Bowl App

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Bowl Appétit!Marketing Strategy

• Brian Bolten
• Pat Campbell
• Elizabeth Chang
• Trent Edwards
• Todd Federman
• Butch Lincoln

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Outline

• Data Collection Analysis
• Strategy Development
• Concept Development

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Data Collection Analysis
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Insights from Lifestyle Trends
Data Collection Analysis

• Insight Shelf stable lunches need to be quick to
  prepare
• Trend Busy professionals and moms have less time
• Trend Increase of take-out-food
• Average American willing to spend no more than 15
  minutes preparing a meal
• Insight Food should be balanced and nutritious
  as much as possible
• Trend Growing awareness of wellness
• Trend Attention on organic foods and alternative
  medicine

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Insights from Lifestyle Trends
Data Collection Analysis

• Insight There exists a market for meal
  preparation kits for busy working people who
  enjoy some amount of preparation
• Trend Industrial appliances and professional
  cookware must haves for kitchens
• Trend Home as sanctuary People enjoy being
  home and like people to see their homes
• Insight Products need to be simple to understand
• Trend Clutter too many choices, too much info

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Learnings from Retail Trends
Data Collection Analysis

• Learning Convenient meal category is highly
  competitive but growing
• 9,248 new products introduced in 2000 550 in the
  meal/meal center category
• Continued increase in private label spending
  (20.1 market share, 15.7 dollar share)
• Innovations increasing
• Healthy ingredients such as calcium and fiber are
  being added
• Organic and all natural products
• Convenience foods such as meal kits

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Learnings from Retail Trends
Data Collection Analysis

• Currently, Bowl Appetit! is not displayed in a
  consistent fashion across retail locations
• Soup aisle, pasta aisle
• Canned dinners/boxed dinners aisle
• Insight Optimal positioning may be in a prepared
  foods aisle (not currently in many stores)
• GM should work with retailers to share best
  practices as to display and promotion
• Additional placement option
• Free-standing display only, e.g. DiGiornos

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Learnings from Retail Trends
Data Collection Analysis

• Learning Conventional grocery store has a
  reduced dominance. Need to reach consumers
  through other channels as well

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Industry Insights
Data Collection Analysis

• The workforce
• 50 spend 15 minutes on lunch
• 66 skip lunch at least twice a week
• 40 eat at their desk
• Movement from meal components to finished meals
• Diet positioned brands falling

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Industry Insights
Data Collection Analysis

• Brand extension have higher success rate and
  require less investment which suggests leveraging
  an existing brand
• Pricing Power
• Mature food industry limits pricing flexibility
• Pricing power and margins enhanced by developing
  customer loyalty through brand awareness
• Development of multi-million products that can be
  sold nationally to create economies of scales

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Competitor Products
Data Collection Analysis
Shelf-Stable Frozen
Campbells Soups Ready To Go

ConAgra Chef Boyardee Healthy Choice
Marie Callenders

Hormel Chili
Dinty Moore

Kraft Easy Mac

Mars, Inc Uncle Bens
No Financial Data Available
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Competition Financials
Data Collection Analysis
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Competitive Activity
Data Collection Analysis

• Feb 2000 Its Pasta Anytime - 15.9MM
• Aug 2000 Uncle Bens - 20MM
• Oct 2000 Healthy Bowl - 6 MM (14.7 MM in 1997)

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Competitor - Campbells
Data Collection Analysis

• 2001 U.S. operations slumping effect on 9
  decline in overall net income
• Ready to Serve soups focus on convenience
• Marketing and sales were 25.9 of sales (focused
  on Godiva, V8 Splash, Chunky)
• CEO Johnson returns from retirement

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Competitor - ConAgra
Data Collection Analysis

• 2001 Package food sales 8,681 account for 31 of
  total revenue
• Includes shelf-stable, frozen, agriculture and
  dairy
• Acquisitions illustrate shift toward brand and
  value-add products
• Banquet and Healthy Choice brands suffering
• Analysts bullish on Marie Callenders
• Double digit gains called for a 12 item entrée
  line
• 2001 acquisitions totaling 1,107.2 MM including
  Chef Boyardee

