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FraserSmith ETHNFC MAAKETIWd.STAATEGIC PLM/NING & PROMOTION PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT MAY 25, 1988 475 t01h AVENUE •SUITE 000 . NEW YORlC N.v. 10018 9 (Y12) 564{68~

PHILIP MORRIS USA ASIAN-AMERIA ELOPMENT IN I. INTRODUCTION II. SITUATION ANALYSIS SUMMARY A. PROBLEMS B. OPPORTUNITIES C. SPECIAL PLANNING CONSIDERATIONS III. RECOMMENDED STRATEGIC AREAS OF DEVELOPMENT A. STRATEGIC AREA I 1. TRADE RELATIONS AND BUSINESS DEVELOPMENT B. STRATEGIC AREA II 1. CONSUMER DEVELOPMENT C. STRATEGIC AREA III 1. COMMUNITY LEADER AND CONSTITUENCY DEVELOPMENT IV. STRATEGIC ACTION PLAN V. AGENCY MANAGEMENT OF ASIAN BUSINESS DEVELOPMENT

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT INTRODUCTION ASIAN-AMERICAN MARKET IS EXTREMELY VIABLE TO EXPLORE FOR BUSINESS DEVELOPMENT DUE TO SELECT MARKETING FACTORS: - GROWTH RATE - EMERGING SCALE - SUBGROUP COMPOSITION - SMOKER AND BUYER BEHAVIOR - TRADE IMPACT FRASERSMITH'S PROJECT STARTED APRIL, 1988.

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT INTRODUCTION (CONT.) PROJECT OBJECTIVES 1. PROVIDE PHILIP MORRIS WITH A STRATEGIC REVIEW OF ACM FROM A CONSUMER AND TRADE PERSPECTIVE. 2. IDENTIFY PROBLEMS, OPPORTUNITIES AND DEVELOPMENT STRATEGIES. BUSINESS 3. DEVELOP PROMOTIONAL CAMPAIGN AND PHILIP MORRIS TO ACHIEVE BUSINESS ASIAN-AMERICAN MARKET. STRATEGIC DOMINANCE PLAN IN FOR THE

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT POPULATION GROWTH 0 DUE TO IMMIGRATION, ASIAN-AMERICANS ARE THE FASTEST GROWING MINORITY GROUP AND WILL TRIPLE BY THE YEAR 2000. 1980 EST. - 3.5 MILLION 1990 EST. - 6.5 MILLION 2000 EST. - 10.0 MILLION 1980 CENSUS PROJECTED Y A % GROWTH Pop•_ vs. 1980 TOTAL MARKET 3,466 9,850 100% +285 CHINESE 812 1,683 17.1 +207 FILIPINO 782 2,070 21.0 +265 VIETNAMESE 245 1,574 16.0 +642 KOREAN 357 1,320 13.4 +370 ASIAN INDIAN 387 1,006 10.2 +260 JAPANESE 716 857 8.7 +120 OTHER ASIAN 166 1,340 13.6 +806

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT GEOGRAPHIC IMPORTANCE 0 73% OF THE TOTAL ASIAN-AMERICAN POPULATION RESIDE IN 7 STATES. 0 CALIFORNIA POSSESSES 36% OF TOTAL. - ALL MAJOR ASIAN SUBGROUPS ARE REPRESENTED IN CALIFORNIA. - REMIGRATION TREND TO CALIFORNIA FROM TEXAS AND COLD WEATHER STATES. 0 IN CALIFORNIA, BY THE YEAR 2000, ASIAN-AMERICANS WILL EQUAL THE PRESENT HISPANIC POPULATION.

