CIGARETTE BRAND ADVERTISING AND CONSUMPTION IN THE UNITED STATES: 1949-1985

GARY B. WILCOXCIGARETTE BRANDADVERTISING ANDCONSUMPTION IN THEUNITED STATES: 1949-1985

GARY B. WILCOX is a protesso' o) advertising andchairman of the department o(advertising at The Universityof Texas at Austin He re-ceived hjs Ph D in massmedia from Michigan StateUniversily. His research ar-ticies have appeared m suchpublicaiions as the Jourrâl olAdvertising and Commurîca-lior} and the law He is co-editor, along wWh RoxanneHovland, ol Adveriismg in So-ciety Classic arid Contempo-rary Readings on Advertising'sRole in Society. His most re-cent interests include cigaretteadvertising and public policyimplications for advertisingregulation

The author would like to thank Dr.George Franke, department of mar-keting, Virginia Tech University, forsuggestions on this manuscript. The au-thor would aiso like to express his ap-preciation to Ms, Julie Maloukis for herinsight and comments on themanuscript.

The cigarette industry in theUnited States has seen al-most continuous growth

since the beginning of the twen-tieth century. In 1900, 2.5 billioncigarettes were sold. Today, thatnumber has increased to almost600 billion. A major period ofgrowth occurred following WorldWar II when returning soldiers,who were given free cigarettesoverseas, brought their habitshome with them. However, afterreaching a peak in 1981, factoryshipments of cigarettes in theUnited States dropped approxi-mately 10 percent through 1987.

This recent decline is partiallydue to the mounting social, polit-ical, and legal pressure thatbegan with the Surgeon Gen-eral's announcement in 1964 thatcigarette smoking was harmfuland a link had been establishedbetween smoking and lungcancer. During the 1980s, severalorganizations focused increas-ingly aggressive efforts towardreducing the consumption of cig-arettes. The American MedicalAssociation joined the fight byissuing a statement in favor ofbanning all advertising and pro-motion of cigarettes (Colford,1987). Numerous lawsuits haveattempted to hold the tobaccocompanies responsible forcausing premature deaths insmokers {Austin-AmericanStatesman, 1989). Several statesand municipalities have enactedrestrictions on smoking in publicplaces (Colford, 1988). The 1980smarketplace for cigarettes was abattleground with assaults on the

tobacco industry regarding itsmotives and responsibilities tothe American society.

At the center of this contro-versy is cigarette advertising. Therole of advertising in the mar-keting of cigarettes since WorldWar II has been a topic of muchdebate. On one side critics haveclaimed that cigarette advertisingis one of the primary factors ofincreasing consumption. How-ever, the cigarette industry as-serts that advertising is a majormarketing tool that enables somedegree of inter-company rivalryto exist within the industry. Theyclaim that without the ability tocompete via advertising, changesin existing products and newproduct innovations can not beeffectively communicated to theconsumer.

While a number of researchershave examined various deter-minants of aggregate cigaretteconsumption, little empirical re-search is available regarding therelationship between brand ad-vertising expenditures and brandconsumption in the UnitedStates. The purpose of this articleis to provide an analysis of therelationship between annual ad-vertising expenditures and con-sumption, using a generalizedleast-squares regression proce-dure, for several popular brandsof cigarettes sold in the UnitedStates from 1949 through 1985.

Cigarette Use inthe United States

Prior to the twentieth century,tobacco was most commonly

Journal of ADVERTISING RESEARCH—AUGUST/SEPTEMBER 1991 61

C I G A R E T T E B R A N D A D V E R T I S I N G

The cigarette did not becomethe most popular way toconsume tobacco until

the 1920s.

used in the form of cigars andpipes. The cigarette did not be-come the most popular way toconsume tobacco until the 1920s.Many factors contributed to itsrise in popularity: improved ciga-rette paper, automated manufac-turing, development of a newtype of "mild" tobacco, and mar-keting efforts by the producers.Almost as soon as cigarettes be-came popular, anticigarette ac-tivists began attacking this newform of tobacco consumption.However, these early campaignsagainst smoking were not effec-tive, and cigarette smoking con-tinued to increase dramaticallythroughout the 1930s and 1940s(Brecher, 1972).

Advertising appeals by the cig-arette industry, in addition topromotional strategies targetingvarious segments of the popula-tion, led to year after year ofrecord-breaking sales figures.Many of the "economy brands"that were popular before andduring World War II lost marketshare in the postwar prosperityof the 1950s. In the late 1960s,most cigarette manufacturersconcentrated their efforts on thecreation and promotion of"family" brands. Packagingchanges were incorporated to in-clude both boxes and soft packsof king-size, filtered-tip, low-tar,and menthol cigarettes to diver-sify product lines (Sobel, 1978).

