sample="quota" bates="1002430081" isource="pm" decade="1960" class="ni" date="19691122" PHILIP MORRIS INCORPORATED INTER-OFFICE CORRESPONDENCE 100 Park Avenue, New York, N.Y. 10017 MARKETING DEPARTMENT RECEIVED JAN 2 1969 PM To: Mr. R. N. Saleeby, Jr. Date: November, 22, 1968 From: A. Udow Subject: CONSUMER BEHAVIOR - CIGARETTE SMOKING 3RD QUARTER, 1968 This is a top-line summary of a national telephone survey of 14,827 cigarette smokers conducted during the first week of October 1968. 1. Trial and switching data show the 100's getting better than average trial in the 3rd Quarter, but no growth in share-thus low conversion. The 60-Account Panel has been showing only slow growth for some months, so the present smoker data suggest even further slowing. Smoker interest in the category is probably waning. 2. The Second Quarter's data has shown B & H Share and Trial firming after three quarterly declines. Unfortunately, this did not continue into the Third Quarter. Trial of the brand, in particular, is worrisome. At 1.5% it makes a new low for B & H. These negative indicators do not apply to B & H Menthol which is holding firm. Despite a reduction in advertising dollars in the 3rd Quarter, advertising recall is up from 53% to 60%, that is, almost as high a level as it has ever been. Since trial is low, the new commercials ("Around the World," introduced 6/21, and "Sheik," introduced 8/27) appear to be memorable but not motivating enough. The rise in advertising recall is due to "World," there being little remembrance of "Sheik" after to be sure, its first 6 weeks of airing. This relative performance of the commercials was indicated by ASI findings: "World" +9 "Sheik" +5, Norm +6. As is being done, "World" Should receive more exposure than "Sheik." Confirming the second quarter trend, Parliament remains static: - Smoker share remains unchanged over the past 4 quarters - Trial has remained level over the past four quarters - Ad recall peaked at 50% (1st Qtr.) and has leveled at 46-47%. Reference to the London campaign are flat at about 30%. Product references are too low. Mildness playback is almost non-existent. Thus, the "London" campaign which has not improved the brand share and which now has recall no higher than Silva Thins (46%) may have lost its freshness and thought should be given to a new campaign while effort continues to improve the product sell in "London." 4. Silva Thins is showing real strength. - Smoker share has doubled to 0.6% in the past 3 months - Trial for the filter and menthol versions combined has doubled (5.0%) and is higher than Marlboro Red and 100's combined (3.9%( and about equal to Winston Red and SKF (4.9%). Trial is second only to Salem. - Ad recall (46%) is fair, equal to that of Parliament, though better than True (35% in the 2nd Quarter). -Relative to smoker share, triers of Silva Thins are coming from Viceroy 100's, B & H Menthol, Pall Mall Menthol, L & M Gold and True Blue, all giving up more than their proportion of smokers. 5. Alpine was named by 10% of all smokers when they were asked to name all the menthol cigarette brands they could "think of." When asked to name all the coupon brands they could think of, Alpine was named by 9% of all smokers behind Raleigh at 78%, Belair at 29% and Old Gold at 14%. During the month September 16-October 18, telephone interviews among women in San Francisco showed 11% aware of Alpine as having coupons, and 5% aware of the stamp convertibility in spite of a special ten week 10-second campaign. Thus Alpine has a long way to go to register its existence and its raison d'etre. 6. An attempt was made in this study to estimate the volume of menthol cigarettes accounted for by "occasional" menthol smokers. It appears that occasional menthol smokers (that is, regular non-menthol brand smokers who smoke on the average as much as one pack of menthols a week - or 52 packs a year) consume only about 2% of all menthol cigarettes - about 2.5 billion cigarettes a year. Even though this is a small number, it is notable that 86% of non-menthol smokers smoke menthols often enough to average a pack a month-- although this usage might be concentrated in just one or a few parts of the year. 7. Discontinuing smoking is a severe problem, especially among men: A. Udow cc: Messrs. Weissman, Millhiser, Bowling, Landry, Cigarette Brand Managers, Bohan (WRG), Snitzer (LB) THE MARKET THE MARKET The Market Smoking The decline in the percentage of people who smoke appears to be leveling in the 36-37% range. The slight increase shown in the most recent quarter is due to a two percent point increase in smoking among women (34%) which is now at its highest level since the inception of the quarterly surveys. For the second consecutive quarter we have obtained some information on non-smokers. The most recent data show men are twice as likely to have quit smoking as are women, ie. 23% of all men were found to have smoked at some time vs. 12% for women. Types Smoked Sorting out people by the types of cigarette smoked "most often" shows little change from past trends. 