~-;-u·~ui~-~;L~ia~li~61:~iE;"i~U"*~;Y~S~L~P~ i COIFEPEYCE OBIECTIVE TO B~IA6 (EY n181ETIM6 AID PRODUCT APPLICAlfD~s THII~ERS TOGE~HER II A SITUATIOM YHICH IS SDFFICI~ATLr tREATIVE TO STI~ULATE tiEMUIMELr IYIOV~~IVE PRODUCf BASED PROJEt~ IDEASI 1U~ SUFFItlEIIIY OflUttUOED TD tXAMICE tHEtE ~DEAJ Ab~llST RE~LISTle TECHMICAL FEASIBrllTr AIO ~IRIETABILI~Y eOMStRAlltsl O BATCo docunent br Loga benkll : Hsdth Clnadl ~3 Ily Ilss LIST OF PARTICIPANTS B08 BEXON IMPERIAL TOBACCO LIMITED, CANADA TED PARRACK · BROWN ANO WILIIAMSON, USA IAH ROSS I SUOMEN TUPAKKA, F~N1AND MIKE SCOTT BIAl~l OK g EI ENGLAND ~AURICIO UURMSER I TABACAIARIA, CANARY ISLES GEOFF BROOKS MARKETING DEPARIRNT, MILLBANK DAVID CREIGHTON PRODUCT APPLICATIONS GROUP, 6R g DC ROB FERRIS PRODUCT APPLICATIONS GROUP, GR s DC (CONVENOR) CO1IN GREIG I PRODUCT APPLICATIONS GROUP, GR s DC TAJ HIRJI PRODUCT APPLICATIONS GROUP, GR 8 DC cn BATCo document for Legal Services : Health Canada 19 May 1999 :~w~-~U~·,a BIOCBOIID AND COIPgBggCE STBUCTIIBE Ihrt are the distinguishing iaatpres oi a commercially applicable product projectl It is generally accepted that, given any set o~ potentially applicable projects, decision makers are capable oi prloretising such a set against the criterion oi 'degree oi commercial applicability', Ibst is less rell understood is the nature oi judgements taken into aaccount thtn n1k11I that PPiOrdtieLtiOP. I good illustration oi this problem can be seen in 8~ cultures, Iny 8I0 culture generates a large portiolio oi i e projects, each ol which enhlbits I liie cycle runaing iron origination as I 'source' project generating iniormation and iandrmeatal Poderstadding oi principles, through to deployment Is an 'applied' project elplolting such inionbtioa in product b applications I The problem ior BID decision makers committed to the application oi BID innovations to the predict lies in reliably disfilllishin( 'ylitd' iron 's6Prcc' proj~6rs and understanding the basis on ~hich such distinctions are lade, GBLDC have Itte~ptsd to resolve some oi these problems by developing a systematic approach toevaluating projects and ~o~d~ Id Ldd~ dr judlelenta uredfn Iri ,tlb~do~. The method is called '8trategic Project Selection' and tas developed In late 1983, in this approach every discrete project Iithin the BID partiolfo (70 projects in 111) rak subjected to a stsndardioed examination oi strategic objectives, anticipated constraints, cm,~~ ii lueccss, I~k~nsd ~Rllcl*~· etc. lollolhl this, several oi the projects thus described mere used in iltarviewe with a slail group oi selecred decision Ilsrs ~itbloeB~DC1 The iatsrrie~s iollo~ed an established psychological approach in rhleh nccesoive pairing oi projects are compared and contrasted, ~ith a vien to draning out the implicit set oi judgements ~bich the iatervienree is using to jPrtlil a mo're global judgement (i,e, that one project is BATCo document for legal Services : Health Canada l9 May 1999 perceived more commercially applicable than another), Typically it is found that the judgement of commercial applicability for sag one individual seems to rest on a structure of shout 8 'sub judgements' on average, These personal judgement sets typically show quite a high degree of overlap within any team of decision makersl This I: establishes a foundation of consensus ior the next stage of the method, in which the interviewees are brought together in a group session where the individual judgement sets are reconciled to a commonly agreed and operationally defined set of judgements all of which are agreed to contribute to the overall perception of 'commercial applicability', The CRBDC judgemental set appears as Appendix r, illustrating the types of judgement which were isolated in this particular application, The judgements are isolated as bi-polar dimensions, which means that they can subsequently be used as scales against which projects can be ranked or scored, In the final stage of the method all the projects constituting the GRhDC project portfolio were scaled by the group against their agreed set of judgemental criteria, This quantitative data pas then analysed using the principal components method familiar to DEITI~ evaluations, This technique had the advantage of Illustrating: a) The contribution of particular 'sub judgements' to the overall perception of 'commercial applicability', b) The prioretisatfon of projects relative to this structure of judgepent, and in terms oi perceived dfiieren eel s~mi laF ity to one another, The utility of this technique within the BBSDC context has been in the identification of product applications projects, The conieredce reported here represents an extension of the technique to support a joint BSD/larketing approach to: BATCo document for LegalSeniees : Health Canada 19 May 1999 ·-··--~L~Y ·1L~--Y-YC~I~~-i-I· ~-- Genersticn oi Ipnorati~e product project propositions. b) ~dentiiieatton ol r jointly spreed set o~ judgemental crfterir relating to perceived commercial applicnbfllty~ c) Evrluation oi the tnPorntire propositions rgrinat the colerei~l rpplicrbility critcrir, the conierePce represents r sfgPiiicint iarther step in the colitleat to get the most oat ai the LLD/r~r~etinl interlace, ~I Irrticularly in terms oi providing Ilrketing releplat lehds br II projeer c~dg. ~oklll 1Rld O lb~I BLDIYlr~eting thinlring on the~gcnerstiop rad epalaotioa oi project lelds is to bring selected BbD rad Yar~etiPg proiessionrll togbther in disc~ssion~ The conicrence as .I thereiore blsed on six ipterpltlonbllp selected Ylrketing proiessionale rad lour members oi CBIDC product dpplic~tioas grOPPI 111 too cited holeper, 'crelltiYity' sessions 1111 throngh lrck oi structured outcome, thereiore GBIDC's experience ~ith Strategic Project Selection rrs incorporrted into the structure ai the three dag tonler8acc. B~Co document for Legal Senicea : Health Canada 19 May 1999 --~· · · ·~s~ ·c·'~ CI~L--- ----~YI~C·C·Y~_ 8T88CTIl88O CREITlVI'IY : TEE PBOCESS This technique recognisea that there are three stages to the process o~ generating project ideas: nITI IcpoIaITrQ ~IWI~III CBIT~POI 8Y8T88dTIC UaI8IS DMI ~UISIPIOI (DAY ~U laisrt to the contributions ~hieh the delegates make to initiate the process of structured creativity, In this case each individual made a iarmal, ope boar presentation to the conierepee durillg the first dry. The timlnl ~ls designed to allon sriiiciena discussion tile lor points o~ clariiicatioo on1! at this stage, ~he presentations required considerable pre-pork and were used as a means oi generating I ~aPber o~ concrete project ideas ior the cooicr,oce to sPbseguentlt rorlr ~ith, The instructions to the delegates, in preparing their presentation, ~era as ioliab: 'rhe theme oi lear presentation must be a personal interpretation oi; a) the current tobacco narletinl scenario, it's ~ay constr~fnto, challenges and opportunities; b) I prediction O~ luture market trends, directions, constraints, and opportunities; c) I personal rie~ oi the current and ipture dc~elopl lent oi consumer needs, attitudes, and segments; d) Vie~s on current and iatare product trends, needs LP( DPPDrflDifiBO, the presentation should he structured in such a ~ry as to end ~ith ~o lullJ spetiiied product project pro~ poeblo accompanied nltb reasonable speciiicatioas ol product parameters, consumer relevance, market scenario Ind, idollly, frrl,t sollsat rad comnunleatlon strltel~,' O -------------~I-_~ B~Co document for Legal Senices : Health Canada 19 lay 1999 These formal presentations are reproduced in fun within the volume which accompanies this report, eoHsTRncrxve cRITIQUE (DAY 22 Befers to the subsequent process in which, after due time to 'incubate' the ideas presented in the papers, each contribution was re-visited and constructively