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856 320 5 i0 15 2O 25 answer to. you on page~twenty-f-ive .(25):~of-that discovery. Me IRVING: Would you mind the witness looking at it while you read it? Me BAKER: Not at all. Q- Starting at approximately line ten (i0). it out loud, please, Mr. Hoult? A- Would you like.me to read it? Q- Yes. A- This is line ten (I0), beginning "while trying..." Q- Yes. A- "While trying to narrow it a little bit, would it be fair to say that in the last few years this brand, Vantage, has been positioned in the concerned segment market, concerned about health? A- As defined by those segmentation studies, where a group of people on the last occasion did fall into that category in terms of their responses to those attitude scales, I would say yes, you probably would have a greater instance of that segment than say you would have in the Export family." Could you read AUDIOTRANSCRIPT, Oivisioo a~ Pierre Vilaire

857 321 i0 15 2O 25 Continue, please. "Q- But.when you position an advertisement or a series of advertisements into a segment of the market, you are targeting that segment, aren't you? A- Yes. Q- So if Vantage is positioned in the concerned segment of the market, you are targeting the concerned segment of the market by your advertising, are you not? You seek to attract those people to your brand who are concerned? A- Well, that is if we are targeting that particular segment. Q- Correct. A- If we are. Q- If you are. A- And I can't say that we were in the case of Van... I can't say that we were, in the case of Vantage,. over the last couple of years. Segmentation takes different forms. You can have different -- you can have brand segmentation which brands cluster together. Q- Yes. A- You can have demographic segmentation and AUDIOTRANSCRIPT, Division de Pierre Vilolr, & Associ4s kt@e

858 322 5 i0 15 20 A- 25 Q- you.can also have,-as we discussed, attitudinal segmentation. Q- I see. A- I'm simply telling you that whatever segmentation system was used for Vantage, yes, in my judgment you would have more of those people expressing those attitudes than another family of cigarettes." I'll shorten it for you, Mr. Hoult. If you'd now be good enough to turn to the middle of page twenty-seven And I'll read the question to you. Line twelve (27). (12): "In an analysis by your own people the recent family segmentation indicates that Vantage has been positioned in the concerned segment? A- Yes. Q- Concerned about what, Mr. Hoult? A- The concerned segment is a segment that is concerned about health as defined by the responses to-those attitude- statements. Q- Thank you." Now, Mr. Hoult, is it still your testimony today that your company never targets concerned people? Yes, it is. Okay. AUDIOTRANSCRIPT, Division de Pierre Vilalre & Asso¢ie, Ll~e

859 323 i0 15 2O 25 Om AD Could I~-elaborate. on-the response, because that simply describes a-segment that concerns smokers. You asked me specifically if we targeted, and my answer is no. What other kinds of groups does your company target? We have gone through the segmentation and I'll repeat some of those -- some of those that we discussed this morning. Women, men? Yes. M'hm. Age bracketed people? Yes. M'hm. Smarter? No, we don't target smarter people, though some of our consumers consider themselves smarter, as reflected again by their attitudes and beliefs about themselves. More highly educated as opposed to less educated? Yes, that we would -- that would be part of, generally speaking, socio-economic, a much broader group than education. When the company positions-brands, Mr. Hoult, does it try to stress attributes of the brands or the people who they seek -- whose loyalty they seek to obtain by their advertising? It does both. Brand attributes are selected, a) which we believe present a competitive advantage to us over AUDIOTRANSCRIPT, Division de Pierre Vila]re

860 324 5 Q- A- 15 Q- A- 20 Q- A- Q- A- 25 other brands, bub-obviouslF the attributes that you select to,advertise and to focus upon are those attributes that you believe that your target group wants. Could you give the Court an example of some of these attributes? Well, a simple example would be the brand Export where we focus almost entirely upon the smoking qualities of the brand, generally expressed as satisfaction, fullness of flavour and so forth. How about masculinity for Export? Yes, well... Is that an attribute? It's an attribute of our smokers, a very strong attribute. M'hm. And that would be reflected in the tone of our advertising, which would tend to be more masculine than feminine and the situations that we would choose would be masculine-type situations more than feminine. And would independence be another attribute of the... Yes. ...of the advertising of Export "A"? Well, we know from our segmentation studies that that is how the brand has been traditionally seen, as a brand AUDIOTRANSCRIPT, Division de Pierre Vilolre & Associ4s L~e

