Evaluation of IQOS marketing campaign within an ethical contex

Factors that affect customers of choosing addictive products. Dissection received performance on people’s attitude of being targeted. Marketing of electronic cigarettes. Development of recommendations for improving marketing strategy in the future.

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FEDERAL STATE EDUCATIONAL INSTITUTION OF HIGHER EDUCATION

NATIONAL RESEARCH UNIVERSITY

HIGHER SCHOOL OF ECONOMICS

Saint Petersburg School of Economics and Management

Department of Management

Bachelor's thesis

Evaluation of IQOS Marketing Campaign within an Ethical Contex

Sidelnikova Anastasia

Supervisor PHD Economics

M.A.Storchevoy

Saint Petersburg 2019

Abstract

In the 21st century, the industry of tobacco and nicotine-containing products is developing despite the fact of strict law regulation around the world. The development of the tobacco industry is closely related to the number of nicotine consumption. Still, the World Health Organization actively fights the tobacco market and limits their influence in the global market. Nevertheless, new tobacco products appear on the market and one of them is IQOS. IQOS is not regulated by law as other smoking instruments according to the smokeless technology. This raises the ethical issue of how IQOS marketing should be built to stay in social norms.

The research aim of my study is to identify and to prevent unethical ways of IQOS marketing campaign by analyzing customers perception of being targeted by IQOS. The paper is going to analyze literature according e-cigarettes and IQOS, marketing of such products and ethics of cigarettes. To reach the goal of the research online questionnaire was conducted and personal interviews are held to get additional comments from IQOS employees.

The study is useful for tobacco companies for a deeper understanding the customer needs and preferences and how to promote new products in an ethical way.

Key words: Marketing, advertising, ethics, tobacco products, e-cigarettes, IQOS, addiction.

Table of contents

  • marketing product electronic cigarette
  • Abstract
  • 1. Introduction
  • 2. Theoretical foundation
    • 2.1 Addiction: specific of its nature
    • 2.2 E-cigarettes: characteristics and trends
    • 2.3 IQOS
    • 2.4 Marketing. Marketing of cigarettes and electronic cigarettes
    • 2.5 Ethics in advertisement
  • 3. Statement of the research question
  • 4. Methodology
    • 4.1 Goal and stages of the thesis
    • 4.2 Description of the hypotheses
    • 4.3 Description of IQOS product
    • 4.4 Methodology of questionnaire
    • 4.5 Methodology of statistical data analysis
    • 4.6 Methodology of semistructured interview
  • 5. Description of the results
    • 5.1 Results of the questionnaire
    • 5.2 Statistical data analysis
    • 5.3 Interviews from PMI
  • 6. Conclusion
  • Reference list
  • Appendix 1
  • Appendix 2
  • Load the data
  • Preparing data for analysis
  • Logistic regression: model 1
  • Compute the odds ratios for all coefficients (model1)
  • Compute pseudo R2s for the model (McFadden)
  • Logistic regression: model 2
  • # Compute the odds ratios for all coefficients (model2)
  • Compute pseudo R2s for the model (McFadden)
  • Appendix 3

1. Introduction

The industry of tobacco and nicotine-containing products is characterized by a dynamic process of innovation as this market occupies a stable place in the world's economy of the 21st century. Tobacco consumption is the leading cause of preventable disease globally, causing an estimated 6 million premature deaths annually (Samet, 2013). Due to the fact that the World Health Organization has been fighting against smoking for almost 16 years, methods of nicotine ingestion through smoking are being modernized and developed.

Current law restrictions on the distribution and advertising of tobacco products in conjunction with world trends in economic development led to the establishment of products such as vapes, e-cigarettes, and other innovative nicotine use tools. New ways of smoking increase the diversity of the market and therefore increase the interest in smoking. This fact arises the new ethical problem that innovative methods of smoking call for an “easier way to quit smoking” or smoking with less harm to health, but as a result, the percentage of smokers increases. One of these innovative products on the worldwide market is IQOS; I-quit-ordinary-smoking with smokeless technology. Being a unique product of this kind from Philip Morris International (PMI), IQOS is increasing its customer base with the help of former clients of competing companies. Cigarette market shows a high level of brand loyalty, smoker would not switch from his favorite smoker despite to some special factor (Choi et al., 2013). However, IQOS Heets (name of the special cigarette sticks that are using for IQOS) has a rapid growth in the world market share. PMI owns six of the fifteen World's best-selling cigarette brands and to the end of 2018 Heets are one of them with 1,6% of the market share and this statistic does not illustrate the sales of IQOS device. (вставить сноску на отчет PMI). It not only shows that IQOS has a strong position on the market already but also that PMI successfully “steal” loyal customers from their own brands and from competitors. Moreover, one of the main competitive advantages of this product is in smokeless technology that allows to use it inside and it is not prohibited by law. In other words, it raises another ethical issue that the regulation of such tobacco product is not equal to others and allows the company to target potential customers in various ways. Consequently, the marketing campaign of IQOS plays in contrast with almost no advertised competitors.

