CASE STUDY ~~ST4~S End Dc~dopmeot Prol~m~ 1991 BATCo document for Legal Services : Health Canada 21 May 1949 BR~P DEYEIOPME~UT PROCR·I\I~I1E C~SE Sn~Y · ~I~(TED SraTES Inrmd~in~ The Care Sm~y is in nvo pYu : Part One: To idmtii~· new brand oppormnitia br Brown & Williarrson, to puantiE~ these oppomnities, to develop a broad ~ons:pr jratement ior ?ach oppormnin· and to ~riodtils then. Pm Two : To develop 3ne idenritied opport~niry tiom :on::pr to Snai !3unch plans. Both parts y: explained in non derail in the iollowin~ pages, Tne broad ritl pro~amml Br the iull Case Study is a follo\c·l : Wedntsd3y 9.00~m - 9.ii am Care Study Introduction 9.15 am · l?.j0 pm CaaStudvPanOne S.jOpm ·;.;O pm PaOne i~rsanriun bllisoljaon ~.OOpm · clS pm Case Study Part: Introduction ~.ij pm · 6.j0 pm Case Stud; Part 1 S.00 ~m C~Ee Stud; P~r: 'Ihursdl! 9.001m · C.jOpm CaeSrudyP~l j.;Opm · 6.j0 pm Case Study Part 1 9,00 Case Study Pn: Friday 9.00 am · 9.j0 am Case SRldv Presentation I 9.j0 Im · ]0.00 am Care Study Frszn3lianl iO,ODYn · IO.jOam CaseSrud;lpts~nt3tion3 10.j01m · I1.M1 3m Cae Smd; Pasm:ldon 1 ii.jOm · Il.jOpm C3seSrudv·~larHappened 1.W pm · :,8 pm C35d Sud; DiS,uSSiOn BATCo document for Legal Services : Health Canada 21 May 1999 CASE S~Y ~~D STATES P~T t Bm: Devdsplcn Pm:r~8e 1991 BATCo document for Legal Senlcea : Health Canada 21 ray 1999 C~E SnUY P~ OSE ne dare is lanoar: brlPBI You 3!1 member of Be new brand dadopmcn re of Brown a wrinoa which has been given the rapollli0 for aepibhr 1 Jle of new brand oppormniries for Le comlq in order m reverse its declining marker Ihre To ala ~ol in Lb ta~ you have iten given tha following ibndol. TABIE I Basic popdt8n and Jodo economic tends 3 Incidence oi smo~c: Br*dswiebhl I 1P~ marker sales zd;ompr! marker shares 5 gel marker Icpsnn shares 6 Kcv marker le~ln~ : smoker prohla leading brand shares Hkran of new hrar,t CaPcbn 9 Brown Sr WaGaon marker ad le~en share analysis 10 Summary pmdla ~BmaPP BI examining this information, la ihonid Tlpi~ rhr new brand ppon~~ exist for ~. L ddnl a. P' bne Cc Llovul lour in ·b : atmi4 each opphig i re.TJs of marker scbmcn~ Product 6taCBdSd3, ad rqa smokers: ql~ii the expecred marker dm for Feb oppPoiq over de pm tu tm; develop 1 broad copeept Iper:lt for each opporrunity pdodire these opporrunlries. You have ha whole morning for bac ·b ad vgO will he ·Pldd to make 11Pta # I~de pne~(l dp~ mu!roa +lild. Wu or! find ir ~P~ t3 use mt irmx on pill 3 w summarize your:ropos~s BMCa document for Lagd Services : Hoalfh Qlldl 11 Y% 1899 ·3· CISP S~PY ~~ DHE SIIMMt\RY OP D~RTUNITIB i. !t~rtn Opportuaity Dcrcrj pdll 51~~ Se~et P:OIPP ORe~h6p ;tg~ Smokers ?. U~rta Shnre RA yp~ I ~1 Yru3 3. B~d Cncpt a Ridtt BATCe document for Legal Services : Health Canada 21 ray 1998 .$. Table 1 ~JPULi~I~ h 80010 E(n~MfC INFC~ION 1980 1 1981 1982 1983 198~ Total Population- IYi~lic~s 226,5 1 I I 1 236, 2 Inal~ -4 49,0 1 I I 1 48l0 Female -B 51.0 i · I I 1 52,0 ·O s5,9 I I I I 85,0 31ac~ -9 1 - I - I - 1 12.2 ot~er -J i 2.3 1 I I 1 2,8 0-!4 -$ 1 2!.9 1 I I 1 21.5 15-24 -$ I 1B,B I - i - I - I 25-34 -9 16,4 1 I I 1 17,3 3549 -$ 16,2 1 I I 1 17.2 50+ -% 26,8 1 I I I 27,0 Retail Prices 100 1 110,3 111l1 120.9 126,1 dF· Prices (Sales aei~~J) 100 109,9 121,1 134,4 143,;1 Real Persoral Incaes :00 102.6 103,5 107.1 114,·4 V~ployrcent-TOtd~ 7,19 7.6% 9,79 9,6% ·Whites 6,3% b,7% 8,6% 8,48 6,5i -Blac'cs i 14.3% 15,6% 18,98 19.5% 17.42 O:garette E~tpenditu~ 5 tr 19,41,1$ ~t u,j 26.8 28,5 % of Total E~p~endit~e 1,2% 1,38 1,3T Average Fac~ pri~e - cen~ 63 '10 82 98 101 Bcllsehold lncfrte Average Ir~c~~ 23100 22600 WCO 22700 23200 VMfer $10,003- 8 20,6 21,0 21,4 20.9 20,4 $10-20,000 -$ 23,2 23,8 23,5 23,7 23,1 $20-35,000 - 8 28,2 i 27,7 28,1 27,4 26,9 $12,3001 -$ 28.0 i 21.5 21.0 1.0 29.6 BATCo document for Legal Services : Health Canada 21 May 1999 -j- ~~bl~ 2 IICIDeaCB Oi CI~~Z SYOKl)lc b PE1 CX1!1l C61SBPTIOW - 2 1980 1981 1982 1983 1981 ~ncidec:E Torll ::cldsnce ol SlokfnO 36~2 34.a 32.a 33.5 34.5 ~ull.:cidcnce 21~ 26.6 26,4 26.; 26,2 26.0 Yale 29~1 28,8 28.3 28,7 28.2 Feulo 23,8 24,0 20,j 24.2 24.