861 325 i0 Q- A- 15 Q- 20 A- 25 for independent---people,, ands. they. like .to see themselves that way. ~And-~much~of.. our..historic advertising has underscored that aspect. And is adventure... Yes. ...one of the attributes of that brand? Yes. The brand and the people who smoke it? Yes. M'hm. And qualities of.,natural leadership, is that one of the attributes of the smoker of Export "A" as you understand it from your very considerable research? I don't particularly recall -- recall that. Certainly as a brand we would position it as a leading brand, a leadership brand in Canada, but it would not be one -- to my recollection, not one of the qualities that the smokers saw in themselves. Does the company link concepts to brands as opposed to simply attributes that we have been discussing? With a new brand, a new brand in itself, at-least we try to ensure that it is a total concept as a brand, representing, for example, some of the qualities that you just described. An advertising concept is a very large, we like to think, a very large idea. And that large idea would be AUDIOTRANSCRIPT, Division de Pierre Vilaire & AssociEs LIEe

862 326 i0 15 20 25 translated into a specific-campaign~ Q- For example, would light be a. concept that you would associate with a brand? A- Would light? Q- Light, you know, lightness? A- Yes, light as a light extension? Yes, it would be a concept. Certainly, in recent years in the Canadian market, the move to light cigarettes has been sufficiently .... THE COURT: I'm trying to figure out what the hell you were saying. You're talking about light cigarettes. Me BAKER: Q- Now, the attributes. Are these things that you assume your potential customer or your existing customer will Am QN Am find attractive in respect of that brand? We would hope that it would go further than assume. In other words, one reason why we do so many pieces of research is to find out what our consumers want and what our competitive smokers want and attempt, a) to give it to them, and b) to communicate that we're giving it. So the object of the exercise for you then, as a marketer, is to get them to identify with the brand through those attributes; is that not correct? That's a very important part of marketing. AUDIOTRANSCRIPT, Division de Pierre Viialre & Associ~s Lt~e

863 327 i0 15 20 25 M'hm. -The brandhas, an attribute,-.the.consumer has an attribute, you match the consumer to the brand through the attribute; is that not correct? I think it can be expressed more simply by saying you determine what the consumer wants are ... And you give it. ...and you attempt to provide it. M'hm. What do you mean, or what is meant in your company's documents, when we read the expression: "Copy Objective,"~ Mr. Hoult? Copy referred historically to that which is written on the advertising, "copy." More recently, in the last few years, it has been taken to mean the whole of the advertising message, which would include the visuals. So a copy objective is the communication objective that you have in developing and putting forth an advertisement: what are you trying to achieve by means of that ad? M'hm. And then "copy testing" of course is? Would be testingthat.particular communication element in that particular ad. Does your research disclose, Mr. Hoult, that from time to time people other than those in the specified target groups find the ads sufficiently enticing to be attracted to that brand? AUDIOTRANSCRIPT, Division de Pierre V;toire & Associgs Ll4e

864 328 i0 15 20 25 Qm Well, when we begin a research program,.~.obviously, the research is much more broadly based, as we saw this afternoon, than your final target. And an ideal research program would narrow in until finally you define your age group and your sex targets and so forth. But, yes, the research does indicate, a) whether you've achieved your goals in the target group, and the degree of appeal in the groups that are in proximity to that group, whether it be age or geography or whatever. So. the answer is that it.goes beyond the specified target group to those in proximity to it; is that correct? Well, I thought your question was: does your research ever tell you? That the ads have attracted people other than those in the target group? Yes. And the answer is... And the answer... ...those in proximity thereto? Yes. Correct. So then, your advertising in respect of say: eighteen (18) to twenty-four (24) year olds might very well attract fifteen (15), sixteen (16), seventeen (17) year olds to it, would it not? AUDIOTRANSCRIPT, D~,,i~o,~ ~ Pie~e Vilo;~ & A~,o~i~, h~'e

865 329 Au 5 i0 Q- 15 A- 2O 25 Well, as.I~ve said, we had no information~because we have never.done any market research but, yes, it would be surprising if people who were fifteen (15) to eighteen (18) year old didn't see the advertising and, of course, seeing the advertising, they would get something out of it, they would have some comprehension, yes. In the same way that a group aged twenty-five (25) to thirty (30) would see the advertising and get some comprehension and get some message out of it. So the fifteen (15) and.sixteen (16) and seventeen (17) year olds might have the same attributes, to some extent, that those eighteen (18), nineteen (19) and twenty (20) year olds had that you were trying to target by using attributes in respect of the brand, and thereby find the brand and the advertising enticing? Well, you're being very specific when you talk about specific ages: eighteen (18), nineteen (19). We never think in those terms, as I said this afternoon. We divide the market generally into four (4) very large age groups, eighteen to twenty-four (18-24), twenty-four to thirty-five (24-35), thirty-five to fifty (35-50) and so forth. So we would never, and I don't think any social scientist would ever compare an individual age like nineteen (19) to an age like twenty-one (21). But I would say this, given the large differences that exist AUDIOTRANSCRIPT, o;,,i,lo,~ de Pierre Vilalre & Associ~s Ltge

