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F I R ~j R ,." CX 33-A 2532 !

THE VIRILE SEGRENT ~ U CX 33-B 86M02533 !

ANALYSIS ~F THE VIRILE SEGHEN[ ORJECTIVES -- " IDENTIFY LONG TERH FORCES AFFECTING PERFORIqANCE OF SEGPIENT ANrJ BRANDS W]THIN IT* " ]~ETERH|NE KEY STRATEGIC ISSIIES FOR BRANDS. CX 33- C :-~ --, ......~; 86M02534

ANALYSIS OF THE VIRILE SEGflENT • BACKGROUND ! SkLES PERFORHANCE :~: - SHARE OF' MARKET ~ - MARKET ~YNAH! CS ." ~-*, "" AGING " -" SWITCH| NG .... • B~ND [SS.ES - ~ARLBORO - glNSTON - CAHEL ! SUmmARY • CX 33-D .~ 86M02535

II ~tALYSIS OF THE VIRILE SEGMENT THE PERFORHANCE OF THE VIRILE SEGNENT IS CRITICAL TO UNDERSTAND-" LARGEST SEGMENT IN SHARE OF HARKET TI~0 LARGEST I~RANO FAMILIES LARGEST CONCENTRATION OF YOUN~ER AOULT S~OKER~ SEVERAL OF THE ~LDEST ~RANDS STILL ON THE ~ARKET LARGEST SOURCE OF S~ITCHERS • HOST STABLE SEGHENT IN SHARE OF MARKET O R ,j R CX 33-E 86M02536

A~ALYS]S OF TffE yIRILE SEBRENT ~EGRENT'~ ~ALES PERFORRANCE SHARE OF MARKET V|R|LE SEGMENT SHARE OF MARKET eSTABIL|ZED" IN 1958 -- -"'1958 SON - ~1.79I -19R5 SO~ - ~O.E2I ~ THIS STABILITY ENDURED IN THE FACE OF THE DECLINE OF THE -0oOq SHARE POINTS/YEAR OVER 28 YEARS TRADITIONAL SEGMENT AND THE GROWTH/MATURAT|ON OF THE OTHER FIVE SEGMENTS- CX 33-F R J R u ,4 2 .2 86M02537

CIGARETTE MARKET SEGMENTS PERCENT SHARE OF MARKET Coolness Stylish )Concezned gT~ CX 33-G

~IALYSIS OF ~H[ VIRILE SEGMENT SEGMENT'~ SALES PERFORMANCE MARKET DYNAMIC~ THE STABLE PERFORMANCE OF THE SEGMENT IS A BEL|CATE BALANCE BETWEEN THE AGING COMPONENT "- YOUNGER ADULTS AND OLDER SMOKERS -- OF THE MARKET DYNAMIC AND THE SWITCHING COMPONENT, THE LARGE -- AND INCREASING -" SHARE OF YOUNGER ADIILT SMOKERS HAS ALWAYS HOME THAN BALANCED THOSE OLDER SMOKER WHO LEAVE THE MARKET --T-* - THE ~-~'E~ENT HAS CONTINUALLY GAINED SHARE THROUGH AGING" THE SWITCHERS FROM THE SEGMENT ARE LOST DUE TO NEW BRAN9 |NTRODUCTION AND MAJOR EXTERNAL EVENTS -- - THE SEGMENT HAS CONTINUALLY LOST SHARE THROUGH SW|TCH|NG. S0M CHANGE nile TO • • • TOTAL AGING SWITCHING 1977 -.78 +,58 -1.36 1978 -.lq +.58 -.72 1979 -.66 +.6~ -1.26 1980 +.]8 +.59 -.q] 19~] +.56 +.66 -.10 19~2 +.59 +.82 -.23 1983 -1.27 +.83 -2.10 198~ +.75 +.Sq -.09 19R5 +.06 +.R3 -.77 SOURCE .' PISA/TRACKER/NF0/CENSUS NOTE: SWITCHING = Jura S0PI CHANGE - ,A, GING CALCULATION R /'1 U CX 33-H 86M02539

YEARLY SHARE POINT CHANGE 2- 0.5 --0.5 | VIRILE MARKET DYNAMICS Aging and Switching Components ......... • .................... ~ "'" Swltch~ng / ,,,v/ • • V I I I I , I I I I I i977 ~i978 1979 1980 19~! 196~ 1963 1984 1985 CX 33-I

¢) '11 ~NALYS|S OF THE VIRILE SEGHEN~ SEGMENT~,,~ SALES PERFORMANCE MARKET DYNAHIC$ FIRST IJSUAL RRAND YOUNGER ADULT SHOKERS THE YOIINGER ADULT COMPONENT I$ OF CRITICAL IMPORTANCE TO THE SEGMENT " THESE SMOKERS START WITH THE SEGMENT AND REHA|N LOYAL TO IT- X WHO STARTED IN SEGMENT TRADITIONAL Jq-OX 12,2¢ 20.OZ 0.0~ VIRILE J 35:1 ~8.8 COOLNESS 33.5 37.1 86-7 66.6 STYLISH 23-9 qg.q qq.7 HODERATION ]7.J 21.7 30.8 3q.7 CONCERNED 16.1 17.q 17.1 16.6 SAVINGS NA HA NA HA SOURCE: 1985 SEGMENT DESCRIPTION STLIDY CX 33-J

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ANALYSIS OF THE ViriLE SEGMENT SEGMENT'S SALES PERFORMANCE MARKET DYNAMICS SWITCHING THE SWITCHING INTERACTIONS HAVE CHANGED FROM SNITCHING NITH Low TAR AND COOLNESS SEGMENTS TO SNITCHING NITH THE SAVINGS SEG~ENTo SPIOKER BFLON# MAGNITUDE- GAINS: THROUGH THE SEGHENT CHANGES CHARACTER HOT VIRILE SWITCHING DIS/RIBUTION LOSSES: TRADITIONAL 21.7X lq.0Z ll-qZ COOLNESS 28.0 23.q 13-8 STYLlS. 15.9 13.7 18-0 HODERATION 16.6 26.2 18-8 CONCERNED 17.~ 22-7 13-5 SAVINGS 0.0 0.0 2q-q TRADITIONAL 12-6 8.q 9-1 COOLNESS 19.9 17-9 8-6 STYLISH 15-~ 12-6 lq-8 ~OOERATION 30.~ ~3-7 17-7 CONCERNEO 21.8 27.2 SAVINGS 0-0 0-2 SOURCE: NF0 ~ CX 33-L 86M02543 R .j R 4 S 2

