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I I I Research International Asia Pie. Ltd. 7500A Beach Road, 3501 Windsor House The Plaza #09-302 311 Gloucester Road, Singapore 0719 Causeway Bay, Hong Kong. Tel: +65 291 7003 Tel: +852 894 6244 Fax: +65 291 7486 Fax: +852 576 7247 ~ RESEARCH NTERN ATIONAL HONG KONG YAMS STUDY 1993 I I I I I I 3 I ~ I I ~ ] a A Qualitative Investigation Of Young Adult Male Smoker Values, Lifestyles and Brand Images Prepared for Philip Morris Asia Inc. and Philip Morris International Inc. by Research International Asia, for and on behalf of Research International UK December 1993 Argentina, Australia, Austria, Belgium, Brazil, Chile, Denmark, Ecuador, Finland, France, Germany, Greece, Hong Kong, Hungary, India, ltaly, Japan, Kenya, Netherlands, New Zealand, Norway, Philippines, Portugal, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Thailand, United Kingdom, USA, USSR.

I I CONTENTS PAGE I I SECTION ONE: EXECUTIVE SUMMARY 1.0 Background 2.0 Philosophy 3.0 Objectives 4.0 Approach 1 I I I I I I I I I I ] 2 4 5 5.0 Main Findings 6 6.0 Conclusions and Strategic Review 16 SECTION TWO: DEVELOPMENT OF YAMS VALUE SYSTEM SECTION THREE: SUMMARY PRESENTATION CHARTS SECTION FOUR: FULL PRESENTATION CHARTS (Volume 2) ~

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I I I I I I I I I I I I I I I I ~ I Research International Asia/MDR EXECUTIVE SUMMARY - YAMS Research Hong Kong 1993 1 Background Following the successful review of lifestyle research among Young Adult Smokers (YAS) by Philip Morris International in Europe, it was decided that a similar approach could be applied in Asia. With Hong Kong one of the region's most mature markets, the territory was selected as the first market for the research to be conducted. Once completed and reviewed, the methodology was to be evaluated and a decision made by Philip Morris Asia Inc. whether to replicate the study in other Asian markets or not. The young adult smoker study, of which the European results were discussed as part of the Monte Carlo conference on Marlboro Red in 1992, examines young adult lifestyles, attitudes and aspirations, as well as their opinions of media, advertising and various cigarette brand, promotion and sponsorship activities. Philip Morris Asia Inc. Hong Kong YAMS Project Page 1 of 31

I Research International Asia/MDR I I I I I I I I I I I I I J 2 Philosophy "When the goal is truly innovative products and markets, simply being customer-led is not enough ....of course it is important to listen to customers, but it is hard to be market leaders if you do no more than that....Market research and segmentation analyses are unlikely to reveal opportunities. Deep insights into the needs, lifestyles and aspirations of today's and tomorrow's consumers, will " Hamel and Prahalad, Harvard Business Review, July 1991 With branding, a crucial element of the marketing mix for cigarettes, it is important, especially in a relatively mature market like Hong Kong, to understand underlying how cultural belief systems and values impact on the market's interpretation of these brand images. Gaining an insight into lifestyles and behaviours enables the marketer to better comprehend how the consumers view their brand and therefore assess the relevance of the images and messages associated with the brands they manage. For example, in Europe where Philip Morris has developed a strong and salient image for its flagship brand Marlboro, the research suggested that the values projected by the brand were becoming less relevant to the YAS segment who were seeking more reality and less imagery. This transition towards a need for more relevant communication was also accompanied by a transition towards so-called neo-traditional values which are oriented towards authenticity, self-control and substance. Essentially, this approach looks to identify how changes in society are impacting upon the lifestyles and values of consumers and how these in turn are altering needs and expectations related to brands and products. In order to better understand how YAMS perceive and react to brand communications and images, it is therefore useful to understand their own personal philosophy ie. how they lives their lives, and what they want to achieve. Philip Morris Asia Inc. Hong Kong YAMS Project Page 2 of 31 4

