1995 KEY AREA PAPER: MARKETING STRATEGTES
Objective:
"To develop a long term worldwide marketing plan
which makes BATCo gain
market leadership on the back of one dominant
brand. Longterm no more than
two international brands per region should be
supported continuously".
Strategy:
The,orldwide trend to intern =;orai '--ran.' s
is.-e;entless and the;r z1obal market
penetration has doubled ave.-:h:!as-. -.en years
:o more than 12%. Ac.---rdin7jv,
marke,inz resources --viii .--ehin-` %he fbi!owine
key international brands
with emchasis or, -he
lonzer-te-ri,
Benson & H;:-_:zes F z. Eas-, k~-ica and Indian
Sub-CDrr;nent.
PGL SL"--Conrinent. k:L-.ca =d :--. 7zr East
Ktni
Barz!av
Ge=-_ 2ric Z-_`_~!;:nas %%`K ~e issued :o ail
_-cmpanies
as ,:7ar-of:heCompanyP'an.:r::!ss Operating
Cornpan~es should demcns,,-are now
they;nzend -c achiee marke,'=`ers~_:; -'--r ",e;r
knv inte-rational Aran_` over :.he
icneer :!--n in acccirdaric: %vir.h -,er=; _-,
irid pian-s. It is cx=eC::d that :.c ccmpany
.vi;l more :~-an :%vo
e --r=ds icnz Ee-m.
Nattora; 6rand's cu,-.endy acccun: c~`3--'-TCo
sales and are hk-z;:.-:o con-irue
to account or thema iori-.; or sa;~s ~n -e
cr"-ezable fur-re. However.
3 ECCaMC4 -.0 these brands shou!Z; '--e cn oflocal
hen-zage which cannot be
ccverez; ~y inte-rizional ;0rand ;.-cmises.
andwi-ere sustainabic lone-re-n simmEcant
consurner ranchises canbe ach.:e,.ec. in zr--cr
'.., move towards the !on9':7-EerM
objecz;,-! or'bu'ldiniz one or two dorninant
brands per region, it
is expe=ez; that no company '.-,ave 7-re 'han
:hree brands in its
port.-"oiio in ihe medium ter7n.
Objecti, e:
"To improve BATCo's profitability by building
brands with critical mass
allowing for spending synergies. manufacturing
scale, research concentration,
gies".
speed of innovation and management synerg
Strategy:
Philip Morris' international proffiabiNty per
m~le;s currently 120% higher :han BAT.
This is a *unction ofa limited brand ranie (less
tFan 40 active trademarks versus 240
for BATCo). concentration on the 3rcrnuurri end
o,' the market, consistent Qlobal or
regional brand straEeeies, ernphasis on marketing
zTiciency and prcductoiry. and
lar2er averaae manw7actiring CiZr.E iIZC.
C-1
BATCO CONFTDFNTI.-kL - C kTF170RY 1: NTINNESOT ~
TOB.ACCO LITTGAT'ON.
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The at-airment ofthese same ---imues -.'-,rms in
:.-regral ;--r- :;I`3.,kTCo's rnarketing
strzirezy The importance ofconsisient suopcr- ofa
fbcuset drive-brand portfolio has
been described above but there are other issues
which nee-_` :o be addressed by
Operating Companies in theirplanni.-.2 ,,hich
3--,z =Eicai :o :he attainment ofthis
objec:'ve.
Marketing Productivity
All comparies 5hould seek to ach~ie% Of at !e23Z
5`~ p.a. in real per mile
trade znc consumer markerinz costs i exc!ucinz
"-rand ccmmumcati .ons expenditure).
Nlethod's :o assess the efficav. .-or mz--.Ke,:rz
-,ius-, eveloped for all aspects
of the mark-efinz -nLx and parric--,Iar-*,-. the
ol--adverTising sDerid iri terms of
its ;rnpac, -,"on 2%vareness anc T`ere :s no
r!ascn rnarke,:niz cannot be
SLCI .e--: -Z: :~.e same quanrira:;%--z ro. f~-
example,
prodLz-.:~:n Op:!rarinq Corrcznies 7!:___:7;-C :0
JL_Z::~.- m2rke.,~r._,, plans on
quant-ec. 7esa2r:h based cr,,,e:7:a :han
;~;_`zement. Measuremen: sysz=IS
ShcuiC '--e `_-cuset on :h.- cons_:mer az2ins:
zornpe-: .tor '_-rands.