A~ALYS]S OF ]HE VIRILE SEGMENT SEGMENT'S ~ALES PERFORHANCE THE SEGMENT'S SHARE HAS BEEN STABLE AT qlZ SINCE 1958 -- -- UNAFFECTED BY THE TRADITIONAL SEGHENT DECLINE OR THE GROWTH OF OTHER SEGMENTS- THIS PERFORHANCE IS DUE TO A DELICATE BALANCE AMONG THE MARKET THE AGING I~YNAMIC IS A CONTINUAL SOURCE OF GROWTH -- -- VIRILE FIRST IISIJAL BRAND YOUNGER ADULT SMOKERS CLEARLY OUTNUMBER OLDER ADULTS WHO LEAVE THE HARKET- -- THESE'-FUBYAS INCREASINGLY REHAIN LOYAL TO THE SEGMENT- THE SWITCHING DYNAHIC IS A CONTINUAL SOURCE OF DECLINE -- RELATIVELY STABLE EXCEPT IN NEW BRAND/EXTERNAL EVENT PERIODS- -- ONLY THE CHARACTER OF SEGMENT INTERACTION CHANGES OVER TIME- -- SHOKER FLOW THROUGH THE SEGMENT CHANGES CHARACTER NOT MAGNITUDE- 86M02544 CX 33-M

ANALYSIS OF THE VIRILE SEGMENT JIIST AS THE STABLE VIRILE SEGMENT PERFORMANCE MASKS CHANGES t~ITHIN OTHER SEGMENTS SO IT MASKS CHANGES ~flTHIN ITSELF. " MARLBORO HAS INCREASED ITS SHARE FIVE-FOLD SINCE - CAMEL HAS LOST 70~[ OF ITS SHARE. - WINSTON .As GAIHEO 15Z iN SHARE. - L&M/RALEIGH/VICEROY HAVE ALL DECLINED- CX 33-N C 86M02545

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4 I I I ANALYSIS OF THE VIRILE SEGMENI ~ARLBORO ~RAND ISSUES THE PRIMARY DRIVER OF MARLBORO'S POSITIVE PERFORMANCE IS |T$ ABILITY TO ATTRACT "- AND HOLD "- FIRST USUAL BRAND YOUNGER ADtlLT SMOKERS. MARLBORO CONSISTENTLY SUFFERS NET SW|TCHING LOSSES SOM CHANGE DIIE TO • • • 1977 +- 3A +. 83 -. q5 1978 +.61 +-86 -.25 1979 +.28 +.90 -.62 1980 +.Tq +-89 -.15 19A1 *.56 +1.01 -.q5 1982 +.91 +1-08 lgA~ +-~ +l-lq ".21 l~aq +1.~5 +1-15 +.20 19A5 +.91 +1.15 SOURCE: MSA/TRACKER/NF0/CENSUS NOTE: SWITCHIN6 = MSA S0M CHANGE - AGING CALCULATION CX 33-P 86M02547

ANALYSIS OF THE VIRILE SEBHENT ~ARLRQRO BRAND [SSIIES THIS ATTRACTION OF YOUNGER ADULT SMOKERS |S EVIDENT IN MARLBORO~S SHARE OF ]~ YEAR OLD WHITE SMOKERS -- NOW ALMOST 50Z OF THAT GROUP° IIRRLBORO SHRRE OF 18 YERR OLD I*IHITE $110KERS ,%] / SOURCE= 19R5 SEGMENT DESCRIPTION STUDY CX 33-Q 86M02548 f

ANALYSIS OF THE VIRILE SE6PIEMT r~ARLBORO BRAND ISSUES THE LOYALTY OF THESE YOUNGER ADULT SMOKERS IS H|6Ho ~ ~r q MARLBORO -~' ,,~ ;~_~- TOTAL BRANDS SOU RC E : WHO STARTED WITH BRAND IN YEAR & SHOKE TODAY 26.8Z ql.6I 71.2I 18-1 30.6 55.8 1985 SEGMENT OESCRIPTION STUDY 9 CX 33-R . : ~:~ ,_. 86MO254q

ml ANALYSIS OF THE VIRILE SEGI'~ENT ~ARLBORO ~RAND ISSUES EFFECTIVE CO~PETITION WITH MARLBORO FUTURE OPPORTUNITIES AMONG YOUNGER ADULT SMOKERS DEPENDENT UPON DISPLACING MARLBORO AS THE FIRST USUAL ]~RAND -" - THESE .~MOKERS ARE THE SOURCE OF MARLBOROeS STRENGTH AMONG ALL~ ABE GROIIPS -- THROUGH LOYALTY. U 86M02550

I ~ALYSIS OF THE VIRILE SEGHENT HARLBORO 8RAND |SSUES EFFECTIVE COHPET1T|ON WITH MARLBORO To UNDERSTAND THE WANTS OF THE YOUNGER ADULT ~IARLBORO SMOKERs THE FOLLOWING ANALYTICAL APPROACH WAS USED -- - OF!ALL YOUNGER ADIILT SMOKERS WHO CHOSE MARLBORO AS THEIR FIRST USUAL BRAND AND THEN SWITCHED~, 2J3 DO SO BY AGE 25- "" AGE GROIIPS 2]-25 ARE THEREFORE THE KEY AGES WHEN LOYAL MARLBORO SMOKER ARE SEPARATED FROM J~ARLBORO SW|TCHERS- LOYAL 2]-25 HARLBORO gOZ ~IARLBOR0 18-20 FIRST USUAL BRAND YOUNGER ADULT SWITCHER 21-25 SHOKERS ' 20][ NON-MARLBOR0 R J R CX 33-T 86M0255l

FFFECTIVE (OMPETITION,WlTH ~ARL~ORO SWITCHERS ARE SIMILAR DEMOGRAPHICALLY TO LOYAL MARLBORO SMOKERS. R .j ~R 86M02552 ,./ CX 33-U j