866 330 i0 15 2O 25 Om in the:twenties.~(20s),~:between people in their early twenties (20s) and late twenties (20s), I would not necessarily believe that people under eighteen (18) had the same beliefs or attitudes at all. Or aspirations? Not at all. So it's your testimony, then, that you wouldn't think that a sixteen (16) or seventeen (17) year old might have the same aspiration as an eighteen (18) or nineteen (19) year old? He might, but I would say he would not on the basis of the research findings that we have for older age groups and their differences. I see. Why would it be, Mr. Hoult, if your testimony is that you would be surprised if people in the younger groups didn't find the advertising interesting... I didn't say that. ...and perhaps an enticement -- I thought you did. I said they would see it and get something out of it. And get something out of it. Get some communication out of it. And why wouldn't your company bother to talk to those people? We do not market to people under eighteen (18) years, therefore we do not get information about people under AUDIOTRANSCRIPT, Division de Pierre Vilaire & Associ~s L,~e

867 331 i0 15 2O 25 Ow eighteen (18) years. Isn't it-important-to you to know who's smoking your cigarettes? It's very important to find out who's smoking our cigarettes, but we define our smoking target as adults, aged eighteen (18) and over. I'm not talking about targets now, I'm talking about people who are actually smoking your cigarettes. Don't you distinguish between smokers and targets? Yes, we do. But we do not market to people under eighteen (18) years. I've heard you say that many times, Mr. Hoult, but I'm now talking to you about people who are actually in the smoking population of this country. You know that large numbers of children smoke, fourteen (14) year olds, fifteen (15) year olds, sixteen (16) year olds, seventeen (17) year olds; people who you say you do not market to. Correct. Having said that, however, you know that they smoke. Yes, they do. And you know that they smoke in very serious numbers; don't you? I do not know that, but I do, of course, know that they smoke. AUDIOTRANSCRIPT, Division de Pi,rre Vil~ire & A$,o(:ie, Lt~e

868 332 5 i0 15 2O 25 Q- You do not know that? A- It's a very... Me IRVING: My Lord, may I just, before we go any further, ask if Mr. Baker would be so good as to let the witness finish his answer before he puts another question as he did this time. Me BAKER: I'll try and restrain myself, Mr .... Q- Question: you do.not know that? A- I don't know what you mean by serious numbers. I don't know whether you're talking about individuals or amount smoked. Q- More than a few -- more than a few percent of the population. Me IRVING: My Lord, my friend has just done it again. Could we please let the witness finish his answer before we have another question? A- We have no information.in our company, neither I nor anybody in our company has ever sought information on people under eighteen (18) years of age and their smoking habits. Therefore, I cannot speculate on what you mean by serious numbers. I do know from my own observation, of course, that people under eighteen (18) AUDIOTRANSCRIPT, Division de Pierre Vilalre

869 333 i0 15 2O 25 years smoke. I simply repeat: we do not market to them, neither do we collect information. So anything that I would say in terms of how many smoke or how many they do smoke would be pure speculation on my part. Me BAKER: Q- Do I take it from your answer, or series of answers, that you as a company do not wish children under eighteen (18) to smoke? A- You do. That is correct. Q- M'hm. Could you explain to the Court how you could perhaps draw a magic curtain around the advertising that your company does so the children won't be exposed to it? We can't draw a magic curtain around our advertising. As I've said earlier, advertising is exposed to most people in Canada, and by various means, and we know what they are. I can only tell you that we make diligent efforts to ensure that our media selection is in magazines which.are directed towards our target, that our advertising message and our brand positions are developed according to market research, are always carried out among adults, and that we abide very willingly with the CTMC code in order to limit such exposure. But there is no way that we can draw a magic Am AUDIOTRANSCRIPT, Division de Pierre Vilalre & Associ~s L~'~e