examined by the group for technical feasibility, marketing possibilities, and any re~inementslalteratioas to the basic idea, This stage resulted in an agreed statement for every project proposition specifying the strategic objective, constraints applying to its achievement, the product specification, the I technical feasibility and the marketing strategy, SYSTEMATIC ANAL~YSIS~(DAY 31 Refers to thC process of setting up a system of judgements which can be used to evaluate the final outcome of the first two stages, In this case individual delegates were interviewed during the evenings of the first two days of the conference to systematically draw out tbe~ty~es'of personal judgement which they made when considering those aspects of projects which they felt contributed most to the probability that the project will succeed in commercial application, On Day 3, these individual judgement sets were consolidated through group discussion to a consensus set which was then used as a judgemental `iramework against which the project ideas generated in Days 1 and 2 were evaluated, Eventual analysis was by principal components technique, BATCo document for Legal Services : Health Canada 19 May 1949 The conference Is therefore designed both to generate project ideas, and to develop a system for their evaluation against a criterion of commercial applicability 1 The conference structure is as iollo~s:- DAY OBE DAY TWO I · I DdY TI1I~E DATA ACQUISITION CONSTRUCTIVE SYSTEMATIC CRITIQUE I I~ALYSIS I ~ Personal present- Development of Agreement of a atioos ai project strategf'e objectives I r) I consensus set of propositions, and consideration of judgementsl feasibility, Scaling of project propositions against the judke- ment set, Analysis of results, nAu onn (1EJ D~Y TD (EVB] INDIYIDUAI, IM)IVI;DUA~ ~NTERYIEIIS INTERVIEWS BATCo document for Legal Services : Health Canada 19 May 1999 '1 'd STR[TCTURED CREATI~VITY TEE OUTCOME ·Tbe_Judsemental Set 111 delegates were.subjected to a psychological interview conducted by the conference conveaor either on the first or second evening of the conference, ~These interviews, based on pairaise comparison of project ideas, produced a total of 69 judgements (~n~average of 8-9 judgements per delegate, excluding the convener and one delegate who had been interviewed an a previous occasion), To illustrate the diversity of judgements identified as relevant to commercial applicability, this list of judgements is reproduced in full as Appendix Il, It should be re-emphas~sed that these judgements are 'bi- Polar' that is, they represent dimensions with logically opposite ends along which projects could be scaled or ranked j) to illustrate their rela:ipe positions. ~t is Ipp~rent from Appendix II that there exists a high degree of overlap across individual judgement sets, which contributed to the relative ease with which the group came to an agreed consensus set of judgements on the final day of the conference, It is interesting to note that no fundamental differences in judgemental structure emerged between those delegates with a $rkcrial, and those dth 1 product Applications baek$round, The finally derived set of judgements was discussed to produce an agreed operational definition of what each term meant, This Agreement on definition is most important since any lack of precision at this stage inevitably leads to 'bendlng' of the judgemental rules at later stages when particular projects are being evaluated, The judgemental set, with associated definitions, was finally agreed as: -- BATCo document for Legal Services : Health Canada 19 May 1999 II High V L_oa BehaPioural Validation '11 measure of the evidence which exists to support a proposition, i,e, Evidence versus speculation, where high · specific observed consumer behaviour and low · ~a~ereptial speculation,' 3. large YSmall la_rget Market 'The size of the target market expressed in equation terms as the number of potential markets X the projected ) sil;e of each affected segment within those marketsl 3, Short Y Long Lead Time to Manufacturability 'The time required to design the product and develop the necessary technology in anticipation of scale production, where short · ( i gear, and long · ) 3 gears, ~, Easy II il;rd to Communicate 'dbflity to express the claim clearly within the constraints of the given market.' 5, High Y Low External Risk 'The probability of provoking a significant attack from external groups which could undermine the ability of the company and industry to continue to operate profitably,' 6, Positive V Negative lanuiacturer Cost Impact 'Ilmeasure of the economic benefit to the manufacturer considering variable costs, fixed and semi~variable costs,, and asset utilisation, ,,I, ---~LC_ BATCo document for Legal Services : Health Canada 19 May 1999 1, Iilh P 16r Pivh a~r Return on investment 'Daiiaed bf total offer development earf, bg total marketing intestrent requirement, bl variable margin field derived Irop unit ~olre potential: 8~ lligh V Lon Commeroial Ippliclbilitf (Ybster Construct) loOol It is intatestiag to compare tbis jpdge~eatal set Iith the earlier set derived from in-house GBtDC Ictfvity under ttmtegic project Selection, This comparison is illustrated ill Table i: ylBtE I ooHPluiIsoN or GR&nC ~ JoIm liDl~rutErra ~Q~~t SETS CRbDC STRATEGIC PROJECT alemor II)IMhRKZTIIG STRUCTURED CRE);TIIlm kiter of Technical/Cost Palribilitl) log Eonie V Imminent ) ~eld Time to ~Prl~ttltbilitl 8chololt Push I Cormercial Pull Plgtce of Copouort Relovanoe ) ( f~h~ioall IalidarIon of Evidenced Certaintl of SPtcess) 5111 of Creative Opp~t~itf 1 Sire of Iat!et Ltllt of 1Plheal Impact ( Positive I Nenative Bwflctrct Coat Contribution to Profit Ootirisotion 1 5 Tear Return 0 Inveetmene ~ I linh Cacrciol eoPrmnieabllitr I Ease of Coluunicatioa It Clerckl bPlielB~ltl I Deeree of C(Rmeroipl DefenllpeI DftansBa tow P EiRh ~ritT of Objlctivl Idalia V Ptodoot Orim~ltf· of External Piek 4 ~----~--------- -- BATCo document for Legal Services : Health Canede 19 May 1999 'It is notable that despite the difference in objectives for these exercises, the degree of correspondence in judgemental structures is fmpressivel Degree of external risk is apparently the sole judgement unique to the joint REDIMarketing exercise, whilst the three judgements unique·to the GRBDC exercise reflect the more parochial emphasis of such an in-house approach( TIlg PROJECT PROPOSIT TONS The proceedings ct the conierence generated 13 dLcrete, product based project propositions, the only propositions which were arrived at by more than one delegate being sidestream reduced cigarettes and slim cigarettes, The initial, uncritiqued presentations are reproduced in the companion volume to this regort~ Each project proposition was subjected to critique during the conference designed to produce an agreed specification of: i, STRATEGIC OBJECTIYF; (The commercial aim of the project) Z.,CDNSTRAINTS (Applying to the achievement of the objective) 31 PRODUCT SPECIPICAT~ON (~hys~callsubject~ve features of the product design) 41 TECBNICAI HOR (Design options, and the technical feasibility 61 achieving the product specification) 51 MARKETING HOI~ (qualitg of strategy required to market the product proposition) O ' IV __ BATCo document for legal Services : Health Canada 19 May 1999 r· *hy~L~~~ ~ _~__ _~_~__~ The 13 propositions nere as follows: 1, ~ODIFIED YENTIIOL/SPICE FLAVOURED PRODUCTS 2, TEE 'BYELIORATED' CIGARETTE 31 SBORTEX IENGTBIREDOCED TOBACCO CONTENT CIGARETTES 4, INDIVIDUALLY BEAT SEALED C~GABETTES 5, 'PRONT END LIFT' CIGARETTES 6( COMPENSATABtE FILT ERS 'I, NICOTINE OPTIMISZD CIGARETTES B, ULTRA SLIM CIGARETTES 9, MOIST SNUFF 10, FULL PLAVOUR CIGAR~TES 11, LOtl CO CIGARETTES 12, IIJGB EXPANDED TOBACCO CIGARETTES