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9 PROFESSOR TIMOTHY P. MEYER UNIVERSITY OF WISCONSIN, GREEN BAY • My name is Dr. Timothy P. Meyer (Ph.D., 1970, Ohio University). I am the ! • Ben J. and Joyce Rosenberg Professor, the University of Wisconsin, Green Bay. I am Chair of the Information Sciences program and teach courses in communication, mass media, advertising and consumer behavior. For the past 28 years, I have taught and conducted research on the effects of advertising. One of my areas of specialty is the impact of advertising on children and adolescents. Many of my research papers have won awards at various conferences and I have published nearly 100 books, refereed book chapters, and refereed articles in scholarly journals. Leading journals in which I have published include: Journal of Advertising, Journal of Advertising Research, Journal of Marketin~,Y, Marketing Research, Journal of Business Communication, Business Communication QuarterlX, and Journal of Broadcasting & Electronic Media. I have served as a referee for many of these same journals and have reviewed research, research proposals, and grant proposals for organizations including the American Academy of Advertising, Association for Consumer Research, and the International Communication Association. I have reviewed the Food and Drug Administration ("FDA") plan to address the issue of underage smoking by banning and restricting cigarette advertising, marketing, and promotion. For all of the reasons set out below in my comments, FDA's proposal is unwarranted, unjustified, unnecessary -- and most importantly -- will not be effective in reducing underage smoking. In fact, as discussed in greater detail below, FDA's

• • • proposed ban on color and imagery in cigarette advertising is tantamount to a ban on cigarette advertising, the premises upon which the proposal rests are inherently flawed, and the evidence relied on is incomplete, inaccurate and scientifically invalid. I. A Ban On Color And Imagery In Cigarette Advertising Is Tantamount To A Ban On Cigarette Advertising • • Color and imagery in advertising for cigarettes is important -- to adult consumers as well as to individual cigarette companies -- and does not influence non-smokers, young or old, to begin smoking. By restricting the use of color and imagery in cigarette advertising, FDA is effectively destroying the primary means by which individual cigarette companies can develop brand identities, differentiate brands, and communicate important brand information to adult consumers -- which is precisely the role that advertising plays for mature products such as cigarettes. Accordingly, FDA's proposed restriction on color and imagery in cigarette advertising is, as a practical matter, tantamount to an outright ban on cigarette advertising. As FDA recognizes, and as discussed below, brand advertising -- i.e., advertising which includes the color and imagery that are associated with the brand and all of the qualities and attributes that the brand represents, is an important type of communication between a company and its customers. Throughout the record, FDA concedes that any 2

0 • • 0 • regulation should preserve for adults (if possible) the informational aspects of contemporary cigarette advertising -- including color and imagery.' FDA however, has demonstrated a fundamental lack of understanding about brand advertising and the marketplace -- and about consumer behavior and consumer decision-making generally. FDA is "iconophobic" when it comes to imagery in cigarette advertising -- it has expressed an irrational fear of images in cigarette advertising -- a fear that is unsupported by the record and unsupported by history, research in the field, or common sense.2 Set out below is a brief look at the history of brand advertising, the research in the field -- and common sense. A. Modern Advertisiniz Is Brand Advertising -- A Brief History In Victorian times, products were just commodities. They were undifferentiated goods. Very few products were branded. Salt was galt, not Morton's from the familiar 1 For example, FDA states, "FDA believes that advertising in publications that are read primarily by adults should be allowed to use imagery and color..." 60 Fed. Reg. 41335; "[T]he proposed rule would not affect advertising in publications with primarily adult readership -- imagery and color would continue to be permitted in such publications." 60 Fed. Reg. 41315; "Advertising in any publication that is read primarily by adults would be permitted to continue to use imagery and color." 60 Fed. Reg. 41328. 2 For example, FDA itself cannot specify the colors or images to which it objects. For example, FDA states, "it is difficult to draw the line between advertising that should be restricted or regulated and advertising that does not pose an unreasonable risk of influencing young people..." 60 Fed. Reg. 41335; 'Tobacco advertising contains an unlimited variety of claims that make categorization difficult." 60 Fed. Reg. 41340. 3