870 334 5 i0 15 2O 25 curtain around. Now, when you say the code, are you referring perhaps to the age of models? I'm referring both to the age of the models and in terms of where advertising is placed. One aspect of the code, for example, covered where outdoor advertising should be placed. It should not be placed within a certain distance from schools and we abided by that, as I say, very willingly. It is part of our corporate philosophy anyway. Me BAKER: Qm Est-ce que je peux voir, monsieur le greffier, les photographies? I'm showing you, Mr. Hoult, Exhibit RJR-9. It is an advertisement for Tempo. The written words at the bottom of the page are: "New time - New taste" In the center of the advertisement or the bottom third, you see a pack of cigarettes with a cigarette across it obliquely, and most of the document is a photograph of two (2) people. Would you describe these people as young people? I'd describe them as young adults. As young adults. And what are the major colors in this photograph, Mr. Hoult? The pastel colors of pink, blue and yellow. AUDIOTRANSCRIPT, Division de Pierre Vilaire & Associes

871 335 I0 15 2O 25 .Q.- Ou Hm, hm~ Now, does.my memory serve me-correctly and did I hear you tell the Court-that the object of Tempo was to compete against duMaurier and Player's, was it? It was to compete among young adults with these two (2) brands that were very strongly positioned in the market. How would you describe the present consumer? When was this series of ads done? Do you remember, Mr. Hoult? I can't remember when they were done, but they were done prior to the launch of the brand, I would judge some time.in the middle of nineteen eighty-five (1985). I see. In the mid-eighties. Would it be fair to describe the typical duMaurier smoker as urbane, sophisticated, socially upscale? Would you accept that as a characterization of that group? That is the image of the brand, yes. Hm, hm. Now I put it to you, Mr. Hoult, that this advertisement that I have in my hand, RJR-9, with its pastel colors and two (2) youngsters with punk haircuts, is dramatically different from what you would expect to find as a duMaurier smoker at the same time, same period of time, in the mid-nineteen eighties (1980)? Perhaps you could now re-analyze that document for the Court and tell us how it is that you were seeking to obtain switchers, for example, of the duMaurier brand with that kind of advertisement? AUDIOTRANSCRIPT, Division de Pierre Vilolr, & Associ4s Ll4e

872 336 i0 15 2O 25 am Am Om Well, firstly you~described.them as.having punk haircuts. I don't accept that at all. I see. These are... Those are not punk haircuts. How would you describe it? and slicked to the side. traditional duMaurier smoker, would you agree with me? I would certainly say that the image of duMaurier would not fit this, which is the major part of -- the major thrust of your question. I'd like to answer it and say the reason that young adults smoke the brands Export, Player's and duMaurier -- and in our case, the competitive brands of course were the two (2) latter -- was that there was not, until we attempted it, a brand specifically and overtly directed towards young adults and this is what we were trying to do. All of those brands were positioned fairly traditionally, but I remind you that when we talked about duMaurier being a major competitor, it was because duMaurier was the most successful brand in this mid-tar segment of brands, which was segment 4. Now that's the tar segmentation. Yes. I'm talking about people who smoke the cigarettes in those segments. They look sort of slicked up I mean, that's not the AUDIOTRANSCRIPT, Division de Pierre Vilaire & Associ~s LtCe

873 337 10 15 2O 25 A - The young-adults--who,, in. that age-group who-smoke, young adults age eighteen(18) to twenty-four (24), smoked primarily the brands Export, Player's and duMaurier. And one reason for that was that these are the three (3) biggest brands in the market. And we specifically set out to communicate that this was a brand for young adults. That was our explicit objective. Q - And is it your testimony -- would it be your testimony that the typical Craven "A" smoker, in the mid-nineteen eighties, was also~a young adult? Is that what your research discloses about the Craven "A" smoker in the mid-nineteen eighties, Mr. Hoult? A - No. All the brands that we've talked about, and Craven "A" too, have an age distribution that goes across a fairly wide band. Q - I thought that the Craven "A," the characterization of the Craven "A" smoker was to older people. Me IRVING: My Lord, the witness was not finished answering the question again or was just about to... A - When I describe brands as having an older age profile or a younger age profile, you must understand that I'm talking about where the center of gravity is for that particular brand. Craven is a somewhat older profile, but there are still many thousands of young adults who AUDIOTRANSCRIPT, Division de Pierre Vilolre & A.~so¢i~, Ll~e

