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SECRET No. 3 l_1_By__d~_ Declassification New Brands and Strategic Research Report MDD_#85-42602;_CT_443 TO: Mr. A. T. Sterling Mr. M. L. Raker PROJECT XG FFLTNM 85 PROTOTYPE TEST FINAL REPORT COPIES TO: Mr. L. W. Hall, Jr. Mr..E-. 3. -Fackelman Mr. G. J. Totterdale Ms. M. H. Parham Mr. H. T. Parks Mr. W. R. Cook XG Fact Book MDIC FROM: Ms. M. A. Albert PUBLISHED BY THE MARKETING DEVELOPMENT DEPARTMENT R.J. REYNOLDS TOBACCO COMPANY, WINSTON-SALEM, N.C. 27102 fX 0 N ~ ~ w co 0 0 RJRT Form 7368 - 10/81

XG FFLTNM 85 PROTOTYPE TEST- EXECUTIVE SUMMARY MDD #85-42602 PURPOSE: To report final results on the performance of two XG FFLTNM 85 SP prototypes (CT 443-A and B) versus Marlboro Lights 85 among target smokers. BACKGROUND: In recognition of the importance of younger adult smokers to RJR's growt:h, Project XG will be positioned to compete aggressively with Marlboro. To effectively meet this goal, Project XG must incorporate a superior product which is superior in smoothness to Marlboro, while providing comparable strength and tobacco taste. Plans currently call for XG to be test marketed in November, 1985. Brand is preparing for test market by developing/testing prototypes in three configurations: FFNM 85 SP, FFLTNM 85 SP, FFNM 80 Box. RESEARCH OBJECTIVES: The objectives of this test were to: • Provide a quantitative assessment of the two XG FFLTNM 85 SP prototypes (CT 443-A and B) versus Marlboro Lights 85 (and CAMEL Lights 85) among male Marlboro Lights 85 smokers, aged 18-24. • Provide input into further development and refinement of the XG products. KEY CONCLUSIONS/FINDINGS: • Neither prototype (443-A and B) achieved action standard of superiority versus Marlboro Lights 85 among male Marlboro Lights smokers, aged 18-24. - Both prototypes were rated at parity with Marlboro Lights 85 on overall acceptance. - The prototypes performed at parity with each other. - Both prototypes (and Marlboro Lights 85) were superior to CAMEL Lights 85. Overall %70+ Acceptance . Sample Size Marlboro Lights 85 288 Prototype 1 (443-A) 280 Prototype 2 (443-B) 274 Target Smokers 62.2 58.8 58.8 ~. 6 CAMEL Lights 85 300 50 < Significant difference (80% confidence level) with arrow pointing to superior product.

• Versus Marlboro Lights 85 The prototypes performed similarly versus Marlboro Lights 85 on attribute performance. - Prototype 2 (443-B) was at ap rity with Marlboro on all product attributes. - Relative to Marlboro Lights 85, Prototype 1 (443-A): -- Was at ap rity on nearly all product attributes -- Had the advantage of less harshness -- Had only a few disadvantages--less rich taste, worse aftertaste Both prototypes were ap rity with Marlboro Lights 85 on key attributes of: -- Smoothness--not attaining superior goal -- Tobacco taste ''~ - Achieving parity goal -- Strength (at idealT' • Versus CAMEL Lights 85 The XG FFLTNM 85 SP prototypes performed similarly versus CAMEL Lights 85 on most attributes. - Both prototypes had several advantages versus CAMEL Lights 85: -- Less harshness -- More tobacco taste -- Less bitterness Prototype 2 (443-B) had several additional advantages (while Prototype 1, 443-A, was parity) versus CAMEL Lights 85: -- More satisfying -- Better aftertaste -- Richer taste - The prototypes were at parity with CAMEL on the remaining attributes of smoothness, mildness, strength, artificial taste. MDD RECOMMENDATIONS/NEXT STEPS: Both prototypes appear to be good candidates for further development. Prototype 1 (443-A) appears to be the better candidate, as it has the advantage of less harshness than Marlboro Lights 85, while Prototype 2 (443-B) was at parity on harshness. For XG FFLTNM 85 to achieve the desired goal of superiority versus Marlboro Lights 85 among target smokers, refinement opportunities (for both prototypes) are to: • Further reduce harshness • Increase smoothness • IncreasE: tobacco taste • While maintaining ideal levels of strength and mildness Two additional XG FFLTNM 85 SP prototypes (CT 558-B and C) are currently in field with topline results to be reported week of'June 24. ~Cla~ue ~.Q<lxri~ M. A. Albert Marketing Development Department

