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CONFIDENTIAL March 5, 1986 TO: Mr.-_J. R. Moore FROM: E. R.-Hardman SUBJECT: Monthly Status Report (February 1986) QUANTITATIVE METHODS GROUP: e Total Proposition Testing Support--Agreed with M/A/R/C to pursue development of the.Fourt Woodlock Model as an addition to the TPT analysis portfolio. This will improve MDD's abilities in two ways: 1. It will provide a third, independent model for estimating a new brand's share potential prior to test makret intro- duction. 2. It will add another consumer-driven approach for estimating a new brand's sales performance in test market. _ Del Monte MDD__has agreed.._to provide --IRI scanner data-- to- -- M/A/R/C to help them calibrate the model for consumer packaged goods other than cigarettes. M/A/R/C is working directly with Del Monte on acquiring the scanner data. The next status meeting with M/A/R/C is scheduled for March 27. s Sales Distributor Inventory Estimation System--The sampling methodology and_the weighting and estimation procedures have been developed. The Sales Department had cancelled the development as a result of a $50,000 charge proposed by TIR as the cost of conversion and maintenance. MDD clarified with Sales,- ande the project, was to continue =at,:-MDD's_initiative - - -- ~ duringF.. 1986. Th e proiect was killedwhen.presented_.to.MLA._-_ • NFO Household Database--QMG has run incidence and profile reports weighted and_unweighted..-..--.Currently in-the process of _ - unnin eri ex re r s e -a e _,r mental switching g p po t -und r rnative lt weighting methodologies. _ t---DRI-Model Development---The"wCigarette ForecastinR Group has requested that the DRT-industry model be brought 'in-house. The model has considerable utility, but supplier responsive_ness_ and performance....are....substandard. Development -is in progress. The development-will`be-a-"ground up" effort since very little support, information, history, or data are available from DRI. The work is cur.rently on hold.

Mr. J. R. Moore -2- March 5, 1986 When-priorities allow, Bill Penick and Will Eddins were planning a trip to Atlanta to meet with Parks Dodd who is the only person to stay with,.-DRI on-the RJR account. Mr. Dodd has the necessary background-and experience to help with this effort. We need to pursue._this with Bill's replacement. s Product Research Support- - - FFM 85 Menthol/Tar RSM: Evaluated and approved proposed experimental design recommended by R&D. Project TSB: This study is a central composite in three variables with four center points. Product mailout was August 7. All response surface modeling analysis for %70+, mean thermometer rating, and attribute ratings have been completed for key smoker groups. Results have been presented to R&D Executive Management. A presentation to RJRTI personnel is scheduled for March 13. - Ammoniated Flue-cured Optimization: A test has been proposed to optimize the relative proportions of C30A, C30, and K22 while keeping the remaining blend components constant. R&D recommended a test design which QMG thought ______was unnecessarily complicated.-and--potentially._misleading. --- MDD and R&D statisticians met and agreed on the design. Based on other recent developments, R&D decided to conduct this test without MDD assistance. - Flue-cured Optimization:__Evaluated and approved a proposed design to optimize flue-cured usage. This study is to -_evaluate the effects_of-differing-amounts of-flue-cured - rather than the relationships of the components within the flue-cured blend. _-Based on unrelated recent developments, R&D has decided--to-conduct this test without MDD assistance. - Brazil- RSM:-- Developed analysis plan, and loaded_new data..__ -Cur`r'ently=-baild'ing database.----Promised analysis no-later __- than March 14. - - - =Merchandisi-ng"Research-== --- Kroger Merchandising."Study: -Completed statistical analysis -to -determine- relative---effect---of--installing a--sliding window as additional security on the RJR and cap carton merchandiser. Analyzed the effect on pilferage as well as carton and pack-movement, sales,_and share.-

Mr. J. R. Moore -3- March 5, 1986 Ralphs Merchandising Study: Completed anlaysis for the Ralphs Study, comparing the relative effects of merchandising carton cigarettes from the-normal RJR and cap fixture versus placing them in the...store lobby close to the manager's"office. Primary emphasis.is on pilferage. Also analyzed the effect on carton and pack movement, sales, and share. • Project XG TPT/Tracking Study--Met with New Brands Research to review objective, timing, etcetera, for a proposed total proposition test for Project XG. Study results can serve as input to develop depth of repeat test market tracking model. IN-MARKET TESTING GROUP: • RITZ Custom Retail Audits--Two custom retail audit programs are in progress to monitor RITZ in-market performance. The parity and St. Louis custom retail audit programs have been extended through mid-March 1986. The last premium price cell audit was completed the week of December 16. RITZ has indicated that they want to conduct custom audits for -- - the national _expansion.___They--have-_outlined_ a very----"------ comprehensive list of criteria for these audits to satisfy. IMT has developed a creative design to meet those criteria. • DORAL Heavy-up Spending Read--Heavy-up media spending is in •progress in Tampa/Sarasota. MSA share analysis will be versus Portland, Maine/Raleigh/Mobile control cell. Heavy-up media and increased consumer promotion spending is-also-in progress in Phoenix. MSA share analysis will be versus Portland, Oregon, control cell. Preliminary.-analysis covered share performance for the three months during advertising heavy-up. --Final _analysis will cover-_six :-months--of -post da-t_a,,_three._,,.wT - months of_advertising and promotion~stimulus and three_months - - - w i t h o u t. "~ T ----------~-- CAMEL Campaign Test--CAMEL__proposed_..t"o__do._:an- in-market--test of a.new campaign. -- The:"' primary: criteriori~for_ evaluating the---,- campaign_ was whether a shift in-pe_rceptions.among._I8.-24_..male smokers results. As a secondary criterion, they wanted to --monitor sales results-: WW IMT-was -i"n "the -process "Wof designing a -suitable methodology, but the study was withdrawn. • --Project XG--Markets have _been, selected_for -two _cells,and-DTS _s is scheduled--for July 7.'-"`IMT -has-- developed-a design " recommendation for custom retail audits, and the proposal has been forwarded. Awaiting outcome of March 12 presentation to MLO.