874 338 i0 15 2O 25 smoke.Craven~ It.'s~..just.that. they-have more, of their total profile, they are more older smokers than other brands. Export has a bi-polar image. It has a fair share, a very strong share of young adult smokers but also a very large share of smokers in their forties. So I'm not -- there is no such thing as a brand that is only for young adults or only for older people in Canada. We were trying to position this specifically as a brand for eighteen (18) to twenty-four (24) year-old. M'hm. Now you described a brand as having a center of gravity. Is that correct? They were my terms. Yes, your terms. Now, the center of gravity of Craven "A" is considerably older than eighteen (18) to twenty-four (24), isn't it? Yes. Right. But it does have its share of smokers in that younger age group. Well, I'm sure every brand does, Mr. Hoult. Yes, that's what I'm trying to say. Now, is it your testimony to the Court that your company launched this Tempo brand, you say or you testify that you were trying to fill the -- or go after the duMaurier AUDIOTRANSCRIPT, Division de P~erre Vilaire & AssociSs Lt~e

875 339 5 A - A - i0 15 Q- 20 A - Q- A - 25 and Craven "A" smoker~--but-that.-the~center of gravity of one (I) of the two~(2) brands was significantly older than that which you hoped to attempt to become a Tempo smoker? We saw... Does that make marketing sense? Yes. We saw an opportunity in the Canadian market, as expressed by the market research that we've described, the needs and.beliefs of young adult smokers for a brand that would be recognizable by them as a brand for them rather than for people in older age groups. The fact that the brand didn't succeed indicates that we either did it wrong or we were wrong. But, nevertheless, that was the plan. And as you go through the research which is in the exhibit, you will see a very strong interest in this concept by people aged eighteen (18) to twenty-four (24) years, hence the planned launch. You couldn't get them away from Craven "A". We couldn't. Or duMaurier, or Player's for that matter. Right. Could you explain to the Court why it is that when your company does use people in the advertisements, they're invariably attractive? Well it doesn't make so much sense to me to put ugly people in advertising. AUDIOTRANSCRIPT, Division de Pierre Vilc~ire & AssociEs Lt4e

876 340 5 i0 15 2O 25 Om Am em aN Am M'hm. And how does~it benefit the company when you put attractive people in advertising? Well, as I said earlier, the whole objective of a marketing message is to develop from the research the aspirations and needs of your smokers as best you can. And in terms of situations as well as people, it benefits because attractiveness, whether it's situation or people, is a more pleasant association than unattractive. It's really as simple as that. Are you trying to. create pleasant associations through your advertising? Yes, we are. M'hm. Certainly not... Why? Certainly not unpleasant. Why would your advertising try to create pleasant situations? Maybe you could explain that? Well, I'm really comparing it to the alternative which is unpleasant. It's certainly not a dynamic in marketing that's discussed very often, I must say. You know from your experience as a cigarette manufacturer and marketer, and a cigarette smoker and an observer of human beings, that people smoke in a variety of situations? AUDIOTRANSCRIPT, o~,,i,~o,~ d, P~..~ WIo~P, & Asso¢i4s Ll4e

877 341 I0 15 2O 25 Yes. Correct? They smoke driving cars. Yes. They smoke in their offices. Yes. Less frequently. I beg your pardon? Less and less frequently. Yes, but they have historically and traditionally. Yes. Why do you think it.is, that your advertising doesn't reflect the real typical everyday situations in which people smoke? Why is it that you have them skydiving, standing around golf courses, cocktail parties, but you don't have them in offices with dirty ashtrays filled up, working in stressful situations, which is where people sometimes smoke? Why is that? Is that one of the ugly situations that you were just referring to very humorously a few minutes ago? No, I don't think so. I think what you've just described is -- is a very simple situation, and that is that the -- one of the objectives of advertising, amidst the clutter, is to gain attention. Firstly, you've got to get the reader or the observer of a billboard to be interested enough to read it, and that's very difficult. AUDIOTRANSCRIPT, Division de Pierre Vilalre & Asso¢i4s kl4e

878 342 i0 15 2O 25 Om Secondarily,. all our advertising is developed as a• result of market research and ultimately you develop advertising on the basis of consumer reaction. They tell you what they like and why and you develop accordingly. That's called consumer feedback. But when you say they tell you what they like and why, what does that really mean, they tell you what they like and why? I mean, I'm sure that most people would rather be on a beach in Jamaica than working in an office. M'hm. Is that what you're talking about? Well, one would -- take the example you gave. I remember very well a situation where we had some rough advertising in an office situation. I don't know what the comparative ads were and I don't even remember the brand now, but this was rejected pretty quickly by the respondents in the market researches as boring. They didn't want to see that. When you ask those probing questions as to: "What do you think about this brand when you see this advertisement?", the sort of questions that we're all familiar with in market research, the answer would be either neutral or it would be boring. The short answer to your question is that consumers want to see advertisements that interest them and in the main say something relevant to them about the brand. So AUDIOTRANSCRIPT, oivi,ioo de Pierre viiaire & Associes L,~e

