C H I C A G O D E T R O I T F R A N K F U R T S H A N G H A I B E I J I N G The Martec Group Confidential Capabilities Overview Customer Intelligence Clinics Product IntelligenceMarket IntelligenceCustomer IntelligenceCompetitor Intelligence The Martec Group, Inc. Enabling Execution Through Insight

The Martec Group Confidential 2 When your list of goals looks like a Post-It explosion… Better marketing and sell-in materials Support demand creation at the retailers Stronger price positioning Uncover unique segmentation perspectives Optimize product offerings, placement, and merchandising support Provide information to retailers that they may not know about their customers Q1 Goals

The Martec Group Confidential 3 …Martec has a unique “one-stop shop” solution to gather a range of B2B or B2C buyer/customer insights Planned vs. Impulse Purchases Channel/Sto re Selection & Loyalty Product Attitudes, Usage Price Elasticity Brand Preference, Imagery and Loyalty Market Basket Purchase Occasion New Product/Con cept Testing Customer Intelligence Clinic Customer Insights Buyer Insights

The Martec Group Confidential 4 The core process involves multiple steps/methods of gathering information. Prior to arrival, respondents complete a screening questionnaire Serves to recruit and pre-qualify each respondent in terms of demographics and attitudinal/background information Respondents can include end- users/customers, dealers, distributors, installers, contractors, etc. A participant background worksheet is completed upon arrival to more fully understand shopping patterns/behavior Preferred channels/stores; frequency of shopping; market basket, etc. Brand perceptions captured via PC-based exercise Self-administered surveys are used in the product and simulation rooms Simulated aisles; new products; new packaging concepts; new formats; etc. Ethnographic Merchandising and promotions testing Respondents participate in a group discussion to fully explore attitudes/perceptions regarding the products/issues PC-based Exercise Discussion Groups Simulation Room (simulated shopping) SERVICE AREA VIEWING 14x VIEWING 15x26 LOUNGE 11x14 CLIENT OFFICE 12x10 OFFICE 11x9 AV 11x8 RECEPTION 24x18 ENTRY COPY ROOM 16x14 CLT VIEWING 24x PHONE Product Room (hands-on product testing) Participant Background

The Martec Group Confidential 5 Case Study: Customer Intelligence Clinic - “Product X” in the Automotive Retailer Channel -

The Martec Group Confidential 6 Project Background Our client sells “Product X” into multiple segments, including manufacturing (food processing, oil/mining, and other areas of manufacturing) and vehicle service and repair, both DIY and DIFM (dealerships, repair shops, etc.). Our client was developing marketing and sell-in materials for leading automotive retailers and needed to better understand what was driving customers’ purchase decisions and usage (past, current, and future) of similar products. Client management used our information and analysis to more effectively address and impact the customer purchase decision (current and future), ultimately driving growth in this important channel. The Martec Group was commissioned to conduct proprietary market research to assist our client with the required customer insights.

The Martec Group Confidential 7 Research involved 200 customers of similar products, covering a variety of demographic and behavioral segments. Conducted in multiple locations. Selected due to representative mix of demographics along with coverage of key retailers (Advance, Auto Zone, O’Reilly’s, etc.) Target audience: Customers who utilize “Product X” and similar products and purchase via “retail” stores Auto retailers – Advance Auto, Auto Zone, O’Reilly’s, CARQUEST, NAPA Mass merchandisers – Wal-Mart, Sam’s Club, Sears, Dollar Stores Home center/hardware stores – Ace, True Value, Tractor Supply, Home Depot, Lowes Currently purchasing or recent purchasers of these types of products Demographics 75% male/25% female Variety of occupations (targeted ~25% professional trades/mechanics) Shopping behavior 55% of respondents “preferred” retailer = automotive retailer (remainder split between mass merchandisers and home center/hardware) Mix of buyers – for work, for home, purchasing for family/business, etc.

The Martec Group Confidential 8 Specific insights gathered… Understand typical usage and purchase patterns for these products, brand(s) purchased Preferred retailers and brands – with reasons (why do you shop at _____?) Purchase frequency and occasion Intended place of use and frequency Understand the customer Decision Tree Key purchase criteria and importance (brand, make-up/format, container size, price, etc.) What does the end customer know about the product, how do they get their information? Measure brand perceptions and performance What are the drivers or triggers that cause a Customer to consider and purchase specific brands? Evaluate new products/concepts Current competitive set of products on hand for evaluation by respondents Included product trial and fragrance testing Measure price elasticity for current competitive set as well as product concepts

The Martec Group Confidential 9 Sample Insights Key takeaways/ insights are highlighted

The Martec Group Confidential 10 There is significant cross-over between product usage at home and at work, particularly among men (~48%). Predominantly an “individual” purchase – not a significant share for “family use” or “employee use”. Also evident in attitudinal responses – don’t see much reliance on “others” for advice, etc. Percent of Respondents Which of the following best describes your purchases of these types of products within the past 12 months?