Nbil~Cal_~K set
z!SL~:: :;r 2,IC Z Z:r-.77..::II Cale approcnaie
Me25L:-!~7V',' 5*-.3Z;!M5 CL:. ~n :nd!r 2__3dnC_'.
'n;! :nUS -n :he ocerannz
Com:zn.:-!~ :., _nsurz tha, ::~cis n.
0 Der2::n, CCM::Z-_;es shcuil~ _:ze z.-.::_-Zi
mass discosal :o ensure
that :ht- zzmve me best va;ut ----r :7z-,, ::~!;r
Marka"ng ~udze:s. Concentrating
ad-,-cn:z:7z :!x7en,4inre ;n ore ,r :,.,o 32enc;!~
:c -ec~uct _:n-_,mssion 'Is encouraized
(subjec- -~.e 2~oi:ai aizenc-.- ammmen: mr
[.-.:zr7a::onai 3=_'s wh~ich wiil be
cont.-ci:e' NE'llbank). Ccrc.-n-.r=:n2
ex;:!7_`irJre in:o the same
agenc-" is or.-;e:- to re!d,.;ce o,erail `_-ts
.:2ya .bie is LS.- tncoura2ed. both from a
_.-mmcnaI:-,.- c..rtssage inc' poin: Managng
-.rz)d,-c:;on Costs. r-~Se--:c', ariC' -4!,.
z:c;:men, :: z:s 2nd other e!e-nents of
:he Marke-:ng budJael to ensure cpr :7.,-,-n
ncrie-.- :s zcmieved ;s essential ifwe
are -o 7.zx~.-nise r~e propor-Licr: 3pent through
ATL and
B 7L =7-Lmunica:'on ro :he
TradI:'cn_,; A-- media s6il :he nnz:S: --s:
e"!,:::% e 7neans of reaching the
COnSLrne7 Mherv.er re--ularicris a,-.z MaT.K.I:
_,ilow. brand budgets
should 'his -ealirv :n less means of reachinsz the
cons=!- ~r.!~- '-,a e,., -2".t I -e2hsz:z
_-:z;!nua; o. nc", e! n V
SLIbje~:- o7
All c.-nsume:- and z.-ade promonois inculd '~-e
zri,. . if the-; are justified by
higher saies. Posz-promotional -valuazions mus: tt
iorm in order to bufld up
a data *-ank of'knowledge on hat prcmotions -.vcrz
in pr--z:::C! and to avoid expensive
errors.
Sponsorships are a key element vithin the
mark!,miz mix- Parzicuiarly For international
brands The;.- role is to provide incr.-mental
!.XPCSLr: -o enhance awareness and
brand imagen/ by emphasisiniz :he ke,. .
artribures at brand :haracter Measurement of
the effecw-eress or'promotionai dKpe'Idi[Ur! is
uridertaken -.-I-r international Lr_
s but all sponsorship ac:,'ries Ccr na::cnal
brar-'s must equally have clear
spon5or5hic C__
.
objec-1ves %,.ith regular monitoring of:heir
a,=.-c:'veness. r,.:
C__
HATCO CONIFTI)ENTIAL - CATEGORY 1: MINNESOTA
TOBACCO LITIGATION.
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Trade marketing should also be part of a rview
ofhow to become more
competitive and more produc--'ve. Better
_'isinbuzicn. POS presence, trade
relationships, etc. are critical ,o the fLxure
::four brands.
Brand Management
The essence ofBATCo's marketing straeq-, ,lies in
disc-._plinez~, consistent and
long-term management ofa focused brand Porrioho.
:3 L,l drive brands must have a deined C,::,.
