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S E C R E T No. 3 81 BY d, Declassification nu_ New Brands and Strategic. Research Report _D_ _#$5-_4_26_1_3_ _ _ (CT _ 601-A; 676-B •x~caae;= TO: Mr. A. T. Sterling Mr. R. F. McCarthy PROJECT XG WINSTON KING PROTOTYPES AMONG XG TARGET COPIES TO: Mr. L. W. Hall, Jr. Mr. E. J. Fackelman Mr. J. D. Weber Ms. K. C. Farizam Patterson Mr. W. R. Cook Ms. R. S. Turlington FROM: Ms. M. A. Albert XG Fact Book MDIC PUBLISHED BY THE MARKETING DEVELOPMENT DEPARTMENT RJ. REYNOLDS TOBACCO COMPANY, WINSTON-SALEM, N.C. 27102 ~ .~ ~ 0 ~ ~ A RJRT Form 7368 - '10/a1

z PROJECT XG - WINSTON KING PROTOTYPES AMONG XG TARGET EXECUTIVE SUtIIMARY (MDD #85-42613) PURPOSE: To report final results on the performance of five WINSTON King prototypes (CT 601-A, CT 676-B, C, F, H) versus Marlboro King among 21-24 year old male Marlboro 85 smokers as possible candidates for XG FFNM 85 SP product. 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 to Marlboro, while providing comparable strength and tobacco taste. Brand is preparing for test market by developing/testing prototypes in three configurations: FFNM 85 SP, FFLTNM 85 SP, and FFNM 80 Box. RESEARCH OBJECTIVES: The objectives of this test were to: • Provide a quantitative assessment of the five WINSTON King prototypes (CT 601-A, CT 676-B, C, F, H) versus Marlboro King among male Marlboro 85 smokers, aged 21-24. • Provide input into further development and refinement of the XG products. KEY CONCLUSIONS/FINDINGS: • None of the five WINSTON King prototypes achieved acton standard of superiority versus Marlboro King among male Marlboro 85 smokers, aged 21-24. Three of the prototypes (CT 676-H, 601-A, 676-B) were parity with Marlboro King on overall acceptance. The remaining two prototypes (CT 676-C and F) were inferior to Marlboro King. In addition, Prototype 676-F was inferior to all other prototypes. Overall Acceptance - Z70+ Male Marlboro Sample 85 Smokers Size Aged 21-24 Prototype CT 676-H 172 Marlboro King 170 Prototype CT 601 A 183 Prototype CT 676-B 171 Prototype CT 676-C 152 Prototype CT 676-F 157 59.4 58.4 57.2 53.8 50.7 3 4 8 4- Significant difference (80X confidence level) with arrow pointing to superior product.

z • Versus Marlboro King Parity Prototype CT 676-H, a "high density" product with WINSTON King configuration and blend: -- -- -- Had Had Was advantages of more tobacco taste and fresher aftertaste the disadvantage of more mildness parity on remaining attributes - Parity Prototype CT 601-A, with the "Gold Standard" blend: -- Was parity with Marlboro on all but one attribute -- Had the advantage of a fresher aftertaste -- Had ideal levels of harshness and mildness - Parity Prototype CT 676-B (translation of current WINSTON Box into 85mm configuration with no dilution): -- Was parity with Marlboro on all but one attribute -- Had the advantage of a more natural taste -- Was at the ideal level of mildness Inferior Prototype CT 676-C (current WINSTON Box translated into 85mm configuration with 9% dilution): -- Had disadvantages of more harshness and bitterness than Marlboro -- Was parity on remaining attributes -- Had an ideal level of mildness - Inferior Prototype CT 676-F, with special G7A: -- Had several disadvantages versus Marlboro--more harshness and bitterness, more artificial taste with a more drying and long lasting aftertaste. Surprisingly, had the advantage of a fresher aftertaste Was parity on the remaining attributes Had an ideal level of mildness MDD RECOMMENDATIONS/NEXT STEPS: Of the five WINSTON King prototypes tested, parity prototypes CT 676-H and CT 601-A appear to be good candidates for further development. For XG FFNM 85 to achieve the desired goal of super- iority versus Marlboro King, refinement opportunities are shown below. The following development direction is among 21-24 and not among XG's target of 18-24 male Marlboro smokers. If XG were to continue developmental work using these two prototypes as a base, future testing should be conducted among XG's target smoker group of 18-24 male Marlboro smokers. • Prototype CT 676-H Reduce mildness Reduce harshness Increase strength Provide less strong/ fresher aftertaste • Prototype CT 601-A Increase smoothness Increase strength/tobacco taste Provide fresher/less long lasting aftertaste Maintain ideal harshness and mildness lwmki Q41&Y- M. A. Albert Marketing Development Department

