1. In 1999, the Czech Republic saved $45 million through not having to support, house and care for those smokers who died prematurely from tobacco-related illnesses Philip Morris International In 1999, the tobacco industry cost Australia $21 billion in health care, business and other related costs Australian Medical Association

2. Smoking - an ethical dilemma? The tobacco industry Government intervention - Australia How to be a socially responsible industry… Targeting young consumers Product diversification – Philip Morris Conclusions

3. The tobacco industry Smoking kills 18,000 Australians every year Will be the No 1 cause of death by 2030 (WHO) In 2000, despite advertising restrictions, the industry spent $8.2 billion on advertising But… Tobacco is a legal product The industry continues an ‘open’ dialogue with governments and pressure groups

4. Marketing the Product Increase brand loyalty Stimulate primary demand in non-smokers Using a traditional marketing mix: –Advertising, Sponsorship, Promotion, Point-of-sale, Product placement, Personal endorsements

5. Government Intervention - Australia

6.             Tobacco Advertising Prohibition Act – amended in 2000 2001-2004: the smoking population fell by 2% to 17%

7. Socially Responsible Strategy Background - Increasing restrictions on cigarette advertising - Pervasive, negative public opinion of smoking Aims - Alternative, indirect tobacco advertising - Influence on customer’s psychology “Philip Morris is a great company trying to be socially responsible, therefore, its cigarette is (may be)….”

8. Socially Responsible Strategy Corporate image advertising - Expenditure increased by 800% from 1998 to 1999 - $142 million spent in the first half of 2000 - “It Spends 1.5 times as much publicizing its so-called 'good works' than it gives away” – INFACT Ethical Issue - Attempt to trick consumers – INFACT - Marketing manager’s ethical dilemma : Truth vs. Loyalty

9. Targeting Young Customers

11. Targeted at Youth Flavoured Cigarette –Bright-coloured labels and youth-friendly names, e.g. Beach Breezer (watermelon), Bayou Blast (berry) –An easier taste for first time smokers –Stylish and Attractive? Promotion at youth events –Mobile tobacco selling and promotional deals Free cigarettes given to teens in Gambia –A recent WHO survey suggests that one in five children under the age of 15 now smoke.

12. Product diversification – Philip Morris Philip Morris had sales of $80 billion in 2000 2/3rds of income is from tobacco products Now owns Kraft Foods (No 2 in the world) and Miller Beer (No 2 in the US) Wants to be seen as a ‘credible’ business Hopes to validate tobacco through an association with alcohol and caffeine

13. Conclusions Claims to be a socially responsible industry - False Hypocrisy & double standards exist across markets The industry continues to market cigarettes to teenagers The industry has never acted ethically & never will The ethical dilemma lies with governments but they continue to avoid the issue Gorilla marketing tactics on the internet have the potential to undermine current legislation

14. YouTube http://www.youtube.com/watch?v=r0K7a4WqR38