879 343 i0 15 2O 25 the advertlsements that you see and that you might criticize are in-large part a function of what the Canadian smoking consumer wants, because he tells us that through market research. Q - M'hm. Me BAKER: Monsieur Thibaudeau, est-ce que je peux voir le paquet des "ads"? The package of ads that you've got. Me BAKER: The.documents that I~ve requested are not here. My friends have simply forgotten to bring them this afternoon. THE COURT: Anyways, you won't be finished with Mr. Hoult tonight. Me BAKER: Oh, I wouldn't think so, My Lord, no. Could I see the ads behind you, please? Je m'excuse, RJR-12. Q- Mr. Hoult, you were asked by your lawyer in connection with the Macdonald Special advertisement, RJR-12, what the information was in the ad. You might want to have a look at it. And your first answer was that the cigarette was a cigarette that was being marketed by a major Canadian company. Do you think that's important information to a consumer when he sees an -- he or she sees an advertisement? AUDIOTRANSCRIPT, Division de Pierre Vilalre & Assoclgs Lt~e

880 344 5 i0 15 Q- A- 2O Q- A- Q- 25 A- Am Yes, I do. Now, a major Canadian company as opposed to what, there are only really three (3) cigarette companies in this country, Mr. Hoult? Well, we are a national company. Our brand share performance, as I said earlier, varies significantly according to which part of Canada you're talking about. I think it's interesting that our strongest reputation, both in terms of imagery and share is in the eastern part of Canada -, and the name Macdonald is extremely well regarded in the eastern part of Canada -- and this brand achieved its, by far, its greatest year in that part of the country. And that's why I say I think the name Macdonald is important. And you think it's because the company RJR-Macdonald is a well established Canadian corporation? No, I don't think that's the total reason but I, I do believe that repute of a company and the brands that it makes is a very important reassurance. All right, we're-lookingat an ad, Mr. Hoult, that's got in the middle of it, what, a safe? Yes. And in the middle of the safe is what, a package of cigarettes? Yes. AUDIOTRANSCRIPT, Division de Pierre Vilaire & AssocI~s kt@e

881 345 i0 15 2O 25 And the~package.of-cigarettes has a name on it? Yes. And what does that name say? Macdonald Sp~ciale. All right. Now, is there any information in that? Well, I've just given you the information about the repute and reputation of the company name. Of the company. THE COURT: Could. I .just have a look before you go on? Me BAKER: Yes, of course, My Lord. Q- So the name Macdonald Special, you say, is information that the consumer will thus -- will then know comes from a well established Canadian corporation? A- Yes. Q- Right. Below the safe I see the words "une cigarette sp~ciale, une attention sp~ciale". I take it you understand what that means? Yes. All right. What -- what's the information there that you were referring to earlier? What's that supposed to mean to the consumer to help the consumer along the road to purchase, Mr. Hoult? That's, that is quite a specific and hard claim. We AUDIOTRANSCRIPT, Division de Pierre Vilaire & Associ4s LtEe

882 346 Oq Am 5 i0 Q- 15 A- Q- 20 A- Q- A- 25 are... No, it's a question I'masking, I'm asking you, I'm not making any claims. No, no, I'm responding to your question, Mr. Baker, by saying that this claim in the advertisement is a very strong claim; that being that it is a special cigarette. We felt capable and confident in making this claim, as I said earlier, in that we took every step in the development of this cigarette to make it special, from the quality of .the blend that we put in to the care and attention to all individual cosmetic aspects of the cigarette and the packaging. Okay. Now, if I could just stop you for a moment. You say that you took special care and attention with respect to the quality of the blend? Yes. Right, now could you point to a place in that advertisement where it deals with anything in respect to the blend, Mr. Hoult? I was referring to the overall descriptor of the cigarette Special. Special could mean anything, couldn't it? It could mean anything but it means it's a special cigarette and there would be expectations with a claim like that, the cigarette would be high quality. AUDIOTRANSCRIPT, Division de Pierre Vilaire & Assoc;~s lt~e

