p2p and look of success in traditional trade

The Way of Shopper Marketing Classified - Internal use 1

P2P and Look of Success in Traditional Trade

Efrain RosarioGlobal Director, Shopper Marketing,

Commercial Leadership

[email protected]

CONFIDENTIAL

Global Shopper DevelopmentConverting Shoppers into Buyers

2

Traditional Trade Performance DriversHow to increase KO share in the Traditional Trade – a summary of commercial best practices

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3

Background and Objectives

The traditional trade is characterized by a wide variety of

size, layout, product offerings, merchandising and customer

service.

After reviewing over 20 traditional trade studies spanning

13 countries, we have compiled the most important “killer

facts” that lead to an increase in Coke share or sales within

this channel.Note: Countries where data was obtained is noted in the upper right-hand

corner of each slide.

http://en.wikipedia.org/wiki/File:Flag_of_Colombia.svg

4CONFIDENTIAL


We started our investigation into Traditional Trade drivers with the results of a robust quantitative study in Mexico

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In Mexico, four items emerged as the top driving factors of sales, resulting in a 12% increase

Mexico

Rex Briggs Mexico, 2009

COOLERS (5.3%)In first position

SOVI (4.3%)Share of Visual Inventory

12%SALES

INCREASE OF

12

PRICE (1.2%)Communication4

HOT SPOTS (1.2%)Top locations in store3

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6

Based on global learnings, we have identified five key commercial drivers for the traditional trade

Coolers1SOVI2Price communication4Shoppability3Shopkeeper satisfaction5

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17

Coolers are the single most important driver for growth

Presence, placement and equipment style are critical

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8

The greater the cooler penetration, the greater the market performance …

Correlation of Coolers per 10,000 and KO per Capita

Mexico is the strongest market, with the highest number of coolers per 10,000

Coo

lers

Per

10,

000

KO Per Capita

Mexico

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9

… as nearly all beverage transactions come from coolers in best practice markets

> 90%of all (non-alcoholic) traditional trade beverage transactions are from coolers

TT Hot Spot Study, Mexico, 2010

Mexico

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10

Higher chilled availability leads to higher market share

MOTOR Philippines, 2008

Philippines

43%share

40-60%SOCVI*

24%share

< 40%SOCVI*

55%share

60%+SOCVI*

* Share of Chilled Visual Inventory

There is a significant loss of share in stores with less

than 40% chilled stockNo Coolers 19%share

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11

KO Cooler exclusivity further increases share

54%Coke share 70%

Coke share

POS Observations and High Level Driver Buckets, 2009

TCCS & CompetitiveCoolers

Only TCCS Coolers

Sri Lanka

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12

Coolers in “1st position” drive volume growth, and even more profit growth …

Mexico

Branded coolers trigger purchases because they are the first place shoppers look for

beverages –cold is sold


5.3%volume increase

8.2%profit increase

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13

… and placing coolers outdoors creates a beacon that captures incremental share

Teen Recruitment CCL Considerations, Pacific 2009

25-30% growth in transactions including share gains when placed outdoors

Pacific

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Improving our visual identity, as in the Showcase cooler, drives share gain

Original Cooler

Showcase Cooler

+8-12%Share Gain

Showcase Cooler and 3D VIS Latam Test Results, 2010

Mexico

Brazil

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Showcase coolers create more stopping power and are more appealing

27% 68%34% 55%

Which cooler gets shopper’s attention?

Showcase Cooler and 3D VIS Latam Test Results, 2010

1

2

3

LightingLED is more efficient and effective

Design

Handle

Driven by …

Mex

ico

Bra

zil

Coke assets, curves & modern look

Dynamic ribbon invites touch

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In summary, when working with coolers we should consider the following:

Chilled availability is most important,

followed by exclusivity of Coke

And first position placement is key -

placing them outside is even better

Finally, coolers that leverage our visual identity garner the

most attention

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217

SOVI & SOCVI* are essential to growing share

Not only do we need to have the right OBPPC, but also the correct space on shelf and in coolers

* Share of Chilled Visual Inventory

18CONFIDENTIAL


First, we need to optimize the OBPPC*…

* Occasion Brand Pack Price Category

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When the desired brand / pack is unavailable, shoppers switch brands…

Traditional Trade Power Principles – Page 2

India

57%bought the same pack of a

different brand

37%bought a

different pack of the same brand

didn’t buy a beverage

Shopper Reaction if Packis Unavailable

6%

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…and we lose out on 63% of shoppers

Traditional Trade Power Principles – Page 2

India

Shopper Reaction if Packis Unavailable

57%bought the same pack of a

different brand

didn’t buy a beverage6%

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Getting the OBPPC* correct requires SKU discipline and optimizing SKU mix across categories


