@AT BRITISH-AMERICAN TOBACCO COMPANY LIMITED
TO: B D BRAMLEY
C C.- U Herter
P N Adams
N David
K S Dunt
R S Hartley
* H Pilbeam
* S Watterton
G Burgess
H Barton
FROM: JIM181I REMBISZEWSKI
DATE: 18 November 1993
SUBJECT: BATCO - PRICLNG STRATEGY
The attached provides a perspec-ive ofhowwe see cigarette pricing developing over the
coming years and what our strategy should be -o cope with the various emerging price
segments.
Key points are:
1. BATCO should continue to focus resources on building Ml revenue business
based on consumer trends and needs in key developing markets in Asia Pacific,
Subcontinent and Latin America. Also, in most of Europe, we should continue
to invest in Barclay and Lucky Strike .o establish a global portfolio of profitable
international brands covering all relevant consumer needs.
To do this successfully, our r5ull revenue brands must be priced with a'ustifiable
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premium over lower priced offers but -In a way that -,ne added value will still be
broadly accessible to smokers.
I
In addition, consistent product. pack- and on-strategy advertisina end promotion
7
upgradings are needed to maintain -,',-,e added value in the eyes of the consumer.
Innovations and creativity will be key to the achievement of this strategy.
2. in parallel to the above, a mid-low price brand port.olio is needed to protect
corporate volumes against competitor pricing activity. This portfolio needs to be
managed consistently with a a centraik, driven product and marketing mix to avoid
brand proliferation and to ensure that BATCo competes effectively against the
global approach from our competitors. These brands should be made ready in
countries where low price competition has a high probability.
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BATCo document for Province of British Columbia 23 April 1999

Establishing these brands in a dear price position vAll also help to avoid
triggering price wars as long as our full revenue brand portfolio is simultaneously
priced on a consistent basis.
3. While we put the obvious international brands into the mid-low sector (Viceroy,
Pall Mill, Hollywood, PGL etc.), we should also consider using new concept
brands which might be seen to be more honest vadue-Ccr-mcney offers by the
consumer than brands which once enjoyed premium status but because of their
inability to create a successful franchi" are now downpriced. The success of
Basic, Golden America, West and Horizon could suggest that the consumer
might react more favourably to those new 'honest' offers provided they do offer
something beyond just a low price. In the case of Horizon, I am convinced that
this brand has a strong. light - fresh appeal, excellent range appeal and colour
coding which comes out of the pack design, not necessarily from the trademark.
We should try not to just 'use' well know brands but try to meet some consumer
needs in the lower price segment as we do in the full revenue sector. i.e.
masculine U1 power, feminine - light etc.
4. A major risk for a global price war stems from increasing capacity in low wage
countries such as in Eastern Europe and the Far East. This comes from
investments in these markets in modem highly efficient machinery coupled with
certain export commitments and/or needs to provide hard currency. We should
closely monitor these capacity build-ups as this could help us to prepare our
responses early enough.
JIMMI P,F.N[13 I SZEWSK I
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BATCo document for Province of British Columbia 23 April 1999