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Competitor - Hormel
Data Collection Analysis

• Increased pork and turkey business through Fully
  Cooked Meal Solutions
• Favorable historic 3 year performance
• Rev growth 149 higher than industry average
• ROE is 55 higher than industry average
• ROA is 86 higher than industry average
• Limited rice and pasta entrees

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Strategy Development
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SWOT Analysis of Bowl Appétit
Strategy Development

• Strengths
• Quick preparation
• Simple instructions
• Betty Crocker brand (trust, recognized,easy to
  prepare foods)
• Single serving

• Weaknesses
• Quality variability
• Small quantity
• Limited variety (starches only)
• Dehydrated food
• Betty Crocker brand (primarily associated with
  baking)

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SWOT Analysis of Bowl Appétit
Strategy Development

• Opportunities
• Ownership of segment
• Other segments to focus on - workplace
• Additional channels food service vending
• Pillsbury technology and distribution
  capabilities to new channels

• Threats
• Comparison to frozen food quality
• Relatively easy market entry
• High educational needs
• Cannibalizing existing brand
• Damaging Betty Crocker name
• Competitive response

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Marketing Strategy
Strategy Development

• Become product leader in shelf-stable
  single-serve meals category focusing on the
  attributes of
• On-the-go Convenience
• Good Taste

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Critical Success Factors
Strategy Development
Convenience Reduced preparation time (two minute target) Simple preparation process Include all items necessary for at work usage (utensil)
Taste Must approach taste performance of consumers existing options (restaurant, packed lunch) Packaging and promotion must convey this
Channel Work with retailers to gain favorable shelf space Help to create a prepared foods isle (optimal store positioning)
Price Although conjoint analysis indicates that consumers were not sensitive to the prices provided in the survey, product would ideally be priced below frozen meal alternatives
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Segment Layout
Strategy Development
Quality/Taste

• Marie Callenders

• Flavor Bowls

• Uncle Bens

• Home-cooked meal

• Sit-down restaurant

• Flavor Meals

• Pasta Anytime

• Ragu Express

• Buffet restaurant

• Homemade Sandwich

• Easy Mac

Convenience

• Bowl Appétit!

• Chef Boyardee

• Fast Food

• Ready to Go

• Cup of Noodles

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Target Consumer
Strategy Development

• Primary White collar professional worker
• Prepared in the workplace
• Kept in stock at home for quick meals
• Secondary Stay-at-home mom with little time to
  cook

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Strategy Development
Target Consumer

• Similar to current Bowl Appetit purchaser based
  on Nielsen panel data

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Target Justification
Strategy Development

• Busy professionals value attributes of the quick
  preparation - 40 of the workforce eat at their
  desk
• Women growing percentage of work force (in 1999
  46.5 versus 34 in 1964)
• Women buy or influence the purchase of 80 of
  consumer goods so their needs must be addressed
• Demand demographics Baby boomers
• Baby boomers (37 to 55 years old) account for 30
  of population
• Focus on nutrition and weight maintenance
• Rising average age of US residents

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Surveys
Strategy Development

• Surveys undertaken
• Qualitative discussions
• Competitive Analysis on four key attributes
• Conjoint Analysis
• Given target consumer, selected Harris Teeter as
  survey location

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Qualitative Discussions
Strategy Development

• Revealed two key concerns
• Overall Product Quality
• Skeptical about taste of microwaved dry noodles
• Serving size may be too small
• Convenience
• Some not comfortable boiling food in microwave
• Not convenient for home users
• Why not just buy frozen

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Consumer Insights
Strategy Development

• Consumers are in search of a product that is
  more
• Substantial
• I need more than potatoes or rice for lunch
• Balanced
• It would be nice if it could have chicken and
  vegetables
• Flavorful
• The taste is important to me

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Competitive Analysis
Strategy Development
Survey asked consumers to compare Bowl Appetit to
four quick preparation competitors based on
price, taste, nutrition and convenience
Bowl Appetit VS. competition Price Average Taste
Poor Nutrition Average Convenience Poor
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Conjoint Analysis
Strategy Development

• Sample survey form Evaluate meat additive, wet
  noodles, price sensitivity

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Conjoint Analysis
Strategy Development

• Survey Results Wet noodles are significantly
  preferred to dry. Price and meat packages not
  significant.