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT Seven States with 100,000 or More Asian Americans in 1980 (Population numbers in thousands) Area Total Asian* Japanese Chinese Filipino Korean Asian Indian Vietnamese United States 3,466 716 812 782 357 387 245 Percent 100.0 100.0 100.0 100.0 100.0 100.0 100.0 California 1,247 269 326 358 103 60 85 Percent 36.0 37.5 40.1 45.8 28.7 15.4 34.8 Hawaii 453 240 56 132 17 1 3 Percent 13.1 33.5 6.9 16.9 4.9 0.2 1.4 New York 328 25 147 36 33 68 6 Percent 9.4 3.5 18.1 4.6 9.3 17.5 2.4 Illinois 171 18 29 44 24 37 6 Percent 4.9 2.6 3.6 5.7 6.8 9.6 2.6 Texas 130 12 27 16 14 23 28 Percent 3.7 1.7 3.3 2.0 3.9 6.0 11.3 New Jersey 108 10 23 24 13 31 3 Percent 3.1 1.4 2.9 3.1 3.7 7.9 1.2 Washington 105 27 18 26 13 4 9 Percent 3.0 3.8 2.2 3.3 3.8 1.1 3.6 . ~ ~ ~ ~ Source: Bureau of the Census, 1980 Census of Population. ~ ~ ~ -6-

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT CONSUMER RESEARCH 0 A SPECIAL ANALYSIS COMBINING 1986 AND 1987 NATIONAL TRACKING STUDY DATA PROVIDES DIRECTIONAL INFORMATION ON ASIAN CONSUMER CIGARETTE USAGE. 0 THE DATA IS DIRECTIONAL SINCE IT ONLY INCLUDES SELF-DESCRIBED "ORIENTALS". INDICATIONS ARE THAT SMOKING INCIDENCE IS HIGH FOR "BRANDED" PRODUCTS. TOTAL M K R ORIENTALS INDEX TO TOTAL BASE 55,202 418 100 MEN WOMEN 50 32 164 AGE 18-24 132 25-34 28 37 35+ 57 43 75 FLAV R MENTHOL 28 25 89 NON-MENTHOL 72 74 103 TAR . FULL FLAVOR 48 48 100 Low FLAVOR 40 39 98 ULTRA Low 11 10 91

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT CONSUMER RESEARCH (CONT.) TOTAL M KER ORIENTALS INDEX BRAND SHARES MARLBORO 23.1 34.0 147 BENSON & HEDGES 4.2 9.8 231 WINSTON 11.5 8.9 77 SALEM 8.6 6.2 73 KENT 3.1 5.3 171 PARLIAMENT 1.0 2.6 258 MERIT 4.4 2.6 59 ~ .~ .N _j _41 4~ ca -8- ~

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT CONSUMER BEHAVIOR FRASERSMITH RESEARCH INDICATES THE FOLLOWING: 0 ASIAN-AMERICANS TEND TO BE VERY IMAGE-CONSCIOUS AND QUALITY IS IMPORTANT. 0 THE MARKET TENDS TO PURCHASE MOST CATEGORIES. PREMIUM/BRANDED PRODUCTS IN 0 SHOWS SIGNS OF HEAVY USAGE OF CIGARETTES, BEER, AND PACKAGED FOOD. 0 NO FORECAST ON MEASUREMENT OF MARKET VOLUME EXISTS, NATIONALLY REGIONALLY OR LOCALLY. ~ rs ~ ~ ~ ~ .~ cz -9- ~

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT TRADE FACTORS IN MANY MARKETS, MOST CONVENIENCE STORES ARE OWNED AND OPERATED BY ASIAN RETAILERS. 0 80% OF WASHINGTON, D.C. SMALL STORE RETAILERS ARE ASIAN-AMERICAN. 0 80% OF NEW YORK CITY INDEPENDENT GROCERY STORES ARE OWNED OR OPERATED BY ASIAN-AMERICANS (PRINCIPALLY, KOREANS). 0 IN EXCESS OF 1000 SOUTHERN CALIFORNIA CONVENIENCE STORES ARE OWNED OR OPERATED BY ASIAN-AMERICANS. 0 MANY ASIAN-AMERICAN RETAILERS VIEW CERTAIN PRODUCTS SUCH AS CIGARETTES AND BEER AS MERELY CONVENIENCE ITEMS, AND DO LITTLE TO MAXIMIZE IN-STORE SALES AND PROFIT OPPORTUNITIES.

