Objective: The purpose of this study was to assess the potential impact of public policies to regulate price discounting strategies on retail cigarette prices and advertising. Philip Morris USA (PM USA) has a policy designed to sanction stores violating state laws banning illegal tobacco sales to minors by temporarily suspending price discounting incentives. This study examined the impact of those sanctions on retail cigarette prices and sales promotion advertising.
Method: In November 2006, the California Attorney General’s Office informed PM USA that 196 stores were found guilty of illegal underage sales. Of these, 109 stores that participated in the PM USA Retail Leaders Program were notified that their merchandising and/or promotional resources would be suspended for the month of April 2007. The remaining 87 stores were not sanctioned and served as a comparison group. Trained raters assessed advertising and prices of selected PM USA brands in these stores pre-penalty and during the penalty phase.
Results: There were no significant differences between sanctioned and non-sanctioned stores on median changes in price and sales promotion advertising from the pre-penalty to the penalty phase.
Conclusion: The lack of impact on cigarette prices and advertising indicate that the PM USA policy may be flawed in its design or execution. If public policies are developed to restrain cigarette price discounting strategies, they should be crafted to ensure compliance and preclude possible compensatory actions by retailers.
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Funding This study was funded by the California Department of Health Services, Tobacco Control Section, under contract numbers 04-35336. Funding is provided by the passage of Proposition 99, the 1988 Tobacco Tax Initiative.
Competing interests KMR has served as an expert witness for US State Attorneys General in litigation related to internet tobacco sales and point-of-sale tobacco marketing and promotions. None of the other authors have any competing interests.
Provenance and peer review Not commissioned; externally peer reviewed.