The results from this study reveal that adult smoker cigarette brand preferences have shifted over the past decade with an increase in the use of discount cigarette brands, especially after the $0.61 increase in the FET on cigarettes in 2009. This finding is consistent with that found by Tauras et al in the decade prior to this study.[6] However, our finding regarding the growth of discount brands after the 2009 FET increase on cigarettes was unexpected since we had anticipated a drop in the sales of discount brand cigarettes since the relative price of discount brands were affected to a larger degree compared to that of higher priced premium brands. It is possible that the aggressive price marketing of premium brands coupled with stricter marketing restrictions have lowered the perceived value of some premium brands. From this perspective, when consumers are confronted with paying higher prices for their cigarettes because of a tax increase, they are more willing to switch to a discount (price marketed only) brand.
Our data also suggest that demographic and smoking trends favor the continued growth of low priced cigarette brands since there are fewer young people taking up smoking compared to previous generations and the resulting pool of smokers is increasingly made up of older, middle and lower income individuals who are less influenced by brand image and more prone to switch to discount brands. Once a smoker switches to a discount brand our data suggest that they typically stay within the discount brand category, although they may switch between different discounted brands. Perhaps in recognition of this trend, cigarette manufacturers have invested in price discounting of some popular premium brands and in some cases have repositioned older premium brands as discounted brands. For example, in 2007, Reynolds American repositioned Pall Mall cigarettes as a discount brand. Our data, consistent with data from other sources, shows that Pall Mall has realized substantial growth in market share since 2007.[18, 19]
Consistent with previous studies, premium brands such as Marlboro, Newport, and Camel continue to dominate the market due to their greater popularity with younger smokers who are less likely to switch to discount cigarette brands.[20] However, even though smokers in our sample between the ages of 18–24 years of age were more likely to report smoking a premium brand cigarette compared to older smokers, loyalty to a given brand was not that strong since we observed frequent switching between different premium brands. It is likely that the traditional pricing tiers of a decade ago (i.e., premium, discount, and deep discount), may no longer apply as cigarette manufacturers have increasing utilized price promotions to keep popular premium brands such as Marlboro priced to be competitive with discount brands.[21]
This study undoubtedly underestimates the true level of brand switching that is happening for two reasons. First, we only counted a brand switch if the person reported smoking a different cigarette brand at the time of the next survey wave. This method fails to take into account brand switching that undoubtedly occurs between survey waves (e.g., switching from one brand to another, but then switching back by the time of the next survey wave). Second, and more importantly, we only counted switching between different brand families rather than switching brand varieties within the same brand family (e.g., Marlboro Red to Marlboro Gold). Another limitation of our data is that our estimates of the use of different brands (e.g., Marlboro, Pall Mall, etc.) and brand categories (i.e. premium and discount) likely over-represent brands that are popular among older adult smokers (i.e., discount brands) and under-represent brands (i.e., Marlboro, Newport, and Camel) that are popular with younger (i.e., under age 18 year old) smokers who were not part of our sample. Additionally, we were unable to measure factors related to the weakening US economy during this period. That is, rising prices and stagnated or reduced disposable income could more fully explain switches to discount brands rather than total income alone. As well, some participants in wave 7 were surveyed after the April 2013 FET increase, indicating that our measure of differences from wave 7 to 8 may be an underestimate. Finally, our study also suffers from biases that result from attrition of our sample over time, which tends to be higher among those who are younger and nonwhite. To compensate for attribution of our longitudinal sample, we replenished participants lost to follow-up at each subsequent survey and have attempted to adjust for time-in-sample variations across the different survey waves.[14]
In summary, with fewer people taking up smoking today, price marketing both within and between the premium and discount brand categories is likely to play an increasingly important role in defining which cigarette brands remain popular in the future. Despite the continued popularity of well-known brands such as Marlboro, Newport, and Camel, the popularity of premium brands such as Winston, Virginia Slims, and Benson and Hedges appear to be on the decline. The traditional pricing tiers of a decade ago (i.e., premium, discount, and deep discount), also seem no longer to apply as manufacturers have increasingly utilized price promotions to keep popular premium brands such as Marlboro priced to be competitive with the pricing of many discount brands.[18, 19, 21, 22]
Previous studies have shown that the presence of discount brands can undermine efforts to discourage tobacco use.[4, 5] This study shows that those who can least afford to keep smoking because of their economic standing (i.e., low-income individuals) and health risks (i.e., older smokers and those who smoke more heavily) were also the group of smokers most prone to use and switch to discount brand cigarettes. From a tobacco control perspective, the findings from this study suggest that governments should consider enacting stronger minimum pricing laws in order to keep the base price of cigarettes high, since it seems clear that aggressive price marketing will continue to be used by manufacturers to compete for the shrinking pool of smokers in the population.
