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PAT McGRATH'S NOTES FOR BISTRO PRESENTAlION TO CURT JUDGE - MARCH 9, 1981 1. We should understand this is not a Harvard Business School type new product development project. It is much more a result of a way things really are in life and reminds me of a speech I wrote about new products, the theme of ~ . which was, "What New Product Development Needs Is More Bulldogs and Less Bullshit!" One example of how we have stumbled,and bumbled on our way to what we think is a brilliant end result is that we started with the name Sentry, then it became Metro, is now Bistro Lights, and just might become Metro again. 2. The breakthrough came at focus groups we did a few weeks ago, and it became , clear tfaat people were involved in and excited about this product. Some loved it. Some hated it, but everyone had an opinion. I looked at my focus group*notes later and remembered I had written down, "My God, we may a.. have harne"ssed 'word of mouth'. If that is in any way true, we are on to something here." 3. I will present the basic premise of the project. In other words "locate" everybody as to exactly what we have up our sleeves. Jim Jordan will talk about why we are confident that Bistro Lights will sell and Gene Case will show you what we are tal kic:g about. OUR GOAL A BRAND ENTRY IN THE HIGHER END OF THE REDUCED TAR SEGMENT THAT WILL NOT CANNIBALIZE EXISTING LORILLARD BRANDS. With brands like Triumph, True and Kent III, the Company is a major factor in the lower end of the reduced tar segment. We are confident that Bistro Lights is a Un1(Iue product and will not cannil>il ize Golden Litjht:,-) in tkie

r a 2 mid-section, nor Kents in the higher end of the reduced tar segment. We don't bdlieve that Bistro Lights will take business from your strong Newport franchise. ~ OUR PRODUCT t THE EF II PRODUCT AT THE 12 mg. TAR LEVEL HAS `, TESTED WELL AGAINST WINSTON AND MARLBORO. 4. Everyone is quite familiar with the positive results of the EF II product test. An important'point I will mention here is our recommendation to go forth with a regular 85 mm and a menthol version of EF II. We wanted to use a menthol instead of 100's for three reasons: - We are~after a younger target and menthols generically skew younger. We are after a dual audience and menthols split 50/50 whereas 100's skew to women. i.. i The most critical point is that we feel menthol is an extremely important part of our total presentation of the Bistro Lights idea. This will. be clear when we show you the advertising. OUR TARGET AN APPEAL TO THE YOUNG MEN AND WOMEN WHO THINK FOR THEMSELVES AND THUS ARE LIKELY TO BE MOVING DOWN FROM LO-FI TO LOW TAR. 5. In hard demographic terms, we are after younger and better educated people. Overall, these kind of people are just more apt to try new and different Cr things. Bistro Lights is certainly new. It is also different. Beyond tt demographics are what we believe to be more important - psychographics. ~ O We believe Bistro Lights will appeal to a very special type of person ... IPA i;J7 i

3 an individualist ... a person who thinks for him or herself and isn't afraid that others know.it. We think the most important underlying characteristic of Bistro Lights users will be this psychographics context rathe'h than any hard, fast, demographic concept. V I think this explains the platform upon which Bistro Lights is positioned to go to market. I would like Jim Jordan to tell you why we think it will be successful. PJM:kes 3/9/81 F

DRAFT #2 4. At a time when it is harder than ever for a brand to stand out, Bistro will emphatically stand out -- and in a very positive way. ~ . Lorillard has indicated that in 1970, the trade could satisfy consumer needs by carrying 40 brands and styles of cigarettes. Today it must carry 100 brands and styles. In other words, it is 21 times harder to get attention today than it was just ten years ago. So today, more than ever, it is critically important for a brand to be distinctive. And yet 2ronically -- at a time when distinctiveness is so important -- there is less and less distinction among cigarettes and their advertising. Very little stands out. There is~-the same look-alike, sound-alike wash of words and pictures and numbers. In a category where imagery and character and personality are perhaps more important than in any other category, very little new imagery or character or personality has been created for a very long time. Bistro is loaded with imagery. It's loaded with character, and it's loaded with personality. ~ And it's the right imagery! The right character! The rig_ht personality! A lot of cigarette advertising today is cold. It looks like it was computed instead of created. I3istro is warm. A lot of cigaretto advertisillg is grim. 13istro is dood-natured. Bistro is dramatically different. hut it's not just c_liffei-c:iit for the sake of being different. It's different for the right rc:asons.