This raising problem how to decrease the level of tobacco and nicotine consumption if new products are releasing to the market with no legal regulation developed. In this regard, the objective becomes relevant how to not ban these new products but to control or edit the ways of spreading the information about such devices as IQOS to mass media, without any ethical contraventions, for example, targeting no-smokers, children and youth, promotion of unhealthiness as a glamorous lifestyle.

The results will be the basis for future research related to the features of heat-not-burn devices and related topics. Research work is also practical for tobacco and e-cigarette companies, especially for PMI as this paper is related to this company exactly, how to make your product stably successful but with no ethical problems that it arises.

The primary aim of this research is to identify and to prevent unethical ways of IQOS marketing campaign. For confidentiality reasons, the name of the product and the company will be used in the paper. In terms of the aim, the research purpose type is exploratory. The aim of this research leads to the formulation of the following research question: “What ways of promoting IQOS could be considered as unethical and irresponsible?”. The object of the study it the market of new tobacco and nicotine consumption devices. The subject of the research is the ways in which marketing of such products that target people with nicotine-containing products in unethical ways

To reach the aforementioned aim, the following objectives have to be attained:

1. to examine literature about the marketing and ethics of tobacco products;

2. to study detailed information about factors that affect customers of choosing addictive products;

3. to review the phenomena of IQOS as a tool of promoting smoking;

4. to develop the methodology of the research in detail (interviews, questionnaire, statistical analysis);

5. to dissect received performance on people's attitude of being targeted by IQOS;

6. to develop recommendations for improving IQOS marketing strategy in the future.

The idea of the research is to see how the situation on the market changed with releasing IQOS which is not regulated by law as other smoking instruments. According to this changes the perception of smoking is changing in customers minds that rise real ethical problem. The future research may be limited in the amount of necessary information and changes in the law regulations. An online questionnaire will provide an overall picture of the people's smoking attitudes and the way in which people feel themselves being targeted by IQOS. Moreover, an interview is used to understand how the company sees the whole market situation from its side.

The following methods were chosen to test the set hypotheses and achieve the ultimate goal of the study: archival research, interview, questionnaire and statistical analysis.

It is also worth mentioning some limitations of this paper. Initially, this work should be based not only statistical analysis of questionnaire results but also be compared with PMI brand sales each month. Unfortunately, it is the closed information that I am not able to get. Secondly, the respondents were collected by word of mouth and publication in VK group that make my results a bit biased according to age and location. Thirdly, there is a psychological limitation regarding to the survey because people could answer untruly; for some people the question of smoking is awkward and they are shy to correspond honestly. However, the lack of the research in this specific topic gives a risk of wrong choosing method and evaluated characteristics.

The structure of this research paper is determined by its objectives. The first part (the literature review) is theoretical and devoted to the study of the addiction, characteristics of electronic cigarettes market, marketing and advertising ethics of tobacco products. Moreover, it analyzes various factors that affect customers from choosing addictive products and how it is affected by marketing campaign. The second part determine the research problem and methodology, defining the research design and uses the method of interview, online survey and statistical analysis for better understanding the market situation in a practical way not in theoretical. The last part describes the results achieved during the research and gives recommendations for further study of the topic.

The total volume of the research paper is 36 without appendixes. This work around uses 50 international sources.

2. Theoretical foundation

Research on the topic of marketing campaign of innovative tobacco products are still few developed. Especially, about how this marketing campaign should be built and implemented according to new devices and ways how to depict them in ethical way. This idea is researched only partly and on abstract and theoretical level. Mostly, previous researches touch ethical regulation of new tobacco consumption products on legal level and illustrate it as a problem nowadays, nevertheless, there is a lack of papers from the point of customer who, regardless of whether he wants to or not, is targeted by advertising such new types of smoking, including IQOS.

2.1 Addiction: specific of its nature

Nicotine is a hard-addictive drug and the addiction is strong like for a heroin. Through childhood people start the try of addiction and with adolescence it becomes strong because statistics show that two thirds of smokers want to quit but only 2% from all succeed (Moxham, 2000). Smokers use nicotine to control mood and get rid of stress with possible positive symptoms of enhancing attention, productivity, reaction, etc. (Rosenthal, Weitzman & Benowitz, 2011). Nicotine has a strong influence on person's body in order of chemical effect and mental cruelty. Genes could play a significant role in the addiction to nicotine (Benowitz, 2008). Animal studies shows that nicotine alters synaptic connections affecting proteins expressed in brain cells that are responsible for managing addiction (Davis & Gould, 2008). In addition, nicotine addiction manipulates with withdrawal psychologically. Time with friends, break at work, taste of cigarette smoke and the feeling of smoke in the throat prevent smokers quitting (Rose, 2006). This how addiction always works in the way of necessary achieving the exact level of nicotine to avoid withdrawals (Friedman et al., 2015). That is why all the indirect and direct mentions about cigarettes and nicotine consumption instantly activate necessity in nicotine consumption. Cigarette addiction is confirmed to be a totally brain disease according to the studies into the biology of substance use (Dingel, Karkazis & Koenig, 2011). On the contrary, several researchers find physical dependence as a key point leading to nicotine addiction. As soon as physical dependence arises, smoker has no other way than to achieve the needed dose of nicotine (DiFranza, Ursprung & Gisиle, 2011).

