sample="quota" bates="2043375178" isource="pm" decade="1980" class="ni" date="19821031" SECTION OPERATIONS REPORT USA PHILIP MORRIS SECTION MANAGER: TONY JOHNSON HEADQUARTERS: DETROIT, MI MONTH: OCTOBER 31, 1982 I: MARKETING CONDITIONS A. New PM Brand - Benson & Hedges Deluxe Ultra Lights continues to be a tremendously successful introduction. During audits, distribution is noted in 97%+ of all calls, with reported movement by retailers. The customer Analysis Report indicates that Benson & Hedges Deluxe Ultra Lights Regular accounts for 1.6% of Section sales for September and Benson & Hedges Deluxe Ultra Lights Menthol accounts for 1.3% of Section sales for September, for a combined share of Section business of 2.97%. Although the introduction was during only the 3rd Quarter, year to date sales for Regular reflects a 0.6% of Section sales and Menthol reflects a 0.5%, for a combined 1.1% of Section sales YTD. With the price increase and overloaded sales situations at the distributor level, it is difficult to determine weekly sales, at this time. The Territory Analysis report indicates a Section average of 9.8% combined distribution, chain and independent. - Marlboro Menthol re-introduction has been accomplished with no problems. Currently, this brand accounts for 3.88% of Section sales for September and 4.0% of YTD sales. New Marlboro Menthol, it is anticipated, will be at every wholesale account and, generally, every retail account prior to the end of the introductory period. We anticipate a very positive reinforcement of this brand with the new support provided. B. Philip Morris Section sales for September are up to 23.3% with all major packings indicating an increase. YTD sales are up 2.0% with all major packings indicating an increase, with the exception of Parliament (off 7.4%) and Cambridge (off 27.0%). Realistically speaking, this is due to the price increases. C. Industry During audits, wholesalers report that industry purchases by them are up for all companies. No other information is available at this time. II: COMPETITIVE ACTIVITY American Tobacco Company A. Sales/Share of Market Sales of Carlton remain steady. With the introduction of Lucky Strike Filter, Box and Soft, there has been some sales increases for this brand due to 'brand awareness' among adults over 35. B. Manpower Nothing to report C. Strategy Paying wholesalers to tape packs together for buy 1 get 1 free. Began the national introduction of Lucky Strike Filter at retail on October 11 and will continue for 8 weeks. They are still competing for more SOM with the introduction of this brand, however, they seem to be few years too late. They are now aiming at the 21 to 35 age group with this brand. D. Programs All programs center around Lucky Strike Filter. In both temporary and permanent displays, this brand is featured and supported by buy 1 get 1 free and coupons for $2 off per carton purchase. Also, there is a coupon for a free pack. Retailers receive $1 each time the American Sales Rep comes in and the retailer is wearing a button saying "Lucky Strikes Again". It is reported that some gas station chains in the Grand Rapids markets are receiving automatic shipments of 15 Soft and 15 Box of Lucky Strike Filter. There will be mass sampling of Lucky Strike Filter in bars, restaurants, bowling alleys, etc. Ad featuring a young male smoker about to light up saying "Lucy strikes again. The moment is right for it". Wholesalers receiving $15 per case off old price during the introduction of Lucky Strike Filter. Lucky Strike Filter incentives include matches, samples, frisbees, and zippo-type lighters to preferred accounts. Vending program for one "starter" carton Lucky's to be placed in vending machines free. A free carton of Pall Mall for each placement made. A $2 bonus, if maintained for 6 months. Their POS piece consists of a sticker announcing Lucky is in the machines, which has an additional $1 payment. All of these fending payments are over and above the annual payment of $4. E. P.O.S. Talkers, cards, posters are supporting new brand. F. Military 50¢ VPR on Carlton at AFCOM, good movement. 