Thursday, 21 November 2013

Day 186: EX-treme witnessing

The small group of regular observers at the Montreal tobacco trials left the courtroom chuckling this afternoon after watching a text-book day of how things can be perfectly prepared and perfectly presented in court, only to fall apart during the cross-examination.

The witness today was Mr. Lance Newman. A difficult name to live up to, perhaps, but this man is lucky enough to suit his moniker. Tall, grey and handsome, as my friends would say. Youthful looking for his 57 years, and with a good voice and nice manner to boot. 

It cannot be coincidence that all of the men on JTI-Macdonald's small list of witnesses look like they went through finishing school. And for good reason -- JTI is the only company that is asking its fact witnesses to go beyond simply refuting the charges (No, we did not market to kids) and to present a competing version of events to Justice Riordan. (Here is what we were trying to do and why). A little courtroom charisma can only help!

JTI-Macdonald counsel
Catherine McKenzie 
Another strength to JTI's presentation is that they are keeping things fresh. For Mr. Newman's testimony, there was a new face in the driver's seat - Ms. Catherine McKenzie.

Although this is the first time she has had so much face-time with Justice Riordan, Ms. McKenzie is no novice to the tobacco file. She worked for JTI-Macdonald more than dozen years ago, during the industry's constitutional challenge to the federal Tobacco Act. (As a result of this experience and her prodigious memory, she is often called on to provide details about exhibits, a distinction it sometimes seems she would prefer not to carry.)

Ms. McKenzie is also an accomplished novelist -- the photo shown here was taken from her author's web-site. It does her more justice than the one posted by the law firm where she is a partner, Irving Mitchell Kalichman.

In presenting Mr. Newman and his evidence this week, Ms. McKenzie was able to strut a different sort of courtroom stuff. With a quick pace and steady voice, she very efficiently lead Mr. Newman through the succession of moves that matched his assertions with a series of documents.  Like professional tango dancers or old bridge partners, they made it look easy.

Their connect-the-dots questions and answers soon emerged into a picture of a company that was marketing its consumer goods exactly as consumer goods are supposed to be marketed. One that always did so in conformity with the laws or voluntary codes that were in effect, and which took such responsibilities very seriously.

The other point emphasized in their counter-narrative was that their marketing initiatives met with such little success that any wrongs that they might have committed resulted in not much real harm. When pushed to explain her granular focus on market share, Ms. McKenzie said this would support their eventual argument against punitive damages. She cited the example of the allegations faced by the companies that they marketed light cigarettes in a deceptive manner - yet her clients "never had more than 2% of the market for light cigarettes."

She may have found Justice Riordan's reaction was a little discouraging. "But isn’t it offset by the fact you were trying to have more?" 

To a man with a marketing hammer, everything looks like a consumer nail.

Mr. Newman picked up the story of RJR-Macdonald's marketing shortly after the mid 1980s, where Mr. Robb had left off. Mr. Newman joined the company in 1992, and is indeed still there, in the position of "Director Strategic Insights, Americas Region". 

The tone for his comments was set late yesterday afternoon he was invited to explain his experience in advertising (at Leo Burnett) and consumer goods (at Unilever) before he joined RJR-Macdonald. His detached language made his remarks sound more like a business-school case study than the result of a 22-year career at one company. He often said "products" where others would say cigarettes. Instead of talking about smokers quitting, he described them as "leaving the product category". 

He presented marketing as an activity applied with neutrality to all goods. Popsicles. Icecream. Cookies. Toothpaste. Toothbrushes. Cigarettes. Mr. Newman had marketed them all and found that "Regardless of the product the underlying marketing discipline is always the same." He saw the common foundation for a marketing group was to be "the voice of the consumer within the company" and to "translate their needs and wants to a product that we can sell profitably." 

But when he arrived at RJR-Macdonald he found that those fundamentals were missing. "Marketing-oriented individuals" had left the company. Those who remained had been pulled in from other departments, and did not know the basics. In one of his first meetings, Mr. Newman was astounded to learn - gasp! - that his new colleagues did not know what a 'brand income statement' was. "I couldn’t believe my ears!"

There were other sources of concern.  There was only one egg in the basket: "The company was Export A and Export A was the company."  And that egg was not a golden one. The Export A cigarette was perceived as "harsh, strong, unsatisfying" and the image of the brand was not much better. The famous truckers were too down-scale. "It caused me many sleepless nights." 

Without the right to advertise, Mr. Newman found few tools available to improve the image. Those that were in place -- like the sponsorship "properties" the company had acquired -- were not much help. Golf games. Salmon Fishing. Hydroplane racing. These he dismissed as "largely off strategy." 

