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o ~ ~ 1t' n n z SECRET rvo.-3-8 ? aY~ New Brands and Strategic. Research Report MDD #85-42602 (CT 443-A AND B) August 13, 1985 TO: Mr. A. T. Sterling Mr. R. F. McCarthy PROJECT XG FFLTNM 85 SP PROTOTYPE TEST FINAL REPORT COPIES TO: Mr. L. W. Hall, Jr. Mr. E. J. Fackelman Mr. J. D. Weber Ms. M. H. Parham Mr. H. T. Parks Mr. W. R. Cook Ms. R. S. Turlington 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 w AJ/IT Form 7=4 -'1afM

PROJECT XG FFLTNM 85 SP PROTOTYPE TEST EXECUTIVE SUMMARY (MDD 85-42602 z PURPOSE: To report final results on the performance of two XG FFLTNM 85 SP prototypes (CT 443-A and B) versus Marlboro Lights 85 (and CAMEL Lights 85) among target smokers. 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. 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 (CT 443-A and B) achieved action standard of superiority versus Marlboro Lights 85 among male Marlboro Lights 85 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. - Prototypes 443-A and B were directionally superior (.70 and .69 confidence level, respectively) to CAMEL Lights 85. - Marlboro Lights 85 was superior to CAMEL Lights 85. Overall Performance Sample % 70+ Among Size Target Smokers Marlboro Lights 85 229 Prototype 1 (CT 443-A) 280 Prototype 2 (CT 443-B) 274 CAMEL Lights 85 212 > 61.9 58.8 , _ 58.8 i 54.2 - ~ < Significant difference (80% confidence level) with arrow pointing to superior product. <--- Significant difference (69% confidence level) with arrow pointing to directionally superior product.

z • Versus Marlboro Lights 85 The prototypes performed similarly versus Marlboro on most product attributes. - Prototype 2 (CT 443-B) which was at parity with Marlboro Lights 85 on all but one product attribute--where it had the advantage of less harshness than Marlboro. - Relative to Marlboro Lights 85, Prototype 1 (CT 443-A): Was at ap rity on nearly all product attributes Had the advantage of less harshness Had only one disadvantage--less rich taste . - Both prototypes were ap rity with Marlboro Lights 85 on key attributes of: -- Smoothness--not attaining superior goal -- Tobacco taste - 3 Achieving parity goal -- Strength (at ideal) • Versus CAMEL Lights 85 The XG FFLTNM 85 SP prototypes performed similarly versus CAMEL Lights 85 on many attributes. - Both prototypes were directionally superior to CAMEL Lights 85 on over- all performance and were superior on the following product attributes: -- Less harshness -- More mildness (at ideal) -- More smoothness -- Less bitter taste Prototype 1 (CT 443-A) had the additional advantage (while Prototype 2, CT 443-B was parity) of less strength (at ideal) than CAMEL Lights 85. Prototype 2 (CT 443-B) had the additional advantage (while Prototype 1, CT 443-A was parity) of a richer taste than CAMEL Lights 85. - Both prototypes were at parity with CAMEL Lights 85 in the remaining attributes of tobacco taste and natural taste. MDD RECOMMENDATIONS/NEXT STEPS: Of the four Project XG FFLTNM 85 SP prototypes tested, Prototypes CT 443-A and B appear to be better candidates than CT 558-B and C for further development. CT 443-B appears to be the best candidate, as it had the advantage of less harshness than Marlboro Lights 85 and was parity on all remaining product attributes. For XG FFLTNM 85 to achieve the desired goal of superiority versus Marlboro Lights 85 among target smokers, refinement opportunities (for both CT 443 prototypes) are to: • Further reduce harshness • Increase smoothness • Increase tobacco taste • While maintaining ideal levels of strength and mildness wao~Q • "v/ M. A. Albert Marketing Development Department

z PROJECT XG FFLTNM 85 SP 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 super- ior 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. Three additional XG/CAMEL FFNM 80 Box prototypes are tentatively scheduled for NFO mailout week of November 4, 1985. • XG FFNM 85 SP In recent testing (CT 444-A and C/MDD #85-42602; CT 552-A and B/ MDD #85-42606), none of the prototypes achieved standard of superiority versus Marlboro. As a result, further development/testing is being pursued as outlined in Attachment 6. • XG FFLTNM 85 SP R&D developed two follows: prototypes designed to primarily address smoothness Prototype 1 (CT 443-A) CAMEL Lights blend and configuration White tipping as Prototype 2 (CT 443-B) Designed To WINSTON King blend White tipping Increase smoothness/mild- ness/reduce harshness Micro laser tipping perforation Micro laser tipping perforation Provide more consistent product No filter flavor No top dressing No filter flavor No top dressing 3.3/44,000 filter tow Improve aftertaste Improve aftertaste Increase smoothness u, 0 (Denser tow) ~ TEG as casing for Increase smoothness v V 0 cutting ~ v I -1-

