R.J. Reynolds Tobacco Co.'s latest promotion for Doral, the nation's No. 3 cigarette and No. 1 value brand, shows the effort Reynolds is going through to maintain a franchise in a period of aggressive discounting.
Reynolds is touring the country with the "Ultimate Tailgating Machine," a sweepstakes featuring a specially designed 15-foot-long tailgate-party trailer attached to a General Motors Corp. Hummer. The promo concludes at the company's 7th annual Doral Celebration in Nashville on Sept. 29.
Doral's power to connect with its smokers-via the 1 million-member Doral & Co. loyalty program launched in 1994-is increasingly important as the discount cigarette landscape gets more competitive.
"Full-price brands are discounting more than ever, and we also have a lower tier, which is growing due to the fact that they don't have to comply with the [Master Settlement Agreement, a financial settlement with states' attorneys general]," said Chris Groom, assistant marketing manager for Doral. "We're getting a price pinch from both ends, which is a market pressure for us."
Reynolds keeps in touch with Doral smokers in an attempt to maintain market share, which declined slightly to 6.2% in 2000, from 6.4% in 1999 and 6.7% in 1998, according to the Maxwell Report. Doral is the third-largest cigarette brand in the U.S., behind premium smokes Philip Morris Cos.' Philip Morris USA's Marlboro, with 37.7% share, and Lorillard Tobacco Co.'s Newport with 7.6%.
"What's happened in the discount segment is the `all other' category has become much stronger, from Commonwealth Brands [which has a 1% share of the domestic market] to the guys that manufacture cigarettes in their garage," said Robert Campagnino, senior tobacco analyst at Prudential Securities. "It's a credit to Reynolds that they actually have been able to hold down the fort for Doral, but it's required a good bit of effort."
Mr. Campagnino credits Doral's ability to keep its share "basically stable" with aggressive marketing and discounts to tobacco retailers, while rivals falter.
This summer's Tailgating USA effort builds on Doral's positioning-"Imagine Getting More"-by giving its smokers two of their favorite activities: cooking out and spending time with family and friends. The winner of the tailgating machine-equipped with a bathroom, leather recliners, Sony TV, Bose speakers, DVD player, satellite dish, covered bar, beer-keg cooler, outdoor grill and doors that turn into awnings-will be the envy of the parking lot. "It's a value cigarette, [but] we really do deliver on the `Imagine Getting More' positioning of our brand," Mr. Groom said.
The Ultimate Tailgating Machine tours eight cities through July. Reynolds is inviting Doral smokers with direct mail and local newspaper ads from Doral shop Coyne Beahm, Greensboro, N.C. Quantum Events, Louisville, N.C., is the event-marketing agency.