2 free packs with carton purchase of Carlton at AAFES outlets, average movement. Brown & Williamson A. Sales/Share of Market SOM continues to decline due to Kool sales still slipping, as well as declines in low tar packings. Barclay sales are climbing slightly. Based on the Account Related Contract Summary Report for September, there were 4 standing Order upgrades or reinstatements presented, of which 1 was rejected and 3 are pending. Distributors are not very receptive to Standing Order presentations at this time. B. Wholesale Grocers The Quarterly Trade Class Report indicates that this trade class had a sales increase for 3rd Quarter 1982 versus 3rd Quarter 1981 of 7.3%. During this period, percent of total Section business declined from 17.4% to 17.2%. YTD figures indicate a 6.9% increase in total PM business and an increase of Section business from 17.3% to 18.1%. Alpena Wholesale Grocers has requested a C/I presentation be given to all store set-up personnel during November, we will comply with this request. Vending Vending prices continue to increase. Presently, price range is currently from $.95 - $1.25. Direct vendors continue to show a slight decline in business. 3rd Quarter 1982 versus 3rd Quarter 1981 reflects a 12.8% decline in purchases, compared to a YTD decrease of 8.4%. Vendors continue to question as regarding a PM supplied coin mechanism to assist in converting machines. Reportedly, RJR has such a device and will offer it to vendors with certain stipulations. One vendor reports that requirements for the RJR accumulator are: 1) minimum of 10 RJR brands, 2) Tru Check reporting if vendor is presently on DataVend. We have not confirmed, as of this date. D. Military VA Canteens - Sales figures for September indicate an increase of 86.0%, and 1.7% YTD. In the Tomah, Wisconsin Canteen, B&H Deluxe Ultra Lights are averaging 15 cartons per week. Coast Guard Exchanges - September sales for this trade group are up 55.5%, 19.1% YTD. B&H Deluxe Ultra Lights distribution with this class is now at 100%. AAFES Exchanges - We continue with 100% compliance on Plan A's in these accounts. Military Manager continues to make presentations for A-1-P and department markers. Navy Exchanges - Great Lakes Naval Exchange reflects 30.2% sales increase for September, however, they continue with a YTD decrease of 10.7%. Air Force Commissaries - PM sales for September reflect an increase of 41.7% and a YTD increase of 6.6%. Currently, at K.I. Sawyer Commissary, B&H Deluxe Ultra Lights reflect movement of 3 cases per month. We have a commitment from this Commissary for participation in the Merit Shopping Spree and the Marlboro Stetson Promotions. Army Commissaries - September sales reflect an increase of 14.5% and a YTD figure of 4.8%. Reportedly, the Midwest Region Office requires all accounts to forward 3rd Quarter consumption figures. We anticipate this for the re-figuring of SOM by company and brand packing. Retail (Chain/Independent) A. Supermarkets Supermarket prices for packs range from 79¢ to 85¢ and for cartons from $7.29 to $7.49, however, in some instances, carton prices are as high as $8.19. These figures are only from accounts surveyed and are not totally complete. During a sales call to Hamady Supermarkets in Flint, the Buyer revealed sales figures for the last 6 months. In parenthesis are market sales figures for the market area: As indicated, all companies are in line, with the exception of Philip Morris and RJR. It was attempted to explain that this inconsistency was due to the fact that PM was not properly inventoried on his fixture, however, the Buyer stated that PM was not properly paying to be on the fixture. We will follow-up. Plan A presentations have been made to all major chains in all markets. We have secured commitments in those areas where we previously had a contract and are meeting obstacles in those areas where they were before. Hardings Markets in Kalamazoo had indicated that they would participate in C/I, however, when they informed RJR, a special presentation was prepared displaying a new RJR fixture. This fixture consists of a standard 16 row universal with an additional 4 feet on either side for cigarettes or tobacco. This information was forwarded to Steve Sabella, NYO. Currently, no pictures of this fixture are available. Direct supermarkets for the 3rd Quarter reflect a sales decrease of 7.7% and a contribution to Section sales of 7.2%. YTD figures indicate a 4.0% decrease in sales and an 8.3% contribution to Section sales. RDA/Convertool/Vendor Placements YTD we have made 1,070 vendor