z PROJECT XG - WINSTON KING PROTOTYPES AMONG XG TARGET (MDD #85-42613) 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 to Marlboro, while providing comparable strength and tobacco taste. Brand is preparing for test market by developing/testing prototypes in three configurations: FFNM 85 SP, FFLTNM 85 SP, FFNM 80 Box. • XG FFNM 80 Box Recent testing on WINSTON Box resulted in a superior prototype (CT 446-D), ' without B-9 in filter, to Marlboro Box (and in-market WINSTON Box) among WINSTON's target smoker group. As a result, this product was put into Phase II manufacturing and a post-production test on WINSTON Box (CT 581-A/ 606 A) was fielded. The WINSTON Box Post-Production prototype did not attain action standard of superiority versus Marlboro Box among male Marlboro Full Flavor 85 smokers, aged 18-24, as it was inferior to Marlboro on overall acceptance. Two additional XG FFNM 80 Box prototypes are scheduled for NFO mailout week of November 4, 1985 with topline results to be reported week of December 9, 1985. • XG FFLTNM 85 SP In recent testing (MDD #85-42602/CT 443 A and B; MDD #85-42606/CT 558-B and C) none of the four prototypes achieved action standard of superiority versus Marlboro Lights 85 among target smokers, as all four prototypes were parity with Marlboro on overall acceptance. XG FFNM 85 SP To date, none of four XG FFNM 85 SP prototypes tested (CT 444-A and C, CT 552-A and B) nor three CAMEL F 85 SP prototypes (CT 566-A and C, CT 668-B) achieved action standard of superiority versus Marlboro King among XG target smokers. Prototype CT 668-B, however, achieved parity with Marlboro King (while the remaining prototypes were inferior) and will be put into CAMEL F 85 Phase II manufacturing with a post-production NFO product test tentatively scheduled for mailout week of October 28, 1985. Other testing is outlined in Attachment 6. Further development/testing is being pursued by XG/CAMEL and WINSTON. WINSTON R&D developed five prototypes for testing as shown on the next page. A detailed description is outlined in Attachment 4. -1-

z • Prototype CT 601-A with the "Cold Standard Blend" was designed to provide information on whether high quality tobacco affects consumer perceptions. • Prototype CT 676-H, a "high density" product with WINSTON King configuration and blend, was designed to reduce harshness/increase smoothness. In addition, the omission of filter flavor was intended to improve aftertaste and bitterness perceptions. • Prototypes CT 676-B and C were both the current WINSTON Box product translated into an 85mm configuration. While Prototype CT 676-B was non-diluted, Prototype CT 676-C had 9% air dilution and was expected to have a more intense delivery than Prototype CT 676-B. The omission of filter flavor in both prototypes was expected to improve aftertaste and bitterness perceptions. • Prototype CT 676-F incorporated a special (George Leeper) G7A and was expected to increase smoothness/reduce harshness and reduce duration of aftertaste. ACTION STANDARD: Full Flavor XG Soft Pack 85 prototypes should achieve overall superiority versus Marlboro King among male Marlboro smokers, aged 21-24. METHODOLOGY: The standard NFO two-pack monadic design with telephone callback was'used in this study. The five WINSTON King prototypes (CT 601-A, CT 676-B, C, F, H) were each tested among approkimately 170 male Marlboro 85 (SP, Box, and 25s) smokers, aged 21-24. Prototype CT 601 A was mailed out week of June 17, 1985 and the CT 676 prototypes were mailed out week of July 15, 1985. Results are compared to Marlboro King (Waves 2, 4, 5, 6 of the Competitive Product Series). DETAILED FINDINGS: A. Overall Performance • None of the five WINSTON King prototypes achieved action standard of superiority versus Marlboro King among male Marlboro 85 smokers, aged 21-24. Three of the prototypes (CT 676-H, 601-A, 676-B) were parity with Marlboro King on overall acceptance. The remaining two prototypes (CT 676-C and F) were inferior to Marlboro King. In addition, Prototype 676-F was inferior to all other prototypes. -2-