ANALYSIS OF THE VIRILE SEGMFNI MARLBORO BRAND |S~UES EFFECTIVE COMPETITION WiTH M~RLBORQ MARLBORO MINpSETS II THE LOYAL ~[ARLBORO SMOKER CAN BE CHARACTERIZED AS HAVING A "WORKING CLA$$'/'PRESENT ORIENTED" MINDSET -- WHILE THE SWITCHERS FROM-'ARLBORO HAVE AN "ASP|RATIONAL VALIIES'J'FIITURE OR|ENTED" CX 33-V ~6M02553

ANALYSIS OF THE VIRILE SEGRENT MARLBORO BRAND ISSUES EFFECTIVE COHPETITIOH WITH MARLBORO MARLBORO M]NDSET$ THE YOUNGER ADULT LOYAL MARLBORO SMOKER KNOWS HOW HE WANTS OTHERS TO SEE HIM -- AS A nSTANDARD" YOUNG ADULT -- AND WHAT HE WANTS IN A CIGARETTE-~- A "STANDARDn REGULAR PRODUCT -- LOYAL-~YouN~E~ ADULT MARLBORO IS/WANTS: DECZS~V~ | NDEPENDENT__~ CUT ABOVE AVERAGE ACCEPTABLE AMONG FRIENDS GENUINE TOBACCO TASTE FULL-BODIED TASTE LOYAL YOUNGER ADULT MARLBORO IS NOT/DOESNeT ~ANT: ~UYS THE BEST ~ODERN/STYLISH/SOPHlSTICATED MODERN & UP TO DATE HIGH CLASS/PRESTIGE INTELLIGENT/SENSIBLE LEAVES FRESH TASTE GIVES MORE VALUE FOR MONEY FOR SOMEONE WHO MUST ECONOMIZE ONE OF LEAST EXPENSIVE F r~ ./ CX

~NALYSIS qF ~E VIRILE SEGI~NT MARLBORO fiRAND |SSUES EFFECT|VE COMPETIT|ON WITH MARLBORO ~ARLgORO MINDSETS THE YOUNGER ADULT LOYAL MARLBORO SMOKER ENJOYS OTHER CONVENTIONAL/ =WORK|NO CLkSS= PRODUCTS TOO -- LOYAL YOUNGER ADULT MARLDORO [~NJOYS: r~o.~ s T I c- l~EER DOMESTIC TADLE WlleE ~ARGARIT~ LOYAL YOUNGER ADULT MARLBORO DOESNeT ENJOY: IMPORTED BEER CNAHPAGNE BRANDY COGNAC APERITIF PSYCHOLOGY TODAY SCIENCE DIGEST Vooue ATTEND CLASSES FIELD & STREAI'I SPORTS AFIELD LADIES HOME JOURIIAL BLUE JEANS & ]-SHIRTS 86M02535 READ BooKs SYHPHOMY

ANALYSIS OF THE VIRILE SEGMENT ~ARLgOeO BR^NP ]~SUES EFFECTIVE COMPETZTION WITH MARLBORO ~]ARLRORO MINDSET$ LIFE DOESN'T CHANGE MILCH FOR THE YOUNGER ADULT LOYAL MARLBORO SMOKER -- THESE ~'WORKING CLASS'~ SMOKERS WORRY ABOUT TODAY NOT TOMORROW ~ O_~ LOYAGYouNG~ LOYAL YOUNOER ADULT ADULT MARBORO FEELS: THESE DAYS LIFE MUCH THE SAME LIFE MORE~COMPLEX TODAY ~ARLBORO ~OESNeT FEEL: |'VE SET GOALS | HAVE TO REACH | NEED TO PLAN OUT MY FUTURE | FEEL RECOGNIZED FOR ACCOH- PLISHMENTS ACHIEVEMENT ORIENTED FEEL [~VE MADE PROGRESS TOWARD GOALS ~ONCERNED ABOUT IMPRESSIONS NEED TO KEEP UP WITH STYLES CX 33-Y 86M02556

ii ANALYSIS OF THE VIRILE SEGMENT MARLBORO BRAND |SSIIES EFFECTIVE COMPETITIOI~ WITH MARLBORO MINDSET IN TOTAL MARKET • IN ATTACKING MARLI~ORO'S LOYAL SMOKERS AND F~RST TIME SWITCHERS YOgi ATTACK A MINDSET -" MORE THAN AN AGE OR OTHER DEMOGRAPHIC • THE APPEAL TO MINDSETS IS MILCH BROADER THAN JUST ~ARLBORO- • THE FIRST STEP TO APPLYING THIS MINDSET TO THE TOTAL MARKET IS TO GIVE EACH RESPONDENT A "MINDSET SCORE" BASED ON THEIR ATTITUDES~ WANTS, AND CUES/SYMBOLS THEY IDENTIFY WITH- CX 33-Z-I ~ " /

A~ALY$1$ OF THE VIRILE SEGMENT ~ARLBORO BRAND ISSUES EFFECTIVE COHPET|TIOH WITH mARLBORO M]NDSET IN TOTAL MARKET |F ENJOY I~RANDY COGNAC, CHAHPAGNE, |HPORTED BEER, ATTEND CLASS, READ PSYCHOLOGY TODAY, WANT A HODERN, UP-TO-DATE C~GARETTE,. ETCo "- GETS "ASP|RATIONAL/FUTURE" PO|NTSo |F ENJOY DOHESTIC BEER/WINE, MARGARITA, BUDWEISER, READ FIELD g STREAH~ IDENTIFY WITH BLUE JEANS & T-SHIRTS, ~ANT A FULL- BODIED C|GARETTE~ ETC. -- ~ET$ "WORKING CLASS/PRESENT" PO|NTS. CX 33-Z-2 t

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ANALYSIS OF THE VIRILE SEGMENT MARLBQRO BRAND ISSUES EFFECTIVE COMPETITION WITH MARLBORO MINDSET IN TOTAL MARKET APPLIEI~'--T0 THE TOTAL. MARKET,, THE MtNDSETS DERIVED FROM THE ~ARLBORO $~ITCHERS AND LOYkLS CLEARLY DEFINE AND DIFFERENTIATE TWO DISTINCT MINDSETSo BASIC mASPIRATIONAL/WORKING CLASSm DIFFERENCES ARE REPRODUCED- THE MINDSET NOW CLEARLY APPEALS TO MORE THAN JUST THE MARLBORO SMOKER, I: CX 33-Z-4

