1. Tobacco industry tactics to undermine plain packs and other tobacco control policies: Lessons from Australia Steve Greenland Associate Professor of Marketing sgreenland@swin.edu.au

2. Swinburne University of Technology 2 Content Australian tobacco regulation >plain packaging, POS & excise The research >Industry response interpreted in relation to marketing theory Implications for future regulation & research

3. 3 Australian tobacco regulation

4. Smoking prevalence & regulation (after Australia Government 2015 http://www.health.gov.au/internet/main/publishing.nsf/Content/tobacco-kff#footnotes ) http://www.health.gov.au/internet/main/publishing.nsf/Content/tobacco-kff#footnotes 1997 text only health warnings 1990-1995 advertising bans & excise increases 2003 national tobacco campaign 2006 POS advertising bans 1998-2006 smoke-free dining 2008 graphic health warnings 2011-12 25% excise increase POS display bans Plain packaging 2013-16 Four 12.5% excise increases Year Higher prices reduce demand. POS & PP remove key tangible brand dimensions % ≥14 yrs

5. 5 Regulation resistance Permission provided by Newspix/News Ltd. for Greenland et al. (2012) Strategic Communication, Pearson. Campaign emphasised functional & convenience aspects... Marlboro brand alone valued at US$73.6 billion (Roberts 2012) Some contradictions: Unfair since it will restrict the launch of new products & line extensions, & brands will struggle to differentiate one another (BATA 2011)

6. Swinburne University of Technology 6 Key marketing role of packaging? Melbourne airport duty free 07/06/2015

7. Swinburne University of Technology 7 Key marketing role of packaging? BRANDING… Attention & recognition Innovation New variants Pack design Brand differentiation & segment appeal −Promote health / social acceptance −Status / luxury −Accentuate gender (Greenland et al. 2012) After plain packaging Brand appeal declines & smokers less likely to display packs (Zacker et al. 2014) 2012 to 2013 consumption down 3.4% & now at its lowest level (Australian Government 2015) Industry contradicts the evidence!

8. 8 The research

9. Swinburne University of Technology 9 The research Objective >Describe BATA’s marketing strategy 2012-2014 >Evaluate in relation to marketing & consumer behaviour theory >Inform & enhance public health policy >45% market share ( Euromomnitor International 2014) Strategic consistency among main players (Greenland 2015) Method >Evaluate BATA cigarette portfolio (variants, packs & price) –Manufacturer ingredient reports –Recommended retail price lists –Supermarket retail audit …Triangulate findings to overcome shortcomings of each

10. BrandsVariant #Ingredient report variant names Winfield 9 Blue Gold Grey Menthol Boost Optimum Crush Blue Optimum Crush Sky Red Sky Blue White B&H 7 Classic Deluxe Kings Smooth Fine Rich Smooth Subtle Ultimate Holiday 9 Bright Blue Cool Blast Cool Chill Cool Frost Dawn Grey Rich Red Sea Green Sun Gold Warm Purple Dunhill 11Blonde Distinct Blue Fine Cut Burgundy Fine Cut Navy Fine Cut White Infinite Premier Refined Release Chilled Release Frosted Switch Black BATA variant portfolios (ingredient reports) 14 brands >72 variants New variants appear e.g., Just Smokes Green and Silver; Pall Mall Menthol Boost Retail audit: brands with modified variant names (tri-component name trend identified) e.g., Dunhill Infinite White Premier Red Refined Grey Chilled Dark Green Frosted Light Green

11. Swinburne University of Technology 11 Marketing context Variant names Take on role of pack in imparting brand imagery Umbrella branding continues Economies of scale production & marketing Awareness & recognition for new variants - imparts established brand associations Reduces consumer uncertainty - more likely to try something familiar

12. Classic example of micro market segmentation Differentiated marketing creates more total sales than undifferentiated marketing (Kotler et al. 2009) “We have never believed that ‘one size fits all. Our portfolio of more than 200 brands is based on distinct strategic segments.” (BAT, 2011)

13. Brands Single pack size options Smallest pack Vogue 120 Rothmans 125 Craven A 125 Wills 130 Kent 120 Dunhill 220 B&H 220 Winfield 220 Stradbroke 140 Holiday 620 Pall Mall 520 Just Smokes 322 BATA pack portfolios (RRP list) Retail audit: Differentiated pack options - cartons available for 20s 200, 22s 132, 23s 138, 25s 200,30s 180, 40s 160, 50s 200, as well as twin packs

14. Brands Single pack size options Smallest pack 01/14 RRP $ per stick Price band Vogue 1201.05Premium Wills 1300.99 Kent 1200.9675 Dunhill 2200.9Mid-range B&H 2200.8875 Winfield 2200.8625 Stradbroke 1400.84Economy Holiday 6200.82 Pall Mall 5200.78 Just Smokes 3220.72Ultra-low BATA pack & price portfolios (RRP list) 15-45%

15. Coles price $Woolworths price $ Brand Single 25s Twin 2 x 25s Carton 8 x 25s Single 25s Twin 2 x 25s Carton 8 x 25s Winfield Price Per stick price (Per pack price) 20.50 0.82 39.50 0.79 (19.8) 158.00 0.79 (19.8) 21.00 0.84 39.51 0.79 (19.8) 165.10 0.83 (20.6) BATA volume discounts (retail audits) Coles & Woolworths $ for 25s pack configurations for Winfield Pack size optimization studies show larger packs result in greater consumption (e.g., Wansink, 1996) Larger purchase conditioned through reward (low price) & smaller single pack purchase dissuaded through punishment (high price)

16. Implications for regulation & future research

17. Swinburne University of Technology 17 Control unrestricted elements Brand differentiation - limit variant ranges (e.g., Uruguay) >Impede greater sales associated with differentiated marketing by limiting brand appeal / attractiveness to specific segments >Remove benefits associated with umbrella branding Price differentiation - fixed / standardised minimum price per stick >Prevent volume discounting & price minimisation behaviour >Significantly reduce brand appeal / attractiveness by preventing brand differentiation by price Pack differentiation - single smaller, fixed pack size >Prevent volume discounting & price minimisation behaviour >Reduce higher consumption associated with larger pack size

18. Swinburne University of Technology 18 Future Continue evaluating industry strategies adopted in response to regulation >Australia & other markets >Highlights the importance of international collaboration Investigate how price promotions, new products & variant names are being communicated to consumers in markets with advertising and promotional bans

19. Thank You This paper is currently being written up as a journal article Please email me for further information sgreenland@swin.edu.au