As early as the 1920s, reportsthat cigarette smoking was haz-ardous to the health appeared.However, it was not until Jan-uary 1964, with the publication ofthe Report of the Surgeon General'sAdvisory Committee on Smoking and

Health, that millions of smokersbecame aware that cigarettesmoking shortened the lifespan,caused cancer, and increased therisk of heart disease and anumber of other illnesses. Re-newed antismoking efforts, pri-marily in the form of antismokingcommercials, appeared in thebroadcast media. Warning labelsappeared on cigarette packagesand later in advertisements cau-tioning the consumer about theeffects of smoking. Antismokingcommercials appeared in thebroadcast media during the 1960sas part of the Fairness Doctrine,and in 1971 Congress banned allcigarette advertising from thebroadcast media in an attempt toreduce cigarette consumption(Sobel, 1978).

Following the assault of anti-smoking activities and the broad-cast ban, the leading tobaccofirms began to explore newmarket segments. By 1978 therewere more than 190 differentbrands and configurations on themarket (Sobel, 1978). Throughoutthe 1980s, advertising brandstrategies attempted to furthersegment the marketplace by sex,age, and geographical area(Davis, 1987). Packaging changesincluded the introduction of anew twenty-five count packageand generic branding (Scredonand Vamos, 1984). However,rising costs coupled with an in-crease in taxation rates led to de-creased sales for the tobaccocompanies. Toward the middle ofthe decade, many companiesshifted their advertising alloca-tions to more general promotionsand couponing (Telser, 1962).After peaking in 1984, media ad-vertising expenditures fell almost15 percent by 1986 (Ticer, 1988).

Predictors ofCigarette Consumption

Previous research concerningthe factors affecting the con-

sumption of cigarettes in theUnited States have included anexamination of the effects of thebroadcast advertising ban, anti-smoking activities, health careissues, the price of tobaccoproducts, and cigaretteexpenditures.

There is a general agreementamong several researchers thatthe broadcast advertising ban hashad relatively little impact onconsumption. Teel, Teel, andBearden (1979) and Bishop andYoo (1985) concluded that theban has failed to reduce cigaretteconsumption. Holak and Reddy(1986) noted that the advertisingelasticity of demand was greaterin the pre-ban period than after1970.

Several researchers have exam-ined the effects of the anti-smoking messages on cigaretteconsumption. O'Keefe (1971)found that the antismoking com-mercials on television had a rela-tively small impact on smokingbehavior. However, three studieshave indicated that the anti-smoking messages were quite ef-fective in reducing consumption.Hamilton (1972), Warner (1977),and Fujii (1980) found that theantismoking messages on televi-sion and radio in 1968 to 1970were associated with a significantreduction in cigarette consump-tion. Furthermore, Warner andMurt (1983) indicated that thedeaths prevented by the anti-smoking campaign represented 5percent of the mortality rate as-sociated with cigarette smoking.

Several studies have addressedthe effects of the health scare as-sociated with smoking on ciga-rette consumption with varyingresults. Hamilton (1972) notedthat the 1964 Surgeon General'sreport tended to depress percapita yearly consumption by al-most 253 cigarettes. However,Fujii (1980) and Bishop and Yoo(1985) concuded that the healthscare had little or no effect in re-

62 Journal of ADVERTISING RESEARCH—AUGUST/SEPTEMBER 1991

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ducing cigarette consumption.Several researchers have iden-

tified the price of cigarettes as animportant factor influencingconsumption. Bishop and Yoo(1985), when examining datafrom 1954 to 1980, noted that thecigarette excise tax had more ef-fect on reducing consumptionduring that period than either thehealth scare or the broadcast ad-vertising ban. Both Holak andReddy (1986) and Fujii (1980)concurred that minimal changesin cigarette prices are likely to re-sult in significant changes in de-mand. However, Baltagi andLevin (1986) noted that increasesin taxation rates may not be aseffective in reducing consump-tion as previously reported.

