The marketing benefits of e-cigarettes: a tobacco industry perspective

preface

Tobacco companies have become heavily involved in the e-cigarette business

As corporations their sole interest is shareholder value

They will therefore use e-cigarettes to maximise this

The question is, will this harm or help public health?

The marketing benefits of e-cigarettes: a tobacco industry perspective

Marisa de Andrade, Gerard Hastings and Kathryn AngusStirling and the Open University

ICO-WHO Symposia on Tobacco ControlCurrent challenges for global tobacco control: electronic cigarettes

Barcelona 18 July 2014

structure

1. The research: an audit of e-cigarette marketing

2. The tobacco business – problems, problems, problems

3. The e-cigarette business: solutions, solutions, solutions

4. Conclusion

origins

the research

the researchorigins

It is important to get a TI perspective

a taxonomy of research questions

Methodology: a systematic audit of e-cig marketing• Traditional print media May 2012 – June

2013: UK newspapers and weekly magazines UK tobacco retailers’ trade press Tobacco industry trade press Company press releases and newswires

• Social media analysis: non-participant observation on Social Network Sites (7 leading brands)

• 991 discrete items (editorial text, images or adverts) – excluding social media

• Thematic Analysis with Nvivo• Five interviews with marketing experts

the research

dissemination

the research

Thanks to all the people who have sent material since – both

from the UK and overseas

We want to use this material to take a TI perspective

structure

1. Research method: an audit of e-cigarette marketing



4. Conclusion

• It all began in 1954:TI – these are safe products• Multi-strand public health policies followed• This stifled TI marketing:

– To consumers: product (constituents controls); price (tax); place (POS) and promotion (esp image)

– To stakeholders (FCTC 5.3; reputational damage)

• Prevalence rates tumbled in TC countries; set to follow elsewhere thanks to FCTC

• Increasing margins were only delaying the inevitable

The tobacco business:problems, problems, problems

1. Youth recruitment

2. Adult retention

3. Reputational harm


Three key threats for the TI:

Problem 1: young people• Became TI’s great weakness• Vital to TI interests (Surgeon General’s 88%);

but marketing to them is indefensible• Evidence that it is happening, intentionally

or not, justifies severe marketing controls• And these have been severe; room for

manoeuvre became very limited


Problem 2: adult quitting• Increasing pressure to quit: tax; GHWs;

PP; mass media campaignsThese measures work• Marketing responses crippled: adbans;

POS; even the brand itself under siegeThese measures work

The tobacco business –problems, problems, problems

Problem 3: Reputational harm• This is the big one • All is lost (for industry) if TI reputation

goes• Recruitment, stakeholder marketing,

influence, investment….• Even in the business community TI was

becoming a pariah

The tobacco business –problems, problems, problems

structure

1. Research method: an audit of ecigarette marketing

2. The tobacco business: problems, problems, problems


4. Conclusion

Problem 1: young people TI is marketing again: ‘For tobacco companies that

have been barred from the airwaves for years, e-cigarettes are a way back in’ (Business Week June 2014)

Product placement, sponsorship, celebrity endorsement, social media…

Nicotine has been rehabilitated – TI can pull them into the market (& keep them – see below)

A hip lifestyle choice; like the good old days

e-cigarettes:solutions, solution, solutions

“We will see a raft of diverse, competing strategies as these brands explore the best ways to connect

with consumers, focusing on passion points stretching from sport to fashion."

Creative agencies after the acquisition of Skycig by Lorillard

“our programme plays to a real sweet spot for us: landing the brand in music, among

influencers and through partnerships."

This is how the TI sees e-cigs as a solution:

And independent e-cig companies too:

This is how TI & independents present the solution…

“Bam* is the perfect brand ambassador and appeals to the millennial demographic that drive viral

adoption. We are excited to see what type of an impact Bam's association will have on the continued adoption of the mCig and VitaCig. At last count, Bam had over 3.6 million Facebook followers and nearly 1 million Twitter followers making him one of the most

widely followed celebrities in social media”Mark Linkhorst, CEO of VitaCig, Inc (2014)

* Bam Margera: skateboarder, stuntman, director, actor, musician, TV and radio personality; now brand

ambassador for VitaCig

TI is obfuscating again By using e-cigarettes, smokers are:

Quitting (but still buying) Dualling (challenges to smokefree) Marketing (nb POS)

And imitating the real thing: imitation is the sincerest form of flattery

Still using nicotine


Problem 2: adult quitting

Adult retention

"Our previous strategy was more focused on offering smokers a way to move away from smoking tobacco but enjoy the same pleasure – now we are moving towards offering smokers a positive lifestyle choice

and not simply an alternative to smoking” Lorillard creative

“to create shareholder value by making the mCig one of the leading choices for electronic consumption of

plant material” Brand Ambassador 24 6 14

How TI and independents see e-cigs as a solution:

This is how TI & independents present the solution…


Problem 3: Reputational harm (stakeholders)

One CEO explains how an e-cigarette acquisition “gives Lorillard a meaningful seat at the table in the

harm reduction debate, and we intend to provide responsible leadership to this emerging category.”

BAT has a product under review at the MHRA*

“the chance to move from ‘curse to cure’” McEwen (2009)

*The UK Government medicines regulator


Problem 3: Reputational harm (customers)

Shifting the guilt: we offer a ‘risk spectrum’; the consumer decides


Problem 3: Reputational harm (customers)The chance to rehabilitate TI’s core product


Problem 3: Reputational harm (customers)The chance to rehabilitate TI’s core product

the opportunity to create a legitimised market in

recreational nicotine with varying levels of risk

structure

1. Research method: an audit of e-cigarette marketing



4. Conclusion

ConclusionWe are trying to tell the futureResearch based: audit of marketing, industry press; interviews with marketing experts and help from TC colleagues (again thanks)But still, no one knows where this will end; many questions remain:

• Is the Tobacco Industry good or bad for public health?

• In their hands, are e-cigarettes a threat or an opportunity?

• How should we proceed?

Health & Medicine

The marketing benefits of e-cigarettes: a tobacco industry perspective