~ 2i-3S ~:s 29,$ ar ]0~9 ~ult .:cidcnea ]h p; ~J ~P /n; Y11P !:·35 yIs 32~8 ~1 33.5 32,a le- yr~ 27.6 27,1 / 26d 26,2 2S~a Fe~ai~ ?:-35 y~s 27~2 27,6 1 28,0 28.8 29.0 !ji yrs 23~ 1 ?2.8 i 22,9 21,8 22,0 Per C1:i:l OOnaumprfda - Oaf!: ~p~ll 25 25 i 26 26 21 29 29 30 30 30 ic~l~ 21 21 22 2? 24 2:-35 ::r; 21 2; 22 23 24 3C yrj 1 28 28 29 28 28 BATCo document br Legal Services : Health Canada 21 May 1999 -r- Tasle id aR~IP 3;iIIC3I!IG Svitehing S~marl - 2 1982 :983 1984 3rand lovd: S~oiers 16 77 19 Mobile S;o~ars - total 24 23 21 ~ Slafrets 2 2 2 - reslarrers a 8 8 - switchers 11 13 11 ~oial Smoice:s 100 100 100 S~ilchinp ~alvsis Index Total Svil:~crs - 9, ot smokers 132 11X Iadex 100 100 100 rale -tptal 98 97 96 !1-?5 yrs 116 lie 120 - 26-35 yrs 120 122 125 - 36-35 yrs 98 98 96 - bbr yrs 70 65 65 ilnale - coral 102 103 105 - 21-?5 yFs 108 110 105 - 26-35 grs 130 135 138 - 36bj yrs 100 110 108 - $6t yrs 65 60 65 N~tc~ The indlr Indicates which smoker types an more or less mobile with the avtrq~ alvl)r belnl LOO· loI r~npie: h 1981, iPnales 16~ Irs are signiil;antly less inclined to change brands than females 26-35 yrs (60 v .38), C·i LT BATCo document for Legal Services : Health Canada 21 May 1999 Table ]I &~~Q~S ult:SIS IIEX (cor] Z Key lzatker Seg3ents 1982 1983 1984 1~ Full '!avour Seglent - s~itch in 10 81 I 80 - J~iteh vithin 90 92 1 91 - sul~eh out 110 112 1 114 2. Young Mule Lie 3tads · svfeFh in 110 112 L13 - suitcb virhln 102 101 1 101 - s~iech Put BO 80 1 81 3. Otbse ;ldult hlo 3tmds - ~~itch in bS 62 i 60 - ~ultch uithln 72 71 73 - J~itch out 125 130 132 4. lights 3rands - s;iitch In L10 114 ' 111 - Ivirch v~rhfo 100 102 · !05 - ssitch out 70 71 · 70 ~~ Feplle Srdads - svtcch In 110 115 · 114 - svitch vlehin 140 138 1 138 - ouitch out 80 85 85 6~ V~luc lot loaey 3nndr - sviech in 102 115 120 - Jvitfh uithin 100 102 100 - luirch out 60 50 50 bra All Ei~urc~ are plreentlges end are indexed to shov tela~t~e Jvltching patterna, For example: In 1981, ~dl ilavour Ivitching our IJ OfsPff:cmlly higher than switching into bit rlavour (114 v 80). BMCo doclm,nt for Legal Slntes: Health Canada 21 Yly 1199 -a· Table i TOW tWUI; ~ COW~ S~S - i r 1980 1981 1982 1983 198h Tocal ~rkc~ 616~9 626~1 622,3 595.9 599.7 I Qmge ~~82 ~1~ZZ a~6X -3. tZ ~.6t Philip ~rrfs 31,0 31,8 32,9 34,a 31,3 Raynolje 32~1 33,1 33~6 31,5 31,6 BblJ 13,1 11,0 13~4 ll,S 11,3 16tillard 9.6 9,1 8~6 9,1 8,2 herfcan Irands 10~6 9~1 8,8 8~6 ~aeelr ~~yetJ Z,J 2,6 C,8 5.7 BATCo document for Legal Services: Health Caeade 21 rly 1899 -1- Table i KEY ~LZ~ET SECI:G S~ :H~DS - i; f 1980 1981 1982 1983 198h Total ~r~e~ 100 1 100 100 100 100 lepbths - i(egular 3.5 ],4 3,2 2.9 2~7 -Wngs 62.8 61.1 60~1 59.0 58,1 3i~9 33,2 36,6 35.9 3f.0 -100~ 1,8 2,0 2~1 2.2 2. Z ~rice- Ful: Pries 100 i 99~1 1 99~0 1 96~3 9!,1 -EcPnoly 1 0.5 1 I,O 1 3.3 S~j -21' s I I I I O,I o,a Daeiting - aox 10~1 1;,5 12,9 lb.j Soit PPe~ 89.5 88.i 87~1 85~0 83,5 Carlon Sales 69 68 67 66 65 Pack sale! 31 32 33 11 35 Tar Segrpcnts O-jpg 1 5~8 7~7 7,9 7.i 6.9 6-91g 13~2 15~2 16.7 17~i 1~13~ 1 18,8 16.9 11.9 19~3 19.5 Ib-1Smg 911 1C.2 L6.2 19.3 19.9 16~ 53~1 10.0 h1,3 35,9 ~5~6 ~ull ;l~~ur 53.0 ll~i 19~6 ~7,3 47.2 lights 30,4 30.8 32~$ 34.7 36.0 Oleri tights 8~6 10~3 10,8 1 111? 