Cigarette companies, bound by the terms of the $206 billion agreement that they reached with 46 states in 1998, cannot market or sell their products to young people, nor can they sponsor events where there are significant numbers of teenagers in attendance. They are not supposed to use cartoon characters, like Joe Camel, in their ads anymore. They can't even use billboards, or ads on public transportation, or sell clothing with their logos, even to adults. And, of course, TV and radio have been out of the question for decades.
Still, cigarette companies remain consumer products companies. As such, they still have to sell their products. And they have to devise new ones, too, and advertise them to the public.
"It's clear to say that introducing a new product in a restrictive marketing environment is quite a challenge," said Susan Ivey, who has been president since January of Brown & Williamson, the maker of brands like Kool and Lucky Strike.
Clearly, however, the task is not impossible.
In January, Brown & Williamson brought a new, filtered version of Pall Mall cigarettes to market. And, by the end of April, the new brand - available in menthol, regular and "light" versions, and as yet distributed in only 50 percent of retail cigarette outlets - had managed to capture a 0.25 percent sliver of the roughly $50 billion United States market, Steve Kottak, a company spokesman, said.
That may be nothing compared with Marlboro, the industry leader, which has a whopping 37 percent share for Philip Morris. But it compares quite favorably with a brand like Kool, Brown & Williamson's best-selling regularly priced cigarette, which has a share that is just under 3 percent. Brown & Williamson's total market share is about 12 percent; it is the nation's third-largest cigarette maker after Philip Morris and R. J. Reynolds Tobacco Holdings.
So how did Brown & Williamson, a unit of British American Tobacco, do it?
First of all, by putting a lot of muscle into the introduction, with magazine ads, point-of-sale promotions, sample giveaways and a nine- million-piece direct marketing campaign that went in the mail a couple of weeks ago. Ms. Ivey declined to give a dollar amount for the effort, but said it was the company's largest direct mail campaign ever. The company also focused on the underlying reasons a smoker chooses a brand.
"The product has to have a consumer benefit," Ms. Ivey said. "You must have an offer that has a relevant message."
In the case of the new Pall Mall filter cigarettes, the message has three parts. Pall Mall is said to taste "smoother," burn "slower" and last "longer" - all things that smokers say they want in a cigarette, said Joe Celia, the chairman of G2 Worldwide, the unit of the Grey Global Group that is handling the introduction. Some of the ads even include a little bar graph that purports to show that Pall Mall smokers can get 10.8 puffs to each cigarette, while Marlboro and Doral smokers are relegated to only 9.0 and 8.6 drags on theirs, respectively.
There is also price. Although the advertising does not stress the point, Pall Mall is a so-called value brand, meaning that it costs less per pack than a comparable full-price cigarette. In high tax states like New York, where a single pack of regular cigarettes can cost about $5, that can be a powerful consumer inducement, although aggressive discounting of regular brands often makes it less so.
Of course, it also helps to have a brand name like Pall Mall, which has been around in connection with a nonfiltered cigarette for over a century and is already widely known. "As long as you can wrap a positive offer around a brand with a favorable pedigree," Ms. Ivey said, "it will work."
But what of the restrictions imposed by the settlement agreement? Rodger DiPasca, regional account director at G2, said Pall Mall's advertising is not intended to appeal to youngsters or induce nonsmokers to take up the habit; instead, the aim is "to tell smokers what the brand is about and get them to switch over."
Hence, mailings are being directed only to adults who have "opted in" to having their names included in a database. Magazine ads are placed only in those publications like Playboy and Ladies' Home Journal, where publishers certify that at least 85 percent of readers are adults. Event promotions are held in locations where age access is already controlled, like bars, and point-of- sale displays are in places where the actual sale of cigarettes is supposed to be monitored and limited to adults only.
But that doesn't mean nonsmokers - and young people - won't get the message anyway, said Matthew L. Myers, president of the Campaign for Tobacco Free Kids, a nonprofit group based in Washington. He said words like "smoother," a part of the Pall Mall pitch, can mislead large numbers of smokers, adults and teenagers, who mistake them for claims that the cigarette is somehow safer than others.
Marketing pitches that may not be formally aimed at teenagers may still have them as targets, he said, citing as an example the recent offer by Kool of a free CD-opener with the purchase of a pack of cigarettes. And point-of-sale displays in places like convenience stores can be seen by all customers, regardless of age.
Indeed, as tobacco companies grow ever more aggressive in marketing their products through the channels they still have, point-of-sale advertising is becoming increasingly important, according to Ms. Ivey, who said that the biggest battle today is at the retail level, where display space is at a premium and the tobacco companies are constantly jockeying for position.
There are plenty of bruised knuckles, too; in 1999, Brown & Williamson, R. J. Reynolds and Lorillard Tobacco sued Philip Morris, accusing it of unfairly forcing retailers to give its brands prominence on their shelves. The case is now in the discovery phase, Mr. Kottak said.
Tobacco advertising of all kinds, meanwhile, has skyrocketed since the 1998 settlement, rising to $8.24 billion in 1999, according to figures released earlier this year by the Federal Trade Commission. That represented an increase of $1.51 billion, or 22.3 percent, over the previous year. And there are those who think that with all the spending, big tobacco is not holding up its end of the bargain when it comes to the advertising restrictions intended to curb youth smoking.
In March, for example, the attorneys general of Arizona, California, New York, Ohio and Washington sued R. J. Reynolds for continuing to advertise in publications like Rolling Stone that have a significant teenage readership. Philip Morris was not named in the suit, nor was Brown & Williamson, whose spokesman, Mr. Kottak, said that it no longer advertised in magazines like those that were mentioned in court.
"We are committed to preventing youth smoking," he said.
That may be. But tobacco industry critics like Mr. Myers say they experience more than just a little cognitive dissonance when listening to those statements. After all, while individual companies may take market share from each other now, and expand their businesses that way, the tobacco industry as a whole will ultimately need to find a whole new group of consumers if it is to survive. That means that young people are certainly going to see tobacco advertising as soon as they become adults, regardless of whether they saw it when they were children.
Does that mean that smoking when you are 25 is safe, even though it is dangerous when you are 15?
No, said Mr. Kottak, who acknowledged that smoking is "risky behavior" at any age.
"It's just that adults are able to properly assess the risk," he said. "And kids are not."
Bernard Stamler, The New York Times. May 2, 2001
Copyright © 2001 The New York Times Company. All rights reserved.