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Stoking a premium tobacco market

A couple of years ago, officials at R.J. Reynolds Tobacco Co. realized they were missing a big boat.

Other companies that sold indulgences - makers of coffee, wine, beer, chocolates, pastries - had figured out how to induce customers to pay a lot more for high-end products.

But cigarettes were still aimed overwhelmingly at the masses. Where was the cigarette equivalent of a Cinnamon Dolce Latte?

That's where Gyro Worldwide Advertising Inc., an edgy marketing firm, came in.

Asked to "re-create the smoking experience" for the "super premium tier," they worked with R.J. Reynolds to fashion everything about its new Marshall McGearty line of cigarettes - from the flavors to the design of the only place where they're sold: the controversial new Marshall McGearty Tobacco Lounge in Chicago. Patrons pay $8 a pack - $35 for 5 - for cleverly packaged cigarettes rolled on the premises, then smoke them in what promoters call "ridiculously plush" chairs.

"It goes above and beyond what a traditional advertising agency can do for you," said Brian Stebbins, senior marketing director at R.J. Reynolds.

This kind of all-inclusive marketing has been building momentum, particularly in the past five years as corporations have hired chief marketing officers - executives in charge of all aspects of a brand, said Rick Boyko, managing director of Virginia Commonwealth University's Adcenter, a master's degree program. In the past, he said, package design, retail display and print advertising, for example, came from different "silos."

The new brand and lounge are a fine example of "experiential marketing," said Lisa Bolton, an assistant professor of marketing at the Wharton School. This advertising, which creates a "kind of powerful, all-sensory response among consumers" has been around for a while for wine or chocolates.

In this case, Bolton said, R.J. Reynolds needed something that would tap into an attractive image of smokers as independent, fun-loving, sophisticated rebels "on every level. . . . From the sound of it . . . they've done a good job."

Because cigarettemakers voluntarily agreed not to advertise to underage youths, advertising cigarettes is particularly challenging, marketing experts said. Many print and broadcast ads are out of the question.

As luck would have it, the opening of the lounge - don't call it a bar - nearly coincided with the start of a public smoking ban in Chicago, landing the lounge in regional papers and the New York Times. Grasse and McGearty wouldn't say if that was good or bad.

Classified as a retail tobacco store, the lounge is exempt from the smoking ban.

Selling the new cigarettes at only one location is a deft move that should increase their desirability, said Rajneesh Suri, associate professor of marketing at Drexel University. "Whenever you make a thing scarce, people get more attracted to it."

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