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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.