SUMMARY OF GROUP MARKVTlNG, STRATFCIFS
(This document replaces all previous Marketing
guidelines and should be read in conjunction
with the BATCo Marketing Department Mission
Statement.)
Obiective:
"To develop a long term worldwide marketing Plan
which makes BATCo gain Market
leadership on the back ofone dominant brand per
consumer segment. Long terrn no
more than two international brands per region
should be supported continuously."
Simte:X,
The worldwide trend to international brands is
relentless and their global market penetration
has doubled over the last ten years to more than
12%. Accordingly marketing resources will
be concentrated behind the following key
international brands with particular emphasis on
the designated regions:
Benson & Hedges Worldwide (where owned)
555 Asia & Indian subcontinent
Lucky Strike Worldwide
Kent Far East
Barclay Europe
General and market specific brand guidelines will
be issued to all operating companies as
part of the Company Plan process. Operating
companies should demonstrate how they
intend to achieve market leadership for their key
international brand over the longer term in
accordance with overall brand plans. it is
expected that no company will support more than
two international drive brands long term.
Local brands will continue to form the majority
ofthe Group business over the coming years.
Resources should be concentrated again only behind
those brands capable ofsustaining in the
long term significant consumer franchises- This
should be on the basis of local hentage
which ran = be covered bv international brand
promises. It should, however. be foreseen
as a long term niche i.e. Prince portraying the
Nordic character. Advertising support must be
limited long term to one Jg1;W brand. In order to
move towards the longer term objective of
building market leadership on one or two dominant
brands per region. it is expected that no
company will have more than three brands in its
drive brand portfolio in the short to medium
term.
Emerging consumer segments should be covered
preferably by spin-offs ofexisting drive
brands or launches of drive brands from
neighbouring markets. Free-standing new local
brand launches should be avoided.
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Oblective:
"To improve BATCo's profitability by building
brands with critical mass allowing for
spending synergies, manufacturing scale, research
concentration, speed of Innovation
and management synergies."
5 tr-3t=:
Philip Morris' international proinabiliry per
mille is currently 85% higher than BAT.- This is
a function ofa limited brand range (less than 40
active trademarks ver= 240 for BATCo),
concentration on the premium end of the market.
consistent global or regional brand
strategies. emphasis on marketing efficiency and
productivity, and larger average
manufacturing plant size.
The attainment of these same virtues forms an
integral part of BATCos nimixting strategy.
The importance ofconsistent support ofa focused
drive brand portfolio has been described
above but there are other issues which need to be
addressed by operating companies in their
planning which are critical to the attainment
ofthis objective.
Marketing Productivity
All companies should seek to achieve reductions
ofat least 5% p.a. in real per mille trade
and consumer marketing costs (excluding brand
communications expenditure and
depreciation). Methods to assess the efficacy of
marketing activity must be developed for all
aspects ofthe marketing mix. There is no reason
why marketing cannot be subject to the
same quantitative measurement disciplines that
apply to. for example, production. Operating
companies will be required to justify their
marketing plaxis on quantified, research based
criteria rather than judgement. Measurement
systems should be focused on the consumer and
evaILLited against key competitor brands. Millbank
Marketing will actively seek to establish
and communicate 3ppropnote measurement systems
but, in their absence, the onus remains
an the opemfing companies to ensure that
appropriate tools are in place.
Operating companies should use whatever critical
mass is at their disposal to ensure that as
much as nossible oftheir m2rketint! budget ii
spent aLainst the conqumer. Concentrating
budgets in a single agency to reduce commission
fees is encouraged (though subject to
agency alignment of international brands which
will be contmiled by Intemationa.1 Brand
Management in Millbank-) Similarly agencies should
incr=ingly be responsible forail
aspects of consumer communications across the
marketing mix and not simply ATL spend in
order both to reduce management overhe3ds and
ensure a commonality ofmessage and look.
Traditional ATL media still represents the most
cost effective means ofreaching the
consumer. Wherever regulations and market
circumstances allow. brand budgets should
reflect this reality. Signific:int investment in
less efficient means ofreaching the consumer
should only be considered ifthey have a realistic
potential of escaping anticipated future
restrictions on tobacco advertising and marketing.
Trade marketing should also be part ofa constant
review ofhow to a) become more
competitive and b) more productive. Better
distribution. POS presence, trade relationships
etc are critical to the future ofour brands.
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Marketing plans should not ignore their potential
effect on manufacturing productivity.
Wherever possible Ul utilisation of existing
machinery and materials should be a common
objective ofboth marketing and production.
Similarly all R&D activity should have an
identified and defined marketing application
within a given time frame. The attainment of
international brand product quality standards
remains a key objective. Smoking quality should be
assessed by the consumer and products
should perform in accordance with the brand
proposition.