r3~ LOW SIDESTREAM/ AMELIORATED AROMA PRODUCT Critiqued specifications of these propositions appear in the next section of this reportl O N 03 W - ---~-------~~ BATCo document for Legal Services : Health Canada 19 May 1999 STRUCIUREO CREATIVITY PROJEGT SPECIFICRTIOHS O [V CO · BATCo document for Legal SeFlices : Heafth Canada 19 May 1999 i, YIOOIFIrm MENTFIOL/SPICE FAVOURED PRODOCTS Strategic O~ective: To develop a product which would offer something extra to current and potential menthol smokers who require either menthol plus an overt modifier or a coollnglspice alternative to menthol~ Constraints : II The spice modifier must be highly tobacco compat~blel 2, There may beacarry over/build up effect which would result in an undesirable aitertaste( 3, The concept mag be confined to existing menthol markets or only be applicable to certain geographical regions, 4, Retention of ilavour during shelf life and after pack opening may be difficult to achieve, ~Product Specification: B normal king size tilter, full flavour US blended product with a strong supporting blends Technical Bon: Feasible using current technology unless ilavoa retention requires the use ai micro-encapsulation either distributed in the blend or incorporated on the cigarette paper, ,,II, ------~1~--- BATCo document for LegalSenices : Health Canada 19 May 1999 ·Ysy-;·l···ni~·lrc·li4i~,~~-ii~;.a,~i_~,~;c~ - ·--~~ Yarketin_k low I, Requires extensive testing to establish type and level of modifying spice~ a. Requires gualitatipe work to establish validity of the Eaacept~ 31 To be positioned as a fresh, clean, high taste alternative to menthol, 4. Fresh dreath assurance and gcod residual aftertaste should be emphasised in consumer communication. 51 The possibility of less offensive sfdestream than normal cigarettes mag be a spin-off product plus. loOo- h, 05 BATCo document for Legal Services : Health Canada 19 May 1999 cc'~c~r --I.' ~I.~.I~·-Ci·~··;CIUWIl~*e5L-~--L . -·i~~__~~_~~~ a, TEE 'AMELIORATED' C~GARE~TE Strategic Objective: To capitalise on the potential for a cigarette which produces less of the unpleasant after effects of smoking in terms of irritation, aitertaste, dryaessl Constraints: Ability to make a product, Prbduct~Speciliehtian: Regular and king size, Around 14mg, around 10mg Noticeable relative reduction of aite~ef~e~ts~ YaiPtenaace of desirable (taste satisfaction) cbaraeter- istics during smoking, Technical Bow: s eoolantsl Sublfminal/lon levels of coolant additionl s Be~ coolants - additives - eugenol I duolite filters 1 citrus peek aromas saliva generators I ventilationl blendsl Yrrketing how position as a positive, Pore enjoyable smoking experience do not concentrate on the problem 1 do not stigmatize the current product ~o001 0~··- -----~------ 1_ BATCo document for Legal Services : Health Canada 19 May 1999 c*IWLui4-~r-L~ ·· 1L_~_C_LyLy~ 9, 9BORTE8 LBlOtH/BPOCP tOBIC~O CoNTENT CIGARETTES 9trate_gic q~ctlrc: To oiler consumers value 10r money through our technical ability to provide the same tlstalg~tiailcttoo as conventional cigarettes ~ith a considerable reduction in tobacco content,' Duty stnctnrss sill is Pst marlcta 11101 aiyliiiFllt cost savings, being bleed to varying degrees on tobacco lreightlad ralorem, LLsed on the iact that only a small proportion oi tobacco is actually smoked, the rest being dissipated during the smoulder process, Constrain ts: Bpeciiic duty structures rhera applied ~ill not rllo~ ior comparable cost 8lllngsl The product nill be unconventional la·~ppearrnca and it may be diiiicalt to communicate the concept in a believable manner, Prodact Bpeciiication: 0se oi specialist paper (PapyrosaP) to achieve sion burn rate thereby Cptttpg do11 dissipation, possible use oi eItra length holder, PossibIs ass oi 80 lav cfrcllisrelecleltra lsnlth rltblr than say 15 small sire cigarettes at same price as normal length cigarette, ,,111 BATCo dclmlat for 16g~ Serviees : Hoalth Canada II May 1999 Technical how: Nothing new suggested in the making technology ~ standard blends, Papers already Available, Packaging may require new machinery dependent on tilter type used, Yar_ketipg how: Yarket as a new, unconventional breakthrough - smoking on a really different product concept, Pack design/advertising should reflect this difference, Pricing could be based on more cigarettes for same price ) (95 for 20 price) or even at a certain premium, Possibly 20 cigarettes for lower price especially ii a slim sizelextra length concept is used, There is a spin-off benefit of low sidestream which could be the main marketing concept under appropriate market conditions, coOol O IV -- ---- __ BA~Co document for Legal Services : Health Canada 19 May 1999 ~L~Ci~Y~i~L~ ·-~.~~~-J-~i~\~~-L_ i~j.;~L~C~;iiii~i(l-~h;Ljl 4, IKDIVIDUAUY HEAT SEAL~ED CIGARWTES Strategic Objective: Bp offering cigarettes in peak smoking condition in any unit volume, to increase: a) Total sales through increasing price accessability, b) larket share through a genuine product benei!t. I' c) profitability through - reduced variable cost e reduced PLSV costs e control of distribution up to the end user, Constraints: Innate conservatism of target smokers, 2, Resistance of traders to lower margins on stick sales, 31 increasing accessability to young people, 4, Physical protection of the cigarette may be reduced, 51 Ease of opening ~ consumer aeceptablet 6, Visibility of individual stick VS, cost constraint of using clear films, ?, Greater bulk - shipping costs, Product S~eiiicbtion: - standard product la~fh hat toil dye stamped brand identifier I continuous reel or board backed units printed film or blister packs 0' 1,111 0~ BATCo document for legal Services : Health Canada 19 May 1999 '· ~s-~c·r- -- ·-IZ.,,_,_ _.. ____~_ Technical how: I Adapt existing technology for beat sealing an the malter thus eliminating the packing unit. Ilarketing Sow: Dse the selling proposition of "Factory Sealed for Perfect quality" 1 it should be ensured the branding and value added image is enhanced by the new packaging, This could be achieved in a Dumber of rays: rl IIot ioil stamping 6f the bread identifier on each productlstick 21 Brandf~ng material printed cn the iilm wrap 3, Ose of dispensers in conjunction with reels of individually wrapped sticks 4.' Self liquidating permanent packs as give-aways with stick salesl loOo- __ ~~ BATC6 document for Legal Services : Health Canada 19 May 1999 __ _~ _ _~_ __ 5, 'PBOlr P IIR' CIGUErTgS Stratetic Objective: To improve the taste and ilavoar oi ~s iirst iea paiis on oigdrettes, i, it is assumed that smokers Ire most likely to make judgements about cigarette quality in the iirst lee ppiia, i, It is assumed that 'need' ior smoking eatisiaction is highest len a eigsrcfte is iirst lit, j, Constraints: People do a6t·sloke like machines, It is andertto6d that thel do in Iact t~, longer palis to some extent ~t the bl~nLld I danPe ~Ycl ~~I pt la ,~*dr 1roDt end lilt, Any additional designed 'iront and liit' should be modest to ratlin credibtc, People Ire unlikely to nbnt to change their 'Ponl' smoking Patterns, Front end Ilit` is likely to diatarb Formal smoking patterns, Smokers may have to learn hon to smoke these products, ProdPct Bpcciiic~tl~: Can be applied to 111 eig~retter, bat likely to be less eiiectitte on low delivery prodacts ior established lo~ delivery ~latcrt, ~bere snob a product may laek credibility, ,,I,, BBCo drum,lt for Legnl 81ntll : H1I~B Clnada 19 May 1899 Technical Sow: Several ideas currently in B8D: 11 Balanced ventilation designs, a, Codevac design (tobacco rods with constant density but variable blend composition), 3, Structured cigarettes with high ilavour tobacco at front end. 4, Low efficiency blocking tilters such as HEE, CSF, 5. Partial blacking