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`y - ~.~~. . ... . ~ .. . ~1 __ New Business Research and Development Report MDD4l 87-41103 June 15, 1987 TO: Mr. H. T. Parks PROJECT TF INITIAL QUALITATIVE EXPLORATORY Copies To: Mr. L. W. Hall, Jr. Mr. E. J. Fackelman Mr. W. M. Dufour Mr. J. A. Herberger Mr. J. D. Weber Ms. E. C. Etzel Ms. J. H. Miller Dr. M. F. Dube Ms. B. W. Arzonico TF Fact Book MDIC FROM: Ms. E. A. Biswell PUBLISHED BY THE MARKETING DEVELOPMENT DEPARTMENT R.J. REYNOLDS TOBACCO COMPANY, WINSTON-SALEM, N.C. 27102 RJRT Form 6756 • 7/80

PROJECT TF INITI.AL OUALITATIVE LKPI.ORATORY (MDfl 87-41103) MANAMENT Stl`1MARRY I PURPOSE This report su®arizes learning from qualitative research which was fielded to explore TF concepts and prototypes among 18-34 year old female FFLT NM smokers. In addition, as part of this research, attitudes and perceptions toward Capri cigarettes were explored among one group of 18-49 NM female repeat purchasers of the brand. BACKGROUND Project TF is a new brand idea designed to address at least two specific aspects of social acceptability: reduced ambient smoke (sidestream) and pleasant aroma. Judgmentally, it has been decided in the short term to pursue,the development of a new brand which incorporates these characteristics/benefits, and possibly pleasant aftertaste, into one proposition targeted to 18-34 year old female smokers. .0 Low sidestream smoke will be delivered via the low sidestream cigarette paper from Ecusta (CC); pleasant aroma will be accomplished with EVG (i.e., ethyl vanillin glucoside) in the cigarette paper. NOTE: Interpretation of the learning from qualitative research is subjective. There- fore, the hypotheses generated by this study should not be considered definitive. SUI~.*iARY OF KEY FINDINGS • Research findings suggest that the TF benefits of less sidestream smoke and a light, pleas- ant aroma (in a smooth, satisfying cigarette) are appealing and relevant to younger adult female smokers. Importantly, the TF prototype using the SA blend with EVG in the CC paper performed well in delivering these benefits. In addition, it was also seen as delivering a light, smooth tobacco taste. • Almost all participants perceived less sidestream smoke to be a unique and differentiating product benefit. Reduced sidestream smoke was perceived as providing a tangible product point of difference which offered both internal ("less smoke on clothes and hair") and external (sQcial acceptability) benefits. • Pleasant aroma was also perceived by most focus group respondents to be an important and unfulfilled product want. As with reduced smoke, many participants believed pleasant aroma would deliver personal and social benefits. Most respondents liked the aroma and described it as smelling "sweet" or like "pipe tobacco"; others, however, believed the aroma was too "sweet" and "heavy." • Most respondents indicated that pleasant aftertaste is an important smoker want. They perceived current cigarette aftertaste to have social and personal negatives associated with it. Focus group participants perceived the SA blend featuring low smoke and pleasant aroma to deliver a different aftertaste than their usual brand. Some liked the aftertaste while others didn't.