I ANALYSIS OE.Tfl,E VIRILE SEGRENI MARLBORO BRAND ISSUES EFFECTIVE COMPETITION WITH MARLBORO MINDSET IN TOTAL MARKET ~ALE FEHALE WORKIN6 77.6% 22.3 25-3(I ..:~ CAUCASIAN BLACK HISPANIC $0-15,000 $15,001-25,000 $25,000* HIGH SCHOOL - HIGH SCHOOL 12-3 2~.1 )9-2 23.1 9)-~ 2.9 2.0 27.8 2~-~ 40.7 57.8 41.8 PROFESSIONAL ~ANAGERIAL CLERICAL SKILLED WORKER SEMI-SKILLED UNSKILLED 7-q 25.8 10-9 5-8 MARRIED WERE MARRIED SINGLE 69.1 14.~ 16.6 --...-> 31.1% 67.6 32-4 30.2 22.9 13.2 75 .g 18.7 2-3 32.6 26.1 38-8 39-6 59-7 13.1 lO.O 1~.1 7.7 3.0 2.9 40.5 22.1 37.q R J R 5 CX 33-Z-5 86M02561

III ANALYSIS OF THE VIRILE SEGHENT MARLBORO BRAND ]SSlIES [FFECTIVE COHPETITION WITH MARLBORO MINDSET IN TOTAL HARKET TRADITIONAL VIRILE ~OOLNESS STYLISH MODERATION CONCEn~O: SAVINOS FILTER "NON-FILTER MENTHOL. : NON-HENTNOL 85.H -, ]00~ • WORKING 8.5 51.5 lq.~ 5.3 8.9 q.5 5.5 88.9 11.1 21.9 76.6 70.5 27.6 FULL FLAVOR FULLER FLAVOR ULTRA LOW TAR Low TAR 60.2 32.q 7.q SOFT PACK Box 0-20 C IG/DAY 21-qO ql+ q8.8 qq.3 5.9 PACKS CARTONS 35-q q9-5 ---..._> 2.5 29.2 25.q 2] .2 ]0.7 8.0 2.2 97.q 2.6 q2.7 56.8 q6.O 53.0 q3-5 q5.8 10.6 73.1 25.5 75.7 20-3 3.0 51.9 35.3 R 33-Z-6 86M02562

I ANALYSIS OF THE V|R|LE SEG~E#T I~ARLBO~O BRAND ISSUES EFFECTIVE COMPETITION WiTH MARLBORO MINDSET IN TOTAL MARKET LIICKY STRIKE PALL MALL WORKING 2.5 CArtEL WINSTON ++ ~ MARLBORO_~ SALEM ~+~- NEWPORT ~+ BENSON & VIRGINIA. SLIHS PLAYER~~ 6.6 13.6 28.8 6.1 2.5 0.6 3.1 1.0 0.0 0.0 VANTAGE MERIT q.2 NOW CARLTON KENT 0.5 1.2 1.6 CENTURY GENERICS 0.2 q-I --) --> --) --> --> ,----..-) --> ASPIRE 0.2 2.2 2.q 7.7 18.3 lO.q 6.8 7.3 2.2 7.3 7.5 0,8 0.8 2.7 5.0 0.7 1.9 0.0 4 _9 2 CX 33-Z-7 86M02563

~HALYSIS OF THE VIRILE SE6MENT MARLBORO BRAND ISSUES EFFECTIVE COMPETITION WiTH ~ARLBORO LESS EDUCATED SMOKERS THE "WORKING CLASS" MINOSET IS CONSISTENT WITH LOWERED LEVELS OF EDUCATION. SINCE THE ONSET OF ANTI-SMOKING CAMPA|GNS, PEOPLE WITH HIGHER EDUCATIONAL ASPIRATIONS HAVE BEEN INCREAS|NG LESS LIKELY TO SMOKE • • THE YOUtlGER ADULT MARKET IS LESS EDUCATED THAN THE PRECEDING • THE OLDER ADULT MARKET WILL BECOME MORE EDUCATED THAN IT IS . CURRENTLY THROUGH AGING OF THE HIGHLY EDUCATED BABY BUBBLE - H.S. PAST TOTAL, 18÷ 72-9 27-1 1~-2~ 7q-6 25.~ 25-~ Gl.~ 38-2 35-q9 75.9 2q.! 50* 78.3 2!.7 THE PAST AND FUTURE SHOKER PROFILE PROJECTION 1990 H.S. PAST 70.3 29-7 -2.6 76-7 2~-~ "2.1 65.7 ~q-) +~.9 70.1 29.9 72.q 27-6 -5.9 SOURCE: NFO 1983 ABSOLUTE CHANSE N.S. PAST U AN APPEAL TO A "WORKING CLASS" MINDSET -- WHILE RELEVANT TO NANY DEMOGRAPHIC GROUPS -- WiLL HAVE DIFFERENTIAL APPEAL TO YOUNGER ADULT SMOKERS IN THE FUTURE. CX 33-Z-8 86M02564

ANALYSIS OF THE VIRILE ~ARLBORO BRAND ISSUES EFFECTIVE COMPETITION WITH MARLBORO THE PRIMARY SOURCE OF MARLBORO'S STRENGTH IS ITS ABILITY TO ATTRACT'AND HOLD FIRST USUAL BRAND YOUNGER ADULT SMOKERS. /~--STRATEGY TO DISPLACE MARLBORO AS THE FURYAS BRAND LEADS TO "AN APPEAL TO A "WORKING CLASS'='/"PRESENT ORIENTED~' M|NDSET, THE APPEAL TO THE HINDSET ATTACKS NOT ONLY II~ARLBORO BUT THE ENTIRE MARKET- THE BWORKING CLASS#/BPRESENT ORIENTEDB MINDSET WILL INCREASE IN IMPORTANCE AS OUR MARKET BECOMES LESS AND LESS EDUCATED "" ESPECIALLY THE YOUNGER ADULTS. R J R U S CX 33-Z-9 86M02565

