The key to success in the cigarette business is to be first on the market, and to tell people about it, according to a study from the Federal Trade Commission.
The recently released report covers 1913 through 1973 and is an exhaustive study of the advantage to a cigarette company of early entry into the market with new products.
The seven submarkets covered by the study were nonfilter 70-milimeter cigarettes, nonfilter 85-mm, plain filter, menthol filter, high-filtration filter, charcoal filter and low-tar filter.
"In six of the seven submarkets, the first firm to offer, promote and widely distribute a branch for which there was a favorable market trend received a substantial and oftentimes enduring sales advantage," the report concluded.
The study found that five of the seven first entrants into the designated markets were able to hold on to their lead despite competitors eventually outspending them in advertising and promotion.
"Despite the evidence that first entry is correlated with relatively low promotional costs, the data show that, in general, first entry is not a substitute for advertising," the study noted. "First entry and advertising appear to be complementary in the sense that first entry, without at least a minimum amount of effective advertising, is insufficient to ensure a substantial market share."
In every case of a new-product introduction, competitors followed with similar, or slightly differentiated, brands designed to take advantage of a growing market trend, the study indicated. But in most cases, the first entry was not dislodged from the top sales spot, it was noted.
The study found that Camel cigarettes were the first entry in the 70-mm nonfilter cigarette market in 1913, and maintained the top position in that market for 50 years before giving way to Lucky Strike in the early 1960s.