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT SITUATION ANALYSIS SUMMARY PROBLEMS -- CONSUMER 1. THERE IS LIMITED QUANTITATIVE DATA ON ASIAN OR ASIAN-AMERICAN SMOKING INCIDENCE, USAGE, ATTITUDES, AND BRAND PREFERENCES. 2. ASIAN-AMERICANS ARE NOT A HOMOGENEOUS GROUP AND REQUIRE SPECIAL SUB-GROUP ANALYSIS TO UNDERSTAND ATTITUDES AND PURCHASE BEHAVIOR. 3. "FIRST GENERATION" ASIANS ARE IMPORTANT BECAUSE THEY REPRESENT POTENTIAL NEW SMOKERS. MOST DIFFICULT TO REACH DUE T FACTORS. HOWEVER, O LANGUAGE THEY ARE THE AND CULTURAL - LATER GENERATIONS ARE MORE ASSIMILATED AND EASIER TO REACH BY APPROACHES. MAINSTREAM BRAND MARKETING AND MEDIA 4. BECAUSE THE ASIAN MEDIA IS NOT WELL DEVELOPED, COMMUNICATIONS TO THE MARKET IS COMPRISED OF COMMUNITY NETWORKING AND WORD-OF-MOUTH.

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT SITUATION ANALYSIS SUMMARY PROBLEMS -- TRADE 1. ASIAN BUSINESS RETAILERS DO NOT HAVE A GOOD UNDERSTANDING OF THE BENEFITS THEY CAN OBTAIN FROM USE OF SELECT MERCHANDISING TECHNIQUES, PARTICULARLY FOR CIGARETTES. - CIGARETTES ARE VIEWED AS A CONVENIENCE FOR THEIR CUSTOMERS RATHER THAN A HIGH BUSINESS PROFITABILITY PRODUCT THAT SHOULD BE PUSHED. PHILIP MORRIS PRODUCTS ARE IN DISTRIBUTION, BUT DO NOT APPEAR TO HAVE STORE VISIBILITY, MERCHANDISING, OR INVENTORY LEVELS COMMENSURATE WITH THEIR CONSUMER SHARE AND PROFIT POTENTIAL. 2. PHILIP MORRIS AND OTHER MAJOR MANUFACTURERS DO NOT HAVE AN UNDERSTANDING OF THE ASIAN CULTURE AND, THEREFORE, LACK SENSITIVITY NEEDED TO BUILD COMPLETE RELATIONSHIPS WITH THESE RETAILERS. - SALESFORCES RECOGNIZE THIS PROBLEM. IT DOES NOT HAVE TOOLS TO DEAL WITH IT, BUT IS INTERESTED IN SOLVING IT.

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT SITUATION ANALYSIS SUM4IARY PROBLEMS -- TRADE 3. PHILIP MORRIS SALESFORCE SELLING TECHNIQUES DO NOT COMPLETELY FIT THE WAY ASIANS "CULTURALLY" PREFER TO CONDUCT BUSINESS. - AMERICAN OBJECTIVE IS TO "CLOSE THE DEAL FAST" VERSUS ASIAN OBJECTIVE OF "ESTABLISHING A RELATIONSHIP FIRST", THEREBY BUILDING A FOUNDATION FOR A LONG-TERM BUSINESS RELATIONSHIP.

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT SITUATION ANALYSIS SUMMARY OPPORTUNITIES -- CONSUMER 1. PHILIP MORRIS HAS THE GREATEST LEVERAGE POTENTIAL, DUE TO RECOGNITION OF MARLBORO AS THE #1 BRAND. 2. OTHER BRANDS SUCH AS BENSON & HEDGES, PARLIAMENT, VIRGINIA SLIMS, AND EVEN CAMBRIDGE, HAVE DEMONSTRATED SITUATIONS OF ACCEPTANCE. 3. PROMOTIONAL OPPORTUNITIES EXIST DUE TO HIGH ASIAN CONSUMER INTEREST IN SPORTS, ENTERTAINMENT, CULTURAL/LIFESTYLE, AND COMMUNITY ACTIVITIES. 4. EXISTING ASIAN EVENTS HAVE NOT RECEIVED MAJOR SPONSORSHIPS AND HAVE BEEN ONLY OPERATING AT LOCAL COMMUNITY LEVELS.

