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F MARLBORO-YAS OPTIMUM FLANKIN~S~ooY Mar]boro dominates 18-24 year old smoker market and thus the future of the Industry.. ~.. • ur potential YAS Brands aren't.. .,~i,, .. reg) ~ To~.._.~. Ma~l___._~ CAME..___~L g'~NSTO~__._._~ I Np~ Kool SALEH ~ Heri ~ V~AGE ~ 25-34 ~ 37 3~ 21 I -~s 4~ 3x I 37 ~4 ~.. and ~ot competitive factors among YAS. SOS "-Z ~ 18-20 21-24 18-24 25-34 18-34 W,~4arlboro -- ~ ~ ~CAMEL 3 3 3 4 3 I ~WlNSTON ~ 3 5 4 8 7 ~SALEM 4 6 5 9 8 ~,~VANTAGE i i 1 3 2 ~ C¢~If unchecR-ed, the growth momentum for Marlboro among YAS will result in PM tripling it SOM lead over RJR from 7 to .~=,-~21 share points by 1995. SOM 87M03452 1987 1995 R3R 3"'-~ 2-'-'~ PH39 47 R JR - PH -7 -21 CX 35-A

MARLBORO YAS OPTIMUM FLANKING STUDY • Hypothesized that initial attraction tolselecti6~'~f.'~ Marlboro based primarily on Marlboro's availab~ty and ~=~isibility among YAS. - ~e~Stay due to inertia and because there is not a , ~sufficiently compelling reason to leave (other than price ~sensitiv~mj~)!. Moreover, PM has flanked Marlboro well to -- ~protect. a~:~st~ switching losses. , R Viril ~e~.~> Marlboro M~o~der~ --> Marlboro Lights ~ ~In~--> Marlboro Menthol ~3~L~lishTFemininity/Upscale --> Marlboro iO0'sl ~ V. S l i ms~H ~ Price~ OORAL/Cambridge ~'~everageab-T~ dynamic is aging - not switching. ~,,must become relevant first usual brand options. ~i~-.H~-. ypothesized that there are strategic benefits of ~Sufficient importance to YAS in first usual brand selection that if properly tapped can override Marlboro':s availability/visibility advantage. RJR brands 0 ~4 ~n 0 CX 3 5 - B 87M0~45-~

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MARLBORO. YAS _.. - .~"" OPTIMUM FLANKING STudY Determine b'~nefits sought by younger adult smokers.,In-. selection of their first usual brand and the degr~ to which RJR brands can potentlally deliver against those benefits. .,. _ - Why recent starters (18-2~) selected their fi~t Osual ~_~,)brand? - Status oF ROR brands in that process? - Current status of ROR brands in terms of appeal and perceptions -. ~.~Utilize ~F~ning to develop brand positlonings to make RJR more rele~ht First Usual Brand options, making sure that corporat~an ROR existing/new brand is positioned ~ against~rF~'~ach key YAS benefit segment. .. S~u~~ Ap. • ch ~- Back dat~ review - Qualit~-~ye Phase: D~pth Interviews Quantit~ive Phase" " Optimum Flanking Study Benefits probes Key study rationale ~=L. Reasons for initial brand selection are different-than reasons for switching• - These reasons can be recalled by 18-21 year olds. - Reasons, other than peer acceptance, can be used to optimally flank our brands against Marlboro making them more relevant to FUBYAS. CX 35-D 87M03455