Point-of-sale cigarette pricing strategies and young adult smokers’ intention to purchase cigarettes: an online experiment

BackgroundPoint-of-sale tobacco marketing has been shown to be related to tobacco use behaviours; however, specific influences of cigarette price discounts, price tiers and pack/carton availability on cigarette purchasing intention are less understood by the tobacco control community.MethodsWe conducted discrete choice experiments among an online sample of US young adult smokers (aged 18–30 years; n=1823). Participants were presented scenarios depicting their presence at a tobacco retail outlet with varying availability of cigarette price discounts, price tiers and pack/carton. At each scenario, participants were asked whether they would purchase cigarettes. Generalised linear regression models were used to examine the associations between of cigarette price discounts, price tiers and pack/carton with intention to purchase cigarettes overall and stratified by educational attainment.ResultsParticipants chose to purchase cigarettes in 70.9% of the scenarios. Offering price discounts were associated with higher odds of choosing to purchase cigarettes. Reducing the number of cigarette price tiers available in the store was associated with lower odds of choosing to purchase cigarettes. Stratified analysis showed that offering discounts on high-tier cigarette packs increased odds of choosing to purchase cigarettes among young adult smokers with at least some college education, while offering discounts on medium-tier cigarette packs increased odds of choosing to purchase cigarettes among those with some college education or less (eg, with a 10% discount, adjusted odds ratio [AOR]some college=1.62, 95% confidence interval [CI] 1.21 to 2.16; AOR≤high school=1.44, 95% CI 1.08 to 1.93).ConclusionsAvailability of cigarette price discounts, price tiers and pack/carton could potentially influence cigarette purchasing behaviours among young adult smokers. Regulating these marketing strategies may, therefore, reduce education-related smoking disparities.

Cigarette Affordability and Cigarette Consumption among Adult and Elderly Chinese Smokers: Evidence from A Longitudinal Study

China is in the midst of an epidemic of non-communicable diseases (NCDs), which has increasingly accounted for a growing share of disease burden, due in part to China’s ongoing rapid socioeconomic changes and population aging. Smoking, the second leading health risk factors associated with NCDs in China, disproportionately affects the old population more than their younger counterparts. Using survey data from the China Health and Retirement Longitudinal Study (CHARLS), this study evaluated the impact of changes in cigarette affordability on smoking behavior among middle-aged and elderly (age 45 and older) smokers. Self-reported cigarette price and disposable income were used to calculate cigarette affordability. Cigarette consumption was measured using the number of cigarettes smoked per day reported by the survey respondents. The correlation between cigarette affordability and cigarette consumption was estimated using generalized estimating equations adjusting for demographics, socioeconomic status, geolocations, and cigarette price tiers, as well as year fixed effects. The estimated overall conditional cigarette affordability elasticity of demand was –0.165, implying a 10% decrease in cigarette affordability would result in a reduction in cigarette consumption by 1.65%. The cigarette affordability responsiveness differs by demographics, socioeconomic status, geolocations, and cigarette price tiers. This study provides evidence that tax/price policies that reduce cigarette affordability could lead to a decrease in cigarette consumption among middle-aged and elderly smokers in China. Smoke-free laws, as well as minimum price regulations, may be needed to compliment excise tax policy to target specific smoking subgroups whose cigarette consumption is less sensitive to changes in cigarette affordability.

Cigarette Affordability in China, 2006–2015: Findings from International Tobacco Control China Surveys

China is world’s largest market of machine-made cigarettes. In 2015, more than 315 million or around 26.9% of the adult population in China were smokers—50.6% among men and 2.2% among women. Growing affordability of cigarettes led to increased cigarette consumption in China to the detriment of public health. This study investigated whether the level and growth in cigarette affordability in China was equally shared by smokers from all demographic and socio-economic statuses (SES) and across all price tiers of cigarette brands. The data came from the urban smoker sample (≥18 years) of the International Tobacco Control China Surveys conducted in five waves over 2006–2015. Cigarette affordability was measured by Relative Income Price—percentage of per capita household income needed to purchase 100 cigarette packs of the last purchased brand. Overall and group-specific trends in affordability by age, gender, SES (e.g., income, education, and employment status), and price tiers were analyzed using generalized estimating equations method. Cigarette affordability was higher among older, female, and higher-SES smokers, and for cheaper brands. It increased overall and across all groups over time. The increase was significantly larger among younger and lower-SES smokers, a trend that poses an added challenge to tobacco control and health equity. To reduce cigarette affordability and consumption among these vulnerable groups, a uniform specific excise system should be introduced in place of the existing tiered ad valorem excise. The specific excise should be periodically adjusted to inflation and per capita income growth observed among younger and lower-SES people, who can potentially experience faster income growth than the national average. The excise tax policy can also be complimented with minimum price regulations and restrictions on price promotions.

The Impact of Income and Taxation in a Price-Tiered Cigarette Market: findings from the ITC Bangladesh Surveys

BackgroundTaxing tobacco is among the most effective measures of tobacco control. However, in a tiered market structure where multiple tiers of taxes coexist, the anticipated impact of tobacco taxes on consumption is complex. This paper investigates changing smoking behaviour in lieu of changing prices and changing income. The objective of the paper is to evaluate the effectiveness of change in prices (through taxes) and change in income in a price-tiered cigarette market.MethodA panel dataset from the International Tobacco Control Bangladesh surveys is used for analysis. For preliminary analysis transition matrices are developed. Next, probit and multinomial logit regression models are used to identify the effects of changes in prices and changes in income along with other control variables.FindingsTransition matrices show significant movement of smokers across price tiers from one wave to another. Regression results show that higher income raises the probability to up-trade and decreases the probability to down-trade. Results also show that higher prices raises the probability to up-trade and reduces the probability to down-trade. Although not significant, there exists a negative relationship between the probability to down-trade and the probability to intend to quit.ConclusionIt is evident from the results that a price-tiered market provides smokers more opportunities to accommodate their smoking behaviour when faced with price and income change. Therefore, tiered structure of the tax system should be replaced with uniform taxes. Moreover, overall cigarette taxes need to be raised to an extent so that it off-sets any positive effects of income growth.

Price-quality relationship in pricing strategies for private labels

Purpose – This article aims to close some research gaps by differentiating between brand types and price tiers. Many consumers perceive high prices as signals of high quality, yet researchers tend to find only low average correlations between price and objective quality. Previous studies do not account for market shares and paid prices though. Design/methodology/approach – A German consumer panel with more than 30,000 households reveals market shares and paid prices. Combining these data with product test ratings, the authors evaluate price-quality relationships with Spearman’s rank correlation coefficients and distinguish food from non-food products, national brands and private labels and three price tiers. Findings – High price-quality correlations for national brands and non-food private labels indicate that a higher price signals greater product quality. For food private labels, negative correlation coefficients inhibit the use of price as a quality indicator. The price-quality relationship for food private labels implies strong competition among brand owners, based on the price and quality of their products. Originality/value – This article investigates price-quality correlations by accounting for paid prices and product market shares; it also reveals differences across food and non-food products, national brands and private labels and different price tiers against the background of competition strategies. By addressing when consumers use price as a quality indicator, it outlines important managerial implications for manufacturers, retailers and consumers.