Ashes to Ashes (77 page)

The matter was finally settled in 1976, when, in place of fines or jail terms, three of the company’s top veteran tobacco-side executives were forced to resign. For Sticht, these resignations had a silver lining—he was free now to bring in fresh talent from the outside—and used the opportunity. Most of the newcomers were Northerners, and few of them would share Sticht’s reservations about throwing his weight around.

Let There Be Light

AS ITS
marketing momentum propelled Philip Morris into second place in the cigarette business at the beginning of the ’Seventies, the company appeared to have more to lose than any of its competitors from the disappearance of television advertising of its product. But what soon became apparent was that Marlboro, its vivid Western imagery having already gained the status of instant folklore, would translate far better into print media than imageless Winston. Magazines, offering better reproduction than newspapers, were soon getting almost 40 percent of the Marlboro budget, as still greater care was lavished on the brand’s presentation. A story line had to be implicit now—no longer could a wrangler be shown just leaning against a bunkhouse and lighting up—and every detail of the graphic, from the patina of the leather to the glow of the campfire, had to be just so. Costly formats, like double trucks, foldouts, and gatefolds, were introduced to accommodate spectacular panoramas of “Marlboro Country” that beckoned to the reader even more vividly than television had managed. The brand also moved vigorously into promotions and premiums as never before. A five-trailer Marlboro “Chuckwagon Caravan” toured the nation, serving as many as 2,000 Western dishes a day at state and country fairs, while the company was giving away millions of copies of a sixteen-page booklet,
Chuckwagon Cooking from Marlboro Country
. Another mail-order device, the Marlboro Country Store, offering merchandise from coffee mugs to sheepskin coats, further enhanced the brand image.

Marlboro was not the only Philip Morris brand to benefit from inventive merchandising in the post-TV era. Ellen Merlo, one of the bright young brand
managers in Jack Landry’s marketing shop, came to him with the idea for a Virginia Slims
Book of Days
, a witty appointment calendar chronicling women’s long, slow rise from social degradation, as a giveaway. The chief marketer grasped at once how the pictured vignettes of feminists’ bygone battles would advance the product. “Jack preached that everything you did for a brand had to be relevant to our audience,” Merlo recalled. “The appointment calendar would be in front of the customer every day of the year and thus reinforce the brand’s imagery.”

Landry’s department had a boisterous, raffish tone—nobody thought much of it that he sometimes referred to Merlo as “Poon” (as in poontang), which she chose to take as a rowdy term of endearment, even as Landry himself came to be known as (but not called to his face) “Loon.” The long, liquid lunches at his favorite steakhouse became a ritual; his indifference to market research data deepened; and his attention at staff skull sessions seemed to dwindle as he sat in a corrier, feigning sleep or on occasion trying to balance a quarter on his nose. Yet when everyone else had had his or her say, Landry would put in the final word, often the most cogent of any uttered during the session.

Emerging as a valuable prop to Landry’s performance as the industry’s marketing Merlin was his chief acolyte, James J. Morgan, the office golden boy out of Princeton, who had been recruited by Joe Cullman himself, a friend and admirer of Morgan’s father, an executive at Exxon. Morgan, turning thirty in 1972, was nearly twenty years Landry’s junior but had early on become a glib propagator of the marketing gospel according to St. Jack, also known inhouse as “The Transcendence of Brand Imagery.” “They were the yin and yang of each other,” Merlo recounted of Landry and Morgan, totally different in their approaches to business and life. Morgan was the strategic thinker and devoted young family man; Landry, the creative force and hell-raiser. “Jimmy handled everything that Jack didn’t want to be bothered with,” Merlo added.

Spectator sports events emerged in this era as the prime venue for promoting cigarettes. Landry himself capitalized on his passion for horses by persuading the New York Racing Association to name a major new thoroughbred event, with an unprecedented purse of $150,000 donated by Philip Morris, after the company’s stellar brand. In its first running in 1973, the Marlboro Cup was won in world’s-record time for the mile-and-an-eighth distance by arguably the greatest racehorse of the century—Secretariat—all of which attracted great attention in the press and blazoned the brand name.

If a showcase horse race was the ideal promotion for a brand that got famous using Western iconography, an even more useful device was hit upon to promote Virginia Slims, which unlike Marlboro had not won a vast consumer base before the TV blackout of cigarette ads. The idea for Slims to sponsor a women’s tennis tourney—and in time a whole circuit of them—was foisted on a not altogether delighted marketing department by the company chairman.
Joe Cullman, a nationally ranked tennis player in the senior age bracket, numbered among his friends the female publisher of the magazine
World Tennis
, who had urged the concept on him as a way to advance the cause of women’s professional tennis, a poorly organized and sparsely attended version of the men’s sport. And how better to push a cigarette brand built on the premise that women had come a long way toward parity with men?

What began as a single experimental event in Houston in 1970 soon blossomed into a twenty-two-event tour, as Ellen Merlo jumped into a station wagon and, with a stack of press releases and one or another of the female net stars in tow, bearded newspaper editors in their dens, pleading for ink for a sport they generally neglected. The early enlistment of the top women’s player of the day—Billie Jean King—brought glitter to the Slims lineup, and a rift with the U.S. Lawn Tennis Association over the prize money brought more of the strong players into the Philip Morris camp. Soon some sixty world-class women were touring, and what had begun as the company’s indulgence of the boss’s passion for the game was building fame for its hot new women’s brand and “star value,” as Merlo termed it, for the players. The promotion worked in large part because Philip Morris took pains to see that it did. “All parts of the presentation had to be right,” Merlo recounted, from the publicity to the look of the arena to the outfits the players and officials wore, especially since at first some of the less successful competitors showed up in ragged shorts and looked to Merlo “as if they were coming to a pickup game at a public park.” The company hired a top designer to create new outfits each season for the athletes, and they were not the traditional all-white uniforms but done in pastels and stripes like those on the Slims package.

