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SECRET .o . ADDRESSEE ONLY ~.~ Fly. ~ ~..~ . . N.B.E.P. STATUS SUMMARY SHEETS (Revised 2/27/87) Distribution List E. J. Fackelman W. P. Whitlatch J. L. Lawson B. W. Zabel 1

N.B.E.P. STATUS SUMMARY (2/27/87) BENEFIT AREA: Smoking Enjoyment EXPLORATORY NAME: "Richer Unique Tobacco Taste" BENEFIT IDEA/PRODUCT OBJECTIVE: Develop a cigarette which has a richer, more flavorful tobacco taste that is distinctively different from traditional non-menthol taste. PRODUCT TECHNOLOGIES: SHORT TERM 1. Unique tasting tobaccos (5 under consideration) LONG TERM 1. Controlled release technologies 2. Non-tobacco fillers as flavor carriers 3. Blended extracts/alternative reconstituted sheet 4. Nicotine extract addition 5. Nicotine fortification 6. Engineered Tobacco Product PRODUCT STYLE DEVELOPMENT STRATEGY: Begin with full flavor (approx. 14 mg. tar) and learning to lower tar levels at a later date. POTENTIAL LEARNING APPLICATION: apply These methods of affecting taste should also have application for low tar with taste benefit ideas. LEARNING TO DATE: Concept/Benefit: Qualitative research suggests non-menthol smokers are interested in a flavor enrichment proposition. This is supported by blind product testing results which show that at least since 1981, no full flavor product has approached the desired level of tobacco taste. While the specific concept has not been quantitatively tested, results from various PR concept tests indicate a high level of interest in rich taste ideas. Product/Technology: None NEXT RESEARCH STEPS: Timing Project Objective/Purpose Design Cost Field Results Qualitative • Assess communica- 5 focus groups 15,000 3/10-11 w/o 3/16 Investigation tion of concept among Male FF statement NM 85 concept • Develop attribute acceptors language for each tobacco CONTINUED ON NEXT PAGE

N.B.E.P. STATUS SUMMARY .(2/27/87) BENEFIT AREA: Smoking Enjoyment (Cont'd) NEXT RESEARt"H STEPS (Cont'd): Pro ect Quantitative Prototype Screening Study Objective/Purpose • Assess taste, acceptance and uniqueness of each tobacco • Assess impact of level (.5, 1.0 and 1.5%) on above • Identify rela- tionship between uniqueness and acceptance Design • 16 products • Male FF NM 85 concept acceptors • Sequential monadic w/o 5/25 L Timing Cost Field Results KEY CHANGES SINCE LAST ISSUE DATE: 112,000 w/o 4/13 • Field date for Screening Study changed from 3/30 to 4/13 to allow time to remake any product if it is out of specification in the first run.

L PROJECT/BENEFIT RATIONALE EXPLORATORY NAME: "Richer Unique Tobacco Taste" PRODUCT DEVELOPMENT OBJECTIVE: Develop a cigarette which has a richer more flavorful tobacco taste that is distinctively different from traditional non-menthol taste. BENEFIT RATIONALE: The basis for this idea is the belief that improving smoking taste enjoyment (tobacco taste and satisfaction) is leverageable in the marketplace. This improvement will be differentiated by a tobacco taste that is not only richer/more flavorful, but will also be unique/distinctive compared to popular non-menthol brands. Qualitative research suggests non-menthol smokers are interested in this flavor enrichment proposition. Smokers (FF) indicate that filter brands on the market today are not especially flavorful. While it is difficult for these smokers to describe what they want, some say they are looking for "a cigarette which tastes like the first few puffs of a non-filter". This perception is supported by blind product testing data which show that at least since 1981, no full flavor product has approached the desired level of tobacco taste. Tobacco Taste Ratings Among FF Virile 85mm Smokers Best In-Market Product Year Ideal Rating Brand 1981 4 67 < 4 00 r Box M lb . . ar o o 1982 4 65 < 4 13 Marlboro . . 1983 4 65 < 07 4 WINSTON . . 1984 4 60 < 4 01 WINSTON Box . . 1985 4.57 < 4.06 Marlboro Box While this specific idea has not undergone a quantitative concept test, results from various Project PR concept tests indicate a high level of purchase interest in rich taste ideas.

