SPRINGTIME FRESH,
0 VISUALS : PORTRAYAL OF MORE CONTEMPORARY
'MODELS/LIFESTYLES, SUPERSEDING SOFT/
SPRINGTIME/PASSIVE IMAGERY .
CREATIVE STRATEGY
SALEM : 1972-1974
0 STRATEGY
0 MOVE AWAY FROM PRODUCT INGREDIENT HEADLINE
IN FAVOR OF CONSUMER END-BENEFIT PROMISE$
0 POSITIONING : THE MOST REFRESHING CIGARETTE
AVAILABLE@
0 ADVERTISING CAMPAIGN
0 ".SALEM REFRESHES NATURALLY" (1972-1974)
® COPY POINTS :
0 NATURAL MENTHOL BLEND MEANS
NATURAL MENTHOL TASTE .
0 NO HARSH, HOT TASTE .
.0 VISUALS : ACTIVE, MASCULINE, YOUNG ADULT
MODELS/SITUATIONS$
0 0011 ADVERT I S I NG CARR I ES R EF R ESKMENT
THEME/MASCULINE USER IMAGERY$
V,!;
MARKETING MIXCREATIVE STRATEGY
KooL : 1971-1974
STRATEGY
0 HIGHEST MENTHOL LEVEL
0 BETTER, FR ESH TASTE
0 INTRODUCE WATERFALL AS SYMBOL OF COOLNESS (1971)
ADVERTISING CAMPAIGNS
0 PROBLEM SOLUTION APPROACH : "LOOKING FOR A TASTE
THAT'S NEVER HOT?"
0 COPY CLAIMS :
0"COME ALL THE WAY UP"
0"THE TASTE OF EXTRA COOLNESS"
MARKFT I PdG M I X
CREATIVE STRATEGY
QTtiER MENTHOLS : 1571-197y
BRAND STRATUy. ADVERTISING
CAMPAIGN
NEWPORT 1971 INCREASED MENTHOL "MENTHOL CHILLED,
1972
TASTE REMARKABLYI ' REFRESHING TASTE .''
YOUTH! APPEAL, pIF SMOKING ISN'TSMOKING PLEASURE A PLEA~UR~, WHY~ BOTHER. LIV~
WITH PLEASURE
BELAIR FRESH TASTE, LIGHT "JUST THE RIGHTMENTHOL TOUCH OF MENTHOL"
MARKEtj NG M I X
AnVERTISINr, COPY
CAMPAIGN PERFORtQANCE
e SALEM'S AD AWARENESS, BRAND AWARENESS, BRAND TRIAL,
AND BRAND ATTITUDES PERFORMED WELL RELATIVE TO KOOL
(LATE 1974) :
PERFOMEASU
RMANCER E SALEM
BRAND AWARENESS
KING 99% 98%LONGS 50% 46%Box 34% 20%
BRAND TRIAL
KING 25% 24%LONGS 10% 8%Box 3% 1%
ADVERTISING AWARENESS 82% 76%
COPY POINT PLAYBACK
SALESPOINT COOL/NOT HOT COOL/NOT HOTFRESH/REFRESHING
VISUAL COUPLE/PEOPLE . PENGUIN/WATER- . SCENES
DAR IMPACT (BURKE) 6% 6%BRAND ATTITUDES(% RATING 7+)
27% 26%
MARKETING MIX
MEDIA SPENDING : 1971-1974
0 SALEM SPENDING DECLINES IN 1971, THEN RETURNS TOPRE BROADCAST BAN LEVEL .
0 SALEM SPENDING COMPETITIVE WITH KOOL
~
YEAR_~ SALE1~~-
$ ND .i
1971 13 .3 5 .3 21,2 8,41972 19 .1 7 .4 19 .4 7 .51973 20 .3 8 .5 16 .6 6 .91974 21 .4 7 .7 20,5 7 .4
0 t,/
MARKETING MI X
MEDIA SPENDING : 1971-1974
MEDIA SALECI ' K401
MAGAZINE 29% 33%
NEWSPAPERS 15 7
SUPPLEMENT 13 16
00N 36 40
ETHN I C _.._Z 4
TOTAL 100% 100%
0 NATIONAL VS . LOCAL SPENDING FOR SALEM AND KOO L
EXHIBIT NO DIFFERENCE #
0 MEDIA MIX FOR SALEMIK00L NOT SIGNIFICANTLY DIFFERENT $
o SALEM USES NEWSPAPER I N 1971I1ST HALF 1973, THEN
DISCONTINUES ROP .
o SALEM CONCENTRATES MORE SPENDING IN MAJOR URBAN
MARKETS (TOP 5O) ; DISCONTINUES LOCAL ADVERTISING
IN SMALLER MARKETS-
MARKETING MIXMAJOR MENTHOL BRANDS
M;:D I,A EXPE"PID I TURES
1971 - 1974e
0~ SALENi AND KOOL CONTINUE TO DOMINATE CATEGORY SPENDING .
SgLEI~ KOOL NEWPORT BELAIR A CATEGORYINDUSTRYSPENDIba
4 r` 1,~ l• r s!.lm
1971 13 .3 5 .3 21 .2 8 .1l 1 .2 .5 4 .5 1 .8 4 .0 1 .6- 74 .8 29 .7 251 .7
1972 19 .1 7 .4 19,4 7 .5 3 .8 1 .5 3 .9 1 .5 5 .2 2 .0 79 .3 30 .8 257 .1
1973 20 .3 8 .5 16 .6 6 .9 4 .0 1 .7 4 .1 1 .7 6 .5 2 .7 81 .3 33 .9 240 .0
1974 21 .4 7 .7 .20 .5 7 .4 E .2 2 .2 4 .4 1 .6 6 .9 2 .5 90 .6 32 .6 277 .9
V-
UZ99 OLEOS
MARKETING MIX
PROMOTION/MERCHANDISING
SALEM SALES PROMOTION STRATEGY : (LATE 60's, EARLY 70's)
0 USE "THEME" PROMOTIONS CONSISTENT WITH INTERESTS
AND LIFE STYLES OF TARGET SMOKERS TO :
t@ SUPPORT CREATIVE CAMPAIGNS .
® INCREASE READER INTEREST, INVOLVEMENT~ .
IN ADVERTISING .1
® INCREASE TRIAL, VOLUME THROUGH PURCHASE
REQUIREMENTS .
© USE ADVERTISED SWEEPSTA}:ES AND "SELF-LIQUIDATOR"
PROMOTIONS TO ACHIEVE BROAD CONSUMER AWARENESS, APPEAL .