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT SITUATION ANALYSIS SUMMARY OPPORTUNITIES -- TRADE 1. ASIAN BUSINESSES ARE CONCENTRATED IN THE CONVENIENCE STORE RETAIL SEGMENT, WHERE IN 1987, AN ESTIMATED 30% OF U.S. CONSUMER RETAIL CIGARETTE PURCHASES WERE MADE. - THIS IS A CRITICAL TRADE CLASS IN WHICH PHILIP MORRIS NEEDS TO PROTECT ITS HIGHER LEVEL OF SHARE DEVELOPMENT AND STRENGTHEN ITS POSITION TO GROW. 2. THERE EXISTS AN IMMEDIATE OPPORTUNITY TO EDUCATE RETAILERS AND TO DEVELOP BUSINESS RELATIONS WITH SALES FUNCTIONS IN CIGARETTES AND OTHER HIGH VOLUME CATEGORIES IN CONVENIENCE STORES (BEER, COFFEE, ETC.). 3. SPECIAL NEEDS OF ASIAN RETAILERS REQUIRE THAT PM BUILD TAILOR-MADE COMMUNICATIONS AND TRAINING TOOLS, WHICH WILL PROVIDE THEIR SALESFORCE WITH A SIGNIFICANT COMPETITIVE ADVANTAGE VS. OTHER MARKETERS.

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT SPECIAL PLANNING CONSIDERATIONS 1. SEQUENCE OF IN-MARKET ACTIVITY FRASERSMITH RECOMMENDS THAT NO SIGNIFICANT CONSUMER PROMOTIONAL ACTIVITY BE INITIATED, PRIOR TO THE DEVELOPMENT OF THE TRADE RELATIONS AND BUSINESS DEVELOPMENT PROGRAM. 2. CORPORATE SYNERGY FRASERSMITH RECOMMENDS BOTH GENERAL FOODS AND MILLER BREWING C0. BE INCORPORATED INTO THE STUDY SINCE MANY OF THE FINDINGS WILL BE RELEVANT TO THEIR SALES GROWTH IN THE MARKETPLACE.

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT RECOMMENDED STRATEGIC ACTION PLAN THREE (3) ASIAN BUSINESS DEVELOPMENT STRATEGIES RECOMMENDED BY FRASERSMITH FOR PHILIP MORRIS ARE: STRATEGIC AREA I 0 TRADE RELATIONS AND BUSINESS DEVELOPMENT (PUSH STRATEGY). - ASIAN RETAILERS - ASIAN BUSINESS GROUPS STRATEGIC AREA II 0 CONSUMER DEVELOPMENT (PULL STRATEGY). SUB-GROUP QUANTITATIVE AND QUALITATIVE MARKET RESEARCH PROMOTIONAL APPROACHES BASED UPON RESEARCH RESULTS SELECT USE OF PROMOTIONS WITH SIGNIFICANCE TO ASIAN CONSUMERS, FACILITATING LEARNING CURVE STRATEGIC AREA III 0 COMMUNITY LEADER AND CONSTITUENCY DEVELOPMENT (CORPORATE GOODWILL).

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT - SUB-GROUP COMMUNITY ASSOCIATIONS - POLITICAL AND CIVIC ORGANIZATIONS