10,j Plain 8~2 7.8 7.2 6,8 6.3 ~lnrhol 28.6 28,6 2818 28,1 28~: bn hnthol 71.4 71.4 11,2 71.9 fL9 Slokar Plrcspelon Youag ~ult 81o Brands 32.8 34.9 36~0 36,6 37.1 female BcaadJ 6.1 1,O 1.8 B~b I~d Value ~or Yoney IraadP 2~1 2,6 3,L 5.2 6,8 Other General Brands 59.0 55,5 53.! 19,6 16,; BATCo document for Legal Services : HelIth Canada 11 Try 1$8 NIL; ~C~vl ~Dn ~3; ~:1 T"1 Jx f! Nrlr~cN NEs--F1 E o oz e3u~~ ,,, 13 ?FI~~ ~am~ aC~~ B o cFI CB O O ~4 "O~"C o·~m >1 c, e 8 o~ p N cc~ r r( N~F~ mlO r~N F" 8 "~ IPm c~~N 3 rl Xp rl el o i\dec pme3 O Flp~ I I rNN 8 NOI 7111 ~~ ~eN *3 8 "" m~pn ~ne~ I UlP ir' me~~ ail \Or; om-l~ WI~N i.i e: mulln ~olnn m Nn~ Nm~ I r- 9 d rlUIV~ ·*10~~;~ NNm~ NNnB 11 1 2Oi i i C~J O r C 4 O O BATCo document for Legal Services : Health Canada 21 May 1999 Table ; 1EhDI.YC 3R;UIP SIU~S - r Brane Company ~T L~8; I 1182 / ill] i IPli L, Lr!bom P?f 17.8 20,2 215 2. ~lis~oo R:R 13.3 13.3 13,2 11,9 11.7 3, Salem IWR 8,; 8.a 8,8 8~1 8,1 B, i(ool B~Y 8,8 B~; 8,2 7.2 5~ 9 6 sedges P?1 4.6 4,; 4.8 5.0 4.9 6. Came! RUR 4,3 0.8 4,9 4.6 0,i 7. Ye:i~ P~ 6~2 l,j 4,5 4.i 4,3 8, Pall ~11 i her i 4~; 1~3 4,2 3,8 9. Vantage RjR 3~8 3,7 3.9 3,7 3,5 10. Zei~ I IOR 5,0 S,O 3,9 3,2 II. gevporr MR 1~9 2,2 2,1 2.8 3,0 12~ viqinia slims P11 2~3 2,5 2,5 2~6 2~6 13. Carltoa 2, j 2,2 2,1 ?,O 1.9 II, ~l~re a.a 1~2 1,5 1~6 1,5 1,5 15, viceroy B69 1,8 l,j 1,4 1.2 1.1 ;U1 OE~ers I I 14.i Il~j 16,3 Noee: These are araod Family marker shares. YDst brand idliea have several versions eoueriag lull :'lavour, lights, Zings, 100's senrbol and non menrhal. L·i L~ C) BATCo document for legal Services : Health Canada 21 May 1999 -.C- ;ajie a SEtEbEO ~EU 3IUYD ~;I:CHES To~al Iledia Spend brrent Yarker Yla: 1 S millions Share - : :982 Ncrtns:nd - full ilavour menthol I I O :982 B d liecges de lure I]ltra Lights 13 0.8 i983 Players - upscale lights Ii 0.2 :983 tlarlSo:3 lights 90x 35 1,8 1984 Virgll!a Slims Ovals 100 Box I - I 0 :981 iuarlboeo 25's Full Flavour and lights ii 1 0,3 l~ynolds :982 Brigt; - ~en~~ol light; :2 0,1 :982 VaPtale Ultra lights Kings i 1 0,3 1982 ~ancuj Lights !OO's I - I 0,8 ;982 Camel30x I I 0,1 :983 Cen~3:7 - value 25'9 for 20'9 price i 11 0,7 :3ai~ Sterling-upscale 95mm 0,3 ;99S lora: [II -branded geaerle :O 1,5 lorillard :P82 ~x S:ln lights !OO's 18 0,1 ;983 Sati3:OO's - iemale upscale 3; 0,3 :98$ I(enr: IIL de lure Box I 0.1 1984 Lvpor:100'5apx / - I O~I .imerlfen Brands 1983 Pall~ll lights I - 1 0,1 1383 lucky strike lights King SI2e h 100's 0.2 :384 lucky Serilre low Tar 100's 0.1 Noll: ~edia 5:end estimates have been considered as ter~ Phen the line extension has not been advertised specifically, bur has Seen integrated Into the overall arpendirute on that particular Brand House or Family, BATCo document for legal Services : Health Canada 21 May 1999 !3- Table 9 aRGuN 6 rILI:~Od s;san s~s -~2 Seqoeot 1980 1981 1982 1983 1984 ~oiil ~rket 13.1 1(10 L3,b ll,j 11,3 ~dl Fllvour 17,1 18~0 1I,L lj~9 11,6 !igh~J 10~7 1.5 7.3 ~lcra Ilghts lb~Z 14.5 13.9 10.6 9.a ~eprh~l 32.0 33~5 32.8 29~: 28,6 ypn lenthol 6.2 6~0 5.5 $~j 30x 3~4 3~1 3.1 I~J 2.4 j,it Pac~ L~,P 15,2 la,B !3~0 13,1 ~ng Sire 1S~8 16~0 1S~S 13~1 13.6 10~ 11,9 12,0 1L3 9~2 8~1 !OOa !P~ng MII: Lie Brands O O O O O i~le Brands O 0 0 O 0 Illue for ~oney Brands O O 0 1 7 1 8 Other General Brands 1B~B 19.3 19~0 18.0 18. 1 W O BATCo document Cr Llsl Services : Health Cs·ds 21 Yly 1999 t~ble 10 sgTe ~~p( -- / ~lper ungrP ~rlr I 11PPinn I Cira $~il? X: Pomsity Ots~~ Mba ~lg 511e 29 84 tl 26,8 ?19 1.2 ~~ Si2e Ushrs 27 84 27 31 24,8 217 0~8 IW's 34 99.6 27,8 31.0 24~8 248 1~? LZ Clinsron;(lngs 25 8$ 21 24,P 250 15.9 1,1 liahtJ !M]'s 1~ 35 2LP UO C.Z 0,9 26 83,6 2~2 31 21~4 2?! f,: O~j S~a ~n35 21 83.1 ?1 24,9 24,9 24; :62 1,1 Ufaa n a~I 03 30.7 21.9 241 Y·l O.a S1~ Ushts 37 98 3; 35 22~5 2!