z ACTION STANDARD: Full Flavor Low Tar XG Soft Pack 85 prototypes should achieve overall superiority versus Marlboro Lights 85 among male Marlboro Lights 85 smokers, aged 18-24. METHODOLOGY: The standard NFO two-pack monadic design with telephone callback was used in this study. The two XG FFLTNM 85 prototypes (CT 443-A and B) were each tested among approximately 280 male Marlboro Lights 85 (SP, Box, and 25's) smokers, aged 18-24. Products were mailed out the week of April 9, 1985. Results are compared to Marlboro Lights 85 (Waves 5-6/1984 combined with Waves 1, 3, 4/1985 of the Competitive Product Series--omitting Wave 2 with extremely high Marlboro %70+) and the most recent and consistent CAMEL Lights 85 product manfactured in Whitaker Park (Wave 4/1985 plus a supplement from the Competitive Series). DETAILED FINDINGS: A. Overall Performance 1. Neither prototype (CT 443-A and B) attained action standard of superiority versus Marlboro Lights 85 among male Marlboro Lights 85 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. • Prototypes 443-A and B were directionally superior (.70 and .69 confidence level, respectively) to CAMEL Lights 85. • Marlboro Lights 85 was superior to CAMEL Lights 85. Overall Performance Sample % 70+ Among Size Target Smokers Marlboro Lights 85 229 Prototype 1 (CT 443-A) 280 Prototype 2 (CT 443-B) 274 CAMEL Lights 85 212 > 61.9 58.8 , _ 58.8 J < , i 54.2 --J < Significant difference (80% confidence level) with arrow pointing to superior product. <--- Significant difference (69% confidence level) with arrow pointing to directionally 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 (CT 443-B), which was rated at parity with Marlboro Lights 85 on overall performance, was also at ap rity on all but one product attribute--where it had the advantage of less harshness than Marlboro. • Prototype 1 (CT 443-A), which was also parity to Marlboro on overall performance, was rated at parity with Marlboro on all but two attributes. Relative to Marlboro Lights 85, Prototype 1 (CT 443-A) had the advantage of less harshness and disadvantage of less richness. • On key attributes, both prototypes were ap rity with Marlboro Lights on: - Smoothness--not attaining superior goal - Tobacco taste ~ -- Achieving parity goal - Strength • Both prototypes (and Marlboro Lights 85) had ideal levels of strength and mildness. 2. Relative To CAMEL Lights 85 The FFLTNM 85 SP prototypes performed similarly versus CAMEL Lights 85 on many attributes (see Attachment 2 for more detail). Both XG FFLTNM 85 SP prototypes were directionally superior to CAMEL Lights 85 on overall performance and were superior on several attributes. • Relative to CAMEL Lights 85, both prototypes had the following advantages: Less harshness More smoothness More mildness (at ideal) Less bitter taste Prototype 1(CT 443-A) had the additional advantage (while Prototype 2, CT 443-B was parity) of less strength (at ideal) than CAMEL Lights 85. In addition, Prototype 2 (CT 443-B) had the advantage (while Prototype 1, 443-A was parity) of a richer taste than CAMEL Lights 85. • Both prototypes were at parity with CAMEL Lights 85 on the remaining attributes of tobacco taste and natural taste. -3-

z 3. Comparison Of Prototypes The prototypes were at parity with each other on overall performance, and were at parity on all but one product attribute--where Prototype 2 (CT 443-B) had the advantage of being richer tasting than Prototype 1 (CT 443-A). 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 CT 443 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. ATTACERiENTS : • 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 (CT 443-A and B) • Attachment 6: XG FFNM 85 SP Product Testing Schedule -4- V C %0 1

3 ATTACHMENT 1 , ATTRIBUTE PERFORMANCE RELATIVE TO MARLBORO LIGHTS 85 AMONG MALE MARLBORO LIGHTS 85 SMOKERS, AGED 18-24 Prototype 1 Prototype 2 (CT 443-A) (CT 443-B) Attributes Where Both Prototypes Were Superior To Marlboro Lights 85 Less Harshness S S Attributes Where Both Prototypes Were Parity With Marlboro Lights 85 Smoothness Tobacco Taste Strength Mildness Artificial Taste Bitter Taste P P P P P* P* P* P* P P P P I Attributes Where Prototypes Differed In Performance Relative To Marlboro Lights 85 Less Rich I P KEY: S = Superior P = Parity I = Inferior * - At Ideal NOTE: Small sample sizes (about 150) for "new" attributes (ease to get smoke through filter, fresh, strong, drying, long lasting aftertaste) for Marlboro Lights 85.

z ATTACHMENT 2 ATTRIBUTE PERFORMANCE RELATIVE TO CAMEL LIGHTS 85 AMONG MALE MARLBORO LIGHTS 85 SMOKERS, AGED 18-24 Prototype 1 Prototype 2 (CT 443-A) (CT 443-B) Attributes Where Both Prototypes Were Superior With CAMEL Lights 85 Less Harsh S S Smoother S S Milder S* S* Less Bitter S S Attributes Where Both Prototypes Were Parity With CAMEL Lights 85 Tobacco Taste P P Natural Taste P P Attributes Where Prototypes Differed In Performance Relative To CAMEL Lights 85 Less Strength S* P* Rich Taste P S KEY: S = Superior P - Parity I s Inferior * = At Ideal

z ATTACHMENT 3 MEAN ATTRIBUTE RATINGS AMONG MALE MARLBORO LIGHTS 85 SMOKERS, AGED 18-24 Marlboro Prototype 1 Prototype 2 Lights CAMEL Lights Pooled (CT 443-A) (CT 443-B) 85 85 Ideal Sample Size (280) (274) (229) (212) %70+ 58.8 58.8 61.9 54.2 Mean Attribute Ratings Stronger 3.5* 3 6* 3.6* 3 7 3.5 8 3 3 0 Harsher 3.2 3.2 < 3.6 < . . 4 < 4 1 4 7 Smoother .5 4 4.3 F .3 . . More Tobacco Taste 4.0 4.1 4.1 4.1 4.3 Milder 4.4* 4.5* 4.3 4.2 4.6 9 < 4 1 Artificial Taste 3.9 4.0 3. . 3 < 3 6 Bitter Taste 3.4 3.2 3. . 4 0 Rich Taste 4.1 > 4.3 4.3 < . < Points to product with significant advantage (80% confidence level) with larger number being more in agreement with attribute on left. * At ideal. NOTE: Small sample sizes (about 150) for "new" attributes (ease to get smoke through filter, fresh, strong, drying, long lasting aftertaste) for Marlboro Lights 85.