iflte'rs of other designs, 6. Addition of volatile ilavours, Ilarketiag Sow: Use the general selling proposition e,g, ns better iravour product"; ba not stress "irOdt end lift" or hnJthffig technical, -obol ,C~J ~-------- BATCo document for Legal Services : Health Canada 19 May 1999 6, COMPENSATABLE FILTERS Strategfc _Obj ecti~e: To make it easier for smokers to take what they require from a cigarette, This means in effect that the filter will be compensatable and implies a high taste to tar ratio, Constraints : Vbat are the ethical implications of such a developmentl People who buy an 8mg product expect to get 8mgl It is also understood that people smoke cigarettes differently under different conditions of stress and relaxation, so they must be aware at some level that they can adjust the delivery of individual cigarettes as well as smoking )different numbers of cigarettes, Should such a development be the subject of a clear declaration of its elasticityl if such a declaration is not made, bow well protected is our competitive advantage from the reaction of our eompetltprs? Sbould we monitor competition product to see if they already have "elastle designs"l Product Specification; This concept is aimed at lo; and ultra la products, Care mast be erercised dth blend strength or a credibility gap will be found, Thus a successful Ibw or ultra low should shoe just more than a prorata increase in delivery for the increase in puff volume, It mag be desirable to take these changes step wise rather than abrupt development of an ultra low that smokes like full flavour, ,, I,P ly · V, · ~ "' BATCo document for Legal Services : Health Canada 19 May 1999 The concept of a l4mg cigarette designed to smoke like a rt-lsmg cigarette was also discussed and endorsedl Technical how: Not known at present, but current RltD leads centre around: i, Optimised combinations of conventional material, 11 Velocity sensitive filters, Ilarketing ~ol: ) If the eventual design Is visually conventional, the proposition would be of a better cigarette that helps you get what you want more easily, Ii the design is visually diii~rent the proposition would be for a low tar product specially designed to produce more enhanced taste had ilavour, loOo- BATCo document for Legal Services : Health Canada 19 May 1999 T, II~~I~B OPTIllISEO CrGIBBrg~ Strntegic Objectives: wore siifclent atLliaation oi in gita nicotine in cigarette nmolre, Constraints: O 1, Derslopaent oi I rslilble measurement d]ratem icr irec broe nicotine, II Is require n batter aaderstbndfng oi ho~ to produce the EI~CC~ Oi inCrblOinp the rbtio oi iree blsa nicotine ~~~itlble Irom snotel 5~ Dnknona aliects ~hto npplied to VlrplPlb blendsl Product Spaciiicrtion: OS blended cigarettes in pencrll. Techoicrl Bo~: II Bss ai uoofl trented aheet mltsrirll 1, Bib Oi di-llOlilB pbospnte on blend on shaet( 3, Other 'buic' trsrtleota iot the blend, 1, The cbme eiicct is not rcblstad nith nllrnline iilters, ~~n~l be II '~ illlvour brllnds:- utllial ,ifher no lese~t or ~ i~iliorc~d illlOPr D~OPOlltlOll 1, Lt delivery brrnda: use improved taste or sp~cirl Process tlpa propositlans( ~Oo- BATCo d#umont for Logal Senicel : Hoolth Clnldl 19 Yey 1949 8, ULTRA SIII CIGARETTES Strategic Obj ec ti~es: 11 DS Ilarket: To develop a near, mainly female-oriented, 'style' segment, 2, International: To develop a new, higher margin, low price offering, Constraints : j, II Physical product assembly, I 2, consumer acceptance: a) Bandling b) Youthieel c) Snake quality d) Social acceptabil: I a) Mole VS Female apF·dl Product Speci~~ entionlTec~:: i~al ~.·~: i, US : 11 X 94 - 100mm, 20 ~ sticks, unique boa a, int: 11-20 X 80 e 841 20 stiCkS, STD 1015 bOX 3, Average puff #, tastelilavour profile 4, Packaging configuration) 51 PilterlBod Assembly ) as bppropriate Ytarketing Row: Proposition themes would depend on market context, but in the OS for example prime selling propositions would be as a cigarette for females and as a stylish product variant, Secondary benefits with potential proposition use would be economy and low sidestream, loOo~ "C3 BATCo document for Legal Services : Health Canada 19 May 1999 ---- --- ~-~~i-,i~y_~;yLy ~__~ __~ _~_~ 9, YOISt SIIPP 9trategic Objective: To capitalise on the potential do~ntreod oi the ppo~ia( habit as the only means oi achieving nicotine satfsiaction by participating in a parrltsl.prodact marliet ~hieh is Iree ol social/herltb concerns, and rith attractive proiitabilitJ potential, eopstrrints: aj Illeged irritation eiitcts b) potential criticism iron the medical/dental proiession, c) Technological know hon is carrently aopltxiJtcnt vfthin the BU group, product bpaeii~i~~tio~: loosesnaii in Ij to i ounce cans in oval ibn or 20 pouches in rectangular can, b) Starter low tar, with renthol and lull illvour II~IPSIOIL, Technical 8~: To be developed based on currently existing industries in the IS, 9nteden and Denmrrk, Yrrlreting Bo~: I open to lull creative treatment The product category is irse oi ray advertising restrictions in most enPiro~eofa( r000- · ---------· BATCo document for Legal SenkeJ : He~th Canada 19 May 1999 10, ·FIIU FIGVOUR PRODUCT Strategic O_bJecttve: To eapitalise on a potential return to fell ila~our by offering a cigarette aith markedly superior smoking characteristics (particularly·qualitatively) at physi6loglclllp acceptable delivery levels, Constraiats: 11 No empirical evidence of a consumer demands a, variable cost implications, 31 Unconventional technology would be a long term development if feasible at all, 4, Can the concept justify a price premium9 51 Strength of existing full flavour brand images, product dpc_c~ica2io?s: ~ 80/84 X 24I8/21,0 X 20mn 1[9 or QC OS or Va Blend PNWNF 14 mgs approx, Nic: 1,4 mgs Technical Boa: Bleed andlor ) dnnular/lemt-annular construction Short term Front end lift Aerosol dispersion (modified smoke Long term flon patterns) (111, ---~ -- - BA~Co document for Legal Services : Health Canada 19 May 1999 Yrrketina Bog · Direct appeal to nostPgi~ Oi the 'gadd old' ei9arettes· Strong, ,~pportable product cla~msl · Bigb image ,,,,,~Pt ~ith product chlrac~eristics~ r0001 1' o · BATCo document for Legal Services : Health Canada 19 May 1999 11, ~1 CO C~GIBmBS btrategic ~ ec tilsa: To understand hce to design 101 GO/tar ratio prodaets and cake them acceptable to smokers in the event that theg are rsqairkd ior 16ague table COl Constraints: 1) thfs is ra area nhere se sbaPld be prepared bat should be reactive ratber than pro-active, 9) Thare is increasing evidence that coasnmers don't ~ant core product il~n~tioP - one ~ie~ is that ion CO cigarettes should be marketed covertlpl I a) There v111 he I~'~~mfnl period' ~biad s~ald LIlow time ior transition to the ns~ prodact shonld league table CO be introduced in ang rrlet~ Product '9peciiicat_icn: 1) This project Is alreadf ~lthiP GBIDC and sets oat Principals oi product construction rather than any single product optcf~iertiod, 1) Dependant upon the style oi league tables It pal be necessary to develop a predict in several categories and ensure that ee are not 'top". Technical Bo~: 1) This is essentially andsi~toodl fhsr6 Irl be a eonilict oi interest since CO levels tend to rise ii aigbly expanded tobacco levels are used ior tinanctal reasons, Provided that the smolrer concurs, se shoald t~Lt the noneJ nov and only go to ion CO ii lorced ~ -- BATCo document for legal Services : Health Canada 19 May 1999 Ilsrketing Boo: i, YsEre no overt proposition to the consumer in the abeepce of CO league tables. a. m the cue oi the appearance oi league tables, emphnsise positive positioning pre and post this ~mpositi6n ~ laOo- O [V BATCo document for Legal Services : Health Canada 14 May 1999 12, BIGH EI(PANOED TOBACCO CTCA~TTES 1 Strategic Objective: To maximise financial return by the use of loPer amounts of tobacco, Thus lower tobacco purchases enable loPer Parehousing and finance charges while maintaining consumer attributes oi the product, C~ Constraints: 1) Use of high levels of expanded tobacco must not in any way jeopardize product quality, 2) It can be anticipated that there may be adverse consumer reaction to some elements of the product, (e,g, burn rate, iirmness, draw characteristics, ash 6 stability), Product S_p_eciiication: i, Cur;ently under test proposal, p·ith the attempt being to match an existing brand o~i a live market as closely as possible, Product specification is similar to the existing brand in question, and level of inclusion o~ expanded tobace6 is at 801. 