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~THE AMERICAN TOBACCO COMPANY Memorandum Mr. No E. S~ith, DaEeOctob~r 22, 1990 Vice President - Brand Management Fr0mJ. C. Bogie, Product Manager~ v Re: Approval Recommendation - LUCKY STRIKE Package Design Exploratory This document will serve as a recommendation to conduct a package design exploratory for the total LUCKY STRIKE product line. The exploratory will cover creative development and qualitative testing of a new family of packages for LUCKY STRIKE. LUCKY STRII<E Non-Filter was introduced in 1916 with its classic green package. The green pack was changed to white in 1942 because the chromium needed to produce green ink became a valued war commodity. It wasn't until 1981 that LUCKY STRIKE introduced its Filtered King size Low Tar product. A new package design and modified bull's eye was used. Soon after the Kings were introduced the 100's skyle was introduced using the same package design. Then, in 1984 LUCKY STRIKE Lights were introduced in King and 100's soft pack styles. The packaging for these styles was again different from Non-Filters and the Low Tar packages. The silver striped packaging with yet still another slightly different treatment of the hull's-eye was used for the Lights product. Attached for your review is a Golor photo copy of the entire LUCKY STRINE line of packaging. RECOMMENDATION It is recommended that LUCKY STRIRE conduct a package design exploratory that would encompass both creative development ($100M-$2OOM) and qualitative testing ($25M) of a new family of packages for the brand. The costs to complete the exploratory are estimated at $125M to $225M.

Mr. R. E. Smith October 22, 1990 Page Two The followinq will identify the key rationale in support of this recommendation: o Our major competitors, Marlboro and Camel, both offer an integrated and totally consistent package design and brand name/logo treatment across all their package styles. (See attached exhibits). These brands have successfully attracted the young adult male audience and can be our role model in how to create one image or one badge in a package line. o An integrated look across all styles can provide an image of quality. In combination with LUCKY STRIKE's more competitive lower price this should result in the brand being perceived as a good value. Establishing a desirable and compelling quality image along with an acceptable price will give consumers the sense that LUCKY STRIKE is a good value. o Introducing a new line of packages for LUCKY STRIKE provides some news value to the trade and the consumer. Designing packages that appeal to our young adult male target (21-29) provides some real news to these consumers and an additional motivation for them to try the brand. If supported with media, this can help our selling efforts as it provides a new reason for the trade to display the brand. o Focus groups have indicated that the green pack would be well received by young adult males. This should be a starting point for the creative exploratory. Many of the smokers at the groups thought that the green packaging was very new and unique. They thought it was eye catching and a different approach to packaging, specifically they stated: - It's distinguished looking - The LUCKY STRIKE logo really stands out - It looks richer, more yuppie like - It would be great to put down on the bar - Designer brand, a Ralph Lauren design

Mr. R. E. Smith October 22, 1999 Page Three o Consumers mention packaging as one of the four important criteria in selecting their ideal cigarette. The four key criteria appear to be: Image Taste Package Price ~EVELOPMENT Peterson and Blyth will develop the new integrated packaging line for LUCKY. An initial cost range off $100M to $200M has been identified as appropriate for the package line development. However, a formal estimate will be obtained once the design objective and specifications have been approved. The objective of the design work is to provide a closely integrated look to the LUCKY STRIKE package line. Due to the importance of the King size to LUCKY's target audience the package design exploratory should focus on that size. This would help economize on the development costs and translating the final King designs to 100's size should be relatively easy. There are two starting points that seem to make sense: i. Use the Non-Filter white look across all styles. 2. Use the nostalgic green package look for Non-Filters and LOW Tar and the current white Non-Filtered look for Lights. Once the package designs have been determined, the carton designs should be a simple translation from the packages. ~SNARCH A qualitative test of two to three package line designs will be conducted to determine which packaging is best received by our tarqet audience. This will be a test of whether the new packaging fits the brand,s new positioning. We must be very sensitive to the desires of our Non-Filters users. They represent two-thirds of the franchise and should be consulted regarding any potential change of the Non-Filtered style. Consumer research among Non-Filter users would be conducted to confirm that an acceptable new package design has been developed. The estimated cost for research is $25M.

Mr. R. E. Smith October 22, 1990 Page Four SUMMAR~ Providing consumers with a package they are proud to display is unquestionably a critical asset to successfully marketing a cigarette. I believe the LUCKY STRIKE can benefit from a more integrated family design. A package design exploratory will enable us to optimize LUCKY'S package and provide so~e real news value for our target. A new package will hopefully provide added motivation for consumers to try the brand. Your approval of this recommendation is requested. JCB/fso Package/l-4

Approval Recommendation - LUCKY STRIKE Package Design Exploratory J. E. Ockers Date T.A. Albert Dite J. E. Vyse Date R. J. Leisure e G. T, Touter Date E. J. Gesell Date Date Date • . " Date R. E. Smith R. M. spight /Date W. J. Moore Date C. H. Mullen Date

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