Tobacco Documents Online

1120 586 5 15 A- Q- 2O A- Q- A- 25 competitive marketing environment, you must understand fully what the consumer wants and provide what the consumer wants, as opposed to trying to convince the consumer to make something or to buy something that you produce. And with that approach, you must communicate quite frequently with the consumer and you must have a very high qualified understanding of what the consumer wants and what the consumer believes about your product. Well, Mr. Brown, I'm going to be asking you questions later on about the various aspects of marketing that you've just explained, but before we do it, I'd like to set the background a bit and go into your background and find out what your experience is in these areas. First of all, could you tell the Court what kind of formal training you have in advertising or marketing? I have no formal training in advertising or marketing per se, other than the odd small course along the way in my career. These courses, I take it from what you've just said, you had them after your career began? Yes, well into it. Well, what -- have you had any training other than formal training in advertising or marketing? Yes. All of my training in advertising or marketing comes through my employment with the company. I've been AUDIOTRANSCRIPT, Division de Pierre Viloire & Associgs Lt~e

1121 587 5 i0 15 2O 25 with the company for twenty-six (26) years and I suppose my training could be defined in that sense as an apprenticeship. I learned all I know about the marketing of tobacco products through my employment with Imperial Tobacco. THE COURT: Q- You're a product of your organization? A- Yes, sir. Me POTTER: Q- So you -- twenty-six (26) years; you joined Imperial in nineteen sixty-three (1963) then, is that right? A- That's correct. Q- And did you go straight to Imperial after -- after your education or did you work before going to Imperial? A- I worked for a very short time. Well, I completed high school and I -- I joined the service, went to college for one (i) year, in a military college. I went to university for one year, in both cases studying Engineering and Science. I worked with a trucking company for a while and then I joined Imperial Tobacco. Q- Were you smoking Export "A" while you were with the trucking company? We heard yesterday that it was all truck drivers. A- As a matter of fact, I was not, I was smoking another competitive brand. AUDIOTRANSCRIPT, Division de Pierre Vilolre & Associ@s DEe

1122 588 i0 15 2O 25 Om Am Om Am Om Am Yes? So you joined Imperial in nineteen sixty-three (1963), and we'll find out in a minute what it was you were doing in nineteen sixty-three (1963). Let's go backwards in time though. Right now, you're vice-president/marketing. That's correct. You've had that title since when? It's been about a year and a half (1½) to two (2) years now. And what were you until a year and a half (1½) or two (2) years ago? Well, prior to my appointment as vice-president/marketing, I was national sales director. And where were you posted for that job? At the same head office here in Montreal where I am now. And what did you do as national sales director? I was responsible for the management of our sales organization and in addition, I was a member of what we call our marketing committee which I now chair with my new responsibilities, which brings the various disciplines within marketing into one committee to propose marketing decisions to senior management. And when did you begin as national sales director, Mr. Brown? It would have been August nineteen eighty-four (1984). AUDIOTRANSCRIPT, Division de Pierre Vilolre & Asso¢i~s Uee

1123 589 I0 15 2O 25 And what were you before that? Prior to that, I was a regional sales director in British Columbia, headquartered in Vancouver. And when did you begin there? I went there in August of nineteen eighty-one (1981). And before that, what were you? Before that, I was here in Montreal, in the main office, and I was the manager of the Market Research Department. THE COURT: Q- Market what? A- Market Research Department. Q- You were manager of that department, is that right? A- That's correct. Q- And what does a Market Research Department do? A- Well, it's primarily -- its primary function is the communication with the consumer that we spoke about earlier. It gathers information from various sources, principally in two (2) broad divisions, one being sales information, the other being consumer information through consumer research. The department first of all tries to determine what the marketing people want to know from the consumer. They communicate to and contract outside research suppliers and set for them the criteria of the research. Once the research has been completed and reported upon by the external research AUDIOTRANSCRIPT, Division de Pierre Vilalre &

1124 590 5 A- i0 15 Q- 2O A- Q- 25 houses, then market research is responsible to communicate that to marketing management. And with that information, getting back to the question I asked some time ago, is there any relation between that information and the future of the market for tobacco products? Well, yes, of course. One of the primary responsibilities of the Market Research Department is forecasting, as .I mentioned earlier, which is a prediction of the size of the industry in the future and our share within it, which therefore defines the volume we will require to be produced over the future and for financial forecasting and purchasing forecasting. The primary forecast for the company is within market research. And in the postion you have today, the position of vice-president/marketing, those things you've just mentioned, in terms of customer or consumer research and market research, do you still have responsibility for those things? I do. Yes, they're within the Marketing Division of the company for which I am responsible. And you had that position of Montreal Market Research Department manager from seventy-eight ('78) to eighty-one ('81)? Is that what you said? AUDIOTRANSCRIPT, Division de Pierre Vila;re &