I i Bistro's very pack will communicate that this cigarette is a pleasure. bistro is the first cigarette ever, to our knowledge, to communicate pleasure lt right on the pack. And pleasure -- despite what we see in a lot of the ads ~ these days -- should be what smoking is all about. ~ Bistro's pack and Bistro's advertising are tailor-made for the 1980's. In the 1980's, 70% of all impressions in the cigarette business will come from split-second media, like outdoor and point-of-sale. In a split-second medium, you should have split visuals. Two pictures can be one picture too many. In the case of Bistro, the pack is the ad, and the ad is the pack. One picture. You can take it all in, even in a split second. Bistro is more than just interesting. Bistro is provocative. People in the focus groups discussed it passionately. They took sides! I know. I was there. How long has it been since you saw people care enough about a cigarette to araue. aboue. it? Not everybody will love Bistro, but some people will love it a lot -- and nobody will be bored by it! 5. Bistro offers a much-desired psycliolocJical benefit t}iat almost everybody neods -- but no olller cigarette is offeriny! People in all walks of life today are fe;d up wit!i their anonymity. We live in a society where people have lost their identity..... where they are known as numbers rather than as names and faces and personalities. Instead of having the grocer say, "Good morning, Mrs. Jones," lie hollers)"G7! Who's got number 67?" In a country built by rugged iiidividualists, we have lost a lot of our individualism. We have become a faceless society -- and we are sick of it. We are fighting back, reaching to regain our individualism -- and we show it in a lot of ways. V/

Pcople.arc activcly on the lookout f,•• things that help them express their own character ... their oA taste ... thc.1r own style. Perhaps there has been no more dramatic example of this than in the clothing market. People don't wear jeans any more. They wear Calvins. Or Jordache. Or Sergio Valenti. Or whatever defines and suits their own individual style. V It all adds up to a major psychological change taking place in this r country. The rebellion against facelessness. The Return to Individualism. And yet astonishingly enough -- in the cigarette category, which turns so heavily upon psychology, not a single marketer has taken advantage of this development. Cigarette advertising, for •the most part, continues to present itself as an endless series of anonymous look-alike words and numbers and pictures. Very few cigarettes offer the smoker an opportunity to make a strong individual statement about himself. . ~ Until Bistro. People smoke cigarettes partly because of what their cigarette says about them. What will Bistro advertising say about Bistro smokers? i.. It will say, "Look. I am not a number. Ialn an individual. I've got character. Above all, I've got my own style. I blaze my own trails. You won't lose nle in tlle crowd, because I'm out in front of the crowd." The theme is: "Bistro. Not just another faceless cigarette." The line works perfectly with the graphics. llow can L'istro be faceless? Bistro has a face! And character. And color. And personality. The line is short, crisp, memorable. Perfect for all those split-second colllnlunications oll ouldoor and E>oilit-0l-}>urcha:;o :;ic.1uS. The line is explicit. lt's meaning is crystal-clear. It tal:es a stand. But it does so without bt;ing heavy-han(.lel.l. It is a CJoll(1-llatllred lill(-. It even hi13 cl touch of humor tc~ it -- Csl)ui:ially in C0liju>>c-tic>11 with the Finally the line 11.1:; yre~A 1unc_l(:vity. It c._ui y0 011 Cin13 on cint1 build awareness and momentuin even if wO slwuld eventually want to say additional things about Bistro.