It is scientifically proved that nicotine addiction is the main reason not to quit smoking that kills in one in two long-term cigarette smokers by smoking consequences U.S. Department of Health and Human Services, 2010 and with time cigarettes became more dangerous as well as an addiction stronger (Thun et al., 2013). Moreover, there is an idea that nicotine addiction has a connection with not fully revealed ingredients list of cigarettes that is used as an instrument to play with consumers by «trade secret» that is not a secret in fact at commercial point (Cumming, 2015). This hidden information that gives poor details about nicotine and tar yields is useful for clear understanding making it just as dangerous (Moxham, 2000).

The electronic cigarettes market is wide spread but not enough researches in addiction paradigm; researchers still does not have general solution on addiction level of e-cigarettes. The problem of e-cigarettes is that having the device itself makes them even more addictive than regular cigarettes. Progressive idea not to ban cigarettes and e-cigarettes but to lower the contents of nicotine in every product in order to be not addictive at chemical level would prevent children for smoking habits and liberate the decision-making process for quitting whenever they want to (Benowitz & Henningfield, 2013). Health specialists overlook what I consider an important point about e-cigarette as an instrument to promote tobacco addiction and to turn smoking into socially acceptable habit (Kmietowicz, 2014). There are several researches that prove this idea and highlight e-cigarettes as “gateway devices” that compounded “the tobacco epidemic among youth” (Dutra & Glantz, 2014).

2.2 E-cigarettes: characteristics and trends

In last few years the worldwide market of nicotine and tobacco consumption devices increased by releasing several new instruments. E-cigarettes first came to the European and United States market between 2006 and 2007 CASAA - Consumer Advocates for smoke-free Alternatives Association. See http://casaa.org/ and reached a market share valued at $2 billion in 2012 (Etter, 2012). Additionally, most of the American tobacco companies publicly revealed that they are planning to enter e-cigarette market (Felberbaum, 2013). Since that time with rises and falls e-cigarettes hold a significant position in nicotine consumption market. E-cigarettes, so called electronic cigarettes, are the electronic devices with battery powered supply that heats a nicotine solution to create a vapour. This vapour is an electronic heating element that evaporates the liquid forming an aerosol that has no effect of combustion; these systems have no smoke E&Y report, 2016 That is why they are common to be named as “vape”. These devices do not contain tobacco but liquid ingredients are obtained from tobacco. According to the research of EY (Ernst & Young, a multinational professional services firm) in 2016, e-cigarette market in seven countries with the highest e-cigarette consumption excluding China and USA was explored. These countries are UK, Germany, Poland, France, Italy, South Korea and Russia with a total 75% of global e-cigarette consumer price turnover. They defined findings that are important to mention for the purpose of this work. First of all, that the number of e-cigarette users increased in 7% in 2015 comparing to 31% in 2013 that consider themselves as “ex-smokers” only in these seven countries. Only in the United Kingdom the number of people who have ever tried or heard about e-cigarettes changed from 8% in 2010 to 52% in 2014 (Kmietowicz, 2014). Secondly, that the number of total e-cigarette users raised in 86% from 2013 to 2015. Moreover, both of these numbers are still increasing. Thirdly, in EY analysis they tried to find main factors why people switch from the regular cigarettes to electronic ones. The most common answers were the following:

· That e-cigarettes are less harmful than regular cigarettes;

· That using e-cigarettes helps to reduce smoking factory made cigarette;

· That e-cigarettes have no smell and do not bother people around;

· That e-cigarettes could be used in the places where regular smoking is prohibited.

It is not the full list of reasons but ones that are listed above are most important for this work. The full list is presented in the Figure 1.

Figure 1 Percentage of regular users

Most of the people who quit smoking cigarettes and start use electronic ones commented that they see a positive change according their health conditions. Nevertheless, in the USA FDA reported about several serious cases of pneumonia and chest pain, however, main side effects that are noted are dryness or burning of mouth and throat, headaches and cough (Pepper & Brewer, 2013).

Supporters of electronic cigarettes argue that new ways of smoking could help people to quit it with the help of e-cigarettes. However, e-cigarettes could be helpful for some people but of the same level or even less as other nicotine supplying devices (Kmietowicz, 2014). David Shaw (2015) compared and equate e-cigarettes with other nicotine sustainable products such as nicotine patches and gum. Banning e-cigarettes would restrict possible instrument for quitting smoking. Consequently, using vaporizers reduce second-hand smoking and is less disgusting to smell (Shaw, 2015). Smoking of the electronic cigarettes has become wide spread around children from 11-18, in the USA the number of ever-tried e-cigarettes among this age increased more than in twice: 6,8% in 2012 comparing with 3,3% in 2011 (Corey et al., 2013). Whereas Public Health England provides ample evidence that e-cigarettes are helpful for quitting smoking and are 95% less harmful than regular cigarettes Public Heath England, 2015 Czoli, Hammond and White (2014) in their work they find out the half of Canadian youth and young adults have seen once the advertisement of it or for sale. Also, in their work they determined that current smokers are more likely to start using electronic cigarettes than non-smokers.