'~,hich forms; zhe Dase documer: on
wh~ich all aspects ofthe branc are maraetz-4. Once
tstablished :hese copy strategies
will not be amended uniess :here are corn-pe--ing
mark.-, reasons for doing soi In the
case of:he six key incemar-onal brands e Copy
SE.-ategy -xi'll be developed by
Inte-nationai Brand Manazement in
Brand resourczs shoula al,.,a,..s be dlrec:ez a:
-ne revenue se-zrnenr ofthe market in
order :o zinve value share ara ---aster rate -n=
ciu-.: 5hanz. SIMI'larly key brand share
will become as ~rporrant a performancz as
__-.-_c,-Z:z share Is currendy.
T-lc:;c--; new brand launches are to ~ea%ciZe-_~
herr--er :os5~'-,ie and in ail ;ns-,anczs
shculd 'ce dra%, -,. 3 ATC z) s cL;r-. en: iio c I
e ::~_,_4ernarks.
Brands mana-2ement mus-, encompass ail mar,:-eang
mix, not simply
advensinz and promor- .on. 1-:,.is ma:.q=nent mus:
nave a ft:2
urderstandim, ofsaies and dism.-buzion.
ror-nuiation -,,:a manutaczure, and te
Ena.nc:a,' .::n;);icanc,rs of:hese. 0VCrar1r.2
ShCLld _4:!:MCnst.-aa how Ehev
in:end :c, mana-ze brands as 1_,usinesses ~r.
A, 'criz-rerm focus on -'eveicciniz brand
_-L:S::-.tsses -=uires -eszone' markers to
measure progress against the eventual Az dnve
!~-rands should have
measura'Cie shor, and medun -,e.-,n tarzi:s ::)
-Lifli :i-~s r.-L;!. These should encompass
not only consumer share and tx-fac:ory ;a:ts ".-uz
disznbui_-.-i :e-,-e!s, brand and
advernsing awareness, smoker predles. 71Z,S.
an::.--rand :ma2e attributes
Objective:
"To develop a long-term global markerin-z plan to
dominate the Lights segment".
strare~-:
Lights is one aspect of the res.-c:ai1saEiC-.
:`-=kinz where~_,v brands and products
become -he foundation for maintaining our
--ne-Eerm.,busiress by focusing upon the
pleasures and positives of smoking as opposed zo
addressing :he negatives. Lights is a
concept, not a product delivery position. %v .hich
Incorporates modernity, freshness,
innovation, excitement and interest, all of, hizn
are :'ccused upon the young adult
smoker. AJthouszh product de!Ivery is one aspect
ofLigh!S, it is the other aspects
which offer BATCo the 2reatesr opporrcun;:y :o gai
.n a competitive edge.
Lights brands currently have an 20% gfcbai share
whereas they are growing at around U7
7 `6 per annum- Their penetration level is 4~izher
in the more developed markets but
they offer a significant competitive advantage
apporLunity in the less developed r
markets by minimising the oppcmurdry for ihii1p
'-form's to establish their Ul flavour
international brands across the var-ous pricz
segments
BATCO, CONFIDENTIAL - CATEGORY 1:MINNESOTA TOBACCO
LITIGATMN.
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BATCo will develop a global strategy to optimise
this smcker se=ent oppcr-.unirr
which will include:
a -!ear definition of the Lights concept and how
to communicate this to smokers.
an evaluation of the potential for Lights in end
markets with each company
deve.lopin2 a means of monitoring smoker attitudes
and behaviour regarding
Lg~rits.
a -!ear role and brand positioning for 37ee
standing Ligims brands vis a vis Lights
line exiensions
a ::ear z!cba~. rezonai and markz- suaregy
fcraxpio1-.:n.- :~e Lizhzs in
-.,-nert pwenfiai :o dc so is 'aign.
-=:-d markats will deve!cr; amarke: sz-ateav for
the lona-:a= ccrLTlisation cz-:~-ex
7
- S bu5iness which wi=il inciu-'ebrand
prionrisation ard znainel manaszemen-,. This
sz:Zrzzy ihould be a key e~emen- .%`,:n~n tc;r
1996 companyPians.
Objective:
"To achieve and maintain product superiority for
our key brands by ensuring
.hat BATCo products meet consumer expectations and
are recognised as being
surierior to tar-_-et competitor products".
