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Abstract
Background Price boards in tobacco retailers are one of the few forms of tobacco promotion remaining in Australia. This study aimed to examine how these boards were used to promote products over a period of rapidly rising taxes.
Methods Observations were made in a panel of 350 stores in Melbourne, Australia, in November of 2013 (just before) and in 2014 and 2015 (after 12.5% increases in tobacco duty). Fieldworkers unobtrusively noted the presence and characteristics of price boards, and the brand name, size and price of the product at the top of each board.
Results Price boards were common in all store types apart from newsagent/lottery agents. The characteristics of the top-listed product changed notably over time: premium brands accounted for 66% of top-listed products in 2013, significantly declining to 43% in 2015, while packs of 20 cigarettes increased in prominence from 32% to 45%. The prevalence of packs of 20 cigarettes in budget market segments tripled from 2013 (13%) and 2014 (11%) to 32% in 2015, with no change in the proportion of packs that were under $A20 from 2014 (37%) to 2015 (36%). The rate of increase in the average price of the top-listed pack correspondingly flattened from 2014 to 2015 compared with 2013–2014.
Conclusions Price boards promote tobacco products in ways that undermine the effectiveness of tax policy as a means of discouraging consumption. Communication to consumers about prices should be restricted to information sheets provided to adult smokers on request at the point of sale.
- Advertising and Promotion
- Price
- Taxation
- Public Policy
- Surveillance and Monitoring
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Introduction
Australia is considered one of the world’s ‘darkest’ tobacco markets.1 Marketing restrictions in retail outlets have become increasingly comprehensive in Australia, with point of sale (POS) advertising bans introduced in the early 2000s and bans of display of products implemented about a decade later.2 Since the introduction of plain packaging of tobacco products, pack imagery, colours and logos are not visible even when serving customers. Tobacco marketing exposure in retail settings has been demonstrated to increase smoking cravings,3 impulse purchases,4 youth smoking susceptibility5 and initiation6 and also reduce quitting success.7 Detrimental effects have been noted regardless of whether smokers are exposed to advertising of their own brand or other brands.4
The ubiquity of tobacco may itself be a form of tobacco promotion.8 Widespread availability, particularly in retailers such as supermarkets, is incongruous with the severity and degree of harm caused by tobacco use.9 Retail availability also influences social norms about tobacco use and may create frequent environmental cues to smoke, which help to maintain smoking and undermine quitting.10–12 In one qualitative study of smokers in Sydney, Australia13—where POS advertising and displays are banned—some participants reported that ‘the mere sight of a tobacco retailer provided a cue to smoke’ (p. 2070), and that a tobacco price board presented similar smoking and purchasing cues.13 One participant stated a price board was like ‘a menu with prices’ (p. 2070).13 A US study of teenagers found that tobacco advertising in stores influenced smoking experimentation, while established smokers were particularly sensitive to price promotions at the POS, including special prices, multipack discounts and gift with purchase offers.6
POS marketing restrictions have not completely removed tobacco cues from the retail environment. For example, in the Australian state of Victoria any store that sells tobacco is required to display a sales-to-minors warning notice and a health warning message.1 Stores are also permitted to display a board or sign that may list tobacco brands, package sizes, prices and price discounts—hereafter referred to as a price board—no larger than 1.5×1.5 m. Stores displaying a price board are also required to display a graphic health warning sign in close proximity to the board. Any store that sells tobacco is also permitted to display an A4-size sign stating ‘We Sell Tobacco Here’.14 A recent study in Melbourne (the capital of Victoria) found that display of ‘We Sell Tobacco Here’ signs doubled between 2013 and 2015, from 40% to 84%.15
The impact of POS display and advertising bans on smoking attitudes and behaviours is not yet fully understood.12 However, it is also important to examine the retail environment to identify remaining, and emerging, ways in which the tobacco industry continues to promote tobacco products.13 Tobacco price boards are a significant opportunity for brand promotion in otherwise ‘dark’ markets. They are effectively the only remaining avenue to communicate brand availability—including new products—and pricing to consumers, and to all other visitors to the store, including former smokers, recent quitters and young people. According to internal tobacco industry documents, securing brand dominance in retailers is a key strategy.8 The POS is considered especially valuable as it is the last promotional material consumers see before making a purchase, and customers presume brands with the most prominent POS display are the most popular.8