The Martec Group Confidential 11 Purchase Occasion Insights Percent of Respondents How often do you purchase for home/work? The more frequent buyers (weekly/monthly) are less prices sensitive, more brand loyal and prefer to shop at auto retailers.

The Martec Group Confidential 12 Shopping Behavior Insights Percent of Respondents Please rate your level of agreement with each of the following statements regarding your purchase, and usage, of the product. One to seven scale – where one indicates completely disagree and seven indicates completely agree. Although familiar with many brands, they seem to be fairly brand loyal. Customers are purchasing from multiple stores.

The Martec Group Confidential 13 Purchase Insights (e.g. “Impulse” and “Planned”) Which of the following best describes your purchase? Percent of Respondents Planned buyers tend to buy less frequently; tend to shop more often at auto retailers; buy larger sizes; are more loyal to a “store” and brand Impulse buyers tend to buy more frequently; shop more often at mass merchandisers; buy smaller sizes; are not as loyal to a “store” or brand

The Martec Group Confidential 14 Store/Brand Selection and Loyalty Insights Percent of Respondents From which of the following places have you purchased within the past 12 months? Which is your preferred source? Approximately 55 percent of the participants “preferred” purchasing at auto retailers (AutoZone, Advance, O’Reilly’s, NAPA and CARQUEST). Many retailers widely shopped, but a couple of clear favorites. Client didn’t realize non- auto (i.e. Wal-Mart) was so prominent.

The Martec Group Confidential 15 Market Basket Insights Percent of Auto Parts Retailers When you are purchasing, how frequently do you purchase the product categories below at the same time as the product in Home Centers/Hardware Mass Merchandisers Customers often bundled the subject product with other products.

The Martec Group Confidential 16 Quantitative Usage Insights Predominantly an “individual” purchase – not a significant share for “family use” or “employee use”. Percent of Respondents Which of the following best describes your purchases within the past 12 months?

The Martec Group Confidential 17 Quantitative Usage Insights Leading activities where the product is used… Restore classic cars Auto repair Furniture refinish Plumbing Painting Home repair Snowmobiling Hunting Ceramics/p ottery 4x4 off road Motorcycles/ dirt bikes Boating/ Jet ski Hiking Arts & crafts Camping Biking Appliance repair Fishing Gardening Landscaping Percent of respondents that “sometimes” or “often/regularly” participate in… Percent of respondents that “regularly” use after this activity Frequency of Activity Usage Automotive Home Improvement Initial focus was on Automotive Retailers only…research highlighted need for a dual channel strategy

The Martec Group Confidential 18 Key Purchase Criteria Insights Stated Importance – Top 2-Box Ratings Derived Importance (based on overall satisfaction) Entry TicketsCritically Important UndevelopedIntrinsically Important Stated vs. Derived Importance Quadrant Analysis Several purchase criteria were classified as “critically important” that were previously thought to be “entry tickets”

The Martec Group Confidential 19 Price Elasticity Insights Optimal Price ~$5.75 Optimal Price ~$5.75 PME PMC Acceptable Price Range ~$4.25 to $6.50 Acceptable Price Range ~$4.25 to $6.50 Analysis of multiple brands Customers consistently had higher acceptable price ranges for client brand vs. competition

The Martec Group Confidential 20 Additional merchandising and improved packaging for the offering are needed. Merchandising is required to take advantage of the high percentage of impulse purchases. Merchandising issues seem to focus less on deals (coupons, sales, etc.) and more on samples ("get them to try it") Bundling with other products could improve top-of-mind awareness in general and specifically for our client  Multiple “baskets” are possible – automotive (cleaning, oil change, etc.); indoor home; outdoor home “I would consider purchasing a package with oil, an oil filter and a small bottle of heavy- duty hand cleaner.” Samples are essential – meet customers at the door of the retailer with opportunities to try product  Most arrive in need of your product

The Martec Group Confidential 21 Purchase Intention Insights 36% 16% Bottom 2 - BoxTop 2 - Box Percent of Respondents How likely would you be to purchase the brand/product at the price you identified as “expensive, but still a possible purchase”? Confirmed that there was purchase activity at the high end

The Martec Group Confidential 22 Contacts Thank you for this opportunity. martecgroup.com Chicago 105 West Adams Street Suite 2125 Chicago, Illinois (312) Detroit Franklin Road Suite 1600 Southfield, Michigan (248) Europe Berliner Strasse Offenbach/Main Germany China 121 Yanping Road Sanhe Plaza 10B Shanghai China +86 (21)