Tobacco Documents Online

Page 40 on the last day of the orientation after having been exposed to all the data that exists in Research. Marketing Research will then use this as a brief from which work can proceed to better satisfying regional information needs. 9) Enhancement of Current Ansl)rtical Techniques Using Existing Data It is our concern in Research that the existing data we have has not been milked to the extent that it can be in providing an interpretation of the market. With the computing capacity that we currently have and the advance- ment in analytical techniques currently being practiced by outside suppliers, there is certainly room for improvement. In the types of analysis performed by Marketing Research, we have set an objective for ourselves that over the course of the year and prior to the annual planning update, we will incorporate new forms of analytical techniques currently in use today to better explain the market. One of these techniques will be ~Itivariate analysis which Peter Illich has assm~d responsibility for. 0 cr~ Oo o BatCo document for PFSFC 1 March 1999

Page 41 I0) Integration of Information As a result of today's technology, the ability to integrate information is at our door step. As it stands now, we have various forms of survey in- formation on line being used and analyzed in iso- lation. Data such as that collected in the C.M.A., the Monthly Monitor, massive switching studies, PMB, sales, advertising expenditures, etc., should be readily available for cross analysis. A com- mittee project headed by Carole Brohmenwill work towards the integration of this information for purposes of analysis. The initial stage of this project requires a position paper on how information can be integrated either internally or externally. Part of this project will be the elimination of redundant information. I: i+ CZ~ r~Y fy~ (30 C~D <24 BatCo document for PFSFC 1 March 1999

Page 4Z 11) Price Sensitivity Historically, the Canactian cigarette market has not segmented on price. Recently, Loblaws in Ontario introduced a no-~meproduct in its stores with ap- parent success. Is the market ripe for such a concept? With the governments raising taxes on to- bacco products continuously an4 a worsening economic climate, is there a measurable level of price sensi- tivity in the Canadian market? What has caused the sudden plateauing in the decline of the fine cut market? Why is incidence in RYO and tailor-made combined up? Our current measurements do not permit us to record accurately shifts in the market as a result of price if there are any takinz place. The day may soon come, if it hasn't already, when cigarette demand will be significantly sensitive to price an4 part of a consumers' purchasing decision will be price. Project Barker will explore the concept for low-priced cigarettes for ITL, while Project Price Sensitivity, the one discussed here, will hopefully give us insight into shifts in attitude and behavior as a result of price and allow us to monitor its magnitude on an ongoing basis. ....a. 0 P,m C~D -../ 0 tw4 C7~ BatCo document for PFSFC 1 March 1999

Page 43 12) Low-Level Incidence Currently, we are faced with increasingly high research costs. These costs increase exponentially when the product's incidence level drops. We must find research techniques to give us answers without prohibitive costs with regards to product incidence. We, therefore, will undertake to find the most appropriate research tech- niques for low incidence tobacco products. This project comes as a follow-up to Project Brand ID, in which it was found to be cost prohibitive or too impractical to implement the proposed methodologies. This project is not in response to consumer confusion towards new brand data, but rather on reliability in representativity of our survey method for quantitative approaches. IS) Pro~ ect Product This project has two overall objectives: I) assessment of our current product-testing methodology with the ultimate goal being an improvement in the instr~nent in terms of time, cost, and information supplied; and 0 r,o 0", Oo o 04 -.--,l BatCo document for PFSFC 1 March 1999

Page 44 z) integration of smoker taste and sensory perceptions to better develop our understanding of attitudes, images, and market segmentation. A meeting has been scheduled in late F'82 with Product & Packaging and R & D along with Martin Oldman to discuss issues in this area. Hopefully, a result of this session will be to set new directions in the area of product mea- surement and testing. 14) ,Expanded Industry Exchange The expanded industry exchange is an exchange of sales data by the manufacturers which measure company/brand performance in a previously defined submarket. The submarkets have been isolated with the submission of "clusters" (groups of whole- sales). As expanded sales data becomes available, regions will be approaching Research for direction on how to use and analyze this information. It is our role to understand the co~position of the information and how it can be used in analysis. 0 C~ 0 BatCo document for PFSFC 1 March 1999