OFFER HIGH VALUE PRIZES TO ACHIEVE CONSUMER PARTICIPATION .
o k00L STRATEGY SIMILAR .-
PR0M0TION STRATEGY LATER ABANDONED DUE TO :
o ABSENCE OF PROVEN INCREASE IN AD READERSHIP,
INVOLVEMENT
0 LOW LEVELS OF VOLUME, TRIAL INCREASES
© AVAILABILITY OF PROMOTION VEHICLES WITH ; ~'
GREATER, MORE IMMEDIATE PURCHASE I"IDUCEMENT
CAPABILITIESI
MARKETING MIX
TAI D,I TRI$uTION/AVAILABILITY
® NEITHER SALEM NOR KOOL EXPERIENCED PROBLEMS WITH RETAIL
DISTRIBUTION/PRODUCT AVAILABILITY .
o RJR's STRONG SALES FORCE ASSURED ADEQUATE PRODUCT VISIBILITY/
AVAILABILITY THROUGH THE U .S. •
® DISTRIBUTION/AVAILABILITY NOT A FACTOR .IN SALEM's POOR
PERFORMANCE RELATIVE TO KOOL .
SALEM vs . KOOLX RETAIL OUT-OF-STOCK
TOTAL U . S .
BRAND STYLE 11/72 11/73 &LZ4
SALEM KI NG 2 .1%KooL KING 1.1 %SALEM LONGS 5 .8%KooL LONGS 5, 0%
1 .3%1,0%4 .4%5 .0%
2 .6%)1 .5%5 .7%6.1%
RKET I NC M I X
6 BOY. CATEGORY GROWING SHARPLY IN EARLY 1970's .
0 CATEGORY PROFILE (YOUNG ADULT/URBAN/MALE)
; REFLECTIVE OF SALEM WEAKNESS RELATIVE TO
KooL,
e SALEM BOX INTRODUCED NATIONALLY IN 1ST HALF
1974,
0 YOUNG, MALE IMAGERY USED IN ADVERTISING ("IJENIM"),
o KOOL FOLLOWS WITH BOX INTRODUCTION IN 2ND HALF
1974,
A CATI:GORY MISJUDGED : A MARLBORO PHENOMENON :
LmTED VOLUME/GROWTH POTENTIAL FOR MENTHOL
BRAP:DS $
o SALEM BOX SOM PEAKS AT .3- .4%; KOOL BOX LEVELSAT .4% S0M .
MARKET ING M I X
SALEM EXTRA
o SALEM "EXTRA COOL" SPIN-OFF DEVELOPED AS DIRECT,
COMPETITIVE WEAPON AGAINST KOOL
0 PRODUCT DEVELOPED AT SAME MENTHOL LEVEL AS KOOL
WITH CORK TIP AND BETTER BLEND . BLIND PRODUCT TESTS
AMONG KOOL SMOKERS REVEAL SALEM EXTRA PREFERRED OVER
KOOL KING,
• SALEM EXTRA TEST MARKETED I N LATE 1Q/y/EARLY 1975r
® SALEM EXTRA FAILS TO ATTAIN ~. 4% SOM . REASONS :
~ KOOL SMOKERS REJECT SALEM IMAGE
~ SALEM SMOKERS REJECT KOOL-LI KE PRODUCT
(T00 STRONG/HIGH MENTHOL)
l f'
MARKETING MIX
FINDINGS/CONCLUSIONS
* SALEM CANNOT AND SHOULD NOT ATTEMPT TO COMPETE DIRECTLY
WITH KOOL FOR THE FOLLOWING REASONS :
1 . PRODUCT IS DIFFERENT (SALEM PROD UCT IS NOT
ACCEPTABLE TO KOOL .SMOKERS AND KOOL PRODUCT
IS UNACCEPTABLE TO SALEM SMOKERS)
2 . PERCEPTIONS OF BRAND TASTE ARE DIFFERENT '
3. IMAGE OF BRAND USER IS MARKEDLY DIFFERENT
4 . CONSUMER PROFILE/ATTITUDE WANTS AND NEEDS
ARE VERY DIFFER ENT
SALEM EXTRA EXPERIENCE CONFIRMS THE ABOVE
© SALEM'S MARKETING STRATEGY SHOULD CONCENTRATE ON
PROMOTING THE BRAND'S OWN UNIQUE BENEFITS AND RETAINING
ITS OWN NICHE IN THE CATEGORY, WHILE BUILDING BUSINESS
AMONG LIKELY NEW USERS OF THE BRAND$
SUMMARY : 1971-1974
O BROADCAST BAN BEGINS (JANUARY 1971)
6 INDUSTRY VOLUME GROWTH RESUMES
© MENTHOL CATEGORY GROWTH CONTINUES
6 •BOX SPIN-OFFS INTRODUCED
KOOL MI LDS I NTRODUCED
0 SALEM KI NG DECL I NES, KOOL I:I (dG GROWTH CONT I NUES
o SALEM LONGS, KOOL LONGS BOTH GROW
® NEWPORT REVERSES DECLI PIE
o HI-FI BRANDS IPJTRODUCED
o K00L"c: CONSUMER PROFILE BECOMES MORE MALE/YOUNG ADULT/
URBAN/'BLACK
LAOw
.o,1,/ Av W
O
S~ MMARY; 1971 -1974 ( CavT , )
KOOL STRONGER AMONG GROWING "NElh' VALUES" SEGMENTS
C BRAND USERS PERCEIVED AS DIFFERENT
o SALEM'S GOOD PRODUCT CONFIRMED IN TESTING
o ADVERTISING CAMPAIGN CHANGES OCCUR TO ADAPT TO PRINTI
o 1974 : "FASHION" CAMPAIGN (LONGS) AND BLACK CAMPAIGN,("SMOKE EASY") INTRODUCED
,o ADVERTISING AWARENESS/BRAND AWARENESS/BRAND ATTITUDES
NOT A PROBLEM
® SPENDING DECLINES BRIEFLY (1971) . RETURNS TO PRE-
BROADCAST BAN LEVELS, SPENDI NG COMPET I TI VE WI Tli KOOL .