~ a~: a~r ~1~ Slle U 21 26 24,8 B959 Lt 1~ 45 99 27 32 21~7 LZ ~les !CO't 99,5 2~8 32~0 1 24.8 243 1 1L? LZ Im~ Ulhn I~ 9().5 Ui 36,0 rl 0.9 ~dr P~s100'~ 84,2 27.3 32~o 24,8 243 0,6 99,3 3L6 3610 24.8 !47 9~6 0.8 ,YevpDrc Ctl 21.0 25.8 24,9 ?37 1612 L2 Vaata8l U~I 1, 25.0 30 24~9 216 bS 0.6 Q·~le ~~1 18 ~,f 30 24,1 219 1417 1.i 100'5 lights I - 98~6 29.8 35 26~7 ?11 LL Pre 1B'r 119 35 39 21 ?61 16.i 1,3 1141d~ S1~ IW Ilghcs 31 98~6 31.6 360 23.1 ?if 9,3 0,7 100 34 99,5 27,1 320 13,0 :16 L1,3 1,1 W O W O BATCa doeument kr legal Senices : Health Canada 21 May 1999 BRtuD DO~OPYM PIOC~I)IE C~ STUDI · U;UITED ~a~ ~md~d81 ne coe S8dl t h a pa : Pm Dns : W a~d3 lel brrd opporm~da Br Bmwn d WBi~o~ c p~ ~e o~oahia, o d~dop ~ bbd ancqt ;nlpel br pch oppodg pd o pdo~ise acm. Pw TPo : B der8p one Ye~ifid oppmig bm mnepr p dni hln~ ~a. B~Co document rpr Lsg~ lentes : Hl~t~ Cllldl H Yg llsB c~~ STlrOY ~r~ED_STATES PART ? End Development Programme 1991 BAlCo document for Legal Services : Health Canada 21 May 1999 -IS· C~E Snl]Y The dal ha moved Bnud by ope yea to IdBbRY ist 19116, in most companies, lhis date Is nodb Ihotidll but not in B~ wbere I~paiJ marketing meeting ho icl dY bv ~ hlrr ;i lhe no R·Br ~hl: k YI I·hL pt i~e just ~a ihi, RnDlil Your ~rBn R*tr d ncw hd olpcmida br mr Company, mu me Idodg new brand project will be a develop as olpanig in me female smokers leprPI ne Bbw R&D Clot~ i conjunction with me ~D Chnae in England, Ca developed an innovatory and nvdtb~y ultra dim product ·ib 1 17~ circumference which. froml product vievlpoint is considered to represent me best means of elp~n: me female smokers segment, PnEmi~ co~uler research hCcra ahigh interest and receptiveness for ab ultra dimpoha You are 1 member of me BBW Uhn Slim H~amg Tak Force. Your task is to develop ~e brand to go ~it this ultra dim product, ifogrri: every elemenr from product design through to pro6r assessment ad 1 launch plan. ~bn specifically, golr plan should incorporate . i, Product Design The physical product dimensions, is visual elements, deliveries, and broad smoking characteristics, Bred Concept ne kev elements. me targer consumer (i quantitative b sJe$ve e~l od Le jn~~bl br de ~*qr i acceptance by your target consumer, Forecast A sales ad market share forecast for Eve vcars, I Packaging ne brief for II pack designer, selection of the bad name me phylc~ apam·cl style and dimensions of the pack and carton, Communic3iiots nt development of advertising conccl~ Btd to your desired brand imlll Your communications budget and plan, including budget allocation across the main alternatives, giving particular emphasis to Is above and below line split and aloelLI rimi each oflat 6, CoaPPcr PaPeh What aspects of I: brand development do you intend to research, how. and when. Costs of research 181~ be BATCo document br Legl Services : Health Cllldell May 1999 ·16· 7. Financial issues Calculation oi a brand pro~t over five years and pay back period calfuladon, Inrladon and price increases should he ignored, together with any discounted cash flow analysis, 8. T~ming ~ recommendation upon when the new brand should be launched, whish should be related to the timing of the elements in the brand development plan, To assist vou in there tasks, you should use the relwanr information in Pan: One of the Care Study ~ addition vOU hive bren given CE bllowing iniormatian : TABLE 11 Ul~a Slims : Slmuiacrure Capacities 1? Ultra Slims : Klv Product issues i; Female Brands b~nent : Sub Segment Shares 1~ Female Brands :.Ma~ker Shares IS Selected Female Brands : Summary Product Data 16 Female Brand Perceptions 17 Female Brands Segment : Smoker Profiles Is F~IFal~ Brands : Smoker Pmrilu 19 ~vai]abit Bland Trademarks 20 Cigarette