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~-' -/1 -'y / PR('jELT TF TARGET SMOKER PRQFI! t OBJECTIVES THE 1985 SEGMENT DESCRIPTION STUDY WAS ANALYZED T0: ! PROVIDE AN INTEGRATED PROFILE TF TARGET SMOKERS, FOCUSING ON: DEMOGRAPHICS/PRODUCT !lSAGE• PRODt1CT/BRAND WANTS• RERSONAL QUALITY WANTS/ATTITUDES• LIFESTYLES• DEVELOP HYPOTHESES ABOUT FACTORS THAT COULD MOTIVATE THEIR BRAND CHOICES• Z899 i55~5 ~~

BACKGRQUND PROJECT TF IS A NEW CIGARETTE BRAND TARGETED TO 1$-34 FEMALE SMOKERS. TF IS POSITIONED AS A BREAKTHROUGH PRODUCT WHICH OFFERS AN OVERALL FRESHER, CLEANER SMOKING EXPERIENCE- WILL DO SG BY DELIVERING: - SMOOTH, SATISFYING TASTE• - LESS SIDESTREAM SMQKE• - LIGHT/PLEASANT AROMA AND AFTERTASTE• RATIONALE: ! PREVIOUS RESEARCH SUGGESTS THAT PRODUCT BENEFITS OF INCREASED SMOOTHNESS AND FRESHER AFTERTASTE ARE IMPORTANT PRODUCT POINTS OF DIFFERENCE AMONG TARGET SMQKERS• ! PREVIOUS RESEARCH ALSO SUGGESTS THAT THE REDUCTION OF SIDESTREAM SMOKE IS AN IMPORTANT POINT OF DIFFERENCE AMONG THIS GROUP• ! PLEASANT SMOKE AROMA APPEARS TO BE A BENEFIT THAT MAY ADDRESS FEMALE SMOKERS COSMETIC AND SOCIAL ACCEPTABILITY CONCERNS ABOUT CIGARETTE SMOKE. ALSO, OLFACTORY PERCEPTIONS, AS THEY RELATE TO SMOKE AROMA, ARE KNOWN TO AFFECT TASTE PERCEPTIONS- z899 E65?S

TF TARGET DEFINITION PROJECT TF'S TARGET SMOKERS ARE 1 g-34 YEAR OLD NON-MENTHOL AND MENTHOL FEMALE SMOKERS• THIS TARGET REPRESENTS 22% OF TOTAL SMOKERS• RATIONALE: • FEMALE SMOKERS REPRESENT AN INCREASINGLY IMPORTANT SOURCE OF BUSINESS. WHILE SMOKING INCIDENCE AMONG BOTH LR"34 MALE AND FEMALE SMOKERS HAS DECLINED SINCE 1980, THE RATE OF DECLINE IS GREATER FOR MALE SMOKERS VERSUS FEMALE SMOKERS• • AMONG THE BRANDS THAT CURRENTLY HAVE APPRECIABLE SHARE AMONG 18-34 FEMALE SMOKERS, ONLY VIRGINIA SLIMS HAS A DISTINCT FEMALE SMOKER PRODUCT BENEFIT• •EVEN MARLBORO, WITH ITS DISPROPORTIONATELY LARGE SHARE (29%), DOES NOT OPTIMALLY ADDRESS KEY PRODUCT WANTS UNIQUE TO THE TASTES AND LIFESTYLES OF FEMALE SMOKERS• • PROJECT TF'S PRODUCT BENEFITS WORK CAN SYNERGISTICALLY PROVIDE A CIGARETTE WHICh MEETS THE TARGETI S PRODUCT WANTS AND FITS WITHIN HER LIFESTYLE• • RJR IS UNDER'REPRESENTED AMONG TF TARGET SMOKERS• $HARE OF TARGET SMOKERS R. J. REYNOLDS PHILIP MORRIS 24' 53% ti899 ~6505

DEMOGRAPHIC PROFILE A. AGE/RACE TF'S TARGET SMOKERS ARE YOUNGER ADULT FEMALES• HOWEVER, THE WANTS/ATTITUDES OF T TARGET REFLECT THE WANTS/ATTITUDES OF THE Z1-34 YEAR OLDS, SINCE THEY REPRESENT ABOUT 90% OF THE TARGET- TF TARGET FEMALES 18-20 11% FEMALES 2I'24 25 % FEMALES 25'34 64% MOST OF TF`S TARGET IS WHITE; THE INCLUSION OF MENTHOL WITHIN THE TARGET BRINGS A LARGE PROPORTION OF BLACK SMQKERS• TF TARGET WH I T E BLACK HISPANIC 86% 11% 2% 1 9299 26539

DEMOGRAPHIC PROFILE (CONT•) B. INCOME/MARITAL STATuS/EDUCATION/QCCi1PATION , • THE TARGET'S ANNUAL HOUSEHOLD INCOME SHOWS THAT THEY HAVE A SOMEWHAT LOWER STANDARD OF LIVING, RELATIVE TO THE CIGARETTE MARKET, PERHAPS DUE TO THE HIGH PERCENTAGE OF SINGLES WITHIN THE TARGET- TF TARGET INCOMF 0-$15,000 40% $15,001-$25,000 29% $25,QQ1+ 32% MARITAL STATUS MARRIED 537 SINGLE 477 ! TARGET SMOKERS ARE LESS EDUCATED -- ONLY 9% HAVE GRADUATED COLLEGE- TF TARGET EDUCATION HIGH SCHOOL OR LESS MORE THAN HIGH SCHOOL 54% 46% ! AROt1T HALF OF ALL TARGET SMOEKRS ARE EMPLOYED IN TRADITIONAL FEMALE JOBS, SUCH AS RECEPTIONISTS, SECRETARIES, STORE CLERKS, OR HO*1EMAKERS/UNEMPLOYED; ONLY 13% WORK IN PROFESSIONAL/MANAGERIAL .10BS• : _ 4- 93*99 E55DS , ..

