PM History/2 - Legacy Tobacco Documents Library

PM history/55
effort in discount sector, helping fuel the growth of the discount sector
w/Bristol & Basic/ALSO= Ehud had NO BACKGROUND IN TOB BIZ yet began to
engender dislike among cig distributors by rigid approach to dec's' -
m~aki~n~ in credit & pricing . . .one key annoyance was Zecis on o allocate
eig sS-iipments longin a3vance of the industry's twice-a-yr price increases/
also managed to alienate co . employees, see one particularly unpopular
gesture by eliminating Secretary's Day perk of sending a dozen roses to
each secy*********(RK recalls McQuigg story of how Ehud objected to paying
for babysitters at biz conf where families were invited)/Campbell elevation
said to portend no major shift in strategy ; Campbell said to have
I played key role in Suchard deal + HELPING LAUNCH PM INTO LUCRATIVE ASIAN
TOB . EXPORT BIZ while he was exec vp=mktg at PM-USA '83-'88//NYT version
, same day : Ehud had been head of USA unit only 20 mos ; Campbell, then 44,
succeeded Ehud, then 4•8, as vp-corp planning . . .Ehud an Israeli citizen who
came to PM in '66///PM-USA OUSTS MORE EXECS, WSJ 10-26-90s Top management
unhappiness w/performance signalled by removal of among others VINCENT
J. BUCC LATO, sr vp-sales . . . further retrenchments as well as reallocations
of A's c g budget expected to spur sales at retail level . . .first time
PM unable to buck the trend of 2-3% loss in units sales yr1y . . .Vince B
moved to sr vp-mktg & sales of PM's intl tob biz (exports?) ; Jim Morgan,
sr vp-planning at USA becomes vp of mktg planning at corp hq, & USA's
eneral counsel Frederic Newman ts s cked///TOBACCO'S SLTAFb .,!$RIP E_ V_EN_
P : Even Marlboro sales~:£bj o 4
sales units, egan to s'o' efi'last yr & shipments were OFF 1 .5% for first
9 mos . of '90 . . .off-pri .ce nromo for
what's going on is ~massive e ec i~'°on ~discount brands by OLDER ?S
& fueled in no sma11 parF>t y P19I i self +Marl . losing some of _t.'~S,
among young smkrs who p~o~ &_ . ., ;noxe . aFe tq ~~,}1~•~o~-i-t~~x"`th'~$Y4 '
c~a° .ds brand,
'S11fi'!P:`STTGNIA' TIiA'T' DE'0"FiS~'~iT~D RJR''S WINS'TtON which had beexi""~Y ~EiI~ "mid-' 70s/
Campbell vigorously dissents in arguinC~' PM's domestic cig niz has topped
~ 9IA
AN'L~ti~Y wnen plciiing a brand . . .for
.
0 L:
ow 36 .
hile ~'ull-b~„ce ul b`r,anc~„ wi!7.,~i„c~ 2 I-of o s a bixthe
discount
' mkt -- BUT : ~.nPV,-F.aAt '~`*,r
'~-~,P hA+-ro,- ~ `a do_s in discountmore it encourapes
Icustomers to trade down threa eni rofi~ins~11T$AL' IP
IdARLBORO . . . M LITTLE CHOIC After much foot-dragging, the
co . is spending lavishly o create consumer lpyalty for such brands as
Bris to1, Buck & Cambridge,,cyhich cost about half as much_as standard,brands'
Bucks is seen as=-brand"that S)ioot~'''r3giit"`a't"'t3ig`"'bs~fS :~'NTai~3:'bo~b;~11~Ii~~Y°~[TNDEF
FIRE FROM MAGNA & DAKOTA, RJR entries ; RJR holds some 31 .3% of discount
sector/CAMPBELL CONCEDES
..,.... TIiQ .... . THE DREl~M ERA of one-hi~;h-;~rice
: ,~ .M
fits-all .... is
~;¢' gone & w~2Trie~~6 Y°""Pb''Ej'.Yr°n &~' "a`1tz~"'E"make a"FsycF`io1og~.bhis
wasa dream bus'nes istorically, but it has become like every other consumer
us ess in Amer ca . PRICE COMPETITION IS A REALIT(//TOUGHER COMP-
ETITION FROM RJR UNDER JOHNSTON : Camel has been rejuvenated2 heavilv advertised
& discounted in "Smooth Charac~^ on e-in-c e ai
wh~.ch has caught on w oun r s rs w o PECIALLY AMUSED BY THE
LATANTLY PHALLIC SYMBOLISM OF UBI@ - . in past
. o .' o K: not huge gain) . . . thus,
PiIARLBORO IS T~j,"__NC ~ mTrs `BI_TTFN s up AT BOTH ENDSs discount brands going after older
'tameY~s` & e'~ad~ ~:-~t~c~3n'~~~r oig.e~/Campbell denies there's evidence
of youth defection to Camel or any other brand . . .BUTs industry tongues
wagged when for 2nd yr in row Marlboro offered Xmas deal of buy-3-get-2packs
free ;anct~• :~unusual for any other brand but is for Mar1 ./B&H now
discounted sales offers its uApi.e ~i1m ~,'~e s~een as outdated in era w Pn moSt
smkrs are downscal.e_. . .new a campaign ha~l ere vlr."IFT~F, too,in trouble ~
as effectiveness of its adv campaign has waned
--FAST R~USSIAN~S~, BY PM, NYT "Talking Deals" 9-27-90 : CULMINATION OF ~
-~~26yr effor , cod eventually win PM 20% of Russian mlkt . . .there are now ~
'` estimated O m_illion Russian smkrs who last yr bought 418 billion units ; ~
~ more would be smokec~i•~: ''th~'"g'oV'1;" moribgoly •could•grrsd#iee ae[*{e~ :op- ~
ln~zit'o3 S-oafie~""m"kt was hobbled bv "break'd6wri'ni"R-s~~i
shortages of tob . & other raw materials + WIDESPREAD HOARDING as well as !V
BALYJY2NG_,OF ,LYES . .._ MKTG TECHNIQUES like adv & product discounting/P&I intl vp
Andreas Gemtiler~~~ sees Y0=1'O% 5f' mkt'pdssibl'e"°(i)£- :~Ye'do' ousr jobs
we11'' . . .earh .er in S~t PM announced plans to sell 20 billion cigs to the
Russian republic byy end-of' `91, also ~ similar"'saTe`s°"b~"t '92 & '95 & is in
riego-tiati.ons w/other republics ; RJR will sell 17~.2 ~bill'on_ ci~s to Russian
republic//Russians expected to relax some o~`-Ic g re~ strictions so it can by
yr's end use cardboard pv of-sales d_ispla_,y., & o-~xademarlits . .,;7,]1ke . Ma,rlboro . . .
'estimate by-fiob"'-Me`PCli'ants Cissri ~riat'typica~ Russiari smkr `1`t7~ of his
income on cigs, many X more than Amer ORIGINS OF PM INVOLVEMENT : in '74
V Tts was as e y govt how to improve quality & revs of its cigs, PM in '75
hel ed th uc co t Apollo-Soxuz space flight cig . . .
co or eve opmen in '87 when shortages hit & PM of£ered to sell
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