POINT OF SALE CIGARETTE MARKETING potx

POINT OF SALE CIGARETTE MARKETING An important tobacco industry strategy Stacy Carter MPH Hons BAppSc The University of Sydney Funded by an Australian Postgraduate Award US National Inst

POINT OF SALE CIGARETTE MARKETING

An important tobacco industry strategy

Stacy Carter MPH (Hons) BAppSc The University of Sydney Funded by an Australian Postgraduate Award

US National Institutes of Health R01CA87110 Australian National Health and Medical Research Council 153857

Outline

ÜSources

ÜAustralia and Canada

ÜIndustry response to serious marketing

restrictions

ÜEvidence that the retail environment is important to the tobacco industry

ÜImplications

Tobacco industry document

sources

Other sources

Australia and Canada

"Australia is one of the darkest markets in the world it

probably is the darkest, I mean ourselves and Canada fight

every month for who’s got the darkest conditions to do

tobacco manufacturing and marketing And one of the

things we can offer the world is what we do best, which is

how to work, maximize, proactively drive our market

position in a market that’s completely dark Now that takes

a different skillset a different type of learning we know

we have a lot of expatriates who come down to Australia for

learning they can come here and learn these techniques

and take them back to Europe or Latin America or to the

United States or to Africa "

David Crowe, Marketing Director, British American Tobacco (BAT) Australia

BATES 2048148837/8989

“Within the present restricted marketing

environment, we will develop programs

to maximise the impact of remaining

advertising opportunities and continue to

research innovative new techniques.”

Philip Morris Asia/Pacific Three Year Plan 1992- 1994 BATES 2500064000/4226

Philip Morris 1991 original budget: Marketing Presentation

October 1990 Bates No 2504107139A/7171

The priority is continuing to foster relationships

between consumers and brands

‘‘Going out and directly contacting our key target

consumer is becoming increasingly more

important, particularly in light of the upcoming

media ban… we must now talk to the consumer

face to face…’’

ÜRetail marketing

ÜAltering the pack

ÜEvent promotions

ÜAdvertising in imported international magazines

ÜSponsorships

ÜBrand stretching

ÜLifestyle premiums

ÜThe development of corporate websites

Marketing activities after bans

Does retail marketing make any

difference?

Ü Limited research on the retail environment

Ü Effects are difficult to measure because retail marketing

happens in the context of other tobacco industry and tobacco

control activities

Ü Many studies poorly designed

Ü Studies associate self-reported exposure to retail marketing in

young people with tobacco use or attitudes, studies of opinions

of the effects of POS

Ü Although marketing research tends to be poorly detailed or very

expensive, it makes great claims for effectiveness of retail

marketing

Ü Thus industry documents provide valuable evidence

What do the industry documents

say?

ÜAfter regulation of marketing, point of sale marketing

became even more important to the industry

Philip Morris Australia Aug 1995 Bates 2071284487/4490

Other research

ÜUS: As regulation increases, the tobacco industry puts

most of their money into the retail environment (e.g

post MSA)

ÜUS: Expenditure in the retail environment is growing –

approximately 80% of marketing expenditure is retailer

incentives

ÜCanada: data released under Access to Information by

Health Canada shows rising retail marketing

expenditures – most recently $90m in the 2003-4

financial year

What does the tobacco industry

do for retailers?

ÜTrade promotional expenditure

ÜIn-store display hardware and assistance with

POS marketing

ÜCorporate advertising and alliance building

ÜBrand advertising direct to retailers

ÜA new, innovative electronic distribution system

Trade Promotional Expenditure

ÜRetailer rewards and loyalty programs

ÜRebates and price supports

Other research

Ü US: Industry spend at retail increases

levels of cigarette advertising and

decrease prices

Display hardware and advice

ÜThe point of sale (POS) display has become a

life-or-death marketing issue

ÜSales reps provide assistance with all aspects

of retail marketing, including designing the

stock selection and display to match the shop’s

demographic, and how to display to increase

purchasing

ÜSales managers and reps now engage with the

minutiae of retail display

Display hardware and advice

“We’ve been pushing retailers to put their cigarettes on the back

wall, and we’ve had some initiatives where we’ve block-stocked

our products [we oriented the] product towards the consumer

rather than having it facing the floor so you see more of the

packet [we] changed the packet colours on one brand so

that it’s a uniform blue The aim of the exercise is instant

recognition: along with Benson&Hedges, that’s given us full gold

and blue blocks on display and that helps our brands stand out.”

Australian Service Station and Convenience Store News 1998;May/Jun:38-39

Stockdale B Australia trip: topline learning (highly restricted market)

12 Feb 1997 R.J Reynolds Bates 518093846/3852

Australia trip: topline learning (highly

restricted market)

12 Feb 1997 R.J Reynolds

Bates 518093846/3852

Stretch loopholes as far as possible

Stockdale B Australia trip: topline learning (highly

restricted market)

12 Feb 1997 R.J Reynolds Bates 518093846/3852

Corporate advertising and alliance

building

ÜRegular tobacco industry involvement in

retail industry events

ÜRegular pro-tobacco industry editorial in

retail trade press

ÜCorporate advertising in retail trade

magazines

Brand advertising direct to retailers

ÜRarely provides new information

ÜExtensive use of imagery and positioning statements

Electronic distribution systems

“the importance of the distribution system is

growing as more marketing restrictions are

placed on the industry”

PHILIP MORRIS ASIA/PACIFIC THREE YEAR PLAN 1992- 1994

BATES 2500064000/4226

Electronic distribution systems

The response:

Üinnovative electronic ordering and distribution systems for

small to medium sized businesses

Üe-Orders from Philip Morris, Quatro4 from BAT

Üdistributing all products

Ücontain tobacco advertising

Üplace tobacco products at the heart of small business

ÜAustralian innovations which may be rolled out to other

markets

ÜNo doubt that the industry continues to market

to consumers however possible

ÜNo doubt that the retail environment is a key

location for such marketing

ÜThe tobacco industry has built deep

relationships with the retail sector: cultural

change will be necessary

ÜRetailers and the point of sale must be included

in any attempts to control tobacco marketing

ÜPoint of sale marketing is not limited to

trademarks: the industry will find ways to use

anything except a complete ban on display

ÜThere is precedent for the industry paying for

the cost of display hardware