PRt?P(ICT USAGE PRQF I LE A. RATE PER DAY/PURCHASE QUANTITY ! THREE-FOURTHS OF THE TARGET SMOKE A PACK OF CIGARETTES PER DAY OR LESS• SINCE THEY HAVE A LOW RATE PER DAY, TF'S TARGET GENERATES A SOMEWHAT LOWER VOLUME THAN ITS ACTUAL SHARE OF SMOKERS WOULD SUGGEST• TF TARGET STICKS PER DAY 0-20 76% 21-44 23% 4I+ 1% ABOUT TWQ-THIRDS OF TARGET SMOKERS BUY CIGARETTES EXCLUSIVELY BY THE PACK OR SPLIT THEIR PURCHASES BETWEEN PACKS AND CARTONS, REFLECTING THEIR LOW RATE PER DAY. TARGET SMOKERS' PACK PURCHASE ORIENTATION SUGGESTS PACK PROMOTIONS AND HIGH AVAILARILITY/VISIRILITY IN PACK-ORIENTED RETAIL OUTLETS WILL BE IMPORTANT FOR TF. TF TARGET PACKS ONLY PACKS AND CARTONS CARTONS ONLY 51% 14% 35 ~ ~~,94 £65~5

PRODUCT USAGE PROFILE B. BRAND/COMPANY THE TF TARGET REPRESENTS AN IMPORTANT OPPORTUNITY TO ATTRACT COMPETITIVE SMOKERS, WHILE MINIMIZING CANNIBALIZATION OE RJR'S ESTARLISHED RRANDS• , THE BULK OF TF ` S TARGET CURRENTLY SMOKE MARLBORO, u I RG I N I A SL I MS, NEWPORT AND SAL E"! • TF TARGET NON-MENTHOL MENTHOL MARLRORO VIRGINIA SLIMS MERIT BENSON AND HEDGES WINSTON SALEM VANTAGE NEWPORT KooL 56% 44% 29% 11% 6% 6% 5% 11% 2% 9% 6% t PHILIP MORRIS CURRENTLY HAS THE DOMINANT SHARE AMONG THE TF TARGET• TF TARGET R • J. REYNOLDS PHILIP MORRIS LORILLARO B & W OTHERS 247 53% 111 8% 8899 EbSVIS .-- . ~_,

p WANTS A. KEY PRODUCT WANTS/ATTIT4JDES THE TF TARGET HAS STRONG WANTS FOR THE TYPE OF PRODUCT THAT IS CURRENTLY BEING DEVELOPED, I•E•, A SMOOTH, SATISFYING TASTE, A PLEASANT SMOKE AROMA, AFTERTASTE, AND LESS OFFENSIVE TO NQN-SMQKERS• TF TARGET VERY/SOMEWHAT iMPORTANT (FOUR POINT IMPORTANCE SCALE) SMOOTH SMOKING MILD SMOKING VERY REFRESHING LEAVES A FRESH TASTE I N MOUTH STRONGLY/MOSTLY AGREE (SIX POINT AGREEMENT SCALE) SMOKE CAN BOTHER NON-SMOKERS SMOKING OFTEN LEAVES UNPLEASANT TASTE IN MOUTH SMOKING GIVES BAD BREATH CIGARETTES USUALLY LEAVE UNPLEASANT AROMA SMOKING MAKES MY CLOTHES/HAIR SMELL BAD 89% 75% 78% 73% 89% 50 % 62% 64% 58% 5844,i55D5

PRtlD11CT WANTS ( CowT • ) AFTERTASTE VERSUS AROMA 4 F tARGET SMOKERS FIND AFTERTASTE, SMOKE ODOR, AND SMOKE TO BE OFFENSIVE ASPECTS OF S!~D!CING. T R ET MOST OFFENSIVE ASPECT OF SMOKING STALE CIGARETTE BREATH LINGERING SMOKE ODOR IMMEDIATE SMOKE ODOR 41% 20 % 6% 13% 10% 10% 0b49 i5S?S

PRODUCT WAIvTS ( CONT • ) C• QROI?t.1CT PERCEPTIONS OF_ THEIR USUAL BRANI? TF`S TARGET CONSIDERS TF's RENEFITS TO AE VERY IMPORTANT. THEIR USUAL BRAND, HOWEVER, DOES NOT COMPLETELY FULFILL THEIR WANTS FOR FEMININE IMAGERY, SENSITIVITY, AND A PRODUCT THAT DELIVERS A FRESHER AFTERTASTE• SMOKERS IN TF TAR ET RATING USUAL BRAND IMPORTANT IMPORTANT IMPORTANT FULFILLED SMOOTH SMOKING MILD SMOKING 89 85 75 66 UNFULFILLED VERY REFRESHING 78 73 5 LEAVES A FRESH TASTE IN MOUTH 74 45 29 FEMININE SENSITIVE 82 58 24 Rs 68 21 E.69~9 i6S)S