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August 25, 1988 TO: MR. J. D. WEBER FROM: J. V. BELLIS SUBJECT: STATUS UPDATE FOR J. T. WINEBRENNER I. Multi-Brand • Maps for key counties in Hispanic expansion markets have been sent to_- Expansion Market Sales regions. The maps, which detail high density Hispanic areas with zip code overlays, complete planned MRD input into market definition for 1989 Hispanic Program Expansion markets. • Sample and questionnaire revisions for Hispanic Consumer Tracking have been finalized and interviewing has commenced to boost younger adult Hispanic smoke base sizes in lead and expansion markets. Next Steps Week of • MRD receives pre-program tracking data 10/31/88 (Jan-Sept.) for lead markets. • MRD receives post-program tracking 1/30/89 date (Oct.-Dec.) for lead markets. • Report for pre vs. post in lead markets. 2/24/89 II. Creative Development/Evaluation WINSTON Advertising • Focus group research is tentatively planned for the week of September 19 to explore target consumer reaction to new creative concepts for the WINSTON back-up campaign. DORAL "Big Brand" • Focus group results were reported on refined POS treatments of DORAL's "top 10 brand" claim. These groups reconfirmed the positive perceptions fostered by the claim among target smokers and will lead to final creative that will combine the best elements of the two POS executions that have performed most strongly in qualitative to date. Upon approval of the final creative, quantitative testing is planned. Hispanic Creative Development • Qualitative research will be conducted to support the creative assignments of the two Hispanic Agency finalists. Three focus groups for each agency will be conducted in each of the Los Angeles and San Antonio lead markets. Next Steps Timin- Focus Groups 9/12-15 Final Report w/o 10/10

III.Packaging Research None - IV. Product Research CAMEL Lights 85 Product Improvement • A decision was made to bypass the planned R&D confirmation test of CAMEL Lights 85 prototype #1559B and move directly to a manufacturing confirmation test, thereby saving resources and about four months of time. The manufactured test will provide confirmation on whether the prototype represents a tangible product improvement among target smokers and will also provide insights into the cork/white tipping issue as the prototype will be tested in both tipping colors among target smokers. Next Steps Week of - Mailout prototype in cork/white 10/17 - Report results 11/25 CAMEL Filter 85 Product Improvement • An improved prototype #1582 A/D was recently identified through PGT testing for CAMEL Filter 85. A manufacturing confirmation test is currently being set up to evaluate whether it represents a significant improvement among target smokers while maintaining performance among franchise smokers. Next Steps Week of - Mailout prototype 10/31 (tentative) - Report results 12/12 DORAL Cost Reduction (Wood Pulp Paper) • As with the FFLT NM85 style, DORAL FFLT NM100 product test results showed that wood pulp paper does not risk the brand's superior status to Cambridge among franchise smokers or the brand's parity status to Cambridge among target smokers. As such, an AR was routed for approval to changeover to wood pulp paper effective 8/29 at an annual cost savings of close to $1MM. Improved WINSTON King Lead Market (VCA) • Franchise switching results for improved WINSTON King showed equal switching among franchise smokers in lead versus control markets. There were also very few consumer complaints. In sum, this supported the decision to expand improved WINSTON King nationally. Initial lead market sales performance will continue to be monitored monthly until national distribution is achieved in fourth quarter, 1988. WINSTON Lights 85 Performance Update • WINSTON Lights 85 (improved product introduced nationally) continues to be parity to Marlboro Lights among target smokers and superior among franchise smokers.

WINSTON Ultra 85 Performance Update • WINSTON Ultra 85 achieved parity to Merit Ultra 85 among target smokers and improved to superiority among franchise smokers. WINSTON FF 100 Development Direction Analysis • Analysis of the current development direction for WINSTON FF 100 among target smokers will be presented to R&D and Brand Management the week of August 29. This will complete direction reassessment for all of WINSTON's key styles. Alpine Product Research • Alpine FFLT 100's and Alpine FFM 85's product will be evaluated versus SALEM FFLT 100 and FF85 and DORAL FFLT M100 and FF M85 among both franchise and target groups. Next Steps Week of Reports: Alpine Light 100 - 9/19 franchise cells Alpine Light 100 - 9/26 target cells Alpine FF 85 cells 10/24 V. Brand Promotion Research WINSTON Sports Connection • A Research Plan to track performance of the 1989 WINSTON "Sports Connection" program will be forwarded to Brand Management the week of August 29. - CAMEL Big Idea • Two "Big Idea" promotion concepts ("Smooth Moves" and "Cruisin") are currently being refined based on prior qualitative research and will be evaluated in a second round of qualitative to take place September 7/8 in Denver. Hispanic Premium Exploratory • Final report will be issued w/o 8/29 on focus groups that were conducted to identify appropriate premium items for multi-pack retail offers and/or for distribution at events.

VI.Miscellaneous Issues WINSTON ULT White-Tip Test Market • Six month sales performance for White-Tipped WINSTON Ultra Styles will be reported this week and will serve as additional input for the go/no go decision on expanding Ultra styles in white-tipping. Sales tracking will continue to be monitored and reported monthly through the end of 1988. CAMEL Big Brand Program (Boston/Detroit) • Nielsen Retail audit data through June continues to show CAMEL to be on_ a positive share trend in both Boston and Detroit as a result of "Big Brand" marketing support. A final report, which will include results of a second post-wave of perceptions tracking data, will be issued the week of August 29. Competitive Brand Assessment • Alpine The Awareness and Usage study found that Alpine had awareness levels equal to BRIGHT at the 8 week period but below BRIGHT at the 12 week period. Trial and purchase levels also lag behind those achieved by BRIGHT. Brand interaction appears to skew highest among Savings brand users and Competitive menthol brand users. Alpine is having difficulty seeding its price proposition as only 32% of those smokers aware of the brand know about its generic price. No further awareness tracking is planned for Alpine in its test market. VII. Line Extensions CAMEL ATF • Assisted Brand Marketing in presenting recommendation to JTW/RMS to test market CAMEL ATF. Approval was given to proceed toward a mid-February test market DTS with the condition that the brand secure the full support of the Sales Department. MAGNA Expansion Tracking • The August 1 expansion, into NASA/Florida and the October 1 expansion into PMSA, will be tracked via retail sales (Nielsen subtabs) and consumer diagnostics (awareness and usage study/B1G1F Response Check). Next Steps Week of First NASA/FL Tracking Report 11/7 First PMSA Tracking Report 1/9/89

DORAL FF Menthol 85/100 • Two test markets will be read for the DORAL FF M 85/100 line extensions -- in Pittsburgh (with Alpine) and in Alabama (without Alpine). These two test markets will be read through Nielsen subtabs to provide "disaster check" share reads and through consumer diagnostics obtained from an on-carton bounceback offer to determine source of business.. Next Steps Week of First Tracking Report 10/31 J.'V. Bellis MARKETING RESEARCH DEPARTMENT JVB/bmt cc: Ms. Fran Creighton Ms. Del Isaacs Ms. Kay McCaffrey Mr. Steve Snyder