Why Focus on Stores?

• Stores are used as the main channel of communication by tobacco companies to reach new and current customers

How Many Tobacco Marketing Materials are in California stores? (1999 data)

0

5

10

15

20

25

30

Convenience stores Gas stations Large drug stores Large markets Liquor stores Small stores

Mea

n N

um

ber

Functional Items

Displays

Signs

Tobacco marketing materials in California stores are easily visible to children (1999 data)

5%

30%

41%

77%

57%

29%

4%

18%

24%

32%

23%26%

3%0%

6%

15%16%11%

0%

20%

40%

60%

80%

100%

Conveniencestores

Gas stations Large drug stores Large markets Liquor stores Small stores

Pe

rce

nt

of

Sto

res

Stores with cigarette brand signs below 3 ft

Stores with cigarette displays within 6 inches of candy

Stores with cigarette brand signs larger than 14 sq ft

Tobacco company marketing expenditures 2000

Point of Sale $347 Million 3.6%

Promotional allowances

$3.9 Billion 40.9%

Retail Value Added $3.5 Billion 36.7%

Other (e.g., newspapers, magazines, transit, etc.)

$1.8 Billion 18.8%

Total $9.6 Billion 100.0%

Source: Federal Trade Commission Cigarette Report for 2000

Changes in tobacco company marketing dollars in stores between 1990 and 2000 (in millions)

0 1000 2000 3000 4000 5000

other

POS ads

retail valueadded andcoupons

promotionalallowances

2000

1990

What are promotional allowances?

Promotional Allowances are:

• Volume discounts: the more you sell, the better the deal

• Display allowances: payments to place display racks and shelving

• Buydowns: special sales on inventory

What is “retail value added”?

• Retail value added is a term used in the FTC report that includes multi-pack discounts such as “buy 2, get 1 free” and gifts with purchase such as a key chain or disposable camera

How do tobacco company marketing expenditures impact the store?

Tobacco marketing expenditures dramatically alter the store environment:

• Special sales

• Lower prices

• Displays and shelving units

• Prominent ads and products

Special Sales and Lower Prices

Displays and Shelving Units

Prominent Ads and Products

Everybody advertises - so what?

In-store marketing works:

• POS boosts tobacco sales by 12 to 28%

• 62% of 7th grade students recall tobacco ads in stores

• Youth who report seeing in-store tobacco ads were 38% more likely to experiment with smoking

What retailers have to say…

In focus groups, California retailers say:

• In-store advertising increases sales of products

• Advertising closest to the counter has biggest impact on sales

• Advertising that highlights a reduced price is the most effective

Retailer focus groups (continued)

• Sales on cigarettes increase overall sales

• Price reductions and multi-pack discounts

are the most prevalent and effective

• Sales on packs or cartons are due to “buydown” offered by tobacco company

What retailers have to say…

What can we do to reduce tobacco marketing in stores?

• Raise community awareness about advertising.

• Increase compliance with and enforcement of existing ordinances.

• Require tobacco retailer licensing.

• Stimulate the passage of new policies:Exterior sign lawsSelf-service display bans