• • • • • • blue box. In the late nineteenth century, if you went into a general store to buy soap, the storekeeper would cut a slice off a bar. No one knew or cared about the brand name. There were very few brand names at all. Food was purchased in bulk. Beers were just beer, coffee was just coffee. Most things we now think of as consumer goods were just nameless, undifferentiated commodities. Around the turn of this century, as the Victorian era gave way to what scholars have called the "consumer age" -- "consumer culture" fueled by advances in industry and technology became the norm. Whereas, prior to the 1950's demand for goods had generally outstripped industries' ability to supply goods, there was now an abundance of products and a proliferation of brands competing with each other in the marketplace. From the beginning of the "consumer age," marketers used "brand" advertising to attempt to break through the clutter in the marketplace, to differentiate their brand from the vast array of other brands, to develop an "image" for the brand that would serve as a cue and • a reminder to consumers of the quality and attributes associated with that brand of the product, to encourage loyalty among consumers to the brand, and to assist consumers by way of color, imagery and packaging in locating and selecting the brand from among • competing brands, as well as to achieve other, like objectives. ~ Today, brand advertising is the way marketing is done. In fact, today we brand everything from plant food (Miracle Gro) and water (Perrier, San Pelegrino) to toilet ~p tissue (Charmin) and lemons (Sunkist). In the case of mature products, differentiating Cst 1~ .© ~ 4 ~ ~

* • • • • your brand is about all you can do. The reasons for this make sense. When a product is established or "mature," consumers already have information about that product category from a variety of sources -- from their life's experience, what they have learned about the product category from family, friends, peers, formal education, informal experience, and observation. It defies common sense to think that consumers consult advertising for mature products such as cars, detergent, and tobacco for information about what the product category does or how it operates. For a mature product, this type of information has already been "mediated" into the culture -- about the only thing really left in advertising that is of interest to a consumer at this stage in a product lifecycle is brand information -- information about the attributes of that particular brand of the product. That is what brand advertising is all about -- differentiation -- nothing more, nothing less. There is no evidence that brand advertising does anything other than differentiate the brand. (See Wilcox 1991 for a review.) Cigarette brands, like brands for many other products and services, need to advertise regularly and widely, repeating their messages many times over. This requirement characterizes the process because the channels available to advertisers trying to reach those most likely to buy their brand are recognized as inefficient (Star, 1989). And this, in turn, contributes to the advertising clutter further adding to the obstacles facing marketers. Cigarettes have of course been around for decades. Information about this . ~ © C3t product category has already been "mediated" into society - information about all aspects .,~ © ~ . W 5 ~'

! • • s • of smoking has been communicated and repeated at least throughout this century by government authorities, educators, family, friends, peers, health care professionals, etc. The only salient commercial information remaining for consumers regarding the product is the brand information -- the brand image, the attributes of the brand and the quality that has become associated with the brand. Cigarette manufacturers -- with over 300 different brands of cigarettes on the market -- rely on the color and imagery in brand advertising to differentiate their brands in a highly competitive marketplace, to compete for their customers' loyalty, and to try to encourage their competitors' customers to switch brands. FDA acknowledges that the cigarette companies have been effective in developing brand loyalty among consumers: "Brand loyalty is seen in many consumer products (such as toothpaste, coffee and automobiles) but is particularly strong for tobacco products." 60 Fed. Reg. 41330. FDA suggests, however, that because there is brand loyalty for tobacco products, the cigarette companies do not need to advertise in order to promote brand loyalty. ("Furthermore, brand loyalty runs higher for cigarettes than for any other product. Thus, significant expenditures would not appear to be necessary to retain loyal consumers and would appear to be excessive and wasteful if they are expended merely to get people to switch brands.") 60 Fed. Reg. 41336. This conclusion of FDA is wholly inconsistent and at odds with research on brand preferences in mature markets. Contemporary research on advertising's role in

• • • • maintaining brand image and brand equity illuminates several important ways in which advertising functions for mature products with consumers in a highly competitive consumer environment. These studies focus on different dimensions that are all applicable to cigarette advertising and brand image/brand equity. Deighton, Henderson, and Heslin (1994) studied advertising's effects on brand switching and repeat purchases. The implications of this research for cigarettes, where repeat purchases are frequent, is that it is essential to continue to advertise to maintain brand loyalty or to induce switching by advertising on a steady, consistent basis. If the advertiser's message is not constantly out there reaching their current customers and potential brand switchers, current and future business may be lost in the form of declines in market shares and the inability to increase share of market. In another recent study, D'Souza and Rao (1995) focused on how more frequent repetition of an advertisement as compared to the competition can affect brand preference in mature markets. They reported "strorig evidence that effects of advertising repetition can show up even in mature product categories" and that advertising is vital for "mature product categories ... to maintain the accessibility of brand associations in the consumer's product-brand knowledge structure." Ibid. 39-40. The implication is that cigarette brands must continue to advertise their brands to reinforce their brand image and message with their customers. 7