placements, 60 convertool placements, and 2,533 RDA placements. V: SECTION OPERATIONS AND ACTIVITIES A. Retail Activity and Accomplishments During September 30 territories cycled at 96% or above and 7 territories cycled at 90-95%. During September, set/sell placements totalled 5,244 (including gravity feeds), of which 4,064 were paid and 1,180 were not paid. In addition, 874 Benson & Hedges Deluxe Ultra Lights buy 3 get 2 free displays were utilized, which represents 90% of total shipment. Temporary POS placements are as follows: Large/small posters: 13,748, cards: 10,304, talkers: 11,004, banners: 453, mobiles: 127, and 858 decals. C. Special Programs During September 25,909 sample 4/6's were utilized by Reps. This reflects usage of 22.8 per day, which is slightly below our Section objective. A total of 11,015 sample 20's were utilized, which is an average of 9.7 packs per day. During the 9 week introduction period, 91% of all complimentary 20's were utilized. D. P.O.S. Permanent During September, 2,056 pieces of permanent POS were planned and 891 were removed, for a net gain of 1,165. The 2 day permanent POS drive improved our gain substantially. Temporary With the completion of the B&H Deluxe Ultra Lights introduction, it appears that about 85-90% of temporary POS and displays were utilized. Much excellent visibility was gained and very little material was left over. Materials Under/Over Produced by Percentage Production of materials appears to be on target. VI: SPECIAL SECTION PROJECTS A. Special Projects Evaluation During September emphasis was placed on the placement of certain POS items, some of which were reported last period. Two days were set aside for the placement of permanent POS. A total of 2,056 pieces were placed during the month of September, with 891 pieces removed, for a net gain of 1,165. This is a significant amount due to the POS drive. During October emphasis was placed on the placement of thermometers and any other POS items left remaining in POS ware houses. To date, I do not have figures to report total placements. Also, top priority was placed on the resigning and resetting of Plan A's. B. Special Projects - Next Sales Cycle Due to there being 2 days during November for the holidays, the B&H ashtrays, Virginia Slims A-1, resigning and setting of Plan A's, the Marlboro Menthol reintroduction, and other projects that may be incoming during November, we have not designated any special project for November. VII: TRAINING AND DEVELOPMENT A. Training and Development Programs In addition to working with Sales Reps on increasing adequate inventory levels of B&H Deluxe Ultra Lights, DM's are working on Plan A presentations, as well as Plan B presentations. Both Supervisors are working with personnel in areas of special need, such as, presentation skills, identifying opportunities, handling objections, and making sound business decisions. Supervisors will work with their personnel to insure proper and thorough understanding of the draft payment system, as well as the merchandising payment system for chains. Seminars One day was spent conducting the new product meeting for Marlboro Menthol. All personnel that were in attendance were extremely excited about the reintroduction and support for this brand. Ed McQuigg, NYO, spent 1 day with AMCS, Judy Logan, auditing and calling on accounts. Attended a meeting called by DRS Bradenbrug. This meeting was informative and helpful. DRS Bradenburg spent 2 days with me conducting audits and reviewing Section performance. Enjoyed the session. Performance Appraisals An analysis of Performance Appraisals indicates that only 4 Appraisals remain to be completed for the year, all on Sales Reps. They will be completed as scheduled. Section Training Time Please see attached recap. VI. TRAINING & DEVELOPMENT RECAPS PERFORMANCE APPRAISALS - YTD COMMENTS: 3 territories will not require PA's this year due to employment dates. Time Utilization IX: MEDIA E. Stadium and Arena It has been reported by vendors that the Olympic Stadium Authority, which contracts advertising space in Cobo Hall and Joe Lewis Arena, has had a disagreement with RJR and that their arrangement may be terminated during 1983. X: ASSOCIATIONS AND CONVENTIONS D. Tobacco Action Network (TAN) Attended the TAN Advisory Committee Meeting. All information has been previously reported.