ANALYSIS OF THE VIRILE SEGMENT WINSTON BRAND lSSOES THE PRIMARY DRIVER OF WINSTON's DECLINING PERFORMANCE |S TWO-FOL~ -- " DECREASING INTERACTION WITH YOUNGER ADULT SMOKERS, INCREASING INTERACTION WITH SAVINGS SEGMENT BRANDS, 1979 19~0 1981 1982 1~83 1984 19e5 CHANGES DUE TO • . . -.~0 +-06 -.q6 -.66 +.02 -.6~ -.58 .00 -.58 --16 -.05 -.13 +.06 -.09 +.15 -.]0 -.01 -.09 -1-30 --09 -1-21 -.18 -.I0 -.08 -.38 -o12 -.26 SOURCE: MSA/TRACKER/NF0/CENSUS NOTE: SWITCHING = ~S~ S0M CHANGE - AGING CALCULATION ,? ,5 CX 33-Z-i0 86M02566

ANALYSIS OF THE VIRILE SEGMENT WINSTON BRAND ISSUES YOUNGER ADULT SMOKERS THE nECREASING INTERACTION WITH YOUNGER ADULT SMOKERS IS SEEN IN WJNSTON's DEMOGRAPHIC PROFILE OVER TIME -- A STEADY DECLINE, TRACKER SHARE OF SMOKERS SHARE WITHIN DEMO WINSTON MA~ ' 14.5 14.4 13.2 -1.3 -9.0 ~ " FEMALE 9.5 9.3 9.2 25-3q ]q.6 11.7 9.5 -5.1 J -3q.gJ 35-q9 13.5 ]5.0 lq.7 +1.2 +8.9 MALE 18-2q II.0 9-6 6-5 "4.5 F'~ MALE 25-3q " 16.2 13-6 11-0 "5.2 MALE 35-q9 16.0 17.~ 17,0 +].0 +6.3 MALE 50+ 13.6 ]q-/ tq-/ +1-1 +8-1 FEMALE 18-2q q.6 4,5 3.7 -0.9 FEMALE 25-3q 12.6 9-5 7-6 -5.0 FEMALE 35-49 tO./ 12-0 12.0 +I.3 +12.l FEMALE 50+ 9.1 9-4 10.8 +1.7 +18.7 (FoR ]97q-RO: 35-50/51+ AGE GROUPS IISED) R J R CX 33-Z-ii 86M02567

ANALYSIS OE THE VIRILE SEGMENt WINSTON BRAND ISSUES YOUNGER ADIILT SMOKERS THIS LESSENING OF YOUNGER ADULT INTERACTION IS ALSO EVIDENT IN THE MAKE-tIP OF SWITCHERS TO AND FROM WINSTON. LOSSES= 18-24 25-34 35-49 50+ WINSTON 17.] ll.9 8-9 -8.2 F'~ 29.5 2R.3 24.q -5.1 1-17.3] 24.0 29.7 35-9 +11.9 +49.6 29-q 30.0 30.8 +1-4 +q.8 13.q lO.q 9-6 -3.8 32-q 29.4 27-4 -5.0 1-15-41 24.0 29.q 28.5 +q.5 +18,8 30.2 30.9 34.6 +q.4 +14.6 tlt R CX 33-Z-12 86M02568

/~NALYS]S OF THE VIRILE SEGI~ENT ~INSTON BRAND Iss.es THE LOYALTY OF YOUNGER ADULT SMOKERS TO ~|NSTON |$ LESSEN|NGo ~ARLBORO ~" -~ ~ I~INSIOH TOTAL BRANDS STARTED HITH BRAND IN YEAR & SMOKE TODAY 26.8Z qI.GZ 71.2Z 27.6 31.9 33.5 18.1 30.6 55.8 SOURCE: ]ggS SEGHENT DESCRIPTION STUDY R J R CX 33-Z-13 86M02569

ANALYSIS OF THE ViRiLE SEGMENT WINSTON BRAND ISSUES OLDER ADULT SMOKE~S BRAND LOYALTY THE GROWTH OF WINSTON's 35+ FRANCHISE PROFILE IS MORE AN EFFECT OF BRAND LOY/~LTY THAN SWITCHING APPEAL -- AND THE SKEW WILL BECOME HORE PRONOUNCED AS WINST(~N's DECLiNiNG INTERACTION WITH YOIJNGER ADIILT SMOKERS AGES ITS WAY THROtlGH TIME, R iJ ~R 6 CX 33-Z-14 86M02570

WINSTON RESPONDENT COUNT .~970 8O 60 4O t8-24 25-3! 32-38 . 39-45 46-52 53-59 AGE 33-Z-15 O!STAY DSNITCHED IN ~SW~TCHED OUT

60 6O 40 WINSTON RESPONDENT COUNT ,,:1975 ~ .::,~ ,~ O S TAY D SHITCHED IN ~J SWZTCHED OUT t-Ij LI'I _t_" IT'I ..,, CX 33-Z-16

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ANALYS]S,.0F THE VIRILE SEGMENT WINSTON Be^Nn ISS.ES YOUNGER ADZlLT SMOKER, S APPEAL TO YOUNGER ADULT HINDSET SMOKERS WITH A YOUNGER ADULT MINDSET ARE MORE LIKELY TO READ ORIENTED MAGAZINES THAN THE CURRENT WINSTON SMOKER -- AN OFFENSIVE OPPORTIINITY FOR WINSTON. EMPHASIZE EMPHASIZE LESS HALE % WHO READ MAGAZINES : WINSTON HAGAZINE MINDSEI ~ DIFF. -'PLAYBOY qo.l 29.q -10.6 FIELD AND STREAM 37.4 22.8 -Iq.7 SPORTS ILLUSTRATED 29.2 20.0 -9.2 PENTHOUSE 25-0 17.3 -7.7 OUTDOOR LIFE 22.7 18.4 -q,q SPORTS AFIELD 22-q 7.9 -1~.5 LIFE 20.2 15.I -5.1 MECHANiX ILL.STRATED 17-8 13.6 -4.2 SPORT 15.9 10.2 -5.7 SPORTING NEWS 1q-8 q.7 "10.1 OMNI 10.6 7-6 "3.0 BETTER HOMES GARDENS 15.,5 28.6 15.1 I001 HONE IDEAS R-6 13.1 GOOD HOUSEKEEPING R.S 16.8 FAMILY HANDYMAN 8.q 12.3 US News & WORLD REPORT 8-2 , 12-2 q.0 FAMILY CIRCLE 7,8 ltl.0 6.2 LADIES HONE JOURNAL 7.7 15,5 7.8 Co SMO POL t TAN 5 • 9 11 • 8 5 • 9 CONSUMERS DIGEST 5-6 11-7 6-1 MCCALLS tl.9 13.7 8.8 WOMAN'S DAY q.q 11.9 7.5 C TV GUIDE 30,1 | NATIONAL GEOGRAPHIC 28.2 | NEWSWEEK 19-6 ]POPULAR MECHANICS 18,2 EMPHASIZE'~TIME 16.9 SAME |PEOPLE 16.9 |NATIONAL ENQUIRER 15.6 |POPULAR SCIENCE 10.5 L_COUNTRY LIVING 9,3 U 26.8 -3,9 28.R 0.5 19.2 -0.q 17.q -0.8 16:5 8.8 -l.l 11.8 2.5 CX 33-Z-20 86M02576

