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Anne Landman's Collection

Switzerland Long Range Plan 930000 - 950000

Date: 19930000/D
Length: 187 pages
2501145890-2501146076
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Abstract

This 187-page report is primarily a marketing plan, but contains sections that describe strategies Philip Morris (PM) planned to use in Switzerland from 1993-95 to defeat smoking restrictions, bans on cigarette advertising, increased cigarette taxes and more.

PM states its rationale for organizing smokers against public health efforts, stating (page -5910): "Smokers, as a consumer group, are today numerically as well as politically, a minority. Furthermore, they lack efficient and powerful organisation for the defence and preservation of their rights and interests. By consequence, it is mainly up to the industry to play this role."

The document also states PM's objective is to reverse existing public health gains against tobacco use: "stop the decline, and eventually start rebuilding the social acceptability of smokers and smoking in society." Other lofty objectives were to "Lead politicians to reorder their priorities...on and around the S&H [smoking and health] debate," and "Restore and strengthen smokers' confidence." Such corporate objectives were completely at odds with the goals of public health authorities.

PM further had as an ally J.P. Dewalder, a psychology professor at Lausanne University and Director of the Lausanne University Institute of Psychology. Dewalder sent a proposal to PM to do a research project in which he would study "the field of social engineering, mandates for lifestyle modifications...the dynamics of tolerant behaviour in society." PM also planned to use Dewaulder as a seemingly independent third party to organize international symposia and spread PM's corporate views on "socio-political themes like tolerance, freedom of speech, the nanny state, health and lifestyle engineering, etc."

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Quotes

[Page 2501145910]:

SOCIAL ACCEPTABILITY 1993 - 1995

1. ISSUE DEFINITION

The level of social acceptability of smoking determines to a large extent the success or failure of all types of anti-tobacco proposals and measures, affecting production, marketing, consumption and, overall, market size. Smokers, as a consumer group, are today numerically as well as politically, a minority. Furthermore, they lack efficient and powerful organisation for the defence and preservation of their rights and interests. By consequence, it is mainly up to the industry to play this role.

2. OBJECTIVES -Stop the decline, and eventually start re-building the social acceptability of smokers and smoking in society,

- Lead politicians to reorder their priorities, perspectives and assessments on and around the S&H debate,

--restore and strengthen smokers' confidence.

3. CENTRAL STRAEGY

The central strategy for achieving these objectives is to unveil social engineering, misinformation, vested interests and self-alarming forces, to restore factual communication on the S & H issue and to put it in the wider context of social, economic, ethic and political considerations, facts and requirements. This also means that industry's communication with decision makers, media and public has to emphasise common ground interests and, to a certain extent, it has to become "political".

[Page 2501145917]:

Based on the assumption that smoking is a health hazard (for smokers and non-smokers) and driven by strong vested interests and self-alarming forces, increasing regulatory measures aimed at prohibiting and reducing tobacco consumption in public places (workplace, restaurants) and transportation are proposed and put into public debate by antis, health authorities and politicians.

OBJECTIVE

The objective is to prevent and to defeat all types of legally imposed smoking bans and restrictions at federal and cantonal level. The central strategy is to prevent mis-information on ETS and to rebuild social acceptability of smokers and smoking in society, to promote awareness of solutions to good indoor air quality in general and to favour voluntary, common sense accommodation between smokers and non-smokers.

Scientific communications on ETS and IAQ

-Organise briefing sessions (S&T/PMI) for journalists, occupational safety and health authorities, company and association managers, labour union officials, etc.

- Exploit the outcome of adequate third party organised ETS/IAQ conferences and symposia.

- Disseminate appropriate scientific literature, as far as possible in local languages (German, French, Italian), to relevant people and target groups, in particular to scientific and public libraries.