Pack Design Resau~h 11 Communications Erpendire Summary ?2 Communications Expenditure. ~ew Brand launch Analysis 23 Communications Expenditure:Brand launch Cos~ngs ?4 Olaa Slims : C3rnmUniWtiOn Strategy ?5 Summarr Fina~;ial Intbrmarion 1986. BATCo document for Legal Services : Health Canada 21 May 1999 -17- nlC1ISG You have t~e rest of Icdly md romonow ~aorning and it zvunint in which to undmake Part Two. You should produce a summary of your brand development proposals on the attached form by me end of tomorrow evening and hand it to Bob Tavlor or Susan Osborne. Ycu ;hould prepare a p~e~a~3rion of your proposals, using overhead acres for which you have 30 minutes. ~SSIST~I~JCE Should you have any qunia or gue,rtions upon any spec: of the Cai~ Study, you should address them to Bob Taylor ilr Susan Osborne. ~SSI~IPITOKS You should assume the following : ~II prices and iosrs will remain constant at 1986 levels ~UI products in rhe I~SA an US ~p~ blends d new ptoducr launc~;aa be national bur is mote normally a roll out over 1 per;od ot'aaythiog up to one yw. Prices in the liS cigarette market are heavily intlutnced by trade considerations and it is difficuli to have a recommmded or regular price whish is different from other brands. This does nor effect price promotional activirv which is ~aerally short term only and which the ~ade accepts and implements Without difficulty, ~he Tord I;S Cig3s:c: ~arkst forecast in billions is : 1983' 1986 198f 1988 1989 1990 1991 WS 58? 5;0 jM) Sj0 js0 j;0 The sales force and distribution element of the brand launch should be ignored. BATCo document for Legal Services : Health Canada 21 May 1999 ·IS· c~se snpy P~ ~O ~BIIlY DF PI~S S~TC~ (I, I, C or D) Rodrd Daip Ila~ Daab Ck~~reoe ~b,s Fl~r TPP$I Heodne smo~a ~~edni~ Ind Conqt Tpga CDPII ~S.~Colepr hrwe Iln~ DIe lar I Ya i Ya 3 Ya 1 la 5 )Irtn Shre I·pi S~~ ~~~dpt Daig Bdd: Sammary Brd rPe Propas~l Type oi ~~ ·d Cnoa ~TCo doclment lor leg~ Bentes : He~t~ Clltd~ 21 Tty 1199 ·19· Communie3lions Advenisin~ Conc:pr Proposals Targ# Brand Image Commicatio~ Bud~t Ye3r I Ye~r i Year 3 Year ~ Year i Total Elpendirurz hbon line S Belowline S Special Communiurioa Plans Consumer Reswreh Sumrnary Fin;md~l Issues Ye3r 1 Year i Y~r 3 Year J Year i B&W Revenues Variable Costs Gross Margin ~arkeling ExpefJa Brand Conuibution Overheads Brand Protit Pay Bvk Period in Yen BATCo document for Legal Services : Health Canada 21 May 1999 Table 11~ Ultra Slim ~anufaftuee Existing 3laa:ag and packing maci~i:erl is sol designed for cigarettes below 21% circlJ~:~rence~ To undertake manufacture of an ultra slim 17 ~ ci::umierence product requires significant engineering development and conversion ~ock~ As at January ist 1986, existing knowledge suggests that ~ariilg and Packing speeds and eillc!encies vill be significantly lover, while the lead time ~pr conversion will he approximately b months in order to obtain the first complex, which will have an annual output of L,000 million cidlreltes, 1 Hauni 'totos with 2 Yolins ii3ge lid Packers Ii all gees tell vi~s L~is first c3mplel, ~he schedule [ar the deliverg of additional machinery is as follows: Zod 1986 The second complex 1000 million annual output Yap:98; The e~ird complex 1000 zillion annual ourpur lov 198; The E~urt~ complex 10M) sillioa annual output By the end Jl 1987 therefore the ar.nualijed Ultra Slim capacity will be 4000 dllioa ciy:2ttes· Berond 1987, it Is anticipated that development work will have taken place to ~anulacture an Ultra Slim product on higher speed machinery and that capacity levels can ~2 increased with relatively j~drt notice up to the following lau~s~s ii re~dred~ End i98; 4,000 millions per annum 5nd 1988 8,000 millions per annul ~nd 1989 12,000 millions per annum End 199C 16,000 millions per annum BATCo document for Legal Services : Health Canada 21 May 1999 Table 12. vlt~ Sliss: ~FI IFMWC ISjlFS Tne Pro~ur.nlRl~c~wt team ~Ve Z~idelr?C! various ~lte~tin prc~cts i: amjurrbien vit~ ~eting wli~ ~e fol:a;-P ndu" an1 p~cd~r::e~a-~d aspects being ~h~~te~ as Ye'cqr issues frc~n a ~cke~ ~e~nP3lllt~ Issue Qn~ts rwgtl - wit~ ~cst f~ra:· 5rar~s being k~rh~eer, tOO nm ad 120 mn, what !er,c~t~ shc~ the proi~ct be or should tle·! De rmra Yan one :enE~? 