business review. s:\0\03856\002.bc\2001.yr\cmb\seminars\av2_busreview.ppt 2 the context all great...

$: Business Review. S:\0\03856\002.bc\2001.yr\cmb\seminars\av2_busreview.ppt 2 The Context All Great Marketing Plans Begin Here$
Business Review

S:\0\03856\002.bc\2001.yr\cmb\seminars\av2_busreview.ppt2

The Context

All Great Marketing PlansBegin HereAll Great Marketing PlansBegin Here


Business Review Module - Presentation Flow

1. What is a Business Review/Why Bother

2. Structuring the Business Review Analysis

3. Translating Data into Key Issues and Opportunities

4. Opportunity Synthesis and Prioritization

5. Developing the Business Review “Story”


1. What is a Business Review?

The opportunity to stand back and evaluate your total market, business situation and activity.

The process of identifying opportunities to move the business forward and achieve competitive advantage in the marketplace.

The all-important first step in preparing a “great” marketing plan.


What is a Business Review?

Business Reviews

Long Term PlanJan./Feb.

Marketing PlanAugust

Category PlanSeptember

The link in the planning process that drives insights for all types of plans.


What is the Business Review End-Point?

Synthesis and prioritization of facts and data into a singular focus area for the brand.

Identification of concrete, actionable opportunities to build the business.

Foundation for the objective, marketing strategy, substrategy and key program

development decisions.


OPPORTUNITY IDENTIFICATION

Analysis is not an end in itself,it’s a means to an end

The End Is


Examples of Opportunities

Implement an integrated communication campaign to build awareness of new Nestlé Classic confections.

Test an in-store sampling program on Frutips.

Explore launching a dehydrated dessert range.

Develop an in-store cross-merchandising program between Nescafe and Coffee-mate.

Test increased coverage in the Pharmacy channel.



To stay focused on the most important issues for the business.

To reduce dead-end “number-tumbling”.

To increase analysis productivity/ effectiveness.

If only we knew the answer to ...


Structuring the Business Review Analysis

What are the Opportunities to Build the Business?

TheMarket

TheConsumer

OurCompetitors

Our ChannelCustomers

Our BusinessPerformance

Based on:

Conduct a scan of the critical questions to identify the key issues to analyze in greater depth.

Look for specific issues and opportunities on your brand relative to the most critical questions.


The Critical QuestionsThe Market

What is the definition of the market we compete in (from a consumer standpoint)?

What are market trends within key segments? Is the market growing or declining; is the trend consistent for sales

Taka, volume and profitability? How can the size of the market be explained in terms of consumer

purchase behavior? What underpins category, segment and brand volumes in this market

(i.e. high purchase frequency, purchases of large quantities, etc.)? What are related/complementary category trends? What is the market outlook?


The Critical QuestionsThe Consumer What are critical consumer needs in this category? Which represent

unmet needs? What are usage and habit trends amongst consumers? What consumer perceptions exist about this category and our brand? Who is our consumer target (influencer, purchaser, user, etc.)? What is the most relevant consumer segmentation in this category? What is the composition of our consumer base relative to this

segmentation? How does our consumer base break down in terms of usage (heavy,

medium, light users)? What behavior change amongst which target consumer is most

important to building our brand?


The Critical QuestionsThe Consumer

What is the flow of the consumer purchase decision in this category?

Where in the consumer purchase decision process can consumers be most influenced?

What environmental factors trigger consumer need for the category (e.g. media, special occasion, on shopping list, family input, price incentive)?

What specific factors trigger selection of our brand (i.e. what makes our target consumer want to buy)?

What are household penetration, purchase frequency, purchase units/ buyer and share of requirement trends for our brand?

How would we categorize the level of loyalty in this category?

How do consumers shop this category (e.g. price hunters, passive, etc.)?


The Critical Questions

Our Competitors

Who is our competition (from a consumer standpoint)?

What are key competitors’ business trends?

What are key competitors’ strengths and weaknesses?

How do we perform versus competition in key areas (e.g. product, package, pricing, availability, etc.)?

What are price/unit (or per serving) trends for key competitors relative to our brand?

What is the price elasticity for our brand versus competition?

What is the consumer’s perception of our brand’s value equation versus key competitors?


The Critical QuestionsOur Channel Customers What are category sales trends by channel? Have there been

any important shifts? Which segments and brands are winning/losing & why? Which channels are most important for us and the competition? What is the trend in level of support for this category by

customers? (display, merchandising, pricing, etc.) What role does our category play for customers; how does this

differ by channel? What are availability trends for our brand? How do our trade

margins compare versus competition in the key channels?


The Critical QuestionsOur Business Performance What are historical sales, market share and profit trends for our

brand; what are the drivers of these results? What are the key financial and operating ratios on the brand? Where have we sourced our volume; how will we create growth? (i.e.

growing the category vs. growing share within the category)? What has been the historical effectiveness of our marketing

activity/spending and specific programs? What has been the success rate of new products? What are the key

drivers of these results? How are we performing versus our key substrategies (e.g. product

and packaging, integrated communication, customer business development)?