ANALYSIS OF THE VIRILE SEGHENT ~INSTON BRAND ISSUES SAVINGS SEGMENT STRATEGY THE CHARACTER OF W[NSTON's SWITCHING INTERACTIONS WITH THE OTHER SEGMENTS HAS CHANGED CONSIDERABLY -- - " [NTERACTION WITH SAVINGS SEGMENT APPROACHES ITS INTER- ' "~ ACTION WITH OTHER VIRILE BRANDS. - THE HA6NITUDE AND QII|CKNESS OF SAVINGS INTERACTION !$ HIGHER AND FASTER THAN FOR ANY PREVIOUS PERIODS OF BRAffD ACTIVITY, CX 33-Z-21 .R J 86M02577

O9 "I- 09 ~I, IITCHIN~ O~IN$ FROrl NI"C SWI"I"CltI;:~ O.'ITPI ~EP~IENT$ YEFIR

W T 1976 1979 1980 |981 19~ 1983 1984 1985 YEaR

~ALYSIS OF THE VIRILE SEGRE#T WINSTON BRAND |SS.~S SAVINGS SEGHENT STRATEGY SHARE_.Po INT GAINS FRo~ SAVINGS SHARE POINT LOSSES Z OF ALL GAI~S WINSTON INTERACTS WITH SAVINGS SEGMENT BRANDS RORE SO THAN DOES RARLBORO. ~WINSTON .006 .020 .0q7 .2~3 .301 NARLBORO -006 -023 -076 -136 -15~ [ WINSTON .051 .051 .2q0 .386 .q60 MARLBORO .070 .0q5 .176 .329 -qql ~WINSTOM 0-q 1.q q.l 17.9 17-q MARLBORO 0-q 1-7 6-7 10.5 11.2 % OF ALL LOSSES ~WINSTON q.0 3.q 16-5 ~2.0 28-9 To SAVINGS L MARLBORO q.7 5.2 I2.3 2q.7 27.2 SOURCE: NF0 R J R CX 33-Z-24 86M02580

, I I ANALYSIS OF THE yJRILE SEGRENT WlNSTOH BRAND ISSUES SAVINGS SEGHENT STRATEG~ GEOGRAPHIC PROHOTION REFINENENTS THESE PROHOTIONAL EFFORTS COULD BE FINE'TUNED/REGIONAL.ZED TO HORE EFFICIENTLY/EFFECTIVELY-'- COUNTERACT THE SWITCHER FLOW TO.THE -~ l~l~i -~- SAV|NGS SEGHENT -- - PRONoTE HEAVILY WHERE SAVINGS IS PARTICULARLY PROMOTE HEAVILY WHERE SAVINGS IS STRENGTH FASTEST, CX 33-Z-25 86M02581

,74 TO : 3.0~ TO 5,42 TO • 7,7§ TO t0,09 ~ t0.~ TO t2,43 t4,11 TO IT. 10 ~S.a~ TO 2~.TT 2t.T7 TO 24. ~0 ....... IIt111~11111 CX 33 -Z-26

.OO TO 51.00 51 .(30 TO 1Ot.OO tot .00 TO tSt.O0 TO 20t .00 201.00 TO 40t.O0 TO 33 -Z-27

l. S2 TO 9.89 TO • 11.2~ TO 12.¢4 TO 0 ~.0~ TO ~S.38 TO 1|.75 ~0 18.t3 TO ================================================================ ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ================================================================================== :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::

1~i~1) OF SAV~NGS SEGMENT • ?4 TO 3.08 O 3.08 TO : 5.42 TO 7.'75 • 10.09 TO 12.42 •12.42 TO 14.~G • ~?. ~0 TO t9.43 n2t.77 TO 24. ~0 :::::00000-** :::::::00000. 00:::::::0000.., ::0000::::::000 .... O0 :0000:::::::00000000 :::::00~000:: ...... Cx 33-z-29

i II I ANALYSIS OF THE VIRILE SEGMENT WINSTON BRAND ISSUES YOUNGER ADULT SHOKERS AND S~yING~ SEGMENT ~TRATEGY A STRATEGY AGAINST THE SAVINGS THREAT DOES NOT EXCLUDE AN APPEAL TO YOUNGER ADULTS -- SHOWN BY ]9~5 SDS RESULTS -- - 7.cJ% OF YOUNGER ADULTS lX-2~i USE PROMOTIONS- " MAJOR PROMOTIONS USED BY YOUNGER ADULTS ARE UTILIZED DY W ! H STOH -- -" .CJl~[ OF PROHOTION-USING YOUNGER ADULTS USED BuY-J- BET-I-FREE OFFERS. -" 73~ OF THESE YOtINGER ADULT PROMOTION USERS REDEERED COtlPONS ON CIGARETTES, -- 67% OF THESE ]~'21i YEAR OLD PROMOTION-USERS USED PRF.J'ilI~i OFFERS- - MANY OF THESE PROMOTION-ORIENTED YOUNGER ADULTS MERE FIIOlt COMPETITIVE COMPANIES "- -- 59% ?M -- 21Z R JR -- ]2% LoR -- 6% -- 1% ATC -- 1% L&M THESE PROMOTION-USING YOUNGER ADULTS ARE OF BOTH SEXES -" ~ -- ~% ~ALE 52% FEMALE ~ CX 33- V'- 30 86M02586