o SALEti/KOOL SALES PROMOTION STRATEGIES SIMILAR
0 RETAIL DISTRIBUTION/AVAILABILITY NOT A PROBLEM
o SALEM EXTRA ATTEMPTED WITHOUT SUCCESS
V . A NEW STRATEGY : 1975 - 1976
a . PROBLEM IDENTIFICATION (1974 & 1ST HALF 1975)• 1. SYMPTOMS OF THE PROBLEM
2 . PROBLEM DEFINITION
3. PROBLEM ANALYSIS
B. INTRODUCTION OF NEW 3-PART MARKETING STRATEGY
(MID-1975)1 . NEW ADVERTISING CAMPAIGN
NEW "LIGHTS" STYLES
3 . NEW SPENDING STRATEGY
PROBLEM 1 I DENT I F I CATI 0N
SYMPTOMS OF THE PROBLEM
1SALES PERFORMANCE
I2, SMOKER ATTITUDES/PERCEPTIONS
13 , SWITCHING LOSSES
PR,OBEM .I]).FNT I F I CAT I OPr' : 19_75-1_a_7FSYMPTOMS OF THE PROBLEM
SALES PERFORMANCE
AND/C FGORY PERFORMANCE ,
1972 - 1074
Al
z VoL .BRAND7 TFGORY ~ CHANGE
SALEM 8.8% + 3 .3%KooL 9.3% +10 .2%NEWPORT .8% - 4 .8%TOTAL MENTHOL 24 .8% + 6 .4%
SUMMARY :
1973
0 SALEM' S VOLUME GROWTH ONLY 1/3 OF KOOL' S
o SALEM's VOLUME GROWTH ONLY 1/2 OF INDUSTRY'S
0 NEWPORT REVERSES DECLINE; BEGINS DRAMATIC GROWTH
o SALEM SOM FLAT; KoOL, NEWPORT, CATEGORY SHOW SQM
GROWTH
PROBLEM I DENT I F I CAT I ON : 1975 - 1976
SYMPZOMS OF THE PROBLE M
SALES PERFORMANC E
ID - 1975 FORECAST
JUNE QUARTER (1975) MRD FORECAST°INDICATED
CONTINUING PROBLEMS FOR BRAND WITH PRO-
JECTED DROP I N SO M :
1974 SOM 1975 SOM (FQRECAST)
8.a% 8.5%
PROBLEM I DENT I F I CA,T I011 : 1975 - 1976SYMPLQ['UE_IIE.EBQB1.Et1
SMOKER ATTITUDES/PERCPTION
MARKETING RESEARCH ALSO REVEALED FOUR MAJOR DANGER SIGNALS
RELATED TO CHANGING ATTITUDES OF THE SALEM FRANCHISE :
SALEM's OLDER, HEAVIER SMOKERS LEAVING. ~THE FRANCHISE : ~
SALEM
SOM TREND BY AGE GROUP
AGE SEGMErJl IM 9~18-24 7.4% 9 .2%25-34 9.0 10 .035-49 9.4 9.550 + I.Z _$.4
TOTAL
®
91' 01, 9,37o + 3
(ATTITUDES, TRIAL, AND PURCHASE RATES AMONG OLDER
SMOl:EttS WERE ALL DOI-11N .) ~--
SMOKER ATTITUDES/PERCEPTIM
2 . SALEM SMOKERS/LIGHTER SMOKERS/LESS COMMITTED/
. SMOKE FOR SOCIAL REASONS/ENJOY SMOKING LESS :
CONSUMPTION
COPISUMPT I ON ~SA~;~LIGHT (1-15) 36% .y7%MEDIUM (16-15) 30% 27%HEAVY (+25) 34% 26%
FNJ~OYMENZ~~ XRA INOE~JJOM~~ r~I
~ ~~SALEM yg%KooL 60%TOTAL SMOKERS 55%
SMOKER ATTITUDES/PERCEPTInNY
3 . SALEM SMOKERS' CONSUMPTION RATE DECLINING :
7SALEM NO. OF CIGARETTES_ PER nAY
AGE V I"C VUP 10/73 10[1~ D.1.LL.i
18-20 15 .9 13 .7 -2,221-24 16 .1 15 .6 .525-34 19 .4 18 .7 .735-49 19 .8 19 .450 +
TOTAL 18 .5 17 .4 -1 .1
MVrjE V,_ll.!_L_1D U L JIPE115t1..i _LJ 5111a
4 . SALEM SMOKERS I3ECOMI NG MORE CONCERNED ABOUT
THE ALLE(:ED HEALTH HAZARDS OF SMOKING :
X CONCERN7+ ON 10 PT SCALE 1973
. .
1M F F .DI,, __
SALEM SMOKERS 57% 61% +4TOTAL SMOKERS 59% 62% +3
f
SYMPTOMS OF THE PROBLEM
SWITCHING LOSSES
SALEM EXPERIENCING INCREASING SWITCHING LOSSES TO
HI-FI BRANDS :
NET LOSSES To Hi-Fi CATEGORY
PERI OD ENDING CHANGE
OCTOBER 1972
OCTOBER 1973 .
OCTOBER 1974
OCTOBER 1975
S.YMPTO' OF THE. PROBLEM
SUMMARY
1, COMPETITORS' VOLUME GROWTH 2-3 TIMES GREATER
THAN SALEM's
CHANGING ATTITUDES OF SALEM SMOKERS PRESENT
GROWING PROBLEM
© OLDER SMOKERS LEAVING THE FRANCHISE
• LIGHTER SMOKERS
0 CONSUMPTION DECLINES
0 "CONCERN" GROWS
3 . SWITCHING LOSSES
p.~QBLE~M IDENTIFICATI9N : 1975 - 1976
PRORLEP'~.UE:F1 N I II~
MARKETING RELATED CAUSES OF THE PROBLEM
E~~Et~t 8C'AS*PRICE ~ No
PRODUCT QUALITY ~ NoSPENDING LEVEL ' No~SPENDING/ffEDIA MIX ~ NoDISTRIBUTION/RETAIL AVAILABILITY NoMERCHANDISING/PROMOTION NoPACKAGING NoADVERTISING COPY YES
PRODUCT ATTRIBUTES/FORMS/STYLES YES
,
P_ ROB LEM I DE! JT I F I CAT I ON : 1975-1976
PROBLEM A'rlALYYS I S
PROBLEM #1 : ADVERTISING COPY
EVIDENCE "A "0 FAILURE TO MOTIVATE/ATTRACT ADEQUATE SHARE
OF YOUNG, URBAN, MALE SMOKERS (MEDIUM FLAVOR,
LIBERALS AND NEW SMOKERS)
CAUSE :
0 BRAND USER IMAGE (PSYCHOLOGICAL BENEFIT)
o FEMALE/PASSIVE/OLD-FASHIONED/NOT EMULATABLE
SOxCiUSIM :1 . USER I MAGE A KNOWN MOT I VAT I NG I NFLUENCE I N
REASONS FOR SMOKING AND BRAND SELECTION
ZSALEM SMOKER PERCEIVED QUITE DIFFERENTLY THAN
KOOL SMOKER
3~ SALE!•i BRAND USER IMAGE NOT COMPATIBLE WITH
LIFESTYLE/ATTITUDINAL NEEDS OF YOUNG ADULT,
• MALE/MEDIUM FLAVOR LIBERAL SMOKERS
y . IMAGE IS A DETERRENT TO SALEWS OPTIMAL GROWTH .
PROBLEM IDENTIFICATION : 1975-1976
PROBLEM ANALYSIS
PROBLEM #1 : ADVERTISING COPY
EVIDENCE "B"
C . ® LACK OF COMMITMENT/ENJOYMENT AMONG SALEM
FRANCHISE/CONSUMPTION LOSSES/LOSS OF OLDER
SMOKERS
CAUSE :
0 BRAND TASTE/BENEFIT POSITIONING (PHYSIOLOGICAL
BENEFIT)
Loss OF IMPACT : REFRESHES/REFRESHMENT
BENEFIT NO LONGER UNIQUE . (GENERIC TO
MENTHOL CATEGORY)
2, LOSS OF MOTIVATION : COMMUNICATION RESEARCH
REVEALS "REFRESHMENT" BENEFIT CONSIDERED
IMPORTANT BY LESS THAN 20% OF SMOKERS
PRQ LEI1 IDEN.TI F I CATIQ'lPROBLEM Ai•JALYS I S
PROBLEM #2 : PRODUCT ATTRIBUTES/FORMS/STYLES
ELIDEN .CE :
0 BRAND PRODUCT STYLE MIX WAS NOT FULLY
MEETING EMERGING WANTS/NEEDS .