2, There are alternative blend/construetionsltar levels available, Technical how: 1) This is a knoffP area and Pith the possible exception of fast drying out in hotldry markets is Pell documented, Ylarlleting_Elon : I) Since there is little mileage in telling the consumer tha~t he/aile is g~tting less tobacco tar bfs/ber O money, this is a covert proposition, TV 11111 0\ --·-~CI- BATCo document for legal Services : Health Canada 19 May 1999 t ~b- -L~;l~iiii~i~;LL~.~i~L~ ~ it mag be possible to turn this concept into a product plus ii required f,eL ~~thin an ultra slim nnea era technology" product positioning, it mag be possible to add a "nea tobacco blend technology" proposition, Positive spin-offs of the use of high level of inclusion of elpaaded tobacco: "alastic" delivery productsl C 1) fiOP CO PPOdUCtSI 3) Reduced sidestream products. loO~ ~-------~ BATCo document for Legal Services : Health Canada 19 May 1999 13, 101 SIDESTREAM SMORG/A_MELIORATED AROMA CIGARETTES Strategic Objective: To pre-emptlavoid potential volume decline from smokers under pressure in social and rork environments by providing them rith an offer ~hich combines reassurance in social smoking nhilst delivering good taste and satisfaction, Constraints: 8isk of government enforced extendabflitp to all breads, b) Difficulty in achieving equivalent taste satisfaction to conventional products, c) Potential negative consumer reaction to possible non· tobacco taste or unusual visual/tactile characteristics of the product, d) questionable real psychological pressure release for smokers, Ban smokers reaction to the proposition is unpredictable, Product Spe_ciiie_atian: a) Minimum actual reduction in sidestream smoke of 50g required to achieve a visually perceivable effect, b) Dse of Ecusta velvet paper or equivalent, c) It least 20~ of expanded tobacco in blend to maintain conventional puff number expeetations~ d) Delivery levels open to market specf~fcsl --- BATCo document for LegalServices : Health Canada 19 May 1999 Technical Bow: Further development work required on papers and appropriate blends, considerably more development vork required on sfdestream aroma ameliorants, YIarketing Bor: Communication platform based on a sociability or 'smoker courtesy' focus with perceived lover sidestream smoke and pleasant aroma as the reinforcing elements, Consumer targets would be socially concerned, pressured or 'dissoaant' smokers, -oOo- -- BAtCo document for Legal Services : Health Canada 19 May 1999 BVAIITATIOIO or PROJE~CF ORDPQITIONS The project specifications were subsequently used by the conference delegates as the basis for evaluating the projects against the commercial applicability judgements previously outlined, The process involved taking each project singly and assigning it a score (bg group consensus) on each of the 8 judgemental dimensions, For this purpose each judgement was considered to be a 10 point sale, For example: La COMMERCIAL I ~ I I I ( _I ~1 I AICA COMMERCIAL BPPIICABI~~TY i 2 3 4 5 6 1 8 9 10 APPIICABILITY The outcome of this process is a matrix of scores for projects X judgements, The matrix arrived at can be· seen in Table a, Visual inspection of the matrix indicates the types of evaluation being made about each project, For example, it can be Inferred that the low sidestreamlameliorated aroma product proposition is seen as having high behavioural validation, large target market, long lead time to manuibcturabi~lity, easy communicability, high external risk and'negative manufacturer cost impact, only modest return on investment, but relatively high commercial appl~cability, The first step to analysing the relationships in this data in a more systematic fashion is to establish correlations of the following ~types nfthin the matrix: i, BOI TO R01: in which case we are comparing the scoring behaviour on any one judgement (bcross all the projects), with the scoring behaviour on any other judgement (across all the projects), For example, the correlation between tbs first tao datb roa oi our matrix would give us no estimate of the degree to which the use of those judgements was similar or not i,e, whether judgements of degree of behnioural validation were similar or different to .judgements of size of target market, BATCo document for legal SerJices : Health Canada 19 May 1999 TsBte 2 PROJECT E~A1UATION DATA m r S k T I i40 a x n i a i n rz i n L( 8 to n) a OI a n H v a r ~I I IX a U a lo a 0 0 I INnIYIUUAIIT fIEAT ·SEALED CICIIRETTES r w I PDU FUW~JR PROD1~Q L~I a W 10 10 P W W ~O N O) PI i UIV S~DESTREh~lhMEt- I6R~ED AIIOHA PRODOb it nOTST SNUFF b U1 a 01 a 0 0 a r w 1 UITRA SIM (AS A a a O 0 N SMOKER PROPOSITION) r N 1 ITRA sltn tbs A low O IO a b 03 Ill COST PfLOPOSITION) 0 0 U YI hi ~1 01 W I )PROa END 1IP~' CfGaReTTES a a 0 N U 0 0 a I COHPENSATABLE tUITERS r I ~n lp 0 in r r I HODIFLED ~ENTdOllSPIQ PWVOURED PRODUerS a ~P a Y ~J u \0 lo I rICOTT~E OPTIHISEI) OIOARETTES * sHoaTEa tENcr~ilReoucu, W O a CI 0 0 r TOBACCO CONTENT CIC. 'A~IEI~IORATED' H 'O U O ~1 + hi a CICAReTl"e a ~u a ~d r 0 0 r I B~IL;d EXPANDED TOBACCO CICARE~ES r I I I I r H I LI~ CD ~TCIReTTZS a cl a PI N *lr r rir CIFI L klkx I r n on zo 6 a O IV C3 V3 CO CO BATCo document fur Legal Services : Health Canada 19 May 1999 2, COtO2N TO COI~M~: in which case we are comparing the scoring behaviour on any one project (across all judgements) with the scoring behaviour on any other project (across all judgements), For example, the correlation between the first two data columns of our matrix would give us an estimate of the degree to which the projects under comparison were judged to be similar or different in character i,el whether individual wrap and full ilavour product projects were seen as relatively similar or different in natures i 1 31 _qoa TO COIUMB: in which case we are estimating the extent to which particular projects correlate, or load high or low, on particular judgement dimensions, This gives us a type of descriptive profile of the nature of the project, The interpretation of a correlation estimate is straightforward, an estimated correlation betreen two sets of scores expresses the degree of similarity or difference between theml A correlation tan fall anpnhere between ~ i, through 0, to ~II A ~1 correlation indicates that the profiles of scores under comparison are exactly the same; a II correlation indicates that the profiles of scores are exactly inversely opposite to one another tan equally high correlation, but a negative one); rhilst a correlation of O indicates a perfectly random relationship between the scores, Clearly in most circumstances correlated relationships nill fall somewhere between the extremes of ~1 to cl, -oOo- The correlated relationships between the judgements derived and used in this conference are presented as Table 3: BATCo document for Legal Seniees : Health Canada 19 May 1999 r~mns, 3 COBBEWLTlONS kfiiEEN SUDCEHE~TS n a C EI ~ t; i I, t; 5 i;l ;1 d~l d B~VIODRBI V~IDATION ]~1,0 t·,l -,5 +,I *,d O ~,2 