SLwMARY OF KEY FINDI NGS (Cont. ) . A slim product configuration was the least important product benefit to all focus group respondents. Although slimness was perceived to enhance femininity, most respondents indicated that they preferred a regular size cigarette to the TF prototype's 20mm circumference. . Overall, Capri does not appear to represent a long-term competitive threat. Trial/purchase of the brand appears to be sustained by high and continuous pack and carton couponing efforts. In addition, the reasons, other than promotion, respondents gave for buying the brand more than once did not appear to represent strong positive personal smoker benefits. Rather, the reasons given were externally motivated ("others think I smoke less when I smoke Capri's"), and it appears Capri smokers trade-off their smoking satisfaction and taste to achieve those benefits. In addition, there was concern expressed by the respondents as to the lack of value offered by the proposition. CONCLUSIONS/IITLICATIONS . The benefits of reduced sidestream smoke and pleasant aroma promised by the TF concept are important and relevant to 18-34 la1 FFLT female smokers. Almost all participants believed these benefits were unique and different from those offered by other cigarette products on the market. In addition, the prototype using the SA blend with EVG in CC paper was perceived to deliver these benefits. . Since there did not appear to be a consensus on the prototype's ability to deliver a pleasant aftertaste, this benefit might be better positioned as a discovered benefit. It is likely that in promising a pleasant aftertaste to consumers, the expectation may be more than the product can deliver. e Focus group findings suggest that a larger circumference cigarette than the 20mm prototype taken to the groups may be more appropriate for Project TF. Most participants indicated that they preferred regular size cigarettes to the TF prototypes taken to the groups. Thus, a regular slim configuration (like 1MORE Lights, Virginia Slims, or SALEM Slim Lights) may serve to enhance a more feminine image and still increase appeal. . Findings suggest that future product development work should include the identification of an optimal aroma level for TF. Although the aroma delivered by the SA blend using EVG was generally perceived favorably, a few smokers indicated that the aroma was too heavy and sweet to be around constantly. . Although Capri is perceived by some to offer some social acceptability benefits ("cutting down" aspect), TF is perceived to be different and more appealing. Capri's benefits are not emphasized in advertising; they are strictly implied. Additionally, Capri's slimness, which appears to be perceived as too different and'not offering product value, may to be a liability in gaining product acceptance in the general market. NE.XT STEPS To aid R&D in determining the optimal product development direction for the TF non-menthol style, a seven-cell concept product test is scheduled to be fielded on August 24, 1987. Six TF prototypes (featuring different aroma levels and blends) and a control will be tested among 18-34 year old female smokers of FFLT AL"i 100mm products.

PROJECT TF INITIAL QUALITATIVE EXPLORATORY (MDD# 87-41103) BACKGROUND Problems related to the social acceptability of smoking may represent a significant opportunity to meet unfulfilled wants in the market today. Anti-smoking publicity and legislated smoking regulations serve as powerful reminders to smokers that cigarette use can jeopardize social acceptance by non-smokers. Importantly, no brand in the marketplace is addressing this opportunity directly. Project TF is a new brand idea designed to address at least two specific aspects of social acceptability: reduced ambient smoke (sidestream) and pleasant aroma. Judgmentally, it has been decided in the short term to pursue the development of a new brand which incorporates these characteristics/benefits, and possibly pleasant aftertaste, into one proposition targeted to female smokers. The Segment Description Study and the Social Acceptability Tracking Study support the premise that reduced smoke and odor are benefits which could support a new brand among female smokers. . Over two-thirds of all female smokers feel that cigarettes leave an unpleasant aroma in the room. . Almost all (90%) of female smokers now agree with the statement that "smoke can be bothersome to non-smokers." Low sidestream smoke will be delivered via the low sidestream cigarette paper from Ecusta; pleasant aroma will be accomplished with EVG (i.e., ethyl vanillin glucoside) in the cigarette paper. These technologies were explored with the SA blend. RESEARCH OBJECTIVES . Explore initial TF concept statements for a product promising significant improvement of negative social acceptability product characteristics (i.e., less smoke, pleasant aroma). . Explore initial TF prototypes utilizing ultra thin configuration (20mm circum- ference).- . Assess overall appeal and fit of concept statements with initial prototypes. . Improve understanding of consumer perceptions of Capri ultra slim cigarettes and how Project TF differs versus Capri. IETHODOLOGY This research was conducted in New Orleans, Louisiana (an on-going Capri test market), on June 2-3, 1987 among a cross section of FFLT NM female smokers with more than half being sensitive to social acceptability issues of smoking. In addition, at least half of all respondents worked outside the home in an enclosed building. The following provides the actual composition of each group:

