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DATF, Ist July, 1976 LONG-IIANGE FORECASTS (19~6) As you probably know, marketing assumptions and the main policies (plus some stratcoies) were dealt with, both at Hot Springs a~=d the T.D.B. Planning meetin0 held on 25 June. One of the results of the Chairman's Advisory Conference Marketing Conference wiIZ be held in October i~ order to discuss significm~t ch~ges in strategy affoctinU the marketing of cJ.g~et%es. There are several assumptions r~lated to product which beyond the ones you listed for m~kcting ~d which overlap those you have listed for the product, ie. Ayres Paper I. Perhaps I shoul~ quote them and then a final synthesis could be made covering all the work that has been done. I quote reIev~t extracts from the paper I wrote for the T.D.B. P~ning meeting. THE ~{~ING ENVIRONHENT Ci~ette Consumption m~d Smoker Confidence Assumptions I. The most serious threat to the smoker posed by incre~in9 pressures brought ~o bear on him, ~'i~ the social unacceptability o~ smokin9. Unless certain initiatives ~e ~en by cig~e~te m~lufacturers~ or by the ~ndustry as ~ole, a declinin@ incidence in These pressures against %he smokin~ habit app].y mainly %o tl*e developed countries, althouuh i% is likely that %hey will ~ruw in %h~ de~elopin~ coup,tries also. THE CON~HER ~D THE SHOKING HABIT There ~e two main assumptions which should be made here as a li~{ %o %he section whi~ follows on product developmeul.. I. The smoker of %he futuru will have far more knowledso ;ibouL the %ethical composition of the ci~aretie. This will come about at first through %ho publication of loa~ue tables in which ~the ~emical constituents of tobacco and smoke will be featured. BAT Industries document for Province of British Columbia 14 November 2000 BAT INDUSTRIES 00290479

At a later stago~ the monu£.',cturers reacting to compnt.itive pre~:sures will need to ~ustify ~nd explain th~ product ch~n~es ~'hlch ),ed~a-ke %he t]cllvur~ levels of parhJcular cons%~tuunts (CO, NO, HCN, ~tc). At the s~,~ time, commentary by 3ourn;~lists ~d ~iters in the popuI~ press will develop ~d expand 9uneral ]~owledge about constituents and their effects. Thus the consumer will base his choice not only o, image and "taste" but also on quasi-technJ.cal appreciation of the br~d to a f~ ~reator ~tent than heretofore. .. are in themselves unlikely to diminish the incidence of smoking. . ~ery's %hoary is that smoking is an easy, convenient ~d very _~.~ effluent method of ,'educing %he distracting effects (and the called "extrovert"). PRODUCT DEVEI~P~NT - CONSTITUENTS I~ng-term changes in the structure of society forecast by futurists ~ In forecasting ±he shape o~ the product (Paper I), t~o major assumptions wore made which must be re-stated he.re~ in order to justify the strategies which folio,:- Three major classes of consumers will prevail in the '8O's with particular product needs: a) b) Younger smokers, less concerned with health hazards and detelnnined to achieve satisfaction with ~tld--flavou~,__ rel.a_,tively big!* ~f-6~£~cs. Relatively older .o, mokers, say 30+, including those with young families ~d~o will demand cigarettes with a degree of health reassurance but with well-defined taste and fl avour. c) Older smokers, especially those over 2~0, who are much concerned with health ~u~d are particularly sensitive to constituents alleged to be "noxious" by the authorities and require significm,tly low delivery cigarettes. Both social stattls~ in particular~ and the personalities of smokers may well cut across the age groups su0gested above so tl.~at particular segments may be identified where differin~ s,nol¢ing needs hav~ to bc satisfied~ for examp]e~ manual v. non-manual workers~ the carefrcc ,he are %Is~ally prepared to take risks~ the {|re~arious, the loners, the nervous and the hypochondriacs. T~) further assumptions are made:- Due to the antl-smoking prosst|res and hoo.l£h thrcat.si the ])rosen|; trend to,&u-ds ~uitting by middle-aged and older smokers is likely to BAT Industries document for Province of British Columbia 14 November 2000 BAT I~DUSTRIES ...... 00290480

continue. However, it seems probable that the development. of products with justifiable health renssur~mce ~vld reverse this trcnd~ to s:..e extent. The trend to ~rowin~ J~Idependence of females will continu~ and with it the opportunities [or ci~ttcs of pnrticulttr f~mle appeal. M~y women will relish ~ull-[lavoured ci~ar- ettes~ but require packa~in~ ci~ctte dimensions ~d presen- tation ~hi~ ue c~e~m~t and stylisl~. PRODUCT DEVE~PH~NT - PAC~GZNG Assmn~ti ons i. Con~e~ tastes ~ preferences ~e likely to remain conservative as f~ as pa~a~in~ ~ are concerned~ ie. HLB and SC, ~ld %o a lesser extent, Shell and Slide with their v~iations in sizes. Some relatively small modifications in style may well occur wherever these bring about ~reater conveni~ce in use. However, such ch~es ~ ~nlikely ~ r~quire radically nuw machines, nor will ~y ~Ses resultin~ from our contiuued ~ndeavour to ~c~icve more economic use of materials. 2. Nithln the increasin~ly restricted enviro,~ent, especially as far as reduced media availability is concerned, surface dcs~.g,~ of pad,s ~11 assume ~reater importance. The pa~ will increasingly become %.he principal message bearer for cl~nr br~d ide~t~ties ~d ~oodwill stewing from br~d f~ili~s~ whethor line extensions or new ones associated with traditional "houses". The use of inserts or cigarette cards is likely to increase in order to provide infon,alion~ reassurance related %o ~y pack ~esi~n ~es~ or even %o n~,ounce fort}*coming new brands. At the s~e time~ %he limita%ion of this techniqu~ is recogn~sed~ because it cannot adequately rea~ the ~okers of competitive brads. P.L. SHORT.. BAT Industries document for Province of British Columbia 14 November 2000 BAT INDUSTRIES 00290481