LEVERAGING ASSORTMENT, PRICE AND PROMOTION TO DRIVE CATEGORY PERFORMANCE SHELF SMARTS

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 2 RETAIL SALES TRENDS IN US. ARE FLAT #Consumer360

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 3 DRIVING EFFICIENCY IS CRITICAL TO SUCCESS COGS 44.1 Adv 7.5 Dist 7.6 R&D 1.4 Sales Programs 19.0 Sales programs (shelf placement, feature, display and pricing tactics) are the second biggest spend #Consumer360

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 4 WE’RE NOT MANAGING ASSORTMENT WELL Scantrack: xAOC 2013 vs Declining velocities against SKU proliferation

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 5 APPLIED ANALYTICS DRIVE ASSORTMENT PERFORMANCE #Consumer360

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 6 6 EXPECTATIONREALITY MATCH PRICE TO MARKET CONDITIONS

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 7 PROMOTING MORE BUT GETTING LESS Promotion Frequency and Trade ROI Trend – Trade ROI Promotion Frequency 7 #Consumer360

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 8 ONLY 10% OF PROMOTIONS ARE PROFITABLE Products ranked by Trade ROI (One Category – in Grocery) $1 is Breakeven $2 Breakeven $1 $0 -$1

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 9 $1 SOME MANUFACTURERS OUTPERFORM PEERS Trade ROI by Manufacturer Sales per Dollar Invested - $1 is Breakeven Trade ROI $0 Negative ROI (<$0) Margin return on trade ($0 < ROI <$1) Positive return on trade (>$1 ROI) Best in Class (top 5% trade ROI)

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 10 $1 CATEGORIES PERFORM DIFFERENTLY BY SEGMENT Trade ROI $0 Negative ROI (<$0) Margin return on trade ($0 < ROI <$1) Positive return on trade (>$1 ROI) Best in Class (top 5% trade ROI) Trade ROI by Segment Sales per Dollar Invested - $1 is Breakeven

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 11 GET YOUR BALANCE SHEET IN ORDER Product Assortment Promotion Management Pricing To enable winning promotions Get the right products on the shelf… At the right price… #Consumer360

CASE STUDY: INTEGRATING ASSORTMENT, PRICE AND PROMOTION #Consumer360

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 13 LET’S LOOK AT IT IN ACTION Each brand has multiple sub-brands Only a few major brands Over 400 UPCs $150 million category, flat sales for a couple years Classic hi-lo retailer 2 brands = 32% of Sales #Consumer360

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 14 Incremental Value ($/Store/Week) Sales Rate ($/store/week) Retailer BREAKDOWN RationalizeDevelop SqueezeNurture RationalizeDevelop Squeeze Nurture Sub-cat sub-brands Region RationalizeDevelop SqueezeNurture New Sub-brand #Consumer360

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 15 FIXING ASSORTMENT DRIVES TOPLINE GROWTH Changes ( Abs. $MM) CURRENTPROPOSED Wide assortment in overdeveloped sub-brands Introduce higher-performing sub-brand Rationalize underperforming sub-brand Minor other 1:1 changes

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 16 THRESHOLDS PUT SIGNIFICANT VOLUME AT RISK Sales Rate Index by Regular Price Point

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 17 CURRENT HI-LOW STRATEGY WITH HOLIDAY FOCUS $3.85 Regular Price Heavy focus on Holiday Discounts Key holiday windows Holiday timingFeatureTPREDLP spendBase #Consumer360

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 18 OPTIMIZED “HYBRID” STRATEGY USES EDLP + EVENTS Use EDLP spend to bring Regular price to $3.49 (below threshold). Focus TPR & Feature below $3.00 (on & off Holiday). Key holiday windows Holiday timingFeatureTPREDLP spendBase Use EDLP spend to bring regular price to $3.49 (below Threshold) Focus TPR & Feature below $3.00 (on & off Holiday) #Consumer360

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 19 HYBRID TRADE STRATEGY DRIVES WIN-WIN Changes ( Abs. $MM) CURRENTPROPOSED Premium regular price Many deep discount ads Fewer deep discount ads Hybrid EDLP spend during peak season to close gap to competition

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 20 LET’S THINK ABOUT THIS AS A SYSTEM Product Assortment Promotion Management Pricing To enable winning promotions Get the right products on the shelf… At the right price… #Consumer360

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 21 FIXING THE BASELINE SUPERCHARGES PROMOTIONS Display provides 200% lift. Same Display effectiveness drives 100 more incremental units due to increase in baseline Total 300 Total 450 Incremental 200 Cannibalization -40 Incremental 300 Cannibalization -30 #Consumer360

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 22 WIN ON ALL METRICS: > 2 Retailer $ Sales Retailer Profit Manufacturer Gross Revenue Trade Spend Manufacturer Profit +6.7% +28.2% +9.4%

INTEGRATED PLANNING USES INSIGHTS TO DRIVE DEMAND #Consumer360

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 24 negative Consumer Response to Assortment (Incrementality) Distribution (# Items) YOU NEED TO KNOW WHERE YOU STAND High incrementality would lead to different actions than low Helps maximize category sales Review slow mover for de-listment NURTURE Detrimental to category performance De-list worst performers SQUEEZE RATIONALIZE Saturated; restricting category growth Make sure you have the best items in distribution DEVELOP Key category driver Increase items positive slow Avg Sales Rate fast

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 25 SUCCESSFUL TRADE STRATEGIES BY CATEGORY Best in Class (top 5% trade ROI)Remaining category #Consumer360

Copyright ©2014 The Nielsen Company. Confidential and proprietary. 26 GET YOUR BALANCE SHEET IN ORDER Product Assortment Promotion Management Pricing To enable winning promotions Get the right products on the shelf… At the right price… += #Consumer360