TABSIZT HILRKET 1 1~1,0 1,2 1.3 -,4 O +,S lgaD 'TlHE I I 1~1,0 ~,2 +,7 +,5 ~.3 O COEPPRPTCIIBaITY i I I j+1,0 1,1 +,3 t,2 B]E~EBNAL BIS~ I I 1. I 1+1,0 ~,P t,Z -,5 POS, ~ANUF~CI1I~NC 1 I I I I 1~1,0 t~, 7 -,2 COST ~HPAQ 11,0.11 1 I I I i 1 (+1,0 am~RcIAL APPIICI~BZ~TTY 1 I i I I I 1+1,0 This information gives interesting insights into the relationships between judgements, Picking out just Go of the more Potable correlations, we can observe a relatively high negative correlation (-,6) between 'bebavicural validation' bad 'external risk' indicating that, in the judgements of these delegates, when behavioural validation is high, external risk tends to be low and vice verse, go observe a high positive correlation (~,?) between 'positive manufacturing cost impact' and 'retura on investment' indicating that the delegates expect a close positive relationship between manufacturing cost and return on investment, It is of particular interest to examine the correlations of judgements to the major judgement of interest to us : COYIMERCIAL BPPIICBBILITYI These correlations indicate the extent to rhich particular judgemen;s cpotribute to thir PPenll d ~ IW perception; CO' O BATCo document for legal Services : Health Canada 19 May 1999 DEGREE OP CORRELATION TO TEE JUDGEMENT COMMERCIAL APPLICABILITY JODGEMENT BE;HAVIOURAL VALIDATION ~,2 TARGET YGBIIF~ +15 LEAD TIME O COMMUNICABILITY glETERNAL RISE et5 POS,~ANOFAC~URING COST 1 1,2 IMPACT RE~URN ON INVESTMENT I +,1 This information indicates that for these delegates the most powerful contributors to the judgement of potential commercial applicability of projects are size of target market (a positive relationship), and degree of external risk (a negative relationship), Degree of behavioural validation is also relatively positively related to commercial applicability, and, perhaps suprisiagly, positive mrinuiacturing cost impact is relatively negatively related to commercial applicability (fndicatiog the expectation that commercially appllCable projects cast more in manufacturing terms), ccao~ The coirelbted rel~tlonships betsecn the projects developed during this conference are presented as Table 4: O iV - 0\ 00 V) --- - BATCD document for Legal Services : Health Canada 19 May 1999 ~~~~OM*~O~M~* DI~ ~ n~ i; i ; + I Y~Y~ Hn~*Mh~na*H4 o~ (I~WYdXr ~n ; ; ; ~ 'O nl*H'~n~~~0~0 ;I~3W3I3 I~ZYI1OIljMY ; ; ; / ~q ~#~n01h1~~0 aL~aWS9 ~~ ( O *~*~~p0hhb ~~n mpruao I ; 1 o ~H~~~Nn~o loma anII~ I ; i ; ; ; i ; o ~~a amrv~vsa~ I ; ; ; ; i q ~hnOhnO nn~~ 10 ~~~*9Q ~31~ ~~ a~ :sm?s ; ; i o 1~*~~on*o f· rate ~n :aa ii i i o ~~o ~n ; q I n~g WYTB~S~6Ig 101 1M~ ~ I : 9 1~~3n ~ 'BB O o 3 mi I I I~Y U(P019O I O a P RO k101~ e o19 o 4 Ylo E 8 11 rl;ll n U19 1oiCIL g O 3~ ~1" a 9 " a "1~I~I~ "'" Y'M ,1~ P II*I·]I ~ # PIU Znr q~ = al~ a g ~irc~iz ~ ~ Bln:lf.la ~191~ ~Ish In~10I ~IIrO .d N B~o docu~lt Lr leg~ tenter : Hl~tb Canldl ~O Yly ~J4J The perceived similarity/diiierence betaeen any pair of projects can be derived from this information by reading the correlation st the appropriate roalcolumn intersection of the tao projects ~hieb It is desired to comp~rs, Illustrating some of the more notable relationships, strong similarities (positive correlations) in the commercial applicability characteristics of the folloping project pairs can be seen: COIIPENSATABLE FrLTERS L01 SIDESTREdll SBOBT CIGARETTE SLIMS - PEYlklE CONCEPT (~~8) grGH EXPANDED CIGARETTE SLIMS - LOW COST CONCEPT (~,?) Correspondingly strong differences (negatfve correlations) ,I in the commercial applicability characteristics of the !olloving project pairs can be seen: SLIMS - LOW COST CONCEPT M1 SLDISTREAM (-19) FRONT gND II%T YOIST SNUFF (1,9) SBDRT CIGARETTE CDYIPENSATABLE FILTERS COMPENSATABLE FILTERS SLIMS I FEMALE CONCEPT [-,8) ~oOo~ The correlated relationships of projects to particular judgements are presented as Table 51 O TV i~Z BATCo document for Legal SeFlices : Health Canada 19 May 1999 CORIIEUTZONS OF PROJEQS TO J~DCEHE~TS rxlgn~n B Ew ·nz ~. a $ 0 a ill 4 16 a a rl a Pe 8 r iii g b g o c n 1 B a ~I n I e: r if a z r i E nr VI r C n 8 H i 111 H XI I 1 'I I i IZ f f f ·C e a I I INDII. WBI\P CIGABET1%S 1 N U 0 W u u r + ·C f I I FULL pLilvoaa r cn ~n u ;J ;1 I I I . c U)w SZDeSTREAn '' 0 * ~O N O' 0 01 $ C I ~ + HOIST SNUFF Fs ;n f~ t 5 ;J t + + + I I I SLIMS: PMALE CDNCEPT ~b;a' tp u in 0 Y + I 1 ·e i 1 I SLIMS: U)W COST CONCEPT I ( r 0 oo N u N Cn I I FRONT EHD LIFT a I r Y O u p 111 w + .I I I I I + CDMPENSATABLe FILTERS U H Cn ~O W J 0 0 ~O~PIED ~WTHOI ( r u iv (J N H 0 ~n I I I DPTIWISED B~COT~NI! II 0 r H ;J ; ; b + + ·e + I I (.SHORT CICAREZTE ( I I P· 01 N IJ 0 CII + I I 1 + ~IORATEO CICIWTTE I , a , ~n U r r Cn W 01 ~ $ u + I I I I1ICB EXP~I~NDED CIC~ERE~T~E r a N U CII N + + $ I 1 I MW CO PIIOOUer c~ w H H Ill N 111 CJ c* 'O rV 03 BATCo document for Legal Services : Health Canada 19 May 1999 bch co'lumn oi this table represents a descriptive profile of the relevant project against the judgements on which it was evaluated, For example, examination of the 'optfmised nicotine' column indicates that this project was perceived to have high behavioural validation, a large target market, moderately long lead time to mauniacturability, relatively difficult communicability, a high external risk, intermediate manufacturing cost impact, moderately high return on investment and overall, a high commercial applicability, B useful way of representing information comparing projects is to plot correlations from this Table on a profile diagram, For example, comparing 'modified menthol' with the 'optimised nicotine' project: DECBeE OP CDBBEI~IOW----9 ~L O ~1 LOW ~ULVIOIIBAI, EIICII BEHAVtOURef, YAIIDBTION YBLIDATION S~ULL TARGET · I LERGE TARGET Hbf~ET HbBKET 10HC LWI TINe SHORT IEAD TI~ TO ~IMRIF~LCFIR- TO IYINUP~UB- IBIZITP~ IBItITY DIWICI~LT EBm CO~O~IICABIbZTY CDHMUNICABILITY BICB EXIEBN~ IOW EXTEBHAI, RISR RISK NZCATxYE ~wm- POSITIVE ~nr- F~~UIIING COST ncnrRfNC COST I~P~C~ I~PICT LOW REIPRN ON BICH BETUBH DN IdlYeSTKEHT ~NVES~FS~T tOW OOMHERCW, BICH CO~RC~ IIPP~CABII~ITP APPIICIIBUI~ .OPTMISED NICOTWE """"' MDIPIED ~TdOL O h) CO BATCo document for Legal Services : Health Canada 19 May 1999 ·~-~C-IUII*- ___ ··I-~·eY·Y~L~·151~·P·IYILIW In this manner, the strengths and weaknesses of particular projects, as evaluated, are graphically illustrated, Another means of representing information of this sort is to use all of these correlations in a principal components analysis of the type familiar from the DELTA technique. The advantage of this approach is that it produces a single representation of all of the relationships between the judgements and the projects on one map. From this way of presenting the information we can discern the overall trends within the data, which is difficult to achieve by using the more detailed correlation tables. Principal components analysis works by treating all of the correlation data reviewed so far as though it were simply a ) collection of angular measurements~(which in tact correlations are)l The statistical method produces a 'best fit' organfsation all these angles to produce a two dimensional representation, or map, of the relationships between judgements and projects, The positions·oi projects are determined in this statistical map by the sum effect of correlations relating them in various degrees of strength or weakness to all other projects and all judgements on which the project was evaluated, The principal components analysis of the data from this conference appears as Figure II On this map, judgements appear as dimension lines with positive and negative ends (like the evaluative scales which they represent), the angle between any two dimension lines Indicates the degree of relationship between those types of judgement, the