1. Non-filters held level at their lowest point (21.6%) since the beginning of the quarterly studies. 2. Filters remained level at the 56-57% of smokers they have had for the past 15 months. 3. Menthols continue to increase to the highest level to date (21.5%). Other categories show: 4. A new high among smokers who report 100M cigarettes as their "regular" brand (21.0%). Although the 60 Account Panel still reports a lower share for 100's (14% of the volume), the present level is a one point increase over the level reported in the 2nd Qtr of 1968 (13%). The consistency of these Trendex numbers means that they are not accidental. Either 100's smokers tend to be light smokers, or some people are confused about the length of their cigarettes. 5. A leveling of Flavor Filter smokers at about 28%. 6. A decrease of almost one percentage point in Hi Fi smokers, i.e. from 11.7% (1st Qtr. - 1968) to 10.8% (3rd Qtr. 1968). 7. Allowing for occasional statistical variations, there had been an average of 7.5% of the smokers reporting a coupon brand. The latest quarter is right on this average. Individual Brands For a complete list of all the brands shown in this section, see Appendix Table I. P. M. Brands and Competitive Brands Marlboro After three quarters of growth, Marlboro showed a decrease in smoker share in the Third Quarter. However, we should wait until the next quarter before concluding that this represents an actual decrease in smoker share. Versus Winston Winston Red and Winston SKF also showed a slight increaser to 14.7% this quarter after increases in smoker share from 14.1% (3rd QTR-1967) to 15.2% (2nd QTR-1968). Benson & Hedges After a slight increase in smoker share during the 2nd QTR, B & H retreated to the same level found in the 4th QTR of 1967 (3.2%). Versus Pall Mall Pall Mall Gold and Menthol combined suffered its first decrease in smoker share since the 4th QTR of 1967. Parliament Parliament continues to hold firm at the 1.8-1.9% level. Versus Kent Kent (Filter and 100's combined) at 7.1% is still below the 7.5% found in the 3rd QTR of 1967 and 7.3% found in the 1st QTR of 1968. Alpine Alpine shows the same level found in the 3rd QTR of 1967 (0.6%). MARKET MOVEMENT - trial - switching - conversion Disloyalty ("Trial Out") "Disloyalty" is defined as the percentage of smokers of a particular brand who have bought some other brand specifically to try in the last three months. The disloyalty "all brand average" shows some leveling over the last three quarters remaining in the 42-44% range. The average for the 3rd QTR was 43.9%. The leading PM brands and the competitive brand, on the whole, show a decrease in rates for the 3rd QTR. Trial of other brands, % of each brand smokers who tried, regardless of whether or not they switched. Trial Trial (Table 6) is the rate at which each individual brand is able to attract new triers. The median average for all brands have varied between 0.7% and 0.9% over the past year. In the 3rd QTR of 1968, the average brand was tried by 0.8% of all smokers interviewed. Individual Brands B & H 100's F: dropped to its lowest level in the past 8 quarters (1.5%), well below its high of 6.0% in the 2nd QTR of 1967 and slightly below the level of Pall Mall Gold (1.7%). B & H 100's M: has remained level over the last four quarters at about 0.8% yielding an average performance. Marlboro: Red and 100's leveling at they high rate of about 3.0% and 1.0%, respectively. Parliament: trial for Parliament, presently at 1.2%, has remained fairly level over the past nine quarters. Conversion Despite no change in the overall trial rate for the 3rd QTR, the conversion rate, i.e., the percentage of smokers who tried a brand and switched to it, showed a marked increase over the 2nd QTR, i.e., from 4.9% to 5.7%, which is the second highest conversion rate since the 4th QTR of 1966, (the highest is 7.6% in the 3rd QTR of 1967.) Although the average conversion