Vype: a (non-) tobacco marketing masterpiece

Vype is the first brand of British-American Tobacco that is advertised in all available channels, including TV, after more than twenty years of TAPS ban in the UK. The media coverage is focusing on the obvious fact of Big Tobacco being back on the TV screen. At K-message we believe that Vype is much more than that. It is a marketing masterpiece designed to bring  Transnational Tobacco Corporations (TTCs) back in the game. We are far from telling you a story of cynical “merchants of death” sneaking to your children’s dorm room. We also do not want to convince anyone that e-cigarettes and other “reduced harm” products are almost charitable way of providing safe way to stop smoking by the tobacco industry. What we want to show you however is that Vype is a well planned and so far almost perfectly executed marketing campaign. How did it start?

TAPS ban in the UK

It has been long time since viewers in the UK last seen cigarettes being advertised in TV. The television commercials of cigarettes in Great Britain were banned effectively on 1st of August 1965. Other tobacco products (mainly loose tobacco and cigars) could be advertised until 1991, and this is why some viewer can still remember that Rab C. Nesbitt was smoking Hamlet Cigars.

Nowadays, comprehensive ban on TAPS is a policy accepted by 170 parties of World Health Organization Framework Convention on Tobacco Control (WHO FCTC). Article 13 of the treaty defines Tobacco Advertising and Promotion as  “any form of commercial communication, recommendation or action with the aim, effect or likely effect of promoting a tobacco product or tobacco use either directly or indirectly” and  Tobacco Sponsorship as “any form of contribution to any event, activity or individual with the aim, effect or likely effect of promoting a tobacco product or tobacco use either directly or indirectly”.

Big Tobacco has no choice but to forget about any presence in TV. Unless it finds another product that does not contain tobacco.

E-cigarettes – a loophole for tobacco marketers

E-cigarettes provide such a loophole. This is why we can see an advert from the second biggest cigarettes manufacturer broadcasted in British TV in 2014, 23 years after the ban for tobacco advertising in the UK.
Experience the Breakthrough says the campaign for Vype, BAT owned brand of electronic cigarettes. They do not contain tobacco, just nicotine. According to the current research they do not cause any harm to users, who are called “vapers” instead of “smokers”, neither to passers-by.  Vype is an electronic nicotine delivery system (ENDS) in the category of cig-a-like.  In human language, Vype is an e-cigarette that imitates cigarettes in the look and user experience. At the time of writing of this article, there are two types of Vype e-cigarettes available in the UK.

• Disposable Vype cig-a-like offers around 130 puffs of so called ECOpure liquid produced with pharmaceutical grade nicotine. There are three flavours of Vype, Bold, Regular and Menthol that differ with nicotine level.
• Vype rechargeable device comes in an attractive packaging, and consists of battery with heater and replaceable reload cartridges with the same ECOpure liquids as Vype disposable e-cigarettes. One reload cartridge provides around 250 puffs of vapour.

Both kinds of Vype try to resemble traditional cigarettes in almost every possible way. They come in attractive packaging showing off branding and made in a shape of Zippo lighter. The look and feel of Vype that imitates cigarette is achieved with the size (one of the smallest in the market) of the device, a paper-like fabric that covers device and the graphical design identical with the one of the traditional cigarettes.

BAT and it’s US partner and subsidiary RJR are the most active of Big Tobacco in ENDS marketing efforts. At K-Message we have recently described the TV advertisement of Vuse, the first television ad from Big Tobacco in the US after 43 years of ban. Vuse is promoted in the way replicating KENT campaigns. In the UK, British American Tobacco promotes Vype in the way that resembles brand world of Pall Mall. But before we discuss the marketing strategy in detail, let’s take a look at the history of BAT efforts in so-called “Harm Reduction”.

BATs efforts on “harm reduction”

It is clear that the best way to reduce health hazards of tobacco products is to stop using them at all. This is a bad news for the industry, and something very hard to achieve to addicted smokers. Therefore, since 1950s, Big Tobacco companies have been investing in different approaches to reduce harm of its products usage. From early low-tar “safer cigarettes” and filters, to the non-combustible tobacco products, there is a whole range of devices that can deliver nicotine with lower amount of tobacco harmful and potentially harmful constituents (HPHCs).
BAT was the first company to introduce filters and later on charcoal filters in its cigarettes (nb. this has no real impact on the health risks of smoking), it introduced snus and snuff on some markets it also works at unique propellant-based nicotine delivery with company called Kind Consumer Ltd.
Since 2001, when IOM has published its “Clearing the Smoke: The Science Base for Tobacco Harm Reduction” report, TTCs started using term “harm reduction” to describe such efforts. In the same time CSR was adopted as a way of cleaning the image of the business (a task so hard, that Phillip Morris executives considered leaving tobacco industry) and to get more impact on policymakers.
As cigarettes sales in Europe started to decline in 2002, the harm reduction efforts were more intense with smokeless tobacco (SLT) products being introduced in form of snus.
Vype e-cigarettes, a product of acquired by BAT in 2012 company CN Creative Ltd and promoted by BAT’s subsidiary Nicoventures, are the latest on this long list of harm reduction products.

