Quizzing and Testing Recommended Readings Web Site Links Statistics in the News
 Statistics for Business and Economics: Excel/Minitab Enhanced Heinz Kohler

## Statistics in the News: Chapter 13 Hypothesis Testing: The Classical Technique

In November 1998, the attorneys general of 46 states signed a Master Settlement Agreement with the four largest tobacco companies in the United States (Brown & Williamson, Lorillard, Philip Morris, and R. J. Reynolds). The agreement prohibits tobacco advertising that targets people younger than 18 years of age. Has the agreement worked?

Recently, two researchers analyzed the trends in advertising expenditures for 15 brands of cigarettes and the exposure of young people to cigarette advertising in 38 magazines between 1995 and 2000. Some of their results appear in Table A.

Table A U.S. Tobacco Advertising in Millions of 2000 Dollars

 Company Pre-Settlement Post-Settlement 1995 1996 1997 1998 1999 2000 In 20 Youth-Oriented Magazines Brown & Williamson 23.8 25.8 10.7 10.7 24.7 5.9 Lorillard 5.5 5.0 4.5 6.2 5.7 6.2 Philip Morris 76.8 68.7 63.1 71.1 82.6 57.3 R. J. Reynolds 22.5 28.6 40.8 52.8 62.9 57.8 Subtotal 128.5 128.1 119.1 140.7 176.0 127.2 In 18 Adult-Oriented Magazines Brown & Williamson 33.1 32.0 14.1 2.0 21.6 2.7 Lorillard 1.9 1.3 1.0 3.7 3.6 4.7 Philip Morris 63.4 52.1 44.3 52.7 66.5 60.1 R. J. Reynolds 11.2 12.3 20.4 20.2 23.5 22.1 Subtotal 109.7 97.6 79.8 78.6 115.2 89.7 Total 238.2 225.7 198.9 219.3 291.2 216.9

In 2000 dollars, the overall advertising expenditures for the 15 brands of cigarettes in the 38 magazines were \$238.2 million in 1995 and \$219.3 million in 1998, at the end of the pre-settlement period. After the settlement, expenditures jumped to \$291.1 million in 1999; then fell to \$216.9 million in 2000, an amount similar to the pre-settlement level. Table A also shows the breakdown of these totals among companies and types of magazines. (The authors classified magazines as youth-oriented if at least 15 percent of their readers, or at least 2 million of their readers, were 12 to 17 years old. This definition corresponds to Philip Morris' 2000 promise to restrict its future advertising to magazines that are not youth-oriented as so defined.)

The authors also took a sample of youngsters and defined cigarette brands as "youth" brands if they were smoked by more than 5 percent of smokers in the 8th, 10th, and 12th grades in 1998. Three such brands were identified, along with their youth-market shares: Marlboro (64.3%), Newport (19.1%), and Camel (7.9%). All other brands were considered to be "adult" brands. These included Basic, Benson & Hedges, Capri, Carlton, Doral, Kool, Merit, Misty, Parliament, Salem, Virginia Slims, and Winston. Expenditures for youth brands in youth-oriented magazines were \$56.4 million in 1995, \$58.5 million in 1998, \$67.4 million in 1999, and \$59.6 million in 2000. Expenditures for adult brands in youth-oriented magazines were \$72.2 million, \$82.3 million, \$108.6 million, and \$67.6 million, respectively. Throughout the study period, tobacco companies consistently allocated to youth-oriented magazines a higher percentage of their youth-brand advertising expenditures than of their adult-brand advertising expenditures: Between 1995 and 2000, 65.3 percent to 71.1 percent of the expenditures on advertising for youth brands was allocated to youth-oriented magazines, whereas only 46.4 percent to 62.5 percent of such expenditures for adult brands was allocated to youth-oriented magazines. Using a two-tailed matched-pairs sample t-test, the differences between adult and youth brands were statistically significant (P = 0.001).

In 2000, magazine advertisements for youth brands of cigarettes reached more than 80 percent of young people in the United States an average of 17 times each. The authors concluded that the Master Settlement Agreement with the tobacco industry appears to have had little effect on cigarette advertising in magazines and on the exposure of young people to these advertisements.

Note: Magazine advertising remains but one small part (4.6 percent) of the tobacco industry's total marketing expenditures (\$8.2 billion in 1999). Other marketing tools include coupons, direct mail, Internet advertising, newspaper advertising, point-of-sale advertising, promotional allowances to retailers, sponsorship of public entertainment, retail value-added programs (such as "buy one, get one free"), the distribution of samples, and the distribution of specialty items. Many of these promotional techniques have previously been found to have great appeal for young people. Clearly, no effort to reduce smoking among young people or other groups will succeed without a complete understanding of the entire marketing programs of tobacco companies.

Source: Adapted from Charles King, III, and Michael Siegel, "The Master Settlement Agreement with the Tobacco Industry and Cigarette Advertising in Magazines," The New England Journal of Medicine, August 16, 2001.