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT STRATEGIC AREA I TRADE RELATIONS AND BUSINESS DEVELOPMENT (PUSH STRATEGY) DUE TO THE PROBLEMS IDENTIFIED WITH THE ASIAN RETAIL TRADE IN CONVENIENCE STORE SEGMENTS, PHILIP MORRIS HAS AN IMMEDIATE OPPORTUNITY TO INCREASE ITS PRODUCT DISTRIBUTION, PRODUCT MERCHANDISING, AND SALES. THE RECOMMENDED TRADE RELATIONS AND BUSINESS PROGRAM WOULD CONSIST OF THE FOLLOWING ELEMENTS: 1. SENSITIVITY PROGRAMS FOR KEY PHILIP MORRIS SALES PERSONNEL. 2. SPECIAL RETAIL SELLING MATERIALS TAILORED TO PROVIDE ASIANS WITH A BETTER UNDERSTANDING OF THE IMPORTANCE OF INCREASED DISTRIBUTION AND MERCHANDISING OF PHILIP MORRIS PRODUCTS. 3. SPECIAL BUSINESS TO BUSINESS SUPPORT PROGRAMS FOR ASIAN BUSINESS/TRADE GROUPS (CHAMBERS OF COMMERCE, GROCERS ASSOCIATION) THAT WILL PROVIDE PHILIP MORRIS WITH A "PREFERRED STATUS" AMONG ASIAN BUSINESSMEN ON A NATIONAL AND LOCAL BASIS.

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT STRATEGIC AREA I TRADE RELATIONS AND BUSINESS DEVELOPMENT (PUSH STRATEGY) TACTICAL COMPONENT #1: SENSITIVITY PROGRAMS OBJECTIVE: 0 SENSITIVITY TRAINING WILL PROVIDE THE FOLLOWING: - AN UNDERSTANDING OF ASIAN-AMERICAN CULTURE AND ITS SUB-GROUP DIFFERENCES - A MULTI-CULTURAL PERSPECTIVE ON BUSINESS RELATIONSHIPS AN ENHANCEMENT OF THE INTER-CULTURAL COMMUNICATIONS AND BUSINESS SKILLS THAT WILL HELP SALES REPRESENTATIVES BUILD RAPPORT AND NEGOTIATE WITH ASIAN-AMERICAN RETAILERS

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT STRATEGIC AREA I TRADE RELATIONS AND BUSINESS DEVELOPMENT (PUSH STRATEGY) TACTICAL COMPONENT #1: SENSITIVITY PROGRAMS TRATE Y: 0 IMPLEMENT FRASERSMITH SENSITIVITY TRAINING SESSIONS ON A "PHASED" BASIS: 1. LOS ANGELES SALES OFFICES - ALL SALES 2. LEVELS. CORPORATE EXECUTIVES IN NEW YORK AND REMAINING CALIFORNIA. 3. KEY ASIAN SALES SECTIONS OUTSIDE CALIFORNIA 4. REMAINING U.S. BASIC TECHNIQUE: 0 TWO TYPES OF MODULES ARE PREPARED: - MODULE 1 ONE DAY AWARENESS SESSIONS FOR CORPORATE AND/OR SENIOR EXECUTIVES.

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT - MODULE 2 TWO DAY TRAINING SESSIONS FOR SALES REPRESENTATIVES, DIVISION MANAGERS AND SUPERVISORS.

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT STRATEGIC AREA I TRADE RELATIONS AND BUSINESS DEVELOPMENT (PUSH STRATEGY) TACTICAL COMPONENT #2: SPECIAL RETAIL SALES MATERIALS OBJECTIVE: 0 PROVIDE ASIAN RETAILERS WITH A BETTER UNDERSTANDING OF MERCHANDISING TECHNIQUES AND AN APPRECIATION OF THE POTENTIAL OF PHILIP MORRIS PRODUCTS/AND MARKETING ACTIVITIES.

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT STRATEGIC AREA I TRADE RELATIONS AND BUSINESS DEVELOPMENT (CONT.) TACTICAL COMPONENT #2: SPECIAL RETAIL SALES MATERIALS STRATEGY: 0 DEVELOP A SPECIALLY TAILORED SET OF RETAIL SALES MATERIALS THAT WOULD PROVIDE ASIAN RETAILERS WITH THE FOLLOWING: - STATEMENT OF COMMITMENT BY PHILIP MORRIS COMPANIES TO ASIAN RETAIL BUSINESS DEVELOPMENT. - IDENTIFICATION OF PHILIP MORRIS PRODUCTS AND THEIR CONSUMER APPEAL. - PROFITABILITY OF PHILIP MORRIS PRODUCTS AND IMPORTANCE TO SUCCESSFUL RETAIL STORE FINANCIAL PERFORMANCE. - RECOMMENDED PROGRAM FOR ASIAN RETAILER TO MAXIMIZE PROFITABILITY WITH PHILIP MORRIS. WOULD EMPHASIZE INCREASES IN DISTRIBUTION, POS, DISPLAYS AND OTHER MERCHANDISING PROGRAMS. 0 MATERIALS WOULD UTILIZE GRAPHICS TO OVERCOME ANY LANGUAGE BARRIERS. -24-

