Flash back to that infamous Friday in 1993, when Philip Morris took swift and dramatic action to stem the tide of discount cigarettes, which had been growing at a rate of 20% a year and had reached 35% of the cigarette market. Philip Morris took huge price reductions on Marlboro and its other premium brands that reduced the price gap between them and their discount competitors by more than 50%. The price cuts stopped the discount brands in their tracks.
Over at RJ Reynolds, one of the brands that took a body blow was Doral. The discount brand had a 4% share at the time, but its positioning was almost entirely dependent on price and presence. Like other discount brands, it enjoyed little consumer loyalty beyond price.
The sweeping transformation of the Doral brand that has taken place in the decade since Marlboro Friday has become a case study in relationship marketing. And the lessons learned from Doral’s experience apply not only to cigarettes and other consumer packaged goods brands—but to the convenience retailing business as a whole.
Journey to the Center of the Brand
Charged with repositioning Doral as more than a price brand, RJR’s ad agency, Greensboro, NC-based CoyneBeahmShouse (www.coynebeahmshouse.com), developed a four-step process for capturing and using intelligence provided by core users—the "journey to the center of the brand."
Step 1: Identify core insiders—the "LEAP." The process begins the way you would expect it to—by carefully identifying and accessing consumers that love a specific brand. CoyneBeahmShouse uses four "triggers" to determine who these consumers are: Loyalty, Enthusiasm, Advocacy and Preference (LEAP). "The best way to build your brand is to begin with those who love it," says Tom Barbitta, senior VP at CoyneBeahmShouse.
Step 2: The Lovefest™. Once the brand disciples are identified, you need to engage them and get them to talk. If you’re thinking focus groups, think again. While one-on-one interviews and online focus groups have come to be part of the agency’s brand-building arsenal, RJR and CoyneBeahmShouse wanted a unique way to reach out to Doral consumers. So they invited smokers from all over the country to Winston-Salem for two days of country music (featuring Alabama; see photo, left), hot air balloon rides, games and factory tours.
More than 4,000 Doral smokers from 28 states accepted the invitation and came to North Carolina at their own expense—and the "Lovefest™" concept was born.
Step 3: The Insights. Bringing Doral consumers together and allowing them to interact with one another was a key factor in helping identify common threads among users—threads that would ultimately become the brand’s new DNA. This invaluable information is then used to establish and maintain a deep emotional connection between current users and the brand.
"We discovered that the core Doral enthusiast is down to earth, with heartland values, very patriotic, with a predisposition to loyalty," says Barbitta. "They are familydriven, and they like to congregate with friends. They like to smoke but don’t want to pay top dollar for their brand. We saw an opportunity to connect smokers to the brand by connecting them with each other."
Step 4: The Creative. The knowledge collected during the Lovefest™ and other forms of dialogue with the consumer was used to develop creative programming for Doral that included advertising, promotions and events—in short, a better way to market the brand. "By rubbing shoulders with our consumers," says Barbitta, "we were able to cultivate this relationship and turn it into a driver for the brand."
One of the first ways RJR and its agency accomplished this was with Doral & Co., a relationship marketing program that included regular dialogue with Doral consumers as well as a Doral & Co. magazine and Web site. This award-winning direct marketing program, the first of its kind in the category, helped build community and a common bond among Doral smokers. Where other promotions in the category were more transactional, Doral & Co. was more relational.
RJR supported the new program with ads featuring the theme, "Imagine Getting More," where consumers find unexpected value. A diner in a Chinese restaurant finds a $20 bill in his fortune cookie, for example.
"One of the things we found in our research was that having the brand perceived as a big brand, a legitimate brand, was absolutely critical to the purchase decision," says Shouse. That’s why the relationship marketing piece had to have the proper in-store support, including strong packaging and POP materials, relevant promotions and adequate inventory. Smokers had to feel good about walking into the store and making the Doral purchase.
"Having the brand perceived as a big brand,
a legitimate brand, is critical to the purchase decision."
More recently, CoyneBeahmShouse has helped RJR launch two successful promotions. The "Imagine Getting More" Fund allowed smokers to make donations to a charitable fund and/or apply for selfimprovement grants. Smokers could donate to the fund by sending in pack seals; for each pack seal donated Doral made a matching cash donation. The funds raised provided self-improvement grants which could be used for education, home improvement or community projects. Doral received thousands of entries, and a panel of judges selected the most qualified applicants. Between May and November of 2004, smokers donated 423,378 seals to help their fellow smokers, and the program generated huge buzz on the brand’s Web site.
"Seals for Soldiers" allowed smokers to donate pack seals to support U.S. military personnel. Doral again matched each seal donated with cash, which went to "Operation Uplink," a Veterans of Foreign Wars program that keeps GIs and hospitalized veterans in touch with their loved ones by providing them with free phone cards. While both funds were successful, "Seals for Soldiers" exceeded all expectations. From October to December last year, RJR collected over 4.7 million seals from 13,500 consumers. Doral translated these seals into a $477,000 check to "Operation Uplink" in the name of Doral Smokers— generating tremendous PR and word of mouth for the brand.
These types of programs create a bond between Doral and its customers that transcends price and the "transaction mentality." That bond has provided the brand with some very real protection.
"Any time you can develop emotional relevance for a brand, you can insulate the brand," says Tom Barbitta. "You can slow a slide, avoid a slide, or even grow and increase your visibility and presence during a downturn, all because you have embraced the consumer instead of just trying to sell them a product."
For Doral, the benefits have been substantial, and the brand has cemented its position as the nation’s leading mid-price brand. Doral has out-performed other discount brands that have seen fourth-tier brands continue to eat into their share.
More importantly, the brand-building exercise has helped Doral customers become fanatics of the brand. Doral enjoys loyalty rates comparable to full-price brands, and its smokers actively recommend the brand at rates significantly above the industry average. "If we can tap into the core consumer of a brand," says Doug Shouse, "and get that consumer to
express that brand’s DNA, that helps us reach out to other users."
Journey to the center of YOUR brand
Do the lessons of the Doral case study apply to convenience stores? Can the process described here be applied beyond the cigarette category to help turn your customers into fanatics about your brand?
"I don’t know of many convenience store chains that have mined the demographics of the communities around them, to really understand who their customers are and what they want or need from them as a convenience store brand," says Tom Barbitta, senior VP at CoyneBeahmShouse. "There is a lot more that retailers can do to put a ‘face’ on their convenience stores. We call it ‘Creative Brand-Building from the Inside Out.™’"
Over the 10 years that the Doral & Co. marketing strategy has been in place, he adds, "there have been hundreds of strategies and tactics applied to Doral, and virtually all of them can be applied to the convenience store market as a whole."
The National Convenience Store Advisory Group (NCSAG), in cooperation-with CoyneBeahmShouse, will help c-store retailers take the first steps in this process by conducting our own Convenience Store Lovefest™. NCSAG is now recruiting interested convenience retailers to participate in a first-ever "deep dive" to the center of the c-store retail world. This informative, interactive study will uncover highly provocative insights about our industry and the direction it is headed, These insights will form the foundation of a presentation at NCSAG’s Fall 2005 Conference, September 9-11 in Nashville, TN.
For more information about the Convenience Store Lovefest™ and how you can participate, please contact: