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POSITIO~ P~PER ~,ON~INUED ]HCREASES IN CONSUHER CONCERHS OVER $14OK]HG AND HEALTH AND THE P~RKET]HG EAPHA$]S PLACED BEH]HD THE CATEGORY BY RJR ANDOTHER /4ANUFACTURERS HILL SI.~STANTIALLY ZeCREASE THE DEHAND FOR LOW #TAR# CIGARETTES. THE CATEGORY IS EXPECTED TO GROW IN SHARE FROR 15,5~ IN .1976 TO 25,4Z IN 1979, COHPANY SALES AND PROFITS ~]LL DEPEND UPON OUR AB[LITY TO ACHIEVE AN EVER INCREASING SHARE OF THIS GROYfTH CATEGORY, 0NGO]NG, ~ ANALYSES AND FORECAST,

"CONSUHER'S DESIRE FOR SATISFACTION ~N THE PRODUCT AND THE PRODUCT'S ]I4AGE, ~ONSUHERS HILL ~ECOHE ]NCREASINGLY D]SCRIHINATING DUE TO FURTHER'IP2ROVEHENTS IN OUR STANOARD OF LIVING A~ INCREASING SOPHISTICATION,I WHAT ]~ILL BE ITS ]HPLICAT|ON'~ [JNLESS THE COHPANY ADEQUATELY DEFINES AND UNDERSTANDS SNOKERS~ DESIRES AND TRENDS IN ~rHESE DESIRES, AND UNLESS NE DEVELOP/R~FINE PRODUCTS A~ ~VERTISIN6 CO~Y - SUPERIOR TO COHPETITION - TO SATISFY T~ESE DESIRESj NE ULTIHATELY NILL GO OUT OF ~US]NESSo OtlGO I ECONOHIC FORECASTS,, YANKELOVICH MONITOR,, ANALYSIS OF PREVIOUS MARKETING DEC]S|ONS IN THE CIGARETTE |NDUSTRY., IN-HOUSE MARKETING PLANNING SEHINARS/WORI~SHOPS,

POSITION PAPER RJR's t~EAKNESS VS, PHILIP I~RRIS, RELATIVE TO NAT]ONAL SHARE OF RARKET, AHONG YOUNGER ADULTS, URBAHIT~S AND mNE~ VALUESm SHOKERS~ ~," " PHILIP FIORRIS t~fiLL cowr]NUE TO EXERT HARKETIHG PRESSURES AGAINST POPULATION SUBGROUPS THAT REPRESENT THE BEST CHANCE FOR FUTURE 6ROHTit, ,;c,:. " PHILIP ~RRI~ H[LL CONTINUE TO CLOSE THE GAP ~EEN OUR S~RE OF ~RKET AND THEIR~5 UNLESS ~E ACH]EVE GREATER GRO~tTH A~NG THE SUBGROUPS, " EXISTING, STUDIES, YANE~OVICH MONITOR~' BUSINESS ANALYSES AND CENSUS INFOR~4ATIONo

POSITRON PAPER POSSIBLE LOSS OF MEDIA EFFECTIVENESS PER DOLLAR SPENT DUE TO AN I~ALANCE IN BOTH COHPANY AND ]NDUSTRY~S SUPPLY VS,-DEMAND AND/ORCOST I~CREASES. -- ~S CO~PETITWE PRESSURES INCREASE, ~ND AS ALL ADVERTISERS RAKE GREATER AN9 GREATER MEDIA DE~-~NDS IN AN ALREAI)Y INFLATIOt~RY ENVIRONMENT~ OUR MEDIA COSTS HAY INCREASE DRAMATICAllY IN ORDER TO MAINTAIN /~I)VERTISING EFFECTIVENESS, ~i~AI:"W~'i'~ B~ ITS IMPt.lCATION? ]}EC['IN~S ~N PROFITS DUE TO SUBSTANT~AI'I~Y HIGHER COSTS', SOME OF THESE PRESSURES EXIST TODAY~ BUT F~Y ACCELERATE IN THE NEAR FUTURE, RECORDS OF CIGARETTE INDUSTRY ADVERTISING EXPENDITURESw OUR ONN FUTURE PLANS~ MAGAZINE PUBLISHERS ASSOCIATION~ AND ARTICLES FROM TRADE JOURNALS,

PO$1TIOfl PAPER KEY_LS. F._E " UNCERTAINW OVER "~HE RELATIVE EFFECTIVENESS AND EFFICIENCIES OF VARIOUS PROMOTION AND MERCHANDISING TECiffiIQUES IN ACHIEVING MARKETING OBJECTIVES.- CON~U~ER PROHOTION AND RETAIL MERCHANDISING TECHNIQUES HILL BEFORE INCREASINGLY IMPORTANT FACTORS IN THE CIGARETTE rlARKETING P~OCESS. THE DEGREE TO HHICH HE UHDERSTAND ~HE COST EFFECTIVENESS OF THESE TECHNIQUES IflPACTS ON OUR ABILITY TO:ACHIEVE MARKETING GOALS AT A REASONABLE, COST. EXISTING, WITH ACCELERATING POTENTiA~ FOR GREATER IHPACT. CURRENT AND ANTICIPATED EXPENDIT~JRES IN SALES PROMOTION AND MERCHANDISING,