*W'THOnOLOGY (Cont.) • 18-34 female NM Virginia Slims Lights franchise smokers (50% 18-24). . 18-34 female NM Marlboro Lights 100 franchise smokers (50% 18-24). . 18-34 female NM FFLT 100mm smokers (50x 18-24). . 18-34 female NM FFLT 100mm smokers (50X 18-24). • 18-49 female Capri NM repeat purchasers (50% 18-34). During each of the groups, all respondents reviewed TF concept statements and discussed their reaction to the proposition. The participants then smoked TF prototypes and assessed the fit of the products with the various concepts. NOTE: Interpretation of the learning from qualitative research is subjective. Therefore, the hypotheses generated by this study should not be considered definitive. I. APPEAL OF TF PRODUCT CHARACTERISTICS/BENEFITS Research findings suggest that the TF benefits of less sidestream smoke and a light, pleasant aroma (in a smooth, satisfying cigarette) are appealing to younger adult female smokers. Concepts explored in the groups featuring these benefits are attached. A. Reduced Sidestream Smoke Almost all participants perceived less sidestream smoke to be a unique and differentiating product benefit. To most respondents, reduced sidestream smoke was perceived as providing a tangible product point of difference which offered both internal ("less smoke on clothes and hair") and external (social acceptability) benefits. Some comments concerning the benefits associated with reduced smoke are as follows: "With less smoke, I would get fewer complaints from co-workers less smell in my clothes, cars, and rooms." "A cigarette with less smoke would make it easier to smoke in public places." - "The less smoke is great. Many people, especially those with contact lenses, are affected by cigarette smoke." and "I would smoke it because I feel it would be 1fts disturbing to a non-smoker. It makes you more considerate of other people." In terms of concept communication, it appeared to work best to describe the low smoke cigarette as simply as possible. A first version of the concept which described in detail the use of "special patented paper" to reduce smoke appeared to create respondent expectations of chemical additives and artificial taste.

B. Pleasant Aroma Pleasant aroma was also perceived by most focus group respondents to be an important and unfulfilled product want. As with reduced smoke, many participants believed pleasant aroma would deliver personal and social benefits. Following are comments from several respondents: "I like the pleasant aroma because even though I smoke, I don't like the aroma of my usual cigarettes after smoking." "It doesn't smell like regular cigarette smoke. It's a smell you can live with and not bother others." "Now I can live in the house with my mother (non-smoker) and smoke." The prototypes' more pleasant aroma was noticeable to focus group respondents soon after they began smoking. The aroma, in combination with reduced smoke, appeared to increase perceptions of a "fresher" smoking experience. Most participants liked the aroma and described it as "sweet," "pipe tobacco," or "cherry tobacco." Only one respondent correctly identified the aroma as vanilla. However, a few respondents, especially Marlboro Lights smokers, believed the aroma was too "sweet" and "heavy." One participant commented that she wasn't sure if she "wanted it around constantly." Another said the unique aroma would just be another smell on her hair and clothes. C. Pleasant Aftertaste Almost all respondents indicated that pleasant aftertaste is an important smoker want. Most participants perceived current cigarette aftertaste to have social and personal negatives associated with it. Focus group participants perceived the SA Blend featuring low smoke and pleasant aroma to deliver a different aftertaste than their usual brand. Some liked the aftertaste while others didn't. Since the prototype was not designed to improve aftertaste, smokers' perceptions may have likely been influenced by the cigarette's aroma (smell and taste working closely together) or the mention of aftertaste in the concept. D. Slimness Of the product characteristics/benefits discussed in the groups, a slim product configuration was the least important product benefit to all focus group respondents. Although slimness was perceived to enhance femininity, most respondents indicated that they preferred a regular size cigarette to the TF prototype's 20mm circumference.

