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Development News PUBLISHED for SENIOR EXECUTIVES INTERESTED in DEVELOPMENT Development News PUBLISHED FOR SENIOR EXECUTIVES INTERESTED IN DEVELOPMENT ® KAE Development Limited KAE House, 7 Arandel Street, London WC2R SDR Telephone: (01) 379 6118. Telex: 21405 KAEMIN G. January 1986 1. RAFFLES - Ruffling the feathers of the cigarette market p. 1 2. DURACELL - Durabeam p. 4 3. Development Comment p. 7 4. Trends from Abroad p. 8 5. Ideas from Abroad p. 10 6. New Product Monitor p. 11 ****************** cigarettes can be advertised and * * promoted, resulting in a market * A VERY SUCCESSFUL AND PROSPEROUS* which is declining at the rate of * 1986 TO ALL OUR READER FROM ALL * 2% per annum. * AT KAE DEVELOPMENT!! * * * Prior to 1984, Philip Morris was ****************** represented in the UK market only by Marlboro. This brand had 1. RAFFLES - RUFFLING THE become the world's biggest seller, but had never attained that FEATHERS OF THE position in the UK and did not seem likely to improve its position or CIGARETTE MARKET its 2-3^ market share. A large part of the reason for this is that Marlboro is blended to suit the Introduction American taste and, despite a reasonable level of acceptance The cigarette market, in common among certain sectors of the UK with many others, has had its share smoking population, has been unable of product failures over the years, to convert the majority whose which is perhaps why the success of preference is for the Virginia Raffles is of particular interest. blend historically used in virtually all UK brands. Launching a new cigarette brand successfully is no easy task The development of a new cigarette particularly when one considers the for the UK market, therefore, amount of publicity and pressure to represented, for Philip Morris a discourage the smoking habit, high level of commitment to gaining coupled with the restrictions additional share of that market, a surrounding the methods by which commitment which has continued - 2 - through the development and launch that the incompatibility of low tar programme and one which has and taste satisfaction has yet undoubtedly contributed greatly to been resolved. its success to date. Being positioned in the LTKS sector The market positioning of Raffles of the market meant that Raffles was carefully identified as one needed to be perceivedas a which was likely to prove 'quality' cigarette in order to successful. However, a compete with the already well- consideration uppermost in the mid established quality image of brands of Philip Morris was to avoid any such as John Player King Size and cannibalisation of their flag-ship Benson & Hedges. The declared brand, Marlboro. intention of Philip Morris was to create a brand which would The trend in recent years has been encourage "smokers to come out of to longer cigarettes, helped by the closet and enjoy their changes in the way in which duty is pastime". Raffles would be a high levied which has made them better quality cigarette, elegantly value for money. This longer- packaged and backed by extensive length sector now represents and distinctive advertising. An something in the order of 85^ of important part of this positioning sales volume and has itself was the need to appeal to women who segmented with the emergence of a have been less susceptible to the sector designated "longer than King pressures to stop smoking than men Size" (LTKS). There is fierce and now out- number them; women competition in this sector, most are particularly important in the major manufacturers having brand LTKS sector. representation in it; it is, however, a growth sector and it was The pack design for Raffles is here that Raffles was positioned. undoubtedly one of the most This places Raffles, without any controversial aspects of the brand particular heritage, in direct - not because it is incompatible competition with brands such as with the image and positioning, but Benson & Hedges Longer Length and because of its close resemblance to John Player Superkings both of the pack used by Imperial Tobacco which can capitalise on the image for its well established John and awareness built up by their Player Special sleek black with shorter (King Size) sister brands. gold lettering. This design undoubtedly fits with consumer The decision to~ make Raffles a low requirements in the market sector to middle tar cigarette was hardly into which the brand was launched: surprising since this is the level it is elegant, it denotes quality, of the main brands in the LTKS it appeals to women without sector. Low tar cigarettes have alienating men and vice versa and not, in the main, been very it has been seen to work successful because they have been successfully with JPS. unable to deliver in terms of 'taste' and the low tar sector has Imperial Tobacco, makers of JPS, remained static at around 15^ for were sufficiently outraged by the some years dominated by Silk Cut. similarity of the Raffles pack to The voluntary agreement