Product Design
Core Process
Abstract
Reports discount cigarette brands challenge Philip Morris [PM] profit margins and recommends lowering production costs. States maintaining market share is paramount and lists project time lines for improving production efficiency to accomplish these goals.
Fields
- Hypothesis
- Design changes over timeChanges in cigarette design over the past half century.
- Inhalation ProfileAre cigarettes designed to cater to individual inhalation profiles?
- Introduction of new/unconventional productsResearch and development of novel nicotine delivery devices and experimental tobacco designs.
- Low-yield cigarettesModification of low yield products to assure that adequate levels of nicotine delivery are maintained, and effects of yield changes on toxicity and dependence.
- Nicotine transport, transfer, and uptakeDesign changes which alter nicotine delivery or effect how the product causes and maintains dependence, including transfer of nicotine from tobacco to smoke, and uptake into the body.
- Sidestream constituent yieldsModification of selected sidestream smoke constituents in response to health concerns.
- Smoke constituent testingDevelopment of methods for measurement of gas and particulate yields in mainstream and sidestream smoke.
- Smoking psychology and behavior
- Use of additivesModification of tobacco products through use of additives and measuring effects on dependence, behavior, and toxicity.
- Use of filters, paper, and ventilationModification of tobacco products through use of filters, paper, and ventilation, and measuring effects on dependence, behavior, and toxicity.
- Use of tobacco processing/ blendsModification of tobacco products through changes in tobacco processing and use of blends, and measuring effects on dependence, behavior, and toxicity.
- Keyword
- Aerosol
- Attribute perception ratings
- Brand differences
- Brand Specifications
- Brand switching
- Consumer acceptability (Consumer preference)
- Controlled profile
- Flavor/ Taste (Attribute measure)
- Human testing
- Ignition propensity
- Impact (Throat grab)
- Intake (Smoker yield)
- Irritation (Attribute measure)
- Low delivery (Reduced delivery)
- Market (B&W marketing term)
- Nicotine delivery (Smoke nicotine or nicotine yield)
- Nicotine manipulation
- Sensory response
- Smoking and Health Controversy
- Smoothness/Harshness (Attribute measure)
- Tobacco taste (Attribute measure)
- Total particulate matter (TPM or Tar)
- Additive
- Licorice (Licorice Fluid Extract, Powder, and Root)
- Smoke Constituent
- Nicotine
- Total particulate matter
- Design Component
- Burley tobacco
- Casing
- Flax paper (Flax wrapper)
- Humectant
- New expanded tobacco (NET)
- Woodpulp wrapper
- Operation/Project
- Project Beta (free-standing 6 mg. cigarette)
- Named Organization
- Administrative Management Society
- EEC (European Economic Community)European Economic Community
- National Institute of Safety and Technology (Formerly known as the National Bureau of Standards)
- Philip Morris Companies Inc. (Parent company of Philip Morris USA, Kraft, Miller)America's seventh-largest industrial enterprise in 1993, owns Kraft, Miller Brewing, General Foods, and more.
- PMII (PM Int'l Inc.)PM Int'l Inc.
- POL National Roster (group of consumers that evaluate cigarettes)
- United States Congress
- Brand
- Basic
- Benson & Hedges (PM)
- Benson & Hedges Ultralight 100's
- Marlboro (PM)
- Merit (PM)
- MERIT ULTIMA
- Parliament (PM)
- Virginia Slims (PM)
- Subject
- additives
- aerosol (technology)
- Blends (Design)
- Burn Rate (Design)
- Expanded Tobacco (Design)
- Fire Safe Cigarettes (Products)
- Formulas (Design)
- Humectants (Additives to maintain moisture)
- Licorice (Additives)
- Low Yield Cigarettes (Products)
- Moisture (Design)
- Novel Cigarette Devices (Products)
- Paper (Design)
- Puff Parameters (Measures)
- Reconstituted Tobacco (Design)
- Secondhand Smoke/Perception
- Sensory Effects—Impact (Effects)
- Sensory Effects—Taste (Effects)
- Smoke Delivery/Transport (Measures)
- Smoke Nicotine (Measures)
- Smoothness/Harshness (Effects)
- T/N Ratios (Measures)
- Test/Consumer Preference (Testing)
- Tobacco Type (Design)
- Transfer to Smoke (Measures)
Document Images
CORE P ROCE,S S'
Order Processing and Fulfiltme(nt
oB=AVE
Cbntinuous Cbst Improvement.