Table: Timeline of BAT harm reduction discourse on BAT’s corporate website (http://www.bat.com), based on archived webpages (dating from 1996–2012) available from http://www.archive.org

Source: Silvy Peeters, Anna B Gilmore, Research paper: Understanding the emergence of the tobacco industry’s use of the term tobacco harm reduction in order to inform public health policy, Tobacco Control doi:10.1136/tobaccocontrol-2013-051502

 
Looking at the history of harm reduction, it is hard to believe that the real and only goal is to make a safer cigarette. Independent research on transnational tobacco companies’ documents show that harm reduction was aimed to gain access to scientists, the public health community and policy makers, and rebuild its reputation as a responsible industry.
Due to the fast growth of e-cigarettes market, current Vype endeavor is for BAT an obvious opportunity to get into this niche and make a profit. At K-message, however, we believe that Vype, as other harm reduction projects is intended to do more than that.

Why Vype is more than yet another e-cigarette

With its extreme cig-a-like design Vype brings smoking habit back to normal, opposing the efforts of anti-tobacco campaigners. Vapers using Vype look the same as regular cigarettes smokers. From this point of view, with Vype all cigarettes are back in the public space.

It may also increase Vype efficiency in being a gateway to the regular smoking as well. We already have some clues that e-cigs young vapers are switching to cigarettes.

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Research: E-cigarettes Impact on Conventional Cigarette Use Among US Adoloscents

A recent research published in JAMA Pediatry, Electronic Cigarettes and Conventional Cigarette Use Among US Adolescents. A Cross-sectional Study assessed how e-cigarettes affect use of cigarettes. According to the researchers, who analysed survey data from a representative sample of US middle and high school students in 2011 (n = 17 353) and 2012 (n = 22 529), use of e-cigarettes was associated with higher odds of ever or current cigarette smoking, higher odds of established smoking, higher odds of planning to quit smoking among current smokers, and, among experimenters, lower odds of abstinence from conventional cigarettes. Use of e-cigarettes does not discourage, and may encourage, conventional cigarette use among US adolescents.

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Vype, a cig-a-like that is supported with 3.6 million GBP worth marketing campaign in the UK will be even more dangerous. It brings back to tobacco marketing two powerful psychological effects. First it may again use social learning theory, providing attractive models smoking Vype, a device that looks and feels just like a traditional cigarette.
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Social learning theory in marketing

In 1961, Albert Bandura performed his famous experiment with a Bobo doll. Without any stimuli (as proposed by an earlier, behavioral theory), children were copying an attitude to the doll observed on the model behavior showed by experimenter (or his confederate). They learned to be either aggressive towards the doll or to play with it peacefully. The experiment proves, that learning is a social process, and that it happens via observation and/or instruction and/or by symbolic means (children reacted not only to living model but also to the movies shown on TV).

For marketers social learning theory means, that to change behavior or attitude of the customer, we need to show them on the model this expected behavior. Efficiency of the learning, according to social learning theory, depends on the model and cognitive processes that observer has to perform. Those needed processes are:
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• attention (observer has to attend the modeled behavior, so it should be clearly noticeable and attractive)
• retention (observer has to remember it, so it should be simple and preferably repeated)
• reproduction (observer has to be able to reproduce behavior, so we should provide conditions to that ie. distribute product in the area where it is marketed, set its price at affordable level etc.)
• motivation (observer has to be motivated to reproduce behavior; or be refrain from doing it, depending on marketer’s goals. This can be achieved by showing consequences of the behavior within a message)

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Secondly, if the initial success is achieved, it may bring back a social proof, or informational social influence principle. Social proof is a phenomena that is very powerful in ambiguous situations, when one is not sure on how to behave. It is a form or conformity, or kind of herd instinct. While lacking other clues, behavior of others, even if not understandable becomes an option to follow.  If there are many people who publicly use Vype, then smoking cigarette that looks almost identical is nothing wrong. In political language this issue is called re-normalisation of smoking, and is one of the strongest arguments for extension of TAPS ban to e-cigarettes.