Evidence of tobacco price boards being used as an important form of promotion has already emerged from Australia. A study of tobacco retailers in Melbourne, conducted shortly after implementation of the 2011 POS display ban, found that 64% had a price board. While 11% of these were arranged alphabetically (without doubt the most convenient arrangement for a shopper searching for their preferred brand) and 2% were arranged by price, the remaining 87% of price boards were organised by some other factor.16 Two-thirds of stores with price boards had mostly premium brands among the top four products listed, and it was common for the majority of the top four brands to be from the same tobacco company. A 2012–2013 study across four Australian capital cities also found that price boards were rarely alphabetised (9%) and approximately two-thirds of stores had premium products as the most prominently listed single factory-made cigarette (FMC) product.17 This is despite premium brands comprising only 14% of the Australian FMC grocery market in 2013.18 Premium brands are those with the highest prices on the market, relying on persistent brand associations of prestige and quality established before advertising bans (and, in Australia, plain packaging) were implemented.19
Price boards allow tobacco products to be promoted in a variety of ways. Bold or colourful text and/or prominent placement can be used to highlight brand names, new products, price discounts and multipack offers. Another strategy that emerged before the implementation of plain packaging was for tobacco companies to launch packs of existing brands with ‘extra’ cigarettes, for example, 21s, 22s, 23s and 26s. These packs tended to be priced similarly to the closest available conventional pack size, thereby providing additional cigarettes for little or no extra cost.20 Other marketing strategies do not necessarily provide a lower price, but rather create the perception of value or affordability. For example, ‘left-digit’ (also called ‘odd–even’ or ‘charm’ pricing), where prices are set just below an even dollar amount (eg, $A9.99 instead of $10.00), draw consumers’ attention to the smaller number in the left-most digit, but offer a negligible discount.21 Price thresholds may also be important, with one Australian study demonstrating in 2011 that $20 per pack appeared to be an important price point above which many smokers would consider quitting.22
The current study aimed to examine the use of promotional strategies on price boards in a range of retailers selling tobacco products in Melbourne, Australia, over a 3-year period; well after the implementation of POS advertising and display bans and plain packaging, and spanning the introduction of three 12.5% increases in tobacco excise duty in December 2013, September 2014 and September 2015. Specifically, the study measured the prevalence of price boards, monitored what types of products were most prominently promoted (at the top of price boards) and examined strategies—and their relationship with advertised prices over time—used to promote tobacco products.
Methods
Store sample
A panel of stores was derived from two prior observational studies of tobacco retailers in Melbourne.17 23 The panels from these two studies were combined and checked for duplicates. During the first wave of fieldwork, stores that were permanently closed or no longer sold tobacco were identified and removed from the panel. The final eligible panel of 350 stores comprised supermarkets (n=86; including large supermarket chains), small mixed-businesses (n=53, eg, milk bars/delis or independent corner stores), convenience stores (n=52; including small independent grocery stores and chain convenience stores with extended opening hours), petrol stations (n=49), newsagent and lottery outlets (n=62) and tobacconists (n=48). One-third (34.9%) of the stores were in low socioeconomic status (SES) areas, 40.0% were in mid-SES areas and 25.1% were in high-SES areas. SES status was determined using the Socioeconomic Indices for Areas 2011 Index of Relative Disadvantage,24 with ‘low SES’ comprising those in the lower 40% of postcodes, ‘mid-SES’ comprising 41%–80% of the distribution postcodes and high SES comprising the upper 20% of postcodes.
Over the study period, a small number of stores in each wave closed or discontinued tobacco sales. Table 1 shows the reasons for ineligibility in each wave for each analysis. While 16 fewer stores were eligible in 2015 than 2013, the overall distribution of store types and area SES remained similar in each wave (data not shown).
Eligible store sample and reasons for store ineligibility within each wave
Data collection
A market research agency with experience in observational retail studies was engaged to carry out the fieldwork on a six-monthly basis from November 2013 to November 2015. In each study wave, a team of fieldworkers visited each store in the panel as part of a larger study. Prior to each fieldwork wave, every fieldworker participated in a 2-hour training session. Fieldworkers were rotated across areas over the course of the study. To minimise fieldworker burden, some data collection tasks were alternated between waves of the study. This analysis focuses on data collected only in November waves.
The fieldworker entered the store as an ordinary customer and inconspicuously observed the presence and characteristics of the price board, including its position, approximate size (A3-paper sized or smaller, larger than A3 but smaller than 1.5 m in height, greater than 1.5 m in height), number of products listed (in intervals of five, capped at ‘more than 20’), whether the brands were listed in alphabetical order and whether the board was electronic or a fixed board. Details of the top-listed product were then noted: the brand, pack size (including configuration if a multipack or carton, eg, 2×25, 10×20), whether the product was roll-your-own (RYO) tobacco, whether the price was marked as discounted and the price. Where two columns of brands were listed, or a single pack price and a multibuy or carton price were listed in the same row, only the left-most product was recorded as the top-listed item.