883 347 5 i0 15 2O 25 Do other cigarettes, marketed in this country, contain the name Special? Yes. How are they supposed to know, the consumer out there, the difference between your Special and somebody else's Special? Well, they don't necessarily have to know, except that, obviously, they're different manufacturers, number one (i) and in the -- and I don't speak for our competitors, but.normally when you would put the descriptor Special on it, there would be some reason that you are confident about in doing so. In certain other markets in the world that I've worked in, it would be the length of the cigarette that would be greater, the fatness that would be wider. In this particular case, it was what we call the whole get up. Right, the whole get up. Well, let's -- I appreciate your international experience, Mr. Hoult, but let's, if we might, stick to Canada for a moment. One (i) brand that comes to my mind -- or another brand that comes to my mind with the word Special is duMaurier Special. You are familiar with that name, I take it? Yes, yes. So how is the consumer, because after all it is the consumer to whom you're advertising, is it not, Mr. AUDIOTRANSCRIPT, ~vision de Pierre Vllalre ~ AssociEs Lt4e

884 348 i0 15 2O 25 Hoult? Yes. To distinguish and make a distinction between, say a Macdonal Special, inside a safe with nothing else really in the ad -- because there is a repeat of the word Special -- and a duMaurier Special? Well, I think there are two (2) factors there that are important. For -- only as examples. The first (ist) is that we know, and I take it from your reading of our research that you are also now familiar that one (i) of the... Don't take anything for granted, Mr. Hoult. Well, in which case I'll explain. That one (i) of the most important determinants of brand, of a single brand imagery is the brand family to which that particular brand belongs. So the imagery of Export Light would be seen by the consumer as a very different brand, in flavour, to the imagery of Player's Light. And the reason for that would be that one (I) would be called Export and the other called Players. So the most important distinction between, as you say, duMaurier and this, would be the name Macdonald, which would give rise to different expectations than the name duMaurier. And secondly, you have to remember that this brand was introduced during the price war and this brand was at AUDIOTRANSCRIPT, Division de Pierre Viloire & Associ~s Lt6e

885 349 Om 15 Q- A- Q- A- Q- 20 A- Q- 25 A- its launch, a reduced price.brand, duMaurier was not. So the special there is in the context of it being a value brand. When you talk about expectations generally, wouldn't you say that about virtually all of your company's advertising, whether it's Macdonald Special or the Tempo ad or a bunch of the ads that we're going to look at tomorrow morning? Don't you sort of assume, as a marketer and an advertiser, that these advertisements will create.expectations in the mind of the diverse consumers out there in the marketplace? We -- we try to ensure that. That there would be... In other words that there is an advertising promise... Right. That the brand has... Well there's, there's something? That is what we try to achieve. Yes, there's something out there, there's something in the ads. Now, you talk about the purpose of your company's advertising and that it's fundamentally, isn't Mr. Hoult, to obtain switchers from your rivals? And -- and equally importantly. Is it equally importantly? Equally important. AUDIOTRANSCRIPT, Division de Pierre Vilaire & Associ4s Lt4e

886 350 i0 15 2O 25 Ou Your brand loyalty? Absolutely. Your lawyer is looking at me rather askance. Yes. Right. I wouldn't distinguish between these two (2). No. THE COURT: I think you've mentioned that already three (3) or four (4) times. Me BAKER: Q- Now, unless you're more specific in your advertising, how is this consumer of another brand supposed to understand things like expectations? I mean you say that you would like there to be expectations associated with an advertisement. What does that mean in real life and in real terms? Let me give you an example. You have a Craven "A" smoker. We know that he or she knows the taste. Sees an ad for another cigarette. It's got a pretty picture. It's lifestyle advertising. I mean, what's the expectation of taste if there are no real descriptors in respect of taste other than words like Special or, you know, all the other words that are used -- because you all use, all the companies use the same words? So how are they supposed to have an expectation AUDIOTRANSCRIPT, Division de Pierre Vilaire &

887 351 l0 IS 2O 25 in respect of taste? Well, the process of advertising comprehension and how it works is not only complex, it's something that, as we discussed at discoveries, is not totally understood. But, in terms of expectations, I think the process is that the smoker brings something, obviously, to the situation himself. He has already a frame of reference. He has an image of the export family and an image of the Craven family and any other brand that he is familiar with. In terms of the.aggressive nature of advertising, that is the function of advertising to take share. If the Export smoker were the target, say, of a Players campaign, I shouldn't really use the competition, I should reverse that. It's all right, use the competition. Then -- then the market research as in Imperial would be determining the strengths and weaknesses of the Export family and they would try to ensure that in terms of their message, leading to the expectation of their brand, they would, specifically directing that message to certain problems that the Export smoker might have, either in terms of flavour or in terms of imagery or in terms of any new brand, any new blend desire he might have. A good example of that would be the desire that people have -- and it has gone on for a number of years AUDIOTRANSCRIPT, Division de Pierre Vilolre & Assoc;¢s Ll~e