II. PROTOTYPE PERFOR.*SANCE The research also suggested that the prototype using the SA blend with EVG in the paper performed well in delivering the benefits of less sidestream smoke and pleasant aroma. Of the prototypes explored in the groups, this prototype was perceived most favorably. • SA Blend Using CC Paper with EVG (17.7 mg. tar) The SA blend with reduced smoke and pleasant aroma was generally perceived as delivering a light, smooth tobacco taste. The aroma (EVG) may have increased perceptions of smoothness as the tar level of this product is higher than in cigarettes usually smoked by the respondents. • SA Blend Using CC Paper (13.6 mg. tar) The SA Blend with reduced smoke was perceived as somewhat harsh/bitter and delivering too little tobacco taste. In addition, the prototype was perceived by several participants as hard to draw. • SA Blend Using Regular Paper (11.6 mg. tar) This prototype was perceived to have a lighter tobacco taste than Marlboro. III. NAME EXPLORATORY All groups were presented with potential name candidates for Project TF. However, none of the names explored appeared to generate much interest among the participants. • Vista. One smoker commented that this name sounded like an organization for the underprivileged. Another commented that the name reminded her of mountains. • Lar o. Many respondents believed the name Largo was too masculine. One smoker indicated the name brought to mind images of the "desert" and "cowboys." • Scectra. The name Spectra was seen as modern and "space age" by several of the respondents. One smoker also said it reminded her of "colors." • Mira e. A couple of participants indicated the name Mirage sounded dream- like. Only one smoker in the groups made a connection between the name and the cigarettes' reduced smoke. • Dawn. Respondents generally perceived this name to be very feminine. Comments about the name also included, "sounds too much like a person's name" and "it's already a dishwashing liquid." %A • Aspen. Although the name Aspen was perceived as "fresh" and "outdoorsy," a many of the respondents believed that it sounded like a menthol product. o 00 • Deco. To some, Deco sounded too "masculine," "hard," and "made up" for the o %A proposition. rv -4

IV. CAPRI Capzi is a nev low taT, ultra slim cigarette which was introduced in Louisiana in January, 1987. The brand represents Brown & Williamson's first attempt to target to female smokers. Capri's ultra slim configuration is 17mm in circumference (compared to 21mm to 23mm for other slim brands) and comes in both menthol and non-menthol styles. Overall, Capri does not appear to represent a long-term competitive threat. The high awareness and trial the brand has generated appears to relate to the promotion support the brand has received as well as to the novelty of the product's unique ultra slim configuration. In addition, purchase has been sustained by high and continuous pack and carton couponing efforts. Most participants had become aware of Capri cigarettes through friends or from newspaper advertisements which offered a free carton of Capri by calling a toll-free number. The first reaction of most respondents when they first saw a Capri cigarette was surprise. None of the participants had expected the cigarette to be so thin. Most believed it would be similar to a Virginia Slims. Some comments concerning.the participants first impression of Capri are as follows: "Capri looked like imitation cigarettes -- they were too small." "When I opened them, everyone was surprised since the carton was the same size as regular cigarettes." "Capri wasn't the right size. It looked like sample packs." Given Capri's ultra slim circumference, there was concern expressed by the respondents as to the lack of value offered by the proposition. Participants generally believed that the price of cigarettes today was exorbitant and some felt that to charge full price for a pack of Capri was a ripoff. One focus group respondent said: "Capri just doesn't have enough tobacco -- you don't get what you're paying for." Interestingly, few of the repeat purchasers had ever bought Capri at full price. Most had bought the brand using free pack and/or carton coupons. The reasons respondents gave, other than promotion, for buying the brand more than onc.e (either at full price or on deal) did not appear to represent strong positive smoker benefits. Few repeat purchasers indicated their purchase of Capri was driven by its great taste or some other highly personal smoker benefit. Rather, the reasons given were externally motivated. One respondent indicated that when she smoked Capri, she felt like she smoked less and was complimented by others for trying to cut down. Another also commented that she heard fewer complaints from her f amily when she smoked"Capri since they believed she was smoking less. Thus, it might be hypothesized that reduced smoking satisfaction may eventually cause smokers to move on to other brands.

