What role do harm reduction products play in tobacco industry strategy
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What role do harm reduction products play in tobacco industry strategy?. Geoff Ferris Wayne Harvard School of Public Health Center for Tobacco Regulation U Maryland School of Law April 20, 2007. Context–the current market. Long term declines in US but continued growth internationally

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What role do harm reduction products play in tobacco industry strategy l.jpg

What role do harm reduction products play in tobacco industry strategy?

Geoff Ferris Wayne

Harvard School of Public Health

Center for Tobacco Regulation

U Maryland School of Law

April 20, 2007


Context the current market l.jpg
Context–the current market industry strategy?

  • Long term declines in US but continued growth internationally

  • Market consolidation

  • Strategic acquisitions targeting new populations and markets

    • Altria  Sampoerna (2nd largest producer of cigarettes in Indonesia, primarily kreteks)

    • RAI Conwood (2nd largest smokeless manufacturer in US, other cigarette companies following suit)


Context the current market3 l.jpg
Context–the current market industry strategy?

  • Accelerating movement toward regulatory oversight, as well as greater coordination of strategies and approaches (e.g. via FCTC/ WHO)

  • Heightened public awareness of health burden of tobacco

  • Heightened public mistrust of industry

  • Greater vulnerability in litigation

    • Response by manufacturers: emphasis on perceived corporate social responsibility and public image, dialogue and cooperation


Context brand development l.jpg
Context–brand development industry strategy?

  • Brand proliferation, particularly by expansion of popular brands (Marlboro, Camel) into new line extensions

  • Flavored products

    • KOOL Smooth Fusions

      Midnight Berry, Caribbean Chill,

      Mocha Taboo, Mintrigue

    • Exotic Camel

      Mandarin Mint, Twist,

      Izmir Stinger, Crema, Dark Mint

    • Also: cigars, bidis, smokeless,

      waterpipes, rolling paper


Context brand development5 l.jpg
Context–brand development industry strategy?

  • New conventional

    delivery technologies

    • Filter pellet

  • Introduction of new

    smokeless products

    • RAI  Camel Snus

    • Altria  Taboka

    • Smokeless line extensions of BAT cigarette brands (e.g. Lucky Strike)

  • Reduced harm products/ PREPs


Some open questions l.jpg
Some open questions industry strategy?

  • What market considerations provide the primary motivation behind development of PREPs?

    • Threat of litigation or anticipated regulation

    • Need to expand or develop new markets

    • Competition among manufacturers

  • Are PREPs different from other industry product innovations?

  • Are PREPs developed in response to the same or different market considerations from other product innovations?


Slide7 l.jpg

One approach to answering these questions is to study the industry:

  • Market/ analyst reports

  • Public statements

  • Internal documents

  • Trial testimony


Analysis of industry trial testimony l.jpg
Analysis of industry trial testimony industry:

  • How PREPs are described or presented in comparison to conventional cigarettes

  • How market success or failure of PREPs is defined

  • How PREPs are described with respect to their potential “safety” or potential for harm reduction

    • Do these change over time? (1996-2003)


Comparison to conventional cigarettes l.jpg
Comparison to conventional cigarettes industry:

  • Language used to describe PREPs is more excited/ radical in earlier testimony than in later testimony

  • Earlier testimony contrasts conventional products with PREPs; later testimony tends to promote similarities (continuum)

  • In later testimony, difference is not a positive attribute (i.e. “next generation”) but a negative (i.e. challenge to be overcome)


Market success and failure l.jpg
Market success and failure industry:

  • Earlier testimony evaluates PREPs based on their market performance; later testimony avoids evaluations of market failure

  • Later testimony focuses on test markets as a vehicle for gathering information rather than as a means of demonstrating market acceptance

  • In later testimony, positive expectations are relied on to provide a sense of progress despite the ongoing reality of continued market failure


Conclusions based on testimony l.jpg
Conclusions based on testimony industry:

  • At least some within the industry appear to have been convinced early on that they were on the verge of the “next big thing”

  • Failures in market have curbed this enthusiasm

  • The new reality means protection of the conventional market is the primary concern

  • Introduction of PREPs is problematic because it begs the question:

    • If there is a radically different, safer alternative to cigarettes, then why are cigarettes still around?