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT STRATEGIC AREA I TRADE RELATIONS AND BUSINESS DEVELOPMENT (CONT.) TACTICAL COMPONENT #2: SPECIAL RETAIL SALES MATERIALS BASIC TECHNIQUE: 0 SALES MATERIALS WILL BE DEVELOPED IN THREE PHASES: - GENERIC PRESENTATION. - EXTENSIONS OF GENERAL SALES PROGRAMS. - COMMUNICATIONS OF PHILIP MORRIS ASIAN ACTIVITIES

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT STRATEGIC AREA I TRADE RELATIONS AND BUSINESS DEVELOPMENT (CONT.) TACTICAL COMPONENT #3: SPECIAL BUSINESS TO BUSINESS SUPPORT PROGRAMS OBJECTIVE: 0 DEVELOP A "PREFERRED STATUS" AMONG ASIAN BUSINESSMEN FOR PHILIP MORRIS SO THAT ITS RETAIL PROGRAMS CAN BE FAVORABLY SUPPORTED BY MEMBERS OF CHAMBERS OF COMMERCE, GROCERS ASSOCIATIONS AND OTHER LOCAL AND NATIONAL BUSINESS ORGANIZATIONS. TRAT' '`Y : 0 PHILIP MORRIS WOULD BECOME A BUSINESS PARTNER WITH ASIAN BUSINESS GROUPS IN THE DEVELOPMENT OF MARKETING PROGRAMS THAT WOULD BE OFFERED TO THEIR MEMBERS.

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT BASIC TECHNIQUE 0 RESEARCHt IDENTIFY AND RATE ASIAN BUSINESS GROUPS IN ENTIRE CALIFORNIA MARKET FOR INCLUSION IN THE PHILIP MORRIS PROGRAM. 0 IDENTIFY BUSINESS NEEDS OF THESE GROUPS AND DEVELOP NEEDS. TURN KEY FOR EXAMPLE: MODULES TO ADDRESS THEIR - MONEY MANAGEMENT SEMINARS - ORGANIZATIONAL AND ADMINISTRATIVE PROGRAM

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT STRATEGIC AREA II CONSUMER DEVELOPMENT (PULL STRATEGY) CONSUMER RESEARCH OBJECTIVE: 0 USE CONSUMER RESEARCH TO IDENTIFY CONSUMER VOLUME AND USAGE BEHAVIOR FOR PHILIP MORRIS AND COMPETITIVE BRANDS, SO THAT BUSINESS POTENTIAL CAN BE IDENTIFIED WITHIN EACH SUB-GROUP. A Y: 0 TARGET THE SIX (6) MAJOR ASIAN SUB-GROUPS: CHINESE, JAPANESE, KOREAN, VIETNAMESE, FILIPINO, AND ASIAN INDIAN. 0 QUALITATIVE RESEARCH WOULD BE RECOMMENDED FOR LOS ANGELES AMONG THE SIX (6) TARGET GROUPS, FOLLOWED BY QUANTITATIVE RESEARCH. 0 FRASERSMITH WOULD COORDINATE DEVELOPMENT OF RESEARCH PROGRAM AMONG ALL PHILIP MORRIS COMPANIES.

