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TOPLINE RESULTS - NOT TO BE CIRCULATED SALEM Box Project SB (MRD #88-31242) (MRD #88-31202) Management Summary Objective• The objective of this report is to review the results from the SALEM Project SB PGT. Backg;ound: The SALEM Brand is currently developing a box full-flavor line-extension named Project SB. This product will target the wants of younger adult male smokers and black male smokers to reverse the erosion of SALEM's development in this segment Prototype A was developed as a direct translation of the current SALEM King size product into a 79mm box style to promote possible implementation in 1989. To provide baseline learning for Project SB, prototype B was developed. This product uses the current SALEM King blend configuration but has lower moisture (12.25%), lower pack menthol (.33%) and a cork-tipped 79mm form. Research Obj_ectives The objective of this study is to provide R&D guidance in developing a full-flavor SALEM line extension, having tobacco taste, strength, menthol delivery, and acceptance at least parity with Newport Or. l! nQ Q11 0 Both prototypes were superior for acceptance by wide margin and had menthol/tobacco ste and strength perceptions at least parity with Newport among competitive male smokers 18-34, 18-24, and 18-34 smokers of box styles. The prototypes were also parity with each other for acceptance among these smoker groups. 2. Among black male 18-34 competitive smokers the cork tipped prototype (B) was superior to Newport an acceptance by a wide margin. Prototype A was inferior to prototype B for acceptance and it achieved only parity with Newport an %70+. Implications: 1. Although both prototypes show great potential for further development, which prototype is pursued depends upon the positioning and objectives of this project • If product is positioned to have more tobacco taste vs. Newport, the cork tipped prototype (B) is the better choice. Prototype B is also the preferred choice if the positioning of the product is toward black male smokers. • If the product pursues a menthol taste position, the white tipped prototype (A) would be the better choice. 2. The difference in white (A) and cork (B) tipping may be impacting perceptions observed for the two prototypes. As a next step, Brand and R&D may want to test prototype A with cork tipping. The use of cork tipping on A might increase tobacco taste perceptions which is currently a disadvantage of A vs. Newport Julie Bils Marketing Research Department

SALEM Box Project $B OlIItD #88-31242) (11M if8$-31202) TOPLIIYE Rackground• The SALEM Brand is currently developing a box full-flavor line-extension named Project SB. This product will target the needs of younger adult male smokers and black male smokers to reverse the erosion of SALEM's development in this segment. The younger adult male segment is generally attracted to fuller-flavor brands with more tobacco taste and typically views current SALEM as a"light tobacco" product. R&D would like to address this segment's perceptions by developing a product with more tobacco taste, more strength, and less menthol delivery to achieve at least parity with Newport. Prototype A was developed as a direct translation of the current SALEM King size product into a 79mm box style to promote possible implementation In 1989. To provide baseline learning for Project SB, prototype B was developed . This product uses the current SALEM King blend configuration but has lower moisture (12.25°/0), lower pack menthol (.33%) and a cork-tipped 79mm conventional form. Research Obiectives: The objective of this study is to provide R&D guidance in developing a full-flavor SALEM line extension, having tobacco taste, strength, menthol delivery, and acceptance at least parity with Newport. Methodologr. Three products, described in Table 1, were tested using the standard two-pack monadic test methodology with telephone callbacks. Each product was tested among 600 FF M 85 18-34 male smokers (ex SALEM and Kool). This study was analyzed among the following smoker groups: 1) 18-34 male smokers 2) 18-24 male smokers 3) 18-34 black males smokers 4) 18-34 male box smokers 2

The total target competitive smoker group yielded approximately 580 18-34 year old males, 225.18-24 year old males. 115 18-34 year old black males, and 200 18-34 year old male smokers of box styles. Product CT # Pack Style Tipptn~ %Pack Moisture %Pack Menthol Proto. A 1741A 79mm Box White Current(12.77) Current(.46) Proto. B 1741B 79mm Box Cork 12.25 .32 Newport 1732C 79mm Box Cork 11.46 .31