Conclusions based on testimony12 l.jpg
Conclusions based on testimony industry:

  • So, the industry needs to position PREPs alongside and not separately from conventional products

    • Legitimizes the sale of conventional products

    • Legitimizes (by association) conventional “harm reduction” efforts (including low tar)

    • Shifts responsibility for harm reduction from company to consumer, as an issue of market acceptance

  • PREPs remain in indefinite test market in order to support the illusion of “choice”


Slide13 l.jpg

Another approach to answering questions about PREPs is to study the products:

  • Market approach

  • Advertising

  • Physical and chemical analysis

  • Consumer response

  • Market impact


Marlboro ultrasmooth mus l.jpg
Marlboro study the products:UltraSmooth (MUS)

  • Test marketed in the US, specifically:

    • Salt Lake City, UT (Apr 2005)

    • Tampa, FL (Apr 2005)

    • Atlanta, GA (Apr 2005)

    • As Marlboro Ultra Lights in North Dakota (June 2005)

  • Uses a modified charcoal filter

  • Various configurations


Sem carbon slides l.jpg
SEM study the products:carbon slides

MUS Carbon Bead and interior structure

Standard Charcoal Granule and interior structure


Machine smoke constituent yields intense l.jpg
Machine smoke constituent yields (intense) study the products:

Percent Yield of Conventional


Http tobaccodocuments org product design 508026176 6283 html l.jpg
http://tobaccodocuments.org/product_design/508026176-6283.htmlhttp://tobaccodocuments.org/product_design/508026176-6283.html


Consumer sensory assessment l.jpg
Consumer http://tobaccodocuments.org/product_design/508026176-6283.htmlsensory assessment

Acceptability*

Irritation

Aftertaste Amount

AftertasteQuality*

Taste Amount*

Impact/ Kick*

Taste Quality*

Mouth Full

Mouth Drying

Draw Effort

* p<0.015


Perceptions of product messaging l.jpg
Perceptions http://tobaccodocuments.org/product_design/508026176-6283.htmlof product messaging

N = 147


Summary of findings for mus l.jpg
Summary of findings for MUShttp://tobaccodocuments.org/product_design/508026176-6283.html

  • Unique technology, but questionable value for harm reduction in comparison to conventional cigarettes

  • Consumer response to MUS is not positive, low levels of satisfaction and acceptability

  • MUS was not perceived as a safer product or as a quitting alternative


What was the objective for mus l.jpg
What was the objective for MUS?http://tobaccodocuments.org/product_design/508026176-6283.html

  • Why introduce a product that is clearly not ready for consumer acceptance?

  • Why attach the Marlboro name to it?

  • Is this:

    • Information gathering?

    • Stepping stone to a new product technology?

    • Protection from litigation?

    • Positioning for potential regulation?

    • Serious attempt at a competitive product introduction?


Putting it all together l.jpg
Putting it all togetherhttp://tobaccodocuments.org/product_design/508026176-6283.html

  • Given what we learned from testimony, MUS and products like it may simply be intended to blur the line between “conventional” and “reduced harm”

  • Proliferation of new products supports the industry presumption that consumers are responsible for “choosing” harm reduction

  • This also defines the regulatory framework, in which “safer” products are placed on the market within the context of a full spectrum of conventional products


Putting it all together23 l.jpg
Putting it all togetherhttp://tobaccodocuments.org/product_design/508026176-6283.html

  • Recent market acquisitions and product innovations suggest continued expansion into alternative tobacco products and technologies

  • The objective of these product innovations is to support and expand the current market

    • Smokeless products negate impact of indoor air laws

    • Flavors/ kreteks develop alternative starter products

  • At least from the industry’s perspective, there is no magic harm reduction bullet on the horizon


Conclusions l.jpg
Conclusionshttp://tobaccodocuments.org/product_design/508026176-6283.html

  • What lessons can we take from this?

    • Eliminate the false continuum of “less safe” to “safer” products

    • Place the burden of harm reduction on manufacturer, not consumer “choice”

    • Limit expansion of products in market and development and use of new technologies

  • Harm reduction products must be evaluated on the basis of their viability as a serious alternative/ replacement to conventional products


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