C,AIE.CxQ.B.Y Z VOLUME CHANGE (75 VS 74)
NFF ~ -2. s%MENTHOL ~ +y,yz
Hi-Fi ~NON-FILTER
100MM-7 .3%+3 .2%
o FRANCHISE ATTITUDES CONFIRM FAILURE TO MEET
CERTAIN WANTS/NEEDS .
LARGE "WORRIER" SEGMENT
LOSS OF OLDER, MORE "WORRIEDit SMOKERS
GROWING It CONCERN" OVER HEALTH
CAUSE :.
o ABSENCE OF SALEM ENTRY IN FASTEST GROWING
CATEGORY (HI-FI) 0
o FAILURE TO PROVIDE ADEQUATE MARKETING SUPPORT
FOR BRAND GROWTH STYLE (100MM)
e ~
INTRODUCTION OF NEW THREE-PART
MARKETING STRATEGY : MID-1975
• NEW ADVERTISING CAMPAIGN
® NEW "LIGHTS" LINE EXTENSIONS
0 NEW SPENDING STRATEGY
' 7
0 BACKGROUND
0 PRELIMINARY STRATEGIES AND RESEARCH RESULTS
o FINAL CREATIVE STRATEGY
0 pSMOKING ENJOYMENT" CAMPAIGN DEVELOPED : RATIONALE
0 PERFORMANCE TO DATE
0 DAY-AFTER-RECALL TESTING
0 CAMPAIGN COMMUNICATION STUDIES
0 CONSUMER RESEARCH
NEI~1 PDVERTISING C1IMPAIGN
BACKGROUhD
© WILLIAM ESTY (AGENCY OF RECORD) AND ROSENFELD,
SIROWITZ & LAWSON GIVEN CREATIVE ASSIGNMENTS
EARLY I N 1974
i FOUR STRATEGIES DEVELOPED-i
1 . NEW MENTHOL BENEFIT
2 . POSITIONING WITHIN CATEGORY
3 . USER IMAGE
4 . RETURN TO ORIGINAL STRATEGY : SALEM AS AGOOD, ENJOYABLE CIGARETTE
0 APPROXIMATELY 100 CAMPAIGN IDEAS DEVELOPED
AND SCREENED ; 40 CAMPAIGNS SUBMITTED TO EXTENSIVE
COPY RESEARCH
NEVI ADVERT I S I NG CATAI GPJ
PREL IMI PIARY STRATEG I ES so, RESE/IRCH RESULTS
STRATEGY #1 : MENTHOL POSITIONING
COPY POINTS
FRESHNESS, MOIST, SOFT, COOL, SPRINGTIME, COUNTRY TASTE .
2, RESULTS® RECALL IMPACT OF MENTHOL POSITIONING CAMPAIGNS AT
OR BELOW LEVEL FOR EXISTING CAMPAIGN ("REFRESHES
NATURALLY") .
A MENTHOL DESCRIPTIVES/BENEFITS NOT NEW, UNIQUE, OR
IMPORTANT .
0%
j4EV ADVERT I S I f JG CAMPA I GN
PfsEL] ~]L1L'JARY STUTEGIES 1 RESEARCH RESULTS
STRATEGY #2 : POSITIONING'WITHIN CATEGORY@
1 . COPY POINTS
SMOOTH, EASY, MILD, NOT HARSHI,HOT .
RESULTS
• GENERALLY LOWER RECALL/PERSUASIVENESS THAN CURRENT
CAMPAIGN,
0 SMOOTH/EASY/MILD CLAIMS NOT UNIQUE, NEW, MEANINGFU~_ .
NEW ADVERT I S I NG CAMPlI I GN
P.BF1. IMI NARY STRATEG I ES & P.ESE.'14RCH RESULTS
STRATEGY #3 : USER IMAGE
1, COPY POINTS
VISUAL/VERBAL DESCRIPTION OF SALEM SMOKERS (CONTEMPORARY,
ACTIVE, MASCULINE)
RESULTS
® IMAGE ALONE GENERATED LOW PERSUASION
0 HARD TO ACCEPT/BELiEVE ;' N'EGATIVE RESPONSE TO
TOO-OBVIOUS IMAGE RUB-OFF
® CONCLUSION : IMAGE BENEFIT SHOULD BE MARRIED WITH
PRODUCT BENEFIT
C
0
4ers
~N
NEW ADVERZI S I PaG CAMPA I GN~ R RA G 8 c MINI& 8
STRATEGY #4 : RETURN TO ORIGINAL STRATEGY
1 . Copy POINTS
ENJOYMENT/SATISFACTION/GOOD CIGARETTE ("WHY
SMOKE IF YOU DON'T ENJOY IT?") .
2 . RESULTS
o ENJOYMENT/SATISFACTION CONCEPT GENERATED
HIGHEST COPY TESTING SCORES AMONG ALL
CAMPAIGNS TESTED :
6 MAIN IDEA COMMUNICATED
0 MAIN IDEA GIVEN HIGHEST RATING OF
1MPORTANCE/DIFFERENCE/INTEREST
c
NEt-! ADVERT I S I NG CAt1PAI GPJ
SUMMARY OF FINDIf1GS/CQNCLUSLONS
0 IMAGE PROBLEM MUST BE ADDRESSED .
NOT EFFECTIVE STRATEGY .
IMAGE ALONE , HOWEVER,
0 MENTHOL BENEFITS/POSITIONING WITHIN CATEGORY NOT UNIQUE/
IMPACTFUL, MEANINGFUL, PERSUASIVE .
0 "ORIGINAL" POSITIONING (PLEASURE/ SAT I SFACT I ONI ENJOYMENT)
MOST MEANINGFUL/IMPORTANT/UNIQUE .
0 OPTIMUM STRATEGY : COMBINE ORIGINAL POSITIONING WITH
IMAGE BENEFIT,
~
NEW ADVERTISING CAMPAIGI4
", MOS KI NG f N OYMFN,T" CAMPA I GN
,,WPALGN DEVE1,QPED AND EXECUTED
0 WILLIAM ESTY CAMPAIGN
RA'[IONALE FOR DE,VELQPdFjNT OF "SMOKING ENJO1jjyFNT" CAMPAIGNI
0 ON-STRATEGY
0 ADDRESSED IMAGE PROBLEM DIRECTLY
0 ADDRESSED PROBLEM OF SMOKER ATTITUDES/PERCEPTIONS
(LOW ENJOYMENT/DECREASING CONSUMPTION)
® UNIQUE BENEFIT MOTIVATING TO ALL SMOKERS
0 COPY PRE-TESTING RESULTS ARE POSITIVE
NEti.I AUVERT I S ING CAMPA I G;d
F I NAL. CRFAT I VE STRATEGY
e OBJECTIVEDEVELOP AN ADVERTISING CAMPAIGN FOR SALEM
WHICH SIGNIFICANTLY OUTPERFORMS THE CURRENT
1974-1975 CAMPAIGN IN TERMS OF ITS ABILITY
TO GENERATE AN INCREASED SHARE OF INDUSTRY
SALES .