N.B.E.P. STATUS SUMMARY t (2/27/87) BENEFIT AREA: S~oking Enjoyment ;-- EXPLORATORY NAME: "Fresh Aftertaste" BENEFIT IDEA/PRODUCT OBJECTIVE: To develop a cigarette which has a more pleasant/fresh aftertaste than any non-menthol cigarette on the market today. It should be perceived as a non-menthol cigarette, yet should address those characteristics which cause cigarette aftertaste to be unpleasant (i.e. dryness,-bitterness, etc.). PRODUCT TECHNOLOGIES: The following controlled release technologies are under consideration: 1. Microencapsulated polymer based flavor fibers inserted in filter. 2. Microencapsulated polymer based flavor pellets inserted in filter. 3. Tobacco based flavor pellets inserted in the rod using TSB technology. PRODUCT STYLE DEVELOPMENT STRATEGY: Qualitative work will begin with a 100mm FFLT non- menthol product. Learning will be applied to other styles at a later date. POTENTIAL LEARNING APPLICATION: Learning on controlled release technologies will be applied to the following exploratories: 1. Richer, more flavorful tobacco taste 2. Unique, cigarette taste 3. Unique, menthol taste 4. Aroma/taste enhancement LEARNING TO DATE: Concept/Benefit: Previous testing on a fresh aftertaste concept produced the following ratings among total smokers: Definitely/Probably Will Buy 59% Very/Somewhat Important - 76% Very/Somewhat Believable 71% Very/Somewhat Different 88% Data from the 1985 SDS and Product Testing Overview confirm the consumer want for a cigarette that delivers fresh aftertaste. Product/Technology: The above mentioned technologies are available and initial learning from preliminary focus groups (PGT Group) was not definitive due to flavor levels that raised occasional use concerns. CONTINUED ON NEXT PAGE

N.B.E.P. STATUS SUMMARY Z (2/27/87) BENEFIT AREA: Smoking Enjoyment (Cont"d) NEXT RESEARCH STEPS: Timing Project Objective/Purpose Design Cost Field Res. Problem Definition/ • Consolidate learning on Report NA Complete Market Overview Qualitative aftertaste and to propose a conceptual framework for directing the exploratory. • Confirm nature of after- ocus Groups 15,000 /18-19 3/30 Research taste problem, wants and constraints - 3 male FFLT - 3 female FFLT • Assess communication of concept statement. • Utilize 2 fiber proto- types, and 1 bad aftertaste product. KEY CHANGES SINCE LAST ISSUE DATE: Issued Problem Definition Report.

PROJECT/BENEFIT RATIONALE s:.. tXPLORATORY NAME: "Fresh After•taste" PRODUCT DEMLOPMENT OBJECTIVE: Develop a cigarette which has a more pleasant/ fresh aftertaste than any non-menthol cigarette on the market today. It should be perceived as a non-menthol cigarette, yet should address those characteris- tic$ which cause cigarette aftertaste to be unpleasant (i.e. dryness, bitterness, etc.). BENEFIT RATIONALE: Smokers recognize the negative aspects of aftertaste (i.e. dryness, bitterness), know that there is a performance discrepancy on this attribute between their usual brand and their ideal brand, and show purchase interest in a product that could deliver to their aftertaste wants. • Half of smokers report they experience unpleasant taste as a result of smoking and almost 70% would describe their ideal cigarette as one that leaves a fresh taste in the mouth. • Smokers recognize that their usual brand is not delivering fresh aftertaste to the degree desired in blind product testing. A review of 1985 product testing results demonstrates a major shortcoming between what smokers want versus what is being delivered on the fresh aftertaste attribute (i.e. Actual minus Ideal scores on the fresh aftertaste attribute show a sizeable gap in a negative direction). The magnitude of this dissatisfaction is relatively consistent across sex and flavor categories. Difference Between Actual Cigarette Versus Ideal Cigarette On The Fresh Aftertaste Attribute (7 point scale) Male FF Female FF Male FFLT Female FFLT Male ULT Female ULT -.78 -.84 -.85 -.93 -.94 -.97 SOURCE: Exploratory Analysis of Fresher Aftertaste Product Wants (MDD#86-42105) • Concept testing indicates the idea of fresh aftertaste evokes high levels of purchase interest, importance, believability, and uniqueness among total smokers. Key Ratings of Fresh Aftertaste Concept Among Total Smokers Definitely/Probably Will Buy 59% Very/Somewhat Important 76% Very/Somewhat Believable 71% Very/Somewhat Different 88% SOURCE: Smoking Issues Concept Test (MDD#85-42216)

