What's the Big Deal About Retail Advertising for Tobacco Products?
Teens & Tobacco Ads • Kids recall retail tobacco ads at almost twice the rate of adults (2) • Tobacco ads have more influence than peer pressure on a teen's decision to start smoking (3) • Tobacco ads and promotions are implicated in one third of youth experimental smoking (3) • A May 2007 study confirms that retail advertising encourages teens to initiate smoking, and that price and merchandise promotions are instrumental in moving teens who are experimental smokers to become regular smokers (4) In-store cigarette advertising (5) • Increases smokers’ daily consumption by cueing smokers to light up • Reduces current smokers resolve to quit or consider quitting • Encourages former smokers to resume smoking by reminding them of their favorite brand • Prompts impulse buying • Entices children and young people to begin smoking • Conveys the impression that smoking is normative, even desirable   75% of teenagers shop at convenient stores at least once a week and are routinely exposed to retail tobacco advertising. Children are more likely than adults to notice and to remember the tobacco advertising Youth are more likely to attempt to purchase cigarettes from stores that display tobacco advertising. $13.1 billion: Amount spent by tobacco companies in 2005 on US marketing. Over 80% of US tobacco marketing was spent at the retail level in 2005.   Studies show that tobacco advertisements and displays in stores boost average tobacco sales by 12 percent to 28 percent. Tobacco sales make up 20–60 percent of total sales for independently owned and franchise stores. Two-thirds of all tobacco retail outlets participate in some type of incentive program with tobacco companies.
97% of CNY retail outlets licensed to sell tobacco display interior cigarette ads, with an average of 17 cigarette ads posted in each store... 56% displayed cigarette ads outside the store, including window signs, freestanding signs, and signs displayed on gas pumps. Those stores had an average of 4 outdoor ads each. Read the details »

Local deli takes out a piece of big tobacco; effort to reduce cigarette advertising at stores gains momentum.

(ITHACA, NY) For years, a six-foot wide sign for Camel cigarettes hanging over the checkout counter has greeted shoppers at Jason’s Deli, 301 College Ave., in this city’s Collegetown neighborhood.

No more. On Thursday, July 26, the Camel sign came down, along with the product rack to which the sign was attached. In its place is a newer rack fronted instead by a reminder that tobacco customers will be carded. Full story »
 

Almost every (97%) CNY retail outlet licensed to sell tobacco has interior cigarette ads, with an average of 17 cigarette ads posted in each store... 56% displayed cigarette ads outside the store, including window signs, freestanding signs, and signs displayed on gas pumps. Those stores had an average of 4 outdoor ads each. Click here for additional details »

 

“Tobacco companies are concentrating their marketing dollars at the point-of-sale to the extent that the store is their primary communication channel with customers. As a result, all shoppers regardless of age or smoking status are exposed to pro-smoking messages. Given the financial resources spent by tobacco companies in stores, this venue warrants closer scrutiny by researchers and tobacco control advocates.” (1)

Tobacco company incentive programs are exchanges that occur between the companies and the retailers.

Incentive programs involve an array of advertising and promotion strategies such as volume discounts or buy downs. In exchange... retailers are expected to follow tobacco company requirements to place products and advertising in specific locations and to advertise special prices prominently.

In many cases the exchange occurs between the tobacco company and the corporate headquarters of the outlet so that the specific retailer in your community has no input into the level of promotional activity, or placement of advertisements.
 

LAWS to limit or prohibit point of sale advertising have been repeatedly overturned by high courts. Click here to learn more » 

Federal Trade Commission (FTC) Cigarette Report for 2004 and 2005 

Spending by U.S. cigarette manufacturers for marketing and promotion in the United States totaled $14.15 billion in 2004, and $13.1 billion in 2005. Spending in 2003 was $15.15 billion.

[Click here for much more from the FTC report.]

Promotional Allowances includes 4 categories:

1. Price discounts (paid to cigarette retailers or wholesalers in order to reduce the price of cigarettes to consumers such as off-invoice discounts, buy downs, and voluntary price reductions).
2. Promotional allowances paid to retailers (payments to cigarette retailers in order to facilitate the sale or placement of cigarettes such as payments for stocking, shelving, displaying and merchandising brands, volume rebates, and incentive payments).
3. Promotional allowances paid to wholesalers (payments for volume rebates, incentive payments, value added service and promotional execution).
4. Other promotional allowances paid to anyone else (other than retailers and wholesalers and full-time company employees involved in the cigarette distribution and sales process, in order to facilitate the sale or placement of cigarettes).

The four promotional allowance categories totaled $11.86 billion for 2004 (83.8 percent of total spending that year), and $10.62 billion in 2005 (81 percent of total spending).

Spending on point-of-sale materials (ads posted at the retail location, but excluding outdoor ads on retail property) was $182.2 million in 2005.

The cigarette manufacturers spends the vast majority of their marketing dollars in stores, where the industry is relatively free from regulation.

Click here for much more from the 2007 FTC report.