smaller the angle, the more similar the types of judgement, We can see for example that size of target market and degree of external risk are highly related judgements, whereas return on investment and size af target market are relntfpely unrelated, BA~Co document for Legal Services : Health Canada 19 May 1999 FIGURE 1 PRINCIPAL COMPONENTS PLOT OF STRUCTURED CREATIVITY RESULTS 'HIGH EO~1UN~t98ILI~iY HIGH RETURN ON INVESTMENT HIGH BEHAPIOUW\1 VALIDATION POSITIVE HIOI COMMERCIAL ~YU~ACTURING F' APPLICABILITY n , 4 IMPACT HIGH EXTERNAL RISK LARGE TARGET MARKET ,5 \ SHORT LEAO TIM I ,11 LONG 1EAD TIME I SMALL TARGET MARKET LOW EXTERNAL RISK NEGATIVE MAiJUFAeTURING \/ I Y low COMMERCIAL COST IMPACT ·APPLICABI1IN (9 LW BEHAlriDUR4L VALIDATION 10W RETURN ON INYESTMENT LOV COIQIUNICPBILITY 1, INDIVIDUALLY WRAPPED CIGARETTES 8, ~ COMPENSATABLE TILTERS 2, FULL FLAVOUR PRODUCT 9, M00IFIED MENTHOL/SPICE PRODUCTS 3, 10W SIOEStREPMIPMEIIORATED AROMA 1O, NICOTINE OPTIMISEO CIGARETTES 4, MOIST SNUFF ·11, SHORTER lENGTH/REOUCEO TOBACCO CONTENT · 5. ULTRA SLIM (FEHPIE CONCEPT) 12, '~YIIE1IOWITED' CIGARETTE 6, ULTRA SLIM (LOW COST CONCEPT) l3, HIGH EXPP~JOED TOBACCO CIGARETTES · 7, 'FRONT MD LIFT' CIGARETTES 14, 1MJ CO CIGARETTES BATCo document for Legal Services : Health Canada 19 May 1999 ·The perceived similarity or difference of projects (in terms of their commercial applicability characteristics) is given simply by the physical proximity of their points on the map, Far example, we can see that low sidestrsam and compensatable filter projects are judged to have~similsr commercial applications characteristics, whereas modified menthol and moist snuff projects are clearly perceived to have different characteristics, The predominant ieatures of any particular project will be revealed by the extent to which it locates Itself toward the ends of any particular judgement dimension or cluster of dimensions, For example, sidestream and compensatable jilter projects show predominant features of large target market, high external risk and high commercial applicability, PRINCZPGL COMPONENTS INTERPRETATION Inspection of this plot structure indicates three zones of project classification into which projects tend to segregate themselves, ZON~ 1 "CLdsGt STRATEGIC PI(OJECTS" Characterised by; HIGH COMMERC~AI~ APRICABIZITP IIGH BF~IBYIOURAL ~A~IDATION (EVIDENCE OF CONSUMER NEED) LBRGE TARGGI MARI(ET But with associated: HIGH PS[TGRNBI RISI LONGER LEIIlI TIME TO IIBNflFBClllftlilBIIITY 0, ~------~ BATCo document for Legal Services : Health Canada 19 May 1999 f Projects characterised in this say are: LOW SIDESTRE~IAIIE~JIoRsTED AROMA COI[PGNSATdtllG FILTERS NICOTINE OPTIMTSED CIGBBG~TE9 Within this project set, 'nicotine optimised' cigarettes represents the least risk element and the highest perceived Eommereilll applle~bil~ty (aad in iact eIhihit the bigSest loading on return on investment), These projects should be regarded as risky but major in terms of the scope and size of markets affected, ZONE 2 "OPPORTUNISTIC PROJECTS Chbracterised by;, i, RICE RETURN ON INVESThE~T IOSITIYE MANUFACTURING COST I~PA~ SHORT LEAD TIME TO MBNUPAC~URABIL~TY 1011 ~EBNAI RISI[ But aith associated: SMALL TI~BGF~ YABXFI~ Projects characterised in this aay are: INDIYIDUAUY WRAPPED CIGARETTES uoIsr smrpp ULTRA SLIMS (FEMILLE CONCEPT) ULTRA SLIMS (L0W COST CONCEPT) SHORTER LENGR/REDOCED TOBACCO CONTENT BIGH gltPBNDED TOBACCO CIGARGTTES These projects could be regarded as unproblemstic, profitable, opportunistic developments likely to be restricted in scape to specific markets, BATCo document for Legal Services : Health Canada 19 May 1999 ZONE 3 "_VBIIDATION qROJ6n9" Characterised by: L01 BEBAVIO~B~I~ VALIDATION LOW BETDBN ON INYEST~ENT LOW CO~MONICQBILITY Projects characterised in this way are: mru ailvoua PRoDncr 'PBONT END LIFT' C~GARETTES MDIPIED IIENTHOL~ISPICG PRDDUC~S The most characteristic feature of zone J projects is their current lack of behavioural validation i,el they are good Ideas/products looking for a rationale in terms of consumer needs, The most urgent requirement prior to further development of these projects would be appropriate consumer validation exercises on the concepts, The sole'exceptioa to this broad classiifcatioo oi project zones is the 'ameliorated cigarette' concept which positions on the basis of high behavioural validation, low external risk and high return on investment, This idiosyncratic positioning mag reflect the fact that this project was presented within the context of its thoroughgoing validation within the specific context of the Canadian market (see delegate presentations), as a point of interpretation, it should be clearly understood that this clssdiication into zones is a relative exercise and that although it is possible to generalfse about the characteristics of each zone, it.is equally true that particular projects within each zone nill exhibit more or less of each of the features going to characterise that zone, BATCo document for Legal Services : Health Canada 19 May 1999 ··.i:·· ·:· ;vr:- ~ ~-· " :k* j'"~ '"''·" :Sr·- ·: :.i. ·I, '-··- ::·j~:· · ·;·· ' '":~·*B I·~~-: · · ~ ·· ·'~ .. · · - '''' ~· ·· 'i·~· -· ;· .e ,, : ·:: ··· "' ····l.rc:· - ·'· · ` '·~-~5i~···: -·, '~%~R1:t`·. " : ~·: · ·· ·:.:LS~ I·: ·· ...: :.; ·I' ·*~ ~:. ···· illTY ·.~:S '~ ·;.:~1. '' ''·luz· - ··-~.·· '"'~:;-'.-.:.: '~'''''~'`. ·····'i:~-~~:~~r'·~ ~~· ilt~e 'U ·3j·c~:;! ISQI: I~.~~A· .: ·~·. , ' :;,:· ··~P~i .-~..p--. :I : I·*i:i ·' ·· · u~a~L.: L,~-~:: ;II~" ,~·iu;rT~i·g~LB,: : ': ·~· :·- ':~' ' `·~ ::~~ · ·'".I":~ .:·· · · '·: ::· ·~·~-lf::::~:'i h .; I %.i·1:·I:: - :~Eul· ~:.·r=·; ·?·~:~ ).~C;r ·. ·:::~:: :·n. *· I~·· -··1~5:~t:I~~ ·: ~~ ~. '..·· ··.·. ·; _ f : 1. · ·' ··~.· · 9,i~:?:m: .\I ·l· ·~lr~Fi ·~ ·~. : ~'"!·: 3 ··'.; · ·. "~ I ·· ~~t~!·· ·T1":: ·:. ··I·:~ : ~· ' : ' ' :-t6 ·.~ ·~i.. ·Ir sdl/.: ··.::· ~:::~ ~a I~r 1·~ r·c~ I~· srf~ -· :· r ·':lr;t · ·~*~7, .. i ~I ·: · : ·~, it, `''' ' ·- ` ·' ·-·..: ·'· ~~· '· ·.:~·~ '~ -~i ~I ·· ·~·~:. ' · -·' ?:·· · .; ·~ ·~: -·· .:~is · ·O ··:~-.~ :'" :·:~:'· ii, ·' ·.:· · : i .;·c::::· q\ ' Q .5. ?· ~· '' ·, 'i! ·: ·· · · ·~-'··!· · ·:· · · ·· 1· .. O ..li I- ''" Q:'·.: .,;. , l't ···-· """ :-!·91'-~L;·~' "'` Ta ~.·. :·, I ~I:· . ·· '' "'' " -·r·:·. . · ;.· BATCo document for Legal Services : Health Canada 19 May 1999 i, karketing and product Bppllcations professionals apparently achieve high levels of synergy in creativity sessions structured in such a nay as to produce disciplined ~ consideration of the marketing and techp~;l IeasibUity of project leads 1 Comparisons of the judgemeatsused by Yarketing and by BED professionals in distinguishing commercially applicable projects indicates only marginal differences beeeen these groups, a, Yarketfng professionals are lukely to be relatively more sensitive to risks involved in certain proje~t propositions ~ith regard to erternal baeBlasb from Gaoernmeotal and Competitor sources, 3, The structure of judgements contributing most clearly to perceived probability of commercial application includes .~·:··r considerations oi behavioural validation (evfdenee of consumer'need), external risk,.and size of target market, The highest probabilitg of aceeesiul eomnercirl anDlfCbtfbP :·I.