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Strategy Development
Pricing Analysis
Current Bowl Appetit! product is priced between
other shelf-stable products and frozen foods
Conjoint analysis and qualitative discussions
indicate that consumers are willing to pay
between 2.50 and 3.00 for a high quality
shelf-stable product
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Key Consumer Takeaways
Strategy Development

• Bowl Appetit compares unfavorably on three of
  four key attributes
• Consumers receptive to wet pasta option
• Must improve perceptions of taste
• Convenience for home and work use are not the same

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Concept Development
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Targeting Unmet Consumer Needs
Concept Development

• - Faster prep time
• - Utensil included
• - Self-contained meal

• - Wet noodles
• - Sauces included
• - Greater variety

Convenience
Quality/Taste
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Introduction of New Brand
Concept Development

• Create new sub-brand and image to target at
  work segment
• Leverage strength of existing GM brand equity
  (such as Betty Crocker)
• A focus on on the go convenience may jeopardize
  home use if introduced under Bowl Appetit brand
• Possibility of transferring wet noodle technology
  to at home Bowl Appetit brand

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Concept 1 Flavor Bowls
Concept Development

• Bowl of wet pasta or rice or dry potatoes is
  packaged together with a seasoned sauce (i.e.
  marinara, meat sauce, cheese sauce, chicken in
  teriyaki sauce, gravy)
• Add seasoned sauce to the bowl heat
• Included utensil will add convenience
• The sauce and larger portion size will enhance
  quality and hunger satisfaction
• Improved graphic design of the product will
  signal convenience and quality

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Flavor Bowl Mock-up

• Bowl would contain noodle package and seasoned
  sauce

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Concept 2 Flavor Meals
Concept Development

• A three-section bowl includes a seasoned sauce,
  wet pasta/rice or dry potatoes, and dry vegetable
  product
• Sauce is a hearty blend of spices, vegetables and
  seasoning
• Empty pouch contents, add water to vegetable
  heat
• Included utensil will add convenience
• The hearty sauce and larger portion size will
  enhance quality and hunger satisfaction
• Improve the graphic design of the product to
  promote convenience and quality

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Value Proposition
Concept Development

• Develop the first shelf-stable products that
  match the taste requirements of white collar
  workers, while providing the speed convenience
  demanded by a growing portion of this group

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Unique Selling Value Proposition
Concept Development

• Complete understanding of competitive landscape
• Provide product that consumers say they need, not
  one that the company thinks they need
• Ensure that the product is truly convenient
• Ensure that the product truly tastes good
• First-to-market advantage
• Priced competitively with respect to quality of
  convenience and taste

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Switching Logic
Concept Development

• At Work Preparers
• Consumers who prepare frozen food or soup/noodles
  at work (easiest target)
• Lunch Packers
• Consumers who require speed and convenience, but
  have been unable to find products with desired
  quality/taste
• Restaurant Goers
• Consumers who desire speed and convenience, but
  go out to lunch because they require better
  quality/taste (most challenging target)

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Promotion Strategy
Concept Development

• Free samples in urban areas offices to increase
  word of mouth advertising
• Celebrity chef spokesperson to promote its
  convenience and quality taste
• Money back guarantee to encourage first-time
  buyers to purchase the product
• Billboard ads on subways and buses to target the
  busy white-collar professional
• Trade promotions (e.g. end-of-aisle displays)
  during the products introduction phase

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Promotion Results
Concept Development

• Targets busy white-collar professional
• Promotes themes of convenience and quality taste
• Encourages trial
• Achieves reach and distribution
• Builds repeat purchase and loyalty
• Increases word of mouth advertising

