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PROPOSAL FOR PRODUCT DEVELOPMENT AND MARKETING RESEARCH CONFERENCE AT SOUTHAMPTON BACKGROUND GRDC are currently doing much work in the areas of basic cigarette research, cigarette product development and analysis of why and how the smoker smokes. Much product development and innovative market research are also being pursued in such B.A.T. member companies as Australia, Canada, Germany, Switzerland, the U.S. and the U.K. Our multinational competitors are extremely active ~n the areas of product development and'innovative market research. The proposed conference would permit the marketing people in the member companies who are responsible for those two areas to (1} compare notes and exchange ideas and technology, (2) determine what information and developments are currently available at Southampton and (3) help guide GRDC's future act~.vities in the areas of basic research, product development and analysls of the smoker. BAT Industries document for Province of British Columbia 13 November 2000 BAT INDUSTRIES 00290400

-2- OP~ANIZATION OF THE CONFERENCE Locatlo-: Duration: Southampton or nearby Maximum one week Participants: - Southampton R & D - smoking behaviottr section, eg. Messrs. Wood and Thornton. - Product development people, eg. Messrs. Haslam (Millbank), Conway, Hook and Horsewell. - Smoking behaviour consultant - Dr. 01dman. - Others from R & D to present papers and participate as required. - Member companies: Canada, Germanyw Switzerland, U.S., U.K. and Australia. - From each company= Marketing Manager, Market Research Manager and Product Development Manager. - Possibly, some invited speakers from outside B.A.T., eg. Dr. Russell, Mr. Burak (Market Facts Canada|, Dr. McKenne11. SUBJECT MATTER It is important that the participants work toward ¢le~ly ~efi~ed goals but that the conference not be over-structured. • All participants should be extremely free and open in discussing new product plans and research techniques. It would be a work- shop type conference and would cover the followlng areas: BAT Industries document for Province of British Columbia 13 November 2000 BAT INDUSTRIES 00290401

-3- Product Development= a} Top priority product development areas both short term and long term indicated by GRDC and each member company. b) Discussion of development areas and agreement on those areas where GRDC can best contribute to local company R & D efforts. c} Exchange of information on current progress in product development areas. d) Discussion of basic marketing theories which seem to best explain current trends in the more sophisticated markets as well as probable future evolution in those markets in terms of product innovations. e) Evaluation of B.A.T. group's success in develop- ment of new product technology relatlve to our princlpal multinational competitors. f} Opening of channels of formal and informal communication among member companies and with GRDC to permit continuing exchange of information on product and market research innovations. (2) Market Research a) Exchange of £nformatlon on new research techniques, particularly those that improve our basic under- standing of the market. BAT Industries document for Province of British Columbia 13 November 2000 BAT INDUSTRIES 00290402

Examples of such techniques aret - Brand image measurement - Market ~egmentation studies - Smoker motivation research - - Research on Smoking & Health and social acceptance of smoking - Research on brand switching - Assessment of new product concepts - Trade-off analysis GRDC has an on-going basic research program entitled "The Interaction of Smoke and the Smoker", which should eventually prove extremely beneficial to all member companies. That program should be discussed thoroughly including such areas as bio-feedback techniques; smoke profiles~ personality studies of smokers, quitters and non- smokers~ smoker motivation studles~ the role of nicotine, etc. The conferees should then agree on how best.such basic research conducted by GRDC can benefit the member companies, determine which activities should be augmente~ and which are ~robably of a lower priority in marketing terms, Th~ basic goal will be to give B.A.T. an international competitive advantage over its competitors. BAT Industries document for Province of British Columbia 13 November 2000 BAT INDUSTRIES 00290403