So How Do I Apply these Critical Questions?

A guide to focus data collection in the initial development stages of a Business Review.

A tool to finetune and build on the existing Business Review as input to the Marketing Plan.

What are the Opportunities to Build the Business?

TheMarket

TheConsumer

OurCompetitors

Our ChannelCustomers

Our BusinessPerformance

Business ReviewsCategory Review

Long Term Plan

Marketing Plan

Category Plan



For each of these critical questions, we want to answer:

What’s happening?

Why? “I’ll bet ......”

What are the opportunities?


Translating Data into Key Issues and Opportunities

Gather BusinessPerformance

Data

Determine“What’s

Happening?”

Hypothesize“Why?

“I’ll bet ...“

Gather CausalData

ProvideRationale

Identify“What are the

opportunities?”

Don’t here

Don’t here

What’s Happening? Why?OpportunityIdentification


Collect and analyze the relevant data to answer the questions

Examples:– share/volume is

down– why is East higher

than West– why did we

achieve these sales results

What’s Happening? Why? … I’ll Bet What are the Opportunities?

Purpose is to focus analysis and gather/ analyze causal data to address your hypotheses

Long list and prioritize your “bets” so data search is limited to proving/disproving your hypotheses

Ask a series of questions until there are no more to ask!

So what?

What should we do about it?

– action orientation



Nestlé Milo is stagnating in growth while the category grows at 5% per annum.

What’s Happening? Why? … I’ll Bet What are the Opportunities?

A key barrier to Nestlé Milo is that the perception that Nestlé Milo offers little nutritional value

Explore the launch of an intensive sampling and communication campaign that focuses on the nutrition of Milo and a means of getting kids to drink milk.



Documenting the Key Issues and Opportunities

Statement of key issue or problem plan must address

Summary of quantitative, factual support

Statement of preliminary opportunity

Reversing the trend on the Nestlé Milo is critical to the long-term viability of the brand.

Nestlé Milo has stagnated at 50 tonnes for 4 years with extensive PFME funding.and the category continues to grow.

Within the category, Milo decline\ have been offset by growth in Horlicks and Ovaltine.

"Restage" the Nestlé Milo brand including product improvements to achieve 60/40 preference, new communication message to increase relevance, and reformulation. Intensive sampling campaign.

Example


Which Are Good Key Issue/Opportunity Statements?

1. We need to increase consumer top-of-mind awareness of Nestlé core chocolate brands to drive consumption Nestlé confectionery brands have low consumer

awareness versus competition

Opportunity: Increase advertising investment on core brands and increase in-store visibility

2. Weaker distribution and sales in the Pharmacy channel of Nutrition products indicate a serious area of underdevelopment for Nestlé Only 2% of Nestlé Nutrition sales come from Pharmacy

Opportunity: Support medical detailing strategy with increased distribution and facings in the Drug channel


Which Are Good Key Issue/Opportunity Statements?

3. Nestlé GUM is over-reliant in the Central Region 80% of sales in Central region

Opportunity: Develop a specific initiative for the East and West Region

4. A key issue for Nescafe is maintaining distribution in small grocery stores 200g and 50g are not maintaining distribution and

does not offer a one time consumption

Opportunity: Develop a specific product for the small grocery outlets


4. Opportunity Synthesis And Prioritization

1. Volume Modeling

2. Brand Strategic Gap Scorecard

Purpose: Isolate key drivers of a brand’s sales to enable prioritization of strategic options/ opportunities and focus of effort


Volume ModelingTarget Segment Population

xAwareness

xDistribution

=Household Base

xTrial Rate (Household Penetration)

=Number of Trier Households

xRetained User Rate/Repeat Rate

=Retained User Households

xAverage Annual Volume/Frequency of Purchase

=Total Annual Sales


Volume Model - Nestlé Milo ExampleTarget Segment 1.75MM households

xAwareness 80%

xDistribution 80%

=Household Base 1.12MM households

xTrial Rate 70% (user rate)

=Number of Households 784M user households

xRepeat Rate 70%

=Average Annual Volume 1.6 200ml/week

Total Sales 45,660M drinks consumed


Volume Modeling - Example

AlternateOpportunity Area(s)

IncrementalSales

MarketingSpend

Risk/Degreeof Difficulty

A) Expand target segment population by 50% (to 2.6MM)

B) Increase usage rate from 70% - 80%

? ? High

C) Increase consumer usage frequency (+1 drink/year/consumer)

? ? Medium

? ? Medium


Volume Modeling - Key Variables

Target Segment Population

Awareness

Distribution

Trial Rate*

Influenced by: size of target market awareness rate trial rate distribution

based on media spend and reach/frequency delivery

perceived product relevance/uniqueness investment in listings

relevance of positioning and product product uniqueness degree of unsatisfied needs perceived value price acceptability expected product quality

* can be substituted by household penetration or usage rate


Volume Modeling - Key Variables

Retained User Rate/Repeat Purchase

AverageAnnualVolume/ Frequency of Purchase

Influenced by product delivery matches consumer

expectations consumer acceptability (taste, performance,

…) price/value acceptability

establishment of habit meaningful product advantage integration into consumption pattern price advantage/acceptability


Volume Modeling - So Where Does This Get Us?Prioritization of Brand Focus of Effort:

expand target segment(s)?or

increase awareness?or

increase distribution?or

increase trial?or

improve product performance?or

increase frequency of purchase?

