Case Study: The Political – Legal Environment for Cigarette Marketing
As society has become more health savvy, the cigarette industry has had to confront new and potentially devastating challenges to their business. The legal, political and other challenges that they face occur both in the United States and abroad. The first challenge they face is the ethics other companies have in associating with or doing business with the cigarette manufacturing industry.
The stigma that the cigarette industry has attached to it affects it in a variety of areas. Mutual fund managers are reluctant to add cigarette manufacturers to their holdings. Corporations that once had cigarette related paraphernalia as a part of their conglomeration have either sold or spun off these portions to ensure the parent company does not have any part in the cigarette industry. Even sporting events, such as the Nascar Winston Cup have become politically correct, changing its sponsorship to Nextel. In fact, even uttering the word Winston by sportscasters during the races now comes with a $10 penalty for each occurrence. (Habib, Kennedy & Bechtel, 2004) Even ad agencies feel uneasy about accepting cigarette companies as a client.
Along with the reluctance of other organizations to associate with cigarette manufacturers, they also face challenges due to the prevalence of medical material in support of the dangers of smoking. New data regarding lung cancer, impotence and even glaucoma is being disseminated in quantities like never before, educating smokers and potential smokers around the globe. In the United States, the Surgeon General’s warning about the dangers of smoking is on each and every pack, carton and advertisements, what little advertisements are still allowed.
The regulation of advertising is another challenge cigarette manufacturers have had to face. Large billboards that once used to sport the image of the Marlboro Man, with a cigarette hanging lazily out of his mouth are gone. The somewhat lovable cartoon character, Joe Camel, is gone as well. Bans of cigarette advertising in a variety of foreign countries has lead to the industry seeking new and innovative ways to hock their wares. But just as the cigarette manufacturers have innovated their advertising campaigns, the anti-smoking organizations have upped their marketing as well.
Part of the money for anti-smoking campaigns comes from the cigarette manufacturer’s industry itself. Couple this financial burden with the multitude of lawsuits that have been brought against the industry, and these are an incredible financial challenge for the industry. Even though few have actually made it to court, and only a fraction of those have been awarded an award, the astronomical settlements that have been received in the United States are hefty. These lawsuits have prompted citizens in other countries to ‘follow suit’ and file lawsuits as well. (Iida & Proctor, 2004)
Increased taxation is a final challenge that cigarette manufacturers have to overcome. Today it is common to have taxes on cigarettes equal closely to the amount of the pack itself, if not more, in the United States. In just 2004, several states are looking to increase their taxation on cigarettes, once again. These states include: Alabama, Texas, North Carolina, Missouri, Kentucky, Oklahoma, Michigan, and California, to name a few. (“Alabama”, 2004; Williams, 2004; “North Carolina”, 2004; Shields, 2004; “Kentucky”, 2004; Williamson, 2004; Lane, 2004; Mitcheli, 2004)
In addition to these challenges, there are a variety of various interest groups, organizations and institutions that cigarette manufacturers must consider when they market their cigarettes. In the United States the Office of the Surgeon General, and the Surgeon General himself, is a powerful institution cigarette manufacturers must face. The American Medical Association, the Centers for Disease Control, and the American Cancer Society as well oppose cigarettes and promote anti-smoking campaigns. State run agencies, such as the Minnesota Department of Health, as well as other local government departments, too are opposition to cigarette manufacturer marketing. Even the Environmental Protection Agency and the Food and Drug Administration have to be taken into consideration when cigarette manufacturers formulate and implement their marketing plans.
Abroad, there is opposition as well for cigarette manufacturers. The European Union has placed restrictions on cigarette marketing, as has the Consumer Protection Agency in Hungary. In addition, the Asian Consultancy on Tobacco is serving to disseminate oppositional information against cigarette manufacturers. Even the World Bank has taken an anti-smoking stance, as well as the World Health Organization.