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Price and tobacco marketing strategy: lessons from ‘dark’ markets and implications for the WHO Framework Convention on Tobacco Control
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  1. Timothy Dewhirst
  1. Correspondence to Professor Timothy Dewhirst, Department of Marketing and Consumer Studies, College of Management and Economics, University of Guelph, Guelph, ON, Canada, N1G 2W1; dewhirst{at}uoguelph.ca

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A marketing strategy involves specifying target markets and establishing a related marketing mix, which is commonly broken down into the 4Ps (ie, product, price, place and promotion).1 It is important for those in tobacco control to recognise that marketing is much broader in scope than advertising or promotion.2 Price entails marketers determining the monetary cost of products, including any applicable taxes, as well as consideration about the time and effort required by consumers to acquire the product. Firms typically determine their break-even point and evaluate whether they will be able to cover all of their costs and generate a profit with their product listed at a particular price. Managers may estimate the impact of alternative price levels on profits. Each of the 4Ps should be designed and directed toward well-defined target markets and developed synergistically to ensure a coherent and consistent brand meaning.

British American Tobacco regards Australia and Canada as the ‘darkest’ markets in the world due to their limited options for brand communications.3 In such ‘dark’ markets, tobacco companies have shifted much of their promotional dollars towards the retail sector and pricing has become an ever more important part of tobacco firms’ marketing strategies.4 In Canada, for example, price had not traditionally been an important differentiating factor in marketing cigarettes, but this changed during the mid-2000s which coincided with federal and provincial legislation placing stringent stipulations on promotion. According to Rothmans, Benson & Hedges Inc. (RBH), ‘the product mix has continued to shift with many consumers leaving their traditional premium brands for contraband or cigarette price category products [those offering ‘value’ or relatively lower prices]. From a 33% share of the total tobacco market in fiscal 2005, price category cigarettes increased to almost 40% this past year [fiscal 2006].’5 Competitor, British …

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