Tobacco Documents Online

CX 7-A ~JM 065~80 79M00787

2, 1977 BUDGET SUV~ARY (GROSS $000) AGENCY MEDIA PRODUCTION TOTAL AGENCY SALES PR~OTION OTHER TOTAL SALEM PER M I '~ 906L OIIOG i ~~ ,~ , INCRFASFIDFCRFASF $22,5q5 $25,600 1,850 2,000 $24,395 $27,600 2,615 ],760 $27 $31,600 $+3,055 +13.6 +150 +8.1 $+),205 +13.1% +1,145 +43.11 $+~,365 +16.01

0 0 O0 SALERKING SALEM BOX SALEM L~GS ~I.F.M LIGHTS ~LF..PI LOnG LIGHTS PRO~CTION TOTAL AGENCY $ 7.0 2/% I.l 8.6 3q-- q.O 16" q.3 ll SAL~S PROMOTI ": S $27.6 100% 100% TOTAL $ /,i 22% 1.8 6 8.8 28 5.8 19 6.1 19 $31.6 .1.00%

I. MARKETING STRATEG~,;,~78 - 1979 MARKETING ENVIRONMENT A. POPULATION/CONSUMER TRENDS 25-34 YEAR AGE GROUP WILL BE FASTEST GRO~ING SEGMENT. " INCIDENCE OF SMOKING AMONG TOTAL POPULATION WILL CONTINUE TO DECLINE (41I IN 19/4; 37% IN 1976). YOUNGER SMOKERS WILL CONTINUE TO REPRESENT AN IMPORTANT MARKET: -- INCIDENCE OF SMOKING INCREASING (OFFSETTING SHARE OF POPULATION DECLINE) -- HIGH MENTHOL CONSUMPTION (41% SHARE ~ONG 14-1/ YEAR OLDS VS. 28% SHARE NATIONALLY) ' -- LESS BRAND LOYAL AND MORE ~SILY PE~UADED TO SWITCH -- THEY RE?RESENT THE LONG TERM ~OKER POPULATION OF THE FUTURE POPULATION SHIFTS WILL GIVE ADDED IMPORTANCE TO TIIE FOLLOWING GEOGRAPHIC MARKETS~ . -- SOUTH ;" ,' ." ..... -',. .:.::~, ~ .. WEST -- SMALL TOWNS, RURAL AREAS /

~06L 6II0~ ~ CATEGORY TRENDS TOTAL MENTHOL CATEGORY WILL CONTINUE TO GROW ATRATES GRATER THAN INDUSTRY. • 85~IM (~ENTHOL)CATEGORY WI'LL,I~|} ~L~ II~R~DECLI'~IN~,, . I00~ (MENTHOL) CATEGORY WILLGROWAT RATES GREATER THAN INDUSTRY, • MENTHOL HI-FI CATEGORY WILL GROW AT SIGNIFICANT RATES. : e MENTHOL BOX CATEGORY NOT EXPECTED TO SHOW$1GNI'FICANT GROWTH FROM A SMALL VOLUME BASE: PROJECTED CATEGORY GROWTH RATES MENTHOL HI-FI 1976 1977 1918 1979 1980 28.6 29.2 29.7 .30.6 q.1 ~.5 4.7 4.8 (S~)' 80-89'1,"1 95-10~MM 6;9

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Z ,--., 0 t CX 7-G 79M00793

, RJM 065887 CX 7-H 79M00794

RJM 065888 79M00795

THE B~ND'S 1978 AND 1979 PROFIT, ~OALS ARE TO ACHIEVE OPE~TING PROFIT BEFORE TAXES AS FOLLOWS: 1976 $148,762 12.2~ 1977 159,865 1978 175,785 IO. OX 1979 192,227 9.4X

1978 - 1979 MARKETING OBJECTIVES CO~ITINUE TO CORRECT IH~ ~L~ ~;P~I~. ~'~:P~O~LF~I, " INCREASE AWARENESS O~ ~ BRAr~ BRO~TH~ff~ ~ ~LONGS, LIGHTS, LONG LIGHTS ~AINTAIN ADVERTISI~iG AWARENESS AT HIGH LEVELS.~ IF~PROVE ADVERTISING PERSUASIVENESS AS M~R~ BY CO~UMER E~ITUDI~L' ~TINGS A~ID BRAND TRIAL. - "..;~ . " INCREASE SA~ ~OKERS' PERCEIV~ ~VEL OF.~OKING ENJOYMENT. EXPAND SAL~'S S~RE OF THE GROWING HI-FI ~NTHOL ~TEGORY A~ PR~ENT F~NCHISE L~SES TO HI-FI ~. ;.-, R~UCE S~ LOSS ~ONG O~ER ~0~; CONTI~E S~GR~H ~0~ " YOU~ER ~0~. " '. 0 0

1978 - 1979 MARKETING STRATEGIES AQ INCREASE SALEB:$. toTAL ~91~ ~ |9~9~TING SPENDING AS FOLLOWS: a ~9:;"B ,' .... • ~: ,.. ]9/9 1977 BUDGET $, $ CHG. $ CHG. MEDIA SALES PROMOTION TOTAL PER M $27.6 $)i. 6 $30.Q . ÷i01 $33.4 • SPEND TO BAINTAIN BRAND GROWTH. ~...i. • OFFSET PROJECTED INFLATIONARY COSTS IN MEDIA." ÷I01 • COMPETITIVE AND NEW PRODUCT. EXPENDITURES EXPECTED TO INCREASE, PARTICULARLY IN HI-FI CATEGORY. ~ ~ ~; * • 1978 SALES PRQMOTION EX,..~ENDITURE REDUCED FROM ABNOP~ALLY ~I@B', 1977 LEVELS (NEEDED TO~INDUCE TRIA :ION SALEM LONG .~

$II~911 9NO'If (INV SIHgll '6L61 (INV 9L6T NI WSO:U.V'Id 9NISII~]A(IV S,W~'IVS ](IIAO'da OI ~NIIN~'~IM NglVdWV~ .IN~W;~OI'N]o S,(]NWll ]HI : 50119

O0 ,,~ C) t~|6L 61|0~ l MARKETING RESOURCES WI LL BE ALLOCATED DISPROPORTIONATELY HIGH KING ..$ • SUPPORT GROW13 ,.;.. ' /

0 DJ THE TREND IN ALLO~TION OF MAR~TI, N~, ~O~R~$~W|.LL ~TOLLOW THE FOLLOWING PA~ER~:,: , ~v"~ ~"~~ ~'i {, !i :,i ~ • INCREASING ALLOCATION TO SOUTHERN AND SMALLER, RURAL Im~RKETS. • INCREASING ALLOCATION TO YOUNGER SMOKERS (UNDER 35)s AND ~N, • POPULATION TRENDS. o INCREASING SI~OKING YOUN~ER S~13KERS. INCIDENCE A/E) VOLUI'IE COIlTRIBUTIOII AI~IOMG O WI~I~EN REPRESE~IT PRIMARY VOLIJI~E COIITRIBUTIOIIS TO EIIOWING ~ STYLES (LIGHTS, I.OIIGS, L(IQ@ LIGHTS) "

i II CX 7-P 79M00802

CX 7-Q RJM 065896 79M00803

0 • OF POTENTIAL I~TII~ PRO~ILANS III ~ TO AIITICI~TE AI~ ~IX~ FOR FUTURE 'e. lIAr-UP Ai~RTISII~ C.AgqPAI61I, "..1