Tobacco Marketing

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Tobacco Marketing
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• Each year smoking kills more Americans than
  alcohol, cocaine, crack, heroine, homicide,
  suicide, automobile accidents, fires, Aids
  combinedvictims die more than twenty years
  before the life expectancy of non-smokers
• US Centers for Disease Control

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Fake Slogan?

• Brand X, Define Sophistication
• Where theres a man theres a Brand X
• Proof with one puff

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Fake Slogan?

• Your throat can tell
• You deserve this
• We made Brand X especially for women because
  women are generally different than men

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Fake Slogan?

• This butts for you
• Who put the men in menthol?
• Blow some my way

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Fake Slogan?

• Made gentle for you
• Gee, mommy you sure enjoy your Brand X
• Available in two healthy flavors

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Tobacco

• Non edible leaf
• Over 4,000 different gasses, particles,
  compounds
• Tar
• Nicotine
• Carbon Monoxide

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History

• Pre-Columbian
• Columbus
• Mid-16th Century,Jean Nicot
• 1612, John Rolfe
• Virginias Largest Export

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Health History

• Early 1900s health risks
• 1930 linked cancer smoking
• 1938 knew of shorter life span
• 1952 Readers Digest Article Cancer by the
  Carton

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Tobacco Use
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Toll of Tobacco
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Tobacco Industry

• First American Tobacco Ad- 1789
• Continues to Advertise
• 4 Billion Annually
• Campaign Contributions

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What countries are doing to curb smoking

• European Union
• Tobacco Promotions Bill
• February 2003 advertising on billboards and in
  magazines ended
• May 2003 in-pack promotions and direct marketing
  ended
• No advertising on websites
• Vending machines must eliminate branding
• Only an actual-size picture of cigarette packs
  are allowed in vending machines

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What countries are doing to curb smoking

• European Union
• New EU product directive
• Effective October 2003, all cigarettes on retail
  displays must have a health warning
• Warning shall cover 30 of the pack
• Prohibits the use of sub-brand name
• Lights, Mild, Ultra
• July 2005, all tobacco sponsorships across the EU
  will cease

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What countries are doing to curb smoking

• England
• Bans product giveaways
• Eliminated coupon activity
• February 2003, advertising on posters and in
  newspapers and magazines banned
• February 2004, direct marketing will become
  illegal

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What countries are doing to curb smoking

• Canada
• In March 2002, the Saskatchewan province banned
  product displays in public places where children
  have access
• Not allowed to advertise brands in the windows of
  retailers

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What countries are doing to curb smoking

• Ireland and Iceland
• Also not allowed to advertise brands in the
  windows of retailers
• Must keep tobacco products in cupboards, drawers,
  or behind the till
• Currently there is no legislation for moving the
  cigarettes from behind the counter to underneath
  it

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What countries are doing to curb smoking

• South Korea
• Advertisers are banned by law from marketing
  cigarettes to women or young adults
• India
• The cabinet recently approved a bill to ban all
  tobacco advertising
• Parliament is expected to ratify it soon

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What countries are doing to curb smoking
Marketing (UK)
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What the WHO is doing to curb smoking

• The WHO is urging the film industry to
• Eliminate smoking from family movies
• Run strong anti-smoking ads with films that
  include tobacco
• Not identify tobacco brands within movies

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What the WHO is doing to curb smoking

• In May 2003, the WHO adopted a sweeping
  anti-tobacco treaty
• The Framework Convention on Tobacco Control
  provides a general ban on advertising and
  promotion
• Health warnings should ideally cover at least
  half of the package
• Aims to strip tobacco of the cool and glamorous
  image
• Takes affect after 40 countries have ratified it
  the U.S. is not making the commitment to sign or
  ratify the treaty

Associated Press
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Differences in cultures and brands

• South Korea
• Virginia Slims are definitely a man thing
• A round of golf at a country club
• Winning an award
• Japan
• Young men Lucky Strike
• Older Men Kent
• Women Capri and Virginia Slims
• Russia
• While many countries are trying to eradicate
  smoking, in 1990 Russian officials asked for 34
  billion cigarettes to be imported to satisfy a
  shortage

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Switch Brands, Not Start Smoking

• British American Tobacco
• Will continue to advertise at the point of
  purchase
• Says its marketing is designed not to sell
  smoking
• Instead, BAT wants to retain customer loyalty
  and win from competing brands

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Switch Brands, Not Start Smoking

• The industry as a whole says that advertising is
  about encouraging smokers to switch brands, not
  to take up the habit
• Industry also says that evidence from countries
  that have introduced marketing restrictions
  suggests that bans do not reduce smoking-related
  deaths

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Classification???