2, Ckom~d~d~ere~ce - Ihe sicci~can: ~iffercxe bet~eo~ a 1'1 mn pre~ and ot~er farala 5rarr15 an be cefsileted as in~vator! a~ ~i~ferent on Be ~osilive side hut nafPlt be ~3rsibr~d as less 930~ v~e or tm thin '3 be acc?p~ble to srokers on Be ne~a~ive side~ 'I~ balanc~'cern~e~ ~ese :ho is cxsiderd to be inpcrtylt. i, Filts & ~i~ - Wha~ lenz~s s~culd Yese Se ~n the li~t~t of e~s-~g ferale 5rzr~ds E?d the issues raised ii 2, a~ve. Sha~~ld we 4ave ~J~xJn or white tipping2 4. Celi~eri - hlChw~ ~atgetd to fe~ales a~3, to fenale slrd~e~ts of lights brands ii ~smirer perception tens, what should t~e ?c~ tar:nic3tine ~elivey Se? 5~ Padca~dng - Wic~ a 17 an cFe~er~nce and ~en~ leJer leaf c~s~, should we seek to ~ar~et the brand m a 25 for 20'5 pde basis or should we na~a~ as a 20'9 aadcinc! - Snould we have box or soft pac~ or variable wcl~i~cs for di:fet~nt s~les or versims! Sn~uld yb~ve; three roJ [7,B,T) pac~ wllich will efhance the slimess or a t4 M [10,10) to nake the padr aF~e~ wider, lZ we t~9ve 25'9, wt~at packing alnfi~ratim should Se adcpt-~ (e.p, 9,8,8)! - S~uld w ~va a mnventicnal ske pack and devise sore r~a~ of filling in the spac~ ~vt~id~ arises ~n the ultra slim 3~C~~b~ - Farale pack mss, because of their desi~ and the use of [TOre ILuxlriouslI r~terials, h:e signiEiwrtry Fi~er~ ~ic~in 3sW, it was felt that the padr offered an cpI~riuni~ to offset ary ~ssible negati~s arisi:a fm~he slirmess of Be pto~ct~ 6. Srddng - Sawtk~ess, abseaee of irritation, 13ler sidestrean, ~h·~crerisdcs feel i? t~e~ar~, feel on the li?s, burn rater draw, rdldness ~ave ?ern recarded as irm3r~nt in past arcliuc~ ~evelcrewt ao'.ivities fa; female ;mke3l BATCo document for Legal Services : Health Canada 21 May 1999 -22- Table 13 FMRIZ BRMJDS SEGMENT EWIKET SRARE B`I MAIS SUB SEC·MENTS $ 1983 1984 1985 TREED n~LL ~LAVOUR 53 fl 4e LIGHTS 41 47 SD t ULTRA LIGHTS O 2 2 O K:%G SIZE O O O O !00 MM 67 67 gj loO ~r ·t 33 33 35 MESTHOL 48 49 SO + / ilOY 1E.E31 52 51 50 SO:T PAGK 54 50 46 ~li~~D BOX 46 50 54 + TOTA~ 100 100 too I i BATCo document for legal Services : Health Canada 21 May 1999 mne 9~3~n ~~""' r ~r~mr" '' O i03=3 1111·" Nf300 n0030C0 3=: ~H' 9=~Pb q~S4: " ~ISI n0000 OC: "C300 ~030 O nPO~O "nl l=~P~ n~nn- " I 111 1 I O ~03CC n3000 003 nc300 nF9~9 ""' """"" O~cn- O / ,.,,~ : I I ·I I ""I 0 naooo oce n0300 ~COC3 e I: n~O~d pn- pCz n~anl .~.I I I I~ n0000 OC= ~aoce o ~~K~rX wX yw~Y ~~XY wY X 1013000 'C; 1~360 10003 :OC O 11~611 E: ~:96 91C~ Pe P Z OC00e e= c~oo coco oc o r, ei Ino I~E C El ; / I ~I i I; I JUUI :qPa U7 U 1~ ii~v i ~; o I21 I- O k~33 r (~~d~ri IJb~Y r-r 0 ~3P3 LS 3 0 333133 31 a L1 E ~I ~1 3 4: Pi OO ~I i O a cc oi 3 3 (O a I x x 0SC ,'30 0000 o gbnn I I X ZZ~ I ~111~ 10C a O~~J~ J eo~J Cli* EOO F Il DP~ 1 ~~33 u F X 3' 3 G~~"' P II (P1D r ~~J~Y ,EE ,,,,; nLrl1 I' 'C5 n E ,OQ~~~' "C3 JDOF~ ~e: 000"""' bnn gr~le gnn ~·, COI ,I ~~~'PP' E~~~O ~~~~: PaZ D 111 Ill 11, 111 1 II'" 'II I P x 3 J I1 2 9 P 3 /Z 3 a 0 E O r a a e u N L C k W Z I 3 O 4 D 8~ : · C L 3 \O BATCo dpclmlnt far 11PI Sonleot : Ho~th Clnlda 21 Yly 1994 rn gn,i n,i nr ~~ n~e ..I 30C0 0",0 C= 00 000 COC PFI,i n·~ m~ ~~ nn~ I I I I I I i I I I I 1~ 11111 n 3000 000 CC 00 000 eco ni tn~ b 3000 OCo c oo ooo cod n n*~ I 0 ~ · ~ ·I I , ~ · ~ I 1 , I r 3030 aoo 0 0 000 luii m~ · · ~ I I I I I I I I I I I C 000 QbO 000 :I 1~ 1~ ; WyyX YXVU 4~YY iooo0 Ico ioooo 10000 III ?I 150P mt CClavl mael II il ;I OCOC 00 0000 oocb oo g IdOnM 100 ICCnn InMOe IPC e~ cl Q I m I O U U 1 O O U W m ii e c II oJ~~ ~u ~OJJ JI19 LlI $~ ~C~r iaa '3303 33 3333 3333 1111 X t II 1~ .