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TOKYO-With a two-prong strategy to turn around its ailing ultra low-tar brands, Philip Morris International isn't just blowing smoke.

The marketer lowered Merit's tar content by 33% to 4 milligrams and began a new campaign, helping slow sales declines by volume to 14% last year from 20% in 1992.

The brand's market share hovers around 1% by volume.

And Philip Morris also expects a new campaign for Next to pay off big with a threefold sales increase to $175 million this year.

Unlike many global markets where cigarette consumption is down, the Japanese market has risen four years running. The Tobacco Institute of Japan reported sales climbed 1.6% to $36 billion for the fiscal year ended March 31. Ultra low-tar brands, classified as those with 6 milligrams or less, are showing exceptional growth in this massive market.

James A. Scully Jr., Philip Morris director of marketing, said ultra low-tar cigarettes now hold 28% of the overall cigarette category by volume and will likely reach a 35% share by 1995.

Merit sales in 1993 were $92 million and are projected to decline about 3.3% in '94. Philip Morris' total sales last year were $1.4 billion.

Merit virtually created the ultra low-tar segment in 1987 with a TV, print and transit ad campaign from Leo Burnett-Kyodo, using the slogan "Thirty-three percent less tar than Japan's leading lights and it tastes better."

"We woke up Japan Tobacco," Mr. Scully said.

In fact, Philip Morris caught Japan Tobacco by surprise, forcing it to reduce the tar content of its leading smoke, Mild Seven Light, by 33% to 6 milligrams. Mild Seven Light and its higher-tar sister brand Mild Seven dominate the industry, with volume shares of 15.6% and 10.9%, respectively.

But by 1992, about a dozen brands had crowded into the field. The profusion sent Merit's sales falling, and for '92, volume sales were down 20%, Mr. Scully said. Merit suffered a disadvantage because it was priced at $2.38 a pack, 14% more than the $2.09 charged for Mild Seven and most other rival brands.

Instead of lowering the price, however, Merit created a new point of difference by dropping tar content to 4 milligrams.

The change was heralded in a TV, newspaper, transit and magazine campaign that began early this year, starring actor Tsutomu Yamazaki. In one 30-second minidrama, a conservative father of the bride re-fuses to pose in the wedding picture. Mr. Yamazaki comes on the scene and says, "For the time being, I wish you happiness," and offers him a Merit.

The father joins the photo session, the bridegroom's toupee falls off and the bride faints.

In another spot, the actor smoothes the ruffled feathers of motorists in a fender-bender by offering them a Merit.

While Merit has been battling back from sales declines, Philip Morris' 1-milligram Next has performed more evenly.

Japan Tobacco opened this even lower-tar niche in the early 1990s with 1-milligram Frontier Light, leaving Philip Morris to challenge the brand last September with Next.

Within one year, the 1-milligram tar niche quickly racked up 3% of the total market, including 1% for Frontier Light and 1% for Next.

Lightness is the overriding theme in Burnett's Next campaign, begun last fall. The spots, a :30 split into two :15s, use animated fingers. The finger with a male voice asks, "The No. 1 lightest, please?" Another finger with a female voice, representing the retailer, says, "The lightest with the great taste." The male voice then says, "Next! That's great. Next with 1 milligrams please."

In the second half of the spot, the male finger finds the "lightest," which is Next at a vending machine.

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