The company was challenged with increasing sales by convincing people who smoked competitors' brands to switch to Export A.  A lot of time was spent this morning on the fine details of their focus on switchers. (Exhibits 40398, 40399, 40400, 40401).

Mr. Newman estimated that "5% to 10%" of Canadian smokers switch annually, and age group they surveyed that was most likely to switch were the 19-24 year olds. In describing the reasons, he made the young person's choice of cigarettes sound no different than that of cologne or clothing.

"As new consumers they are still trying to develop a brand repertoire. They are not yet clear on what brand they like – what style makes sense for them or what taste signature makes sense for them. There is a certain amount of trial that goes on to satisfy the emotional benefit and the functional benefit the taste that they like and the brand that is true with who they are." 

Money spent to capture marketing share from competitors was a good investment -- but there was no value in encouraging starters, discouraging quitting, or trying to get smokers to increase the number of cigarettes they used each day.

Either you like it or you don't 
A second area that received detailed attention was the diligence with which the company approached the voluntary advertising code that was adopted after advertising became legal again in Canada in 1995. (Exhibits 881, 40005 S).

There were creative restrictions (no people! not near schools!). Requirements (warnings). And for extra-confidence, all ads were pre-cleared by a panel of 3 retired judges. (Exhibit 40402). 

Yet despite these precautions, RJR found itself in hot water when it became the first company to launch ad campaigns. One of their billboards was found within the 200 meter safe zone from school entrances. (Exhibit 40407, 40407A)

"I was livid," said Mr. Newman today. "I am a bit of a perfectionist. I don’t like making mistakes."  He described with pride the measures the company took to strengthened their controls with their suppliers, to issue contrite public and private statements, and to confirm that complaints that the campaign was too youth friendly were not justified. (Exhibits 40408, 40409, 40410, 40411, 40412)

This incident, he said today was "the one and only complaint we ever received."
Going their own way.

Mr. Newman's description of the next campaign - the Extreme Sports Series - gave little hint that this had been one of the more controversial cigarette marketing initiatives of that period. He presented it as a natural extension of the image goals that Mr. Robb had outlined the previous day.

"It was a very targeted and very relevant articulation of the brand position of confidence and individuality," Mr. Newman explained. To avoid ending up in the "same situation as we did with the smooth campaign," they conducted research to make sure it was not "seen as too  young or inappropriate." (Exhibit 40413, 40414). They chose events that were not mainstream with youth -- not snowboarding, but skiing, for example.

"We realized we needed to stay true to Export's heritage, but to present it in a compelling and positive way." Confidence was a more positive way to express the harsher taste. Independence was a more positive way to express the idea of a loner.
The whole truth?

My mind was reeling with the many events of the 90s that Mr. Newman had not included in his polished version. By shining a very bright light on the minute details of one or two incidents, was it possible to obscure whole chapters of public health history? Even my colleague, new to the file, could see gaps in this version of events. "They are using the tree to hide the forest," she whispered to me.

The hint that several of these gaps would be filled during cross-examination came when Philippe Trudel gave notice that the plaintiffs would need more than the expected half day with this witness.

His first question focused on what Mr. Newman had presented as the primary role of the marketer - to respond to the needs and wants in their customers. So why had they not responded to their market research that repeatedly told them that smokers wanted to quit? Mr. Newman looked non-plussed, returning to his message that they "do nothing to influence quitting" before acknowledging that such activities were just not in the plan. (I learned today that companies also can sound bureaucratic. What he actually said was "It is a personal choice and we don't from a brand perspective have that as an operating guideline".

Exhibit 859A
Mr. Trudel's second question brought Mr. Newman to the screening questionnaire that Ms. McKenzie had filed as an exhibit earlier in the morning. (Exhibit 859A). If the company was interested in 18-24 year olds, why were they screening out people who were as young as 20?

"There appears to be a typo in the screener," Mr. Newman said. Given the way these questions are set up (several of which have been referred to previously in the trial), this seemed like an unlikely explanation -- but Mr. Newman stuck with it.

Exhibit 578A
He similarly stuck with his explanation that the reference  to "Nintendo age" in their plans for a website to promote the Export A Extreme Sports did not suggest that young users were hoped for. He himself played Nintendo games, he said -- he saw the term as a "creative way" to describe those who liked computers.

But it was when Philippe Trudel turned to the application of the 1995 voluntary code that Mr. Newman seemed to struggle. He could not remember what the restrictions were on lifestyle promotions in sponsorships, or age restrictions on the ages of contestants. He did not know why there were exceptions for broadcasts of sponsored events. He could not remember that the code had been amended. When prompted, he tweaked his earlier testimony that "three judges" had been responsible for pre-clearing ads, and admitted that the responsibility had been transferred to the Canadian Advertising Foundation. He could not remember complaints about the company's retail displays. (Exhibit 40005S, 1645A, 1645)  .

