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CONFIIDENTIAL ez -6 6-/0 Consumer Research Report CR-66-10 A STUDY OF THE MENTHOL CIGARETTE CONSUMER Prepared by Raymond B.- Hooker, Jr. PUBLISHED BY THE MARKETING RESEARCH DEPARTMENT R. J. REYNOLDS TOBACCO COMPANY, WINSTON-SALEM, N.C.

September 1, 1966 Mr. A. G. Weber Re: STUDY OF THE MENTHOL CIGARETTE CONSUMER R- - 0 Attached is an outline of consumer preference statistics suggested as reference materit?1 for menthol cigarette market- ing planning. The report attempts to answer a request from you sometine back for a menthol group profile study. I believe the outline is a fairly comprehensive compilation of statistical data as it relates to menthol consumers. The analytical points are a few of the more significant observations that I developed from the information. Further judgment as to the effectiveness of the study can be gained as you utilize the material. Your comments about the report's value, as well as those from others in the Marketing Department, can help decide whether we should develop similar studies on lo-fi, hi-fi, or non-filter consumers. Raymond B. Hooker, Jr. Marketing Research Department Pmii:aw CC: t-:essrs. W. S. Smith, Jr. R. A. Blevins, Jr. Howard Gray J. H. Saylor, Jr. R. M. Odear, Jr. J. A. Albanese rb ~r. `k RWoRT KP1~~l.1~e~T '~e //lG/l=%O/ &e/ T800,<_

INTRODUCTION The Marketing Department has expressed an interest in determining changes in consumer profiles among major ciga- rette brands. It is actively seeking to implement advertising strategy and new cigarette products in line with current con- sumer desires and trends. The following report analyzes menthol brands to provide some insights into these brands' consumer markets and outlines trends as they are affecting the menthol cigarette category. Developed from a series of trend study reports prepared by William Esty Company in 1965 and 1966, the information is presented in a series of reference tables - each followed by a short analysis noting a few•of the more significant findings. The report comprises four sections. They are: I. Profile of Smokers by Menthol Category and Brands II. Profile Shifts of Smokers by Menthol Category and Brands III. Loyalty Rates and Gains and Losses of Smokers by Menthol Category and Brands IV. Source of SALEM Gains and Losses

I. PROFILE OF SMOKERS BY MENTHOL CATEGORY AND BRANDS (November, 1965)

PROFILE OF SMOKERS BY SEX Total Menthol Profile Category SALEM Kool Total Belair Newport All Others Preferences of All Smokers Men 15.8% 7.9% 4.1% 1.6% 1.1% 1.1$ Women 27.5 10.9 4.5 4.5 3.3 4.3 Total 20.8 9.2 4.2 2.9 2.0 2.5 Preferences of Menthol Smokers Men 100.0 50.1 26.0 10.1 6.9 6.9 Women 100.0 39.6 16.4 16.4 11.9 15.7 Total 100.0 44.1 20.3 13.6 9.7 12.3 Distribution of Menthol Smokers Men 42.4 48.1 53.9 31.2 29.7 24.5 Women 57.6 51.9 46.1 68.8 70.3 75.5 Total 100.0 100.0 100.0 100.0 100.0 100.0 Sex Distribution of All Smokers Men 56.2% Women 43.8 Total 100.0%

ANALYSIS OF MENTHOL SMOKERS BY SEX Principal Findings 1. Like the menthol category as a whole and each of the major brands, SALEM experienced higher preference share among women smokers (11%) than among men smokers (8%). 2. Among menthol smokers, SALEM was preferred by about 50% of the men and 40% of the women. Other than SALEM, Kool was the only menthol brand surveyed with a greater preference penetration among male than female menthol smokers. Belair, Newport, and especially the smaller menthol brands possessed preference shares skewed heavily to female menthol smokers. 3. SALEM's distribution pattern reflected a 48% male, 52% female ratio - indicating some more male preference than in the total menthol category. Kool's distribution data pictured a 54% male, 46% female proportion - the only menthol brand with more male than female smokers. Other menthol brands showed a highly feminine profile with over two female smokers to one male smoker.