Classification of product types and characteristics
Data cleaning procedures used in an earlier observational study of tobacco price boards were applied.17 Product details were coded into numerous categories of product and price promotion. FMC brands were coded by market segment, using traditional definitions of premium, mainstream (mid-priced) and value (low-price) from Retail World magazine,18 and including a ‘super-value’ segment which captured the large number of FMC products emerging on the Australian market in recent years that are much lower in price than products that have traditionally been most popular.20 25 Brands were also coded by tobacco company: British American Tobacco Australia (BATA), Imperial Tobacco (IT), Philip Morris (PM) and all other smaller importers. Products introduced onto the market in the previous 12 months, including new pack sizes within existing brands, brand extensions and new brands, were identified from the retail trade magazine The Australian Retail Tobacconist,26–29 and previous years’ observations (including from previous retail studies to ascertain new products in 2013). The presence of a price discount was retained as a binary variable, product type was retained as a three-level categorical variable (single pack, multibuy, carton) and pack size was recoded to collapse categories with low prevalence (20s; 21s, 22s, 23 and 26s combined; 25s; 30s; and 40s and 50s combined). Pack price was binary coded into <$20 or $20 or more. To examine left-digit pricing, advertised prices were coded as either ‘odd’ (prices ending between $0.95 and $0.99, as the smallest currency in Australia is $0.05), ‘even’ (whole-dollar prices) and all other prices. Finally, prices per stick were calculated by dividing the advertised pack price by pack size.
Statistical analysis
Data were analysed using Stata/MP V.14.2. Unadjusted proportions and χ2 tests were used to describe the prevalence and characteristics of price boards. Unadjusted proportions of each product characteristic were calculated within each wave. Next, change over time was examined using a binary-coded indicator variable of each product characteristic. Linear regressions were used to examine prices over time, overall and within market segments and adjusted average prices were produced from these models, as price is known to vary by store type and area SES.17 In all regression models, year was included as a categorical variable with 2013 as the reference category. All models also controlled for store type and area SES, with robust standard errors to adjust for multiple observations per store over time.
Results
Presence of price boards
Tobacco price boards were observed in four-fifths of the 1022 store observations across the study (2013: 79.1%, 2014: 80.6%, 2015: 82.6%; χ2=1.35, p=0.510). Prevalence of price boards differed by store type (χ2=136.38, p<0.001). Overall, price boards were most common in petrol stations (93.2%), convenience stores (92.8%), supermarkets (90.7%) and small mixed-businesses (82.5%), and much less common in tobacconists (67.6%). About half (55.1%) of newsagent/lottery outlets had a price board. Price board prevalence also differed by SES (χ2=15.58, p<0.001), with price boards more common in stores in low-SES (84.6%) and mid-SES (82.6%) areas compared with high-SES areas (72.5%).
Characteristics of price boards
Price boards were electronic for 17 of the 825 price board observations: 2.5% of stores in 2013, 1.5% in 2014 and 2.2% in 2015. Electronic price boards are substantially different to wall-mounted or ‘fixed’ price boards both in appearance and contents. As these usually scroll through products, they have no identifiable top-listed item and were therefore excluded from further analyses.
The characteristics of the remaining 808 price board observations were then examined. Since few changes over time were found, we combined all years. Three-quarters (75.3%) of price boards were positioned behind the sales counter at approximately eye-level, 10.0% were behind the counter but below eye-level, 12.1% were in front of the sales counter and 2.6% were in some other position, such as hanging from the ceiling or on a stand on the sales counter. Most price boards (69.3%) were judged to be larger than A3-size but <1.5 m in height, while 21.9% were judged to be smaller than A3-sized and 8.8% were judged to be >1.5 m in height.
The vast majority (95.3%) of price boards listed price information. Only 2.1% of price boards had 10 or fewer items listed, 48.5% had 11–20 products and 48.8% had >20 (0.6% had missing data for this item). Finally, 12.1% of price boards listed brands alphabetically.
Characteristics of the top-listed product
Stores with alphabetised price boards were excluded from this analysis, as the primary aim was to explore potential promotional strategies—that is, boards arranged by some other factor. Complete observations of the top-listed products were made in 669 stores (see also table 1). In all years, FMCs were by far the most common top-listed products: in 2013, 97.7% were FMC (2.3% RYO); in 2014, 99.6% were FMC (0.4% RYO); in 2015, 97.8% were FMC, 1.3% were RYO, and 0.9% (n=2) were newly introduced tubing tobacco products (also called make-your-own tobacco).29 Given the rarity of non-FMC products, these were also excluded from the analysis of the top-listed product (table 2).