Company
Philip Morris
Author
Corporate author, Philip Morris
Recipient
Corporate recipient, Philip Morris
Region
Switzerland
Named Organization
Alisa
Angehrn
Balair
B.A.T. Industries PLC (BAT)
British American Tobacco Industry, parent company of Brown & Williamson Tobacco Co. in the U.S.
Bernag Ovag
Billi
Black
Brenner
Brunes
Burrus
Cartel Commission
CISC
CITA
Coop
Coop Denner
Demaurex
Denner
Duerr
Ecofin
EEC (European Economic Community)
European Economic Community
EEMA, (PM Eastern Europe, Middle East & Africa)
Efta
Federal Commission on Tobacco
Federal Council
Federal Office of Public Health
Feller
Frehner
Geovision
Grisotabac
Gruenig
Health Promotion Org
Hofer Curti
Horeca (Hotels, Restaurants and Catering/Cafes)
European acronym for an association of hotels, restaurants and cafes or caterers in the European Economic Community. Also seen spelled as "Ho.Re.Ca" or referred to as the Horecasector. Businesses or individuals pay membership dues to belong to Horeca.
Inst of Psychology Lausanne Univ
Keller
Kindler
Kiosk Ag Naville
Mabeag
Magro
Margot
Meili
Meuli
Morosoli
Mppc
National Manufacturers Association (Defense groups for cigarette companies worldwide)
In places around the world where these associations did not exist, the tobacco industry created them to help defeat public health efforts around tobacco.
Ochsner
Oettinger
Ofsp
Othmar Spirig
Parisienne Extra
Pick + Pay
PM Brunes
PM US Intl
PMI, Philip Morris International
Portmann
Price Surveillance Office
Prodega
Reemtsma (German tobacco co.)
Restomat Uniromat
Reynolds
Rinsoz Ormond
Rothmans (UK To bacco co.)
Saeuberli
Shell
Spateneder
Star Discount
Strebelmuth
Swiss Advertising Assn
Swiss Assn for Personnel Management
Swiss Federation of Small Industries + C
Swiss Natl Tourism Office
Swiss Tourism Federation
Swiss Tv + Radio Assn
Swissair
Tadisa
Tgmp
US Intl
Usam
Usego
Valtabaccco
Vobema
Volg
Vorort
Waro
Weber
Weitnauer
Wellauer
World Health Organization (Concerned with global public health)
International organization concered with public health worldwide
Widmer
Litigation
Stmn/Produced
Named Person
Atteslander, Peter (PM Corporate Services)
Dauwalder, J.P. (Professor of Psychology, Lausanne Univeristy)
Director of the Institute of Psychology at Lausanne University
Denner
Jaeggi
Martin, J.
Suchard, J.
W, B.S.
Type
MRRT, MARKET RESEARCH REPORT
CHAR, CHART, GRAPH, TABLE, MAPS
Subject
industry activity
industry front group
industry influence
industry recommendation
industry research scientists
industry response
industry sponsored conference
industry sponsored research
industry strategy
taxation
smoking restriction
advertising restriction
trade association
Social Acceptability (Social acceptability of smoking)
The industry fought the decline in social acceptability of smoking through public relations campaigns, legislation, etc.
social policy
public transportation
public smoking law
public relations