888 352 5 15 Q- A- Q- A- Q- 20 A- Q- A- Q- A- 25 Q- -- to move.to light cigarettes. ~.One (i) reason we know why Players~have done so very well in the last ten (i0) years is that they were first (Ist) with a successful light cigarette in the mid-nineteen seventies, and we were late. And they took many of our existing Export smokers from us and that continued until we were able to introduce our own brand. Now, Mr. Hoult, that was very interesting. But I'm .talking to you about expection and taste. Tell the Court, please, how a consumer is supposed to discern what the taste might be from lifestyle advertising? It doesn't always have to, because it may not always be the need or the want that that particular advertising is addressing. Right. It might be some other need or want? Yes. Other than, for example, taste? Yes. Like feeling good? Yes. Like feeling social? Yes. Like feeling important? Status consciousness would be a better word. Like feeling athletic? AUDIOTRANSCRIPT, oivi,~oo de Pierre Wlaire & Associ6s U'4,

889 353 Am 5 i0 A- 15 2O Q- A- Q- A- 25 Q- No, I would not... No? ...accede to that. You mean golfers and tennis players and windsurfers are not -- that's not athletic to you? Yes, but that -- that in terms of the advertisements that we have used, that the objective there was not to communicate feelings of being athletic. Well, I don't notice your windsurfers with broken legs so could you-explain, to.the_Court what it could mean if it's not meant to, to indicate some kind of athleticism? Well, for -- the best example would be a campaign that we ran in the mid-eighties, early eighties which was a skiing campaign and this campaign had been developed as a result of this research that we've talked about and it was a campaign that communicated many, many qualities of the, of the Export. Outdoors, enjoyment of the outdoors, an activity that people enjoyed, an activity that people participated in. You mean skiing, skiing? Yes, but not... That's athletic, isn't it? It happens to be athletic but that was not the objective of the, of the -- the copy objective. Just outdoor scenes? AUDIOTRANSCRIPT, Divi,ion de Pierre Vilaire & A,socig, Ltge

890 354 i0 15 2O 25 Am Om And with an interesting, attractive visualwhich was skiing and we were also sponsoring skiing at the time, so there was a tie-in between a sponsorship of Canadian skiing and our advertising of an individual on the ski slopes. So you wanted to associate the brand with the outdoors and skiing and a sense of well-being, correct? Well, the skiing was an activity, an interest that our Export smokers had indicated to us, a place like where they'd like to be~in our research, as I said. And therefore, it was one of the things considered for illustration and ultimately through further research, it was the advertisement or the campaign that was selected. But one (i) reason why it was selected was that it allowed a certain consistency between the advertising campaign, which was one (i) activity, and the sponsorship of skiing which is another activity. Would it be fair to say, Mr. Hoult, that that kind of lifestyle advertising campaign was a direct attempt by your company to associate smoking with healthfulness? No. It would not? No, it would not. So then, could you explain to the Court why it is, in the answer that you've just spent five (5) or ten (i0) AUDIOTRANSCRIPT, Division de Pierre V~loire ~ Associ~s L'~e

891 355 5 i0 15 2O minutes giving,.about this good -feeling of being.in the outdoors and it's clean and it's fresh and its snow and its pristine and it's also skiing, which is a healthy thing to be doing. I think you'll agree. If that's not what your company, by its advertising, is trying to indicate to the consumer out there in the world who is going to view this thing, then what is it really, Mr. Hoult? What is it you're selling? A- I, I would agree with everything you've said except your emphasis on athletic and health. Q- And health? A- Yes. It is not our campaign, that campaign was succeeded by a campaign with entirely different objectives, which had no people in it at all. So we, we didn't continue it for an excessive period of time. Me BAKER: My Lord, it's four twenty-seven (16:27), and rather than move to either another advertisement, or another subject, my recommendation is that we break for the evening. THE COURT: Okay. Tomorrow at ten (i0:00). AUDIOTRANSCRIPT, Division de Pierre Vilcire & Associ~s Ll~e