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Statistics for Business and Economics: Excel/Minitab Enhanced
Heinz Kohler
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Statistics in the News: Chapter 13 Hypothesis Testing: The Classical Technique

Tobacco Advertising Targeting Youth

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).

Finally, the authors defined "reach," a standard measure of exposure to advertising, as the number of young persons 12 to 17 years old who read at least one issue of a magazine containing an advertisement for a particular brand of cigarette during a given year. Between 1995 and 2000, the average proportion of young people in the United States who were potentially exposed to cigarette advertisements in magazines each year ranged from 81.9 percent to 88.4 percent for youth brands of cigarettes and from 55.5 percent to 80.1 percent for adult brands. The average proportion of these young people who were reached by cigarette advertisements was higher for youth brands than for adult brands throughout the study period. Using a two-tailed matched-pairs sample t-test, the differences between adult and youth brands were significant (P = 0.004).

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.




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