. o CREATIVE STRATEGY
1 .
SMOKERS .
USER POSITIONING
CREATE A POSITIVE/CLEARLY DEFINED BRAND
USER IMAGE : MASCULINE, ACTIVE, CONTEM-
PORARY, EMULATABLE, THE IMAGE MUST HAVE
SPECIAL APPEAL TO MEDIUM FLAVOR LIBERAL
. o~ o+
, o+v+. ~
o CREATIVE STRATEGY (CONT,) :2, PRODUCT BENEFIT POSITIOWING
COMMUNICATE THAT SALEM ALWAYS DELIVERS
REAL SMOK I P!G ENJOYMEPJT/SAT I S FACT I ON/
PLEASURE . THE "REASON WHY" I S SALEM'S
GOOD CIGARETTE TASTE AND ITS REFRESHING/
COOLING MENTHOL .
0
@ CREATIVE STRATEGY
3 . EXECUTI OEJALGL1 i DEL I f•!E S
• PROVOCATIVE/IMPACTFU L
® HONESTY, CANDOR, BELIEVABILIT Y
® CAPABILITY TO INTEGRATE ALL BRAND
STYLES WNIDER CAMPAIG N
• ADAPTABLE TO ALL SPECIAL MARKET
SEGMENTS
• SIMPLE, CLEAR LANGUAGE
C/`~PAB I L I TY OF LONG TERM DURAT I OiJ
0NEW ADy R~ T I S ING CAMPA I GN
" I 'N6 ENJOYMENT" CAMPA I G[~!
CQ,['Y Pf;E-TE STING S~ ULTS ARE POSITIVE
A. EXPLORATORY RESEARCH (FOCUSED-GROUP SESSIONS)
® HIGH COMPREHENSION OF MAIN IDEA.
0 UNIQUE/UNLIKE OTHER CIGARETTE ADS
A YOUNG SMOKERS STRONGLY ATTRACTED TO MODELS
6 BELIEVABLE/HONEST
B. RECALL IMPACT (DAR TESTING)
o DAR TEST SCORES OF ADS AVERAGE 35% VERSUS
CIGARETTE NORM OF 19%
C . PERSUASION/MOTIVATION (PORTFOLIO ATTITUDE SHIFT)
® PORTFOLIO ATTITUDE SHIFT SCORE (101)
HIGHEST OF ALL 40 ALTERNATE CAMPAIGNS
TESTED
NEW ADVERTISING CAMPAIGN
"SMOKI NG ENJOYP9EPlT" CAMPAI GN
CAMPAIGN INTRODUCED NATIONALLY IN ALL MAJOR
MEDIA VEHICLES IN AUGUST 1975
__'SMOK I NG ENJOYMENT" CAtqPA I C NPERFORMANCE To DATE
DAR TESTING
® RECALL IMPACT
o 36% DAR AVERAGE (7 ADS)
o 60-65% ABOVE ALL-CIGARETTE NORM
® COMMUNICATION
o 57% OF RECALLERS PLAY BACK "ENJOYMENT"
(WINSTON TASTE : 56%)
0 100% OF RECALLERS PLAY BACK MODEL
o 40% OF*RECALLERS PLAY BACK STRONG ATTI-
TUDINAL COMMENTS RELATING TO MODEL/IMAGE
0 VOLUNTEERED BRAND STYLE PLAYBACK 20-30%
N" ~MOICI NG E!`1JOYMENT" CIIN' PA I G N
Pf RFORMA CE TO DATE
CAMPA I Gjy_C 9t'1(y1N I CAT I ON STUD I E S
0 ADVERTISING AWARENESS HOLDING AT HIGH LEVELS (74%)
0 BRAND AWARENESS UP :
BRAND STYLE
KI NG
BoxLONGS
LIGHTS
417. 4. V75 kdL99% 100% 100/wo
44% 49%54% 59% 60%
A"ENJOYMENT" SALESPOINT COMMENTS BEGIN TO APPEAR
0 COMMENTS ON MODELS/IMAGERY BEGIN TO APPEAR
® BRAND ATTITUDES UP
A'[? I TUDES R/75 Ylfi
% RATING
SALEM 7+22% 25%
"sMC!KINr, OYMENE CAMPAIGN
PE RFORMANCE TO DAT E
[ON$11M R _SEARC H
e MRD MONITOR INDICATES THAT PROBLEMS IDENTIFIED I N
74/75 ARE BEING CORRECTE D
0 BRAND SOM AMONG YOUNGER SMOKERS SHOWING
INCREASING STRENGT H
® BRAND CONSUMPTION RATES HAVE INCREASEDi
0 FRANCHISE NOW SKEWING MORE TO HEAVIE R
SMOKER S
0 SALEM SMOKERS ENJOY SMOKING MORE THAN
. IN 74/75
NEW THREE-PART MARKETING STRATEGY
1 . NEW ADVERTISING CAMPAIGN
2. NEW "LIGHTS" LINE EXTENSIONS
o SALEM LIGHTS IN NOVEMBER 1975e SALEM LONG LIGHTS IN OCTOBER ' 1976
SALFM LIGHTS_
BACKGROUND
1 . DEFENSIVE OPPORTUNITY
o SALEM ' S LARGE "WORRIER" SEGMENT
• GROWING LEVEL OF "CONCERN"
o SALEM KING TAR LEVEL HIGH AT 19 MGI
0 SWITCHING LOSSES TO Hi FI BRANDS
• Loss OF OLDER SMOKERS
OFFENSIVE OPPORTUNITY
0 ATTRACT COMPETITIVE MENTHOL SMOKERS
SALEM LIGHTS .