Mr Newman had come to testify about good-faith efforts to uphold the voluntary code. But his inability to answer Mr. Trudel's questions -- and his frequent excuse that he was unaware, not involved or not informed - seemed to have had the opposite effect.

Exhibit 1645
Mr. Trudel's coup de grâce on the voluntary code was the 11-page compilation of complaints prepared by the Canadian Cancer Society. (Exhibit 1645) There was no denying that JTI's team had been well aware of it (it had been filed during the constitutional trial that Ms. Mckenzie was part of). So why was he so unaware of the challenges his marketing department had faced at that time? And why had he been asked to testify that there was "only one" complaint when there had so clearly been others?

 Perhaps when Mr. Newman returns -- at a date yet unspecified -- these questions will be answered.

The trial breaks until December 2nd, when the first of the government of Canada witnesses will appear. Former directors of Agriculture Canada's Delhi Research Station,  Mr. Marks and Mr. Johnson will testify during that week.

Wednesday, 20 November 2013

Day 185: The two-edged witness

There are moments in the long-running Montreal tobacco trial when it is a little hard to tell the players - even with a score sheet. Today's testimony by Mr. Robin Robb was one of those times.

No Tardis was in sight, but it felt like we had been taken back a year to the time when other JTI employees were under oath and helping the plaintiffs build their case

The qualities that had made Mr. Robb a likely choice for the companies - he is polite, intelligent, seemingly sincere, a knowledgeable marketer and heartfelt in his defence of the tobacco industry -- also made him an effective witness for the plaintiffs when it came their turn to cross-examine him. 

One of the sharper knives in JTI's drawer - but one with a blade that could cut both ways.  

A toothless tiger

In his questions to Mr. Robb, JTI-Macdonald's lawyer, Mr. Guy Pratte, had focused on the way in which the industry's voluntary marketing code had been applied. Various versions of the Code were in effect from the early 1970s until federal laws controlling marketing in place. (The Tobacco Products Control Act was in force from 1989 to 1995, and the Tobacco Act has been in force, albeit amended on two occasions, since 1997).

This code was again in the spotlight today, as André Lespérance and Bruce Johnston asked Mr. Robb to go deeper in his explanations of how this self-regulatory system was applied. 

Before long, they had put Mr. Robb in the position of confirming many of the criticisms that the code had provoked within the public health community. Some of these concerns are captured in documents which are not yet part of this trial record - including the celebrated "Catalogue of Deception", compiled by the Non-Smokers' Rights Association and a report commissioned by Health Canada.

The rules were changed when inconvenient -- and sometimes retroactively. 

The CTMC rules were changed - and backdated -
to allow posters like these in stores near schools
When under pressure in 1984 to apply the code's provisions against placing "posters" in stores near schools, the CTMC opted to change the rules rather than to change their members' marketing practices. Mr. Robb was unaware, until shown by Mr. Lespérance, that the change had been backdated. (Exhibits 40005M, 40005M.1, 40005M.2, 40005M.3, 40005M.4) 

Did they cheat the system, or was it the system that cheated?

In the first days of testimony, Mr. Robb had left no doubt about his frustration at the cap on his advertising budget imposed by the CTMC Code. (Rule 2 reads: "The industry will limit total cigarette and cigarette tobacco advertising, promotion and sponsorship expenditures for any year to 1971 levels." ) 

In this court, he had not volunteered that this restriction was systematically flouted by the companies. But when presenting marketing options to his international managers in 1982, he had spoken openly about the value of using sponsorship advertising or retail displays because such expenditures did not count. (Exhibit 1641). 

In 1982, Mr. Robb planned a way to
overcome a cap on advertising expenditures 
Even after persistent questions by Mr. Johnston, he would not admit that this practice was inconsistent with the wording of the Code. Instead, he hid behind the fact that it had been approved by the auditors who "put their reputation on the line" in their statements that "advertising, promotion and sponsorship expenditures" conformed with the CTMC guidelines. (Exhibit 40375) (No, the accounting firm was not Arthur Andersen!)

In defending the practice, he seemed to confirm the view that the industry had the right to apply the Code as it saw fit. "The convention that existed was that these were not included in expenditures.... These were the rules and I accepted the rules as I found them." 

Mr. Johnston invited him to agree to the simple mathematical conclusion that, on the basis of his 1983 projections, his budget for promotions was $28 million (worth $56 million in today's dollars). This would have been almost twice as much as the $15.5 million the firm would have been entitled to spend if the CTMC spending cap had meant what it said. "We can throw numbers around," said Mr. Robb "But I don’t think it is constructive."