The effect that advertising hashad on cigarette consumption hasbeen examined by several re-searchers. Borden (1942), in ananalysis of annual advertising ex-penditures from the late 19thcentury through the late 1930s,noted that advertising was animportant factor in expediting afavorable trend of aggregate de-mand for cigarettes. Borden alsonoted that while advertising ex-penditures were one of the moreimportant determinants of brandsales, other factors such asproduct flavor, quality, and pricewere also important factors in theconsumer's evaluation of the cig-arette brands. Both Hamilton(1972) and Abernethy and Teel(1986) noted a positive relation-ship between advertising expen-ditures and aggregate demand,but the relatively small effectsizes for the advertising variablesimplied that advertising had onlya minimal influence on aggregatedemand. However, Telser (1962)and Holak and Reddy (1986)identified advertising as a majorsource of competition betweenfirms in the cigarette industry.Schmalensee (1972), in his exam-ination of yearly data from 1955to 1967, contradicted these

findings by concluding that in-dustry advertising appeared tohave no significant effect on in-dustry demand or on the impactof advertising on sales of indi-vidual firms.

To summarize, the most suc-cessful predictors associated withcigarette consumption in theUnited States have been anti-smoking activities, health-relatedissues, the price of tobaccoproducts, and advertising expen-ditures. However, the majority ofthis research merely examinesaggregate consumption data.Only a few studies have exam-ined the relationship betweenbrand advertising expendituresand brand consumption, a vitalcomponent in the discussion ofthe effects of cigarette adver-tising. The following sectionspresent an analysis of the rela-tionships between the consump-tion of several popular brands ofcigarettes and advertising expen-ditures in the United States from1949 to 1985.

Research Methodology

Data Base. The major objectivein developing the data base wasto choose variables with reason-ably frequent observations over aperiod of time that reflected ad-vertising and consumption levelsas well as other factors that mightbe expected to affect cigarettebrand consumption levels. A va-riety of sources were used to ob-tain yearly data from 1949 to 1985for as many variables as possible.The data base included 10 ciga-rette brand consumption vari-ables, 10 cigarette brand adver-tising variables, and 3 socioeco-nomic variables. The consumptionvariables consisted of the totalyearly sales reported in billions ofunits for each brand and werefelt to be the most reliable con-tinuous measure of brand salesactivity currently available. Theadvertising variables consisted of

media totals for each brand re-ported on an annual basis. Al-though these variables may notreflect total advertising expendi-tures, they are the best measuresof expenditures currently avail-able (see Table 1). All advertisingseries were deflated using theU.S. Bureau of Labor StatisticsPurchasing Power of the Dollar(1987). Four separate 0-1 pre-dictors were included in themodels (Surgeon General'sWarning, warning labels, broad-cast antismoking commercials,and the advertising broadcastban) to capture different forms ofantismoking activity during thisperiod that might affect brandconsumption.

The socioeconomic variablesused were average retail price forcigarettes, consumer price index,and per capita U.S. cigarette con-sumption. Per capita cigaretteconsumption was used as an in-dependent variable to representthe trend of general decliningconsumption throughout the pe-riod analyzed. As noted earlier,previous research has shown theabove variables to be importantdeterminants of cigarette con-sumption (see Table 1).

The cigarette brands werechosen for inclusion in the anal-ysis based on two major criteria.First, a yearly series of adver-tising and consumption data wasnecessary for a brand to be in-cluded in the analysis. Secondly,a sufficient number of observa-tions of cigarette and consump-tion data was required of eachbrand. Therefore, several popularbrands in the present marketwere excluded because of an in-sufficient number of observationsor missing data. The results ofthe selection process yielded 10brands to be included in theanalysis (see Table 1). The brandschosen were produced by thefive leading tobacco companies inthe United States as of 1985, andmost of the brands were posi-


C I G A R E T T F B R A N D A D V E R T I S I N G

tioned in the top five in sales atsome point during the time pe-riod under investigation. For ex-ample, in 1950 Camel and LuckyStrike were the top two salesleaders with a combined marketshare of over 50 percent, while in1985 Marlhoro, Winston, Salem,Kool, and Benson & Hedgeswere the top five sales leaderswith a market share of over 53percent {Business Week, 1950; U.S.Bureau of Labor Statistics, 1987).

Data Analysis Procedures. Astepwise regression analysis withbackwards elimination of nonsig-nificant predictors approach wasused in determining which vari-ables were significant predictorsof the 10 consumption series.First, for each cigarette brand,advertising and the other pre-dictor variables were used in ageneralized least-squares regres-sion equation with brand con-sumption as the dependent vari-able. Next, the least significantpredictors were dropped and an-other regression analysis wasperformed. The analysis con-tinued until final models werefound with all variables signifi-

. . . advertising andconsumption levels in the

United States aresignificantly related for five

brands of cigarettes from1949 to 1985.

cant {p < .05). Finally, the R-squares of sequential modelswere compared to ensure thatthere was not a significant dropin explained variance.

