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PROJECI XG EMOTIONAL INTENSITY COPY STRATEGY XG'S ADVERTISING WILL CONVINCE YOUNGER ADULT SMOKERS THAT THE XG BRAND IS THE MOST RELEVANT FOR THEM AS IT REFLECTS AN IMAGE OF EMOTIONAL INTENSITY, THE PRIMARY OBJECTIVE OF THE COPY WILL BE TO APPEAL TO THE TARGET VIA VISUALS THAT DEPICT MOMENTS OF MATURE SOCIAL INTERACTION BETWEEN STRONG AND INDEPENDENT PERSONALITIES, THESE MOMENTS WILL BE PROVOCATIVE, INTENSE AND INTROSPECTIVE AS WELL AS EMOTIONALLY AND ELECTRICALLY CHARGED, THE ADVERTISING WILL COMMUNICATE THAT XG'S SMOOTH, FULL FLAVORED TASTE IS THE - UNPARALLELED COMPLEMENT TO SUCH MOMENTS.

PROJECT XG • MOST CRITICAL PROJECT FOR LONG TERM GROWTH OF RJR'I* • HIGHEST PRIORITY IN NEW BRANDS • ADDRESSES KEY CORPORATE ISSUE • A DIRECT COMPETITOR TO MARLBORO DESIGNED TO REPLACE IT AS THE MOST RELEVANT YOUNG ADULT SMOKER BRAND

PROJECT xG--- , BASIS FOR OPPORTUNITY • YAS HAVE BEEN THE CRITICAL FACTOR IN THE GROWTH/DECLINE OF EVERY BRAND/COMPANY IN PAST 50 YEARS, - ONLY 5%-OF SMOKERS START *A-FTER AGE 24, - BRAND LOYALTY FAR OUTWEIGHS ANY TENDENCY TO SWITCH (E,G „ 62% OF SMOKERS CHOOSING MARLBORO AT AGE 18 STILL SMOKE BRAND BY AGE 24.) • MARLBORO GROWS +,9 SOM PER YEAR DUE TO 18 YEAR OLD SMOKERS ALONE. • VALUE OF A LOYAL 18 YEAR OLD SMOKER APPRECIATES +30% OVER TIME DUE TO INCREASE IN RATE/DAY. • BETWEEN 1979 AND 1983, RJR SHARE QF-18-24 SMOKERS SLIPPED FROM 26.1% TO 21,3%, WHILE PM'S SHARE GREW FROM 44,8% TO 58,4%, • MARLBORO IS CURRENTLY THE ONLY ACCEPTABLE BRAND AMONG 18-24 YEAR OLD NON-MENTHOL SMOKERS. (SOURCE: MDD 1984 YOUNGER ADULT SMOKER OPPORTUNITY ANALYSIS)

NROJECT XG CONCLUSIONS •BECAUSE YAS ARE CRITICAL TO SHORT AND LONG TERM GROWTH, THEY REPRESENT THE MOST IMPORTANT AREA OF OPPORTUNITY FOR RJR NEW BRANDS, • AS MARLBORO CLEARLY HOLDS THE STRONGEST YAS MARKET POSITION, IT REPRESENTS THE PRIME TARGET FOR NEW BRAND OFFENSIVES.

-:..--_ --- ~ -+ - PROJECT XG OBJECTIVE: REPLACE MARLBORO AS THE MOST RELEVANT BRAND AMONG YOUNG ADULT SMOKERS, STRATEGIES: (1) PROVIDE THE TARGET WITH SUPERIOR PRODUCTS, (2) UTILIZE MORE RELEVANT AND CONTEMPORARY IMAGERY AND MARKETING ELEMENTS THAT SPECIFICALLY APPEAL TO THE WANTS AND MINDSET OF THE TARGET. cn 0 w rn . cu ~ tn N W

PROJECT XG• RATIONALE: (l) MARLBORO SMOKERS WOULD PREFER A SMOOTHER PRODUCT • THAT DELIVERS THE SAME TOBACCO TASTE AND SATISFACTION, "- (2) MARLBORO HAS BECOME EVERYBODY'S BRAND - IT'S THE COKE, JACK DANIELS, AND BUDWEISER OF CIGARETTES, (3) MARLBORO'S IMAGE IS DRIVEN BY ITS ACCEPTABILITY AS MUCH AS ITS ADVERTISING, (4) YOUNGER ADULT SMOKERS CHOOSE MARLBORO BY DEFAULT, OR INERTIA. AT THIS STAGE OF LIFE THERE ARE CURRENTLY NO RELEVANT ALTERNATIVES,

PROJECT XG BRAND NAME: MAGNA PRODUCT: ALTERNATIVE 1: • NON-ME-NTHOL • 85MM/SOFT PACK • 2 STYLES - FULL FLAVOR - FULL FLAVOR LOW TAR • TIPPING COLORATION - FULL FLAVOR = CORK - FULL FLAVOR LOW TAR = WHITE ALTERNATIVE 2: • NON-MENTHOL • 85MM/FULL FLAVOR • 2 STYLES - HARD PACK - ~ - SOFT-PACK -- • TIPPING COLORATION - CORK

PROJECT XG PRIME PROSPECT XG IS TARGETED TO YOUNGER ADULT SMOKERS, 18-24 YEARS OF AGE WITH PRIMARY EMPHASIS ON 18-20 YEAR OLDS, ~ O W W ~ N aN

. PROJECT XG DEMOGRAPHIC PROFILE • PRIMARILY, 18-20 YEAR OLD MARLBORO SMOKERS • 65% MALE/35% FEMALE • 75% WITH NO EDUCATION BEYOND HIGH SCHOOL • PRIMARILY BLUE/OPEN COLLAR WORKERS • LONG-TERM EARNING POTENTIAL OF THIS GROUP WILL BE LOW TO MIDDLE INCOME

14 . vr PROJECT XG PSYCHOGRAPHIC PROFILE • IN A "STAGE OF TRANSITION" - THEY HAVE LEFT THE FAMILY NEST (SECURITY) BUT HAVE NOT FULLY-ACCEPTED THE ADULT WORLD (INSECURITY). • ARE UNIVERSALLY SELF-CONSCIOUS AND INSECURE IN ADAPTING TO THE RESPONSIBILITIES OF ADULTHOOD. THEY ARE PRE-OCCUPIED WITH PRESENTING AN IMAGE OF: - SOCIAL EXPERTISE AND INDIVIDUALITY WITHIN THE LIMITS OF THE YOUNGER ADULT SUBCULTURE. - SELF-DETERMINATION, CONTROL, AND INDEPENDENCE, • MAJOR INNER CONFLICT STEMS FROM TW.O DIAMETRICALLY OPPOSED NEEDS: - NEED TO BE INDIVIDUAL AND STAND OUT, - NEED FOR PEER ACCEPTANCE, TO BELONG, TO FIT IN. THESE OPPOSING NEEDS ARE PARTIALLY FILLED BY BELONGING AND CONFORMING TO A GROUP THAT IS SET APART FROM OTHER GROUPS.