He suggested that some number throwing might have taken place when he was presenting the budget to Headquarters. "We were in Winston Salem presenting to the board for RJR International. The Canadian company had a lot of problems. We were there trying to show that we had our hands around the business and were going to make things change and do big things. There was a bit of bravado in how we presented ourselves and our plans ... We would try to make our number as big as possible."

The missing link: from non-smoker to new smoker

Mr. Robb testified repeatedly that the prohibition against marketing to young people was one the company took extremely seriously -- it was "hard wired" into the organization. 

Young people only became "relevant" for marketing purposes after they had reached the age of 18 and after they had become smokers. So what was meant, Bruce Johnston wanted to know, by the terms "new smokers" and "first time smokers" in their marketing plans. (Exhibit 1272). It was not the first nor the last time in the day that Mr. Robb testified that the words in a document did not mean what they appeared to say.
Exhibit 1272
He said that the company's plans to use counter top displays to "induce trial" among "young adult starter smokers" did not mean that they wanted people who were not smokers to try their cigarettes. (Exhibit 1640). 

Nor did they take any responsibility for whether or not young people (i.e. those under 16 or 18) were able to buy their cigarettes. "Once the cigarette went to the store, the retailer was responsible for making sure it not sold to someone under 16. We had no control over that." 

Sadly I missed Mr. Robb's answer to the question "How do you influence the second cigarette, but not the first?" 

Concerns about anti-smoking ads on the CBC

The last document shown by Mr. Johnston was a worried note written to Mr. Robb's department by their advertising agency following the unexpected broadcast of an anti-smoking ad during the Export A Windsurfer World Championships. 

Mr. Robb said yesterday that teenagers would likely not be interested in windsurfing, but Health Canada apparently thought otherwise . So did the ad agency which noted that the "Break the Habit" ad which was "directed at teenagers in an attempt to deter potential starters"  had been placed on CBC Sportsweekend.  "The reason is obviously that sports programming attracts a large audience base of young males." (Exhibit 1642).

"That's kind of obvious to state," Mr. Robb replied when Mr. Johnston asked whether the company would have preferred that the anti-smoking ad had not been aired during the broadcast of their sponsored event.

The re-direct

As the day wore on, the courtroom atmosphere began to get a little frosty - or frostier than it has been for the past couple of weeks. There were more than a few moments when the entente between the lawyers for JTI-Macdonald and the plaintiffs seemed to become a little less cordiale.

This tension added to the feeling of suspense when Mr. Pratte began a final hour of questions for his witness, and perhaps contributed to the sense of anticlimax at the content of the exchange.

Yes, the average age of contestants in the sporting events was over 22. No, the events had not succeeded in associating the Export Brand with skiing or windsurfing in smokers' minds. (Exhibit 40392) No, the federal government had never offered studies to show that sponsorship promotions induced young people to start smoking. No, their own focus groups had not found that smokers perceived these campaigns as attractive to young people. Yes, those who might have seen the Vantage Arts Academy advertisement were "wealthier and more educated" and even - gasp - business people.

The end of the afternoon was in sight before Mr. Robb was thanked by Justice Riordan and invited to step down. Soon the next witness - Mr. Lance Newman - was standing before the bench.

Mr. Newman's testimony about marketing at RJR-Macdonald in the following decades will be told to the court (and in this blog) tomorrow.

Tuesday, 19 November 2013

Day 184: The Smart Smoke

For information on accessing documents, see note at the end of this post.

The man who directed marketing at RJR-Macdonald 35 years ago began his second day of testimony this morning at the Montreal tobacco trials.

As he had yesterday, Mr. Robin Robb answered the questions put to him by JTI-Macdonald's counsel with apparent sincerity and candour.

But more noticeable than yesterday was the fact that he sometimes had to be prompted to make the points that Mr. Pratte was seeking, and was always willing to do so. It's an unkind business, testifying. Give a well constructed answer too many times, and it sounds pre-fabricated.

(Besides - just how many times can you say that the marketing of the Vantage brand as a low-tar cigarette for concerned smokers was a mistake before drawing attention to the fact that Vantage was marketed as a low-tar cigarette to concerned smokers?)

Does that sound like a complaint? Well then, it is appropriately so, for this morning Mr. Pratte focused on how RJR-Macdonald responded to complaints about marketing during the 1978-1984 period when Mr. Robb was at the company. (Exhibit 40005L-1976)

Misleading advertising

There was the complaint from the federal department of Consumer and Corporate affairs regarding misleading advertising with respect to the term "Smoke Smart" in an advertisement for Vantage cigarettes. (Exhibit 40387). "If a decision is to be made between smoking and not smoking, there is nothing 'smart' or 'common-sense' about smoking," the government official pointed out.