SITUATION ANAL'YSIS
The continued growth of the discount category is pressuring PM-
USA's profit margins. As discount unit volume, particularly deep
discount products such as Basic, become a larger percentage of PM-
USA total unit volume, PM-USA's total blended marginal contribution
will be negatively impacted. This situation demands that potential
sources of cost savings be investigated and if appropriate,
implemented. Research & Development is identifying and analyzing
now cigarette components and manufacturing processes that may
contribute to lower product costs without altering product
subjectives. R&D is Involved in several projects designed to improve
the cost: efficiencies of our premium and discount products through
modifications to blends, casings & flavors, and cigarette materials.
Their most important task is to ensure that any modifications to a
product maintain consumer acceptability.
STRATEGY/ TIMING
Establish prototype processing and cigarette specifications to ensure
that any modification maintains consumer acceptability.
Prototype production
Analytical evaluation
Subjective evaluation
- Internal panels (Leaf, Flavor, etc.)
- Expert panel
Product Opinion Lab evaluation
- Replicated testing
Dscount Produc tQ51 ,&c3uction lnitistivem
Evolution of BRICA blend
-!n July 1992, the blend for all PM Discount brands was
consolidated into the BRICA blend. Further
development of this blend will be explored using
lower cost off-shore tobacco.
~ Reduced weight in BRICA blend products.
Qiange composition and source of filter tow to use lower
cost materials. 1992-1993
Prernium Byand P=oduet Cbst Reduction Initiatives
1992 (Implemented)
Weight reduction and increased use of offshore tobacco.
7/92
Increase in expanded tobacco and weight reduction
specification standardization. 11/92
Filter tow changes. 12/ 92
1993 (Plann ed)
Standard recon specifications. 2/93
- Reduced humectants
- Eliminate burley stem washing
- Liquid flav or s
Reduce use of alcohol in casing applications. 2/93
1:993 IUndsr evaluation)
Reduce block licorice use 6/ 93
Increase use of offshore tobacco 7193
Alternate humectant in recon 9/ 93
NET incorporation program 10/ 93
- 149b in Marlboro
- 15% NETin other premium brands
+ Reduce flax cont ' cigarette paper /93~
- Impleme 25%wood pulp/75% flax apor in PM-
USA Prsmiu n s wit su ~ct ve parity and to
achieve cigarette paper consolidation that moets
manufacturing and subjective needs with the minimum
number of different paper specifications.
RFQUI RED RES OiJRCES
Leaf L',epartment will secure tobacco required for blend development,
factory trials and PdL testing.
Manufacturing will support factory trials.
Engineering will Implement machine changes required for processing
MEASUREMENTS
Net reduction of cost of production of both premium and discount
brands is achieved.
Changes to accomplish goals are found to be subjectively acceptable.
R.Y SKS
Changes may adversely affect smoking subjectives.
Cbst of development and implementation may negate savings.
(hanges may involve becoming source and/or vendor limited
generating a high risk for reliable supply.
N
Q
N
N
A
m
~
C~
CORE PROCESS
oB,lECrIYE
Respond to legalJregulatory changes.
SITUATION ANALYSIS
Federal, state or local governmental regulations that affect PM-USA's
business are a constant concern. The mmt pressing current issue is
the Fire Safe Clgarette Act of 1990 which may ultimately result in a
mandate that U.S. cigarettes be "fire safe" by 1994. Should this
mandate be issued, it could impact every product we manufacture
today.
The Kennedy and Synar bills, if passed, could require ingredient
disclosure on PM product labela. Flavor recipes contain a large
number of ingredients. A program is in place designed to identify ali
ingredients in PM flavor systems, obtain certification from vendors
that these will be the only ingredients present, to reduce the number
of ingredients to the minimum without negative subjective impact,
and to substitute where possible natural ingredients. It is a
defensive action in anticipation of some additional labeling
requirements.
There are a number of countries in which tar and nicotine tevels are
regulated, and R&D has supported PMI in ensuring that products for
these countries have optimal subjectives while meeting delivery
ceilings. On January 1, 1992, the first round of tar ceilings went Into
effect in the EEC Clgarettes in most member nations cannot exceed a
tar delivery of 15 mg tar. 'Qe January 1, 1995, the second tar ceiling
goes into effect for the = specifically, 12 mg. The vast majority of
products marketed by PM-Burope in the EEC can be reformulated to
meet the 15 mg ceiling with relatively few problems. Meeting 12 mg
tar ceiling, however, will require considerable effort in order to
maintain current subjectives. Additionally, duty free products
specifically, Marlboro, exported from the U.S. to Harope, must also be
reformulzted.
gT1tATEUYL TIMING
Ciosely monitor and be prepared to comply with proposed
government regulations.
Ignition Pro,pensity._(19931
Project Tomorrow addresses the pending ignition propensity tests
and regulations. Two product approaches are under assessment:
Self-extinguishing
Low mass burn rate
Feasibility evaluations and tests are to be completed in 1993.
Ingredjr,nt R&duction (1993-199?)
