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~ ~THE AMERICAN TOBACCO COMPANY Memorandum A7825 G ~7) yO ~rom ~er Mr. R. E. Smith, Vice President - Brand Management J~n~zy 7, 1991 DaI~ J. C. Bogie, Product M~ager Approval Recc~me~dation - LUCKY STRI~ Package Design Exploratory This document will serve as a recommendation to conduct the initial phases of a package design exploratory for the total LUCKY STRIKE product line. LUCKY STRIKE Non-Filter was introduced in 1916 with its classic green package. The green pack was changed to white in 1942 because the chromium needed to produoe green inR became a valued war commodity. It wasn't until 1981 that LUCKY STRIKE introduced its Filtered King size LOW Tar product. A new package design ~nd ~odified bull's eye Has used. Soon ~fter the kings were introduced the 100"s style was introduced using the same package design. Then, in 1984 LUCKY STRIXE Lights were introduced in King and 100"s soft pack styles. Th~ packaging for these styles was again different from Non-Filters and the Low Tar packages. The silver striped packaging with yet still another slightly different treatment of the bull's-eye was used for the Lights product. Attached for your review is a color photo copy of the eDtire LUCKY STRIKE line of packaging. R~COMM]ENDAT~ON It is recommended that LUCKY STRIKE conduct the initial phases of a package design exploratory ($30,000). The exploratory will cover design development through preparation of quality silkscreened comprehensives for the Low Tar ~nd Lights King Soft Packs.

Mr. R. E. Smith January 7, 1991 Page TWO The following will identify the key rationale in support of this recommendation: i. Consumers ~ention packaging as one of the four important criteria in selecting their ideal cigarette. The four key criteria are: Image Taste ~ackage Price Thus, optimal packaging is critical to successfully competing in the cigarette industry. 2. An integrated look across all styles can provide an image of quality. In combination with LUCKY STRYKE'S more competitive iowsr price, this should result in the brand being perceived as a good value. Establishing a desirable and compelling quality image along with an acGeptable price will give consumers the sense that LUCKY STRIKE is a good value. This packaging and pricing strategy has been most recently accomplished by Montolair and was undoubtable important to its current success. 3. We need to conduct LUCKY'S packaging design exploratory while we're still resolving the brand's pricing strategy. This will put the brand in an ever stronger marketing position to be relaunched in the near future. Thus, the brand,s optimal packaging design should be resolved prior to the completion of the sub-generic price test. 4. Dramatic or significant changes are needed to reverse LUCKY Filter's -24% annual sales decline. An integrated quality paokage design alone m~y not reverse the decli~e, but Gan be one importaDt contribution in slowing or reversing the decline. 5. Introducing a new line of packages for LUCKY STRIKE provides some news value to the trade and consumer. Introducing packages that appeal to a young adult male target (21-29) may provide an additional motivation for them to try the brand. If supported with media, this can help our selling efforts as it provides a new reason for the trade to display the brand and could even be tied into the 75th anniversary of the brand.

Mr. R. E. smith Jan%laY~] 7 , 1991 Page Three 6. 7, Onr Major competitors, Marlboro and Camel, both offer an integrated and totally consistent package design and brand name/logo treatment across all their package styles. These brands have successfully attracted the young adult male audience and can be our role model in how to create one image or one badge in a package line. An integrated package design look can provide for greater in-store presence. One package or carton color with integrated bull's-eye design can better compete as a "family" in today's cluttered in-store environment. PACKAGE DESIGN DEI<ELOPMENT Peterson and Blyth will develop the new integrated packaging line for LUCKY. This approval recommendation is for the initial phases of a package design exploratory. This ~ill provide us key insights i~to whether an improved package design can be developed and will help the selling appeal of the brand. Once w~'ve ~ad~ thi~ determination, additional funds will be required to complete the design development for the other styles and cartons. The ebjective of the design work is to heighten the quality image and p~ovide a closely integrated look to the LUCKY ST~I~E package line. Due to the i~portance of the King size to LUCKY's target audience the package design exploratory should focu~ on that size. This would help economize on the development costs and translating the final ~ing ~ize designs to 100"s size should be relatively easy. There are two starting points that see~ to make sense: i. Use the Non-Filter white look across all styles. 2. Use the nostalgic green package look for Non-Filters and Low Tar and the current white Non-Filtered look for Lights. Once the optimal package design has been determined, as p~evieusly ~entioned additional design work will be required. Specifically what will be needed are side and end panel design work, design work for the re~aining three styles, oarto~ designs a~d reproduction artwork. It was estimated this phase of the package design expleratory would cost an incremental $32,000.

Mr. R. E. smith January 7, 1991 Page Four Providing consumers with a package they are proud to display is unquestionably a critical asset to successfully marketing a cigarette. LUCKY STRIKE can benefit from a hi~2er quality image and more integrated family design. A package design exploratory will enable us to optimize LUCKY'S package and provide so~e real news valu6 for our target. A n~ paGkaqe can hopefully provide added motivation for consumers to try the brand. Your approval of this recommendation is requested. $cB/fso Packaqe2/l-4

Approval Recommendation - LUCKY STRIKE Package Design EXploratory J. M. Ookers J. E. Vyse R. J. Leisure G. T. Touger Date T. P. Kriz Date R. E. Smith Date R. M. Spight Date Date T.A. Albert Date Date E.J. Gesell Date Date J.J. Mellett Date D. S. Johnston Date W. J. Moore Date C. H. Mullen Date

LUCKY STR_~KE PACKAGE DESIGN EXPLO~ATOR~ OBJECTIVE The objective of the package design work is to obtain a closely integrated and family look to the LUCKY STRIKE package line. DIP~CTION Due to the importance of the King size to LUCKY's target audience (M 21-59) the package design exploratory should focus on that size. This would help economize on the development costs and translating the final ~ing designs to 100's size should be relatively straight forward. There are two starting points that seem to make sense: i. 2. Use the Non-Filter ~hite look across all styles. Use the nostalgic green package look for Non-Filters and Low Tar and the current white Non-Filtered look for Lights. Once the package designs have been determined, the carton designs should be a direct translation from the packages.