by go to litigation and to do so on cigarette manufacturers to bring more than one occasion. Their case tar levels down is creating more was not, however, upheld despite activity within this sector but the fact that Raffles could be there are no indications as yet shown to be taking share from John - 3 - Player Special. Whether this the success of any new decision means that yet more brands product, the pack is vital will appear in the future clothed with the realms of cigarette in elegant black and gold or marketing. whether some new colour-coding for up-market cigarettes will have to v) The product was initially be found, remains to be seen! pitched on a psychologically significant price-point, at a Perhaps one of the most important time when the consumer was strategic decisions in the launch particularly sensitive about of Raffles was its launch price. the cost. This was pitched rather lower than other prestige brands in LTKS sector selling at 99p for 20. The Results price rose after the introductory period in test market to levels of So what does all the careful around £1.08 (£1.16 RRP) but this planning and development conducted still represented good value to the by Philip Morris add up to in terms consumer compared with main of achievement? competitors. The controlled test market in the South saw the Raffles brand share Summary rise to &% of the market and this success was continued after Thus, having established the need national launch. 1985 saw Raffles for a new cigarette within the UK - take the number one position in the a market which must have been LTKS sector in its original launch somewhat disappointing to them, in area and become the eighth best comparison to their worldwide selling brand nationally. dominance - Philip Morris approached the problem in a This represents for Philip Morris a commendably logical fashion. doubling of the share of the market which they enjoyed with Marlboro i) The taste of the brand was alone, without any significant loss specifically developed for the of share for that brand. UK consumer. ii) The brand was positioned KAE Comment within the expanding "longer than Kingsize" sector, with a The success of Raffles illustrates tar (and therefore taste) a great many of the features which level in tune with market characterise new product successes trends. and which are often patently missing from those products that iii) Philip Morris recognised the fail. Having recognised the growth importance of a "quality" limitations for Marlboro in the UK, positioning, and of the despite its worldwide brand necessity to include women leadership, Philip Morris set about within the target audience. tackling the problem with a high level of commitment and a clearly iv) The packaging and advertising thought through strategy. Care was were developed to be entirely exercised in identifying the most consistent with the quality appropriate market sector, the positioning of the product. requirements of the target market Although clearly important to in terms of both product and - 4 positioning in that sector and this doubled the size of the static was then followed through in a lavatory cleaners market and single-minded fashion through a achieved a 60^ share of the successful and controlled test- expanded total. This was achieved market to a national launch. The by taking a completely fresh look need for high promotional at the market and satisfying expenditure in order to ensure previously unfulfilled consumer success was accepted and the needs. expenditure well utilised. While success can never be guaranteed, the lessons which can be learned One company which has recognised from new developments such as the validity of this argument is Raffles undoubtedly show the value Duracell. It is interesting to of single-minded commitment and examine their first development careful planning. away from batteries which is providing a new area of opportunity *********************************** for Duracell. Background 2. DURACELL - DURABEAM Until two years ago Duracell was a one product company with Alkaline Historically, conventional wisdom batteries. The company had has suggested that in identifying determined that in the first potential development areas for new instance diversification should be products, growth markets are likely in areas close to their existing to offer the greatest opportunties. business where they could use the However experience has shown that brand values associated with their because growth markets attract a batteries. Other important great deal of attention, entry into considerations to the Duracell such sectors is usually a "free for management were distribution all" with too many products chasing profile and international insufficient sales. Therefore potential. Duracell have quite a companies that have decided that large salesforce in the UK calling they would prefer to be big fish in on a large number of different little ponds have often been more types of outlet.
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