Cbntinue to reduce the number of btgredients in flavor formulations
by 291r39'oper year.
Meet International Tar and Nicotine Leye~_l.s (t993-1995)
PM-USA R&D will continue to support PMI in the development of
products to meet government tar and nicotine requirements.
R8QUYRED RESOURCFS
The main thrust at R&D is to work within the industry and NIST to
develop a standardized test for ignition propensity of cigarettes, and
to develop technologies which may lead to products that will pass the
test proposed to Cbngress by NIST.
MEA 5URIIVIENTS
Product meets government . requirements and obtains acceptable
subjective results.
RIgh'S
Changes in flavor systems or cigarette design could adversely affect
smoking subjectives.
.s
N
fl
N
N
CD
~
~
m
CDRE PROcESS
Qr d~ r o~ssin-g-~t~d~~ulfill~e~n t
oBJEcrivE
Lxecute trademark portfolios' new prodduct pian.
SITI3ATIaN ANALYSIS
An analysis of the cigarette market over the last SO years suggests
that there have been only two major influences on smokers' buying
patterns. First, smokers seeking to address their health coneerns
through filtered, Iow tar and uttra low tar products. The second is
smokers seeking price relief. As a result, their has been thz
introduction of branded discount packings sznce 1985.
However, the majority of these brands have had little or no brand
equity, offering consumers only low price. This has proven to be an
unsustainable competitive advantage.
The inevitability of discount category growth suggests thst a new
prodLet would benefft from having the combination of an estabiished
trademark with strong brand equity and a lower price point. To
capitalize on this potential, FM-USA is developing value line
extensions for its premium brands.
Work is continuing on projects to develop products designed to
address smokers' health eoncerns by using technological
breakthroughs to develop ultra low tar products that deliver taste
out of proportion to their tar leve[.
STRATEGY/ TIMING
Build on Premiu m_&and EQnitiea.
Value line extensions: 1993
Lbvelop Marlboro RX
Ikvelop Virginia Slims KS
Develop Merit 3 mg
~ Cbntinuing programs 1993
Merit U[tima Menthol
_
B&H K5 Ultra Lights
RFQt7I RFD RFSOURCES
Leaf will supply tobacco for blend development.
Manufacturing will support factory trials.
Phgineering will implement changes in machinery
processing and manufacturing.
MEA SUREMF.NTS
Product must obtain acceptable subjective results.
Product factory trials are successful.
Product meets market sharo targot.
RISKS
required for
Product viewed as a system consisting of filler, paper, filter and
packaging does not meet other goals of low cost components and
manufacturing, environmental and social acceptability concerns.
Product does not achieve acceptable subjective results.
Product does not achieve desired market results.
r
4
CORE PROCESS
tkder Processing and Fulfillment
oB,jFCrI V E
Lbvelop new product technologies that address social acceptability
issues, consumer health concerns and future growth opportunities.
SITUATION ANALYSIS
Smoking restr ictions continue to Increase in the U.S. Clarrently,
states and more than localities have laws to restrict smoking in
restaurants, states and approximately localities have
laws governing smoking in the work place. percent of all U.S.
companies now restrict smoking, up from 1b9bin 1980. One-quarter
of 283 companies surveyed in 1989 by the Administrative
Management Society were smoke free, up 14% from 1988.
Therefore, any change that would make smoking more socially
acceptable to non-smokers will promote added value to our
consnmers.
These restrictions are clearly having a negative effect on cigarette
sales. R&D will address the following three cues identified by non-
smokers: visible sidestream smoke, sidestrearn odor, and irritation
caused by sidestream smoke.
N
O
N
N
~
~
CO
0
~
STItATEGYI TIMING
Fnhance the product attribute3 of existing and future products.
Offensiv (12Q31997)
Sidestream amoke modification
Reduced cost discount product blcnds
New expanded tobacco tNEt)
Distinctive flavor systems
New primary technology
New fiiter te ology
Alternativ s~~ ctz.okift articles
- Pioj
Ybfensiye =19Q71
Ignition propensity
Ingredient reduction & labeling
Packaging (I-993-t 971
Booklet pack
Aluminum pack
Low odor offset printing
Water borne inks
REQUI RII) YtES QURtES
Leaf department will obtain tobacco and Manufacturing will support
factcry trials.
Purchasing will Identify sources of required materials and negotiate
purchasing agreements.
Fngineering will implement changes in machinery required for
processing and manufacturing.
MEASURnZENTS
New technologies are achieved with accepxable subjective results,
meet regulatory requirements and generate a significantly new
business with substantial and sustainable competitive advantage.
RI S KS
Qian$es may adversely affect smoking subjeetives.
Cbsts of implementation may be too high.
Dwelopments may not be perceived as beneficial or of added value
by the consumer.
