intro to obppc architecture shelf savvy tool books

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Introduction to OBPPC Architecture OCCASION / BRAND / PACKAGE / PRICE / CHANNEL SHELF-SAVVY TOOLS

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Page 1: Intro to obppc architecture   shelf savvy tool books

Introduction to OBPPCArchitectureOCCAsIOn / BrAnd / PACkAge / PrICe / ChAnnel

shelF-sAVVY TOOls

Page 2: Intro to obppc architecture   shelf savvy tool books

3OBPPC – Occasion Brand Package Price Channel ArchitectureBook Cover, Spine and Back

OB

PP

C A

rchitecture

FOR INTERNAL USE ONLY.Copyright© 2010 The Coca-Cola Company. DNA: The Coca-Cola Way of Marketing, Brand Value | Brand Love and the Dynamic Ribbon are all trademarks of the Coca-Cola Company.

Introduction to OBPPCArchitectureOccASION / BRANd / PAckAgE / PRIcE / chANNEL

global Customer & shopper Marketing Converting shoppers to Buyers

shelF-sAVVY TOOls

Page 3: Intro to obppc architecture   shelf savvy tool books

Driving profitability by creating and capturing value for the Coca-Cola System.

An Introduction to OBPPc ArchitectureOccasion Brand Package Price Channel

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7OBPPC – Occasion Brand Package Price Channel Architecture

Metrics

The Shelf-Savvy Tools Series is intended to provide you with information about the different ways we create value at retail for all the stake-holders in our System.

Each book explores a different topic in depth, and provides you with resources and tools to help you put the content into action.

Use these books as a reference, as a repository for global best practices, and as a refresher.

DifferentiatingBrand / Pack

Strategy

Commercializing with Customers

Activating for Retail Impact

Prioritizing Shopper Opportunities

Picture of Success

Shelf-Savvy Tools Series

Page 5: Intro to obppc architecture   shelf savvy tool books

9OBPPC – Occasion Brand Package Price Channel Architecture

All shoppers are different. They have different values and different preferences, which lead to different price elasticities. We can create value by recognizing the differences in purchase occasions, and by offering a unique assortment of brands, packages and price points for each channel they are served by.

We design OBPPC architectures to create value by considering three core principles:Define distinct package roles Each package plays a distinct role in driving Incidence, Transactions, or the Amount of a transaction. By defining roles for each package, we can build a proposition to grow our holistic business.

Capture unique shopper needs Shoppers have different motivations at each occasion and channel. We can capture the value of each occasion by defining the package roles to best serve each unique shopper need.

Differentiate across channels Each of our customers serve different shoppers with a unique retail experience. We can help them to be more effective by differentiating our OBPPC offering across channels and customers.

An Introduction to OBPPc Architecture:Overview

Page 6: Intro to obppc architecture   shelf savvy tool books

WhAT is OBPPC?1

11OBPPC – Occasion Brand Package Price Channel Architecture

Page 7: Intro to obppc architecture   shelf savvy tool books

WhAT

13

OBPPC is a critical element of shelf-savvy marketing.

For each Occasion, it defines the optimal Brands, in the appropriate Packages, at the right Prices, in the target channels.

OBPPC – Occasion Brand Package Price Channel Architecture

Page 8: Intro to obppc architecture   shelf savvy tool books

WhY is OBPPC critical to System success?

215OBPPC – Occasion Brand Package Price Channel Architecture

Page 9: Intro to obppc architecture   shelf savvy tool books

OBPPc enables us to move the demand curve and sell more products at higher prices through segmentation and differentiation.

WhY

pric

e/L

volume

Before

After

17OBPPC – Occasion Brand Package Price Channel Architecture

OBPPC Impact on Demand Curves

Page 10: Intro to obppc architecture   shelf savvy tool books

19OBPPC – Occasion Brand Package Price Channel ArchitectureWhY

OBPPc captures value by considering consumer, shopper and customer motivations.It provides different packages, at different prices, for different segments to the extent that it can be executed by our System.

Page 11: Intro to obppc architecture   shelf savvy tool books

Limited assortment and price point variance

Unique needs only met for some shoppers

Some consumers paid less $/L than they were willing to

WhY

good OBPPc drives both volume and value by aligning offerings with shopper needs.

