Trying to keep Kool with under-30s

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Brown & Williamson Tobacco Corp. wants 20-somethings to think it's Kool, and has been banking on music-oriented promotions to lure the coveted age group to its flagship. But boosting share requires stealing smokers from competitive-and much bigger- brands, a formidable challenge for a company fighting to hold a distant third place in the market.

"I can't disagree with the strategy in principle, but Brown & Williamson is in a difficult competitive position," said Robert Campagnino, senior tobacco analyst at Prudential Securities. B&W, with 11.7% industry-wide market share, trails Philip Morris Cos.' Philip Morris USA, with 50.5%, and R.J. Reynolds Tobacco Co., at 23%, according to The Maxwell Report. "In the near term, [B&W] faces a significant uphill battle," Mr. Campagnino said, against premium brand leaders Philip Morris' Marlboro, Lorillard Tobacco Co.'s Newport and RJR's Camel, with 37.7%, 7.6% and 5.4% share, respectively. Kool had only 2.8% share last year-a steady fall from 3.2% in 1999 and 3.4% in 1998.

But B&W is not giving up, instead rolling out its third music-oriented promotion in a year for the brand-the Kool All Access Hip-Hop Tour. The 10-city concert event, which benefits the philanthropic group 100 Black Men of America, features hip-hop stars Da Brat, Kid Capri, Doug E. Fresh and Memphis Bleek. In addition to promoting Kool as the hip smoke for its stated target of urban 20-somethings, the program will raise money to increase Internet and technology access in urban communities.

Although B&W, a unit of BAT Industries, maintains that these concerts are held in adult-only facilities, some skeptics think these events also target minors. "This is precisely the kind of sponsorship that has the greatest impact on teenagers, no matter what Brown & Williamson says," said Matthew Myers, president of the Campaign for Tobacco-Free Kids. "Hip-hop tours that say they target 21-year-olds have a significant effect on underage kids," he added.

Adult smokers under 30, deemed ASU30 by the company, are attractive "because they are the least price-sensitive smokers in the market," said Nick Wilkerson, B&W's director of Kool. "[Kool's market share] declines have been among the older portion of the franchise, and it's been driven primarily by the price sensitivity of those smokers," heightened by rapid price increases resulting from the industry's legal settlement with states, he said.

The under-30 age group, which currently accounts for only 10% of Kool's customer base, "is the lifeblood of any tobacco brand," said David Adelman, analyst at Morgan Stanley Dean Witter, adding that if a marketer succeeds in winning them over, "their underlying bias is that they're very brand loyal."

But loyalty can't begin until they're in the franchise, and B&W, despite one promotion after another, has seen only dips in share. Last June, the company launched a new ad campaign through Cordiant Communications Group's Bates Worldwide, New York, for Kool, which included mini-radio giveaways. In August, B&W began its second annual Kool MIXX program, a national competition for up-and-coming DJs. The company spent $17 million in measured media on all Kool brands in 2000, according to Taylor Nelson Sofres' CMR.

But Mr. Wilkerson acknowlegdes it will not be easy to compete with Newport, Camel and Marlboro. "You're going against three of the best brands in the world. They've had a head start on us in terms of their ASU30 marketing activities," he said. "In this industry, it's a long, engaged process. You don't turn around a brand overnight," Mr. Wilkerson said.

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