1125 591 5 10 15 2O 25 A- Yes. Q- And what were you before that? A- Before -- before that, I was marketing planning manager in the main office in Montreal. Q- And how long were you Montreal marketing planning manager? A- Well, I started there in July of seventy-six ('76), so it would have been a year and a half (1½) or two (2) years. Q- And before that, what were you? A- Before that, I was in Toronto as marketing manager for the Ontario region. The province of Ontario was a sales region at that time. Q- And what is it you do as a marketing manager, Mr. Brown? A- Well, that was a new position, an experimental position. My responsibilities were to recommend to main office marketing any special marketing approaches that should be taken on a regional basis, to identify regional differences from other regions and to direct the main office marketing group or to recommend to them, I should say, that they provide specific types of advertising or promotion support for that particular market of the province of Ontario. THE COURT: Q- Just an aside. Did anybody ever tell you that you have AUDIOTRANSCRIPT, Division de Pierre Vilaire & Associ4s Ltee

1126 592 i0 15 2O 25 a voice which sounds just like Gary Cooper's voice? Me POTTER: He's our next witness, My Lord! A - I hope, My Lord, you mean when Gary Cooper was much younger. THE COURT: It's stunning. Me POTTER: I wish you hadn't said it, My Lord. I'll now be able to think of nothing else. Me BAKER: We're bringing Lassie in in a couple of minutes. THE COURT: I'm sorry. Go ahead. Me POTTER: Q- When did you begin your stint as a marketing manager in Toronto? A- In nineteen seventy-four (1974). Q- And what were you until you took on that responsibility? A- Prior to that, I was back here in Montreal as a brand manager for the Player's brand. Q- I see. And how long were you brand manager for the Player's brand? A- I came here first in January seventy-two ('72), so that would be about two (2) years, in that order. AUDIOTRANSCRIPT, Division ~e Pierre Viloir~ & Associes Dee

1127 593 10 15 2O 25 ON Am Om Now, what was it that a brand manager did for Imperial at that time? Well, the brand manager's responsibilities were to analyze the market and the brand's performance, through use of consumer research primarily -- and sales research, to define the target smokers that the brand would be directed to, to develop advertising programs for the users of that brand, as well as users of competitive brands that were targeted, to recommend and develop and be responsible for the maintenance of the product characteristics, packaging, promotions. Just, in general, be responsible for the marketing of that brand through -- the process would be to make proposals to senior management and recommendations for the spending of dollars and the activities conducted to market that brand. Now, we heard from Mr. Hoult yesterday, or perhaps even the day before, that RJR has brand managers today. Does Imperial have brand managers today? No, we do not. And when did Imperial stop having brand managers? About nineteen seventy-four (1974) or five (1975). In that -- in fact, it stopped having brand managers when I was sent to Toronto... Nineteen seventy-four (1974)... ,4UDIOTR,4NSCRIPT. o~,,i~ioo d, Pi~ Viloi~, & A,~o~i~ ~.~¢~

1128 594 5 i0 15 2O 25 Om ... so that would be nineteen seventy-four (1974). ... according to your... Yes. ... testimony. It changed. And please explain to the Court why it is Imperial decided to make that change and just what the change was. Well, we were, up until that point in time, had a long track record of losing market share and we reviewed our whole attitude toward the marketplace and concluded that since cigarettes are all sold for the same price and virtually have the same product structure -- sorry, profit structure, that it didn't mean -- we really didn't care which brand people chose as long as they chose our brand. So we viewed the brand management structure as creating internal competition and therefore inefficiencies. So we went to what we referred to as a central planning structure whereby we addressed the market as a whole and strategically placed brands in various parts of the market to address market opportunities and avoid overlap or internal competition. Essentially, that's the reason for the change. And the philosophy which you mentioned a few minutes ago, of going out to find what the consumer wanted and AUDIOTRANSCRIPT, Di,,~,ioo d, Pierre Vilolre & Associ,~s

1129 595 5 i0 15 2O 25 then setting about giving it to him, how does that philosophy tie in to the new nineteen seventy-four (1974) Imperial approach you just mentioned? Well, basically that's what -- that was the result of the philosophy is that we looked at smokers collectively as a group who choose different brands for different reasons, so we started to, and today do a very significant amount of consumer research to segment brands, segment market positions, and then address these market positions in terms of priority of opportunity by developing a market plan that positions various brands in distinct parts of the market aimed particularly at competitive brands. Okay, Mr. Brown, before moving on to find out just how well you did in that job, let's just finish up on your background and training. You began, you say, as Brand Manager, I forget whether you said nineteen seventy-two (1972) or seventy-three ('73). THE COURT: Seventy-two ('72). A- Seventy-two ('72). Me POTTER: Q- A- Q- Seventy-two ('72). Before... It may have been seventy-three ('73). Before being Brand Manager for Player's, what were you? AUDIOTRANSCRIPT, D~,ioo a~ P~erre ViJclire ~ A,so¢I@$ Lf@,