21OBPPC – Occasion Brand Package Price Channel Architecture

Before OBPPC

Shelf

Volu

me

Price

/L

differentiated assortment, with segmented price points

Needs of all key shoppers are met, incidence up

The price requirement of all shoppers is met

After OBPPC

Shoppers drive volume

by making purchases.

We optimize value through segmentation,

driving price/L.

Page 12: Intro to obppc architecture   shelf savvy tool books

good OBPPc offers both short and long term benefits.

23OBPPC – Occasion Brand Package Price Channel Architecture

Short termEliminates short term price fluctuations by increasing pack/price diversity

Reduces risk of commoditization

Reduces reliance on few packs

Long termBuilds a long term franchise by capturing unique needs for multiple shoppers

Addresses customer pricing differentiation needs

Reduces channel leakage by providing specific Pack/Price architecture by channel

WhY

Page 13: Intro to obppc architecture   shelf savvy tool books

good OBPPc consistently delivers strong results.

25OBPPC – Occasion Brand Package Price Channel Architecture

Profitability

Volume share

Revenue share

Revenue / uc growth

Number of transactions

Source: Selected data from over 25 internal case studies 2003-2008, AC Nielsen

WhY

Page 14: Intro to obppc architecture   shelf savvy tool books

good OBPPc is strategically planned for the short and long term.

27OBPPC – Occasion Brand Package Price Channel Architecture

Short term

Meets today’s execution capability

Reflects today’s retail reality and shopper landscape

Focuses on quick wins with existing packages plus price point changes

WhY

Long term

Plans for enhanced execution capability

Anticipates tomorrow’s retail reality and landscape

Plans innovation for tomorrow’s packages including consid-erations of capital, Route to Market, and staged price increases

Page 15: Intro to obppc architecture   shelf savvy tool books

hOW do we develop a good OBPPC strategy?

329OBPPC – Occasion Brand Package Price Channel Architecture

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31OBPPC – Occasion Brand Package Price Channel ArchitecturehOW

OBPPc planning is an integral element in dNA: The coca-cola Way of Marketing.The goal of marketing at TCCC is to combine art and science to build Brand Love and Brand Value. From a marketing perspective, OBPPC starts with the occasion. From a commercial perspective, it starts with the channel or customer.

We use elements from Brand and Portfolio Plans to tailor the OBPPC to accomplish both our marketing and commercial objectives.

OPPORTUNITY IdENTIFIcATION

Prioritize channels, categories, and occasions via Profit Mapping

OBPPc ARchITEcTURE

Defined category and channel architecture according to occasions

IN-OUTLET PIcTURE OF SUccESS

Customized with marketing elements and Customer sell in story

Page 17: Intro to obppc architecture   shelf savvy tool books

33OBPPC – Occasion Brand Package Price Channel Architecture 33OBPPC – Occasion Brand Package Price Channel Architecture

Away from home Meals

Channel

On The go

At homeLeisure

grocery convenience hOREcA

$XX billion opportunity

Occ

asio

n

OBPPc commercializes the priority opportunities in store.

hOW

OBPPc work starts with the

highest leverage opportunity.

Page 18: Intro to obppc architecture   shelf savvy tool books

35OBPPC – Occasion Brand Package Price Channel ArchitecturehOW

good OBPPc incorporates three key principles.

differentiate across channels

(& customers)

capture unique shopper needs

(within a channel or customer)

OBPPc Architecture

Segmented by pack role, consumption occasions, and socioeconomic level

Segmented by pack role, consumption occasions, and socioeconomic level

Define distinct package roles

1 2 3

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37OBPPC – Occasion Brand Package Price Channel ArchitecturehOW

differentiate across channels

capture unique shopper needs

Define distinct package roles

1 2 3

First principle:OBPPC defines distinct package roles.

OBPPc Architecture (by category and channel)

(within a channel or customer)

(& customers)

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39OBPPC – Occasion Brand Package Price Channel Architecture 39OBPPC – Occasion Brand Package Price Channel ArchitecturehOW

Entry Frequency Upsize Upscale

Entry price point Frequent usage size

Value convenience

IncidenceRecruit new category

consumers or competitive users

TransactionsDrive frequency among

existing consumers

Amount Increase purchase

amount

AmountOptimize valueon less elastic

purchases

1.0L (PET)$0.99$0.99/LValue Index 106

1.5L(RefPet)$1.40 $0.93/LValue Index 100

2.5L (RefPet)$1.99$0.80/LValue Index 86

2x 0.75L (PET)$2.25$1.50Value Index 161

Obj

ectiv

eR

ole

Exa

mpl

ec

ore

d

iffer

entia

tor

Define package roles consistent with PITA objectives.