3 Overall Acceptance - %70+ Male Marlboro Sample 85 Smokers Size Aged 21-24 Prototype CT 676-H 172 Marlboro King 170 Prototype CT 601-A 183 Prototype CT 676-B 171 Prototype CT 676-C 152 Prototype CT 676-F 157 59.4 58.4 <-, 57.2 53.8 50.7 T 43.8 < Significant difference (80% confidence level) with arrow pointing to superior product. . B. Attribute Performance Relative To Marlboro King • Prototype CT 676-H was parity with Marlboro King on overall acceptance and arit on most product attributes. Versus Marlboro, Prototype CT 676-H: Had advantages of more tobacco taste and a fresher aftertaste Had the disadvantage of more mildness than Marlboro (while Marlboro was at the ideal) Was parity on remaining attributes Was at the ideal on ease to get smoke through filter • Prototype CT 601-A, which was also parity with Marlboro on overall acceptance, was parity with Marlboro on all but one attribute, where it had the advantage of a fresher aftertaste. In addition, the prototype (and Marlboro) had ideal levels of mildness and harshness. • Versus Marlboro King, Prototype CT 676-B was parity on overall accept- ance and on all but one attribute, where it had the advantage of a more natural taste. The prototype also had an ideal level of mildness. • Prototype CT 676-C, which was inferior to Marlboro King on overall performance, had a few disadvantages and no advantages. Versus Marlboro, the prototype: - Had disadvantages of more harshness and more bitterness - Was parity on remaining attributes - Was, however, at its ideal level of mildness and ease to get smoke through the filter -3-

z • Prototype CT 676-F was inferior to Marlboro on overall acceptance and had several disadvantages. Relative to Marlboro, Prototype CT 676-F: Had disadvantages of: -- More harshness -- More bitter taste -- More artificial taste -- More drying and more long lasting aftertaste Surprisingly, had the advantage of a fresher aftertaste Was parity on remaining attributes Had an ideal level of mildness and ease to get smoke through filter -C. Product Refinement Opportunities If development efforts were to continue on the parity prototypes (CT 601-A 676-H and 676-B), key refinement opportunities to attain the desired goal of superiority versus Marlboro King would be as follows: Protot pe 676-H Prototype 601-A Prototype 676-B Reduce mildness Increase smoothness Increase tobacco taste Reduce harshness Increase strength/ Reduce harshness/ Tobacco taste Increase smoothness Increase strength Provide fresher/less Provide less strong/ long lasting aftertaste fresher aftertaste Provide less strong/ fresher aftertaste Other less important attributes and ETA ratings, which show correlation between X70+ and product attributes are shown in Attachment . ATTACHMENTS : • Attachment 1: Attribute Performance Relative To Marlboro King • Attachment 2: Mean Attribute Ratings • Attachment 3: Development Direction (ETA Ratings) • Attachment 4: Description Of Prototypes CT 601-A, CT 676-B, C, F, H • Attachment 5: Analytical Data For CT 601-A, CT 676-B, C, F, H • Attachment 6: Comparison Of Prototypes On'Attribute Performance • Attachment 7: XG FFNM 85 SP'Product Testing Schedule -4-

s ATTACHMENT 1 ATTRIBUTE PERFORMANCE VERSUS MARLBORO KING AMONG MALE MARLBORO 85 SMOKERS, AGED 21-24 676-H 601-A 676-B 676-C 676-F Strength P P P P P Smoothness P P P P P More Tobacco Taste 0 P P P P Milder 0 P* P* P* P* Harsher P P* P 0 0 More Natural P P 0 P 0 More Bitter P P P 0 0 Rich Taste P P P P P Strong Aftertaste P P P P P Fresher Aftertaste 0 0 P P 0 More Drying Aftertaste P P P P 0 More Long Lasting Aftertaste P P P P 0 Ease Through Filter P* P P P* P* Key: P - Parity S - Superiority I s Inferior * - At Ideal