II I AHALY$|S OF T~E V|R]LE SEGHENT WINSTON 8RAND ISSUES YOUNGER ADULT SHOKERS AND SAVINGS SEGMENT STRATEGY (CONTINUED) PACK. I Z BUY WITH PACKS AND CARTONS ABOUT EVENLY, IHESE YOUNGEI~ ADULT PROHOTION-IISER$ CAN BE REACHED YOUNGER ADULTS CAN BE REACHED BY BOTH PACK AND CARTON PROMOTIONS -- WITH GREATER APPEAL TO PACK PROMOTIONS "" 61Z OF YOIINGER ADULT PROHOT|ON-U~ERS BUY PRIMARILY BY THE MAJOR OUTLET TYPES -- -- 39~ BUY PRIMARILY IN CONVENIENCE/GAS STATIONS. -- 2~ BIIY PRIMARILY IN SUPERMARKETS, CX 33-Z-31 86M02587

ANALYSIS OF THE VISILE SEGMENT H|NSTON ~RAND |$$UES THE PRIMARY SOilRCES OF ~|NSTONas DECLINING PERFORMANCE ARE ITS DECREASING iNTERACTION WITH YOIINGER ADULT SMOKERS AND ITS INCREASING INTERACTION WITH ~AVINGS SEGMENT. APPEALS TO A ~WORKING CLASSm/UPRESENT ORIENTED~' MINDSET I~OULD DIFFERENTIALLY ATTRACT YOIINGER ADULT SMOKERS, ATTACK ~ARL- BORO'S STRENGTHS -- AND DRAW ON ItlNSTON's HERITAGE "" - I~EDIA LISTS ARE OFFENSIVE OPPORTUNITY HiNSTON's SWITCHING INTERACTION WITH THE.SAVINGS SEGMENT APPROACHES THAT OF ITS INTERACTION WITH OTHER VIRILE BRANDS -- - EXPLOIT THIS THROUGH FINE-TUNED GEOGRAPHIC PROHOTION "" WHERE SAVINGS IS STRONG OR GAINING STRENGTH FASTEST* YOUNGER ADULT SMOKER AND SAVINGS SEGMENT STRATEGIES CAN BE COMBINED "- COMPETITIVE SMOKING YOUNGER ADULTS USE PARTICULAR PROMOTIONAL VEHICLES AT HIGH LEVELS IN PARTICULAR OUTLET TYPES- CX 33-Z-32 86M02588 R J R U

~IALYSIS OF THE VIRILE SEGMEWT C.AHEL BRAND ISSUES • CAHEL IS CURRENTLY ENJOYING A PERIOD OF RELATIVE STABILITY COHPA~ED TO ITS PREVIOUS STEEP DECLINE- THE BRAND HAS EXPERIENCED SHARE LOSSES OVER TINE PR]HARILY DUE 1982 1985 TO ITS AGING FRANCHISE "" RQ~ CHANGES rUE TO • . • TOTAL AGING SWITCHING -.~0 -.12 -.18 +.20 -.11 +.31 +.05 -.01 +.06 ÷.O2 -.09 +-ll +.q7 --11 *-58 +-ll --10 ÷-21 -.3q ".08 ".26 --12 --OR "-0q -.09 -.08 -.01 SOURCE: HSA/TRACKER/NF0/CENSUS NOTE: SWITCHING " HSA SOM CHANGE - AGING CALCULATION • AGING LOSSES ARE FROM CA/~EL REGULAR -- OTHER CAI~EL STYLES SHOW SMkLL GkINS- R J R CX 33-Z-33 86M02589

ANALYSIS OF THE VIRILE SEGMENT CAMEL BRAND ISSUES YOUNGER ADULT SWITCHING THE BRAND ~LA$ NOT BEEN ABLE TO SUSTAIN THE POSITIVE SWITCNINII INTERACTION IT HAD WITH YOUNGER ADIILT SMOKERS IN 1980 -" NET SHARE POINTS WITHIN DEM0 18-20 .00 SOURCE: NF0 /, CX 33-Z-34 86M02590 I

SAVINGS SEGHENT ANALYSIS OF THE YlR[LE SEGMENT CAMEL BeANO ISSUES UNLIKE W]NSTON, CAMEL's SWITCHING GAINS ANn LOSSES TO AND FROH ' .~ :~ SHARE POINT ~ CAMEL .0! "~,~ , *" SHARE POINT CAHEL .02 ~ '~" Losses ~INSTON .05 THE SAVINGS BRANDS HAVE BEEN SHALL -- GAINS/LOSSES TO SAVINGS S011RCE= NFO • 02 .00 .11 • 02 .0S .29 • 03 .07 .1~ .1~ .05 .2q .39 .q6 R R CX 33-Z-35 86M02591 I

ANALYSIS OF THE V[RILE SEGMENT CAMEL 8RANO ]SSUES SAVINGS SEGHENT NEITHER CAMEL REGULAR NOR OTHER CAMEL STYLES INTERACT WITH SAVINGS TO ANY S]GNIF|CANT DEGREE- NET SHARE POINTS OF SHOKERS SNITCHED W[~H SAVINGS NA NA -.07 -.03 -.05 -.02 NA NA --0] .00 -.0| -.01 NA NA --06 -.0} -.oq ".01 II I Fi CX 33-Z-36 86M02592

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0 MAP' OF CANEr. (MSA $OM YEAI~. 1t|5 • 4.35 !.40 t'0 2.3S ~ 2.35 TO 3.30 : 3.30 10 4.25 * 4.:~5 TO 5.20 • 5.20 TO f,. 15 X 5.|5 TO ?.tO 8 8.~ TO 8.99 X o,g9 TO 9.94 ~ ~.94 TO ~O.OS

SC'- 01 09"C- • ~I'9- Ol 80'OJ- IO'O~- O~ £C'ci- 01

I ANALYSIS OF THE VIRILE SEGMENT CAMEL BRAND ISSUES GEOGRAPHIC DEVELOPMEN~ WHEN COMPARING STRONG CAMEL DIVISIONS TO WEAK CAMEL DIVISIONS, CAMEL STRONG AREAS ARE FEMALE, YOUNGER, WHITE, FILTER, FFLT, Box, MEDIUM RATE PER DAY. DEMOGRAPHIC DIFFERENCES ARE CLEAR -" CAMEL WEAK AREAS ARE MALE, OLDER, BLACK, FF, SOFT PACK, HIGH RATE PER DAY, 6 CX 33-Z-40 86M02596

IIGI I~-II V,i $.l "I.~ IIGI li-ll 21,I 14,0 -II,I I ~ ~I~4~I II-I~ I,? I,I l.l Ill ll-ll ~ b.$ -I.) 0 40 $Oo~Vtt 14,~ l~.e 4,) 13"I$,~0~ /O,J Ik.O -4.)