Because of the serious prob-lems autocorrelation can presentin analysis of time-series data, ageneralized least-squares regres-sion approach that uses estimatesof autocorrelation in a model'sresiduals in estimating structural

Table 1Variables and Sources

Brand sales/advertising variables Manufacturer Time period

Lucky Stni e

Kool

Camel

Salem

Winston

Kent

Newport

Pariiament

Benson & Hedges

Marlboro

American

Brown & Williamson

Reynolds

Reynolds

Reynolds

Loriliard

Lorillard

Philip Morris

Philip Morris

Philip Morris

1949-1985

1949-1985

1949-1985

1956-1985

1956-1985

1952-1985

1957-1985

1955-1985

1961-1985

1956-1985

Source: Historical Sales Trends in the Cigarette Industry, A Statistical Summary Covering 61Years (1925-85), John C. Maxwell, Jr. April 1986Advertising figures are in millions of 1967 dollars, Leading National Advertisers, Inc.

Socioeconomic variablesAverage retail price for cigarettes for alSource: Tax Burden on Tobacco, 1988

1 taxing states 1949-1985

Consumer price index for tobacco products 1949-1985Source: U.S. Department of Commerce. Bureau of the Census, and Bureau of Labor Statistics

Per capita U.S. cigarette consumptionSource: Economic Research Service. Li.S. Department of Agriculture

1949-1985

parameters and significancelevels was used. The maximum-likelihood approach in the SASAUTOREG procedure (SAS Insti-tute, 1984) was used taking intoaccount significant autocorrela-tion at lags of 1 and 2 years.

FindingsTable 2 presents the final con-

sumption models for each brand.Advertising expenditures exhib-ited a significant relationshipwith consumption for five of theten brands. Per capita consump-tion, average retail price, andthree of the four 0-1 predictorswere also significantly associatedwith brand sales.

An examination of the indi-vidual models reveals that thepredictors explained over 85 per-cent of the variance in all but twoof the models. No significant ef-

fects were noted for lags of 1 or 2years suggesting that there is noevidence of a lagged relationshipamong these variables.

DiscussionThe major finding in this study is

that advertising and consumptionlevels in the United States are signif-icantly related for five brands ofcig-arettisfrom 1949 to 1985. Kool,Salem, Newport, Benson &Hedges, and Marlboro all exhib-ited a positive relationship be-tween advertising expendituresand brand consumption.

Because most of the previousempirical work examined aggre-gate advertising and consump-tion data, it is difficult to com-pare those findings with the re-sults reported here. Thereappears to be a general agree-ment among the researchers that


C I G A R E T T E B R A N D A D V t R U S I N G

aggregate cigarette advertisingexpenditures in the United Stateshave little or no effect on aggre-gate consumption but that adver-tising is one source of competi-tion between brands for marketshare. The findings presentedhere support that relationshipwith five of the brands showinga positive relationship betweenadvertising expenditures andconsumption.

It is enlightening to note thatall five of these brands have ex-hibited very strong marketgrowth since 1950. Kool, Salem,Benson & Hedges, and Marlborowere four of the top five salesleaders in 1985, accounting foralmost 42 percent of the marketsales (Ticer, 1986). None of thesebrands were in the top five salesleaders in 1950. By contrast.Camel and Lucky Strike were re-sponsible for over 50 percent ofthe cigarette sales in 1950 andhad dropped to sixth and twen-tieth, respectively, by 1985 {Busi-ness Week, 1950). This does notimply, however, that advertisingis the most important marketingtool for cigarette brands. Thesecond best-selling cigarettebrand in 1985, Winston, was notsignificantly related to adver-tising expenditures. However,this relationship is probably dueto the several ad theme changesand the difficult translation of thebroadcast theme to print in 1971(Dagnoli, 1989). This does sug-gest that advertising is perhaps afairly important marketing tooland that, when used effectively,it may influence brandconsumption.

The socioeconomic and 0-1predictors were included in theanalysis primarily to explain vari-ance in consumption that mightotherwise be attributed to the ad-vertising variables, but they dohave some relevance of theirown. For example, per capitaconsumption shows a decliningrate relative to the total popula-

