The act banned TV, and radio advertising of any tobacco product. Another factor was that people became more aware of the health risks of smoking. .
INDUSTRY OVERVIEW.
There are three major factors that affect the tobacco industry. Because of the risks tobacco poses to smokers, the government feels free to take action in order to keep its citizens healthy. This brings us to the first factor of the tobacco industry, government actions and intervention. The government has the right to control the amount of tax that is put on a pack of cigarettes, pass laws that limit what images and sounds can be placed in an advertisement, and at what age citizens of the United States can begin using tobacco products.
The taxes that the government puts on cigarettes and other tobacco products are called excise taxes. A study done by Richard McGowan (1995), author of Business, Politics, and Cigarettes, revealed that when the government invokes a small tax on cigarettes (considered to be ten cents or less), cigarette firms are extremely likely to add the tax into their cigarettes, explaining it is a government tax. Meanwhile, when a large tax is initiated, tobacco firms refrain from raising prices because it looks as if the company is simply jacking up prices from the customer's point of view. Cigarette firms can easily look at this situation as a lose-lose situation. Smokers are less likely to buy their "usual" brand of cigarettes and more likely to switch to another brand after a price increase. The ladder part of the lose-lose situation is that with a high tax increase companies must pay the tax with each pack of cigarettes, bearing the cost themselves. The government uses the power of the Surgeon General to enforce the health hazards of smoking. "The Federal Trade Commission annually rates varieties of domestic cigarettes according to their tar, nicotine, and carbon monoxide content. The United States Surgeon General considers each of these substances hazardous to a smoker's health (McIntyre, 1994).