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Page 1: clj22e00
S W I T Z E R L A N D LONG RANGE PLAN 1993 - 1995
Page 2: clj22e00
TYP 1993 - 1995 NIANAGIlMENI' SUMMARY MARM OVERVIEW Based on planned yearly price increases and assuming that sales at the border will remain constant, the total market is forecast to remain stable in 1993 and decline by 100 mio in 1994 and 150 mi.o in 1995, i.e; reaching a 16 bio level in 1995. The plan incorporates a 20-centimes price increase, slightly above inflation, in March of each year which should maintain the current gap with other Eur.opean countries. Zhe major dawn.side of the plan could come fran large excise tax increases to finance the federal budget deficit. The full-flavour segment is forecast to lose 3.9 share points fran 41.1% in 1992 LE to 37.2% in 1995. Zhe light and extra-light segments will grow frana 32.3% to 33.6% and 26.6% to 29.1% respectively over the same period. The US/International segment market share is planned to grow fran 49.6% in 1992 IE to 53.7% in 1995. PM and Reynolds, the third largest PM's ecnnpetitor; are the only manufacturers who are foreseen to increase market share over the TYP period. In effect, PM and R7R are well positioned to take advantage of the trend towarcls American blend and LZN cigarettes. BAT, second in the market, and &=us, third in the market, have both established long term strategies attempting to ccapezsate the volume losses of traditional brands with the volume gains of American brands. The newly introduced free market ernrirornnent will increase the threats of a price war fron the manufacturers which have low volume in Switzerland and nothing to lose. Rothmaris which is already experiencing price wars in many European markets could be tenWted to launch a 25 packs/American blend at the price of a 20 pack. It is also anticipated that the trade may be much more active than today in launching their awn brands.
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TYP 1993 - 1995 MANAGF3MENT SUMMARY KEY ISSUES AND ACTION PLANS 1. Dismantlinct of the manufacturers' cartel In August 1992, the cartel of manufacturers was abolished and the trade agreement was cancelled for Deaember 31, 1992. As frcan January 1993, the Swiss manufacturers will live in a free market enviroinnent under the scrutiny of the Price S'urveillance Office and of the Cartel C',cmm.ission. We will iff1plenent new selling conditions as from March 1, 1993, with the price increase, which will take into account more effectively the market structure, the different needs and services of each trade channel. OBJEC'I`IVES 1. Keep current level of industry margins. 2. Keep and favor an efficient logistics system managed by specialized wholesalers distributing 60% of the cigarettes sold in Switzerland. 3. Recognize the buying powex of large customers through a small volume rebate (up to 0.5% of factory price including excise and turnover taxes or 1.5% of factory price excluding taxes). 4. Establish an attractive but controllable scheme of trade allowance insuring: - visibility and sufficient stock level for leaders; - adequate distribution of strategic low volume brands; - branding, advertising and prcenotions in selected channels and POS. The likely consequences are a more efficient distribution system in Switzerland, the disappearance of low volume brands, i.e; 100 out of 240 driven by the reduction of assortments and an improved use of the marketing mix.
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TYP 1993 - 1995 MANAGIIMENFI' SCMMARY 2. Pricing and Taxation The existing plan of the Federal authorities foresees annual tax increases of 15 cts/pack, providing that the industry only take minor increases. This is the min.imtinn that we should expect from a government living under budget constraints and the potential pressure of neigbboring countries. Tax incidence at 50% is significantly below the European average. In the context of the dismantling of the cartel, the scrutiny of the Price Surveillance Office, the cartel cozrnni.ssion and the threat of a price war, our pricing strategy of annual increase of 20 cts/pack aims at protecting PM's long term profitability. It is essential to continue coordinating with the tax authorities for our price increases. 3. Advertising restrictions There are currently 2 proposals aimedd at restricting freedan of cxomercial speech: the popular initiatives against tobacco and alcohol advertising and the related Federal counter project. If the counter-project passed, marketing activities would be limited to product advertising in press and at point-of-sale and some form of sponsoring. The counter-project will be discussed in Parliament in 1993 and could be in force by 1995 if the Parliament speeds-up the vote and reduce the leadtime before the implementation. If the initiative passed, Switzerland would no longer enjoy marketing freedom. The vote by Swiss people should take place in 1994. The ban of tobacco advertising would become effective in 1996/1997. Our strategy is to fight both the initiative and the current Federal counter project based on the manufacturers' self limitations and intense lobbying, direct or through public campaigns. Until 1996, we want to consolidate/establish cigarette brand images before advertising restrictions are impo<-.ed, and define arrl set-up alternative ccxrnrninications. Priorities are to: - secure permanent advertising inside and outside the P06's. - develop dialogue marketing and alternative coamnunication concepts for Marlboro, Philip Morris, Muratti.
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TYP 1993 - 1995 MANAGIIKEN'P SUMMARY 4. EEA-EC On December. 6th, 1992 Swiss people will vote on the EEA agreement which will only be ratified if acxepted by the majority of both the cantons and the people. The impact of the EEA agreement is already felt as the Swiss authorities implement new legislations that are Euro-con-patible. Based on develolxments in the EC, PM in Switzerland will be ready to adopt and adapt the EC directives for product regulations but soften and delay the impleme.ntation of stringent legislation on advertising and smoking restrictions. In terms of taxation we are working very closely with the tax authorities highlighting the weakness of the F.oOFIN regulations aiming at keeping the largest possible specific element in total tax. 5. SRAND ACPION PLANS MARL80RO Our objective is to increase Marlboro from 22.9% in 1992 IE to a 25.2% market share in 1995. Marlboro Red is a concern as it lost share in 1992 but attenuated as it improved its strong performance in its target group. The share loss is due to the seasonal workers that have left the