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I Research International Asia/MDR I I I I I I I I E- ] I I I I I I While not all of the respondents were motivated by the same values, to the same degree, responses were very homogenous in contrast to those in Western Europe. This consistency would appear to largely be a result of a combination of factors, namely: the economic prosperity of Hong Kong, the stability of the socio-political environment due to the laissez-faire administration of the territory by Britain, together with Chinese social norms of familism with its mutually supporting structures and a general Chinese orientation for conformity, and security through acceptance by others etc. The "value system" itself reflects the unique nature of the Hong Kong environment and combines both traditional and adapted Chinese value orientations such as the reliance on relationships and respect (those on the left hand side of the map), with the more "modem" self-oriented preferences for freedom, good times and a comfortable lifestyle (those on the right). Brand Images and Implied Value S, sy tems Overall, it emerged that most of the major cigarette brands that are popular among these smokers had distinctive market positions although the degree to which their images were salient and relevant to the YAMS smoker group varied. Marlboro Red and Salem Lights clearly have the most salient and consistently positive imagery/implied value system whereas those for Kent and Marlboro Lights in particular are less so. This tends to reflect either a lack of a clearly communicated image (as in the case of Marlboro Lights), or wear-out and lack of communication initiatives in the YAMS segment (Kent) as well as comparatively poorly perceived product performance. Assessments of the images and value system associations for each of the four brands covered in this research project are summarised on the following pages: Philip Morris Asia Inc. Hong Kong YAMS Project Page 7 of 31 .i1

I Research International Asia/MDR I ] i I I I I I I I I a i Marlboro Red Marlboro Red is clearly in a strong position in the YAMS segment with a dominant position driven by both product and image. The brand's position is also extremely consistent among all smokers although product preferences are variable, mainly in terrns of reaction to the product's strength (less appeal to respondents who smoke milder cigarettes especially Salem Lights). Brand and Communication Imag_erY Assessing reaction to Marlboro's overall communication in the marketplace reveals that the respondents clearly like the current promotional themes. The execution style and images are clearly Marlboro with the impressive open country scenes clearly regarded as consistent with the dominant nature of Marlboro's position in the market. A number of respondents also mentioned Marlboro's Chinese New Year advertising of a few years ago, which they felt matched the general thematic style of Marlboro advertising (big country) but also appealed because of the obvious cultural links. General reaction to the cowboy image remains mainly positive and is a key communications icon for the brand. Key associations for Marlboro clearly relate to this "cowboy factor" with images of freedom, independence, and the "cool" man-in-control obviously appealing to the YAMS segment. In terms of the cowboy/Western imagery this is not regarded as overtly American but the environment is regarded by many as possibly a little harsh. With these respondents clearly oriented towards enjoying their life, images of hard work in hard dusty, dirty conditions is not so appealing. Value Review In the YAMS segment, the brand appeals to many as is evident by.its market share, with many smokers attracted by the "man in control" and related "cowboy" factor images such as those noted above. Philip Morris Asia Inc. Hong Kong YAMS Project Page 8 of 31 I

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t Research International Asia/MDR I I I I I ] I I I I I ] J I While some of the images are taken quite literally by the respondents, Marlboro Red clearly represents an appealing "state of mind" for the respondents, and appeals to the more individualistic values of self- determination and independence. Moreover the brand is also seen as successful and powerful, ("a brand that does not make you lose face" as one respondent put it) and while it is less likely to be regarded as aspirational in "state of life" and related self-indulgent terms, the brand clearly benefits from its power and leadership associations. On balance, the cowboy and American West remain key image drivers for Marlboro Red and although the respondents appreciate the freedom images, some are less enamoured with the evident lack of comfort in the images. Overall Marlboro Red's product and communication images are very consistent, "a strong product in a stronger environment" These clearly reinforce perceptions of the product (ie. taste) and inhibit Salem Lights smokers especially who are looking for a milder, easier taste (indeed, Marlboro Red smokers will smoke Salem if they feel that their throats are irritated). Others images suggest that while Marlboro is not really regarded as overtly macho, the character is seen as a little "rough". Marlboro Red Review Primary Value Drivers: Power/Leadership (strong) Independence/Individualistic (strong) Secondary Value Drivers: Personal Well-Being Philip Morris Asia Inc. Hong Kong YAMS Project Page 9 of 31 J

I Research International Asia/MDR TI I I I I I I I I I I I j Marlboro Lights Marlboro Lights has a confused image. While seen by Marlboro smokers as largely inheriting most of the traditional Marlboro Red images and attributes, but in a softer and generally positive way, Marlboro Lights is not particularly well regarded by other brand smokers. This appears to be because the brand is not really regarded as any different to Marlboro Red in any major way, with the exception of a lighter taste. Even on a taste platform however, non- Marlboro smokers seem to consider that Lights may not really seem light, having similar tobacco flavour as Marlboro Red. This expectation would appear to be related to the brand's communication as few respondents can spontaneously mention any brand specific communication for Marlboro Lights. As a result Marlboro communication images are applied to both brands. Brand and Communication Imag_es Unfortunately for Marlboro Lights, when the respondents were asked to discuss image associations for the brand, most associations outside slightly lighter product characteristics were generally weak reflecting a general lack of real brand identity. For example, while the personality of the Marlboro Lights brand is not seen to have the same "raw qualities" of Marlboro Red, the development of a desirable, refined and more upscale image is inhibited by a lack of personality strength. While still independent, Lights comes across as too insular and reserved, even less accessible than the Marlboro Red character. When prompted on differences between Marlboro Red and Lights communication, possible associations bear out this "lack of character development". Marlboro Red's communication uses strong colours whereas Lights is weaker, Marlboro Red appears more sociable (more people in various executions) whereas Marlboro Lights appears lonely etc. Philip Morris Asia Inc. Hong Kong YAMS Project Page 10 of 31 J