The unapologetic reply prepared by the company (Exhibit 969A) made no concession that the words might be problematic. Nor did it mention that the company had entertained its own reservations about the phrase. The reason given to the government for the term being disappeared from their campaign was the natural rotation of advertising copy -- yet yesterday Mr. Robb had testified that he had initiated a review of the term that led to its being removed from advertising (Exhibit 40386).

Concerns about appeals to concerned smokers 

There was the complaint from Health Canada officials regarding the Vantage ads which were aimed at concerned smokers.The reply to this complaint was similarly unapologetic. (Exhibit 969E)  

Nonetheless, Mr. Robb explained today that as with "smart smoke" the company changed its promotional message -- away from a focus on the "concerned smoker" and towards a more aspirational reflection of the target market. (Exhibits 572D and 572F shown)

A slippery slope

There was the 1984 complaint from the Minister of Fitness and Amateur Sport to the Canadian Ski Association regarding its acceptance of a promotional sponsorship for Export A cigarettes. The reply suggested by RJR-Macdonald to the ski association was defiant in its defence of the sponsorship. (Exhibit 40389)

The sponsorship did not last long -- but Mr. Robb attributed the dissolution to the company's decision to withdraw. "Our involvement was met with a high degree of opposition in the media and from the anti-smoking groups. We laboured on through the first year and then we decided that we should withdraw from the sponsorship."

Beyond the school borders

There were complaints filed with the CTMC regarding billboards and store-front signs that had been placed by RJR-Macdonald within 200 metres of schools, in contravention of the voluntary code (Exhibit 480, 480A, 480B). The company decided to remove the billboards, but not the store-front signs. (Exhibit 40390)

Mr. Robb explained today that he had not considered that signs on stores were advertising in the traditional sense, and was waiting for the CTMC to act to clarify that they were not to be restricted. "I thought the best course of action was not to precipitate what might come out of the CTMC discussion." 

Sure enough, in 1985 the CTMC amended its regulations to clarify that it was okay to advertise on the front of stores that were within the 200 meter boundary (they concurrently added another form of outdoor advertising - pillar ads -to the list of those that could not appear near schools). (Exhibit 40005M.2, 40005M.3, 40005M.4, 40005N)

(When Mr. Lespérance asked why the company had not agreed to the request of Health Minister Monique Bégin to extend the school zone from 200 to 500 meters (Exhibit 1637, 1637A), Mr. Robb revealed a reluctance for strengthening that provision. "Some of those things have very big repercussions," Mr. Robb said. "Going from 200 meters to 500 meters .. might have meant wiping out billboards altogether. There were weighty matters that had to be discussed.")

The cross examination

The pace began to pick up slightly when Mr. André Lespérance began the cross-examination of Mr. Robb, as though this plaintiff's lawyer had a number of documents he wanted to get through in short order.

Among these were marketing presentations that Mr. Robb had made which referred to the use of cinema advertising to reach "younger adult males." (Exhibit 1634). Mr. Robb accidentally provoked some laughter when he explained that these ads were placed at drive-in theatres only, and that they were only shown during movies that were restricted to adult audiences.

Mr. Robb was insistent that when designing advertisements that were intended for 18-24 year olds, the company had "skewed more heavily towards the 24 year olds." This, he explained, was because they were concerned about alienating the majority of their smokers, who were over 30. When asked, he could not think of any evidence to prove that there was a heavier weighting given to the upper end of the age group, however.

He did not agree with Mr. Lespérance's suggestion that 12 to 17 year-olds would be as affected by imagery of "independence and masculinity" as those over 18.  He conceded that the company had not measured whether or not younger people liked their advertising.

"We're damned if we do and damned if we don't," he said.Monitoring youth views would have been unacceptable, and yet they were now facing criticism for not doing so. In this case, Mr. Lespérance pointed out, "common sense" would have to guide such decisions, and Mr. Robb agreed.

Mr. Robb did not, however, agree with Mr. Lespérance's suggestion of how common sense might apply to a "Taste for Adventure" advertisement the company ran while he was directing its marketing. (Exhibit 573C)

Unlike the lawyer, Mr. Robb was certain that this ad would be more attractive to 24 to 27 year olds than it would be to 15-17 year olds. He based this conclusion on his "experience as a marketer."

There were a few exchanged glances when Mr. Robb suggested that it was the physical difficulty of windsurfing that would discourage interest in this activity among teens. He had tried windsurfing and found it "'quite a difficult thing to do... It would be beyond the reach and the imagination of the 15 year old." 

Perhaps at his home in Chester, England there are no skate-boarders or other reminders of the relative physical prowess of teens at sports that require daring and balance.

