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267 RnA:,rsKie /1Cr xx , WO; '; 00. C axi Ck,~16U (1U3)126 )061 /Varkeflng Orporo ot/menco January 13, 1977 1 Mr. R. E. Smith Lorillard 200 East 42nd Street New York, New York 10017 Dear Dick: Yes, the 1/11/78 product objectives statement raises an important question: What makes us think that a lo-fi .smoking experience continues to be the standard? Here's what I would do: written them. 1) For the time being, leave the objectives as you have 2) Place the following BPT's: ,,~ ~ r'~uc~C E ---~ea~vs. 1Zlerit amona low tar, very low tar smokers 2~ and low fi smokers who are "prone". 0 -- Marlboro vs. Merit among 3 similar cells -- KGL vs. Merit among 3 similar cells If this testing generates new insights, then change the objectives as necessary. There is an overwhelming rationale for conducting these tests -- Tom Mau's statement that in our recent experience product was more important than copy in determining success/ failure. 1) He's totally right. 2) Our strategic success vis-a-vis larger, more powerful competition has been almost entirely a function of -- better understanding of segments/categories -- better understanding of what makes a cigarette acceptable (spiderwebs) ~

Mr. R. E. Smith -2- January 13, 1978 3) The 5 Year Plan commits us to maintain/extend this stra- tegic edge (e.g., all the emphasis on re-categorizing the market, volume objectives geared to share goals by category, • etc.). 4) To obtain proper guidance and maintain our executional ad- vantage ve. competition it behooves us to lead the industry in understanding "smoking experience expectations" by seg- ment. 5) The New Products group is the ideal focus point to direct this activity with benefits to all brands, and immediate applicability in our corporate commitment to reduce all brands' tar levels. I've selected Real, Merit, KGL as representing 3 different kinds of cigarettes. I propose Merit as the non-menthol benchmark be- cause of its success and the fact we have data comparing it to other brands. Philosophically, I'd prefer a Lorillard standard, but this is the most practical approach. Marlboro is included specifically to test the EFII objective. If we can persuade Bob Ave of the corporate importance of this proposal, I suspect we may want to expand the list. I'm as intrigued as when I put together the first memo on spiderwebs from a corporate and strategic standpoint. Use of MCA letterhead is deliberate. Let's talk. Sincerely, Benito Vila FiV/jP