Characteristics of the top-listed product on tobacco price boards that had a FMC product listed first, 2013–2015
From 2013 to 2015, several statistically significant changes in the typical characteristics of the top-listed FMC product were observed. In 2013, premium brands accounted for 66% of top-listed products, declining to 43% in 2015. In contrast, the proportion of super-value and value brands each significantly increased; collectively these ‘budget’ brands accounted for approximately 20% of top-listed products in 2013, doubling to 40%. In 2015, super-value brands were seen at the top of more than one-quarter of price boards that had an FMC product listed first.
The proportion of top-listed FMC products manufactured by BATA and PM were both around eight percentage points lower in 2015 than in 2013, but BATA brands were still most common (46% in 2015). In contrast, the proportion of IT products increased by approximately 11% over that period. A significant increase in the proportion of brands from ‘other’ manufacturers was also observed, from <1% to 5%.
The proportion of new products (introduced in the previous 12 months) was significantly higher in 2015 (11%) compared with 2013 (4%). The apparent increases in the proportion of products with price discounts or with left-digit pricing were not statistically significant between 2013 and 2015 (table 2). The proportion of packs that were under $20 halved from 2013 (71%) to 2014 (36.6%), but showed no change between 2014 and 2015 (35.6%).
Cartons were the among top-listed FMC products only in 2013. There were no significant differences in the proportion of single packs or multibuys over time, with more than 90% being single packs in each year. However, the size of single FMC packs did change over time. Packs of 25s were most common in 2013, accounting for 58% of observations, but significantly declined to 40% in 2015. In contrast, the proportion of packs of 20s significantly increased from 32% to 45%. Packs of 30s doubled in frequency from 4% to 9%, but this difference did not reach significance (p=0.072). Packs with bonus cigarettes and large packs remained relatively uncommon at the top of price boards across the study period.
The average price of the top-listed single FMC product was examined over time. Figure 1 demonstrates that the overall adjusted average price per stick showed a large increase from 2013 to 2014 (B=0.15, 95% CI 0.14 to 0.17, p<0.001) and rose more modestly from 2014 to 2015 (B=0.06, 95% CI 0.04 to 0.08, p<0.001). A similar, significant, pattern was seen within all market segments. However, the rate of increase was more consistent across all years for super-value, value and premium brands. The smaller stick price increase from 2014 to 2015 for all combined market segments coincided with the increase in proportion of super-value and value brands and decline in premium brands that largely occurred between 2014 and 2015 (see table 2).
Adjusted average price per stick, overall and by market segment and overall price per pack, 2013–2015.
Average prices adjusted for store type and area socioeconomic status.
This pattern was also demonstrated in the adjusted average pack price of the top-listed FMC product. While the increases from 2013 ($17.84) to 2014 ($21.52) and 2014 to 2015 ($22.58) were both significant, the first increase was notably larger than the latter (2013–2014: B=3.67, 95% CI 3.18 to 4.17, p<0.001; 2014–2015: B=1.06, 95% CI 0.23 to 1.89, p=0.013). This was due largely to the timing of data collection, with the 2013 survey conducted before the 12.5% increase in duty effective from 1 December 2013, and the second collection happening subsequent to both that tax increase and the 12.5% tax increase that occurred on 1 September 2014). However, the other factor that contributed to this pattern of findings was the increased prevalence of packs of 20s in 2015 (a higher proportion of packs of 20s would not in itself be expected to reduce stick price, as smaller packs within the same brand are often more expensive per stick). Further analysis shows that the top-listed product was three times more likely in 2015 (32.2%) compared with 2013 (13.2%) or 2014 (11.4%) to be a pack of 20s from the budget segment, and about half as likely to be a pack of premium 25s in 2015 (29.8%) compared with 2013 (49.2%) or 2014 (41.9%).