A. Product In terms of product perceptions, Capri was seen by most repeat purchasers as delivering a light, mild taste. However, many participants perceived Capri to be much less satisfying than their usual brand. One smoker commented that she "had to smoke twice as many Capri's to get the same satisfaction" as from her usual brand. To many participants, Capri's product configuration was too thin. Some complained that Capri's ultra thin shape was extremely awkward to hold and smoke. B. Packafzing/Name Capri's package features pink and yellow graphics on a glossy off-white box with the product's name stamped in gold and the words "Trim and Light." Among repeat purchasers, the Capri box packaging was perceived very favorably. Overall, the package was seen as "feminine" and "modern" and "expensive looking." In addition, the white background color and design on the pack communicated product perceptions of fresh taste and light/mild. Some comments as to what the design on the packs represented included "wings," "birds," and "paint." Many participants believed that Capri's packaging was unique versus other cigarettes on the market. Capri's compact size and distinctive pack design was viewed by several respondents as being less conspicuous than regular cigarette packs by looking more like a package for a non-controversial item such as a "deck of cards" or "perfume." The Capri name was also perceived positively by the repeat purchasers. One participant commented that the name reminded her of a"holiday" or "vacation." C. Advertising Ad awareness among Capri repeat purchasers appeared to be fairly high. Most repeat purchasers recalled seeing advertising for the brand in out-of-home, magazines, and/or newspapers. Overall, Capri advertising was regarded positively by most respondents. The advertising was perceived by the respondents as depicting the cigarette as "preety" and "dainty" and "definitely for a woman." However, all respondents indicated that the ads did not accurately communicate Capri's ultra slim circumference. CONCLUSIONS/IMPLICATIONS . The benefits of reduced sidestream smoke and pleasant aroma promised by the TF -`- .,_ ..~ i concept are important and relevant to 18-34 ii FFLT f emale smoxe-=s. r.J.most CLJ.+ participants believed these benefits to be unique and different from those offered by other cigarette products on the market. In addition, the prototype using the SA blend with EVG in CC paper was perceived to deliver these benefits. ~ 0 P O 00 O ~ N `O

• Since there did not appear to be a consensus on the prototype's ability to deliver a pleasant aftertaste, this benefit might be better positioned as a discovered benefit. It is likely that in promising a pleasant aftertaste to consumers, the expectation may be more than the product can deliver. • Focus group findings suggest that a larger circumference cigarette than the 20mm prototype taken to the groups may be more appropriate for Project TF. Most participants indicated that they preferred regular size cigarettes to the TF prototypes taken to the groups. Thus, a regular slim configuration (like MORE Lights, Virginia Slims, or SALEM Slim Lights) may serve to enhance a more feminine image and still increase appeal. • Findings suggest that future product development work should include the identifi- cation of the optimal aroma level for TF. Although the aroma delivered by the SA blend using EVG was generally perceived favorably, a few smokers indicated that the aroma was too heavy and sweet to be around constantly. • Although Capri is perceived by some as providing social acceptability benefits ("cutting down" aspect), TF is perceived to be different and more appealing. Capri's benefits are not emphasized in advertising; they are strictly implied. Additionally, Capri's slimness, which appears to be perceived as too different and not offering product value, may be a liability in gaiining product acceptance in the general market. NEXT STEPS To aid R&D in determining the optimal product development direction for the TF non-menthol style, a seven-cell concept product test is scheduled to be fielded on August 24, 1987. Six TF prototypes (featuring different aroma levels and blends) and a control will be tested among 18-34 year old female smokers of FFLT NM 100mm products.