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT STRATEGIC AREA II CONSUMER DEVELOPMENT TACTICAL COMPONENT #2: PROMOTIONAL ACTIVITY OBJECTIVES: 0 PROVIDE PHILIP MORRIS AND ITS SALES FORCE WITH OPPORTUNITY TO OBTAIN EXPERIENCE WITH ASIAN CONSUMERS AND RETAILERS. TRAT Y: 0 SELECTIVELY PARTICIPATE IN SIGNIFICANT CONSUMER EVENTS IN LOS ANGELES AREA THAT WILL BUILD CORPORATE GOODWILL FOR PHILIP MORRIS COMPANIES. 0 GAIN LOS ANGLES EXPERIENCE WITH ACTIVITY WITHIN THE TOP FOUR (4) GROUPS (JAPANESE, KOREAN, FILIPINO AND CHINESE). BASIC TECHNIQUE o NISEI WEEK JAPANESE FESTIVAL IS FIRST EVENT RECOMMENDED FOR CORPORATE SYNERGY SPONSORSHIP. OTHER EVENTS SUCH AS LUNAR NEW YEAR WILL BE EVALUATED. -29-

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT STRATEGIC AREA II CONSUMER DEVELOPMENT NISEI WEEK JAPANESE FESTIVAL, AUGUST 3-14, 1988; LOS ANGELES NISEI WEEK OFFICIALS HAVE VERBALLY AGREED TO A JOINT SPONSORSHIP FOR ALL PHILIP MORRIS COMPANIES COVERING THE FOLLOWING: 1. OVERALL 0 CATEGORY EXCLUSIVELY FOR EVENTS THAT ARE NOT ALREADY TAKEN. 2. ADVERTISING RELATED SUPPORT 0 USE OF THE NISEI WEEK OFFICIAL LOGO ON ITEMS SUCH AS COMMEMORATIVE POSTERS. 0 USE OF OUTDOOR ADVERTISING SPACE AT THE JAPANESE-AMERICAN CULTURAL AND COMMUNITY CENTER DURING NISEI WEEK. 0 INCLUSION OF FREE ADVERTISING SPACE IN THE 1988 SOUVENIR PROGRAM.

FRASERSMIT}i PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT STRATEGIC AREA II CONSUMER DEVELOPMENT (CONT.) NISEI WEEK JAPANESE FESTIVAL, AUGUST 3-14, 1988; Los ANGELES 3. MERCHANDISING SUPPORT 0 PROVISION AND RIGHTS TO SET UP A PROMOTION AND REDEMPTION BOOTH AT THE FESTIVAL SITE DURING NISEI WEEK FOR THE DISTRIBUTION OF MARLBORO AND OTHER SAMPLES AS WELL AS OTHER LOCATIONS SUCH AS THE AUTO SHOW AND PARADE. 0 EXHIBITION OF THE INDIANAPOLIS 500-TYPE MARLBORO SHOW CAR DURING NISEI WEEK AT THE AUTO SHOW. 0 PRESENTATION OF HONORARY WALL PLAQUES TO BE PRESENTED TO MEMBERS OF THE TWO BUSINESS ORGANIZATIONS THAT SPONSOR THIS EVENT AS A WAY OF RECOGNIZING THEIR SUPPORT OF NISEI WEEK (LITTLE TOKYO BUSINESS ASSOCIATION AND JAPAN BUSINESS ASSOCIATION).

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT 4. PROMOTION SUPPORT 0 RIGHTS TO CONDUCT AN AUTO SHOW SWEEPSTAKES WITH NISEI WEEK VISITORS AWARDING A FREE TRIP FOR TWO PERSONS TO THE MARLBORO 500 AUTO RACE IN JACKSON, MICHIGAN. 0 AN OPPORTUNITY FOR PHILIP MORRIS SALES PERSONS AND THEIR GUESTS TO RECEIVE COMPLIMENTARY TICKETS TO THE VIP RECEPTIONS AND/OR CREATE A VIP HOSPITALITY RECEPTION "HOSTED" BY PHILIP MORRIS. 5. STATUS 0 NISEI WEEK FESTIVAL CHAIRMAN RESPONDED ON MAY 24 To FRASERSMITH'S REVISED REQUEST FOR SYNERGY PARTICIPATION PACKAGE FOR A $30,000 SPONSORSHIP FEE. 0 CLOSING REQUIRES A FACT TO FACE MEETING TO REVIEW ALL ASPECTS OF SPONSORSHIP.

