Transcript to the presentation (Powerpoint or viewer

Tobacco industry tactics to undermine
plain packs and other tobacco control
policies: Lessons from Australia
Steve Greenland
Associate Professor of Marketing
[email protected]
Content
• Australian tobacco regulation
> plain packaging, POS & excise
• The research
> Industry response interpreted in relation to marketing
theory
• Implications for future regulation & research
Swinburne University of Technology
2
Australian tobacco
regulation
3
Smoking prevalence & regulation
(after Australia Government 2015 http://www.health.gov.au/internet/main/publishing.nsf/Content/tobacco-kff#footnotes)
25
%
≥14
yrs
1990-1995 advertising bans & excise increases
2003 national
tobacco campaign
1997 text only
20
health warnings
2006 POS
advertising bans
1998-2006
2011-12
smoke-free dining
25% excise increase
POS display bans
Plain packaging
15
2008 graphic
health warnings
2013-16
Higher prices reduce demand. POS & PP
remove key tangible brand dimensions
Four 12.5%
excise increases
10
1995
2000
2005
Year
2010
Regulation resistance
Campaign emphasised functional &
convenience aspects...
Some contradictions: Unfair since it
will restrict the launch of new products
& line extensions, & brands will
struggle to differentiate one another
(BATA 2011)
Marlboro brand alone
valued at US$73.6 billion
(Roberts 2012)
Permission provided by Newspix/News
Ltd. for Greenland et al. (2012)
Strategic Communication, Pearson.
5
Key marketing role of packaging?
Swinburne University of Technology
Melbourne airport duty
free 07/06/2015
6
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)
Industry contradicts
the evidence!
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)
Swinburne University of Technology
7
The research
8
The research
Objective
> Describe BATA’s marketing strategy 2012-2014
• >45% market share (Euromomnitor International 2014)
• Strategic consistency among main players (Greenland 2015)
> Evaluate in relation to marketing & consumer behaviour theory
> Inform & enhance public health policy
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
Swinburne University of Technology
9
BATA variant portfolios (ingredient reports)
Brands
Variant # Ingredient report variant names
Winfield
9
B&H
7
Holiday
9
Dunhill
11
Blue
Gold
Grey
Menthol Boost
Optimum Crush Blue
Classic
Deluxe Kings Smooth
Fine
Rich
Bright Blue
Cool Blast
Cool Chill
Cool Frost
Dawn Grey
Optimum Crush Sky
Red
Sky Blue
White
Blonde
Distinct Blue
Fine Cut Burgundy
Fine Cut Navy
Fine Cut White
Infinite
Premier
Refined
Release Chilled
Release Frosted
Switch Black
• 14 brands >72 variants
• New variants appear
e.g., Just Smokes Green
and Silver; Pall Mall
Menthol Boost
Smooth
Subtle
Ultimate
Rich Red
Sea Green
Sun Gold
Warm Purple
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
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
Swinburne University of Technology
11
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)
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
Brands
Vogue
Single pack Smallest
size options
pack
1
20
Rothmans
1
25
Craven A
1
25
Wills
1
30
Kent
1
20
Dunhill
2
20
B&H
2
20
Winfield
2
20
Stradbroke
1
40
Holiday
6
20
Pall Mall
5
20
Just Smokes
3
22
BATA pack & price portfolios (RRP list)
Brands
Single pack Smallest 01/14 RRP
size options
pack $ per stick
Vogue
1
20
1.05
Wills
1
30
0.99
Kent
1
20
0.9675
Dunhill
2
20
0.9
B&H
2
20
0.8875
Winfield
2
20
0.8625
Stradbroke
1
40
0.84
Holiday
6
20
0.82
Pall Mall
5
20
0.78
Just Smokes
3
22
0.72
Price
band
Premium
Mid-range
15-45%
Economy
Ultra-low
BATA volume discounts (retail audits)
Coles & Woolworths $ for 25s pack configurations for Winfield
Larger purchase conditioned through reward (low price) &
smaller single pack purchase dissuaded through punishment (high price)
Brand
Coles price $
Single
Twin
Carton
25s
2 x 25s 8 x 25s
Woolworths price $
Single
Twin
Carton
25s
2 x 25s 8 x 25s
20.50
0.82
21.00
0.84
Winfield
Price
Per stick price
(Per pack price)
39.50
0.79
(19.8)
158.00
0.79
(19.8)
39.51
0.79
(19.8)
Pack size optimization studies show larger packs
result in greater consumption (e.g., Wansink, 1996)
165.10
0.83
(20.6)
Implications for
regulation & future
research
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
Swinburne University of Technology
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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
Swinburne University of Technology
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Thank You
This paper is currently being written up as a journal article
Please email me for further information
[email protected]