Yet the market of electronic cigarettes is well developed but among the available studies there is still no visible single attitude to their perception.

2.3 IQOS

IQOS (I-Quit-Ordinary-Smoking) is the leading product in alternative nicotine consumption market and could be listed as a type of electronic cigarette. However, by e-cigarettes commonly understood vaporized liquid device and in IQOS the technology is called HTP, heat-not-burn (McKelvey et al., 2018). The cigarettes are marketed by PMI as a “revolutionary technology that heats tobacco without burning it, giving you the true taste of tobacco, with no smoke, no ash and less smell” IQOS site 2017 http://media.corporate-ir.net/media_files/IROL/14/146476/PMI-FINALFILES/index.html. Starting launching IQOS in 2014 from Japan and now this device is spread around 30 countries. In the annual quarter reports of PMI, a rapid growth is shown in IQOS sales since it was released to the market. By the end of 2018 Heets (special tobacco sticks for IQOS) achieved 1.6% of total cigarette market share being on the same level with Parliament PMI annual report 2018, http://media.corporate-ir.net/media_files/IROL/14/146476/PMI-FINALFILES/index.html. PMI owns six best sells cigarettes brands and now Heets is one of them and the trend is growing. These statistics exclude sales of the IQOS itself. One of the researches was conducted on analyzing the perception of IQOS in Japan and it shows a sharp rise in people's interest after shown advertisement of IQOS on the TV during one of the famous shows. The buying attitude changed from 2.7% to 10.3% based on showed ad (Tabuchi et al., 2017).

Several researches provide the information that IQOS is not so harmless. It obviously does not lead to illnesses caused by cigarettes with smokeless technology but there are new diseases that it arises. Using a heat-not-burn device causes vulnerability to respiratory tract infections and can lead to asthma attacks (Miyashita & Grigg, 2018). Heating special HeatSticks that are inserting in IQOS device produce carcinogenic and other harmful substances (Yoshida, 2018). In IQOS smoke or tobacco aerosol presented such chemicals as polycyclic aromatic hydrocarbons, and carbon monoxide that are harmful on the same level as elements in cigarette smoke (Auer, 2017). One of the works was made on experiment with rats that were exposed by cigarette smoke and IQOS aerosol emission. As a result, it indicated high toxicity of IQOS that are not presented in cigarettes that could lead to serious diseases Possible hepatotoxicity of IQOS Tob Control November 2018 Vol 27 No 1.

The Food and Drug Administration met several claims regarding HTP products to enter the USA market (Kress, 2017) but the latest decision regarding IQOS was revealed on 30th of April 2019. IQOS could operate on US market but with strong prescriptions preventing youth use and marketing control. FDA permits sale of IQOS Tobacco Heating System through premarket tobacco product application pathway. April 30, 2019. https://www.fda.gov/news-events/press-announcements/fda-permits-sale-iqos-tobacco-heating-system-through-premarket-tobacco-product-application-pathwayThe existing studies on IQOS concern only the consideration of the device from the side of harm to health through the analysis of chemical components and its possible consequences. One of the latest studies assessed awareness through interviewing people and representation of people was explored only on their social portrait and status American Journal of Preventive Medicine Am 2017.

2.4 Marketing. Marketing of cigarettes and electronic cigarettes

Marketing is a channel that allows company to communicate with their customer though various ways to spread their products and services.

It is believed that marketing should take responsibility for the first four steps of the classic sales funnel - customer awareness, brand awareness, brand consideration and brand preference, and the sales department for the last four: intention to make a purchase, purchase, customer loyalty and protection of their interests (Kotler, Rackham, & Krishnaswamy, 2006). In this case, marketing is directly related to the process of making a purchase decision. Including absolutely unimportant this process takes place online or offline (Wang & Katawetawaraks, 2013). The key element of marketing strategy is advertisement. Today, with technological growth and increasing competition between businesses, advertisement has become an important strategic part Abdullah O?zkan Strategic Importance of Ethic Values in Advertising and Concept of Self-Regulatory. The role of advertisement is to build a communication between product or service with a potential target group being convincing and reliable (Batэ, 2010). Modern advertising works in such a way that it creates the appearance of a need for a certain product, sometimes creating a special image that will affect a potential group of buyers manipulating with their will that make them being adopted to specific view or attitude (Gulsoy, 1999).