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Distribution Strategy
Concept Development

• Rank of importance
• 1 Supermarkets
• 2 Mass merchandisers (multi-pack)
• 3 Drug and convenience stores
• Educate the grocer of industry best practices
• Convince grocers to introduce a prepared food
  aisle (e.g. Convenience Aisle) to improve
  convenience for the shopper
• Leverage supplier power
• Secondary, utilize GM Foodservices advantages to
  bring product to targeted customers environment
• Corporate cafeterias and vending machines

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Distribution Results
Concept Development

• Own new Prepared Food aisle
• Achievement of favorable shelf space
• Strengthened customer relationship
• First-mover advantage
• Increased profits for customers (stores)
• Potential unique reach cafeterias and vending

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Pricing Strategy
Concept Development

• Position the product as the premium shelf-stable
  product in terms of quality, convenience and
  portion size
• Set selling price higher than Bowl Appétit!
• Position the product as a convenient and less
  expensive alternative to frozen lunches with
  minimal difference in quality of taste
• Set the selling price slightly lower than the
  floor price for frozen foods.

Target Price 2.69
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Pricing Results
Concept Development

• Not caught in the middle
• Charge for value convenience taste
• No exact competition
• Premium for brand value
• Higher margins for customers and GM

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Concept Fit with General Mills
Concept Development

• Continue to leverage Betty Crocker brand
• Current Bowl Appétit! serves a base for new
  product (brand name, bowl concept, etc.)
• Consistent with existing consumers and
  distribution channels
• Leverage marketing experience/expertise
• Consistent with current offerings
• Leverage manufacturing experience/expertise
• Utilize Foodservice to enter unique channels

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Potential Concept Limitations
Concept Development

• Technology
• No similar product currently being manufactured
  by General Mills
• According to GM, patents for technology are
  readily available
• Operations
• If expertise is unavailable in house, GM can and
  does outsource certain manufacturing processes

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Concept Development
Impact on Competitors

• Initial market share gains likely from at-work
  preparer segment
• GMs scope defends against initial price
  promotion response
• There is little long-term competitive recourse
• Secondary gains expected from converting
  restaurant goers and lunch packers
• Significant competitive response is unlikely

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Competitive Response
Concept Development

• Most likely scenario
• Frozen food competitors re-emphasize quality
• Shelf-stable competitors commit to improve
  quality (through acquisitions or increased RD)
• Successful introduction may attract new players
• General Mills strategy
• Quickly attract earn consumer loyalty in target
  segment
• Focus on leading taste and convenience factors
• Plan new flavors and combinations on regular
  basis to maintain trial meet consumers
  changing tastes

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Fit with Industry or Environmental Issues
Concept Development

• Slumping economy results in less eating out,
  consumers looking for cheaper alternatives
• Concepts cheaper than eating out but provide
  similar experience (it isnt leftovers)
• Also less expensive than frozen competition
• Scope of GM firms aggressive acquisition
  strategy leads to competitive advantages
• Economies of scale
• Technology and RD leadership

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3-Year Pro Forma Revenue
Concept Development

• Step 1 Develop Assumptions
• Identify potential buyers Professionals
  At-home moms
• Determine the market size for potential buyers
  using census data
• Project usage rates Trial and Repeat
• Step 2 Project Year 1 Revenue for target
  buyers
• Step 3 Assume an annual growth rate to project
  Year 2 3 revenue

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Pro FormaModel Assumptions
Concept Development

• Census data used to project market size for
  professional and at-home buyers

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Pro Forma Year 1 Projections for Professionals
Concept Development
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Pro Forma Year 1 Projections for At-home
Concept Development
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Pro Forma Year 1Calculations for Professionals
Concept Development
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Pro Forma Year 1 Calculations for At-home
Concept Development
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Pro Forma Year 2 3 Revenue Projections
Concept Development

• Annual Growth Rate 6
• Year 1 Market Size 550,000 (in MM)