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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