POINT OF SALE CIGARETTE MARKETING

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1 POINT OF SALE CIGARETTE MARKETING An important tobacco industry strategy Stacy Carter MPH (Hons) BAppSc The University of Sydney Funded by an Australian Postgraduate Award US National Institutes of Health R01CA87110 Australian National Health and Medical Research Council Outline Sources Australia and Canada Industry response to serious marketing restrictions Evidence that the retail environment is important to the tobacco industry Implications 1

2 Tobacco industry document sources Other sources 2

3 Australia and Canada "Australia is one of the darkest markets in the world... it probably is the darkest, I mean ourselves and Canada fight every month for who s got the darkest conditions to do tobacco manufacturing and marketing. And one of the things we can offer the world is what we do best, which is how to work, maximize, proactively drive our market position in a market that s completely dark. Now that takes a different skillset... a different type of learning... we know we have a lot of expatriates who come down to Australia for learning... they can come here and learn these techniques and take them back to Europe or Latin America or to the United States or to Africa... " David Crowe, Marketing Director, British American Tobacco (BAT) Australia BATES /8989 3

4 Within the present restricted marketing environment, we will develop programs to maximise the impact of remaining advertising opportunities and continue to research innovative new techniques. Philip Morris Asia/Pacific Three Year Plan BATES /4226 The priority is continuing to foster relationships between consumers and brands Going out and directly contacting our key target consumer is becoming increasingly more important, particularly in light of the upcoming media ban we must now talk to the consumer face to face Philip Morris 1991 original budget: Marketing Presentation. October 1990 Bates No A/7171 4

5 Marketing activities after bans Retail marketing Altering the pack Event promotions Advertising in imported international magazines Sponsorships Brand stretching Lifestyle premiums The development of corporate websites Does retail marketing make any difference? Limited research on the retail environment Effects are difficult to measure because retail marketing happens in the context of other tobacco industry and tobacco control activities Many studies poorly designed Studies associate self-reported exposure to retail marketing in young people with tobacco use or attitudes, studies of opinions of the effects of POS Although marketing research tends to be poorly detailed or very expensive, it makes great claims for effectiveness of retail marketing Thus industry documents provide valuable evidence 5

6 What do the industry documents say? After regulation of marketing, point of sale marketing became even more important to the industry Philip Morris Australia Aug 1995 Bates /4490 6

7 Other research US: As regulation increases, the tobacco industry puts most of their money into the retail environment (e.g. post MSA) US: Expenditure in the retail environment is growing approximately 80% of marketing expenditure is retailer incentives Canada: data released under Access to Information by Health Canada shows rising retail marketing expenditures most recently $90m in the financial year What does the tobacco industry do for retailers? Trade promotional expenditure In-store display hardware and assistance with POS marketing Corporate advertising and alliance building Brand advertising direct to retailers A new, innovative electronic distribution system 7

8 Trade Promotional Expenditure Retailer rewards and loyalty programs Rebates and price supports Other research US: Industry spend at retail increases levels of cigarette advertising and decrease prices 8

9 Display hardware and advice The point of sale (POS) display has become a life-or-death marketing issue Sales reps provide assistance with all aspects of retail marketing, including designing the stock selection and display to match the shop s demographic, and how to display to increase purchasing Sales managers and reps now engage with the minutiae of retail display Bates /1432 9

10 Display hardware and advice We ve been pushing retailers to put their cigarettes on the back wall, and we ve had some initiatives where we ve block-stocked our products... [we oriented the] product towards the consumer rather than having it facing the floor so you see more of the packet... [we] changed the packet colours on one... brand... so that it s a uniform blue. The aim of the exercise is instant recognition: along with Benson&Hedges, that s given us full gold and blue blocks on display and that helps our brands stand out. Australian Service Station and Convenience Store News 1998;May/Jun: Stockdale B Australia trip: topline learning (highly restricted market) 12 Feb 1997 R.J. Reynolds Bates /

11 Stockdale B Australia trip: topline learning (highly restricted market) 12 Feb 1997 R.J. Reynolds Bates /3852 Stretch loopholes as far as possible Stockdale B Australia trip: topline learning (highly restricted market) 12 Feb 1997 R.J. Reynolds Bates /

12 Corporate advertising and alliance building Regular tobacco industry involvement in retail industry events Regular pro-tobacco industry editorial in retail trade press Corporate advertising in retail trade magazines 12

13 13

14 Brand advertising direct to retailers Rarely provides new information Extensive use of imagery and positioning statements 14

15 Electronic distribution systems the importance of the distribution system is growing as more marketing restrictions are placed on the industry PHILIP MORRIS ASIA/PACIFIC THREE YEAR PLAN BATES /4226 Electronic distribution systems The response: innovative electronic ordering and distribution systems for small to medium sized businesses e-orders from Philip Morris, Quatro4 from BAT distributing all products contain tobacco advertising place tobacco products at the heart of small business Australian innovations which may be rolled out to other markets 15

16 Conclusions No doubt that the industry continues to market to consumers however possible No doubt that the retail environment is a key location for such marketing The tobacco industry has built deep relationships with the retail sector: cultural change will be necessary 16

17 Conclusions Retailers and the point of sale must be included in any attempts to control tobacco marketing Point of sale marketing is not limited to trademarks: the industry will find ways to use anything except a complete ban on display There is precedent for the industry paying for the cost of display hardware 17

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