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Optimizing category mix and SKU reduction drove incremental revenue growth

From: To:

• 139 SKUs• 4 Door Cooler

• 75 SKUs• 4 Door Cooler

Reduction in SKUswith

Improvement in Revenue

-45%+3%

Before

60%

26%

14%

After

59%

32%

9%

Sparkling

Stills

Water

Sparkling

Stills

Water

Mexico

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Once we have the optimal OBPPC*, we then need to ensure we have the correct space to sales ratio


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There is a direct correlation between increasing SOVI and increasing share

Correlation Between Share and SOVI

DATA: Aeon POS/RED Tested at 7 stores, 2010

Japan

Russia

SHA

RE

SOVI

CompetitorsTCCS

R2 = 0.9218

When TCCS inventory is increased, there are more brand and package options – allowing for shoppers to fulfill their needs and make Coke top of mind

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As a guiding principle, our percent of SOVI should be at least equal to our volume share

%SOVI

Volume Share

Winning In-Store By Focusing on the Most Important Elements (v 2.0) – page 1

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Silv

er

Cus

tom

ers

This requires having the correct amount of cooler doors to support SOCVI needed

Australia IC Best Practice, Customer Portal; Mexico Double the Bet, 2011

Australia

+12%-14% volume

& +18% NSR

Mexico

By increasing doors we create additional chilled space showcasing the extended portfolio, reaching more shopper occasions with greater package differentiation and prevents out of stocks

From 2 doors to 3 doors

From 3 doors to 4 doors

Gol

d C

usto

mer

s

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To summarize, when working with SOVI and SOCVI, we should consider the following:

Increasing SOVI directly increases

share and it should equal volume share

in the area

It is important to optimize SKUs by having the right

OBPPC and balancing SKUs properly across

categories

Need to have the correct amount of

cooler doors, especially in top

customers

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328

Shoppability plays a critical role in driving traditional trade sales

Merchandising coolers, hot spots, and communicating effectively are key for turning shoppers into buyers

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Shoppers are making quick decisions in-store … requiring a high impact store environment

General POS Observations and High Level Driver Buckets – Slide 8

41%

59%

Purchased Brand on List Chose Brand In-Store

Less than one minute spent shopping for beverages

59% choose brands while in-store

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We must create an efficient shopping experience with effective merchandising – starting with the coolers

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Poor merchandising erodes the competitive advantage that coolers bring

Camouflage to the brainLack of merchandising

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Optimized cooler merchandising adds up to +19% in growth

<1-4 facings per brand

Varied Lines

Horizontally Merchandised

10 Brands

Straight LinesVertically Merchandised

3 facings per brand

9 Brands Total

Colombia

Effective Cooler Merchandising, 2008

ControlWhat didn’t work

OptimizedWhat did work


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Placement within the cooler makes a big difference!

Medium Impactfor routine, frequency packages

Low Impactfor destination, loyalty packages

Highest Impactfor high margin,

high impulse productsOp

enin

g Si

de

Coolers have specific high-to-low priority zones to utilize when designing planograms

Colombia

Effective Cooler Merchandising 2008;


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As a reminder, three facings per SKU creates higher visibility, and higher share

3 Facings per SKU

89share index

Effective Cooler Merchandising, 2008; POS Observations and High Level Driver Buckets – Slide 4

Thailand

This applies to cooler merchandising, as well as ambient merchandising

19-28%Share increase

Colombia


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Once coolers are merchandised correctly, we must focus on effectively utilizing hot spots

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In addition to the cooler, we’ve learned there are three other critical hot spots in the store

Colombia

Entrance

Counter

Ambient

Cooler

NeuroFrocus Retail Design Impact Charter Test, Colombia 2011


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But, less is more - focus on 3-6 merchandising elements to optimize impact

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1 2 3 4 5 6 7 8+0%

20%

40%

60%

80%

100%

# of Elements

Impa

ct o

n Pu

rcha

se In

tent

3-6 elements =purchase intent of

88%1-3 elements =

purchase intent of

15%

7+ elements =no beneficial impact on purchase intent

Value wall element has the greatest impact on

purchase intent

* Elements are individual materials placed in hot spots

Colombia



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By utilizing purposeful, occasion-driven shopper marketing techniques, we are transforming stores…

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After

Before

Argentina

Colombia

EcuadorRetail Design Impact Charter


http://en.wikipedia.org/wiki/File:Flag_of_Ecuador.svg

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... resulting in higher presence, effectiveness and most importantly, volume!

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Effectiveness

Emotional Inv.