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Entry Frequency Upsize Upscale

hOW 41OBPPC – Occasion Brand Package Price Channel Architecture

Strategic Package Roles

Customer Objectives*

Incidence Number Of Trips

Size Of Purchase

Retail Price/L

* Customer objectives translate into PITA formula

Package roles can then be linked to customer objectives.

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43OBPPC – Occasion Brand Package Price Channel Architecture 43OBPPC – Occasion Brand Package Price Channel ArchitecturehOW

Second principle:OBPPC should capture unique shopper and consumer needs within a channel or customer.

OBPPc Architecture (by category and channel)

Define distinct package roles

1 2 3

differentiate across channels

capture unique shopper needs

(within a channel

or customer)(& customers)

Page 23: Intro to obppc architecture   shelf savvy tool books

45OBPPC – Occasion Brand Package Price Channel ArchitecturehOW 45OBPPC – Occasion Brand Package Price Channel Architecture

“ We want coke, but at the best price to meet my family’s needs.”

She buys primarily for: home Meals

She buys primarily for: home Meals

She shops primarily at: Mass

A pack she might buy:4x2L (PET)

$9.50$1.20/L

A pack she might buy:1.25L (PET)$1.75$1.40/L

OBPPC meets shopper need and optimizes profitability

She shops primarily at: drug Stores

“ We want coke, but I’m time pressed – I’ll pick it up when I can.”

consider two mothers shopping for the same occasion:Susana Mary

dRUgcO pharmacy

higher Price Elasticity

Lower Price Elasticity

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47OBPPC – Occasion Brand Package Price Channel Architecture

“ I want a coke, but I have a daily budget that I need to stick to.”

He buys primarily for: On the go

She shops primarily at: Traditional He shops primarily at: Traditional

A pack she might buy:1.25L (RgB)

$1.70$1.36/L

A pack he might buy:0.5L (PET)$0.99$1.98/L

“ I want a coke, and I want it now for the commute home.”

Corner Mart Corner Mart

hOW

And two workers shopping the same channel:

47OBPPC – Occasion Brand Package Price Channel Architecture

Lina Robert

higher Price Elasticity

She buys primarily for: home Meals

Lower Price Elasticity

OBPPC meets shopper need and optimizes profitability

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hOW 49OBPPC – Occasion Brand Package Price Channel Architecture

OBPPc meets shopper needs and optimizes profitability by occasion.

On the go

SUPERMARkETS IN cOUNTRY A

At home meals

0.33L (can)$0.43

$1.30/L

0.5L (PET)$0.86

$1.72/L

1.5L (PET)$1.55

$1.03/L

2x1.5L (PET)$2.94

$0.98/L

4x0.5L (PET)$2.98

$1.49/L

Meets Susana’s needs:

Value

Meets Mary’s needs:

Convenience

Could meet Robert’s needs: Convenience

Example: Sparkling Soft Drink Category Entry Frequency Upsize Upscale

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hOW 51OBPPC – Occasion Brand Package Price Channel Architecture

Entry Frequency UpsizeSUPERMARkETS IN cOUNTRY B

At home meals

OBPPC reflects the elasticities of different income groups.In this example, the same packs are sold at different prices in different neighborhoods.

High IncomeNeighborhood

Mid IncomeNeighborhood

Low IncomeNeighborhood

1.25L (RGB)$1.19

$0.95/L

1.25L (RGB)$1.09

$0.87/L

1.5L (PET)$2.09

$1.39/L

1.5L (PET)$1.99

$1.32/L

1.5L (PET)$1.99

$1.32/L

2.00L (PET)$2.69

$1.35/L

2.00L (PET)$2.59

$1.30/L

2.00L (PET)$2.39

$1.20/L

Meets Lina’s needs:

Daily Budget

Example: Sparkling Soft Drink Category

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53OBPPC – Occasion Brand Package Price Channel ArchitecturehOW

Third principle:OBPPC differentiates across channels and customers.