Page 4S 15) Price Audits As the federal and provincial governments continue to increase taxes on cigarettes, it has become essential that we gain a better insight into price variance in Canada. Presently, the instruments ~ use to measure retail prices of cigarettes do not optimally reflect price differences and their impact on sales. The initial step in developing a test to measure price more effectively will be an analysis of all existing vehicles. At the completion of this stage, proposals wCll be made to improve our means of tracking and measuring retail cigarette prices. 16) Retail Audits There is a need to improve our ability in measuring brand performance at retail. Retail audits will be studied this year. At the present time, our sophistication is to a level of conducting mini audits in selected markets for specific brand tracking. Co -.o BatCo document for PFSFC 1 March 1999

Page 46 The reliability of these samples and their representativity is questionable. Aposition paper on the subject will be put forewardby Research recommending that such information should be purchased by a supplier. However, before designing any approach, a clearer definition of information needs is required. Are we concerned with only a measure of gross inventories to adjust sales or should we be looking into the future at store segmentation, retail n~nagement and retail inventory control? 17) Trade Inventory Armlysis Trade inventory analysis will be an in-house investigation of tobacco and associated products inventories. The objec- tive is to measure the influences of economic conditions on inventory levels at various points in time, while improving our power to predict trade reactions to changing economic conditions. This project will be done in conjunction with retail audits. 18) Sales Force Activities Sales force activities interact with virtually every other phase of the marketing system. Each year, millions of dollars are spend in support of field activities, either O rk5 c;-, co CD r-.. (ZZ~ BatCo document for PFSFC 1 March 1999

Page 47 directly, or indirectly. Yet, our only measurement of the execution of the field activity (or strategy) depends largely upon intuition. The objective of this project is to develop a statistical measurement which will assess the execution of field activ- ities. 19) Distribution Network In 1950, ITL serviced 3,700 direct accounts. By 1981, this figure had dropped to 685. The total n~nber of retail outlets selling tobacco in 1981 was 43,746, although if present trends continue, we estimate that only 21,000 retailers will sell to- bacco by the end of the 80's. This project will explore the changes which have been taking place at the wholesale and retail level, i.e. why are distributors closing? where? are there new "kinds" of distributors opening? what are the ramifications of the changing retail environment? will we need more salesmen? fewer? etc. While there are few distributors, these fewer are controlling greater amounts of merchandise, and are in a position to ulti- mtely exert a tremendous influence on what mam~acturers might 0 crx o--9 c-D J BatCo document for PFSFC 1 March 1999

Page 48 do in the marketplace. As a result, we must be aware of any. "power shift" from the manufacturer to the distributor in order to develop s~trategfes to preserve the present balance between manufacturer and distributor. 20) Project Pre Test At the present time, much of the advertising research which is conducted utilizes a qualitative methodology. Focus groups are employed to assess different creatives and to evaluate new concepts. This does provide general direction, and will remain useful in discriminating amongst ntmerous concepts and creatives. However, this methodology is inadequate in terms of deter- mining the impact of an advertisement, particularly when compared to industry norms. Further, qualitative research will never be able to fuzx~ish answers to various questions which exist. Among these are: - the use of black borders on duMaurier advertising; - red on red for dt$4aurier Light; - is the low awareness o£ the Peter Jackson Extra Light campaign a result of the creative?; - can black and white deliver the same message as color?; 0 c._-/) BatCo document for PFSFC 1 March 1999

Page 49 -what is more effective in terms of cost: half a page, full page, or dou51e page adverti'sement~?; - average view~ t~aue ~or an advertisement; - average viewing time for each specific ad element; - the percentage of respondancs who read headline and body copy', both partially and fully; - etc. There is snAmerican firm, TelcomResearch Inc., a leader in the field of eye-movement track.g, which is currently expanding in the Canadian market. They suEzest that the), can provide answers to all these areas of cnncern. As an initial step, Research intends to com,fssion a pilot study cn existing Peter Jackson Extra Light and du~urier Light creatives. The results will then be compared to various norms which, although scant>-, have already been collected in the Canadian Industry, 21) .Pr, o~ect Incidence There is growing need for a continuous, accurate measure of incidence of smoking. Historically, we have relied on two annual readings frum the spring and fall Monitors. ~bwever, various factors in the market, particularly price and the 0 r,o o-, co -..j BatCo document for PFSFC 1 March 1999