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~THE A/vlERICAN TOBACCO COMPANY To Mr. J. M. Ockers, Director Strategic Planning & New Products Fr0mM. J. Burns, Product Manager ~ef LUCKY STRIKE -- Direct Marketing Status Report ~," "~,, ~i' ~'~\~% ,~ Memorandum ..... <' 0ateJuly 31, 1990 COOS, as requested, please find below an update on the status of LUCKY STRIKE Direct Marketing Programs. I've attached the most recent ATCO Direct Marketing Status Report for LUCKY STRIKE from Clarion for the week of 7/27/90. pirect Mail Programs Clarion presented several direct ~arketing options on June 28 and f recommend that we execute the following: CQmpetitive Green Filter Pack Mailin~ - Section C-2 Objective: Generate trial of "new" LUCKY STRIKE Filters. Pmmsxgm There are approximately 12,000 young adult male smokers of ~arlboro, Camel Filter, Winston and price value brands i~ Section C-2 whose names ~re currently in our name bank. We'd like to send these smokers an offer to receive a free Green Filter pack which also includes the LUCKY STRIKE Squadron Collection catalog. Follow-up mailing would contain: A) Green Filter Pack B) Free Pack coupon C) BIGIF coupon Three additional follow-up mailings would occur in 1991 with a single item offer. Each mailing would consist of a cover lettert a reprint Of one of the Petersen insert promotional ads and coupons good for future pack purchases. The cost of this program is $103,225. However, only $22,575 is projected to impact the 1990 budget while the balance of $80,650 will affect the 1991 budget. Detail cost estimates for this program are outlined on the next page:

Mr. J. M. Ockers July 31, 1990 Page TWO o Creative development artl mechanicals $12,000 o Free Green Pack offer to 12M @ $675/M 8,100 o Redemption @ 8.3% (1,000 redemptions @ $I,800/M) 1,800 Pack coupon redemption (i,000 base) o - Free pack @ 30% x $1.50 450 o - BIGIF @ 15% 225 $22,575 o Creative development, art, mechanical o Premium offer to 12M @ $675/M x 3 o Free pack @ 30% x $1.75 x 3 o BIGIF @ 15% x $1.75 x 3 Total Costs Mail baok to Green Filter Daok ad respondents - Section C-2 ~: Generate trial of "new" LUCKY STRIKE Filters Pmmgxgm A commemorative Green Pack two-page spread will run in four magazines starting AugUst 27. This ad represents a further attempt to reinforce the Brand's imagery by building on the current campaign's heritage cues. The ad, a copy of which is attached, provides a legitimate promotional platform that allows us to measure the level of appeal to our young adult male smoker target. In addition to a free commemorative Green Filter pack, respondents will also receive the LUCKY STRIKE Squadron Collection catalog which gives them the opportunity to order additional self-liquidating items (poster, lighter, jacket and mug). The cost of this program is $85,000 including $20,000 in additional space cost. Approval has already been received (AAM of 5/21/90) and funds required are in the LUCKY STRIKE promotions budget. Program costs are outline below: o creative development, art, mechanicals o Free Green Pack fulfillment, SqUadron Collection to 6,000 respondents @ 1,800/M Pack coupon redemption (6,000 base) o - Free Pack @ 30% x $1.50 o - BIGIF @ 15% x $1.50 $28,000 24,300 18,900 $80,650 $i03,22~ $15,000 10,800 2,700 ~29r850

Mr. J. M. Ockers July 31, 1990 Page Three o Creative development, art, mechanicals 8,825 o Premium offer to 6,000 respondents @ $675/x 3 12,150 o Free pack @ 30% x $1.75 x 3 8,450 o BIGIF @ 15% x $1.75 x 3 4 725 $85,150 Total Costs Non-Filter Self LiaUldator Objective: .Protect Non-Filter franchise volume through value-added premium offers at significant price reductions. ~Lqg~m A total of i16,544 smokers responded to this promotion which officially ended June 30, 1990. Over iii,000 or 95% of the total respondents requested a free LUCKY STRIKE T-shirt. Since only one T-shirt was allowed per household we feel that we have obtained the names and addresses of 47% of LUCKY STRIKE Non-Filter smokers (235,000 total) via the T-shirt offer alone, overall, we have obtained approximately 50% of LUCKY STRIKE Non-Filter smoker names. Clarion will provide a complete profile (age, sex, states and smoker data) once the data base has been down loaded week of August 13. At that time, a final evaluation of the program will be submitted. Non-Filter Green Pack Promotion Objective: Help retain those smokers who may be considering abandoning the franchise in search of a lower price alternative while obtaining the names of a substantial number of the 50% of LSNF smokers who did not respond to our free T-shirt promotion. The Non-Filter Green Pack offer will help franchise retention by providing a value-added element. At this stage we expect to deliver the offer via in-carton insert. A follow-up mailing to respondents would follow after six months with a single item offer. The follow-up mailing would contain a personalized letter plus a reprint of the zippo lighter Petersen insert ad.

, L Mr. J° M. Ockers July 31, 1990 Page Four The cost of this program is $218,570 broken down as follows: Creative development, art, mechanicals Deliver offer in-carton (I.0MM cartons) Redemption free No~-Filter Green Pack @35% of franchise (82,250 of 235,000) @ $I,800/M $ 3,000 TBD * $148 050 $151,050 To be determined. Creative development, art, mechanicals $ 18,090 Follow-up mailing to 82,250 smokers @ $675/M $ 55 520 $ 67,520 I feel that We should conduct each of the programs outlined above. Excluding the costs of the already approved mail back to Green Filter Pack ad respondents, these direct marketing programs will cost an additional $173,625 in 1990 and $148,170 in 1991. With your approval, ~ will submit approval recommendation tQ conduct each ~rogram.

Prolect Lucky Stdke Defensive Direct Mail program Non-filter Seff-I~quldator Client MB MB ATCO. DIRECT MARKETING STATUS REPORT Week Ending July 27, 1990 S',~s Agency presented direct ~ program, 6/28. Agency awaiting Client comments. Agency received a tape of 116,544 respondam to this promolion. Agency advised client that a complete profile (age, sex, states, smoker data) will be delivered once the database has been downloaded. Profiles due to cllenL Dale Due 8/13

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