Sporting sponsorships

Windsurfing was one of the sports identified by RJR Macdonald for promotional sponsorship. (Exhibit 712), and one for which the company gave detailed consideration to promotion. (Exhibit 1635, 1635A). Mr. Robb, however, thought that the documentary record reflected the "hot air" of contract public relations staff or the "wish list" of the event organizers more than any intention of the company to drum up widespread coverage of the event they were sponsoring.

Earlier in the day Mr. Robb had spoken about the sponsorhip of downhill skiing. He seemed unaware that their competor, Imperial Tobacco, had withdrawn from the sport a decade earlier out of a concern that it was a sport which attracted young people. (Exhibit 105-1970). He was similarly unaware that the Minister of Health, Marc Lalonde, had written the head of the CTMC in 1977 to request that the tobacco industry recognize "an inherent incompatibility between smoking and sports." (Exhibit 1558)

Even today, he does not agree with criticisms of associating cigarette brands with sports.  "I think it fell into the realm of free choice. One made one's own choice to smoke or not."  The only circumstances where he might see a problem was if it was suggested the cigarette would enhance the ability of those in the sport.

Mr. Lespérance asked whether televised sponsored events might be in conflict with Rule 1 and Rule 3 of the voluntary code.

Mr. Robb read through the copy of the Code and regulations in front of him for a several long seconds before answering that it was because the event organizers were in charge of publicizing the events that the code did not apply.

He took a defence that has not often been heard during this trial -- the other guys were doing it.  "That had been the practice of Rothmans and Imperial Tobacco - and it was done without challenge... We did not go further than anyone else and we thought it was in complete compliance with the rules." 

More concerns for the concerned smoker

Mr. Lespérance spent the last hour of the day dissecting the preparation for and execution of campaigns for Vantage cigarettes. He probed for the relationship between this low tar brand and any views of the marketers about responding to concerns about smoking and health.

Mr. Robb acknowledged that low tar cigarettes were sold as being less harmful "Vantage as a low tar cigarette was better than Export A which was a high tar cigarettes," and that this was the natural conclusion of the government press releases and pressure for reduced tar levels."We were doing what the government told us to do." 

Robin Robb will continue to testify tomorrow morning. In the afternoon, another JTI-Macdonald witness - Mr. Lance Newman. 

To access trial documents linked to this site:

The documents are on the web-site maintained by the Plaintiff's lawyers. To access them, it is necessary to gain entry to the web-site. Fortunately, this is easy to do.

Step 1: Click on:

Step 2: Click on the blue bar on the splash-page "Acces direct a l'information/direct access to information" You will then be taken to the document data base.

Step 3: Return to this blog - and click on any links.

Monday, 18 November 2013

Day 183: Export, eh?

After a week's diversions into other courtrooms, the regular suspects in the Montreal tobacco trials were once again rounded up on the 17th floor of Montreal's Palais de Justice.

It was before a different judge in a different classroom that differing perspectives on one aspect of this trial were argued last week. (A full report on that hearing, and my misadventures within in it, will appear here as soon as the green light is given.)

Suffice it to say that there are now two good reasons to keep an eye on rulings released by Justice Robert Mongeon: in his hands are key decisions in two separate Quebec tobacco trials - a decision on JTI-Macdonald's financing related to the  Blais/Létourneau class action and also the constitutional challenge to the Quebec government lawsuit.

Following his temporary reassignment to Family Court and child custody disputes, I wonder if Justice Riordan is of the view that a change is as good as a rest.

The road a head: 11 more weeks of witness testimony

As they said they would, the companies this weekend provided their schedule of remaining witnesses. There are 21 identified between now and the end of March. This list - much shorter than once anticipated - is shown at the bottom of this post.

Retired public servants whose name does not appear on this list cannot yet breathe a sign of relief. Two weeks at the end of the trial have been reserved for yet unspecified "government witnesses".

Order of the day: Mr. Robin Robb

Mr. Robin Robb
Over a year has passed since the first witness called by JTI-Macdonald, Mr. Peter Gage, gave his colourful story of the ideosyncratic and somewhat despotic management of the Macdonald Tobacco company when it was owned and controlled by Walter Stewart and his son, David Stewart, .

Today's witness, Mr. Robin Robb, picked up the corporate history in the late 1970s, a few years after it had been purchased by RJ-Reynolds. He described his task at the re-named RJR-Macdonald to re-fashion the company's marketing efforts.

Mr. Rob arrived in Canada in 1975, escaping from the troubles in his native Northern Ireland. Not even 30 years old, he already had several years experience in marketing soaps, toothpaste, foods and other "Fast Moving Consumer Goods."  His first job in Canada was with Pepsi Cola, where he worked on the legendary "Pepsi Challenge" across the country. It was that success that seemed to have brought him to the attention of a head-hunter, who recruited him to join RJR-Macdonald as a director of marketing.