z ATTACHMENT 2 MEAN ATTRIBUTE RATINGS AMONG MALE MARLBORO SMOKERS, AGED 21-24 Proto Proto Proto Proto Proto 676-H 601-A 676-B 676-C 676-F Sample Size (172) (183) (171) (152) (157) %70+ 59.4 57.2 53.8 50.7 43.8 Mean Attribute Ratings Stronger 4.0 4.0 3.9 4.1 3.9 Hard to get smoke through filter *3.5 3.4 3.4 *3.4 *3.5 Harsher 3.8 *3.6 3.6 (4.0) (3.9) Fresh aftertaste 3.8 3.6 3.5 3.4 3.6 Smoother 4.3 4.4 4.1 4.2 4.1 Strong aftertaste 3.9 3.9 3.9 4.0 3.9 More tobacco taste 4.4 4.2 4.1 4.2 4.2 Drying aftertaste 4.1 4.0 3.9 4.2 4.6 Milder 4.3 *4.1 *4.1 *4.1 *4.0 Long lasting aftertaste 3.8 3.8 3.8 3.8 4.1 Artificial taste 4.1 3.9 3.7 4.1 4.2 Bitter taste ~ 3.5 3.4 3.5 U.8) (3.7) Rich taste 4.2 4.2 4.0 4.1 4.3 Marlboro King Pooled Ideal (170) 58.4 4.0 4.4 3.3 3.2 *3.7 3.5 3.3 4.5 4.3 4.7 4.0 3.4 4.2 4.8 4.1 3.2 *4.0 4.1 3.7 3.4 4.0 3.4 4.2 Q Indicates significant advantage (80% confidence level) versus Marlboro King Q Indicates significant disadvantage (80% confidence level) versus Marlboro King * At ideal. NOTE: Larger number is more in agreement with attribute on left.

ATTACHMENT 3 '' DEVELOPMENT DIRECTION (ETA RATI NGS) WINSTON KING PROTOTYPES AMONG MALE MARLBORO 85 SMOKERS, AGED 21-24 PROTOTYPE 676-H PROTOTYPE 601-A PROTOTYPE 676-B m ~ ETA REDUCE MILDNESS .53 INCREASE SMOOTH• .55 REDUCE HARSHNESS .52 REDUCE HARSHNESS •48 INCREASE STRENGTH .51 INCREASE TOB TASTE .49 INCREASE STRENGTH .47 FRESHER AFTERTASTE .48 INCREASE SMOOTHNESS .45 LESS STRONG AFTER .42 LESS LONG LAST AFT .47 EASIER THRU FILTER .41 FRESHER AFTERTASTE .42 INCREASE TOB TASTE .43 LESS STRONG AFTER .41 FRESHER AFTERTASTE .40 INCREASE TOB TASTE .39 EASIER THRU FILTER .38 INCREASE SMOOTHNESS .38 LESS STRONG AFTER .38 INCREASE STRENGTH .37 LESS DRYING AFTER .38 LESS DRYING AFTER .31 LESS LONG LAST AFT .36 LESS LONG LAST AFTER .36 LESS DRYING AFTER .33 MAINTAIN EASE THRU MAINTAIN IDEAL HARSH .57 MAINTAIN IDEAL MILD •51 FILTER .42 MAINTAIN IDEAL MILD .43 PROTOTYPE 676-C PROTOTYPE 676-F MARLBORO KING INCREASE STRENGTH .53 INCREASE STRENGTH .52 LESS LONG LAST AFT .63 REDUCE HARSHNESS .52 LESS LONG LAST AFT .49 INCREASE TOB TASTE .59 INCREASE SMOOTHNESS .51 INCREASE TOB TASTE .47 INCREASE SMOOTHNESS .57 LESS STRONG AFTER .47 REDUCE HARSHNESS .40 INCREASE STRENGTH .55 FRESHER AFTERTASTE .47 LESS STRONG AFTER .55 INCREASE TOB TASTE .47 LESS DRYING AFTER .39 LESS DRYING AFTER .52 LESS LONG LAST AFTER .42 INCREASE SMOOTHNESS .39 EASIER THRU FILTER .45 LESS STRONG AFTER .36 FRESHER AFTER .44 LESS DRYING AFTER .31 FRESHER AFTER .34 MAINTAIN IDEAL MILD .40 MAINTAIN IDEAL MILD .30 MAINTAIN IDEAL HARSH•60 MAINTAIN EASE THRU MAINTAIN IDEAL EASE MAINTAIN IDEAL MILD .54 F ILTER .•36 THRU FILTER .29 ;,,„ 50R7# 0530, 7. 2fi-f1.