Discussion
This study found that price boards are a common, often prominent, feature of tobacco retailers in Melbourne, Australia, observed in about 80% of stores from 2013 to 2015. Price boards were almost always present in supermarkets, convenience stores and petrol stations—typically large retail chains—and were slightly more common in low-SES and mid-SES areas than high-SES areas. Only 12% of price boards were alphabetised, even though research for the convenience store sector considers this the preferred arrangement for shoppers.30
There was a notable shift in the type of products promoted at the top of the price board over the study period, mostly between 2014 and 2015. Premium brands were most common in 2013, but the proportion of super-value and value brands had significantly increased at the expense of premium brands by 2015. At the same time, packs of 20s became substantially more prevalent, replacing 25s as the most common pack size. Brands from manufacturers other than the ‘Big 3’ companies (BATA, IT and PM)—which tend to be cheaper17—also significantly increased in prevalence. The proportion of top-listed products from each manufacturer in 2015 was generally similar to their share of the Australian tobacco market in 2015: BATA market share: 38%; PM: 32%; IT: 27%; all others: 2%.31
These changes in product offerings were reflected in the average (current) prices of the top-listed products over time. Average stick prices rose consistently within the budget (super-value and value) and premium market segments. However, the overall rate of price increase of the top-listed product was lower in 2014–2015 compared with 2013–2014, due to the increase in the proportion of budget brands observed in 2015. Similarly, the overall pack purchase price increased from $17.84 in 2013 to $21.52 in 2014—both years in which premium brands and packs of 25s were most common at the top of price boards—but rose much less in 2015, to $22.58, when packs of 20s became the most common pack size and budget brands were about as common as premium brands at the top of the price board. This was also evident in the proportion of packs that were under $20 in each year: this halved from 2013 to 2014, but with the substantial shift to small budget brands from 2014 to 2015, no real change was observed in the proportion of packs under $20 from 2014 to 2015.
Therefore, while the price of the top-listed product calculated on a per stick basis has increased over time, the upfront purchase price of the top-listed product was not substantially higher in 2015 compared with 2014—and not proportionate to the 2015 12.5% tax increase. In 2015, about one-third of the most prominently promoted products had low upfront purchase prices, being largely from the budget segments of the market and in the smallest possible pack size. Packs of 20s do not necessarily represent better value per stick, even among cheaper brands. Marketing products in small pack sizes thus allows tobacco companies to preserve profits both by keeping the upfront purchase cost as low as possible—below the important price points of $2022—while selling products with a greater return per stick than products in a similar segment but in a larger pack size.
Other strategies that give the appearance of value or discounting were uncommon at the top of price boards, and did not change over time. These included price discounts, left-digit pricing (although 31% of observed products in 2015 did show left-digit pricing), product bundling and packs with ‘bonus’ cigarettes. The present study was unable to examine all pricing and promotional strategies used on price boards across this panel of tobacco retailers, as it focused only on the top-most item. However, psychological pricing strategies may be used elsewhere on the price board, and this form of marketing requires further investigation. Another limitation is that this information was collected only annually and in one city, and those trends observed may have been transitory or localised. Even if this is the case, these study results demonstrate a strategic effort to promote specific types of tobacco products across retailers at a given point in time and among a large section of the Australian population.
Premium FMC brands were observed as the top-listed product in two-thirds of stores in 2013, consistent with previous Australian studies.17 23 While this declined in 2015, the rate of premium brand display remained disproportionate to the much lower market share of these brands. Products introduced within the previous 12 months more than doubled in frequency over the study. Tobacco price boards are not only used to signal the availability and pricing of products, but also to promote new products and influence brand choice.
Tax increases on tobacco products are a highly effective way to discourage smoking,32 33 but this policy is being undermined in Australia by increasing availability in recent years of tobacco products sold at budget prices.34 It is clear from this study that price boards are being used to communicate the availability of these low-cost tobacco products and their price in relation to other products. While little prior research has focused on the impact of tobacco price boards on smoker behaviour, qualitative studies with Australian smokers13 and a US study of teenagers suggest that smokers may be susceptible to price promotions.6 Price boards in retail outlets are clearly operating as a form of promotion of tobacco in Australia and should be specifically banned under state tobacco legislation as is already the case in the state of Queensland.2 Product availability and price information could be provided to adult customers on request as a simple printed sheet, alphabetised by brand.
What this paper adds
Point-of-sale tobacco advertising and product display is banned in Australia in recognition of the well-established negative effects of these environmental tobacco cues on smokers, recent quitters and youth.
Tobacco price boards still offer a significant opportunity to promote tobacco products and offer price discounts.
This observational study of tobacco retailers in Melbourne, Australia, has shown that price boards are being strategically used to promote particular brands and new products. Tax policy is being undermined by changing the characteristics of those products most prominently promoted on the product board following annual tobacco tax increases.
References
Footnotes
Contributors MS, MW and MB contributed to study design, and MB coordinated fieldwork and undertook data analysis. All authors contributed to manuscript writing and revisions and approved the final version of the paper.
Funding This study was supported by Quit Victoria, with funding from VicHealth, the State Government of Victoria and Cancer Council Victoria.
Competing interests None declared.
Ethics approval Institutional Research Review Committee, Cancer Council Victoria.
Provenance and peer review Not commissioned; externally peer reviewed.
Data sharing statement No further data available for sharing at this stage.