• Simple Moral Problem
• Concentrated benefits
• Dispersed harm
• Organizational pressure to perform

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Adult Numbers

• 48 million American adults smoke
• (http//www.cdc.gov/tobacco/30yrsgen.htm)
• 23 of adults
• (Washington, 2002)
• Ninety percent of smokers start in their teens
• (Washington, 2002)

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Teen Numbers

• 28 percent of high school students smoke
• 5000 children try a cigarette for their first
  time every day
• 2000 will not be able to stop and become adult
  smokers

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Why is Teen Smoking on the Rise?

• Children are 3 times as susceptible to tobacco
  advertising than adults
• Advertising is a more powerful inducement than is
  peer pressure

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Teen Marketing

• 2002 Tobacco industry marketing budget 8.4
  billion per year for the United States
• 2001, Philip Morris sold more than half of all
  cigarettes consumed in the United States

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Advertising Trends

• 2000 Philip Morris spent 216 million on print
  ads
• 2001 Philip Morris spent 114 million on prints
• Philip Morris USA comprises 40 of the 261
  million spent in magazines last year

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Internet Marketing

• Public Health Cigarette Smoking Act of 1969
• Master Settlement of 1999
• Forcing Direct Marketing

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Internet Marketing

• More than 200 websites in the U.S. that sell
  tobacco products
• Well over 200 websites based overseas selling to
  U.S. residents
• Internet tobacco product sales will account for
  14 of the total U.S. market by 2005

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Ethical Issues

• More than 88 tobacco companies in 23 states use
  the Web to sell discounted cigarettes.
• Internet makes low-cost cigarettes readily
  available to kids
• Internet makes it easier to evade state taxes

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Government Solution Strategies

• Tobacco free internet for kids act
• HR 2914 Sponsor. Rep. Marty Meehan (D-MA)
  Cosponsor. James Hansen (R-UT)
• Summary. Bans the sale of tobacco products to
  minors over the Internet, and gives the states
  the power to enforce it in federal courts

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Government Solution Strategies

• The Internet Cigarette Warning Label Act
• HR 3007Sponsor. Rep. Marty Meehan (D-MA) Original
  cosponsor. James Hansen (R-UT)
• Summary. Extends to the Internet the requirement
  that warning labels be placed on cigarettes

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Prevent All Cigarette Trafficking (PACT) Act.

• "Contraband cigarettes contribute heavily to the
  profits of organized crime syndicates,
  specifically global terrorist organizations,"
  stated Hatch..

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Prevent All Cigarette Trafficking (PACT) Act.

• "It is clear that cigarette trafficking is
  becoming a method of terrorist financing," Kohl
  said. "This legislation will comprehensively
  combat tobacco smuggling. In reducing cigarette
  smuggling, we will simultaneously help deny
  terrorists a needed source of funding and help
  our financially struggling states collect their
  revenue." . .

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Corporate Solution Strategies

• Requires prospective buyers to send another
  adult's signature to the company verifying that
  the purchaser is at least 18 years old

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Corporate Solution Strategies

• Requires tobacco buyers to send in a copy of
  their driver's licenses
• Pay only with a credit card when buying online

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Corporate Solution Strategies

• Have an age verification request form that
  requires the name, date of birth, driver's
  license number and state in which the buyer
  resides

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Are Corporate Solutions Effective?

• PhilipMorris restricts advertising in
  publications that have over 15 youth readership
  
• Stopped advertising on the back covers of
  magazines

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Top ad icon of the 20th century
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Food and Drug Administration Conducts
Investigation

• 1994 - FDA Conducts Investigation Lasting Over a
  Year Researching
• Role Nicotine Plays in Tobacco Products and
  Patterns of Tobacco Product Usage
• How Advertising and Promotional Practices Affect
  Childrens Decisions to Use Tobacco Products

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FDA Publishes Proposed Rule - Accepts
Recommendations

• August 10, 1995 - FDA Proposed to Regulate
  Tobacco Products
• August 11, 1995- FDA's Proposed Rule Published in
  Federal Register
• August 12, 1995 - January 1996 - FDA Accepted
  Comments on Proposed Rule
• Responses Received From Tobacco and Advertising
  Industries, Medical and Public Interest Groups,
  and Individuals

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FDA's Final Rule on Tobacco - Federal Register
- August 1996