·: is Associated itth high levels of all of thess ittributes,. I, The portfolio oi projects generated in this conference can be classified in terms of: .iJ a) "GLOBILL STILB~TEGIC PROJECTS" representing propositions :: 1:~ rith the most universal relevance and hence potential j scale of market, least market specificity, and most risk of external response, b) "OPPORT(JNISTIC PROJECTS" representing unproblematic, profitable gropasitions dhich are likely, ha~eper, to be restricted in scale to specific markets, c) "~bLIDBrtON PBOJBQS' representing veil elaborated product propositions in the absence of any behaPioural validation (evidence of consumer need), Pltther development of validation projects should pend appropriate consumer validation erercisesl · - ·· ~: ,111( 10CLS9201 ~-~ BAfCo document for legal Services : Health Canada 19 May 1999 :IT---311 _ ~_~ __ I, This ttps oi exsrelse shnld not he ooulusod ~ith detriled l~uibilitl ~laFcisQII rhe iptention is to proridd Ipproptilts leads iar a aubsequent ~n~lp~ is~ofbilltl proOrrurrme coadpctsd bl ~ssfposd h61sct Iane(srsl d( Rojset 8elcctioa iad Str~aPsd~ers~aitltl st,reitso sppdr6otll oiler ~ r6l~tirclf tfatar~tie ttod tile eliectlta [O route to generrtfsg sud apnlPatinl pojsct pmpsitfone ~2tiast the critpri6n oi CorrciL1 Ippllcrbilitt, ~t is ~ofleiprtsd that the erereise oi aPeh taehPipPee rrithiu ~lOpor~tinb Gompaolas ~o~ld add a bell rrt~t per~p,ctf~~ to our Current, less I~r~et spectiic le~el oi Indsrstmdfp61 Q :··· · · I·? ~ U O O BATCo document for Legal Services : Health Canada 19 May 1999 II RpPEHIIIX 1 68a~PLSIBBIW198~t~ ,I ~p~ELIIlLIBLSU O O O P BATCo document for Legal Services : Health Canada 19 May 1999 1, LONG RANGE V IY~INENT The timescale between the current point in time and the point at which the project is complete (deifned as the point st which one could reasonably expect to make a viable product)l B1 DEFENSIVE V OFFENSIVE A measure of bow we are reacting to external pressure as contrasted with how far we are taking action,independent of external pressures, e,g,: STRATEGIC STRATEGIC STRATEGIC STRATEGIC ·) IHPORlddlION ) PRODOC~ )IN~~RUATIO% 5PRODOb BASED BASED BASED BASED DEFENSE DEFENSE ATTACK ATTACK C, TECHNOLOGY PUSH Y COHMERCIAI PUII The distinction between projects which have origins within GR~DC and mag be domipated·by what we can do, and those which have targets emerging from commercial Activity and may be dominated by considerations of what we should do, D, 101 V HIGR CONSUMER RELEVANCE The degree to which a project is informed by or directed by any understanding of consumer nsedslrequfrcments. B, IOn ~ BIGB BREIL~BROUCR BEPIBWE~T The extent to which the perceived required technology is availab2ef P, INFORMATION V PRODUCT ORIENTATIOIP Activity aimed at producing information about the product as contrasted with acti~~tl Aimed at changing the product, -- BATCo document for Legal Services : Health Canada 19 May 1999 G, LOll V_HIG_A TECBNICAZI/COST PBA_SIBILITY I measure of likelihood of uptake in the operating (speciiicallp manufacturing) eapironment, H, LESS V MORE CREATIVE OPPOBT[INITY The degree of scope or lack of constraint in terms of anticipated Dumber of opportunities for nela productsl I, LOll V BIGB CLARITY OF O&TBC~IVE The degree of specification or quantii~catioa of parameters of the project efth~n an agreed end target, a J, 101 V IIIGB COMMERCTGI, CO~I~NfCBBI1ITP Ability sad/or freedom to put over the project outcome message free of constraints in terms of consumer comprehension and legislative barriers, II, LOW B BIGB EVIDENCED CERTAINTY OF SUCCESS B measure of the extent of prior commercial pathfinding Or precedent, L, LOW v BIGH MAGNITUDE OF BOSINESS IIIPAfl On the assumption of project success - a measure of anticipated commercial value, Y, tOW V BIGB CONTRIBUTION TO PROFIT OPTTMISATION The extent to Phich the project Is seen to contribute to achieving optimfsationlimprovement of profit from the current 'commercial scenario, N, LO1 V HTGfI CD~ERCIAL APPLICABILITY O. (Master Construct) ~3 0; BATCo document for Legal Services : Health Canada 19 May 1999 APIENOIX II .. - ·····u~~ 18 O N G\ Q Q BATCo document for legal Services : Health Canada 19 May 1999 ,· KNOWN MANUFACTURABIIITY V UNKNOWN MANUFACTURABI1IT\I REALISTIC SELLING PRICE Y UHKNOWN SELL[~G PRICE LOW OEYELOPMENT CYST HIGH DEYE1OPMENT COST IMMEDIATE PRACTICAL Y LDNG TERM (SPECU1ATIVE) IMPLEMENTATION jl APPLICABLE TO DEVELOPED Y APPLICABLE iO DEVELOPING MARKETS MARKETS UNIVERSAL APPEAL · V LIMITED SEGMENT APPEAL COHTROYERSIAL V UNCONTROVERSIAL ion CONCEPT CO~MUNICABIIITY V HIGH CONCEPT COMMUNICABILITY HIGH DEFINED CONSUMER V 10W DEFINED CONSUMER OPPORTUNITY OPPORTUNITY HIGH PROFIT CONTRIBUTION ~~ LDW PROFIT CONTRIBUTION HIGH HEALTH REASSURANCE Y LOW HEALTH REASSURANCE PERCEIVED GOOD VALUE FOR Y PERCEIVED POOR VALUE FOR MONEY MONEY -- BATCo document for Legal Services : Health Canada 19 May 1999 INtERY~EII 2 ~I6H PROFlf POTENTIAL V LOW PROFIT POTENTIAL ~MMEDIATE MARKE~ RELEVANCE V ANTICIPATED MARKET RELEVANCE CONCRETE CONSUMER NEED Y PERCEIVED CONSUMER BENEFIT EVIDENCE PROMPTED Y SPECULATION PROMPTED j; HIGH TBHIOL06YIBSOUR[E Y LOW li00LOGYiffti011t~ j DEMAND DEMAND HIGH CONSUMER COMMUNICABILITY V IOW tO~SUMER GOMMUNIGABILITY LOU GOAPORATE KUDOS Y HIGH CORPORATE K~OOS LOW SPIN·OFF PROBABILITY Y HIGH SPIN·OFF PROBABILITY 'o ----~--- - BA~Co document far legal Services : Health Canada 19 May 1999 mnnEY 3 BE~AIDIIC LEAST BEHAVIOBR V DEMAIOIYG MDST BEHAVIOUR CHAYGE CHAIGE tARGE SCA1E BUSINESS V SMAIl SCALE BUSINESS I~PACT IMPACT a16H PO~ElfIAL SPIW-OTF Y IOW POTEITIAl SPII-OFF UH~nBI~I~~ V 10Y PRECEOEYT FOR SUCCESS HIGH SMOKING 1 HEALTH V 10W SMOKING I HEALTH IELEVAYCE RELEVANCE MARKET PU11 V TECHNOLOGY PUSH HIGH COISUMEA ORIENTATION V 10Y CONSUMER ORIEITATIDY IOW PROFIT CONTRIBUTION V HIGH PROFII CON~RIBUTION PRODUCT ATTACK V STPATE6IC QEFEYSE BATC6 document for legal Services : Health Canada 19 May 1999 IITERVIE~ SHDAT TERM FE~SIBILITY V 1016 TEPM FEASI%I1IIY DEFIWED COISU~EW IEEDI V GEIEBIC IEEDIAnORPHOUS SEG~EYT TARGET ESTABLISHED BEHAVIOUR ~OOES V YEY BEHAVIOUPAL IABIT YITHII BASE TECH#0106r V OUTSIDE BASE TECHIDLDGr BI IIIY~I I nr aEurr aI6H RETUR~ DM TOTAl ' Y 10Y IETURY OI TOTAL ASSEI REPUIPE~EYT ISSET IEPUIB~EII H16H COYSUnER SALIEPCE V 10Y COWSU~ER SALIEYCE /OY COISU~EB COMaUMICABItITY V HISH COYSU~ER CO~~URICI~ILITY PDSITIVE PBECEDEOT Y IE6ATIVE PBECEDEIT u;~an ,nlnnl ~ ul a6n ~nlsna - -----·------- BATCo document for legal Senlces : Hea~h ClnadP ~9 Yly 1999 INTERYIEY S H~6H EVIDENCE OF MARKET V 10W EVIDECGE OF MARKET OPPORTUNITY OPPORTUNITY MORA1IEIHICAI FREEDOM V MORA1IETHICAl 1IMITATIONS IMPROVEMENT ON ESTABLISHED V NEW OPPORTUNITY 6AP SITUATION LIMITED IMPACT Y BROAUER IMPACT (MARKET SPECIFTC~ (GRUUP RELEVANT) 1 PROTECTION OF MARKET SHARE Y VOLUME BUILDING IOHSIIW BUi~fli Y BILIIRI1IIER IIIIrI1 ;51 ~ i --------- BATCo document for Legal Services : Health Canada 19 May 1949 INTERVIEW 6 CO~~ENSIONAl TECHNOLOGY V UNCONVENTIONAL TECH~OIOGY SHORT DNELOPMEOI TIME V 1016 OEVELUPPIENT TIME EYIDENCEIBEHAYIOURAL FACI V SUPPDSITIONIATTITUDINAl STANCE EASY TECHNICAL REALISAIION Y DIFFIGU1T IECHNICAl. REALISATION LARGE PDTENTIAl MARKET Y SMALL POTENTIAL MARKET BREADTH OF IMPACT G LIMITED SEtiMENT APPEAL HIGH CONTRIBUTION Y IOW COHTR1BUTIDN COMMERCIAL DEMAND V SE1F JUSTIFYING TECHNO1OGI HIGH CONSUMER RELEVANCE V LOW CONSUMER RELEVANCE INCREMENTAL Y CANNIBALISING ~--~---- BATCo document for Legal Services : Health Canada 19 May 1999 LHTERVIEGL2. HIGH CERTAINTY DF EVIDENCE Y 10V CERTAINTY OF EVIDENCE OF A NEED OF A NEED LOn RISK Y HIGH RISK POIEHTIA11I REDUCES INDUSTRY Y POTENTIALtY INCREASES INDUSTRY SIZE SIIE UNETHICAL V ETHICAL / UIWER HEI ItX SKAR~ II HI6HER IEi IEX SHRRL BATCo document for Legal Services : Health Canada 19 May 1999 IIITEBVIE~_S IDENTIFIABLE SEGMENT TARGET V ONIDENTIFIABLE SEGMENT TARGET FAMILIAR v AI·IEN PERtEIYED NEEDS 8 ATTITUDES V CONCRETE NEEDS g BEHAVIOUR GENERALISED CONSUMER Y SPECIFIC SEGMENT APPEAL CATCHMENT· ) RE~OIE COMMUNICATION V 'SYMPATHETIC' COMMB~ICATIOH 10W PROFIT OPTIMISATIO# Y HIGH PROFIT OPT[MISA~ION LOW RATIO DF CONTRO1IED RISK Y HIGH RATIO OF CONTROI1ED RISK MANUFACTURER BENEFIT V CDNSOMER BENEFIT N · BATCo document for Legal Services : Health Canada 19 May 1999