, . .OBJECTIVES
somYEAR
YEAR IYEAR IIYEAR I II
2 . PROFIT
GROSS ;OM NET SOM,y%,y%,4% ,2%
• DISCOUNTED R0I OF 27%~~
MARGINAL CONTRIBUTION EQUAL TO SALEM KING
m
4% SAI .FrI LIGHTS
STRATEGY
1 . POSITIONING
o LOWERED TAR CIGARETTE OFFERING SALEM'S
GOOD CIGARETTE/MENTHOL TASTE
2 . PRODUCT
9 REPLICATE SALEM KING TASTE WITH A TAR
LEVEL OF IZ-l4 MG .
o 85 MM SOFT PACK
3 . TARGET MARKET
® FEMALES
e OVER 350 UPSCALE
DISTRIBUTION
0 NATIONAL INTRODUCTION
5 . COPY9'ANNOUNCEMENT" COPY/FOCUS ON NEW PACKAGE
® f'NEON" DEV I CE
6. SPENDINC
0 $20 rTi ANNUAL RATE (IST 4 MONTHS)
SALEM LIGHTSFOR~~IANCE TO DATE
0 GROSS SOM OF 1 .1% IN 1976 vs . .47 OBJECTIVE
A NET $OM OF .3 -,4/ vs . .1% OBJECTIVE
• TOTAL BRAND SOM/VOLUME LOSSES REVERSED ; NEW
GROWTH BEGINS
AWARENESS UP TO 60%
9% SALEM LONG LIGHTS
BACKGROUND
1DEFENSIVE OPPORTUNITY
0 NEW BRAND INTRODUCTIONS (MERIT, KENT GOLDEN
LIGHTS, FACT) THREATEN SALEM BUSINESS
! ANTICIPATION OF MERIT MENTHOL 10015
0 100MM LENGTH CONSTITUTES 30% OF BRAND BUSINESS
0 SALEM LONGS TAR LEVEL HIGH AT 19 MG .
® SALEM LONGS SMOKERS' GROWING If CONCERN"
o LONGS EXPERIENCING ,1 -2% SOM LOSSES TO
HI-FI CATEGORY
2 . OFFENSIVE OPPORTUNITY
NI••FI CATEGORY CONTINUES DRAMATIC GROWTH
(+.15, 4' I N 1976)o EXISTING VOID IN 100MM/NI-FI CATEGORY
1. SOM
SALEM LONG LIGHTSOBJECTIVES ,
YEAR GROSS SOM NET SOM
YEAR I 5% 2%'
YEAR II 6% .2%
YEAR III .7 % .2%
2. PROFIT
c DISCOUNTED ROI OF 16%
0 MARGINAL CONTRIBUTION EQUAL TO LONGS
MUM LONG LIGHTS, TRS ATEGY
1. POSITIONING
® LOW TAR, LONGER.LENGTH, SALEM's MENTHOL
. TASTE
~ 0 SALEM LI GHTS NOW COME I N A KFa LQLLG,EB .
LENGTH
0 SELL LIGHTS/LONG LIGHTS AS LOW TAR FAMILY
FROM SALEM (LENGTH ALTERNATIVES)
2 . PRODUCT
0 IoOMM
8
o
REPLICATE SALEM LIGHTS TASTE
12 MG . TAR
3 . PACKAGING
0 SOFT PACK
0 WHITE PACK CLOSE REPLICATION OF SALEM
LIGHTS GRAPHICS
y . SPENDING '
0 $ZSMM ANNUAL RATE (IST 6 MONTHS)
NEW THREE-PART MARKETING STRATEGY
1 . NEW ADVERTISING CAMPAIGN
2. NEW "LIGHTS" LINE EXTENSION
3. NEW SPENDING STRATEGYf
0 NEW BRAND STYLE MARKETING MIX
9 SEGMENTATION STRATEGY
0 NEW SALES PROMOTION STRATEGY
0 SPENDING TESTS
NEW SPENn I "IG STRATEOY
NEW BRAND STYLE P1ARKETING PJIX~~~111
B HISTORICALLY. LOW LEVEL OF COPY EMPHASIS
ON INDIVIDUAL BRAND STYLES,
• SPENDING ALLOCATION BY BRAND STYLE FAILED
TO REFLECT GROWTH/GROWTH OPPORTUNITIES,
SALEMBRAND STYLE ALLOr.AT i ON
SHARE OF VOL UME VS . SHARE . F TIVE T I S.IM
BRAND STYLE
KING
LONGS
BoxBRAND FAMILY
TOTAL
--1.410 - --197-1-- __1SZ2__ 1973 1974_SQY M4 M SDA M SPA M MA m SQA1~ 43 77 36 - 7<< 29 ' 72 35 67 12
-45
26 17
3A
F28 7
3a
29 134 24
100 100 100 100 100 100 100 . 100 100 1o0
NEW SPEND I NG STRATEGYNEW BRAND STY E MAR KET ING M I X
A! 19CAT I ON PLAN
NEW BRAND STYLE SPENDING MIX IMPLEMENTED CONCURRENTLY
WITH NEW CAMPAIGN INTRODUCTIONS
BRAND STYLE SPENDING
SECOND H ALF 1975/IST HALF 1976
BRAND STYLE Z YQLUME Z SPEND I NG
SALEM KING 63% 33%SALEM LONGS 31% 447SALEM Box 4% 10%SALEM LIGHTS ( INTRO) 2% 13%
NFW SPEND I ~I_ G STR~TEGYNEW BRAND STYLE MARKETINQ MIX
CRE.A? IVE PLAN
0 INDIVIDUAL BRAND STYLE MESSAGES/BENEFITS INCORPORATED
INTO NEW CAMPAIGN .
0 COMMON BENEFITS (IMAGE/ENJOYMENT) DELIVERED IN ALL
ADVERTISING IMPRESSIONS; BRAND STYLE MESSAGES;
SEGMENTED BY AUDIENCE POTENTIAL :
IENJOYMENT
(PHYSIOLOGICAL). BENEFIT
IMAGE(PSYCHOLOGICAL)
BENEFIT
LONGSKI NG Box .
a+a~o,
NEW SP~dDING STRATEGYNEW SEGMENTATION STRATEGY
PREVIOUS STRATEGY0 ALLOCATE MARKETING DOLLARS TO MARKETS ON BASIS OF
POPULATION/CURRENT, ACTUAL VOLUME FOR TOTAL BRAND,
NEW STRAT GY0 GEOGRAPHIC SEGMENTATION AND SPENDING
0 MODEL DEVELOPED TO ALLOCATE DOLLARS ON BASIS
OF TRENDS/FUTURE VOLUME POTENTIAL FOR EACH
BRAND STYLE$
0 DEMOGRAPHIC SEGMENTATION AND STRATEGY
o MODEL DEVELOPED TO ALLOCATE DOLLARS ON BASIS
OF TRENDS/VOLUME POTENTIAL FOR MAJOR DEMO-
GRAPHIC GROUPS FOR EACH BRAND STYLE@
ON NEW SPENDING STRATEGY
NEW SALES PROMOTION STRATEGY
0 BACKGROUND
0 HISTORICALLY, BRAND USED SELF-LIQUIDATING
PREMIUM OFFERS AND SWEEPSTAKES PRIZES TO
GENERATE PACK SALES (VIA PROOF OF PURCHASE)
AND TO EXTEND ADVERTISING MESSAGE/READERSHIP
0 N0 EVIDENCE OF VOLUME INCREASES
0 NEW STRATEGY IMPLEMENTED : 1976® TRIAL/CONVERSION/VOLUME-BUILDING PROMOTIONS
• COUPONING IN 1976/1977
0 SAMPLING IN 1977
NEW SPENDING STRATEGY
SPENDING TESTS
0 PURPOSE : REFINE KNOWLEDGE OF BRAND'S RESPONSIVENESS
TO
B VARIATIONS IN ToTAL SPENDING LEVELS
0 VARIATIONS IN $TYLE SPENDING LEVELS
. ~0 SPENDING TESTS BEGUN IN RAY 1976
~
® +100% OF NATIONAL, LEVEL
,
o +50% ~0 -50%0 BRAND STYLE MIX (CONVERT ALL LOCAL
ADVERTISING TO BRAND STYLE WITH IDENTIFIED
GROWTH POTENTIAL)
@ RESULTS DUE LATE 1977
,
0 NEW CAMPAIGN AND LIGHTS STYLES HAVE INJECTED
NEW LIFE INTO SALEIVS BUSINESS .