Attention

Memory

6.6 7.98.6 8.56.2 8.06.2 7.2

PRE POST

Neuromarketing Total Effectiveness PRE POST

54 62

PRE POST

68 76

Share of Cold Inventory

Share of Visible Inventory

+ 8+ 8

INCREMENTALVOLUME

Brand Awareness

Execution Quality Index CDE Purchase

Transactions

Series1

36%

50%

20%

33% 30%

64% 67%

49%

63%55%

SSD Juices Water

Pre

Post

+28.6%

Colombia



40CONFIDENTIAL


While merchandising and utilizing multiple hot spots is foundational, the temporary POP materials must be effective

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The presence of Point of Purchase Materials (POPM) strongly impacts Coke share

62%

54%

21%

49%

22%

10%

Sri Lanka

India

UAE

POPM Present

POPM Present

POPM Present

Absent

Absent

Absent


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But often we miss the mark with our shopper!

“There are so many that I don’t always notice them”

“They make it hard to find basic products”

“They are placed over other brands”

“They can be worn, dirty or torn”

“Sometimes they’re for products or promotions that are out of date

or out of stock”

Traditional Trade Video – “The Shop Space”

What shoppers say about POPM…

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To summarize, we should consider the following to make stores more shoppable:

Since shoppers are shopping quickly,

its important to stay top of mind

and create an efficient shopping

experience

However, less is more – focus on 3-6 elements to

avoid over saturating the shop’s space

While POPM presence strongly

impacts Coke share, we must strive to

produce more effective POPM

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Prices must be clearly communicated

…and SRP* must be complied with

* Suggested Retail Price

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Clear, consistent price communication in-store is driving sales

1.2%incremental volume

Mexico

3%incremental system profit


Clear pricing makes the purchase decision easier

for shoppers

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Price communication is a crucial part of shoppability, as it helps guide choice …

Top selling stores perform significantly higher than bottom performing stores

Argentina

*Than low selling stores Improving Shoppability in the Traditional Trade, Argentina 2010

5xPrice

Communication is One Factor that

Leads to

More TCCS Sales*

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… while cluttered price communication reduces effectiveness

Colombia


8%Increase in

Total Effectiveness

Cluttered price communication Organized price communication


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We can increase volume by ensuring that shopkeepers comply with the Suggested Retail Price

SRP compliance drives sales uplift by 21%

Picture of Success Drivers, Neilsen, 2009

Philippines

…and it’s historically weak in the traditional trade

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To summarize, when working with pricing, we should consider the following:

Along with focusing on

coolers and SOVI, by communicating prices, we see a

lift in volume

But, be careful to avoid over-communicating

prices, as this can lower effectiveness

Finally, ensure the SRP is complied with to increase

volume

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550

It’s important to keep the shopkeeper involved

Assisting them increases Coke share

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Satisfied Shopkeepers = Higher Coke Share

62%

53%

Satisfied Shopkeepers

share

share


Dissatisfied Shopkeepers

India

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Shopkeepers that are engaged and knowledgeable lead to higher sales

Top selling stores perform significantly higher than bottom performing stores in all of these areas

+13% They always know what shoppers want

+9% They are available to provide assistance

+7% They are enthusiastic about helping shoppers

+7% Shoppers enjoy talking to them

Gap vs. Bottom Performing Stores

Argentina

Improving Shoppability in the Traditional Trade, Argentina 2010

MORE TCCS SALES*

5xOne factor

that leads to

53CONFIDENTIAL


A few considerations to improve Traditional Trade

performance

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Coolers are the #1 driver of sales

COOLER TO DO’S

Ensure chilled availability

Offer Coke products exclusively

Place coolers in 1st position

Strive for outdoor placement

Leverage our visual identity

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SOVI directly impacts share

SOVI/SOCVI TO DO’S

Have the right OBPPC

Create the optimal SKU balance

Ensure SOVI equals volume share

Have the right amount of cooler

doors to support SOCVI

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Shoppability converts shoppers into buyers

SHOPPABILITY TO DO’S

Create effective merchandising

Make store easy to shop

Display effective POPM elements

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Price communication increases volume

PRICING TO DO’S

Clearly communicate prices

De-clutter pricing signage

Ensure SRP compliance

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Shopkeepers strongly impact Coke share and sales

SHOPKEEPER TO DO’S

Show shopkeepers we care about

their business

Allow them to voice their opinions

Share shopper insights to show

partnership to win together

The Way of Shopper Marketing Classified - Internal use

THANK YOUFor additional information please visit the Shopper/Customer Marketing

Community at www.KOSCMarketing.com

p2p and look of success in traditional trade

Documents

traditional trade drivers

traditional trade studies

ko share

coke share

share of visual inventory12

correlation of coolers

significant loss of

sales increase of1