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

1. 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?

2. The marketing benefits of e-cigarettes:
a tobacco industry perspective
Marisa de Andrade, Gerard Hastings and Kathryn Angus
Stirling and the Open University
ICO-WHO Symposia on Tobacco Control
Current challenges for global tobacco control: electronic cigarettes
Barcelona
18 July 2014

3. 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

4. origins
the research

5. the research
origins
It is important to get a
TI perspective
a taxonomy of
research questions

6. 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

7. 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

8. structure
1. Research method: an audit of
e-cigarette marketing
2. The tobacco business –
problems, problems, problems
3. The e-cigarette business:
solutions, solutions, solutions
4. Conclusion

9. • 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

10. 1. Youth recruitment
2. Adult retention
3. Reputational harm
The tobacco business:
problems, problems, problems
Three key threats for the TI:

11. 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
The tobacco business:
problems, problems, problems

12. Problem 2: adult quitting
• Increasing pressure to quit: tax; GHWs;
PP; mass media campaigns
These measures work
• Marketing responses crippled: adbans;
POS; even the brand itself under siege
These measures work
The tobacco business –
problems, problems, problems

13. 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

14. structure
1. Research method: an audit of
ecigarette marketing
2. The tobacco business:
problems, problems, problems
3. The e-cigarette business:
solutions, solutions, solutions
4. Conclusion

15. 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

16. “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:

17. 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

20.  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
e-cigarettes:
solutions, solution, solutions
Problem 2: adult quitting

21. 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…

23. e-cigarettes:
solutions, solution, solutions
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

24. e-cigarettes:
solutions, solution, solutions
Problem 3: Reputational harm (customers)
Shifting the guilt: we
offer a ‘risk spectrum’;
the consumer decides

25. e-cigarettes:
solutions, solution, solutions
Problem 3: Reputational harm (customers)
The chance to rehabilitate TI’s core product

27. e-cigarettes:
solutions, solution, solutions
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

28. structure
1. Research method: an audit of e-
cigarette marketing
2. The tobacco business –
problems, problems, problems
3. The e-cigarette business:
solutions, solutions, solutions
4. Conclusion

29. Conclusion
We are trying to tell the future
Research 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?