Vype advertisement

Let’s look at the first advertisements of Vype that are broadcasted in the UK to see how the brand positions itself. The 30 second TV spot broadcasted in the biggest UK commercial channels is produced by Iris Worldwide agency. Iris has won the Vype multimillion budget in late 2013, after three tier process of selection.

While e-cigarettes in general lack strong brands and differentiation between products, it seems that Vype tries to focus on the young, urban population of smokers.  Thus we can see young man and woman running through the urban night landscape to the ultimate jump into the cloud of vapour symbolising “the breakthrough”. The ad, directed by Lionel Mougin, was shot in Cape Town over three nights, it was produced by Pointblank Productions and post production was made by MPC.

It is worth to note, that there is a clear mention of “adults only” targeting, as male actor runs through the door with age limit label. An online version of the ad refers to smokers, while the TV version of the smoke talks about “pure satisfaction for vapers”.

Nicoventures, due to its symbiosis with BAT has an access to the extensive research on the habits and needs of the smokers in different socioeconomic segments. The Vype brand resembles a bit positioning of the traditional Pall Mall. It is even more clear if we look at another video posted on GoVype official YouTube channel, showcasing a #vypesocial bar in London’s East End.

Vype was also visible on the recent London Fashion Week sponsoring A/W 2014 collection of London based designers Annette and Daniela Felder (Felder Felder). This activity has fed Vype’s Instagram. 

Vype has also launched a sampling campaign in London and Manchester with a small fleet of branded Fiat 500L cars, handing out over 2300 disposable Vype e-cigarettes.
Nigel Hardy, head of Nicoventures U.K. and Ireland, describes his brand positioning for AdAge magazine:  

“[E-cigarette is] a difficult category to show the benefits and create a positioning. Vype is a modern brand targeting adult smokers in a way that appeals to them, so it’s quite broad, because the needs of smokers are different according to their life stage.”

Vype campaign is truly cross channel, with very prominent digital marketing. Brand is promoted on Twitter, Facebook, Instagram, YouTube and via display advertising. There is a strong ATL presence with TV and print (all media planned by Mindshare), and lots of outdoor and event activities.
Vype goes now for FUBYAS and urban trendsetters, to possibly expand its reach to the casual smokers. What is more important the brand provides an attractive choice for those who want to try their first e-cigarette. In the recent sampling campaign 40% of the people sampled had tried an e-cigarette before, but never a Vype, while for 60% it was the first contact with an e-cigarette.
Incumbent e-cigarette producers try to fight back, with NJoy TV spot with clear anti-tobacco message “Friends don’t let friends smoke” and nation wide distribution via Sainsbury’s and a lot of WOM activity that tries to diminish Vype on the users forums.
BAT’s big budget however makes a difference, and there is no doubt that Arizona based e-cigarettes maker can not stand it in the long term. For a sake of comparison, NJOY so far raised 145 million USD in total, while 2013 operational profit of BAT was at striking 5,526 million GBP (9.2 bn USD). NJOY is proud of their Sainsbury’s presence, but Vype is already not only in Sainsbury’s but also in Tesco, McColl’s, Spar and Shell being available in more than 10,000 retail outlets in the UK. There is no comparison here, really.
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Main reasons for ban on e-cigarettes advertising

1. Health hazards of using e-cigarettes.

• E-cigarettes are not thoroughly researched, liquids containing nicotine are not checked for dangerous chemicals and may have an adverse effect on users health.

• E-cigarettes are not perfect cessation aid. As their usage is very similar to the one with usual combustion cigarette, there is a huge group of hybrid users who use both electronic and traditional cigarette.

• E-cigarettes may attract people who did not smoke tobacco before, and they can move towards traditional tobacco in consequence.

2. Tobacco control issues.

• E-cigarettes and other NCP are blurring the message. Clear message that smoking kills is not working so well if one can see a list of exceptions.

• E-cigarettes marketing under old tobacco brands will strengthen the brand of traditional products. It can also affect smokers who tried to cease smoking or attract non-smokers and be a gateway to conventional cigarettes.

3. Political reasons

• Current WHO FCTC is very strict in that smoking should denormalized (Article 12). If smoking e-cigarettes will be common, then smoking will be normal again.

• Smoke free legislation may be undermined by e-cigarettes. If everyday you vape in the cafe and this time you have a traditional cigarette the psychological difference is not very big.

• FCTC in Article 5.3 limits any engagement of Tobacco Industry in setting up policies. As E-cigarettes and other harm reducing products are often controlled by Tobacco companies any research on those products may breach the rule.

• The same Article 5.3 of FCTC disregards any Corporate Social Responsibility (CSR) efforts of Tobacco Industry. Harm reduction is such activity, and thus Tobacco Control community is obliged to disregard it.

