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CONFIDENTIAL October 28, 1982 TO: J. W. Johnston RE: Weekly Activities Report - Brand Management This reports Brand Management activities of significance during the week of October 25. WINSTON 1. National manufacturing of improved WINSTON Lights 100's/CAMEL Lights 100's products began this week. The improved product achieves superiority versus Marlboro Lights 100's among target competitive smokers and represents a significant improvement over the previous product which was rated inferior. 80% retail distribution of the improved products will be achieved by mid to late December. 2. An improved WINSTON Box product, identified in recent NFO testing, began sample manufacturing runs/testing (Phase I/II) this week. The improved product has been rated superior to Marlboro Box among target competitive smokers, representing a significant improvement over the current inferior product. The official AR Form proposing the national introduction of the improved product is currently being routed for approval, and the national manufacturing start is scheduled for the week of November 22. 3. Creative shoots for new Hispanic and Black creative will begin in New York next week and will continue in Louisiana the week of November 8. In-market appearance of new creative for both the Black and Hispanic markets is scheduled for March, 1983. 4. On Monday, October 25, 4.4 million consumer offers, each containing three WINSTON coupons were delivered to consumers via direct mail. This coupon offer included one $1.50-off- a-carton and two 75C-off-a-carton store redeemable coupons, good on any WINSTON brand style. The WINSTON multiple carton coupon program is designed to generate quality trial, develop continuity of purchase, and generate incremental brand volume in high priority markets.

J. W. Johnston October 28, 1982 Page 2 CAMEL 1. Authorization Request for national introduction of an improved CAMEL Regular product (prototype #FT-3663-C) was approved this week. The improved product incorporating a reduced circumfer- ence, QTF variables and 719 paper was rated superior to current product among CAMEL Regular franchise and provides a cost savings of $.1405/M units versus current product. Phase III national manufacturing of the improved product will begin week of 11/1/82 at Whitaker Park and as early as 11/15/82 at Plant *64, pending installation of reduced circumference manufacturing equipment. Improved product will begin appearing at retail in late December/early January, 1983. 2. Phase III national manufacturing of a revised CAMEL Lights 100's product (currently shared with WINSTON Lights 100's) began this week. The revised product improved WINSTON Lights 100!s position from inferiority to superiority versus Marlboro Lights 100's among competitive smokers and achieved superiority among their franchise smokers. While this revised product has not been tested against CAMEL Lights 100's action standards, previous WINSTON/CAMEL product tests indicate a strong correlation between each brand's product performance relative to their action standards. The new product will begin appearing at retail in late December/early January, 1983 and will be tested against CAMEL Lights 100's action standards via a manufacturers retest in January, 1983. 3. Authorization Request for a revised CAMEL Filters Hard Pack product (WINSTON Box prototype #3611-A) will be forwarded this week. This prototype, which has also been recommended as a replacement for the current WINSTON Box product, provides a significant cost savings of $.303/M units versus the current CAMEL Filters Hard Pack product in addition to manufacturing efficiencies to be gained by sharing a common product with WINSTON. Product performance indicates this prototype performs at parity versus Marlboro Box and the current product against the two highest priority CAMEL action standards. The product was not tested against the third action standard group (CAMEL Filters smokers) since it was part of a WINSTON prototype product test. However, the prototype's smoking characteristics and performance against other action standards suggest it will be equally accepted vis-a-vis the current product among this smoker group. Phase III national manufacturing is scheduled to begin week of November 22 for both CAMEL Filters Hard Pack and WINSTON Box. CAMEL will obtain a performance read of this prototype against all three CAMEL Filters Hard Pack action standards via a manufacturers retest tentatively scheduled for January, 1983.

J. W. Johnston October 28, 1982 Page 3 CAMEL continued 4. The Brand and Agency met with Promotion, PR, Media and the Sampling/Field Marketing supplier to review, discuss, and finalize all elements of the Brand's 1982/83 "CAMEL Ski Adventure" Winter Resort/Ski Program. This program will commence on 12/17/82 and run through 4/9/83 in 28 major East and West Coast winter resorts. A revised tactical plan reflecting input from this meeting will be provided to the Brand the week of 11/1/82 and forwarded to Management for review. 5. The Brand reviewed with me three CAMEL programs planned for 1983: CAMEL RockVideo, CAMEL Rockbill Vinyl Preview, and the CAMEL Spring Gear Gatefold. The CAMEL RockVideo program is planned for First Quarter 1983 implementation and is composed of a series of brand sponsored animated rock video spots, which will feature brand identification in conjunction with current/popular rock music groups. These tapes will be distributed to approximately 100 of the most popular younger adult nightclubs in major metros throughout the country, thereby providing the Brand with an innovative and impactful vehicle for reinforcing CAMEL's association with the younger adult smoker's lifestyle. The Rockbill Vinyl Preview Program will commence January, 1983, and will appear every other month within the highly targeted Rockbill publication, which is distributed to approximatel~ 70-nightclubs throughout the country (monthly circ. of 500M). This spread, featuring a CAMEL sponsored review of select new album releases, will also provide the Brand with an innovative, impactful vehicle to enhance CAMEL's younger adult smoker lifestyle association. The CAMEL Spring Gear Gatefold, which represents a continuation of the Gear image enhancement program, will appear in targeted monthly magazines during April/May, 1983. 6. Preliminary information regarding initial retail acceptance of CAMEL Filters Hard Pack will be provided by Sales in early November. However, early indications are that retail acceptance has been very favorable for the Brand, which went DTS on 10/18/82 into the Pacific/Mountain sales area (less Omaha region). In conjunction with the introductory media program (newspaper, OOH, magazines), the following promotional programs will also be executed in support of the introduction: sales distributed sample 10's and one-for-one sampling, retail B1G1F (commencing 11/1), and field marketing activities (commencing 11/15).