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT STRATEGIC AREA III COMMUNITY LEADER AND CONSTITUENCY DEVELOPMENT (CORPORATE GOODMILL) OBJECTIVE: 0 TO BUILD A POSITIVE IMAGE FOR PHILIP MORRIS BY NETWORKING SELECT COMMUNITY LEADERS AND GROUPS WHICH ARE DIFFERENTIATED FROM BUSINESS GROUPS BY THEIR SPECIAL INTEREST FOCUS. STRATEGY: 0 TARGET ASIAN GROUPS IN 5 DISTINCT AREAS: - WOMENS GROUPS - POLITICAL - ARTS & CULTURE - SENIOR CITIZENS BASIC TECHNIQUE: 0 BEGIN FOCUSING ON ORGANIZATIONS THAT HAVE HEADQUARTERS IN WASHINGTON, D.C. OR CALIFORNIA.

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT 0 DEVELOP COMPREHENSIVE DIRECTORY OF ALL ASIAN ORGANIZATIONS SIMILAR TO THE PHILIP MORRIS' BLACK AND 'HISPANIC BOOK OF ORGANIZATIONS, AS A MEANS TO GET THE ORGANIZATIONS TO STIMULATE INITIAL CONTACT. ~ ~ 4h ~ .~ .:k -34- 4*

: 044744035 1988 1989 JUN - SEPT OCT - DEC JAN - MAR APR - JUN JUL - SEPT OCT - DEC STRATEGIC AREA I (PUSH) Tactical Components: 1. Sensitivity LA NY and - -----Key Asian Markets----------- Remaining US Programs Remaining CA Outside California 2 Retail Sellin LA R i i C A - - - - - - - - - - - - - - - - N 1 t i . g Materials e m a n n g - - - - - - - - - - - - - o n a - - - - - - - - - - - - - - - - - - - a 3. Business to Business -------- California--------- ------- --Key Asian Markets------------- Support Programs Outside California Remaining US STRATEGIC AREA II (PULL) Tactical Components+ 1. Consumer Research Size of Market & Brand Basic Data Concept Tests------------------------------- 2. Promotional Activity Nisei Week--------------- Lunar Proprietary Promotions with Synergy------------ New Year STRATEGY AREA III (Corporate Goodwill) Tactical Components: 1. Research -------- --------------- Civic, Social and National Group---- -------------------------- 2. Directory ---------------- Publish-------------------------- --------------- Circulate--------------

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT AGENCY MANAGEMENT OF ASIAN SYNERGY PLAN 1. INCORPORATE GENERAL FOODS AND MILLER IN ASIAN MARKETS BY CONDUCTING THE FOLLOWING MINI SITUATION ANALYSIS RESEARCH: - CORPORATE HEADQUARTERS IN DEPTH INTERVIEWS WITH BRAND, SALES AND PROMOTION PERSONNEL. - FIELD SALES INTERVIEWS AND RETAIL CHECKS IN THE LOS ANGELES MARKETING AREA. 2. A MINI SITUATION ANALYSIS WOULD ALLOW FRASERSMITH TO ASSESS THE NEEDS OF MILLER AND GENERAL FOODS AS IT RELATES TO THE TARGETED AREAS AND ITS DEVELOPMENTAL STRATEGIES.

FRASERSMITH PHILIP MORRIS USA ASIAN-AMERICAN MARKET DEVELOPMENT AGENCY MANAGEM NT OF ASIAN SYNERGY PLAN ESTABLISH AGENCY STAFFING 0 MAINTAIN CURRENT FRASERSMITH MANAGEMENT TEAM TO CONTINUE THE FOLLOWING: - FRASER - STRATEGIC BUSINESS AND PLANNING - FALLIS - OVERALL ACCOUNT MANAGEMENT - IWATSU - RESEARCH AND PLANNING 0 EXPAND EXISTING TEAM WITH THE FOLLOWING RESOURCES: - ACCOUNT EXECUTIVE - FULL TIME, Los ANGELES BASED - ADMINISTRATIVE ASSISTANT - FULL TIME, Los ANGELES BASED - ADMINISTRATIVE ASSISTANT - FULL TIME, NEW YORK BASED