Kilbourne (1999) point is that «advertisers like to tell parents that they can always turn off the TV to protect their kids from any of the negative impacts of advertising. This is like telling us that we can protect our children from air pollution by making sure they never breathe. Advertising is our environment. We swim in it as fish swim in water. We cannot escape it … advertising's messages are inside our intimate relationships, our homes, our hearts, our heads» (Kilbourne, 1999). No matter how product is good or bad, how it is needed for the customer advertisement would easily precure to buy (O?zkan, 2014). There are various types of advertisement, for example, it could be inside and outside banners and posters, special stands and promotion shops, display in points of sales, targeting advertising in the internet, promotion by employees, TV commercial, radio ad, etc. Outdoor advertisement, especially ads that are put in the points of sale has a profound effect on buying decision of youth (Varvadas et al., 2013). Tobacco points of sale has shown an increase in cigarette consumption not only around youth but also around people who just quitted smoking (McCarthy & Wakefield, 2010). Further research shows that adults are also highly exposed to advertising through unregulated points of sale, also demonstrating a propensity for unintentional buying (Clattenburg, Elf & Apelberg, 2013). In 2008-2010 around 65% of Russian youth aged >15 years saw any type of direct and indirect marketing of tobacco products Centers for Disease Control & Prevention (CDC). Direct market via mail and web has also a significant effect to consumption cause common marketing through these channels is in cost reduction by coupons or special offers (86%) (Brock, Schillo & Moilanen, 2015). As far as marketing is concerned, the main message about e-cigarettes is that they are able to deliver nicotine as effectively as cigarettes. However, it was not proved scientifically (Henningfield & Zaatari, 2010). Marketing helped to spread the idea that e-cigarettes are tent to be healthier than regular cigarettes and consumers marked it like one of the most important reasons to quit regular smoking (Henningfield & Zaatari, 2010). That lead to the fact that cross border e-cigarette advertising was prohibited by the European Products Directive in 2016; electronic cigarettes could not be depicted on television, radio, the internet and newspapers. However, countries can locally determine to put such advertisements on billboards and buses (Kmietowicz, 2014). Images of the e-cigarettes whenever are they helping to quit smoking or increase nicotine consumption rate show by sexual and curious ads that smoking electronic cigarettes is glamorous and stylish creating the new lifestyle pattern (ДОБАВИТЬ СНОСКУ Using sex to sell vaping--should this be allowed? 2013).

2.5 Ethics in advertisement

Ethics “is a branch of philosophy which searches, defends or criticizes human behavior, principles of it, judgement and rules on the morality ground” (Зelik, 2013). Ethical principles have become obligatory in order of deceptive and deceitful communication by advertisement to mass media. These principals are presented in several official documents such as American Advertising Federation, American Advertising Standards Alliance, the International Chamber of Commerce Code on Advertising Practice and others. The main ideas are about morality, honesty, truthfulness, social responsibility, protecting children and young, protecting consumer and health.

Main principles of ethics in advertisement did not change dramatically through decades. However, for the last few years with changing of marketing tool new finding take place (Drumwright & Murphy, 2009). INSTITUTE for ADVERTISING ETHICS INSTITUTE for ADVERTISING ETHICS, 2011 Wallace S. Snyder published a list of 9 principles of advertising ethics. I will list them in brief:

1. The common goal of advertising and marketing itself is in telling the truth in highly ethical way;

2. While creating the content for targeting consumers marketers and advertisers should first correspond to their own ethical concerns;

3. The difference between editing material and advertising to mass media should be found by marketers;

4. To show opacity and openness of the brand revealing all essential conditions, such as payment;

5. The communication should be built rightly according to the specifics of the targeting group;

6. Marketers should never jeopardize personal privacy of customers;

7. All the federal, state and local laws relating to advertisement should be followed as well as self-regulatory programs;

8. All mass media communications should be tested on ethical concerns and every editor should have an opportunity to speak about his own ethical thoughts;

9. Announcement of all components of business relations will lead to trust between all the members.

Society every year start being more precise in finding «ethics» in things that are broadcasted and how business is built itself misleading of ethical concepts might lead to decline in sales. It shows that there is the only way show to do business - ethically (Dimmock & Fisher, 2017).

Cunningham (1999, p. 500) reviewed ethics of advertisement as an instrument that shows what is good or bad in order to achieve marketing goals not only proved legally.

Overall, existing literature provides an overview on the topic of marketing ethics of e-cigarettes but do not correspond to all of the concept of this specific thesis. IQOS has a wide spread marketing campaign by having promoting shop or display in every crowded place, Heets are presented for sale in the most part of grocery stores, promotion for test-drive or special price is everywhere around the Internet and many other. Being a tobacco and nicotine containing product PMI is still free in marketing moves because of the smokeless technology. Advertisement campaigns are seen by everybody from children and youth to adults that just quitted smoking. Moreover, studies have shown that IQOS is not less harmful as regular cigarettes, the damage is caused due to other elements that are not present in cigarette smoke, but which are present in IQOS and are leading to serious diseases. All of these points rise the problem of ethical marketing of such product as IQOS that would be analyzed in this work.

3. Statement of the research question

After analyzing the theoretical foundation of this paper, it is became clear that there is a lack of researches upon the idea of ethical ways of marketing tobacco heating systems that are not regulated by law as regular cigarettes. During this work the research problem will be explored how to advertise tobacco heating systems in ethical way. This research is one of the first works made on ethical marketing campaign based on IQOS product.

In the course of this work, both smokers and non-smokers will be interviewed using the survey, since answers from both sides are important for this work. The questionnaire was primarily tested with 10 respondents in face-to-face format to check for availability and clearness of questions. Questionnaire was spread by word of mouth and by publication in the VK group page. The survey is developed in three sections: 1) respondent overall information (age, gender, wealth); 2) smoking habits (are you smoking or not, are you planning to quit, etc.); 3) IQOS oriented questions (have you ever seen IQOS ad, have someone ever offered you IQOS, etc. and questions to check ethical ideas).