PROFILE OF SMOKERS BY AGE Profile Total Menthol Category SALEM Kool Total Belair Newport All Others Prefere nces of All Smokers WK--" ' ' f Age 21-24 22.2% 10.0% 5.0% 2.6% 2.6% 2.0% Age 25-34 23.4 10.1 4.3 3.7 2.6 2.7 Age 35-49 20.3 8.9 4.3 2.5 1.7 2.9 Age 50 and Over 20.0 8.6 3.9 2.7 1.8 2.0 Total 20.8 9.2 4.2 2.9 2.0 2.5 . ~ Prefere nces of Menthol Smo ker s ~ ,. ~, - Age 21-24 100.0 46.5 20.1 12.1 12.1 9.2 Age 25-34 100.0 43.3 18.4 15.7 11.1 11.5 Age 35-49 100.0 44.0 21.2 12.2 8.3 14.3 Age 50 and Over 100.0 45.2 20.5 14.1 9.6 10.6 Total 100.0 44.1 20.3 13.6 9.7 12.1 Distrib ution of Menthol Sm oke rs Age 21-24 9.2 9.6 9.2 8.1 11.3 6.9 Age 25-34 28.3 27.6 25.8 32.5 32.3 26.9 Age 35-49 37.2 36.9 39.2 33.3 31.7 44.0 Age 50 and Over 25.3 25.9 25.8 26.1 24.7 22.2 Total 100.0 100.0 100.0 100.0 100.0 100.0 Age Distribution of All Smokers Age 21-24 8.8% Age 25-34 25.2 Age 35-49 38.3 Age 50 and Over 27.7 Total 100.0% 0 N o N v tA 0

ANALYSIS OF MENTHOL SMOKERS BY AGE Principal Findings 1. A slightly stronger preference for menthol cigarettes by smokers under age 35 was suggested by the age profile. 2. Although SALEM and Kool's distribution showed only moderate variance from the total menthol category regarding smoker's age, the data picture SALEM with a slight amount of strength in the 21-24 age bracket. Kool's distribution pattern reflected some weakness in the age 25-34 grouping. 3. Belair appeared to show strength in the age 25-34 category while the "all other" grouping tended to be weighted in the 35-49 age breakdown. 4. Newport was skewed significantly high in the younger age groups, showing distribution percentages well above the total menthol category as well as above all smoker age distribution.

PROFILE OF SMOKERS BY FAMILY INCOME Total Menthol Kool All Profile Category SALEM Total Belair Newport Others Preferences of All Smokers Less than $2,000 19.8% 9.3% 6.1% 1.9% 1.6% .9% $2,000 - $3,999 20.4 10.0 3.9 3.3 1.1 2.1 $4,000 - $5,999 21.0 8.7 5.4 2.7 1.7 2.5 $6,000 -$7,999' 20.6 9.9 3.9 2.8 1.8 2.2 $8,000 - $9,999 21.4 8.6 4.3 3.0 2.4 3.1 $10,000 and Over 21.5 8.9 3.0 2.8 3.2 3.6 Total 20.8 9.2 4.2 2.9 2.0 2.5 Preference s of Mentho l Smokers Less than $2,000 100.0 47.0 31.0 9.7 7.9 4.4 $2,000 - $3,999 100.0 49.1 19.1 16.0 5.4 10.2 $4,000 - $5,999 100.0 41.5 25.7 12.7 8.2 11.9 $6,000 - $7,999 100.0 48.2 18.9 13.5 8.9 10.5 $8,000 - $9,999 100.0 40.2 20.1 13.8 11.4 14.5 $10,000 and Over 100.0 41.2 13.9 13.0 15.1 16.8 Total 100.0 44.1 20.3 13.6 9.7 12.3 Distribution of Mentho l Smokers Less than $2,000 5.9 6.2 9.0 4.2 4.8 2.3 $2,000 - $3,999 15.3 17.0 14.4 18.3 8.6 12.7 $4,000 - $5,999 22.5 21.2 28.6 21.4 18.8 21.7 $6,000 - $7,999 21.2 23.3 19.8 21:4 19.3 18.3 $8,000 - $9,999 14.3 13.1 14.1 14.8 16.7 17.0 $10,000 and Over 20.5 19.2 14.1 19.9 31.8 28.0 Total 100.0 100.0 100.0 100.0 100.0 100.0 Family Income Distribution of All Smokers Less than $2,000 6.2% $2,000 - $3,999 15.7 $4,000 - $5,999 22.5 $6,000 - $7,999 21.6 $8,000 - $9,999 14.0 $10,000 and Over 20.0

ANALYSIS OF MENTHOL SMOKERS BY FAMILY INCOME Principal Findings 1. Preference of all smokers for menthol brands ranged quite narrowly by income groups. Menthol category penetration did show slight strength in the higher income brackets although the preference would not be considered very significant. 2. Among menthol smokers, SALEM and Kool's preference shares were higher among lower income groups. Kool showed consider- able strength in the "less than $2,000" and $4,000 to $5,999" profile breakdowns. 3. Newport and the "all other" group were skewed toward upper income families more than the menthol category while Belair varied narrowly from the category except in the $2,000 - $3,999" bracket.