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.