That the athletes on the Virginia Slims tour, eventually earning millions in prize money, were being willingly exploited to help sell a product likely detrimental to the achievement of excellence in that sport was a contradiction that seemed to bother neither the players, anxious for a living from the game and for its glamour, nor the sponsoring company. Merlo, who had more to do with establishing the tour than anyone else at Philip Morris, would always deny that wearing the brand’s colors and bannering its name by participation in a Slims event was implicit endorsement of the product, even though to others they seemed a tacit denial that smoking was incompatible with the vigorous physical demands of tennis. “That’s a very simplistic interpretation,” Merlo argued. “Adults are capable of making decisions in their lives, especially about their own health and bodies, whether it’s smoking or having an abortion or whatever.”

The company’s claim of clean hands was often supported by the Slims tour participants, whose loyalty to Philip Morris seemed to grow fiercer whenever it was attacked by antismoking critics. More than twenty years after the association began, Billie Jean King defended the company on the editorial page of
The New York Times
by stating: “Not one of the Virginia Slims players has ever been asked by those who work for Philip Morris to smoke, to appear in cigarette advertising or otherwise endorse smoking.” But surely King and her sister tennis stars were open to the charge of “otherwise” endorsing a product harmful to health generally, let alone athletic prowess. In her
Times
letter to the editor of December 2, 1993, King also wrote, “The Philip Morris executives I know … are enlightened people who understand and acknowledge the possible hazards of smoking.”
Possible
hazards?

For all their collective smarts as marketers, Landry, Morgan, Merlo & Company had one serious blind spot. Philip Morris brands were running at an accelerated pace now, but retail shelves were not kept adequately stocked. What, then, was the point of all the advertising and promotional skills that were pulling in the customers? Monitoring stores to prevent out-of-stock situations and pushing for large enough orders by store managers took warm bodies, and Philip Morris still did not have enough of them in the field. In the late ’Sixties, the company’s field force numbered fewer than 500—about one-third as many as the fearsome Reynolds sales phalanx. By 1973, Philip Morris had doubled its field force, advanced salaries by about 20 percent, notably improved its data-gathering and training techniques, and was paying for preferential placement on the Reynolds-owned racks, but such measures were viewed by some on the sales side as still inadequate. “I was concerned and parted company with Landry and Morgan,” recalled Richard Schoenkopf, manager of sales personnel and planning and later head of merchandising. “I felt that in-store was where we had to be strong. … It wasn’t just that they were unwilling to spend money—it was a mentality left over from the days of TV advertising,”
i.e.
, the barker would pull the customers into the tent.

To counter the big advantage Reynolds had enjoyed by virtue of its supermarket racks, Schoenkopf talked Landry into experimenting with a Philip Morris version, an improved, spring-loaded model in which a replacement slid neatly into place each time a customer bought a carton. The point of the investment was to end the second-fiddle placement of the surging Philip Morris brands, and in the early test results, its brands in fact improved their sales by more than 25 percent. A second test was somewhat grumpily ordered by the marketing overseers, and though it, too, produced favorable results, Morgan began to nitpick in analyzing the added expenditure (“Look, Alpine lost business”). Finally, Morgan admitted to Schoenkopf that Landry had no heart for spending big on anything so prosaic as in-store fixtures, “even though,” as Schoenkopf put it, “we were getting our asses eaten on the existing racks by Reynolds.” He later brought the marketing team a second promotional scheme—the chance to pick up from fading Liggett & Myers a two-dollar-per-unit annual charge for auditing vending-machine sales, allowing vendors to get paid accurately, in exchange for preferential placement in the
machines. But while Philip Morris hesitated, Reynolds jumped in to pick up the auditing expenditure for appreciative vendors, thereby adding to its great field strength.

II

ALTHOUGH
Philip Morris was not exactly spendthrift in its retail servicing tactics, it did not hesitate long to make a major commitment in the vital area that Reynolds was neglecting. As PM brands kept registering annual sales gains of about 15 percent, churned out from antiquated plants in Richmond and Louisville, operations chief Clifford Goldsmith prevailed on the board to believe the company’s own marketing projections and build the largest and most technologically advanced cigarette plant in the world. And to make it, as well, one of the most beautiful factories on earth, a working advertisement for the company’s burgeoning success.

Urged on by corporate President George Weissman, its resident culture maven, who argued that good architecture was no more expensive than the bad kind, the company chose Gordon Bunshaft of the top New York firm of Skid-more, Owings & Merrill to design the new manufacturing center, originally budgeted for $80 million in 1970 but costing over $200 million by the time it opened in 1974—the largest outlay for a single purpose in Philip Morris history but just part of the half-billion dollars it would spend on cigarette-making facilities in the U.S. and abroad over the course of the 1970s.

The easiest part of the huge capital investment was the decision to keep the core of the manufacturing operation in the Richmond area, the company’s traditional production base. The Virginia capital had recently upgraded its port and communications facilities and remained the home of ultra-discreet Universal Leaf, the world’s largest tobacco broker and independent leaf-processor, which continued to handle all of Philip Morris’s purchases and gave the cigarette makers from New York access to the state’s—and thus the region’s—financial, political, and social elite. Thus, the giant new Philip Morris manufacturing complex, with forty acres of in-plant floor space, was set down a few miles south of the city, across the James River and hard by U.S. Interstate 95, the most heavily trafficked north-south artery in the Eastern half of the nation. The monumental horizontality of the immense structure, broken by ten towers each rising nearly a hundred feet and proclaiming the structure a titanic bastion of modern commerce, seemed the product of a totalitarian sensibility.