I Penaul Rolaao~nH~ (msrriagdwl[ddildra~) Carefree Benevolaw \ I / Relaxation Good II(s Personal Steadleoss & Rd[aliHty Comfort Value Personal Health Enjoy Good dmos Enjoy Activity f MARLBORO LIGHTS

Research International Asia/MDR I I I I I I I J I I I I I I Brand Values Extending the communication and brand imagery into the value system shows that Marlboro Lights retains some of the independence images present in Marlboro Red and even contributes to some achievement and prosperity due to a slightly younger but more upwardly mobile user image. However, the fact that it is not regarded as being as successful, together with its lack of any strong brand identity outside Marlboro Red dimensions means that it does not represent anything particular. This presents a fundamental question to Philip Morris in what to do with Marlboro Lights. Reviewing the possible ways to extend Marlboro Lights into other value dimensions reveals mixed possibilities. It is possible that Marlboro Lights could look to extend the Marlboro imagery into the value segments where the brand has some association, such as Achievement and Personal Well- being, although these are already secondary to Marlboro Red. Developing more prosperity images are also possible but probably a little harder to support under the existing communications strategy (they are however supported through sponsorship and trademark diversification). Despite such possibilities, because most of these values are at least in-part derived from Marlboro Red, Marlboro Lights' position remains indistinct being based on the associations of lighter product performance (not always viewed positively), and a slightly more accessible but possibly weak and introverted (not Marlboro enough?) personality. Beyond this, even though the brand appears to hold a slightly more desirable user image profile in socio-economic terms, Lights remains exclusively the "little brother" of Marlboro Red. As a result, it remains inaccessible to those who do not relate to the Marlboro image and implied product performance. Marlboro Lights Review Primary Value Drivers: Independence/Individualism (moderate) Secondary Drivers: Personal Well-Being Achievement/Prosperity (some) Philip Morris Asia Inc. Hong Kong YAMS Project Page 11 of 31 J

SALEM LIGHTS , i

Research International Asia/MDR I I I I I I I I I I I I I i I Salem Lights The key competitor brand to Marlboro in this key YAMS segment, Salem Lights strength is very similar to that of Marlboro Red in that it is supported by a distinctive image and good product performance. Interestingly, the brand is a clear opposite to Marlboro Red, offering the benefits of a lighter, menthol taste together with appeals based on relaxing communication images. Brand and Communication Images A key factor in this positioning is the menthol taste platform which clearly offers an alternative to smokers with associated comfort imagery that traditionally accompanies menthol. This is reassuring and very comfortable to most YAMS. These images are also projected in the brand's communications. Salem Lights is non-offensive, and occupies a position that in many ways is uniquely Chinese ie. low key and restrained, yet youthful and pleasant, non-confrontational etc. The brand offers a clear "state of life" image of clean living, a pleasant personality as well as an orientation towards relative prosperity and leisure. Brand Values As is evident from the discussion above, Salem's positioning on the value system is virtually opposite of Marlboro Red being strongly collective, with additional emphasis on youth, good times, personal well-being and relationships. It clearly communicates the benefits of less hardship and more leisure that is appearing in the YAMS value system (as opposed to Marlboro Red's hard working, tougher life image). Salem Lights Review Primary Value Drivers: Collectivism Personal Well-Being Secondary Value Drivers: Traditional Relationships Personal Well-Being & Hedonism Achievement & Prosperity (some) Philip Morris Asia Inc. Hong Kong YAMS Project Page 12 of 31

Research Internationa! Asia/MDR 1 I I I I I I I I I I I J J Kent While Kent's overall image is clearly weaker in terms of overall "power" than Marlboro Red and Salem, the brand is still quite clearly defined in the eyes of the respondents. This is not surprising given the time the brand has been on the market. It is however clearly in decline, as while it supports a more up-market aspirational image implying a leisure-oriented lifestyle (especially among Kent smokers), it has clearly been inhibited by a worn-out market image and a lack of a tangible product benefit (compared to Marlboro Red's strength, and Salem Lights' light refreshing menthol taste for example). Brand and Communication Images A lack of product performance and no investment in the brand's promotional theme has bored the market. This is especially important to the YAMS who want to be seen as smoking a trendy brand. To many, Kent has aged with its smokers and has not looked to maintain its presence in the YAS market. In addition, the YAMS do not see the overtly western and affluent images associated with the Kent communications as being relevant to their lifestyle (a little too indulgent). Furthermore, the brand's user profile is generally regarded as being too old, while in terms of personality, the brand implies a lack of reliability and a playboy image which is seen more negatively these days. These more than offset the positives associated with the success and recreational lifestyle images. Brand Values Interpreting these images in terms of the value system shows that Kent despite quite an overt prosperity and hedonistic positioning does not really generate empathy in this smoker group. While there are secondary associations to traditional relationships and achievement, the brand does not have the status of Marlboro Red, nor the valued personal and collective characteristics of Salem Lights. Philip Morris Asia Inc. Hong Kong YAMS Project Page 13 of 31 J