Business Review

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Business Review
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The Context
All Great Marketing PlansBegin Here
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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

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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.

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What is a Business Review?
The link in the planning process that drives
insights for all types of plans.
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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.
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Analysis is not an end in itself,its a means to
an end The End Is
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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.

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2. Structuring the Business Review Analysis

• 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 ...
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Structuring the Business Review Analysis

• 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.

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The Critical Questions

• The 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?

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The Critical Questions

• The 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?

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The Critical Questions

• The 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.)?

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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 consumers perception of our brands
  value equation versus key competitors?

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The Critical Questions

• Our 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?

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The Critical Questions

• Our 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)?

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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.

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3. Translating Data into Key Issues and
Opportunities

• For each of these critical questions, we want to
  answer
• Whats happening?
• Why? Ill bet ......
• What are the opportunities?

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Translating Data into Key Issues and Opportunities
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Translating Data into Key Issues and Opportunities
Whats Happening?
Why? Ill Bet
What are the Opportunities?

• 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

• 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

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Translating Data into Key Issues and Opportunities
Whats Happening?
Why? Ill Bet
What are the Opportunities?

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

• 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.

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Documenting the Key Issues and Opportunities
Example

• 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.

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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

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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

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4. Opportunity Synthesis And Prioritization
Purpose Isolate key drivers of a brands sales
to enable prioritization of strategic options/
opportunities and focus of effort

• 1. Volume Modeling
• 2. Brand Strategic Gap Scorecard

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Volume Modeling

• Target Segment Population
• x
• Awareness
• x
• Distribution
• Household Base
• x
• Trial Rate (Household Penetration)
• Number of Trier Households
• x
• Retained User Rate/Repeat Rate
• Retained User Households
• x
• Average Annual Volume/Frequency of Purchase
• Total Annual Sales

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Volume Model - Nestlé Milo Example

• Target Segment 1.75MM households
• x
• Awareness 80
• x
• Distribution 80
• Household Base 1.12MM households
• x
• Trial Rate 70 (user rate)
• Number of Households 784M user households
• x
• Repeat Rate 70
• Average Annual Volume 1.6 200ml/week
• Total Sales 45,660M drinks consumed

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Volume Modeling - Example
AlternateOpportunity Area(s)
IncrementalSales
MarketingSpend
Risk/Degreeof Difficulty
A) Expand target segment population by 50 (to
2.6MM)
? ? High
B) Increase usage rate from 70 - 80
? ? Medium
C) Increase consumer usage frequency (1
drink/year/consumer)
? ? Medium
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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
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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

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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?
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Brand Strategic Gap Scorecard

• A tool to assess the gap in our performance in
  key strategic areas of the brands business.

Are we actually executing our strategic intent?
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Brand Strategic Gap Scorecard
ActualPerformance
Root Causefor Gap
Area
Desired Performance
Gap
Indicated Action
CompetitivePosition
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
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Brand Strategic Gap Scorecard
ActualPerformance
Root Causefor Gap
Area
Desired Performance
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. competition Feature price vs.
competition Channel price targets
Actual pricing gaps versus target
Availability
Distribution targets
Actual results
In-Store Effectiveness
Display targets Shelving targetsMerchandising
targets
Actual results by channel
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Brand Strategic Gap Scorecard - Example
ActualPerformance
Root Causefor Gap
Area
Desired Performance
Gap
Indicated Action
CompetitivePosition

• 60/40 product preference
• 55 leadership share of voice

• 40/60
• 30 share of voice

• (20) points
• (25) points

• Intensive sampling
• Focus on sampling / SOV

• Milo is not being prepared correctly
• High spend in Sponsorship

Focus ofEffort
30 trial level through sampling
Sampling to achieve 10
20 points
Ineffective sampling program
Refocus sampling effort and tie in to outlet
coverage
Availability
75 distribution at grocery channel
80 achieved plus
NA
NA
NA
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
Product/ Package

• Consumer preparation
• Lack of single serve

• Awareness
• Introduce RTD

Pricing
Competitively priced versus other value-added
value beverages on a per serving basis
Achieved
NA
NA
NA
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Brand Strategic Scorecard - Gap Analysis
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5. Developing The Business Review Story

• Synthesis of business overview hows business
  on the brand and why
• explains key reasons for results
• Can be tackled as a news story
• headline concept
• sub-headlines
• text

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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.

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The Business Review Story - Coffee-Mate (contd.)

• 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.

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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 brands performance (is this
  good/bad/indifferent).
• Self contained (like newspaper headlines)

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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