The results from this study reveal that adult smoker cigarette brand preferences have shifted over the past decade with an increase in the use of discount cigarette brands, especially after the $0.61 increase in the FET on cigarettes in 2009. This finding is consistent with that found by Tauras et al in the decade prior to this study.[6] However, our finding regarding the growth of discount brands after the 2009 FET increase on cigarettes was unexpected since we had anticipated a drop in the sales of discount brand cigarettes since the relative price of discount brands were affected to a larger degree compared to that of higher priced premium brands. It is possible that the aggressive price marketing of premium brands coupled with stricter marketing restrictions have lowered the perceived value of some premium brands. From this perspective, when consumers are confronted with paying higher prices for their cigarettes because of a tax increase, they are more willing to switch to a discount (price marketed only) brand.
Our data also suggest that demographic and smoking trends favor the continued growth of low priced cigarette brands since there are fewer young people taking up smoking compared to previous generations and the resulting pool of smokers is increasingly made up of older, middle and lower income individuals who are less influenced by brand image and more prone to switch to discount brands. Once a smoker switches to a discount brand our data suggest that they typically stay within the discount brand category, although they may switch between different discounted brands. Perhaps in recognition of this trend, cigarette manufacturers have invested in price discounting of some popular premium brands and in some cases have repositioned older premium brands as discounted brands. For example, in 2007, Reynolds American repositioned Pall Mall cigarettes as a discount brand. Our data, consistent with data from other sources, shows that Pall Mall has realized substantial growth in market share since 2007.[18, 19]
Consistent with previous studies, premium brands such as Marlboro, Newport, and Camel continue to dominate the market due to their greater popularity with younger smokers who are less likely to switch to discount cigarette brands.[20] However, even though smokers in our sample between the ages of 18–24 years of age were more likely to report smoking a premium brand cigarette compared to older smokers, loyalty to a given brand was not that strong since we observed frequent switching between different premium brands. It is likely that the traditional pricing tiers of a decade ago (i.e., premium, discount, and deep discount), may no longer apply as cigarette manufacturers have increasing utilized price promotions to keep popular premium brands such as Marlboro priced to be competitive with discount brands.[21]
This study undoubtedly underestimates the true level of brand switching that is happening for two reasons. First, we only counted a brand switch if the person reported smoking a different cigarette brand at the time of the next survey wave. This method fails to take into account brand switching that undoubtedly occurs between survey waves (e.g., switching from one brand to another, but then switching back by the time of the next survey wave). Second, and more importantly, we only counted switching between different brand families rather than switching brand varieties within the same brand family (e.g., Marlboro Red to Marlboro Gold). Another limitation of our data is that our estimates of the use of different brands (e.g., Marlboro, Pall Mall, etc.) and brand categories (i.e. premium and discount) likely over-represent brands that are popular among older adult smokers (i.e., discount brands) and under-represent brands (i.e., Marlboro, Newport, and Camel) that are popular with younger (i.e., under age 18 year old) smokers who were not part of our sample. Additionally, we were unable to measure factors related to the weakening US economy during this period. That is, rising prices and stagnated or reduced disposable income could more fully explain switches to discount brands rather than total income alone. As well, some participants in wave 7 were surveyed after the April 2013 FET increase, indicating that our measure of differences from wave 7 to 8 may be an underestimate. Finally, our study also suffers from biases that result from attrition of our sample over time, which tends to be higher among those who are younger and nonwhite. To compensate for attribution of our longitudinal sample, we replenished participants lost to follow-up at each subsequent survey and have attempted to adjust for time-in-sample variations across the different survey waves.[14]
In summary, with fewer people taking up smoking today, price marketing both within and between the premium and discount brand categories is likely to play an increasingly important role in defining which cigarette brands remain popular in the future. Despite the continued popularity of well-known brands such as Marlboro, Newport, and Camel, the popularity of premium brands such as Winston, Virginia Slims, and Benson and Hedges appear to be on the decline. The traditional pricing tiers of a decade ago (i.e., premium, discount, and deep discount), also seem no longer to apply as manufacturers have increasingly utilized price promotions to keep popular premium brands such as Marlboro priced to be competitive with the pricing of many discount brands.[18, 19, 21, 22]
Previous studies have shown that the presence of discount brands can undermine efforts to discourage tobacco use.[4, 5] This study shows that those who can least afford to keep smoking because of their economic standing (i.e., low-income individuals) and health risks (i.e., older smokers and those who smoke more heavily) were also the group of smokers most prone to use and switch to discount brand cigarettes. From a tobacco control perspective, the findings from this study suggest that governments should consider enacting stronger minimum pricing laws in order to keep the base price of cigarettes high, since it seems clear that aggressive price marketing will continue to be used by manufacturers to compete for the shrinking pool of smokers in the population.
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