· ii e u 03 C I E 00 1 X I i i a F O IoI 0 11 3 rxr LII J~ E ~ 51: O r~u O ~C O E -~r C ~ec E 110 Z I WlIlI IPP r Sd~ 0 Z ·~~ 0 ~jio e P~ I I)I a ~IX ~E~Cf ~· · fE~ m· · E~ ~· ~~~DP oOO ~~~~00 J00~~ L00 000 -~' nn Onn~~ 000 iim~i ~·~ pia·· b~~aP b*~ I I I I I I I I I 1 I I I I I I I I I I I I p O p C r a pa 51" f 4 MI c c 3; a I n( O Y L aY J r 01 n ~P 11 BATCo document ler Legd ScrvIcoI : Heelth Ceuada 21 Yg 1199 1 ~~ i31 ~ 0 C e n c X cg 03 0 " ~ * O nn ca n e n n n ~ d; dd ; i : ; , o I P~ n~ n *1 O nn n a n m r c QP n* r a a 9 I rl 3 a n n m n : 44 nn a n 4 4 o n e: s ·o 41 mn n~ M 7 n r n PI fl i ' an an a n n a n n C 3 e6 lZC P ~O e ~I Pi i i b a Fl\o bg ~ n m d ~ i? nn mn n m m n 3 n O ~I I 11 31 I L W VJI I 1 3 u on In - ~ o I A o Am nn n o n n 3 3 ~1Epmrepacle : Pb C~ a a a 8 C 3 1 03 03 J I E I a Ip I I b0 On G: c E O I; i ~ f C 2 D) 1 1 3 1 4 L - 4 3 W I=1" O Q~O) O I W \C BATCa document for Llgd Services : HoIIth Canada 11 llay 1191 -i3- Table 16 T~E 1~9 P[B~~~QS S~LE -~: r~llE SIOQU B~ ~lcamIor tpel Zve 188 lirgiaia Slinf 177 ~ore 146 Carltoa 138 B ~ i1ed80s 137 saratoga 130 Saiem Sills 121 Silva Thins 120 1~ 118 Sacln 115 ,Yore The inrarprctltisa of rhls index is t~lt Eve is ooosldered eo be ~l~iailcmtly sore Lewle ori~p~~rsd than ~ or S1:in~ W LJ BATCo document for Legal 80rvlces : He~th Qnada 21 May 1999 ~~ble :; n~E I~S ~~~k: SHOCR PIIOFIIES !482 :983 1984 1985 Total ,, !m 100 100 12,5 / 12, 3 12~7 10,5 ~ena;z 87, 5 87l3 89.5 10.3 10,9 21-1, yrs 1316 26-!j yrs 26,8 26l· 16.0 2519 36·kj yrs L8,9 22.4 :9~3 qjt ~rs 4016 jO.i 61l7 h3,B Fec:a I\S~ 9~9 10,4 ?1-ii grs 13.2 26-!j yes 21.2 11.i 23t6 21,9 Ib-lj yrs lii~6 1i.1 23l0 16.8 hb~ vr5 33,4 32ii 33,8 31~3 Tnl:E. 91·5 93.: 94,6 94,0 Slack 618 1·~ ~·7 a,f Other 1,7 1.· 0.9 1,3 Incoe $ 41,,000 31.0 Il.i 29.1 29~1 il-1P,OoO 10.9 3A9 38,8 30,COB 28l1 29.- 32,0 32.1 BATCo document for Legal Services : Health Canada 21 May 1999 Table Is FE~IAIE BRZND PROFIL:S - I Brand Total Yale ~2aale 21 35~t Total :o[al to Carlton 100 20 eo 35 Is Eve 100 3 9i 18 79 Max tOO L9 d; 14 61 More 10Q 22 ;S 15 63 Salem 100 3 9; 57 39 Saratoga 100 13 d; 25 62 Satin 100 96 27 69 S~ Thins 100 5 9j is 17 Vlrg Sliss 100 ?6 54 42 B b Ledges r00 16 31 38 46 B h Ledges tights 100 26 ;4 34 66 B S Ledges Urtral Lights 100 24 ;b 22 78 iv BATCo document for legal Services : Health Canada 21 May 1999 Table 19, UXIWI1Z BRWD IgMIE~UIS Iradelarb Depar:~ent Itod~ced a list of over 10 possible napes ior this ultra slip concept ~rd~ which 4:%eting has selected the following fi,'teen for [3rther consideration, &; are owned by 96;; in the USI. Tradepart Co~ment ad Status Ed: registered worldwide F~EPORT Sil: registered in Europe, Far East CtYE.PON B1;: registered in selected countries pal! ChPLI Sri: registered in post countries E~O Ba: registered in most countries FLlIB BC:egistered in post countries t~cT~ONT Ed: registered In most countries ~iiMh~ 8~:;egis~ereC in selected countries dn!r SIC'OI BC registered in selected countries outside Europe SLEEKS BC registered worldwide h'i,LVT BaT registered worldwide ZISGdMS 82~:egislered worldwide BROOKS B~: registered in selected countries on!? ~E~TLEY BA: registered in selected countries oary SOCLETY Ed: registered in selected countries bP!! BA~Co document for Legal Services: Health Canada 21 klay 1999 -:~2· Table 20 CICI1P~TTE PACK ~ESIG3 RES~~CB ----~-~II-- ~nrroduc:13: ~specific ;wll~ative research exercise ·Jas under:aite~ in 1985 to evaluate snoiets' percepttoPs di cigarette p~cu, dt~iln end :!.alr Irrirudes to it. Ihe key findings ifom this prajee: are s~a:lsed in t::e ~sllavlng pages bur; I~e overall conclusions are: Respondent; 3enerally insisted that paclginl leans tery Urrre ~a them, and that tsey la? no atrenrion to how a package looks pen contemplating a I"cnase~ i;everrheless, they sril! id some very definite opinions about lack c0lunicar:~n~ For instance, blue and 3'ece clearly denote meclhol, ?hi!e red and orange:eooee aowea~hol~ Certain colours are associated with males (bnld, ~ri~arl colours), Yhi!e others Ire associdrc: vith [emales (pale, pasrels;· in gePeral, chose elements that suBBeSI "ior men. also suggest strength and a lot of se~::ol - bold lettering, pPiBfr) :O:OErs, a;d boxes and shoccer s~yles· Those elements suggesting "for uomen are soft pastel colours, script lettering, ~rilly details, rall, thin, soft packs~ (The cigarette name must also be isisine~) These same design elaelu also suggest mildness and li;Ei? menthol ;n a cigaret:l· Overall, consumers do attach meaning to sang of the elements of pack design which suggests that their viev chat, pac~d5ing does nor influence them signif.can::Y uben eooremplaring a purchase, shouli be treated uith some Fautio3. BATCo document for Legal Services : Health Canada 21 May 1999 ·!tt - Package Design 'Eiement Communication Male vers~r(j FenlaIe FE~I1~IE MA1E COU1RS SO1D,SOUDCD1ORS SOF~, PASTEL COLORS DARK RED, PDII, YEllOw, DARK GREE~, PhlE COLORS li~vY BLUE, BROVI~ WXII~G BOLD, BLOCK C1IRSI~F IETIEi(DJG; 1FITWUNo; T~l~j,DEUgTiSCRIPT; LESSYRBIACIE MDRECOPY DEnG~ SOIIDCOIORS, WILLY DEThILS; EIDIE~TS SIRAICKI~I~, SOFT COLOR GEOMEIRICSHAPa, GRADIWTS, BO~ D~IGh'S; CDoRDi~slm, IS1\N,UNC1UfirRED; COLORS TRADmOEiP~ SI~IBOIS ~14SCU~U~S'IUBOLS, nOwERS, 1ACE, COWBOYS,POLO, ~R~US P~JCHORS PhCI( B0)3~S; SOFT·PACKS; SHORT, SQUAT PACKS; ~All, Tr(I~ PACKS, ZSPbCXS; GO1DMawmi P1AWSIinaFO11 EMBOSSI~C; S~T~IY ~T~SH R~ME BADmONMNA~MES F~II1I~I~E NAMES- EVE, VIRGIII~Y\ S1MS BATCo document for Legal Services : Health Canada 21 May 1999 -:Ce - Package Design Element Communication High SlofILs versus PlaC·Ordi,lari HJCH SWUS ORDh'~RY COU3RS GO1D,SIiVER,B1ACK; BO1D, PRIE~RY COLORS; RICII, S~I~ILE CO~RS; ~IAI~1Y wHliE (1IKE MEUaCS GENERICS); O~JIY O~F COLOR ~RI~IC F~C( CU1IGIW~F~; P1AIN,Um~O·RE~ID, I1IISED 1F~I~RS, BLOCK PRIISIING; 1~TIE YIWTiVG WC3, B1~9C~ IFI~I~RC~G DESIGN EMBOSSC~G; SPIIPLE, P1AI~ COLORS, UEME~S S~nEPATIERNS; liMP~C, C·EOMEiillC DUIG~S CIG~JIETTE~CASE LOOK SI~ifl;L~1TED LEAT~R SYMBOLS CRESM, CROVI~S, SMP1E, ~~SY·TO·RECOCHIZE; COATS·OFAR~IS 1CCKYSTRIKEThRCIFf, VICEROY aavRO~ PAcx BOXES; REGUt~AR SOR·PACKS; TA11,S1IMPACKS; SHORT,SQ1'I1TPACKS n~T BO~S THAT LOOK lI~Z CIG~RETIZ CASES NAME BESSO~& HEDCES~RI~Z, SI~1P1E, EASY·TO·READ, Y~S S~~ LAURE\ST EASY·TOPRONO~UCE BATCo document for Legal Services : Health Canada 21 May 1999 Package Design Element Communication Old·Farliioned vers~s Up·L"·Date OLDF~ZSHIO~ED l~·TOIDhTE COU)RS BRIGtTI BOLDCO1ORS; DUI1COIORS,E~R~1·TOI\ZS; U4PsY COLORS OR SFADU; BROw~, PUI~ V~MTE; IRIDESCE~, ~a;hUICS FEw COLORS O~ PACK ~I(~II~C MCDWU SCI~T; TR~DmOl~A1ME SMES; CO~V~~TWPRC;fn;G P1AI~i, B1OCi( LfiIERC~G DESIGN BO~DDESIG~eFME~S- MU~ COLORS, ~n7s ~O~ORT~FiCO1OR TdhDmO~~ TRI~G1ES DR OTHER ORUAMEETT~flOh' SMP1ESrlZP~P~ s~olS IGilTE~M~GES; wACOB w~ELS, HORSiS; rm~zE~ ROCKFISHJPS OR TIUDI~G CO1~PD~S COMP1'IER ~IITING RBU/AR SORPACKS; Boxzs; SHORT,S~UATPACKS PhCIi TP~L,SLM PACKS; F~Y·1;I~ BOXES A~IOST ~UVY 4F~ ANY 10SG-STMINCI BR~~D BR~~I) ~k~IE BATCo document for legal Services : Health Canada 21 May 1999