1976 SOM OF $ .9i~ HIGHEST IN BRAND'S HISTORY .
0 8 .9% SOM NEARLY HALF-A-SHARE-POINT HIGHER
THAN 1975 FORECAST .
0 SHARE GROWTH ATTAINED IN SPITE OF NEW BRAND
PROLIFERATION
TOTAL N0 . OF BRANDS/STIFS
27 1040 GHANGING CONSUMER PREFERENCES ( I .E . LONGER
LENGTH, LOWER TAR, ETC .)
0 STRONG COMPETITION FROM K00,.,
MENTHOL SPIN-OFFS
NEW BRANDS,
d EVIDENCE SUGGESTS BRAND CAN AVOID NORMAL PRODUCT
LIFE,CYCLE PATTERN EVEN AFTER 20 YEARS .
50310 6682
i. ;. - . . . . . . . . . . . . ~.~
/ ~... r . .. ' .._T^~F ∎.-_ ,
~. ' ..L
..•
~ rAw*!,~.'f„~ww~l+ ~". ~+.. J . •
r
US I PIESS PROJ EC'f I ONSQYERICIFJW
SALEM IS IN A STRONG POSITION AS BRAND ENTERS 1977 AND
FUTURE .
o BRAND VOLUME/SOM GROWTH RESTORED IN 1976 . WILLCONTINUE IN 1977 .
0 PRODUCT/BRAND STYLE MIX WELL-POSITIONED TO MEET
GROWING CONSUMER WANTS/NEEDS .
0 QUALITY PRODUCTS
o MILD TASTE PERCEPTIONS
0 TWO "LOW TAR" STYLES
o BRAND COMPETING IN GROWIFIG MENTHOL CATEGORY AND
GROWING SUB-CATEGORIES .
0 * HI-FIa IooMM
o RESEARCH SHOWS ADVERTISING CAMPAIGN
EFFECTIVELY CORRECTING PREVIOUS PROBLEMS :
4 BRAND IMAGE MORE CONTEMPORARY
© MORE MOTIVATING PROMISE
~ IMPROVED SMOICER ATTITUDES (ENJOYMENT
OF SMOKING~ CONSUMPTION)
US INLESS PROJECTIONS
DVEBICIEW
0 POPULATION/DEMOGRAPHIC SHIFTS AND TRENDS PRESENT
FAVORABLE ENVIRONMENT FOR SALEM .
o POPULATION GROWTH SHIFTING TO SALEM's STRONG
AREAS (SOUTHEAST/SOUTH CENTRAL) $
® MOVEMENT OF POPULATION BUBBLE INTO MIDDLE-I
AGE SEGMENTS CONSISTENT WITH SALEM's STRENGTH :
18-24
25-34
35-49
50+
65-7 0
+227
70-75
+12%
+p2
-2+8
75-80
+11 %
+22 1
o SALEM EXPERIENCING SOM GROWTH AMONG YOUNGER SMOKERS :
SALEM SHARE OF SMIOKERS.
~'iEQg4u.p APR . '74* AP3 .VS APR . '76
18-20 1111% 10,49: 11 .3%
21-24 9.5 9.6 919
' ;
BUSINESS PROJECTIONSOVERVIEW
• KOOL EXPECTED TO SHOW SOM/VOLUME DECLINES .
• LEVELING/DECLINING BLACK MARKET SOM
• LEVELING/DECLINING INCIDENCE OF
SMOKING AMONG YOUNG SMOKERS
6 SLOWDOWN I IV GROWTH RATES OF YOUNG .
ADULT POPULATION SEGMENTS
o KOOL INCONSISTENT (STRONG/HARSH)
WITH CHANGING CONSUMER PREFERENCES
(HI-FI/MILD TASTE)
a
BU I 'dPROT I MS
Q1(EffiCIEW
0 NEWPORT GROWTH LIKELY TO LEVELI
0 STRENGTH/GROWTH HAS BEEN CONTRIBUTED BY
YOUNGER WOMEN
0 SLOWDOWN IN GROWTH RATES OF YOUNG ADULT POPU-
LATION SEGMENTS
0 LEVELING/DECLINING INCIDENCE OF SMOKING AMONG
YOUNG SMOKERS (PARTICULARLY FEMALES)
® ABSENCE OF HI-FI ENTRY AS YOUNG SMOKERS
BEGIN TO ADOPT LOW TAR PREFERENCES
BUSlNESS PROJECTIONS~ QV.EPiYIE11
O BRAND MUST, HOWEVER, MEET CHALLENGES FRONI EXISTING
AND ANTICIPATED COMPETITORS
o MERIT MENTHOL : g5'S, NEW 100'5
8 NEWPORT LIGHTS '
'N
0 `KENT GOLDEN LIGHTS/CARLTON MENTHOL/VANTAGE MENTHOL
6 BENSON & HEDGES MENTHOL LIGHTS
• NEW PM MENTHOL BRAND
0
N
~~
BUSINESS PROJECTIONS
CATEGORY SOM PROJECTIONS
CATEGORY - l9Z6 1~IZ 1978. 1m 1980
MENTHOL 28.6% 29.2% 29 .7% 30.2% 30.6%NFF 41.3 41.0 41.0 40,8 40.595-101MM 24.2 24,8 25,4 26.2 26.8Hi-Fi 15,4 18,8 21.6 24,2 26 .5
O MENTHOL (4 .7) (6.0) (6.9) (8.0) (8.6)® NON-MENTHOL (10 .7) (12 .8) (14 .7) (16.2) (17 .9)
SUMMARY© MENTHOL CATEGORY SOM WILL GROW AT EXPENSE OF NON-MENTHOL
BRANDS .
e SALEM WI LL PARTICIPATE IN OTHER GROWINr- CATEGORIES/SUB-
CATEGORIES :
Q 100Mao HI-'FIo HI-FI MENTHOL
50310 6691
BUS1 NESS PR JECTIONSCATEGORY SPEND?NG
1975 1976 1977 CHG . '77 vs . '75,yCAIEGQBY $ .~ $ .. -L $ ~ $.
Hi-Fi $ 56 .9 20% $169 .3 45% $182 .0 45% +$125 .1 +220%
BALANCE INDUSTRY 232 .5 ..$( J 206 .1 M 2,2$aQ --
TOTAL $289 .4
.
100% $375 .4
-
100%
,.. .