XG FFLTNM 85 PROTOTYPE TEST MDD #85-42602 BACKGROUND: In recognition of the importance of younger adult smokers to RJR's growth, Project XG will be positioned to compete aggressively with Marlboro. To effectively meet this goal, Project XG must incorporate a superior product which is superior in smoothness to Marlboro, while providing comparable strength and tobacco taste. Plans currently call for XG to be test marketed in November, 1985. Brand is preparing for test market by developing/testing prototypes in three conf igurations: FFNM 85 SP, FFLTNM 85 SP, FFNM 80 Box. • XG FFNM 85 SP In the first test of conventional XG FFNM 85 prototypes (MDD #84-42602/ Prototypes 444-A and C), neither product achieved action standard of superiority versus Marlboro. As a result, further development/testing is being pursued. Two XG FFNM 85 prototypes are currently in field with topline results to be reported June 10. • XG FFNM 80 Box Recent t:esting on WINSTON Box resulted in a superior prototype (CT 446-D), without B-9 in f ilter, to Marlboro Box (and in-market WINSTON Box) among WINSTON's target smoker group. As a result, this product is in Phase II manufact:uring. The post-production test on WINSTON Box (CT 6062-A) and the supplement (on WINSTON Box and Marlboro Box) among XG target smokers is scheduled to be mailed out week of May 27. Topline results will be reported week of July 22. • XG FFLTNM 85 SP R&D developed two prototypes designed to primarily address smoothness as follows: Prototype 1 (443-A) Prototype 2 (443-B) Designed To CAMEL Lights blend WINSTON King blend and c~Onfiguration White tipping White tipping Increase smoothness/mild- ness/reduce harshness Micro laser tipping Micro laser tipping Provide more consistent perforation perforation product No filter flavor No top dressing No filter flavor Improve aftertaste No top dressing Improve aftertaste 3.3/44,000 filter tow Increase smoothness (Denser tow) TEG as casing for cutting Increase smoothness -1-

ACTION STANDARD: Full Flavor Low Tar XG Soft Pack 85 prototypes should achieve overall superiority versus Marlboro Lights 85 among male Marlboro smokers, aged 18-24. METHODOLOGY: The standard NFO two-pack monadic design witrh telephone callback was used in this study. The two XG FFLTNM 85 prototypes (443-A and B) were each tested among approximately 300 male Marlboro Lights 85 (SP and Box) smokers, aged 18-24. Products were mailed out week of April 9, 1985. Results were compared to Marlboro Lights 85 (Waves 4-6/1984 combined with Waves 1-2/1985 Competitive Product Series) and CAMEL Lights 85 (Waves 3-4/1984 combined with Waves 1-2/1985 Competitive Series). DETAILED FINDINGS: A. Overali. Performance 1. Among male Marlboro smokers, aged 18-24, neither prototype (443-A and BZ attained action standard of superiority versus Marlboro Lights 85. • Both prototypes were rated at parity with Marlboro Lights 85 on overall acceptance. • The prototypes performed at parity with each other. • Both prototypes (and Marlboro Lights 85) were superior to CAMEL Lights 85. Overall %70+ Acceptance Sample Target Size Smokers Marlboro Lights 85 288 Prototype 1 (443-A) 280 Prototype 2 (443-B) 274 CAMEL Lights 85 300 62.2 58.8 58.8 T 50.6 < Significant difference (80% confidence level) with arrow pointing to superior product. -2-