• B. Color and Imagery Are Essential To Brand Advertisin~ 1 i • • • One of the most important topics in advertising and marketing in the 1990's is the value and importance -- and the need to manage -- brand equity. Brand equity refers to the set of assets and liabilities linked to a brand, its name and symbol, that add or subtract from the value provided by the brand to its firm and/or its customers (Aaker 1991). The economic impact of brand equity can be seen in the purchase price paid for acquiring companies with well known and established names and symbols.3 The first step in developing brand equity is to establish and maintain a unique identity for a brand. Aaker defines a brand as, "a distinguishing name and/or symbol (such as a logo, trademark, or package design) intended to identify the goods or services of either one seller or a group of sellers, and to differentiate those goods or services from Differentiation via branding contributes to a brand having inelastic demand. Elasticity is defined as .s/.p: where s is sales, and p is price. The seller of goods or services wants to be able to have sales be relatively unaffected by changes in price, where demand stays the same even when price increases. This desirable condition is known as • inelastic demand. Achieving inelastic demand is every marketer's goal. Demand elasticity is largely determined by the number of perceived acceptable substitutes. A brand which has no perceived acceptable substitutes, thus has complete brand loyalty and inelastic demand. It is differentiation through advertising that creates demand inelasticity. In pure economic terms, sellers and their advertisers want the most inelastic • demand for their products. They want to be able to charge a premium price and suffer no resultant loss in sales. This is fundamental capitalism, which branding facilitates. Brands, and brand imagery, make it possible for Bayer aspirin (which is, by law, just aspirin) to sell for three and four times the price of generic aspirin (also, by law, just ~ aspirin). Demand for Bayer aspirin is thus more inelastic, as a result of the power of ~ branding. ~j • a ~ 8 0

i! • • • • • • those of competitors" (Aaker 1991: p.7). With the number of brands proliferating in the marketplace, it is particularly important for a brand to find a way to stand out and be recognized. Brand images are created using, for example, distinctive colors, symbols and imagery and even packaging to associate with the brand. The establishment and maintenance of brand image costs millions upon millions of dollars, and takes years and years to establish. This is reflected in the history of many national advertisers, e.g. Campbell's, Coke, Ivory, etc. as well as in the thousands of advertising failures, e.g. the Edsel, "New" Coke, etc. This is particularly true in a cluttered and highly competitive advertising environment, such as the one that exists today. The ability to use color in brand advertising is essential. Examples of the use of color to establish brand image are numerous. For example, among brands of photographic film, the gold color of Kodak and the green of Fuji are highly recognizable and clearly associated with these companies. (Certainly FDA does not really believe that Kodak and Fuji could effectively compete against each other if forced to use a black and white text-only format.) Similarly, the red used by Coca-Cola has become a recognized symbol around the world, as has the ,"Big Blue" IBM symbol. When people encounter these shades of color, this stimuli alone can help trigger recall of the related brand and this serves as an aid to brand recall for these companies. 9

• • • Symbols and imagery are also essential in creating a distinct and highly recognizable identity for a brand. Effective symbols used in advertising can include inanimate objects and shapes (Transmerica pyramid, Travelers umbrella, Prudential - Rock of Gibraltar); animated characters (Jolly Green Giant; Mr. Clean; Pillsbury Doughboy; Michelin Man; Energizer Bunny) or people (Colonel Sanders; Mr. Whipple; Betty Crocker; the Maytag repairman). Each of these symbols has allowed advertising for these products to create strong brand awareness and identity. Packaging can also serve as an important element of brand equity. Brands such as Federal Express, Morton's Salt, Leggs pantyhose, Tide, Brillo, Campbell's Soup, Absolut Vodka and Perrier have developed highly distinctive packaging that aids consumers in identifying and remembering the brand. Since consumers are better able to recall and recognize visual symbols (Aaker 1991), distinctive packaging prominently shown in ads can be particularly helpful to consumers in quickly identifying and finding desired brands in the cluttered retail environment. I Brand image development and maintenance is largely dependent upon advertising and promotion -- advertising and promotion are at the core of the image process. And, since brand image in turn drives brand equity, it is vital to the economic value of the brand and is a key link to the company's return on its investment in the brand. If the opportunity to advertise is restricted or eliminated, so is the opportunity to maintain ~ brand image and brand equity. This limitation on the advertiser's ability to build brand 4t) ~ . a ~. 10 W