A 'War in the Store' Started Twenty Years Ago, and the battle still rages on...
Tobacco companies now spend the vast majority of their advertising and promotional dollars at the point of sale, vying for customer hearts and minds. This “War in the Store”was triggered in 1993 when Philip Morris heavily discounted its Marlboro brand, and other tobacco companies followed suit to compete.
While the Master Settlement Agreement of 1998 (an agreement between the major tobacco companies and 46 state attorney generals) curtailed some tobacco company advertising. For instance, by getting rid of Joe Camel and other cartoon characters and banning product ads on billboards and magazines, it left the store environment relatively free of restrictions. The tobacco industry took full advantage of the gap.
Point of sale (POS) marketing targets both consumers and retailers. POS promotions include exterior and interior tobacco advertisements, price discounts, product placement strategies, incentives offered to retailers to increase in-store marketing, and many other strategies.
Spending at the Point of Sale: Federal Trade Commission Reports
Cigarette companies have always valued the retail point of sale as an advertising channel, but in the last decade, spending on branded advertising and promotions at the point of sale has soared. In fact, the retail environment is now the lead channel for cigarette marketing, advertising, and promotional efforts.
The Federal Trade Commission has been preparing reports on sales, advertising, and promotions of cigarettes since 1967, using data gathered from the five major tobacco companies, Altria Group (Philip Morris products including Marlboro), Reynolds America (Camel, American Spirit), Commonwealth Brands (USA Gold, Phillies, Dutch Master), Lorillard (Newport), and Vector Group (Pyramid, Liggett). Since 1987, the FTC has tracked sales and promotions of smokeless tobacco from Altria Group (Copenhagen, Skoal), North Atlantic Trading Company (Trophy, Durango), Reynolds America (Grizzly), Swedish Match North America (Longhorn, General), and Swisher International (Redwood Snuff) . Reports are issued every few years and give tobacco control advocates detailed advertising and promotion spending reports in more than two dozen categories.
Spending at the POS has increased almost every year since 1967. In 2014, the tobacco industry spent nearly 91% of their total marketing expenditures for cigarettes and smokeless tobacco at the point of sale.
As seen in the table, according to the Federal Trade Commission Cigarette and Smokeless Tobacco Report for 2014, the tobacco industry spent over $8.2 billion to advertise and promote their products in the retail environment. Price discounts remain one of the largest categories for both cigarettes and smokeless tobacco, though expenditures on price discounts deceased from 2013 to 2014. However, over the same time period, expenditures on coupons for smokeless tobacco increased by 27% and expenditures on coupons for cigarettes more than doubled.
Spending aimed specifically at the retail point of sale is comprised of five categories: (a) point of sale advertisements, (b) price discounts, (c) promotional allowances to retailers, (d) retail-value added bonus tobacco products, and (e) coupons. (Other marketing dollars not considered to be aimed at POS include, for example, promotional allowances to wholesalers and dollars spent on direct mail, magazines, internet, or sponsorships.)
What Does Point of Sale Spending Buy the Tobacco Industry?
Countertobacco.org is your complete resource to counteract tobacco product marketing at the point of sale. We offer a comprehensive toolkit to assist your efforts around six unique yet complementary policy solutions. On each page you will find an overview of the particular solution, research findings, tools, case studies, and links to additional partners and resources to help gather support for your work. See policy solutions in the “Next Steps” box above to see what may work best for your state or locality. Also use our evidence summaries for more information on special topics, such as tobacco stores near schools. Check out our glossary for a primer on POS terminology.
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