GROUP R&D OBJECTTVFS PRODUCT RFSFARCH RESPONSE TO CONSUMER DEMAND (0 SUBJECTIVE SMOKE IMPROVEMENT: TASTE AND FLAVOUR HARSHNESS, IRRITATION, IMPACT EASE OF DRAW (REWARD FOR EFFORT) PROPOSED OBJECTIVE: "TO HAVE THE TECHNOLOGY TO ENABLE GROUP COMPANIES TO ACHIEVE AT LEAST PARITY WITH LEADING COMPETITIVE BRANDS AND TO BE ABLE TO MAINTAIN SMOKE GUALITY WHILST RESPONDING TO OTHER PROBABLE RESTRICTIONS. THIS WILL INCLUDE THE NEED FOR RELIABLE METHODS OF MEASURING CONSUMER ASSESSMENTS-" (11) SUBJECTIVE CIGARETTE PHYSICAL PARAMETERS: - FIRMNESS - ENDS/COAL FALL OUT - PUFF NUMBERS - PRESSURE DROP - ASH STABILITY- PROPOSED OBJECTTVE: "To IDENTIFY CONSUMER STANDARDS FOR PERFORMANCE AND TO BE ABLE TO ACHIEVE THESE BOTH EFFICIENTLY AND CONSISTENTLY WHILST RESPONDING TO OTHER PROBABLE RESTRICTIONS-' L~j Un (-n r\j C) \,C: C_\ BATCo document for Province of British Columbia I November 1999 REsPIINSE TO CON-,tIMFR DEMAND (111) CONTROL OF SMOKE LEVELS/SMOKE COMPONENTS IN BOTH MAINSTREAM AND SIDESTREAM: - TAR DELIVERIES - SPECIFIC SMOKE COMPONENTS - BIOLOGICAL INDICES PROPOSED OBJECTTVE: 'To ENSURE THAT THE GROUP IS TECHNOLOGICALLY PREPARED TO ADAPT PRODUCTS TO RESPOND TO CONSUMER REQUIREMENTS WITH RESPECT TO SMOKE LEVELS AND CONSTITUENTS WITHOUT IMPAIRMENT OF CONSUMER ACCEPTANCE IN OTHER RESPECTS-" (IV) COST REDUCTION: LEAF UTILISATION PROCESSING MODIFICATIONS EXPANSION FILLING VALUE IMPROVele(TS PROPOSFn OBJECTTVE: _r0 HAVE THE TECHNOLOGICAL CAPABELITY OF BEING THE LOWEST COST PRODUCER FOR CORRESPONDING STYLES OF PRODUCTS IN GROUP MARKETS WHILST MAINTAINING QUALM STANDARDS-' L-4 C:) (jj r\,) CD \.0 --4 BATCo document for Province of British Columbia I November 1999 RESPONSE TO CONSUMEP DEMAND (V) SOCIAL ASPECTS: - REDUCED SIDESTREAM - SIDESTREAM AROMA/IRRITATION - BUTT ODOUR - AMBIENT SMOKE PROPOSED 03JECTTVE: "TO REDUCE THE SOCIAL CONCERN FOR SMOKING THROUGH PRODUCT MODIFICATIONS WHICH ARE AIMED AT ALLEVIATION OF 'NUISANCE' ASPECTS-" (VI) NOVELTY/DISTINCTIVENESS: - FILTERS - BLENDS/FLAVOURS - CIGARETTE DIMENSIONS - SELF EXTINGUISHING CIGARETTES PROPOSED 013JECTIVE: 'TO ESTABLISH A LEADERSHIP POSITION FOR THE GROUP IN INTRODUCING NEW PRODUCTS APPROPRIATE TO IDENTIFIED MARKET SEGMENTS-` (m) ALTERNATIVE PRODUCTS: - WET SNUFF - NON-COMBUSTIBLE CIGARETTE-LIKE PRODUCTS PROPOSED 013JECTIVE: 'To POSITION THE GROUP WITH APPROPRIATE TECHNOLOGY IN THE EVENT THAT ALTERNATIVE PRODUCTS TO CONVENTIONAL CIGARETTES EITHER BECOME A SIGNIFICANT THREAT TO OUR BUSINESS OR CONSTITUTE AN APPROPRIATE DIVERSIFICATION-` C:) CD Qn Ln C~o BATCo document for Province of British Columbia I November 1999