rate increased, the conversion rate for the leading PM brands decreased, except for Parliament, while competitive brands showed more increases than decreases. ADVERTISING RECALL Parliament Advertising Recall Advertising Recall for Parliament has peaked. The 46% playback recorded in the 2nd QTR was confirmed this QTR (47%), both below the 50% playback elicited in the1st QTR of 1968. References to the "London" campaign have leveled off at about 30%, while product references have declined steadily over the past four quarters. Benson & Hedges Advertising Recall The percent of respondents who could recall some element of the advertising increased 7 percentage points to 60%. Although this is still below the level achieved in the 2nd QTR 1967 (65%), the advertising expense for the 3rd QTR of 1968 was only 1/3 as much as that of the 2nd QTR of 1967. Silva Thins Advertising Recall Recall for Silva Thins advertising (46%), which was measured for the first time, was as high as Parliament (47%) and above the 2nd QTR 1968 levels elicited for True (35%) and Pall Mall (22%). Scenes showing a man leaving a girl and taking the cigarettes with him received the biggest playback (21%) while comments relating to reduced tar and nicotine were a distant second (8%). PARLIAMENT PLAYING CARD OFFER To determine the extent to which a free pack of playing cards obtained with the purchase of two packs of parliament cigarettes created trial and conversion for Parliament, all smokers and triers of Parliament were asked: "During the past few months have you received something extra free with purchase of Parliament cigarettes?" Although the numbers are small, it appears the offer contributed heavily to Parliament's increase in trial with no apparent effect on conversion. AWARENESS OF MENTHOL AND COUPON BRAND To determine awareness of Alpine as a menthol cigarette, respondents were asked to name all the brands of menthol cigarettes that they could think of. Higher awareness for Alpine was found in California as opposed to the remainder of the U.S. both as a menthol brand (14% vs. 10% - See table 12) and as a coupon brand (12% vs. 8% see table 13). The higher level of awareness for Alpine can in part be explained by the greater exposure received in California through spot TV and by the convertibility program being associated with the state's leading trading stamps, Blue Chip. As can be seen from table 13, Alpine and Old Gold are the only brands that enjoy a higher level of awareness (as a coupon brand) in California vs. the remainder of the U.S. most likely due to the exposure received on their convertibility programs. OCCASIONAL MENTHOL SMOKERS In this study, an attempt was made to estimate the volume of menthol cigarettes consumed by "occasional" menthol smokers, i.e., smokers who reported a non-menthol brand as the cigarette they smoke "most often." Defined this way, "occasional" menthol smokers account for about 12% of all menthol cigarette sold. PERCEIVED MILDNESS BY SMOKERS OF INSTANT BRAND In the 2nd QTR study, we found that "mildness" has a "relative meaning to all smokers and in some abstract manner may be a desirable attribute to most smokers." (See page 81, 2nd QTR, 1968 Survey). As a follow-up we have tried to find out how smokers related to the leading mildness playbacks to their own brand. This time each smoker was asked: " Of all the cigarette brands you know, which one best fits this description: 1. Does not have a strong tobacco taste 2. Doesn't burn your throat or mouth 3. Is good tasting 4. Not harsh enough to smoke 5. Doesn't make you choke or cough." It is now apparent that there is discrimination among mildness qualities by the smokers of each brand. For example, Marlboro was one of the five lowest brands which was named for all of the listed qualities except "Is it good tasting" , as was Lucky Strike, Camel, Chesterfield, and Pall Mall, and therefore not associated with mildness. On the other hand, Carlton and Spring were most often mentioned by their respective smokers for all qualities except good taste. Parliament was among the brands receiving the highest playback for qualities "Does not have a strong tobacco taste" and "is not harsh to smoke" while B & H was among the five brands receiving the highest playback for "Not harsh enough to smoke" and "doesn't make you choke or cough". Thus, it appears that smokers of Parliament perceive the brand as being on the mild side along with smokers of Kent, True, and surprisingly, B & H. APPENDIX