B. Attribute Performance 1. Relative To Marlboro Lights 85 Both prototypes performed similarly versus Marlboro Lights 85 on product attributes (see Attachment 1 for more detail). • Prototype 2 (443-B), which was rated at parity with Marlboro Lights 85 on overall performance, was also at ap rity on all product attributes. • Prototype 1 (443-A), which was also parity to Marlboro on overall performance, was rated at parity with Marlboro on all but four attributes as shown below. The prototype had the advantage of less harshness versus Marlboro Lights 85. As shown, the prototype had few disadvantages. Parity Inferior Superior Smoothness Less rich Less harsh Tobacco taste Worse aftertaste Strength Faster burn Mildness Satisfying Artificial taste Bitter taste Draw • On key attributes, both prototypes were ap rity with Marlboro Lights on: Smoothness--not attaining superior goal Tobacco taste Strength ~ -- Achieving parity goal • Both prototypes had ideal levels of strength and mildness.

2. Relative To CAMEL Lights 85 The XG FFLTNM 85 SP prototypes performed similarly on most attributes (see Attachment 2 for more detail). • Relative to CAMEL Lights 85, both prototypes were superior on overall performance as they had advantages of: Less harshness More tobacco taste Less bitterness Easier draw •.Versus CAMEL Lights 85, both XG FFLTNM 85 SP prototypes were arit on: Smoothness Mildness Strength Artificial taste • The prototypes were inferior to CAMEL Lights 85 only on the minor attribute of faster burn rate. • The prototypes differed in performance relative to CAMEL Lights 85 on only three attributes (as shown), with Prototype 2 being the better performer versus CAMEL. Prototype 1 Prototype 2 (443-A) (443-B) Parity - Satisfying More Satisfying Parity - Aftertaste Better Aftertaste Parity - Rich Taste Richer Taste 3. Comparison Of Prototypes The prototypes were at parity with each other on overall performance, as they were at parity on all but two product attributes--where Prototype 2 had advantages of being more satisfying and richer tasting than•Prototype 1. C. Product: Refinement Opportunities For XG FFLTNM 85 SP to achieve the desired goal of superiority versus Marlboro Lights 85 among target smokers, refinement opportunities for both prototypes are to: • Reduce harshness/increase smoothness • Increase tobacco taste • While maintaining ideal levels of strength and mildness ETA ratings which show correlation between %70+ and product attributes are shown in Attachment 4. -4-

ATTACHMENTS: • Attachment 1: Attribute Performance Relative To Marlboro Lights 85 • Attachment 2: Attribute Performance Relative To CAMEL Lights 85 • Attachment 3: Mean Attribute Ratings • Attachment 4: XG FFLTNM 85 Development Direction (ETA Ratings) • Attachment 5: Analytical Data For XG FFLTNM 85 Prototypes (443-A And B) (d -5- ao ln -1

ATTACHMENT 1 ATTRIBUTE PERFORMANCE RELATIVE TO MARLBORO LIGHTS 85 Prototype 1 Prototype 2 (443A) (443B) Attributes where both prototypes were parity with Marlboro Lts. 85 Smoothness Tobacco Taste Strength Mildness Satisfying Artificial Taste Bitter Taste Draw Attributes where prototypes differed in performance relative to Marlboro Lts. 85 Less Harsh Less Rich Worse Aftertaste Faster Burn S P I P I P I P Key: S: Superior P: Parity I: Interior *: At Ideal

ATTACHMENT 2 ATTRIBUTE PERFORMANCE RELATIVE TO CAMEL LIGHTS 85 Prototype 1 Prototype 2 (443A) (443B) Attributes where both prototypes were superior to CAMEL Lights 85 Less Harsh S S More Tobacco Taste S S Less Bitter S S Easier Draw S S Attributes where both prototypes were parit, y with CAMEL Lights 85 Smoothness P P Strength P* P* Mildness P* P* Artificial Taste P P Attributes where both prototypes were inferior to CAMEL_Lights 85 Faster Burn I I Attributes where prototypes differed in performance relative to CAMEL Lights 85 More Satisfying P S Better Aftertaste P S Richer Taste P S KEY: S: Superior P: Parity I: Inferior *: At Ideal