Based on: incremental sales incremental marketing spending risk/degree of difficulty

What If?


Brand Strategic Gap Scorecard

A tool to assess the gap in our performance in key strategic areas of the brand’s business.

Are we actually executing our

strategic intent?


Brand Strategic Gap ScorecardArea Desired

Performance

ActualPerformanc

eGap

Root Causefor Gap Indicated

ActionCompetitivePosition

Identify 2-3 areas of superiority or uniqueness vs. competition

How are we performing

Focus ofEffort

Trial, re-trial, continuity, increased consumption frequency, etc.

Quantitative level achieved

Value Proposition

Benefit/price relationship

How are we performing

EffortPriorities

List of 5-6 strategic initiatives

How many completed

Product and Packaging

Target performance (e.g. 60/40, taste profile)

Test results


Brand Strategic Gap Scorecard

Area Desired Performance

ActualPerformance Gap

Root Causefor Gap Indicated Action

Integrated Communication

Image/equity Image scores

Media Reach/frequency/GRPs, share of voice, awareness level

Actual results of media plan

Pricing Avg. price vs. competitionFeature price vs. competitionChannel price targets

Actual pricing gaps versus target

In-Store Effectiveness

Display targetsShelving targetsMerchandising targets

Actual results by channel

Availability Distribution targets Actual results


Brand Strategic Gap Scorecard - ExampleArea Desired

Performance

ActualPerformance Gap

Root Causefor Gap Indicated

ActionCompetitivePosition

• 60/40 product preference

• 55% leadership share of voice

• 40/60• 30% share

of voice

Focus ofEffort

30% trial level through sampling

Sampling to achieve 10%

Availability 75% distribution at grocery channel

80% achieved plus

Value Proposition

Superior rich chocolate delivery at parity with other single serve beverages on per serving basis

Parity price achieved; product not 60/40 preferred

Pricing Competitively priced versus other value-added value beverages on a per serving basis

Achieved

• (20) points

• (25) points

• Intensive sampling

• Focus on sampling / SOV

20 points

NA

Product/ Package

NA

Ineffective sampling program

Refocus sampling

effort and tie in to outlet coverage

NA

• Consumer preparation

• Lack of single serve

NA

NA

• Awareness• Introduce

RTD

NA

• Milo is not being prepared correctly

• High spend in Sponsorship


Brand Strategic Scorecard - Gap Analysis

AlternateOpportunity Area(s)

IncrementalSales

MarketingSpend

Risk/Degreeof Difficulty

A) Improve product performance ratio to 60/40

B) Invest in increased media support (build SOV to 55%)

? ? High

C) Increase sampling effort

? ? Low

? ? Low


5. Developing The Business Review “Story”

Synthesis of business overview: how’s business on the brand and why explains key reasons for results

Can be tackled as a “news story” headline concept sub-headlines text


The Business Review Story - Coffee-Mate Example

2000 was another disappointing performance year for Coffee-Mate with sales down -10% and profit flat versus 1999.

Over the past 4 years, the brand has experienced a rapid decline in household penetration (a loss of approximately 40% of our user base) as consumers have shifted away from the static powder segment of the whitening market into the growing liquid segment. On a combined powder and liquid basis, our brand share has declined from 34% in 1999 to 27% in 2000, and within powder, share has declined from 45% to 40%.


The Business Review Story - Coffee-Mate (cont’d.)

Beyond losing share to other whitening occasions (e.g. liquid), Coffee Mate is also being hurt by the continued growth of Private Label powders (19% share), driven by aggressive pricing. Average selling prices for Control Label were up to 40% less than those for Coffee-Mate in 2000.

Critical to the long-term reversal of this business performance is consideration of a launch into the liquid segment followed by a plan to minimize losses on powder including product reformulation, aggressive product cost savings and targeted investment in PFME support.


Characteristics of a Good Business Review “Story”

Provides sufficient business context (past year, history).

Sufficiently explains the “why” behind business performance.

Identifies how the reader should be thinking about the brand’s performance (is this good/bad/indifferent).

Self contained (like newspaper headlines)


Business Review Module - Presentation Flow

1. What is a Business Review/Why Bother



4. Opportunity Synthesis and Prioritization

5. Developing the Business Review “Story”

business review. s:\0\03856\002.bc\2001.yr\cmb\seminars\av2_busreview.ppt 2 the context all great...

Documents

business review slide

business review analysis

business review story

business performance

business situation

business reviewwhy

business review endpoint

key issues