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Byline: Larry Riggs

Brown & Williamson works the mails to push product, build loyalty

CIGARETTE GIANT Brown & Williamson Tobacco Corp., already a heavy user of direct marketing, has begun to rely on it even more. And why not? Faced with increasing restrictions on advertising, shrinking markets and cutthroat competition, the $5.4 billion firm has realized it's got to reach consumers as subtly as possible.

The Louisville, KY-based company is using DM to help launch a filtered variety of Pall Mall cigarettes and to shore up slower selling brands through BWT Direct LLC, a catalog sales subsidiary formed last fall. The unit is conducting one of the largest mailing efforts B&W has made to date. And in the fourth quarter, BWT Direct will add a Web site to its marketing mix.

On the whole, direct marketing isn't always the easiest undertaking for packaged goods marketers, which typically lack access to sales transaction data, says Dan Davidson, former director of the strategic target-marketing group at CheckMark, Ralston Purina's St. Louis-based marketing communications unit. But even so, packaged goods makers can still employ direct and database marketing to promote customer loyalty. Like Ralston, B&W doesn't have a great deal of transaction data from retailers and doesn't rely much on loyalty clubs, says B&W spokesman Steve Kottak.

This month the tobacco firm plans to send out 6.5 million direct mail pieces to people who prefer cigarettes that burn slowly and, it says, provide more value for one's money. Targets for this large-scale mailing come from the firm's database, estimated by some industry observers to contain more than 20 million names. The list is compiled from sources such as calls into company phone lines, respondents to direct mailings and other sources, says division vice president Paul Wessel. The rollout of filtered Pall Malls follows a four-month test in Alaska.

The mailing piece is a 6-inch-by-9-inch black self-mailer with the headline, "Does Your Cigarette Suffer From Early Burnout?" Inside are an accordion-like pullout of four coupons and a business reply card questionnaire. B&W is seeking the name, address, phone number and current e-mail address of recipients as well what brands they smoke, whether or not they smoke cigars and how often they smoke them.

Kottak says the company uses information from direct mail pieces for later retention efforts.

Although B&W is prohibited from e-mail prospecting, it's allowed to capture and target e-mail addresses, which it does with traditional mail pieces and its informational Web site (www.brownandwilliamson.com). For all its communications, the firm requires signatures and photo IDs to prove that smokers are over 21, notes Kottak.

Later this year, B&W may also promote filtered Pall Malls in custom-published magazines Flair and Real Edge, distributed by Hearst. They're sent free of charge directly to targeted groups of people, in this case smokers, to help build brands. Real Edge's audience is 21- to 30-year-old men; Flair's readership consists of women ages 21 to 35.

In addition to all this, the firm will run general space ads for filtered Pall Malls in such wide-circulation magazines as People and USA Weekend, notes Wessel. And, of course, it will be doing a variety of retail promotions.

Brown & Williamson's other big direct response initiative, BWT Direct, helps move less widely distributed brands like Carlton and Tareyton. BWT is mailing to California, Florida, Georgia, Kentucky, Massachusetts, North Carolina, Oregon and Texas. Before starting the unit, the company tested the BWT Direct model in North Carolina.

The profile for these smokers is more wide-ranging, says Kottak. Cigarettes like Capri are aimed more at women, while others, like Barclay - claimed to be a low-tar brand - tend to be favored by older people.

Wessel stresses that the company won't market the new filtered Pall Malls through BWT Direct because it doesn't want to undercut its retailers.

The monthly four-color catalogs, offering cartons of cigarettes at varying discounts, are sent to several hundred thousand names in those states culled from B&W's database, says Kottak. At present, the catalog accepts mail, phone and fax orders.

Kottak concedes that further campaigns by BWT Direct are awaiting resolution of taxation and other legal issues in individual states.

Last October B&W sued New York state, seeking to overturn its just-passed ban on DR cigarette sales - reportedly the first law of its kind in the country. A hearing in New York's U.S. District Court is set for June, he says.

That sales ban was passed after cigarette sales in stores reportedly dropped in response to a 55-cent-per-pack increase a year ago in New York's cigarette excise tax. Section 1399-11 of the state's public health law makes it a crime to ship or transport cigarettes sold via mail order, telephone or the Internet to state residents.

"The Constitution prohibits any one state from regulating avenues of national commerce such as the Internet, the U.S. mails and interstate shipping," said David Remes, a B&W attorney, in a statement.

However, selling cigarettes online can be a touchy issue. One Web site, Supercheapcigarettes.com, and its parent company E-Commerce Today, were sued in January by Texas Attorney General John Cornyn for allegedly selling cigarettes to minors. But other commercial sites like Cigarettes bymail.com and Discount Cigarettes Dotnet have sprouted up.