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Tax, price and cigarette smoking: evidence from the tobacco documents and implications for tobacco company marketing strategies
  1. F J Chaloupka1,
  2. K M Cummings2,
  3. CP Morley2,
  4. JK Horan2
  1. 1Department of Economics, University of Illinois at Chicago, Chicago, Illinois, USA
  2. 2Department of Cancer Prevention, Epidemiology & Biostatistics, Roswell Park Cancer Institute, Buffalo, New York, USA
  1. Correspondence to:
 F J Chaloupka, Department of Economics (m/c 144), University of Illinois at Chicago, 601 South Morgan Street, Chicago, IL 60607-7121, USA;
 fjc{at}uic.edu

Abstract

Objective: To examine tobacco company documents to determine what the companies knew about the impact of cigarette prices on smoking among youth, young adults, and adults, and to evaluate how this understanding affected their pricing and price related marketing strategies.

Methods: Data for this study come from tobacco industry documents contained in the Youth and Marketing database created by the Roswell Park Cancer Institute and available through http:// roswell.tobaccodocuments.org, supplemented with documents obtained from http://www.tobaccodocuments.org.

Results: Tobacco company documents provide clear evidence on the impact of cigarette prices on cigarette smoking, describing how tax related and other price increases lead to significant reductions in smoking, particularly among young persons. This information was very important in developing the industry's pricing strategies, including the development of lower price branded generics and the pass through of cigarette excise tax increases, and in developing a variety of price related marketing efforts, including multi-pack discounts, couponing, and others.

Conclusions: Pricing and price related promotions are among the most important marketing tools employed by tobacco companies. Future tobacco control efforts that aim to raise prices and limit price related marketing efforts are likely to be important in achieving reductions in tobacco use and the public health toll caused by tobacco.

  • tax
  • prices
  • marketing strategies
  • ATC, American Tobacco Company (ATC)
  • B&W, Brown & Williamson
  • L&M, Liggett & Myers Tobacco Company
  • NBER, National Bureau of Economic Research
  • RJR, RJ Reynolds Tobacco Company
  • YAS, young adult smokers
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Footnotes

  • * Interestingly, in a memo from around the same time, Johnston discusses the effects of higher food prices on overall cigarette demand.34 In this memo, he notes that it is possible that the significant increases in food prices (particularly meat prices) that were occurring in the late 1980s, could have “a small effect on per capita cigarette consumption”, but that because of a rapid rise in inflation adjusted per capita disposable income, the effects were more likely to be negligible.

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