J. W. Johnston October 28, 1982 Page 4 SALEM 1. Introduction of Improved Lights 85 and Full Flavor 85 Products Previously, NFO results indicated that improved prototypes were developed on Lights 85's (parity versus inferiority) and on Full Flavor 85's (superiority versus parity). Both proto- types utilize total casing. Given the importance of these two styles, Mr. Christopher indicated that the availability of total casing equipment could be accelerated from January to December 10 and requested which style Marketing deemed as the most important priority to be followed by approximately two weeks with the next style. At the Brand's recommendation, I identified that highest priority be placed behind Lights 85's as it is currently inferior. Specific timetables are being developed in recognition that total casing equipment will be available on December 10 to commence Phase II of manufacturing. 2. SALEM Spirit Spring/Summer Pool-Outs Brand reviewed, at Esty, out-of-home comps and selected slides from the second leg of the recent shoot. Photographic quality was vastly improved and situations dramatically captured the spontaneity, naturalness, vitality, and sociability of SALEM smokers. Prior to the meetings next week with you, I will review recommended Spirit pool-out executions and sustaining Slim Lights recommendations later this week. 3. Slim Lights Sustaining Campaign DAR Topline results on a sustaining campaign execution ("Girl/Tennis Racquet") indicate that recall was as efficient as that achieved on a post-introductory campaign execution ("Girl/White Jacket") and fell within the Coolness Segment form for 1P4C executions. Topline DAR Results Total Females 18-34 Females 35+ Females "Girl/Tennis Racquet" (Sustaining) 17 14 20 "Girl/White Jacket" (Post-Introductory) 14 17 12 Coolness Segment (1P4C) 20 20 20 Norm Range (15-25) (13-27) (13-27) Final results will be available the week of November 8.

J. W. Johnston October 28, 1982 Page 5 SALEM continued 4. SALEM Spirit Ski Scene outreach Program As part of SALEM's Ski Scene Outreach Program, the Brand has commenced participation in ski shows most recently in Chicago and Boston. In total, the Brand will be involved in premier ski shows in eight major cities with attendance expected in excess of 250M people. SALEM activities include sampling, banners, and sponsorship of award-winning ski films. MORE 1. The Brand Group and Schechter Group reviewed the improved MORE packaging exploratory with Agency Management on Friday, October 22. Discussion was held regarding the range of packaging options desirable in terms of maintaining MORE's distinctive image in the market. The Brand Group and the Agency both stressed the need for a full in-market test read to determine the total impact of the packaging changes. 2. Focus groups will be held on Wednesday and Thursday, October 27-28, to solicit consumer impact on the refined packaging developed basis the first focus groups. The designs will be exposed to female MORE 120's, MORE Lights 100's and Stylish Segment smokers as well as male MORE 120's smokers. The Brand Group is currently scheduled to present the prototypes to you on Monday, November 1. 3. The Brand Group is recommending an increase in the moisture level of MORE Lights 100's (M). This recommendation is based on results from the aged product test which indicated that the product was both initially low in moisture versus other RJR products as well as losing significant amounts of moisture over a period of time. Due to the large quantity of product which will be shipped out in December and be on retail display First Quarter 1983, this improvement will be implemented immediately. NOW 1. Advertising Lorillard has voiced some dissatisfaction with the NOW "Fan" execution. It is not clear in the ad whether the Lorillard packs are 85mm or 100mm styles. Brand has agreed not to run the ad after December, 1982, and we will assure that future executions indicate that packs are 100mm styles.

J. W. Johnston October 28, 1982 Page 6 NOW continued 2. Research Brand, MDD, Agency, Promotion, R&D, and Packaging attended a Synectics session on 10/25-10/26 for the purpose of exploring refinements to the current NOW positioning. Selected ideas will be developed further and exposed to focus groups in mid- November. 3. Media The Brand recommendation to run ACTMEDIA in November/December 1982 has been approved. Brand is proceeding with implementation of ACTMEDIA. 4. Product An AR has been approved for the rejection of heavy weight (+75 mg) NOW Filter and Menthol 100mm styles. Additional tobacco weight causes increased air dilution which results in "tar" delivery of less than 1.5 mg/cigarette and product that smokes too mild. Conversion to NOW's common blend and G-13 on the 100mm style is being completed, with fielding scheduled for mid-November. The 85 Menthol style trended out of tar level action limits the week of 10/4, but is now back within standards. Other 1. 12-Pack Test Manufacturing will begin producing 12-packs for test market on Monday, November 1. Bob Sherrod and Alan Sterling have met with the participating vendors in Detroit and Tampa, and the vendors have agreed to participate in the program. 2. Project VC MDD and Brand Marketing will be conducting a series of focus groups on November 1-2 in Tampa and Washington, DC, to determine consumer reaction to several line extension concepts that address price and value. A summary report on this project is being forwarded for your review.

J. W. Johnston October 28, 1982 Page 7 Other continued 3. Semi-Rigid Packaging A recommendation to test market semi-rigid packaging on MORE 120's was forwarded for your approval. The test market will begin in April, 1983, with a final report scheduled for August, 1983. M. L. MLO: jhg cc: Mr. G. H. Long Mr. Mr. N. G. W. Glover Novak Mr. Mr. Mr. Mr. Mr. Mr. Mr. R. H. G. J. L. K. C. A. J. W. R. W. J. R. Kampe Lees McKenna Shostak Hall, Jr. Keiser Hill Orlowsky

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