Communicating in the Highly Regulated Tobacco Industry the Case of Philip Morris International Luís Carlos Carvalho Carapinha M
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Communicating in the highly regulated tobacco industry The case of Philip Morris International Luís Carlos Carvalho Carapinha Master in, Marketing Supervisor: Prof. Mónica Mendes Ferreira, Invited Assistant Professor, ISCTE Business School, November, 2020 Department: Marketing, Operations and General Management Communicating in the highly regulated tobacco industry The case of Philip Morris International Luís Carlos Carvalho Carapinha Master in, Marketing Supervisor: Prof. Mónica Mendes Ferreira, Invited Assistant Professor, ISCTE Business School, November, 2020 Communicating in the highly regulated tobacco industry: The Luís Carlos Carvalho Carapinha case of Philip Morris International ACKNOWLEDGEMENTS I am struggling as much to write this small section of the report as the rest of it. Which is strange since in public/personally I am quite sentimental – I do not hide my insecurities and weaknesses, I praise my colleagues and friends, and I thank others when I feel I should. Perhaps it is because it is meant to be in written format, and the written word is so definitive and binding that it turns into a cruel and violent process something that comes out of me so very naturally and spontaneously, something that should solely remain privately registered in the moment and memory of the ones involved. I am probably over-thinking (which is recurrent). I could list here all the people who were part of my academic journey which is culminating (as of now) in this report, but that would make for an extensive list and I would forever be remorse for having left someone out. I could list the most important people, but how to quantify such? What would be the criteria? Besides, the degrees of importance are not always reciprocal, and the last thing I want is to with an apparently innocuous section of this report trigger disappointment or resentment in others. I also want to avoid formality, as I do not thank others out of obligation but out of pure gratitude; but I also want to avoid the recurrent and excessive use of adjectives and compliments appealing to emotions. I will keep it simple and concise. That said… I want to thank my parents and sister. I want to thank my closest family (the ones that are still here and the ones who live in memory). I want to thank Professor Mónica Ferreira. I want to thank Professor João Guerreiro. I want to thank my friends. Thank you. i ii “Everyone has the right to freely express and divulge his thoughts in words, images or by any other means, as well as the right to inform others, inform himself and be informed without hindrance or discrimination.” – Article 37 (Freedom of expression and information), Constitution of the Portuguese Republic iii iv RESUMO Este relatório surge para estudar como certas regulamentações legais restringem os esforços de comunicação e promoção da indústria do tabaco, no mundo e em Portugal. O objeto de estudo escolhido foi a Philip Morris, principalmente devido às tentativas no passado de superar as limitações da indústria, à importância histórica em relação à comunicação em Marketing, e à nova oferta de produto (IQOS). O consumo de tabaco está em declínio. Os consumidores estão mais instruídos, têm mais acesso à informação e estão mais conscientes do que o tabaco faz à saúde. O IQOS aparece como resposta às preocupações de saúde do consumidor moderno e à queda da quota de mercado dos cigarros, mas também como via para a Philip Morris comunicar externamente sem tantas restrições – a empresa olha para o futuro em vez de depender dos produtos e campanhas do passado. Em Portugal, a Philip Morris tem um público-alvo imediato de 610.000 para vender o IQOS – fumadores diários, dos 25 aos 54 anos, que querem mudar e melhorar a saúde. A Philip Morris incentiva todos os fumadores a parar, mas se eles falharem nessa tentativa o IQOS surge como uma maneira menos prejudicial de apreciar o sabor e experiência do tabaco. Para atrair e manter esse público-alvo e difundir o novo posicionamento da Philip Morris foram propostas algumas recomendações, focadas em cinco objetivos de comunicação: aumentar/criar reconhecimento da marca, mudar atitudes relativamente aos RRPs, estabelecer a necessidade de RRPs, influenciar a intenção de compra, e reter clientes existentes (fidelidade à marca). Palavras-Chave: tabaco, regulamentação, produtos de risco reduzido, marketing, comunicação JEL Classification System: M31 Marketing L66 Food • Beverages • Cosmetics • Tobacco • Wine and Spirits v vi ABSTRACT This report was developed to study how legal regulations restrict the communication and promotional efforts of the tobacco industry, worldwide and in Portugal. The object of study chosen was the tobacco firm Philip Morris, mostly due to its attempts in the past to overcome industry’s boundaries, its historic importance regarding communication in Marketing, and its new product offering (IQOS). Tobacco consumption is declining in the world. Consumers are more educated, have more access to information and are more aware of what tobacco products do to their health. The IQOS comes as an answer to the health concerns of the modern tobacco consumer and to the dropping cigarettes’ market share, but also as a possible way for Philip Morris to communicate externally without so many restrictions – the firm looks into the future instead of relying on yesterday’s successful products and campaigns. In Portugal, Philip Morris has an immediate target of 610,000 to pitch the IQOS to – these are daily smokers, aged from 25 to 54, who want to change and improve their health. Philip Morris encourages every smoker to quit, but if they fail in such attempt the IQOS is there for them as a less harmful way to enjoy the tobacco taste and experience. To attract and retain that target and to spread the new positioning of Philip Morris some recommendations were proposed, which focused on achieving five communication objectives: increase/build brand awareness, change attitudes towards RRPs, establish need for RRPs, influence purchase intent, and retain existing customers (brand loyalty). Keywords: tobacco, regulation, reduced-risk products, marketing, communication JEL Classification System: M31 Marketing L66 Food • Beverages • Cosmetics • Tobacco • Wine and Spirits vii viii TABLE OF CONTENTS CASE STUDY CONTEXT .............................................................................................. 1 1. Tobacco Marketing ............................................................................................... 3 1.1. Formulas ........................................................................................................ 3 1.2. Vehicles and Targets...................................................................................... 4 1.2.1. Sports ...................................................................................................... 7 1.2.2. Corporate Social Responsibility (CSR) .................................................. 9 2. Regulations ......................................................................................................... 11 2.1. Continental scope (Europe) ......................................................................... 11 2.2. National scope (Portugal) ............................................................................ 12 2.2.1. Taxation ................................................................................................ 14 2.3. Specific Restrictions around the World ....................................................... 17 2.3.1. Plain Packaging .................................................................................... 17 2.3.2. Retail Display Ban ................................................................................ 18 3. Philip Morris and Tabaqueira ............................................................................. 19 3.1. History ......................................................................................................... 20 3.1.1. Marlboro ............................................................................................... 22 3.2. Market .......................................................................................................... 24 3.3. Competitors.................................................................................................. 24 3.4. Trends .......................................................................................................... 25 3.4.1. IQOS ..................................................................................................... 29 3.5. Current Campaigns / Strategies ................................................................... 34 3.5.1. Formula 1 / Ferrari with “Mission Winnow” ....................................... 34 3.5.2. Social Patronage and Sustainability Causes ......................................... 35 3.5.3. “Unsmoke Your World” and “It’s Time” ............................................. 37 QUESTIONS .................................................................................................................. 43 APPENDIXES ................................................................................................................ 45 ix x TEACHING NOTES ...................................................................................................... 75 4. Case study target ................................................................................................. 75 5. Pedagogical objectives .......................................................................................