Difference between revisions of "Product Innovation"
Latest revision as of 11:35, 18 April 2019
According to intelligence firm Euromonitor, in 2008 tobacco product innovation had three purposes—‘to justify a premium price, to promise a different experience and to suggest a reduced risk experience’. In the UK, prior to 2005, tobacco product innovation was infrequent. However, following the Tobacco Advertising and Promotions Act 2003, which led to the end of conventional forms of advertising in 2005, product and packaging innovations, along with pricing tactics, became the only way to communicate with customers and promote tobacco products in what the industry refers to as a “dark market”.
Annual reports and investor presentations of each of the four big tobacco companies reveal the importance of both product innovation and packaging innovation to the current and future success of their business. The term innovation is often used to refer to both packaging and product innovations. Product innovations refer to the creation of new brands and brand variants (e.g. capsule cigarettes, slims, Make Your Own) which inevitably also include packaging innovations whereas packaging innovations refer to instances where the product remains unchanged and only the packaging is altered.
In 2007, following their reinvention of its Lucky Strike brand in 2006, British American Tobacco (BAT) spoke about the importance of innovation in their annual report.
- “Innovation is central to our continuous growth. Our growth strategy aims to generate greater consumer relevance measured by consumer demand, a reconsidered brand image, brand loyalty, willingness to pay a premium.” 
In light of further regulation in the UK, such as the Point of Sale Display Ban (POS), which came into effect for larger stores in April 2012, (with smaller stores expected to comply by April 2015) and the threat of plain packaging for tobacco products, both product and packaging innovations have become more frequent than ever before as tobacco companies attempt to popularise their brands.
A list of pages in the category Product Innovation
In December 2011, in light of the impending POS display ban, UK retail magazine, The Grocer noted that:
- "the most notable trend of the past year has been an unprecedented level of new tobacco launches - everything from female-focussed super-slim and demi-slim cigarettes to flavour-changing innovations. Manufacturers are clearly in a hurry to get their NPD [New Product Developments] into the marketplace ahead of the display ban..." 
- Capsule Filters
In November 2011, Japan Tobacco International (JTI) was the first tobacco company to introduce a capsule cigarette into the UK market with its Silk Cut brand variant ‘’Choice’’. Capsules are incorporated in the filter of the cigarette. They allow the smoker to release menthol flavour when they start smoking the cigarette, at some stage during the course of smoking the cigarette, or not at all.
All four major tobacco companies now have capsule products for sale on the UK market.
- Roll Your Own and Make Your Own cigarettes
- Additive Free Cigarettes
- Miniature Cigars
Please view the gallery below for examples of these innovations. Click on the image to enlarge.
Concerns have been raised that consumers may believe that each of the four product innovations mentioned here convey a message of reduced risk akin to the ‘light’ cigarette controversy, whereby the term ‘light’ led consumers to believe that they were smoking a reduced risk cigarette.
Menthols are often considered to be less risky  and thus capsule cigarettes may be misperceived in the same way. Similarly, females have considered slims to be less harmful as there is less tobacco in each cigarette.
Roll Your Own (RYO) tobacco has been thought of as more organic, with fewer chemicals and “better than cigarettes”. The introduction of ‘additive free’ RYO may exacerbate this misperception.
As aforementioned, innovation also refers to packaging innovation. In 2010, PMI attributed packaging innovation to the renewed global success of its Marlboro Gold brand which received a [Philip Morris’ Marlboro Brand Architecture| new brand architecture in 2008]:
- “The roll-out of the new Marlboro Gold packaging, present in almost 100 markets at the end of 2010, has been one of the main drivers of the variant’s success. Indeed, Marlboro Gold’s share was stable or increased in almost 70% of the top 30 volume markets in which it was present in 2010.” 
- Price Marked Packs
- Limited Edition Packs
- Curved Edge Packs
- Slide Opening Packs
Why is Product and Packaging Innovation Important? Public Health Concerns
There are a number of public health concerns with regards to innovation.
- “Innovation can be used to undermine both tobacco tax and marketing policies and to mislead consumers into believing products may be less harmful.”
- There is a suggestion that many of these innovative products are targeted at young people and this form of marketing therefore represents a means of continuing to attract young people to take up smoking.
We have already touched upon the timeliness of innovations in response to POS display bans and plain packaging, however there are some broader issues that may be of significance.
Capsule cigarettes are unique in that they offer innovation to the cigarette market even with the POS display ban and plain packaging. The capsule is not a visible entity on the exterior of the cigarette and it is therefore possible that capsules cigarettes will remain if plain packaging legislation were passed. However, the revision of Tobacco Products Directive calls for an end to flavourings such as menthol in tobacco products in the EU. If this legislation comes to pass then capsule cigarettes will become illegal in the EU.
If you would like to share some additional examples of packaging innovations that you have noticed in the UK please send a message to TobaccoTactics.org.
For more examples and stories detailing specific instances of innovation please visit the following pages:
- Marlboro Bright Leaf: The Pack is Important
- Philip Morris' Marlboro Brand Architecture
- Are White Packs the New Light Cigarettes?
- Euromonitor. Global tobacco: survival strategies for a savage market. Chart 29. 2008. Available from: http://www.euromonitor.com/Global_Tobacco_Survival_Strategies_for_a_Savage_Market, accessed May 2012
- C. Moodie & G. Hastings. Making the pack the hero, tobacco industry response to marketing restrictions in the UK: Findings from a long-term audit. International Journal of Mental Health and Addiction, 2011, 9(1):24-38
- BAT, Annual Report and Accounts 2007, Accessed December 2012
- The Grocer, "NPD Fails to Stub Out Drift to Cut-Price Cigarettes", 17 December 2011
- Ronan Hegarty, "JTI and BAT rolling out two-in-one cigarettes" The Grocer, 25 November 2011
- Anderson, S.J, et al, Implications of the federal court order banning the terms “light” and “mild”: what difference could it make? Tobacco Control (2007) 16, p275-279
- S. J. Anderson, Marketing of menthol cigarettes and consumer perceptions: a review of tobacco industry documents, Tobacco Control, 2011, 20(Suppl 2): ii20-8, Accessed January 2013
- C. M. Carpenter, G. W. Wayne, G. N. Connolly, Designing cigarettes for women: new findings from the tobacco industry documents, Addiction, 2005, 100(6), 837-51
- D. Young, R. Borland, D. Hammond, K. M. Cummings, E. Declin, H-H. Yong, R. J. O’Connor, [Prevalence and attributes of roll-your-own smokers in the International Tobacco Control Four Country Survey], Tobacco Control, 2006, 15(Suppl 3), iii76-82
- Philip Morris International, PMI Annual Report 2010, Accessed December 2012
- Gilmore A. Understanding the vector in order to plan effective tobacco control policies: an analysis of contemporary tobacco industry materials. Tobacco Control 2012; 21: 119-26