PAPER NEED FOR FULL DISTRIBUTION AND DISPLAY OF EXISTING ANTICIPATED RJR BRANDS IN AL~ APPROPRIATE OUTLETS, " TNE INDUSTRY WI~ CONTZNUE TO INTRODUCE NEW SRANDS TO FURTHER SEGI4ENT THE EXISTING H/~RKET. MEANWHILE/ RETAILERS ARE DEVELOPING GREATER SOPHISTICATION IN DETERRININ6 THE PROFITABILITY OF ITEMS CARRIED IN INVENTORY. "" 3: ~paT WILL BE Its IMPLICATIO/IL? It wI~ BE IHCREASINGLY DIFFI'CU~T For RJR TO O~TAIH DI~TRIBUTION AND DISPLAY OF ITS NEW/MARGINAL BRANDS~ THUS DIMINISHING OUR CHANCES OF ACHIEVING OUR BUSINESS 61~JECTIVES, EXISTING/ AND WILL LIKELY ACCELERATE IN THE HEAR TERM, ANALYSES OF INDUSTRY TRENDS~ OUR 01qN FUTURE PLANS~ ESTiI.~TES ON THE ADVENT AND IMPACT OF UPC AND EXPERIENCEOF OUR SALES FORCE,

POSITZOti PAPER 1. NE~--D TO RAX]I'IIZE USEOI~ SALES FORCE 14ANPOt'~ER, ~RRIS'"XCHIEVlNS SALES FORCE ~NPOWER PARIW: HITH US COU~ S~ERELY "DIRIHISH OUR ~VANTAGE OVER THB4 IN THIS AREA' THE POTEN:I'~A~oF THE LOSS OF OUR ."~DVANTAGE COULO REsuLT IN SUBSTANTIALLY HIGHER MANPOHER REQUIREMENTS AND COSTS$ OR~ ALTERNATIVE~,' OUR ADVANTAGE HILL IN FACT "BE DIMIN]SHEO, AND ACCELERATING, 1976.

POSITIOH PAI'ER EEY ISSUE It "2, " NEED FOR HIGHEST PRoFIc]ENCY NITH]~ I~[ARKETIN6, THE RAPID ACCELE|~J~TION AND DIFFUSI0ti:~)F CHANGES IN CONSUMER TASTES AND I]FESTYLES, ]NCREASING CONPET[T|VE PRESSURES AND AN UN~ERTA]N ECON(}R]C.O.UTLOOK H]LL CREATE EVEN HORE COHPLEX i4ARKETPLACE.COND]T|ONS, WHAT ~]LL 8E |TS ]HpI~ZCATION? . : CB/~NGE CREATES OPPORTUN[T]ES FOR HEU" .ORGANIZED, I'tARA~ED AND STAFFED HAR,~ETERS.~ RESUI~TS THOSE THAT AREN'T,' .. PROFESSIONALLY IN BUSINESS DECLINES WHEN WILL IT "HAPPEN? ONGO]NG, °° YANKELOVIClt MONITOR, SEGMENTATION STUDIES, ' ACTIONS, ECONOMIC FORECASTS AND STUDIES~ CORPET I T] VE

INFORIdATION, I~EED FOR NORE, BETTER AND FASTER ......... ;.." - ". .~RKETPLACE.. INCREASING IN COMPLEXITY AS NOTED ON " PREVIOUS ISSUES, ~AT WILL BE ITS IMPLICATION? WE ~ILL BE UNaBlE TO FORECAST AND UNDERSTAND CHANGING CONDITIONS AND PROPERL~ ADDRESS THEH UNLESS HE PROPERLY DEVELOP A~B UTILIZE OUR ]NFOR~IATION RESOURCES," WHEN W~'LI~ "IT HAPP~ 0NGO]NG, SAME AS PREVIOUS ISSUES DEALING WITH COMPLEXITY AND CHANGING CONDITIONS,

POTENTIAL EROSION OF COHPANY PROFIT HARGIN DUE TO UNFAVOR/~LE RATIO OF NIGN-TO~LOWER COST ]BRANDS. -OUR HIGHER COST ]~RARDS HII'L TEND TO RETAIN THEIR COST STRUCTURE AND CONTINUE TO (~UT PERFOR]4 OUR LOI~ER COST ITEHS, t~IAT ~ILL 8E ITS ]FtPL|CAT]OH? THE COMPANY WI~ HAV~ tO ~CCEPT LONER-THAN-STANOAR9 HAeG[NS OR ]'H~REASE PRICES AT A GREATER RATE AND~OR MORE FREQUENTLY THAN CURRENTLY PLANNED, o WHEN WILL IT HAPPENS. EARLY ~980'S WITH POTENT|AL TO OCCUR SOONER, • SHARE FORECASTS AND FINANCIAL AN/iLYs~S,