Brand Management
The essence of BATCo's marketing strategy lies in
disciplined. consistent and long term
management ofa focused brand portfolio.
All drive brands must have a defined Copy Strategy
which forms the base document on
which all aspects ofthe brand are managed. Once
established these copy strategies will not
be amended unless there are compelling market
reasons for doing so. In the case ofthe rive
key international brands the Copy Strategy will be
developed by International Brand
Management in Millbank-
Brand resources should always be directed at the
full revenue segment ofthe market in order
to drive value share at a faster rate than volume
share- Similarly key brand share will
become as important a performance indicator as
corporate share is currently. Tactical new
brand launches are to be avoided wherever possible
and in all instances should be drawn
from BATCo's current portfolio ofactive tmdemarks.
Brand management must encompass all elements of
the marketing mix. not simply
advertising and promotion. This implies that
marketing management must have a full
underst3nding ofsales and distnbution. product
formulation and manufacture, and the
financial implications of these. Opemting
Companies should demonstrate how they intend to
manage brands as businesses in their own right.
A long term focus on developing brand businesses
requires 'milestone' markers to measure
progress against the eventual objective. All drive
brands should have measurable short and
medium term targets to fulfil this role. These
should encompass not only consumer share
and ex-factory sales but distribution levels.
brand and advertising awareness. smoker profiles,
trial rates. and brand image attributes.
Sales Management
The active management ofdistnbution channels has
received only limited attention over
recent years in both developed and developing
markets. Low margin FMCG companies have
been forced to recognise that individual
distribution channels need specific strategies and
these are vital to develop competitive advantage.
Operating companies should critically
examine their existing distribution arrangements
and formulate plans to enhance their
salesforce productivity and competitive position.
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Objective:
"Develop and test copy, products, packaging and
line extension strategies ror R&H and
555 which, once proven to drive market shares in
premium segments in core markets,
will be rolled out giob2fly."
BATCo will only invest centrally behind B&H and
555 amongst its UK International Brand
portfolio. Full brand guidelines will be issued as
an integral part ofthe Company Plan
process.
Agency assignment for these brands is the
responsibility of International Brand Management
in Millbank- The agency of record for 555 and B&H
is BSB and all brand support budgets
must be channelled through them (both ATL and
BTL). Any exceptions to this require prior
approval from International Brand Management.
Any Operating Company that wishes to market these
brands will be expected to adhere to the
international brand plans. Local variations in
product formulation and advertising execution
will only be permitted on the basis ofquantitative
research evidence.
No significant element ofthe marketing mix ofthese
key brands can be altered without
quantitative research backing and the prior
approval of International Brand Management.
Maintenance of international qu3l ity standards is
a fundamental pre-requisite for the right to
manufacture the key international brands.
Operating Companies must indicate how they
intend to achieve these standards as measured by
QUArNT and MASQ within a defined time
frame.
BATCo will fiind a development package for Players
Gold Leaf in conjunction with the
African and Sub Continent operating companies.
This will encompass a new copy strategy.
revised packaging. new advertising and
reformulated product guidelines. Completion is
expected by the end ofthis year. Assuming a
successful market test this will form the basic
brand package to which Operating Companies will be
expected to adhere. In the interim new
launches should be avoided.
Usage ofall other BATCo trademarks. including JPS,
remain the prerogative of operating
companies. Brand plans should conform. however. to
the marketing principles outlined
above.
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Oblective:
To develop in accordance with the Brand Owners,
best business building strategies for
Lucky Strike, Barclay, and Kent-
Strateyv*
International brand strategy will remain the
responsibility ofBmwn & Williamson but
BATCo's marketing ofthese brands will be
co-ordinated and controlled through the.USIB
unitinMillbank. Accordingly all proposals
affecting strategy for these brands should be
channelled through the USIB unit in Millbank in
the first ins=ce.
The operating principles goveming the key UK
internationzil b=ds apply equally to the
B&W trademarks. Brand guidelines will be issued as
part ofthe Company Plan process.
Objective:
"To build and hire the best marketing talent
worldwide.
Though the Group has highly talented mangers
worldwide there remains a question mark
over their professionalism. This is due partly to
the absence ofcommon performance
standards across the Group and partly because
formal training has concentrated on marketing
strategy mther than job skills development and
strategy implementation.
Millbank Marketing will develop over the course of
this year a series of modular training
programmes designed to foster proficiency in the
building blocks of marketing.
Nevertheless. the onus for marketing management
development remains with the operating
companies themselves. Operating companies should
construct plans to improve the
professionalism oftheir marketing staff through
career planning principles and training and
development opportunities.
Attachment: Marketing Department Mission
Statement.
7 th Mav 1992
(J4
BATCO CONFIDENTIAL - CATEGORY 1: MINNESOTA TOBACCO
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BATCo document for Province of BritiSh Columbia 23
April 1999