Ethical ideas that planned to be checked are the following:

· IQOS advertising affects not only smokers, but also children and those who do not smoke at all;

· IQOS - a tool for tobacco use, which is advertised as a product without harm to health;

· IQOS loyalty program binds the consumer to the device more than cigarettes;

· Promotions and test drive of IQOS products increase the propensity to consume their products;

· IQOS can be smoked in places where cigarette smoking is prohibited, which increases their attractiveness to smokers, but violates the borders regarding non-smoking;

· Since IQOS is a tool for tobacco use, its distribution should be equal to cigarettes: restriction of advertising and stickers on the dangers of packaging.

These ethical ideas that are planned to be checked are compiled by theoretical foundation in the second section of research paper and were tested in face-to-face interview. Each ethical parameter was tested by various questions by Likert Scale.

Thus, after completing the practical part of the study, it will be possible to draw conclusions about whether there is a correlation between people's perception of IQOS and propensity to use it.

This study is a combination of qualitative and quantitative approaches to testing the following hypotheses that are built according the analyzed literature and marketing campaign of IQOS:

H0: IQOS advertising target everyone not only smokers but also children and nonsmokers that raise an ethical dilemma;

H1: IQOS advertising affects children and nonsmokers in an unethical way;

H0: Being advertising as a product for smokers with I-quit-ordinary-smoking product, IQOS became a product which smoker would definitely choose;

H2: Smokers are more likely to switch from the cigarettes to IQOS than nonsmokers;

H0: IQOS created around itself the image of a popular, new and better analog of cigarettes, which does not carry any restrictions in order to try it. New factors and the same factors that convince people to switch from regular cigarettes to e-cigarettes take place;

H3: IQOS public image makes it more desirable to try this device.

To test the set hypotheses and achieve the ultimate goal of the study, the following methods were chosen: archival research, interview, questionnaire and statistical analysis. Using these methods, the study will fully comply with a given design. Rstudio software will be used for data processing.

4. Methodology

4.1 Goal and stages of the thesis

This research work allows not only to qualitatively consider the relationship between people's attitude towards IQOS targeting and their likelihood to start using IQOS, but also the ethical concepts will be considered with quantitative proves of it. The intelligence stage of the research, which consists in the first block of research work, makes it possible to understand in general the reaction of users to cigarettes and e-cigarettes advertisement and what effect it has on them. Moreover, what ethical dilemmas new products arise and how should the ethical advertisement looks like. In the first block of research, hypotheses are not put forward but the goal of identifying the unethical promotion of IQOS promotion and finding ways how to prevent it according to ethical principles. In the second part of the research, the put forward assumptions are investigated using statistical methods, identifying underpinnings for confirming or refusing the hypotheses proposed by this study, recommendations are given for the application of the obtained results and further research on this topic.

PMI company and their IQOS product was chosen because they were the first to develop heat-not-burn technology and tent to raise a significant popularity around the world being presented in 30 countries and being one of the best-selling tobacco products around the world in four years.

The goal of this thesis is to identify and to prevent unethical ways of IQOS marketing campaign. The aim of this research leads to the formulation of the following research question: “What ways of promoting IQOS could be considered as unethical and irresponsible?”. The object of the study it the market of new tobacco and nicotine consumption devices. The subject of the research is the ways in which marketing of such products that target people with nicotine-containing products in unethical ways.

To explore this problem, object will be designed as a mixed methods study and will employ: interviews, questionnaires, and statistical analysis.

The first stage of the study is archival research is needed to explore in-depth the cigarette innovations and ethical concepts according to the marketing. This will help to generate research hypotheses according to purchasing behavior and controlling of this market segment. The analyzed literature meant to give a deep understanding of literature review revealing the gap and giving the understanding of ethical concepts in cigarettes and e-cigarettes market. However, the available could not give a full overview on the particular thesis because of the lack in recent studies.

The next step is to conduct the online survey that allows to examine the situation in the tobacco consumption market from the consumer point of view. It will include the questions about smoking attitude in general, what they are thinking about quitting of smoking, what product they are using and why. Nevertheless, before there is a need to make a face-to-face survey check interview to make a list of closed question despite the open ones.

The third step is statistical analysis to find the correlation between dependent and independent variabilities. The program that is used for this statistical analysis is RStudio because it has all needed commands to identify significant p-value that will prove or reject the following hypotheses. The results of the used tests are not influenced by the order in which they are made.

In addition, to build the whole situation according to IQOS marketing the interview with company's employees is conducted. It has to give additional details to describe the phenomena of the analyzing product. Moreover, to prove or reject the whole attitude of the company and their employees to this specific situation on the market after launching the product.