country. We plan to stabilise ML Red market share at its 1992 level despite the continued decline of the Full Flavor segment. To achieve this, we will maintain our advertising pressure and optimise the mix of subjects in the Marlboro base campaign and mainly use cinema, outdoor and magazines and continue our permanent outdoor and FCS advertising presence, with special emphasis on major impact outlets, gas stations and tourist resorts. We will continue to concentrate on the two targeted promotional themes of racing and music and further develop the tailor made 7GMP progrannne with Marlboro exclusivity in pubs, bars and music clubs. Together with EEC and EEMA countries, we are participating in the review of Marlboro Red performance and marketing mix. Marlboro Lights is foreseen to bring the growth of the brand family as more smokers switch towards lighter cigarettes and many beginners no longer start with Full Flavor products. The need for a line extension of Marlboro may become essential as the graath of the Superlight segment continues. Marlboro Classics will continue to build its business in Switzerland. Marlboro Travels, inspired by what is being done in Germany and in Belgium, started to develop in the previous years. 2501145894
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TYP 1993 - 1995 MANAGIIMENr SUMMARY PHILIP MORRIS Although Philip Morris family is in the grawti seyme.nt where most of the new brand launches are taking place, our objective is to increase market share frcen 4.1% in 1992 IE to 5.6% in 1995 and establish PM as the leading brand amongst smokers below 35 in the extra-light category. We will change PN Ultralights to a bold product in 1993 and look for completing the offer with a 2mg version. We will evaluate the opportunity to develop additional line extensions. We will keep the uniqueness of PM advertising by using the New York skyline campaign and dedicate more resources to the basic advertising campaign using mainly cinema, outdoor and magazines. Our promotional platform will be mostly related to cinema activities. We will support the grawth of PM Ultral ights by extending its distribution in vending machines chains. We will establish a PM design shop offering design articles for sale through a mail progranme and give it credibility by sponsoring the only official Swiss design price and introducing . MURATTI We will maintain Niuratti family's market share at 8.8% over the plan period by launching Muratti Ultralights and supporting Muratti Licshts lainched in 1991 with a new advertising campaign in press and magazines and product ads that emphasizes the ]mg claim. rERIr We will stop supporting Merit during the plan period but will get media exposure during the 1993/1994 Pace Around the World . We will support the brand vis a vis the trade in order to maintain its curre.nt distribution. We will maintain Brunette's segment share by keeping its distribution.
Page 7: clj22e00
TYP 1993 - 1995 MANAGIIMENNP SUMMARY We will increase CheStexfield family market share fran 0.4% in 1992 IE to 1.0% in 1995. Whilst awaiting the PMI's campaign we will continue to advertise the brand. In the promotional field, we will proceed with unusual and targeted promotions around the themes of adventure and music and exploit the international Off-Road activities in Switzerland. NEW PFtoIx7G"IS Our portfolio of brands will be cozrplemented during the plan period in order to answer to threats of conpetitors' new products. If the cheap segment were to grow due to an American blend product we are ready with L&M, both in 20' and 25's packs. We would have at that time to consider the use of Chesterfield if the battle requires a product combining image and price advantages and for a possible better use of human and financial resources. We are also ready to retaliate with a traditional product, (i.e; Flint in a revamped packaging), in order to cut the competitors cash cows or respond to a threat in the traditional segment. We are also considering Belmpnt for a use against threats in the Other blondes segment. Burrus is testing nNewland", a product which could capitalise on the current ecological trends. As this phenomenon is increasing, we are also preparing a concept and a product. We plan to enter the slim segment with line extension of established brands. We have started with Multifilter slims in the Ticino to capitalize on the grawth of the segment in Italy and be ready to follow with slims versions of Muratti and Philip Morris. 6. HUMAN RFSOURCES Although we will keep the same headcount during the plan period, we will have to adapt the organisation to the developnents of the Key Accounts management, the trade m3rketing and the dialogue marketing. We will most likely have one headcount tran.sfe.rred to the ccenpany that will deal with the diversification programme. We will dedi.cate 2 additional headcounts to K.A in 1993 and 1 headcount to dialogue marketing in 1994. The major impact of the cartel's dismantling will be on the definition of the call mission, frequency and territories of the sales representatives and the role of the merchandisers. 2501145896
Page 8: clj22e00
TYP 1993 - 1995 MANAGEMENI' S'[JMr'ARY 7. SYNERGIES AND PROFITABILITY IMPROVIINIIRT PROGRAMNIE Based on the current media buying of PM for cigarettes, synergies with other FM companies have been developed in order to provide them with the best possible buying conditions. The current sales force information system (SCORE) will be inproved as data entry currently done by the sales representatives on paper and data typists on cxmputer will be replaced by a direct entry in the field on Grid Pad (small easy to use portable PC). This will allow savings in mail (daily call cards sent by post) and salaries of data typists.
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SWITZERLAND LRP 1993 - 1995 TAEE OF OCNTENTS PACES NARKEP WFRtT.ffiW 1 - 2 ZNVIRONMENT 1. EC/EEA 1993 -1995 3 - 4 2. SWISS NMA 5 3. GOVFRIdMEN'I' RELATIONS 6 - 8 4. SOCIAL ACCEPTABILITY 9 - 10 TcAK-UE, STRA~`LEIES AND ACIZCN PIANS 5. ADVERTISING 11 - 13 6. PRODtJGT RE3tJLATIONS 14 7. SMOKIldG RE.'SIRIGTIONS 15 - 17 8. TAXATION 18 - 19 9. PRICING 20 - 21 10. CARTEL DISNANTLING 22 11. BRAND P'OR1'FOLIO 23 - 25 12. 2RADE PROGRAMIlME 26 - 27 13. DIVERSIFICATION 28 - 29 14. SALES FORCE MISSION AND ORGANISATION 30 - 33 17. PROMOTION FORCE NLISSION AND ORGANISATION 34 - 35
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SWI'I'ZERIAND IRP 1991 - 1993 TABHIE OF CONTENI5 PAGES PRUI7UCT PIANS AND NEd PROIX7~I5 Marlboro 36 - 38 Muratti 39 - 41 Philip Morris 42 - 44 Chesterfield 45 - 47 VbII7MFS AND ~',~rA`rtON PRICIlIG

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