• FDA Will Regulate Sales and Distribution of
  Cigarettes and Smokeless Tobacco to Children and
  Adolescents
• Resulted From Agency's Assertion of Jurisdiction
  Over Tobacco Products
• Based on an Intensive FDA Investigation of the
  Tobacco Industry, Tobacco Use and Its Health
  Consequences

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FDA's Final Rule on Tobacco - Federal Register
- August 1996

• FDA Assumed Jurisdiction Over Tobacco Products
  Based on Data Collected About Addictive
  Properties of Nicotine
• Age at Which Nicotine Addiction Begins and Its
  Consequences Suggested Regulation Needed to
  Protect Children

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FDAs Final Rule - Restricting Access to
Cigarettes

• Federal Violation to Sell Cigarettes and
  Smokeless Tobacco if Under 18 Years Old
• Retailers Must Check ID if Under 26 Years
• Establishes Minimum Package Size of 20
• Bans Most Vending Machines (Adult Only)
• Bans Self Service Displays to Reduce Theft
• Prohibits Free Samples

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FDAs Final Rule - Reducing Advertising to Youths

• Limits Tobacco Advertising to Black White, Text
  Only Format in All Existing Media Forms
• Outdoor Advertising Prohibited Within 1000 Feet
  of Public Playgrounds or Schools
• Restrictions of Logos on Promotional Items
• Sponsorships May Not Include Brand Names

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FDAs Final Rule - Youth Education on Health
Risks

• FDA Proposed to Require Tobacco Industry
  Establish and Fund a National Program to Educate
  Children on Effects of Tobacco Usage

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FDAs Final Rule - Additional Items

• FDA Proposed to Take Additional Action if
  Significant Reduction of Youth Tobacco Usage Not
  Met Within 7 Years
• Removed from Final Rule, FDA Will Monitor
• Federal Laws Preempt State or Local Laws

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FDAs Final Rule -Implementation

• Most Provisions Went Into Effect One Year After
  Final Ruling
• Two Exceptions
• Within 6 Months, Retailers Enforce 18 Year
  Minimum Age Requirement and Check IDs
• Tobacco Companies Had 2 Years to Enforce the
  Sponsorships Provision to Honor Pending Contracts

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FDAs Final Rule -Economic Impact

• Expect Rule to Produce 28 - 43 Billion in
  Health Related Benefits per Year
• Will Impose One-Time Cost of 174 - 185 Million
• Recurring Annual Operating Costs of 149 - 185
  Million

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Discussion Points

• Is Ruling Equitable to All Concerned?
• Tobacco Companies
• Health Advertising Industries
• State Local Governments and General Public
• Discuss Proposed Economic Impact in Relation to
  Other Industries
• Tobacco Farmers, Distribution Channels, etc.

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FDA Final Rule - Resulting Legal Decisions

• April 1997 - Federal Judge Affirmed FDA Authority
  Over Tobacco Products
• August 1997 - Both Tobacco Industry and US Dept.
  of Justice Appealing Provisions
• Validity of FDA Jurisdiction
• Reducing Youth Access to Tobacco Products
• Marketing Tobacco Labeling Restrictions
• First Amendment issues for Marketing Restrictions
  (US Supreme Court)

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Tobacco Industry Legal Settlement With States

• 1998 - Tobacco Companies Signed Legal Settlement
  with States
• Settlement Ended Lawsuits Filed by 40 States
• Tobacco Industry agreed to pay 246 billion over
  25 years and limit marketing
• Have since increased their marketing expenditures
  by 42 to 9.6 billion
• Much new advertising is effective at reaching kids

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Pending Federal Lawsuit

• September 1999 - Federal Government Filed Lawsuit
  Against Nation's Major Tobacco Companies
• Legally accountable for deceiving public about
  health risks of smoking
• Addictiveness of Nicotine
• Marketing to Children
• Federal Budgeting Delays - Trial Scheduled to
  Begin July 15, 2003

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Pending Class Action Legislation

• Pending State Class Action Bill Would Protect
  Tobacco Companies
• Could Move State Class Action Suites to Federal
  Courts - People Lose Right to Have Cases Heard
  in Federal Court
• More Difficult for Consumers to Successfully
  Litigate Class Actions - Clog Federal Courts
• State Level Class Actions Effective at Holding
  Tobacco Companies Accountable

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Discussion Points

• Are the Tobacco Companies Acting Ethically in
  Regards to Their Legal Agreements?
• Are Consumers, Specifically Children, More or
  Less At Risk From Tobacco Addiction Than They
  Were Ten Years Ago?

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