OBPPc Architecture (by category and channel)

Define distinct package roles

1 2 3

Define distinct package roles

differentiate across channels

capture unique shopper needs

(within a channel

or customer)(& customers)

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hOW 55OBPPC – Occasion Brand Package Price Channel Architecture

different channels will have different package offerings for the same occasion.

Primary consumption Occasions

At home MealsOn the go

At home MealsAt home Leisure

Shopper behavior in this channel

daily tripshigher rate of impulse buysLower price points

Weekly stock-up tripsLower rate of impulse buyshigher elasticity

Channel Differentiator

convenienceProximity

PriceAssortment Breadth and depth

OBPPC Strategy Frequency size packsRgB for lower price point

Upsize packs in addition to entry size packs Large PET to drive down price/L

Traditional Trade Grocery

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hOW 57OBPPC – Occasion Brand Package Price Channel Architecture

Primary Consumption Occasions

At home MealsAt Work Meals

At home MealsAt home Leisure

Shopper Behavior in this Customer

Smaller householddaily trips Lower price sensitivity

Larger household2 trips/weekhigher price sensitivity

Customer Differentiator

Breadth of assortment convenienceLarge footprint

compact assortment Proximity to neighborhoodSmall footprint

OBPPC Strategy Over-index in single serveFocus on frequency and convenience pack role

Over-index in multi serve and multipacksFocus on frequency and upsize pack role

“Customer A” “Customer B”

different customers will have different package offerings for the same occasion.

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59OBPPC – Occasion Brand Package Price Channel ArchitecturehOW

hOW do these three OBPPc principles come together?

59OBPPC – Occasion Brand Package Price Channel Architecture

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61OBPPC – Occasion Brand Package Price Channel ArchitecturehOW

A holistic OBPPc model incorporates multiple channels, occasions and shopper segments.

AOccASION

1

Immediate consumption

Future consumption

OccASION 3

OccASION 2

OccASION 2

A

A

A

B

B

B

B

_0.33l can @ $ 0.49_chilled_3 SKU traffic driver

chANNEL: SUPERMARkETS

Occasions can be further segmented by:

_Shopping missions_customer clusters_Socio economic level_Region/Location

BUSINESS OBjEcTIVE

Entry Frequency Upsize Upscale

For each segment, we will define:

_Pack size, type_Price point_Number of items_Placement_Equipment_customer objectives

BRANd:

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63OBPPC – Occasion Brand Package Price Channel ArchitecturehOW

Individual OBPPcs are integrated into one portfolio OBPPc for each channel.

Individual Category OBPPC Example: Traditional Channel

Integrated Portfolio OBPPC Example: Traditional Channel

e.g. MyCoke e.g. Flavors e.g. Water

ENTRY FREQUENcY UPSIZE UPScALE

ON ThE gO

SNAckS

WaterFlavorcola

WaterFlavorcola

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65OBPPC – Occasion Brand Package Price Channel ArchitecturehOW

The complexity of an OBPPc is dependent on the capability to segment and execute.

convenience On the go

convenience Snacks

Traditional On the go, Snacks

hypers On the go, Snacks

hypers On the go, Snacks

Supers On the go, Snacks

convenience On the go, Snacks

Traditional On the go, Snacks

Supers On the go, Snacks

convenience On the go, Snacks

Traditional On the go, Snacks

hypers On the go, Snacks

Supers On the go, Snacks

convenience On the go, Snacks

Water / Flavor / cola

Brand level

cOMPLEXITY: ILLUSTRATIVE EXAMPLE

Channel level Region level Total market

REgION ONE REgION TWO

Page 34: Intro to obppc architecture   shelf savvy tool books

OBPPc Architecture

Driving profitability by creating and capturing value for the TCCC System.

Page 35: Intro to obppc architecture   shelf savvy tool books

global Customer & shopper Marketing Converting shoppers to Buyers

FOR INTERNAL USE ONLY.Copyright© 2010 The Coca-Cola Company. DNA: The Coca-Cola Way of Marketing, Brand Value | Brand Love and the Dynamic Ribbon are all trademarks of the Coca-Cola Company.