By the time he left the company, six years later, he was directing the marketing for all the brands sold by Canada's third largest tobacco company, notably Export A, and Vantage. Since his departure back to foodstsuffs in 1984, and eventually back to the United Kingdom, he has not been involved in tobacco marketing.

Clarity. But to what end?

The intervening 30 years do not seem to have eroded Mr. Robb's memory of his experiences selling cigarettes. Perhaps it was the nature of the questions put to him today by Mr. Guy Pratte, but Mr. Robb seemed to have no difficulty in providing quite detailed answers, and recalling quite specific extracts from long documents.

A well-rehearsed witness, perhaps, but also one who seemed knowledgeable, candid and credible. Today was one of those pleasant days where information was provided through nicely sequenced questions, clear answers, connected documents and infrequent interruptions.

The questions put by Mr. Pratte to Mr. Robb went beyond simply refuting allegations that the company had targetted young people or non-smokers, although these obvious issues were covered in a predictable way. They also elicited insights into what drove the behaviour of the company (fear of losing market share), how it tried to meet its challenges (modernizing its methods and its products' imagery), and what prevented it from achieving its marketing goals (restrictions on marketing in the voluntary code).

I was relieved to hear mid-day that I was not the only one wondering how this interesting story would be helpful to JTI-Macdonald's case. Even Justice Riordan sought some guidance on how to "position" Mr. Robb's testimony.

Mr. Pratte's answer seemed to satisfy the judge. He said that his goal was to show that "the imagery campaigns did not have the impact that they might have had. I want the Court to understand how complex the process is and how in the end it did not work."

Heavily regulated marketing. And no money to boot. 

Mr. Robb contrasted the unfettered scope of the job of selling soft-drinks to the "heavily regulated" cigarette market. "At Pepsi Cola, we could market our goods to whomever we wanted, in more or less whatever way we wanted, but there were many restrictions on what we were able to do in the cigarette business."

He included in these restrictions the ban on advertising cigarettes on television, conducting research on people under 18, or using younger models in advertisements. But the most important rule, he said, was Rule No. 7: "Cigarette or cigarette tobacco advertising will be addressed to adults 18 years of age or over and will be directed solely to the increase of cigarette brand shares."

There was absolute compliance with this and other regulations in the CTMC voluntary code, he said. "Everyone in the marketing department got to know the Code by heart." 

Mr. Robb emphaized that the sections of the code that capped advertising expenditures constrained his ability to market cigarettes. (Exhibit 40005L40374)
1979 Expenditure Cap. Exhibit 40374
At the time he began working at the company, RJR-Macdonald had an advertising budget of only $12 million, out of a total industry budget of $52.5 million. (In today's dollars, the equivalent figures would be $36.3 million and $159 million.)

He made it sound like a paltry sum, and a barrier to an "investment spend" in marketing. "We couldn't spend our way out of the problem."

Slowing the downward momentum of Export A

The problem that Mr. Robb might have wanted to spend his way out of was the diminished market status of Export A. For much of the century, it had been the brand that defined smoking in Canada. ,

He made it sound like company was the victim of its own success. "Export A was still the biggest brand in Canada – but it had previously been absolutely massive. I think a kind of complacency may have built up in the company because the sales and profits were able to come without too much effort."

The company knew it was in trouble when it saw Export A tumble from its pole position in the second half of the 1970s,(Exhibit 40379) but "they didn’t have a plan." 

When he joined the company, he found the marketing department "in disarray ... There had been various attempts to break out of the downward momentum, but without any particular success." The decision to move head office from Montreal to Toronto (after the election of the Parti Québecois) physically divided those working on marketing, creating even more "turmoil."  He described several changes in senior management.

Export A lost sales to Players: Exhibit 40379
From rugged to independent

Mr. Robb spent much of the day describing the steps he directed to stem the hemorrhaging of Export A smokers to Player's following the "phenomenol success" of Player's Light. In doing so, he gave a frank admission of the importance of imagery to successful cigarette marketing.

"The absolutely key thing was that with the Export family we were not satisfying the needs of the smokers – particularly with the imagery we were offering to them." 

"It's not just the product that people are smoking - it's the imagery that goes with it. It's a sort of badge. ... It used to be, when you could smoke in bars, one of the first things that someone would do was take out their brand and put it down. ... [We] had to be certain that what that brand stood for was something that [the smokers] were comfortable with."

