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In 1999, the tobacco industry cost Australia $21 billion in health care, business and other related costs Australian Med

In 1999, the tobacco industry cost Australia $21 billion in health care, business and other related costs Australian Medical Association .

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In 1999, the tobacco industry cost Australia $21 billion in health care, business and other related costs Australian Med

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  1. In 1999, the tobacco industry cost Australia $21 billion in health care, business and other related costs Australian Medical Association 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

  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. Government Intervention - Australia O O O O O O • 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

  10. 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.

  11. 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

  12. 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

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

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