Table 2Final Consumption Models

Brand consumption

Predictor

Lucky StrikePer capita consumption

Total RSQ = .327 DFE = 31

KoolIntercept

Advertising

Warning labels

Antismoking commercials


SalemIntercept

Advertising

Average retail price

Broadcast ban

Per capita consumption


WinstonIntercept

Surgeon General's Warning


Broadcast ban




KentIntercept



NewportIntercept

Advertising

Warning labels

Broadcast ban




ParliamentIntercept


B value

5.8240

5079.9834

7.9329E-07

-1789.5916

2523.7665

-18468.5702

2.5952E-07

5,5801

513,6533

4.8660

-13019.0745

1395.1484

811.4559

1635.0264

2.5372

4.2816

-8516.7927

2.4295

-3814.2131

5.0337E-07

-120.3816

-369,4614

.8413

2.9866

-4275.8519

1.1687

t Ratio

2.262

17,876

2.063

- 2.400

2.960

-11.770

3.677

9.173

2.896

13.599

- 5,668

5,118

3,023

6.787

3,294

7,880

-2.242

2.835

- 5.742

3.964

-2.337

-5.636

5.743

8.441

-11.434

12.745

Probability

.03

.0001

.0476

.0226

.0059

.0001

.0013

.0001

.0081

.0001

.0001

.0001

.0061

.0001

.0032

.0001

.0334

.0086

.0001

.0006

.0360

.0001

.0001

.0001

.0001

.0001



Table 2—cont'dFinal Consumption Models

Brand consumption

Predictor


Total RSQ - ,904 DFE = 27

Benson & HedgesAdvertising


Broadcast ban

Total RSQ = .914 DFE - 21

MarlboroAdvertising

Broadcast ban


CamelPer capita consumption


B value

.8746

3,4797E-07

562.0119

1656.6686

1.5951E-06

3177,6556

1,5537

f Ratio

7,464

4,199

2,779

8.359

8.890

6.613

2.365

Probability

,0001

.0004

.0113

.0001

,0001

,0001

.0241

tion in the United States, and itwas the only significant predictorfor three brands—Lucky Strike,Kent, and Camelâll of whichhave a similar declining con-sumption pattern. Four differentbrands also exhibited a significantpositive relationship withaverage retail price—Salem,Winston, Newport, and Parlia-ment. This finding suggests thatperhaps consumers of thesebrands might be less price sensi-tive than consumers of com-peting brands.

The 0-1 predictors also exhib-ited significant relationships withseveral of the brands. The anti-smoking broadcast commercialsand the Surgeon General'sWarning showed significant pos-itive relationships with Kool andWinston. The broadcast ban wassignificantly related to Salem,Winston, Newport, Benson &Hedges, and Marlboro. The di-rection of this relationship waspositive for all brands exceptNewport. Finally, the warninglabels exhibited a negative signif-icant relationship with both Kool

and Newport.The presence of several posi-

tive relationships is inconsistentwith much of the previous workin the area. While several of thepast studies have suggested thatthe effects of these governmentalefforts to reduce consumptionmight be minimal, this studyfound that consumption levelsfor several of the leading brandsexhibited positive relationshipswith these efforts. This findingmight lead to the conclusion thatefforts by the cigarette companiesto dilute the effects of govern-mental regulation on thesebrands were very successful.

ConclusionsWhat is clear from this analysis

is that, for certain brands, adver-tising exhibits an important rela-tionship with consumption—how important is difficult, if notimpossible, to determine. How-ever, product innovation such aspackaging or tar-content changescan only be effectively communi-cated to a mass market via massmedia advertising. Governmental

attempts to reduce consumptionby eliminating advertising forcigarettes would likely have adevastating effect on the commu-nication of salient product infor-mation to the consumer.

In relating advertising expen-ditures to consumption, it is dif-ficult to show that advertisingalone causes consumption. Fur-thermore, the relationships ob-served in this study are correla-tional, not necessarily causal.Other factors not included in theanalysis such as changing atti-tudes toward smoking, restrictivesmoking policies, or personalpreference shifts in brand choicemay no doubt have had an im-pact on consumption of thesebrands. It may be, in many cases,that consumption "causes" ad-vertising expenditures.

Also, this study only examinesadvertising expenditure levels.The creative appeals used by theadvertisers play a critical role byinteracting with expenditurelevels to result in effective adver-tising. There was no attempt hereto measure such interactioneffects.

The cigarette advertising con-troversy exists within a broad so-cial and legal context. However,to restrict the flow of all commer-cial information about theproduct from producer to con-sumer in an attempt to affectconsumption appears to be moreextensive than necessary. Thisarticle has focused on the eco-nomic aspects of the cigarette ad-vertising controversy and haspresented evidence that, in somecases, advertising is important tobrand consumption. Clearly thesocial and legal aspects are areasthat will require further empiricalinvestigations and analyses. •

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CIGARETTE BRAND ADVERTISING AND CONSUMPTION IN THE UNITED STATES: 1949-1985