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Nicoventures – a Big Tobacco’s Healthcare Company

Vype is a new category of the product for BAT, but the entrance of the company into e-cigarettes is not surprising. As we discussed above, Big Tobacco companies including BAT were looking for not-so-lethal products for long in their harm reduction projects. Electronic cigarettes however were a new territory for the company. Because of that (and yet another reason we will discuss in a moment), BAT has created a subsidiary called Nicoventures. The sole goal of Nicoventures is to work on “nicotine based alternatives to cigarettes”.

Although Nicoventures is a separate company, it is very closely connected to BAT. It’s management consists of former BAT executives. Since the beginning Nicoventures was reporting to BAT’s Director of Corporate & Regulatory Affairs (CORA), Kingsley Wheaton. Its current CEO, Des Naughton, is also Managing Director, Next Generation Products in BAT.
Having Nicoventures separated allows BAT to circumvent limitations of Article 5.3 FCTC. What is more Nicoventures, as not only non-tobacco company but a… Healthcare company. To be honest, we could put this article also under Pharma Marketing category. Positioning Nicoventures as healthcare company may look strange. After all, pharma is also strictly regulated and cannot advertise. Although counterintuitive, this is very good for BAT.
If Vype and future products of Nicoventures are treated as regulated medical devices, there is a big chance that regulatory will take a look at all the players on the market. This immediately pushes out of the UK market cheap e-cigarettes imported from China, as importers will not invest their money and time into regulatory process with MHRA. Most probably, they would not be able to meet quality standards obligatory for medical devices, especially taking into account nicotine liquids.
For BAT it means that they have a healthcare company to speak with health authorities, and that the market will be cleaned for them with governments hands.
Let’s summarize why Vype is so special, almost diabolically perfect marketing tool for British-American Tobacco.
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• Vype technically allows advertising cigarettes in all media. including TV
• Vype allows promotion of cigarettes in all trade sectors, including HoReCa
• Vype speaks to the existing customer base of cigarettes smokers
• Vype has potential of the gateway for new users from e-cigarettes to cigarettes
• Vype allows BAT to profit from fast growing e-cigarettes market
• Vype circumvents Article 5.3 of FCTC via healthcare company that can freely talk to policymakers
• With MHRA process Vype has potential to remove incumbent players from e-cigarette market in the UK
• Last but not least Vype really is a safe alternative to cigarettes and a possible cessation help.

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People behind the Vype

As a conscious non-smokers and non-vapers we cannot talk about the product quality and efficiency in delivering nicotine (reviews on the web are not so great, but we assume this is mostly WOM from incumbent producers). From the marketing point of view, where we have some expertise, it is a masterpiece. Who stands behind Vype brand, its TV advertising and the whole Nicoventures strategy?
Des Naughton, Managing Director, Next Generation Products BAT
Des was appointed Managing Director, Next Generation Products, in March 2013. He joined the Management Board as Director, Eastern Europe, in September 2010 before being appointed Group Operations Director in June 2011. Des was previously Regional Head of Marketing, Africa and Middle East. Since joining the company in 1995, he has held a number of general management and marketing roles across the world including Global Brand Director for Dunhill and General Manager, South Korea.
Kingsley Wheaton, Director, Corporate and Regulatory Affairs BAT
Kingsley became Director, Corporate and Regulatory Affairs in June 2012. He joined the Group in 1996 and has held a number of roles in Marketing. He was Marketing Director in Nigeria and Russia, before becoming General Manager in Russia, one of the Group’s most significant businesses. He was then the Global Brand Director responsible for Kent and Vogue before taking his place on the Management Board in January 2012 as Deputy Corporate and Regulatory Affairs Director.
Philippe Zell, Director of Sales and Marketing, Nicoventures
Philippe is Nicoventures’ Director of Sales and Marketing. He was previously the Global Chief Marketing Officer of Novartis Consumer Health. Philippe joined Novartis in 2001 from Procter & Gamble, where he was the European Marketing Director for the snack food division. Before that, he progressed through a number of marketing and sales positions in Switzerland, Hong Kong and Israel. Philippe earned a master’s degree in Chemical Engineering from the Swiss Federal Institute of Technology and completed a Management Training Program at Harvard Business School.
Nigel Hardy, Head of UK and Ireland, Nicoventures
Nigel is Nicoventures Head of UK and Ireland. He was previously the Sales Director for CN Creative and Nicoventures. Nigel joined Nicoventures from AB WorldFoods, where he was also the Sales Director. He has previous experience in Tobacco gained in JTI where he was a Trading Director for more than 5 years. He is an expert in FMCG with an experience from Tesco and Marks and Spencer where he was responsible for operations in Spain.  Nigel holds IEP diploma from INSEAD.