'Stm t egY:
Rez.-iar and re;;abie consurner fetd~ac.,_
complemented %,it;, thcrouzh in-*.-louse
c--;:,-HnQ or !"a products. is a n-ndamenrzi
requirement anving the
_-;;:-;e;o9rnen: P~ocess. Operating Companies
should undertake consumer product -tests
o-ri k-ev products versus targe: competitor
products at least once per annLrn using
-.,-.a -'vL-kSQ methodology and tmpiernent
necessary product improvements to maintain
Nlcnitoriu ofown and competition products
forvisual and acz~e, physical and
:1-M-rucal quality characteristics through PQRS is
now we!l established withdr, -,U
Dpe -ve should be cons:;-_-r:r!%, to outper-"Cr-ri
:he
L
raung Companies. The initial object.
competitors products by at least 10% in PQ Rating,
not only cn the overaU brand
-erf-ormance, but also on each of the three
elements - outer. pack and cigarette.
Additionally, the international brands must also
conform to the quality standards as
specified by the International Brand Groups-
Therefore, Operating Companies must
maintain the appropriate level of sampling for
monitoring em-market samples bur
additicnally, introduction ofthe CARS approach for
ensuring conformance to
st
., andards must be considered.
To meet the product quality objective outlined
above, a high level oftechnicai
capability is required within Operating Companies.
This can only be developed
internallv, to which end BATCo will develop a
modular training programme.
comprising 'on the job' training supported by BATC
o workshops. Fromthettraining
checklist- Operating Companies should construct
c!ear training plans to ensure
technical capability in the short and long term.
BATCO CONFID ENTIAL - CATEGORY 1: MINNESOTA
TOBACCO LMGAT' ON.
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Objective:
"DevelOp and test copy, products, packaging and
line extension strategies for
SEZ-5-4. B&H and JPGL which, once proven to drive
market shares in premium
and bigh price segments in core markets, will be
rolled out globally".
BA---.),.,,ill only invest centrally be~:ind
SE555. B&H and !PGL arnor.2z: ::s [.7K
International Brand portfolio. Full brand
zuIdelines will be 'ssued as art ~;--zzrai par. of
me C-ripany Pan process.
assienrrieir -cr these bran-'s is ihe
:esconsibdin, or----.:er-,.zr:onzJ 3rand
Nli'lban~. Tie =enc-,- 3`*:tcord ~'cr SZ555 and
3&H is ---.:J=-5
WC'~-'DVVIDE t also Luckv Strike). ~Mhere2s ic vs
GFLEY TPGL. -U- '-.rind
'
anneile-d :hr~uah the-n (both A-.- 3r-' BTT-',.
su-----7: budizets -nust be ch
to this require prior ap2ro,.ai -',~:rn
lnt!rnat-.onzi 3.an-` Manaz-2ment.
tn' narke, :haE wishes to :~-ese brancs -.viil be
ex:~e::!` to ac-!re- :o :he
ir=----::ona1 brand olans. Locai var:a-,:C.-.S -M
or any ct~ier e!errient cr -,re rrix wi:l be on
the
ba.:. - : -':uarr;rar-.%-t research e%~dtnce znz~
-.4-h -~c prior of1r=.-2t;cn?J
B:-:--: Manaszemen:.
Ma=!nanc.- o-'riternationai quaiu,-; ir=.dxr--is
Is a -undarnenzzi --or the
:z -nanufacrure the key inre-natiorai ~rznds.
Operating Cornpanies must indicate
:-c%-, ---!y Intend :c achieve hese szzrd`z:-`s as
measL:.-ed by QUkf,,T ar.-~ \L-kSQ and
PQRS within a de-;ned cirre rrarne
BA- --~) ?ias deve;oped a new uniform P2ck-z2t
--or .chn P!2-.,-r C-4-1d L;!:!--:-
con----.:r,on with -ne African and Sub Cam~nent
Operating Czrnpan~ies 7-.--:s
enc::-:asses anew copy strategy, standard riew
packagini, 2 sz=zarc: Z;7,zre-,e. new
advz:7:sinsz and new product zulde;ines. T,-~s
will form the ~aslc -rand .:ackaize which
and porennal end marke:s wiil adccr in 199-5,96 or
iave -Jone so ziready. End
. . I 'PC
are tncouraged to idenri"..- new opporruruit as
forthe 'auncri oCJ 1.
Usaz! -.-'all otner BATCo tradmark; . !main rhe d
Campanies.
B=: --;ans shouid conform. however. zo prinz#les
outl;-.:---; above.