The company had made mistakes in the imagery of its lower tar version of Export A. "It was not positioned properly in relation to its parent. If you are bringing in the low-tar extension, you want to keep the imagery the same - the same warm feeling when  you go into the bar and put your pack down. You want to retain that feeling, but with lower tar."

He said there was a dissonance between Export A lights and its parent brand, and that when smokers moved "down" to the light version "they did not feel good. They were accustomed to putting down a green pack - instead they found a gold pack with feminine script."

Even the image of the parent brand was no longer working. Mr. Robb explained how the image values of "traditional and reliable" began to be seen as rather dull. He was part of efforts to move it towards a new image of "masculine, rugged, self-determined and independent." (Exhibit 4037640382)  

Mr. Robb described how the company and its advertisers worked to "rein the ruggedness in," to soften the image, and to give the product a less "down market" impression.

The everyday truck was replaced with an expensive Peterbilt rig - but even that elegant touch was found to be too close to the work environment. Eventually the smoker was left alone in "satisfaction country." 

He did not stay there for long. Further research (Exhibit 40383) suggested that they "had to go further to satisfy the image needs of the Export A smoker."  High adventure, high energy sporting activities were chosen. With kayaking, sailing and hang-gliding, they felt they had arrived at the right image for "self-determined and adventurous."

The image was right, perhaps, but Mr. Robb said it was still not enough to reverse the declining sales - especially without the ability to bump up their advertising spend.

"I like to think it declined less than it would otherwise would have. I like to think we were addressing the problem through the right kind of executions. ... We were limited by the fact that we could not 'investment spend' these executions that we now thought were right. ... Even though we had 'the creative' right, we could not spend our way out of the problem."

The Vantage disadvantage

Mr. Robb described the advertising mistakes that were made with the company's second largest brand family, Vantage. The brand was introduced in 1977, as the market was "moving at a rapid rate from high tar to low tar cigarettes." Almost 10 years after the first league tables were published by the government (in 1968), the company still "had absolutely zero representation" in the low-tar segment.

The first Vantage cigarette - at 11 mg tar - was not, even by the standards of the day, a very low-tar cigarette. Mr. Robb said the company's big mistake was to market it as one. "The advertising that was used to launch that product did not communicate high taste and low tar - it only communicated low tar ." This defective advertising lead smokers to believe that the brand was in the super-low tar category - a category of cigarettes that few smokers wanted to try.

Mr. Robb was in charge of marketing Vantage when advertising copy was designed which might be interpreted as suggesting that smokers move to low tar cigarettes instead of quitting, or that there is a "smart" way to smoke.

Today he brushed aside such perspectives. The ad which discussed quitting  had been designed to generate attention without spending a lot of money stand out from the crowd, and also to "show some sympathy" by "positioning ourselves on the side of the consumer." 

The campaign was successful in getting attention - but not in recruiting smokers. "The taste credentials did not come through." 

The replacement campaign had its own controversial elements, notably the exhortion to "Smoke Smart" at the baseline. Mr. Robb said this line had been intended to appeal to the self-image of Vantage customers, who were "smarter and more educated" than smokers of other brands.

Mr. Robb recommended the removal of this term (Exhibit 40386). In later ads it was replaced with "Think Vantage."

Mr. Robb's testimony continues on Tuesday.  On Wednesday and Thursday, Mr. Lance Newman will testify.

Remaining witness list

C. Frank Marks
Agriculture Canada
December 2,3, 4
P. Wade Johnson
Agriculture Canada
December 5,
Brian Zilkey
Agriculture Canada
December 9, 10, 11
AJ Liston
Health Canada
December 11, 12,
RS Pandeya
Agriculture Canada
December 16
Imperial Tobacco
December 17
James Hogg
UBC researcher
December 18
Jim Sinclair
Imperial Tobacco
December 19
Peter Hoult
January 13, 14, 15
Bill Rickert
Labstat/Health Canada
January 16
Kip Viscusi
Expert – warnings
January 20, 21
Dominique Bourget
Expert, Addiction
January 22, 23
John Davies
Expert, Addiction
January 27, 28
Keiran O’Connor
Expert, Addiction
January 29, 30
Sanford Barsky
Expert, disease assessment
February 17, 18
Dale Rice
Expert, disease assessment
February 18, 19
David Soberman
Expert, marketing
February 20, 24, 25
Laurentius Marais
Expert, epidemiology
March 10, 11, 12
Bertram Price
Expert, epidemiology
March 13, 17
Kenneth Mundt
Expert, epidemiology
March 18, 19
Stephen Young
Expert, warnings
March 20, 24
James Heckman
Expert, Advertising, Statistics
March 25, 26, 27
Additional government fact witnesses

April 9, 10, 14, 15, 16, 17
Possible class members

April 21 and on