EVALUATING GENERIC PROMOTION PROGRAMS

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EVALUATING GENERIC PROMOTION PROGRAMS
Bill Thomas University of Georgia 2001 Southern
Dairy Conference
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Milk Production Commercial
Disappearance, U.S., 19975 - 1999
170
Milk Production
160
Commercial
Disappearance
150
140
Billion Pounds
130
120
110
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
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Evaluating Generic Promotion Programs

• Cornell University Economic Impact
• Beverage Marketing Corporation Business school
  approach to assess milk marketing programs

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Generic
Cheese
Brand Cheese
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Cornell Study

• Impact of programs 1996-99
• Fluid consumption 1.4 w/o programs
• Total consumption 1 w/o programs
• Cheese consumption 1.2
• All milk price 0.85 lower w/o program
• BCR 4.29
• Return of 4.29 for each 1.00 invested

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170
160
Actual
Trend 1975-83
150
Trend 1984-99
Billion Pounds
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
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U.S. Fluid Milk Sales and Cheese
Sales (Milk Equivalent)
80000
75000
Fluid Sales
70000
Cheese Sales (Milk
65000
Equivalent)
60000
Million Pounds
55000
50000
45000
40000
35000
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
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Total Per Capita Cheese Sales, U.S., 1975-98
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Per Capita Fluid Milk Sales, U.S. 1975-98
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Project Objectives of BMC

• Develop an in-depth understanding of the beverage
  environment
• Input into future programs and annual Report to
  Congress
• Provide a third party qualitative assessment of
  generic milk marketing programs
• Assist with competitive measurement system

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How Milk Fares in Competitive Universe

• Milks growth lags the category

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Milks Performance Lags the Category
Competitive Beverage Set Per Capita Consumption
Growth 1995 - 1999P
PPreliminary Source Beverage Marketing
Corporation
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Milk is the Only Category Showing a Decline
New Product Introductions 1998-1999 Change
Sports Beverages
Soft Drinks
Bottled Water
Fruit Beverages
Milk
RTD Tea

• Includes non-dairy milk and yogurt drinks
• Projected based on five months data
• Source Beverage Marketing Corporation Marketing
  Intelligence Services

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Milk New Product Introductions Declining

• Includes non-dairy milk and yogurt drinks
• Projected based on five months data
• Source Beverage Marketing Corporation Marketing
  Intelligence Services

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Potentially Competitive Products to Milk Appearing
Orange Juice with Calcium Sales 1998-1999 In
Millions
Soy Beverage Sales 1996 - 1999 In Millions
12
15
58
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Chilled and frozen concentrate Source Beverage
Marketing Corporation A.C. Nielsen
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How Milk Fares in Competitive Universe

• Milks growth lags the category
• Milk addresses basic and functional product
  benefits
• while the competition addresses higher-order
  consumer benefits

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• Overall, milk addresses primarily basic/
  functional benefits
• However, consumers now expect higher-level
  emotional benefits from the beverages they drink
• Well-positioned, highly-marketed products tend to
  address higher-order consumer benefits

Consumer Benefit Hierarchy for Milk
Highest-order Benefits
Self-esteem
Well-being
Confidence
Emotional Benefits
Trust
Smart Choice
Social status/ acceptance
Self-indulgence
Individuality

• How do I feel about this?

High Quality
Filling
Soothing
Nutritious
Refreshing
Functional Benefits

• What does it do for me?

Basic Product Attributes
Taste
Dependable/ Consistent
Cold
Generic
Good Value
Flavor Variety

• What is it?

Source BMC
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Milk in lowest segment for growth, innovation and
benefits
Highest Order Benefits
High Growth
Isotonics
e.g. Sobe, Snapple Elements
Traditional
Innovative
Colas
Low Growth
Basic Attributes
Source BMC
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How Milk Fares in Competitive Universe

• Milks growth lags the category
• Milk addresses basic and functional product
  benefits
• while the competition addresses higher-order
  consumer benefits
• Milks packaging is functional/operations-driven

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Beverages must have the appropriate packaging
formats/array
Beverage Packaging Trends
Enhance Market/ Consumer Promote
Convenience Proprietary
Image CSDs Bottled Water Fruit
Beverages Sports Beverages RTD Tea Milk
Excellent Good Good Excellent Good Poor
Excellent Excellent Good Excellent Excellent Fair
Good Excellent Good Excellent Excellent Fair
Excellent Excellent Excellent Excellent Excellent
Poor
Portable, resalable, unbreakable, light-weight
Source BMC
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How Milk Fares in Competitive Universe

• Competition addresses the issue of product
  availability better than milk
• although milk is improving

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Availability is a key element
Immediate Consumption vs. Take Home
Distribution 1998
Source Beverage Marketing Corp.
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Milks Availability in MM has Increased, but
Still Lags
Percent ACV in Mass Merchandisers 1996 - 1999
Source Beverage Marketing Corporation AC Nielsen
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How Milk Fares in Competitive Universe

• Competition addresses the issue of product
  availability better than milk
• although milk is improving
• Milks voice in the marketplace is soft
  relative to its size

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• Milks Share of Voice is Less than its Share of
  Volume

Milks Relative Share of Voice
Source Beverage Marketing Corporation
Competitive Media Reporting
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Only Bottled Water Spends Less on Advertising
Competitive Set Ad Spending per Gallon 1999
Source Beverage Marketing Corporation
Competitive Media Reporting
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How Milk Fares in Competitive Universe

• Competition addresses the issue of product
  availability better than milk
• although milk is improving
• Milks voice in the marketplace is soft
  relative to its size
• In-store, milks merchandising falls behind
  competition

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Milk Lags in of Dollar Volume Sold on Feature
Percent of Beverages Sold on Feature 1999
Source Beverage Marketing Corporation A.C.
Nielsen
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BMCs Assessment of Milk Marketing Programs

• Program is notable for unusually high consumer
  awareness
• Endorsements make product contemporary
• Good media mix for messaging
• Programs greatest weakness is low share of voice
• Spending is over-indexed to adults
• Generic lacks impact of branded advertising

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BMCs Assessment of Milk Marketing Programs

• Effective marketing has moderated declines
• Even with the marketing program, milk is still
  vulnerable to a decline

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BMCs Areas of Improvement

• Evolve messaging
• From functional/nutritional to higher order need
  states and emotional benefits
• Adjust ad mix to emphasize key 12-24 age and
  ethnic groups
• Increase ad/promotional spending

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BMCs Areas of Improvement

• Enhance processor marketing programs
• positioning, packaging,pricing, availability,
• Develop field execution expertise comparable to
  competition
• Innovation is key to future growth

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