Time horizons is one of the limitations of the research cause in this work there is a need to combine cross-sectional and longitudinal types to have a full picture of the marketing of tobacco products in cases of previous innovations comparing with the nowadays market situations with launching of the IQOS. Initially, this work should be based not only statistical analysis of questionnaire results but also be compared with PMI brand sales each month. Unfortunately, it is the closed information that I am not able to get. Thirdly, the respondents were collected by word of mouth and publication in VK group that make my results a bit biased according to age and location. Fourthly, there is a psychological limitation regarding to the survey because people could answer untruly; for some people the question of smoking is awkward and they are shy to correspond honestly. However, the lack of the research in this specific topic gives a risk of wrong choosing method and evaluated characteristics.

4.2 Description of the hypotheses

The main hypotheses of the study are based on a theoretical foundation and are tested by statistical analysis:

H1: IQOS advertising affects children and nonsmokers in an unethical way;

H2: Smokers are more likely to switch from the cigarettes to IQOS than nonsmokers;

H3: IQOS public image makes it more desirable to try this device

4.3 Description of IQOS product

Philip Morris International start their sales of IQOS and Heets in Russia in 2015. I-quit-ordinary-smoking (IQOS) launch their innovative heating tobacco system with smokeless technology beginning from Japan in 2014. IQOS has successfully entered the Russian market and the analytical forecast that by 2022 the sales in heating tobacco devices market will reach around 43 863 million dollars Euromonitor Report on e-cigarettes and cigarettes consumption https://www.kommersant.ru/doc/3880842 https://www.euromonitor.com/cigarettes-in-russia/report.. That tendency and growing popularity of IQOS makes the focus on this product relevant. There is no open data about the number of users in Saint-Petersburg but increasing amount of them could be observed empirically. Thus, it is tobacco and nicotine containing product the fact that it is advertised through all marketing channels is at least unethical.

4.4 Methodology of questionnaire

The significant part of the research is built on questionnaire. Insofar as the main focus of the research is on the perception of IQOS advertising by people and its influence on them, that it is why it makes sense to build a study on the survey. To reach more people online questionnaire was conducted.

First sample of the survey was checked by face-to-face interview to correct all the misunderstandings and to test questionnaire undergo. The survey takes between five and six minutes to pass which allows easily receive positive feedback on participating from respondents. This interview contains only closed questions with predefined possible answers that are typically used for a standardized interview.

Questionnaire is developed in three sections:

· Overall information on the respondent that play a role of profile identity;

· Smoking habits questions;

· IQOS oriented questions: questions about direct and indirect interconnection with IQOS and evaluation of several IQOS characteristics.

The first part consists of three questions about gender, age and material situation. The second section is devoted to cigarette use and is divided in five question. This section is needed to make a separation indicator whether person is smoking or not and to and to immerse the respondent in the specifics of the survey. The third part is divided in two sections: four questions about IQOS promotion and twenty three Likert Scale questions from 1 to 5 - from fully disagree to fully agree.

The Likert Scale questions were built to indicate significance of marketing and promotion ideas of IQOS in ethical context. The following Table 1 demonstrates what are the indicators and how they communicate with questions:

The Google Forms platform is used to process the questionnaire and to collect data. This platform was used because it does not have restrictions for the number of received responses and have an easy-going interface to meet all the required needs. The representative sample was drawn up according not only smokers in Russia but this paper is interested in both smokers and nonsmokers, age parameter does not matter either because children could be also targeted by IQOS. Consequently, the aggregate population is almost 147 million of people according to the Russian population in 2019. The confidence interval in this paper is 95% with possible statistical error of 6%, that is why after calculating by formula the representative sample is 267 respondents.

4.5 Methodology of statistical data analysis

For successful data analysis, a binomial logistic regression is applied. To process the analysis the statistical program RStudio is used. For binomial logistic regression dependent binomial variable is whether the person will switch to IQOS or not and as for independent variables are used according to Likert Scale answers on each characteristic. Due to the analysis each characteristic should be coded:

After testing each independent variable, the p-value should not exceed 0,05 and where the p-value is lower than 0,05 these variables are understood as significant influence on dependent variable.

Table 1

IQOS ethical dilemmas and the questions from the survey

Ethical dilemmas raised by IQOS

Likert Scale questions

IQOS advertising affects not only smokers, but also children and those who do not smoke at all

· IQOS advertising needs to be banned;

· I hate being targeted by IQOS advertising;

· Kids will be attracted by IQOS ads.;

· Children will definitely see IQOS ads.;

· Pictures of the possible diseases after smoking should be put on IQOS Heets packs.

IQOS - a device for tobacco use, which is advertised as a product without harm to health

· IQOS helps quit smoking;

· IQOS is really harmless;

· IQOS is positioned as harmless, but in fact it is also harmful in some way;

· Nicotine is completely harmless to health;

· Nicotine use makes me more successful;

· I could have a great life without IQOS, but it's hard for me to give up because of the habit;

· IQOS is less harmful than cigarettes.

IQOS loyalty program binds the consumer to the device more than cigarettes

· Consumers like IQOS because of the design;

· IQOS is attractive for consumers because of the loyalty program;

· People switch to IQOS due to its popularity.

Promotions and test drive of IQOS products increase the propensity to consume their products

· Purchase promos and test-drive promotions successfully attract customers to try IQOS;

· IQOS is cheaper than other types of smoking.