$410 .0 100: '+w120 .6 + 42%
SUMMARY,• Hi-Fi CATEGORY ' S IMPACT ON INDUSTRY EVIDENCED IN CURRENT /PROJECTED SPENDING (45% oF
TOTAL IN 1976/1977) .
B1lSlNESS P.R . .JEO CT I 0"1S
SALEM SOM FROJ ECT I ONS
Q 1977 SOM GOAL : ACHIEVE ALL TIME HIGH SOP1 OF 9 .0%
BRAND STYLE
KING
Box
LONGS
LIGHTS
LONG LIGHTS
TOTAL 8. 9M 9 . - 0%
VOLUME(BILLIONS)
52 .6 53.5
VOLUME %CHANGE
+3.3% +1 .7%
1977 MARKFTI ^!GST.BA.L GY
a PosITION SALEM :o As CIGARETTE THAT REPRESENTS SMOKING ENJOYMENT (I .E .
A GOOD, ENJOYABLE CIGARETTE WITH MENTHOL TASTE) .
© As CIGARETTE FOR COiJTEMPORARY, INDEPENDENT, SELF-
ASSURED ASSURED SMOKERS, WITH YOUNGER MALE EMPHASIS (CON-
~TINUE TO UPDATE BRAND IMAGE)
1977 MA_T I NG~ TRAT rY
• SUPPORT THE BRAND WITH HIGH COMPETITIVE
LEVEL OF SPENDING RESOURCES (31 .6MM),
.TERMINATING SALEM'S ERODING SHARE OF
INDUSTRY SPENDING (6%) .
. -1977 MARKE,T I rJG STRATEGY
CONTINUE INTRODUCTORY ADVERTISING SUPPORT
JCREATIVE AND SPENDING SUPPORT) FOR LIGHTS/
LONG LIGHTS THROUGH 1ST HALF OF 1977 .
r
' ~ . . . .
1977 MAR ETIPJG STRATEGY
0 IMPLEMENT SEGMENTED BRAND STYLE MARKETING
PLAN. DELIVERING ADVERTISING AND PROMOTION
TO DEMOGRAPHIC AND GEOGRAPHIC SEGMENTS
REPRESENTING HIGH GROWTH POTENTIAL FOR
EACH STYLE8
,3.977 MARKE]' IN5 STRATEGY
OON
e ALLOCATE BUDGET TO BRAND STYLES CONSISTENT WITH PROJECTED
GROWTH POTENTIAL :
BRAND STYLE Z SPE[dD I NG ~ VOLUME VQLUME TREND
KING 2LBox -- ~LONGS 25-LIGHTS/LONG _51'. ,;
483
28Zl
DOWN
DOWNFLATup -
LIGHTS
TOTAL 100% 100 % UP
1„477 MARKETING STRATEGY
DVERTISINr CAMPAIGN
® OBJECTIVES :
0 CONTINUE TO UPDATE/CONTEMPORIZE BRAND USER
IMAGE
® CONTINUE TO COMMUNICATE THAT SALEM ALWAYS
DELIVERS REAL SMOKING ENJOYMENT
• NEW EXECUTIONS TO BE ADDED TO POOL (PRE-
SCREENED BY COPY TESTING)
b CONTINUE MALE EMPHASIS (80%)
• EXPLORATION OF LIGHTS/LONG LIGHTS INTEGRATION
INTO CAMPAIGN UNDERWAY
o EXPLORATION OF THE USE CF MULTIPLE BRAND
STYLE S IN CURRENT CAMIPA :.GPl,
6 EXPLORATION OF NEW LIGHTS CAMPAIGN OR
LIGHTS/LONG LIGHTS INTEGRATION INTO
CAMPAIGN UNDERWAY,
1_97Z MARKET I NG STRATEGY
_NSUER RESEARCH
i CONDUCT MAJOR RESEARCH ANALYSIS OF MARKET AND
BRAND I N 1.977 . -
0. OBJECTIVES ;
0 IDENTIFY EMERGING CONSUMER TRENDS AND
PROBLEMS/OPPORTUNITIES FOR SALEM AS
BRAND CHARTS FUTURE DIRECTIONS
0 DEVELOP OPTIMAL LONG TERM STRATEGY FOR
BRAND (I .E . LIGHTS/LONG LIGHTS)
0 STAY AHEAD OF COMPETITION
1277 P"AgKET I NG STRATEG Y
PROj~w-CT , TE ST IIG L,DEVEJ,.,OPMENT
B DEVELOP CAPABILITY TO REDUCE TAR LEVELS
FOR KING AND LONGS TO 17 MG . BY END OF
YEAR
0 DEVELOP CAPABILITY TO- LOIVER KING TAR LEVEL
TO 15 MG . IN 1977
6 DEVELOP CAPABILITY TO LOWER TAR LEVEL ON
LIGHTS STYLE S
o DEVELOP C.4PAB I LI TY TO IMPROVE BLENDS OF
ALL BRAND STYLES
MAgKEllu p yT
1976 vs 1977
($m"I)
BUDGET 1n 1277 - I CHANGE
ADVERTISING $27 , 4 $27 ,6 + 1%
PROMOTION 2 , 9 M. +30
OTHER A .2 -50
TOTAL GROSS $30.7 $31.6 + 2%
TOTAL NET $28.4 $29,6 + 3%
a2A l.ldl
1977 FINAPICIAL SUMMARY
® MARGINS WILL CONTINUE TO BE HIGH . .
0 RETURN ON SALES WI.LL REMAIN HIGH/INCREASE SLIGHTLY
® CHANGING BUSINESS MIX (I .E . TO LIGHTS STYLES) WILL
NOT DIMINISH MARGINS/RETURN
0 OPERATING PROFIT (BEFORE TAXES) WILL CONTINUE TO
INCREASE (+9 .0% VERSUS 1976)
0 SHARE OF CORPORATE PROFIT ( 31 % BEFORE TAX PROFIT)
WILL EXCEED SHARE OF CORPORATE VOLUME ( 26 %)
SALEMEINANCI SUMMARY
($000M NET)
J ~ ~ ~. / (DEC. ) ~
NET SALES $658.4 $697.0 $38.5 ~MARGINAL CONTRIBUTION 223.2 239.8 16.6" ~7.4OPER . PROFIT BEFORE TAXES & 184 .5 199 .0 14 .5 7 .9MKT . CONT . EXPENSE
SALES t"~ERCHAND I S I NG EXPENSE ~_ 1],j5 _ . 3 3.0
OPER. PROFIT BEFORE TAXES AND $173 .3 $187 .5 $14.2 8.2%ADV . EXPENSE
I ADVERTISING & PROMOTION $ 28.4 $ 29.6 $ 1.2 . 4.0%
OPER . PROFIT BEFORE TAXES $144 .9 $157.9 $13.0 9.0~
OPER. PROFIT AS % NET SALES
BEFORE MKT. EXPENSE 28.0% 28 .6%
AFTER PZKT . EXPENSE 22.0/00' 22 .7%
SOL9 0 lEOS - 1.~