Tobacco Documents Online

May I, 1975 < r. JP Ray, Jr. .,~9.~ . R. _ .... ~ NEW ADVERTISING CAMPAIGN - SALEM .{~.~_ will address the questions you raised in your 4/28/75 memo, ~:~ect as above. ~%"What is the brand's basic problem(s) that can be at least ....... --..~partially corrected through advertising?" ~S~EM has an excellent product-one that is preferred signi- ficantly over the n~er one brand in its cahegory. Virtually all smokers have heard of SALZM and most ~84%) have tried the brand at one time or another in their smoking experience. The ~ brand is popularly priced and is available practically eve~y- ~:~::~where cigarettes are sold While the (King's) packaging is ...... ~:::~ ....... s~jectively judged a bit old-fashioned, no hard evidence ~:.:.~.:..~:~:~. : suggests the package is inhibiting sales. S~EM's problem appears to be one of image - both product .... #~{~ and user. Menthol catego~ growth (mostly a Kool phenomenon) :{~-" :has come primarily from young people and blacks. Over the year~ ~*~"~: S~EM's advertising acted to position the brand as a mild, light@ ~ ..... ~ smoke for white, middle class (establishment) ladies. Both ~ ..... young people and blacks tend to base their brand choice on the :~<~":~}::: ~age that brand projecCs about themselves. Since both groups ...... ~:~-~ found S~EM's image alien to their own desires, they turned ~<~.~:~/":~ elsewhere. ~{~ "From where is the industry growth coming?" ~}~m~ Between 1970 and 1974, .industry vol~e increas ed by nearly 13%, :~."{~<..~ while smoking - age population increased about 8%. Thus, a .................... ~: majority of the growth is probably attribut~le to population .... {~:~ gains. The balance is attributable to increased smoking inci- ~::~ dence (particularly young people and women) and increased rate [~::~:~}::~: per day (though rate per day declined in late 1974). At this ?~::~:~: t~e, we have no firm figures on the proportion of each. RH0005516 CX 53-A

~Lr. P. R. Ray, Jr. Page Two May i, 1975 From where is menthol category/Kool/Marlboro/SALEM growth coming? ~_~.~.~::~Certain problems with NFO switching data make it difficult to estimate the p~$~ortioh of growth homing from new smokers ~1~and switching We see a large percentage of "new smokers" over 18; yet, most pe6ple start smoking in their teens. ~Perhaps the best way to address this question is to look at category/brand shares of 14-17 year olds as a means of ~assessing the relative contributions of truly new smokers ~ane at source of switching gains for smokers 18+ for switching contribution. S~LARE OF SMOKERS 14-17 :Menthol Category Total Kool Total SALEM October October % Pt. 1971 1974 Diff. 25.7 40.9 + 15.2 12.1 22.8 + 10.7 37.8 33.9 - 3.9 5.9 9.3 + 3.4 .... ~e~rly, new smokers entering the market have made a significant :~contrlbut~on to the growth of the menthol category - particularly ~i - though SALEM has done fairly well too. Marlboro continues !i~{~ capture the largest share of beginning smokers but to a lesser ~:~i~nt than they did four years ago. (Between the two of them, i~..~ and Marlboro account for 56.7% of the teenage market.) DISTRIBUTION OF SWITCHING GAINS BY SOURCE (18+) (Average of Past 3½ Years) TOTAL TOTAL TOTAL MENTHOL SALEM KOOL Non-Filters 12.8 ~.0 13.0 Normal Flavors 56.4 29.6 32.2 Low Flavors 30.8 14.2 9.6 Menthols - 48.2 45.2 RH0005517 O CX 53-B

Mr. P. R. Ray, Jr. Page Three May I, 1975- .~ou can see Kool picks up a higher proportion of its switchers ..~ro~ non-filters and normal flavors than does SALEM, which gets ~:::~latlvely hlgher proportion from low flavors and other menthols. ~[~.-~n~menthol smokers who see][ a nenthol and choose Kool over SALEM do ~arily for image reasons, for SALEM has an ove~vhelming product ~$~erence over Kool on a blind basis ~ong these smokers. ~:~;~% hen a SALEM smoker switches away, where is he likely to go?" .{~}~/:~To another menthol brand primarily - one of the "normal flavor" ~:.:~:.~::~variety. Normal flavors have historically been the next most likely recipient, followed by low flavors and ~on-filters It has recently been hy:pothes~_-~,~:~<~ ~=._na~ S~ ~n,'~ smokers are switchi-':~ to ..... <-w f]avor at an inc<ea<{<,-~ rate because _~ .increased health :~{:.{~{~.~::~;:<concerns. The NFO data chosen to illustrate the answer to this ~}~}~[~{~:.{~<question only hints that this is true. Perhaps April '75 NE0 data will confirm the hypothes~s. TOTAL SALEM SWITCHING LOSSES (% OF SALEM SMOKERS SWITCHING TO CATEGORY INDICATED) April '72- Oct. '72 April '73- Oct. '73 % % SWITCHED TO Non Filters .8 Normal Flavors 3.8 Total Low Flavor 3.1 Low Flavor Filter 1.8 Low Flavor Menthol 1.3 "Normal Flavor" Menthol 5.1 Total Menthol 6.4 .8 3.8 3.1 1.8 1.3 5.1 6.4 April Oct. ' 74 ~ 2.3 3.3 1o9 1.4 5.6 7.0 RI-IO005518 O C~ t~ CX 53-C

Mr. P. R. Ray, Jr. Page Four May i, 1975 I%.~i~:, I've tried to an%~wer these questions in a way that would ~ide you with the bes~ fraie of refe~eice from which to deal ~.:~::j the issues at hand. If you think other ways of addressing ~he questions would give you a better understanding, let's dis- ~,-" @~< Since there are n~ers of ways to look at brand switching .~, you're probably best advised to develop a good "feel" for ~l~hive sources of gains and losses rather than trying to remem- ~~~@pec~f~c magic n~ers. L. W. Hall, ~::::~Mr. J. H. She~ri!l, Jr. Mr. T. L. Ogburn, ~: .... Mr. D. A. Cumins ::::::::::::::::::::: Mr J. T Winebrenner P,/-I0005519 CX 53-D