Grip I G~P 3 Old, C~(~LCA~ O,O 7.0 1.0 ! I[II~[D 4,l lSol IO.S I bO*l O,O O,O V,i e 33-Z-42

r 1:1 W4~E( ~|~F[R U*O e,o o.o l~I 141 1)4 • CX 33-Z-~3

ANALYSIS OF THE VIRILE SEGtIENT BRAND HERITAGE AND MINDSE[ THE HERITAGE OF CAHEL IS CLEARLY DEFINEO "- AND PERFECTLY IN STEP WITH THE WANTS AND ATTITUDES OF THOSE MHO SHOKE IT TODAY. RESARDLESS+ OF DEROGRAPHICS, SNOKERS OF CAt, EL ARE DISTINGUISHED FRON OTHER SHOKERS BY A COHERENT lqlNDSET -- CHARACTERIZED AS SELECT INDIVIDUALS WHO ENJOY mTHE REAL THIN6B. EVEN THOUGH THE DEMOGRAPHICS OF CAEEL SNOY2RS NAY DIFFER BETWEEN STRONG AND WEAK DIVISIONS, THEIR HINDSET APPEARS CONSISTENT. CX 33-Z-44 R J R 4 5 2 86M02600

fJ~EL flINDSET ANALYSIS OF THE VIRILE SEGMENI CAMEL BRAND ISSUES PEOPLE WHO ARE OWN PERSON DIFFERENT/UN IQIIE AIITMENT ! c/T RAD | T | ONAL GENUINE TOBACCO TASTE FULL-BODI ED TASTE HIGHEST OUAL I'TY LEADER STANDS OUI- | NDEPENDENT A])VENTUROUS AGGRESS~VE~_-~ RUGGED LIKE TAKE RISKS CAN BE TOUGH ~UYS THE BEST ~ASCULINE ~NJOYS BEING DIFFERENT ~EADER ]N FADS ~ILD SMOKING LIGHT TOBACCO TASTE EXTREME TAR CONCERN LEAVES FRESH TASTE ONE OF LEAST EXPENSIVE TODAY*S WOMAN FEMININE CONCERNED ABOUT IMPRESSIONS FRIENDS INFLUENCE ME PRICES RISING AT SAME RATE TOO EXPENSIVE CANADIAN WHISKEY BOURBON WHISKEY IRISH WHISKEY SCOTCH WHISKEY CHAMPAGNE SANGRIA PARTY ~INE DOMESTIC WINE DOMESTIC Low CAL ~EER ' U CX 33-Z-45 86M0260!

SUMMARY ANALYSIS OF THE VIRILE SEGMENT CAMEL BRAND ISSUES CAMEL's RECENT STABILITY MAY BE TEMPORARY IINLESS IT CAN INCREASE ITS ABILITY TO ATTRACT YOUNGER ADULT SMOKERS, UNLIKE WINSTON, CAMEL HAS LITTLE INTERACTION WITH SAVINGS BRANDS* OVERALL MARKET SHARE STABILITY MASKS VAST REGIONAL DIFFERENCES OF STRENGTH IN THE WEST AND WEAKNESSES IN THE EAST. THE BRAND'S HERITAGE IS CLEARLY DEFINED -- AND IN-SYNC WITH THE MINDSET OF ITS SMOKERS -- EVEN THOUGH THE DEMOGRAPHICS MAY DIFFER, -- SELECT INDIVIDUALS WHO ENJOY BTHE REAL THINGB U ,__-, CX 33-Z-46

ANALYSIS; OF THE VIR]LF. SEGMENT SIIMPIARY FOR THE SEGMENT AS A WHOLEs ITS REMARKABLE STABILITY OVER THE LAST 2~ YEARS HAS BEEN DUE TO THE BALANCE BETWEEN ATTRACTING YOUNGER ADULTS AND LOSING SWITCHERS TO NEW BRANDS OR BECAUSE OF EXTERNAL EVENTS- - SMOKER FLOW THROUGH THE SEGMENT CHANGES CHARACTER NOT MAGNITUDE, e FOR HARLBORO, ITS STRENGTH ZS CLEARLY ITS ABILITY TO ATTRACT AND HOLD FUBYAS* - THESE SHOKER,~ POSSESS A mWORKING CLASS*'/mPRESENT ORIENTED" MINDSET- " MANY ,~MOKERS IN THE GENERAL HARKET ALSO POSSESS SUCH A MINDSET. - "[HE MINDSET WILL GAIN IMPORTANCE AS OUR MARKET BECOHES LESS AND LESS EDUCATED. • FoR ~I|NSTON, ITS DECLINING PERFORMANCE iS DUE TO LESSENED YOUNGER ADULT INTERACTION AND HEIGHTENED St~ITCHING INTERACTION t~ITH SAVINGS BRANDS- - APPEALS TO THE ~WORKING CLASS~' MINDSET t~OULD DIFFERENTIALLY ATTRACT YOIINGER ADIILT SHOKERS AND WOULD BE CONSISTENT WITH HINSTON's HERITAGE- - GEOGRAPHIC PROHOTIOHAL EHPHASIS COULD EXPLOIT SAVINGS INTERACTION- - YOUNGER ADtlLT SMOKER AND SAVINGS SEGMENT STRATEGIES CAN BE COMBINED- • FOR CAHEL, ITS RECENT STABILITY MASKS A PROBLEH IN ATTRACTING YOUNGER ADULT SMOKERS. - STABILITY A FUNCTION OF SUBSTANTIAL REGIONAL DIFFERENCES. ITS HERITAGE IS CLEARLY DEFINED AND IN-SYNC WITH ITS SMOKERS' M[NDSETS -- EVEN THOUGH DEMOGRAPHICS HAY DIFFER. R 4 5 2 9 CX 33-Z-47 86M02603