N.B.E.P. STATUS SUMMARY (2/27/87) BENEFIT AREA: SM&ing Enjoyment EXPLORATORY NAME: "New Taste/Sensation" BENEFIT IDEA/PRODUCT OBJECTIVE: To develop a cigarette with a unique taste/sensation that is perceived as different from conventional non-menthol and menthol cigarettes with the preliminary benefit being smoothness/new kind of refreshment. PRODUCT TECHNOLOGIES: The following technologies are under consideration: • Flavored Top Dressing • Controlled Release Technologies (Polymer based) PRODUCT STYLE DEVELOPMENT STRATEGY: Initial product style development is contingent on target identification (see next research steps below). POTENTIAL LEARNING APPLICATION: Learning on polymer based flavor carrier will be applied to the following exploratories: 1. Richer, more flavorful tobacco taste at FF, FFLT, and ULT tar levels. 2. Unique menthol taste. 3. Aroma/taste enhancement. LEARNING TO DATE: Concept/Benefit: R&D developed a chocolate-mint flavored non-menthol product (Project CM) in 1983 which was well received by consumers. This execution suggFsts that consumers may be receptive to a unique cigarette taste. At this point in the exploratory, it is worthwhile to consider the range of tastes as sensations that might address the benefit of smoking enjoyment (see next research steps below). Product/Technology: All previous product work has involved flavor application through top dressings. However, problems of top dressing volitility over time make polymer based flavor carriers attractive. Initial learning on this techr.ilogy from preliminary focus groups (PGT Group) was not definitive due to flavor levels that raised occasional use concerns. NEXT RESEARCH STEPS: Timing Project Objective/Purpose Design Cost Field Results Research Review • Determine what Report NA NA w/o 3/1 flavors have been previously tested/ investigated. • Assess how flavors perf ormed among specific smoker groups. • Reexamine the via- bility of Project CM using flavored top dressings in today's market. KEY CHANGES SINCE LAST ISSUE DATE: Research review to be issued w/o 3/1 due to a change in priorities.

PROJECT/BENEFIT RATIONALE EXPLORATORY NAME: "New Cigarette Taste/Sensation" i PRODUCT DEVELOPMENT OBJECTIVE: Develop a cigarette with a unique taste/sen- sation that is perceived as different from conventional non-menthol and menthol cigarettes. BENEFIT RATIONALE: Redefining traditional cigarette taste and/or sensation may represent an important opportunity in the marketplace. There are indica- tions, in other categories which are known for having a customary/traditional taste, of an increasing acceptance of new flavors and taste sensations. The traditional taste of tea is being enhanced with fruit flavors. Products which provide unique mouth and throat sensations are growing in popularity, too. Examples include increased consumption of Mexican and Italian foods and the increasing popularity of spice and herb food preparations. Redefining the smoking experience requires tobacco compatible taste alterna- tives that smokers have yet to be offered. The basis for this approach is not what smokers are saying they want but rather what a smoker might desire if it was available. SALEM, with its lower menthol taste relative to other brands of the time, is an excellent example of legitimizing a non-traditional taste and sensation (minty taste/cooling sensation) to smokers in the late 1950's. The likelihood of identifying another taste that is compatible with tobacco appears to be high considering the recent success of taste redefinition in other product categories. To date, no consumer research has been conducted on new mouth or throat sensations related to smoking. For the most part, cigarettes on the market today are developed to affect taste and smell but have not fully addressed the sensory experience of feel/sensation associated with smoking with the excep- tion of menthol. This idea does seem to have potential in light of other product categories wherein "feel" has become essential to the product (e.g. the fizz sensation in carbonated beverages or the piquant/peppery sensation associated with Dr. Pepper).

N.B.E.P. STATUS SUMMARY -(2/27/87) BENEF7T AREA: gmoking Enjoyment EXPLORATORY NAME: "Unique Menthol Taste" BENEFIT IDEA/PRODUCT OBJECTIVE: Develop a cigarette that has a new/unique menthol taste that is distinctively different from traditional menthol taste. PRODUCT TECHNOLOGIES: 1. Eucalyptol flavor with menthol. 2. Controlled release technologies (polymer based). - crystals in a cavity PRODUCT STYLE DEVELOPMENT STRATEGY: TBD POTENTIAL LEARNING APPLICATION: This exploratory will utilize learning from the New Taste/Sensation Exploratory Project. LEARNING TO DATE: Concept/Benefit: None Product/Technology: None. Flavors will be considered/procured by R&D at this time. NEXT RESEARCH STEPS: Timin • Menthol market review 4/87 • - Review available in-house data to understand: -- share trends of category/brands -- demographic segments of categories/brands -- basic product wants of these segments -- RJR's position -- Potential targets for this idea Qualitative research /87 - Using new menthol taste protocepts (range of flavors) gain insight into the appeal of the idea and product development direction.