IQOS can be smoked in places where cigarette smoking is prohibited, which increases their attractiveness to smokers, but violates the borders regarding non-smoking people

· The advantages of IQOS are that it can be smoked in places where cigarettes cannot be smoked;

· IQOS has less smell than cigarettes;

· IQOS is more fashionable than regular cigarettes;

· IQOS does not cause public censure, like regular cigarettes;

· If I use IQOS, it enhances my image or makes it more interesting;

· IQOS should be legally regulated as regular cigarettes.

Table 2

Coded characteristics

Independent variable coded

Independent variable description

x1

IQOS is cheaper than other types of smoking

x2

IQOS helps to quit smoking

x3

The advantages of IQOS are that it can be smoked in places where cigarettes cannot be smoked

x4

IQOS has less smell than cigarettes

x5

Consumers like IQOS because of the design

x6

IQOS is attractive for consumers because of the loyalty program

x7

People switch to IQOS due to its popularity

x8

IQOS is less harmful than cigarettes

x9

IQOS should be legally regulated as regular cigarettes

x10

IQOS advertising needs to be banned

x11

Pictures of the possible diseases after smoking should be put on IQOS Heets packs

x12

Purchase promos and test-drive promotions successfully attract customers to try IQOS

x13

I hate being targeted by IQOS advertising

x14

If I use IQOS, it enhances my image or makes it more interesting

x15

IQOS does not cause public censure, like regular cigarettes

x16

IQOS is more fashionable than regular cigarettes

x17

I could have a great life without IQOS, but it's hard for me to give up because of the habit

x18

IQOS is positioned as harmless, but in fact it is also harmful in some way

x19

IQOS is really harmless

x20

Children will definitely see IQOS ads.

x21

Kids will be attracted by IQOS ads

x22

Nicotine is completely harmless to health

x23

Nicotine use makes me more successful

4.6 Methodology of semistructured interview

As I am analyzing IQOS product and PMI company there is a sense to answer employees directly about their perception about current market situation. Due to this fact semistructured interview was conducted. It helps to see the whole atmosphere in PMI company and get some insights. Semistructured interviews are used only for additional comments and analysing the received results got from the questionnaire to compare the consumer point of view with salers of the product. Interviews were collected individually by telephone calls. The conducted interview is followed by the guide, in which a list of questions is given, the order of which may vary. This interview contains only open-ended questions in order to get a more complete picture, and since the requested information carries a confidentiality parameter, it is possible to touch on these topics by doing so, trying to avoid leaving the question from the respondent. The formulation of the questions is constructed in general form. All of them were gathered anonymously.

The interview is based on five questions. Here is the list of these questions:

· What position do you work / worked?

· How can you characterize the IQOS marketing strategy?

· What are the goals of the IQOS marketing campaign?

· How can you comment on the success of IQOS as a product?

· Do you think IQOS should be equated to cigarettes by government regulation?

During the study 6 semistructured interviews were conducted. Employees for the interview were found randomly through the web. The names of the participants of the interview are not disclosed.

This method of research, as a semi-structured interview, is time consuming, that is for communication procedure and arranging the interview were spent around two weeks. During each interview, an audio recording was made, which was then transcribed in MS Word in tabular form.

5. Description of the results

5.1 Results of the questionnaire

The main question of this paper is to analyze what ways of promoting IQOS could be considered as unethical and irresponsible from the consumer point of view and how it influences their buying attitude.

The total amount of the responds that were received is 325 and 322 of them are representative and relevant to use for the analysis.

First of all, to understand the received responses I will provide distribution analysis to illustrate the characteristics of the respondents. The program that is used for data visualization is Orange. The questionnaire was conducted in Russian, so the distribution figures will be also written in Russian and I will comment on each chart.

As it was mentioned, the total number of respondents is 322 that is higher than need representative sample. The prevailing majority of respondents are men with 205 answers that are equal to 63,7% and 117 women equal to 36,3% of answers (See Figure 2).

Figure 2 Smoking attitude by gender

On the Figure 2 above, smoking habit is defined by gender. On the left side the women smoking habit is illustrated: yes (52,17% from total number of women); used to smoke (5, 21% from total number of women); no (43,48% from total number of women). On the right side the men smoking habit is illustrated: yes (36,59% from total number of men); used to smoke (10,24% from total number of men); no (52,68% from total number of men). Comparing these results, it is clearly seen that women are more addicted to cigarettes. The majority of women respondents are smoking and percentage of smoking women is higher in 15,6%. Moreover, the likelihood to quit smoking is higher for men almost double times comparing to women. Overall, the total amount of smokers who pass this survey is 135 respondents is almost 42% and the number of people who used to smoke is 27 that is 8,4%.

Secondly, there is a sense to check the age range of the respondents. The full scale of ages is defined in groups (See Figure3): younger than 18 (24 respondents - 7,5%); 18-25 (275 respondents - 85,4%); 26-30 (14 respondents - 4,3%); 31-35 (3 respondents - 0,9%); 36-40 (1 respondent - 0,3%); 41-50 (4 respondents - 1,2%); 51-60 (0 respondents -0%); older than 60 (1 respondent - 0,3%);

...

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