$IJMMA1tY OF FIlVDINGS 1. Among total 18-34 year old competitive male smokers, both prototypes were superior to Newport by a wide margin for overall acceptance. The two prototypes were also parity with each other for acceptance. The superiority over Newport was supported by the attribute ratings. f~N • Both prototypes were parity with Newport for strength and mildness. • Key advantages and disadvantages of prototype A vs. Newport were as follows: Advantages for A (vs. NewDort): Disadvantages for A: More menthol and cooling perceptions Less tobacco taste More smoothness More menthol taste than tobacco taste (Ideal) • Prototype B was parity with Newport for tobacco taste, harshness, and natural taste. • Prototype B had no disadvantages vs. Newport. Key advantages of _ prototype B vs. Newport were as follows: Advantages for B (vs. Newoort): More menthol and cooling perceptions More smoothness More menthol taste than tobacco taste 2. Results among 18-24 year old males and box smokers were consistent with those among 18-34 year olds. However, among black males, prototype B was superior to both prototype A and Newport by a wide margin. • Among blacks, prototype B was parity with Newport for tobacco taste, harshness, and mildness, and had the following advantages over Newport. Advantages for B (vs. Newport): More strength (Ideal) More smoothness More menthol taste 3. Attribute perceptions of the two prototypes were consistent with their analytical differences and with the perceptual differences expected because of their different tipping colors: Prototype A: 12.77% moisture .46% pack menthol white tip Prototype B: 12.25% moisture .32% pack menthol cork tip • Key advantages for prototype A vs. B were as follows: Males 18-34: Advantages for A (vs. B): More menthol taste More menthol than tob. taste (Ideal) Black Males 18-34: Advantages for A (vs. B): Less tobacco taste (Ideal) More menthol than tob. taste (Ideal) Advantages for B (vs. A): More tobacco taste (Ideal) More natural taste Advantages for B (vs. A): More menthol taste More strength (Ideal) 4

DETAILED FI1yDINGS - MALES 18-34: %70+ and Mean Thermometer As shown In Table 2, both SALEM prototypes were rated superior to Newport on both %70+ and mean thermometer by a wide margin. Proto. A Table 2 Ngwpor-t Proto. B (Base Size) (597) (583) (554) %70+ 63.0 <----- 51.4 -----> 63.5 Mean Therm. 68.6 <----- 64.0 -----> 68.6 (Note: arrows indicate product with the advantage read at 95% confidence interval.) Attdbutes Strength and Tobacco Taste The two prototypes achieved parity with Newport for strength as shown in Table 3. The prototype with cork tipping and with lower moisture/menthol (B) also achieved parity with Newport for tobacco taste. Newport and prototype B had the advantage of more tobacco taste vs. the prototype with white tipping (A). Additionally, prototype B had ideal tobacco taste. 4 Table 3 Proto. A Newport Proto. B Pooled Ideal Strength 3.92 3.81 3.91 4.22 Tobacco Taste 3.74 -----> 3.96 4.09* 4.13 L ------------------ --------------- ~ (*At the Ideal.) 5 Males 18-34

Menthol Taste Related Attributes Both -prototypes had advantages over Newport of more menthol taste, more cool taste, more cooling aftertaste, and more fresh aftertaste as shown in Table 4 below. Both prototypes also had the advantage of menthol/tobacco taste balance vs. Newport. Prototype A also had the advantage over prototype B for all the menthol related attributes. Additionally, A was at the Ideal for two of these attributes: cooling aftertaste and menthol/tobacco taste balance. Table 4 Proto. A Newport Proto. B Pooled Ideal Menthol Taste 4.68 <----- 3.65 -----> 4.23 4.90 ^L ---------------------------------i Cool Taste 4.46 <----- 3.62 -----> 4.08 4.65 n L ---------------------------------i Cooling Aft. 4.16* <----- 3.34 -----> 3.55 4.23 ^L ---------------------------------j Fresh Aft. 4.14 <----- 3.48 -----> 3.89 4.46 A, .............................. --a Menthol/Tobacco 3.61* <----- 4.40 -----> 4.06 3.65 T~te ^L ---------------------------------J Smoothness, Harshness, and Mildness As shown in Table 5, both prototypes had the advantage of more smoothness vs. .,_~, -- ~ ~ - ~ Newport. rsotn prototypes acruevea pariiy with NewporL ior both harshness ancd mildness. The white tipped prototype (A) was at the ideal for harshness and all three products were at the ideal for mildness. Table 5 Proto. A Newport Proto. B Pooled Ideal Smoothness 4.58 <----- 4.21 -----> 4.52 4.92 Harshness 3.19* 3.35 3.34 3.19 Mildness 4.16* 4.20* 4.16* 4.22 6 Males 18-34

Drying, Sweet, Long Lasting and Strong Aftertaste The white tipped prototype (A) had the advantage of less dzying aftertaste and more sweet aftertaste vs. Newport (Table 6). Both prototypes were parity with Newport for long lasting and strong aftertaste. Proto. A Table 6 New-port Proto. B Pooled Ideal Drying Aft. 3.56 <----- 3.78 3.76 2.99 Sweet Aft. 2.85 <----- 2.65 2.69 3.22 Long Lasting Aft. 3.46 3.51 3.48 3.30 Strong Aft. 3.65 3.64 3.60 3.25 Artificial Taste, Bitter Taste, and Draw As shown in Table 7, the cork tipped prototype (B) achieved parity with Newport for artificial taste, however, the white tipped prototype had the disadvantage of too much artificial taste vs. prototype B. Both prototypes, however, achieved parity with Newport for bitter taste and draw. Additionally, the white tipped prototype (A) was easier to draw than prototype B. Table 7 Proto. A Newport Proto. B Pooled Ideal Artificial Taste 3.83 3.63 3.59 - L --------------------------------- ^JI Bitter Taste 2.97 3.10 2.96 Draw 3.06' 3.15' 3.31 3.11 ^L ---------------------------------4 7 Males 18-34