Objec-.ive:
"To develop in accordance with the Brand Owners.
best business building
str2te%ies ror Lucky Strike, Barclay and Kent".
Sirnte-g-:
Inte-z"-onal brand strategy will remain the
responsibility cifBrov-n & Wilharnson but
BATC: ; marketing ofthese brands will
beco-ordinated and controlled -hrough the
US15 --UE in Nfillbank. Accordingly. all proposals
eeczing s:rarez- for zhese brands
shou:--' ~e channelled through the USM unit in
),511bank in the first instance. C11
tll-~
BATCO CONFIDENTIAL - CATEGORY 1: MINNESOTA TOBACCO
LITIGATION.
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The operatinz :r-z-c:::es izove-mng the key UK
inemational br
ands apply =uaUv to
the B&-W ira~;!.-nzr~c3 Brand zuide!lnes will be
issued as part ofche Comp-, .iv Plan
process.
ana2emen- :n
Agenq; assiz.=,ent:s :heresponsibility
ofTnternational Brand NI -
NObank. The afrecord for Kent and Barcfav is GREY
whereas Ir;s BATES
WORLDWME -cr L.:c"' Stnke.
Objective:
"To build and hire the best marketing talent
worldwide".
SIT-Itet-.:
Tj :--- -, - - .
stra-zzles oudinec' ab,-,e S.-k77-3
--rcfesslona]5- Our policy is o deveiop ird
pror-note:--ternalIv
O%er:he However, urE:l the quJ-;ry ofince-nal
rnark-erinz 7nanagers
hlaS a-aint: -t 7=.--ired itandard. ;i will be
nectssary to
3 =;: external recn-amenr o-7,,nid,'-cz:-zzr
-~ssionzis
BATCo to focus uccn'on the iob :rz;nine -~.e line
7-Inazer
1 jity for this. The Brand Excei"enc: moduie,. w
.ru.ch
nav:n- :he I
~e-z: in brand rnark ne wiiI ~brm or .-;s
",-z-UnzAnrn
an
7.-,de availabie in !are 199'~ En-; -rar:---,s
should
C., clear
on, :7ians :c improve the quail-.-
of:heir.-narknng staff 7*~--;s xu
be sub'ec: sDec'-'-- sern nars BA-.CD.
The new SraffPlannir.2 sysTem w1171 be
implemenr!'d progr!s;,---ziF
dunnz 1-1':~4 -xim ::.---ac-;ve career planning cr
managers on Gmde 10- :-
eauivalenr 1:;iLS -.;,cse be!ow Grade 10 'out
identified as havinz PoEenri-,1. whether
intemat;orai :.-::a:--*,-nal staff. This nev
system %,.ill ensure that BATC.- :s ze-dr,2
rhe ~es-. ::s staFwhils: developing indi-.iduals
zzo Lht;.- Maxim=
poren:;2.'
Objecti,~ e:
"To build a Aorid class trade marketing
organisation so that the trade regard
BATCo as their preferred supplier over our
competitors whiist ensurine that
trade markeiing efforr and expenditure is
inte-,rnted fully with our brand
objectives".
Siratep-:
To achieve 3aies and profit targets by securing
the ac:ive support of-zhe nolesale
and retail trade ~y offeHng them sup ort in all
aspects ofTrade Market;ns and
p
Distribution ;n each trade channel. BATCo %ill
offer them ad%ice and suzoort
which is cailcre-d to their specific needs.
To ensure , ---uiar xade coverage either direcrIv
or tl~rouzh diszr-.butor sa:;!s florces
of out!es acz.,untinz ror at least 75~'. of all
market vaiume sales.
C-I,
r -1
6
BATCO CONIFTI)ENTIAL - CATEGORY 1:.NIINNESOTA
TOBACCO LITIGATION.
BATCo document for Province of British Columbia 23
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To increase distribudon and visibility of our
brands in each trade channeL to target
sales calls better and to optimise the
effectiveness of all trade marketing personnel.
To restructure the trade marketing organisation to
reflect the sophistication and
specialisa:ion of the trade and to ensure changing
patterns of sales are anticipated
and exploited.
IM
BATCO CONFIDENTIAL - CATEGORY LMINNESOTA TOBACCO
LITTGAT'O.N.
BATCo document for Province of BritiSh Columbia 23
April 1999