Research internationat Asia/MDR I I I I II I I I I I Through a greater understanding of these dimensions, marketers can tailor more effective communication programmes, by developing messages of the type this segment are open to hearing, in terms they understand. The YAMS study is oriented to providing this insight. As shown above, all these factors incorporated in the project naturally impact on consumer behaviour. In Hong Kong, this is especially important as brand perceptions drive "conspicuous consumption" in many categories ranging from paper tissues to beer to cigarettes, being inextricably linked to images of success, good fortune and face. ~ N) Ln a ~ -a cr ~ ~ . ~ ~ t -~ I I J Philip Morris Asia Inc. Hong Kong YAMS Project Page 3 of 31 -1

1 Research International Asia/MDR I ii I J ] I I I 3 I 7 I I I I 3 Objectives The main objectives for this study were generally similar to those applied in the European review of YAS. The main objectives of this study were as follows: (1) To gain a thorough understanding of Young Adult Male Smokers (YAMS) in terms of their attitudes, values, aspirations, interests and lifestyles, and specifically how young adult male smokers perceive Marlboro as a brand in relation to the competition; (2) To gauge the perception of the current Marlboro campaigns (thematic, tactical and sponsorship) vs competitive brands among YAMS; (3) To fmd out any distinction, if any, in the image and perception of Marlboro Red and Marlboro Lights in the eyes of the YAMS. Specifically, the study needs to identify how consumers view Red vs Lights (total "consumer offering"); and how they view each of the brands' various elements eg. packaging, product and advertising; (4) To assess the impact and overall image benefits of various Marlboro sponsorship and trade-mark diversification activities as well as their overall acceptability to the YAMS segment. Philip Morris Asia Inc. Hong Kong YAMS Project Page 4 of 31 4

I I I I I I I I I 1 I I I I I I Research International Asia/MDR 4 Approach As noted, the research applied the successful research design applied in Europe. This involved an intensive (3 hour) in-depth interview which addressed a wide range of subjects from lifestyles and aspirations to a detailed exploration of brand imagery and communication preferences. The research itself was undertaken among eighty (80) young adult male smokers aged between 18 and 24 divided into four groups according to the brands they smoked (regular brand): Marlboro Red, Marlboro Lights, Salem Lights and Kent. All respondents were required to meet normal Philip Morris "smoker" definitions. In terms of analysis, this largely followed the format developed by Philip Morris International in preparing an overview of the European research whereby a "value system" was developed for Hong Kong (see Section Two for discussion). This "value system" essentially reflected the universe of lifestyle motivations held by the respondents identified in reviewing responses to the lifestyle, life philosophy and aspirations section of the interview. From the Hong Kong research, eight (8) "value dimensions" were identified reflecting a mix of traditional and adapted Chinese values as well as a range of more modem values normally associated with "western" cultures, (discussed in more detail in the following section). This "value system" was then used to evaluate the position of the four main brand of interest as well as a number of well known "International Success Brands" including Polo, Nike, Coca-Cola, Swatch and Levis. This involved reviewing image and communication associations for each brand and interpreting them in terms of the "value system". As a result, the values implied by each brand were represented on a two-dimensional "map", and the various positioning implications for each brand discussed. Philip Morris Asia Inc. Hong Kong YAMS Project Page 5 of 31

I I I Ii I I I I I I I I I Research International Asia/MDR 5 Main Findings Value System Development Based on the interviews and a review of various commentaries and papers on Chinese as well as cross-cultural social-psychology, an eight dimension "value system" was developed for Hong Kong as shown below. This value system, like that developed by PMI for the European YAS study, represented the wide spectrum of "value orientations" held by the respondents. Specifically, the eight "value dimensions" or orientations are descriptive labels for a set of behaviours or motivations which encompass each dimension as shown. Adapted Hong Kong YAMS Value System y ~ -M ~tn.nd.l s«~ruy Own Bnsinss Philip Morris Asia Inc. Hong Kong YAMS Projed Page 6 of 31 Power/ I Achievement /\ D~~+ ~oe" Leadership I orfentatio 7, ~ M F ~