DETAII.ED I+'IIVDINGS - MALES 18-24 %70+ and Mean Thermometer As shown in Table 8, males 18-241tke males 18-34 rated the two prototypes superior to Newport for both %70+ and mean thermometer by a large margin. Proto• A Table 8 Newpo#~ $ grotg, _ Mase Size) (230) (217) (233) %70+ 66.2 <----- 51.1 -----> 67.3 Mean Therm. 68.8 <----- 65.0 -----> 69.1 (Note: arrows indicate product with the advantage read at the 80% confidence level.) Attributes Strength and Tobacco Taste As shown in Table 9, both prototypes were rated parity with Newport for strength. The cork tipped prototype (B) was rated parity with Newport and superior to the white tipped prototype (A) for tobacco taste. In addition. Newport was directionally superior to prototype A. Table 9 Proto. A Newport Proto. B Pooled Ideal Strength 3.99 4.05 3.98 4.26 Tobacco Taste 3.80 -(79%)-> 3.99` 4.09' 4.07 L ---------------------------------!JN 8 Males 18-24

Menthol Taste Related Attributes Both prototypes had the advantages of more menthol taste, cool taste, fresh aftertaste, and superior menthol/tobacco taste balance vs. Newport (Table 10). The white tipped prototype (A) had the advantage of more menthol taste and superior menthol/tobacco taste balance vs. prototype B. Prototype A also had the advantage of more cooling aftertaste vs. both Newport and prototype B. Table 10 Proto. A Newport Proto. B Pooled Ideal Menthol Taste 4.71 <----- 3.86 -----> 4.32 4.92 ^.................. --............. j Cool Taste 4.48 <----- 3.72 -----> 4.09 4.65 Cooling Aft. 4.23* <----- 3.42 3.53 4.26 u AL ---------------------------------j Fresh Aft. 4.21 <----- 3.64 -----> 4.02 4.52 Menthol/Tob. 3.35 <----- 4.31 -----> 4.04 3.62 Taste AL --------------------------------j Smoothness, Harshness, and Mildness As shown in Table 11, the white tipped prototype (A) had the advantage of more smoothness and less harshness vs. Newport while the cork tipped prototype (B) achieved parity with Newport on the same attributes. In addition, prototype B had the advantage of less mildness vs. Newport while the white tipped prototype was parity with Newport for mildness. Proto. A Table 11 Newport Proto. B Pooled Ideal Smoothness 4.60 <----- 4.28 4.44 4.92 Harshness 3.18* <----- 3.49 3.45' 3.30 AL --------------------------------~ Mildness 4.18' 4.33 -----> 4.09• 4.17 9 0 0 J N W Males 18-24 c~n r Q)

Artificial Taste, Biter Taste, and Draw As shown in Table 12, both prototypes achieved parity with Newport for artificial taste and both had the advantage of less bitter taste vs. Newport. In addition, the cork tipped prototype (B) achieved parity with Newport for draw but had the disadvantage of being too hard to draw vs. the white tipped prototype W. Although their ratings were significantly different, neither prototype A nor Newport had the advantage of draw over the other. Table 12 Proto. A Newnort Proto. B Pooled Ideal Artificial Taste 3.74 3.71 3.56 - Bitter Taste 3.00 <----- 3.34 -----> 3.06 Draw 3.04* <-----> 3.29• 3.51 3.18 ---------------------------------~ Drying, Sweet, Long Lasting, and Strong Aftertaste The prototype with white tipping (A) had the advantage of less drying and less long lasting aftertaste vs. Newport. Prototype A also had the advantage of less drying aftertaste vs. the cork tipped prototype (B). Prototype B, however, achieved parity with Newport for both drying and long lasting aftertaste. In addition, both prototypes achieved parity with Newport for sweet aftertaste and strong aftertaste (Table 13). Proto. A Table 13 Newport Proto; B Pooled Ideal Drying Aft. 3.48 <----- 3.84 3.75 3.01 ^L ---------------------------------1 Sweet Aft. 2.89 2.74 2.81 3.29 Long Lasting Aft. 3.38' <----- 3.66 3.55 3.36 Strong Aft. 3.70 3.72 3.62 3.34 10 Males 18-24