Mr. J. R. Moore -4- March 5, 1986 • SALEM Box--Retail audits are underway for two sets of consumers in Reading, Philadelphia, North Philadelphia, Frazier, and Harrisburg Divisions. Audits are-underway for general market consumers in convenience stores and gas stations.. Audits are also underway in- small food stores, convenience stores, and gas stations whose consumer traffic is at least 50% Black.. The audit program has been extended with five additional waves through March 1986. The SALEM Brand Team received approval to expand SALEM Box to St. Louis in April 1986. IMT developed an audit design for input to the Brand Research proposal for this additional audit program. However, the project was cancelled when the proposal reached Executive Management. • VANTAGE MRT--Evaluating the sales impact of a package change on Total VANTAGE. Test areas in Seattle and Tacoma, Washington, are being read via Nielsen's major market service. The control area for that test area is the Pacific/Mountain Sales Area (excluding Seattle Metro). Oklahoma City is also a test area and is being read via Nielsen's major market service. The corresponding control area is.the__Mid-Continent Sales Area (excluding Oklahoma City).----A compromise in this _ - --- -- test was allowing VANTAGE to test in RITZ test markets. Nielsen results will be read through February, with data available to MDD in early April. -- ---- -- WINSTON Promotion Test--Evaluated sales impact of sustained in-store promotion activities for WINSTON in Lawson's Convenience Stores-in-Ohio. Custom retail audits.were :. conducted by Meyers Research Center._ Currently analyzing invoice data for Crown Convenience Stores in Arkansas. • Concord Retail Audits--Audit_. program_complet,ed.____-_ - --- • Players - 25's- Retai-1-Audits--Audit-program'.-:compl'eted:`_--~------- • Cambridge Custom Retail Audits--Designed a custom _r_etail_audit _~ _program -:to":.monitor_Cambridge---sales~=performance--in-Denver=-and==~i "- Des Moines.-"--Arranged to IoadTaudi"t data from the Players 25's audit program to serve -as pre data. -_This wiYl-.help-assess the impact_of__the Cambridge introduction-_on_-DORAL.--_="---- --- • CENTURY Heavy-up Spending Test--Provided proposed design to CENTURY EBR. Sensitivity analysis-on--the design-suggested that it-could :read-.-a~change-'nf20=-sharevpoints, -depeadin~ " ~ on CENTURY share variability. CENTURY decided to wait until BMD introduction has been completed.

Mr. J. R. Moore -5- March 5, 1986 • WINSTON Lights Box--WINSTON is testing a lights box line .extension in 20% of the United States. IMT will read sales performance via Nielsen subtabs versus a control area, representing 16% of United States- population. MARKETING DECISION GROUP: • DEC/VAX Conversion--The VAX 8600 has been installed, and the conversion effort is underway. System 1032 is available for use. The MDS Group has completed intensive traning on the new system, including an in-house training seminar on System 1032. The conversion team has been built up to five consultants, in addition to the regular MDS staff, all of whom have finished the basic training courses. This includes introduction to VAX/VMS, EDT, S1032 Course, and S1032 Primer. Three consultants still need to take the intermediate VAX/VMS Course. A comprehensive description of databases, files, and programs to be converted to the VAX has been developed. The 20 definition data sets (brand, names, geographic labels, etcetera) are being transferred from the DEC 2065 to the VAX, and the 28 programs that maintain these data_sets_a_re be_ing _ converted. We estimate this part of the conversion will be completed by the end of March. We are arranging with Software House for periodic reviews. •.QMG Graphics Device--A new graphics.device has been installed. It will enable the QMG to provide state-of-the-art RSM graphs to the Product Research Group. This goes along way in =_ maintaining MDD credibility with end users in R&D. MDS will review other graphics applications, such as Business Analysis, with the goal of converting all applications from-the Tektronix 4632 to other output devices. -PC-Recommendations--Developed-a-.-plan and-recommendat'ion-for°`- ` providing needed PC support to the Product Research-Area-and for measuring the need for PC support to Established Brands =-.-=:=Research. '- Developed-_=an=AR for-acquiring= PC--hardware and--" - -- software for PGT based on a clearly demonstrated need. A separate AR will include two other hardware items needed in---- Lyle Smith's Area to-maintain -their current -capability and--to ------------- enhance productivity.. The plan also addresses the need for PC support in EBR by providing PC equipment on a loaner basis. This equipment will be in EBR well prior to the start of-- - - -- - business--analysis_to allow timeYfor users-to get acquainted with it. During business analysis, EBR can assess their need for the machines on a permanent basis and will have the opportunity to demonstrate their need.

Mr. J. R. Moore -6- March 5, 1986 • MDD AnalyticaZ Support System--The MDD End User Council, chaired by Doug Weber, has convened. Under Doug's leadership we are grappling with the task of identifying the benefits of the MDD Analytical Support System. s MDS Problem Solving and On-going Support--In the face of a very ambitious conversion effort, MDS continues to meet the day-to-day needs of MDD end- users. Specific examples will be provided in on-going weekly accomplishment reports. • System Management--Added_?two headcount. Currently in the process of developing a comprehensive and specific workplan for managing the VAX and'DEC Systems. 1 t t*~ E. R. Hardman ca cc: QIDIC ., w