1 Insert client logo in master here Copyright © 2002 ACNielsen Copyright 2005 ACNielsen a VNU business Measuring Merchandising Effectiveness ACNielsen Romania October 2005

Insert client logo in master here 2 Copyright © 2002 ACNielsen Copyright 2005 ACNielsen a VNU business Agenda Defining the merchandising standards How can we determine the impact of merchandising on sales? Location types – examples POPM types - examples Merchandising criteria – examples The best mix

Insert client logo in master here 3 Copyright © 2002 ACNielsen Copyright 2005 ACNielsen a VNU business Defining Merchandising Standards How do I want my products to look like in the stores? In standards definition/fine-tuning, several main areas should be covered: In which area of the store do I want my products to be present? ­ In Category Section ­ In Main Traffic ­ End of Isle ­ At Check-Out ­ Secondary Placement What do I place? ­ Products ­ Products aided by POPM ­ Other aids How do we place? ­ Merchandising criteria And most important WITH WHAT RESULTS? or WHAT IS THE MOST EFFECTIVE MERCHANDISING MIX FOR MY PORTFOLIO ?

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Insert client logo in master here 13 Copyright © 2002 ACNielsen Copyright 2005 ACNielsen a VNU business

Insert client logo in master here 14 Copyright © 2002 ACNielsen Copyright 2005 ACNielsen a VNU business

Insert client logo in master here 15 Copyright © 2002 ACNielsen Copyright 2005 ACNielsen a VNU business Within the multitude of messages in a store, the shopping experience is not always easy … Through merchandising we can help our customers decide easier and better…. And hopefully to select OUR brand

Insert client logo in master here 16 Copyright © 2002 ACNielsen Copyright 2005 ACNielsen a VNU business A successful merchandising program is a synergy of several factors The Impact of the merchandising activities on the sales depends on a lot of factors: ­ Category type ­ Store type ­ The brand ­ Quality of the aids ­ Competitive activity ­ Implementation quality ­ Permanent review ­ Other factors The impact can be determined through: ­ Past evaluation ­ In store tests of new concepts

Insert client logo in master here 17 Copyright © 2002 ACNielsen Copyright 2005 ACNielsen a VNU business How can we determine the impact of merchandising on sales? How we analyse: 1) First we analyse individual activities in terms of scope and impact on sales: ­ We compare the sales of the stores where a specific activity is present with the average of all stores or with the stores not having that activity ­ We have to bear in mind that the merchandising activities are generally placed in the “good” shops. Thus the results per-se show higher impact due to the fact that these shops are by definition preferred stores for that brand. Example: ­ Product in Main Traffic Flow - 5% contribution ­ Floor Display in category section - 6% Contribution 2) Then we analyse the interactions between these activities, resulting in a joined impact : - Main Traffic Flow + Standing Display in category section - 5.5% contribution This shows that adding up of the activities is not necessarily an additive process but a multiplicative process. 3) Finally we determine the combination of activities that delivers the highest impact (sales, share or impact on competition).

Insert client logo in master here 18 Copyright © 2002 ACNielsen Copyright 2005 ACNielsen a VNU business Locations Types ­ Category section: where most products of a specific category are placed ­ In main traffic: on (one of) the main route(s) from entry to exit ­ End of Isle/end of gondola ­ At Check-out ­ Secondary placement: any other location in the store except of the above ­ …….

Insert client logo in master here 19 Copyright © 2002 ACNielsen Copyright 2005 ACNielsen a VNU business POPM Types Most frequent POPM encountered in the stores: ­ Floor Display ­ Shelf Display ­ Poster ­ Sticker ­ Wobblers ­ Shelf stopper ­ Section marker ­ Hanger ­ Stripes ­ Shelf display ­ Shelf liner ­ Shelf tray ­ Shelf talkers ­ Header board ­ Counter display ­ Window display ­ Pyramid ­ Money tray ­ Leaflet tray ­

Insert client logo in master here 20 Copyright © 2002 ACNielsen Copyright 2005 ACNielsen a VNU business Location and POPM Scope In how many stores my brand and its main competitor are in Location Y and have POPM Z?

Insert client logo in master here 21 Copyright © 2002 ACNielsen Copyright 2005 ACNielsen a VNU business What Activity has the highest impact ? How am I performing when... Eg. I have Shelf liners in the store and I am at Check-out ? Other correlations: My total company share when I have... My sales per shop when... (how important are these shops) My competitor share when I have….

Insert client logo in master here 22 Copyright © 2002 ACNielsen Copyright 2005 ACNielsen a VNU business How many POPMs should I place to obtain maximum impact but not waste money?

Insert client logo in master here 23 Copyright © 2002 ACNielsen Copyright 2005 ACNielsen a VNU business How does my POPM impact my competitor brand ?

Insert client logo in master here 24 Copyright © 2002 ACNielsen Copyright 2005 ACNielsen a VNU business What is the combined impact of activities (for me and my competitors)?

Insert client logo in master here 25 Copyright © 2002 ACNielsen Copyright 2005 ACNielsen a VNU business Merchandising Criteria Most frequent criteria encountered in the stores: Facings Brand block Beginning/end of section Eye level/ shelf no X Near product Y (own or competitor’s) Within segment Z Near category W Exclusive location At hand level Product order Coupons Coupon/promo/demo ladies Product sampling Long term appearance in the leaflet...

Insert client logo in master here 26 Copyright © 2002 ACNielsen Copyright 2005 ACNielsen a VNU business Facings 4 End Facings 3 Full Facings 7 Facings 4 Full Facings (not 7)

Insert client logo in master here 27 Copyright © 2002 ACNielsen Copyright 2005 ACNielsen a VNU business What Criterion has the highest impact ? How am I performing when... Eg. My products are displayed in Brand Block in channel ABC?

Insert client logo in master here 28 Copyright © 2002 ACNielsen Copyright 2005 ACNielsen a VNU business What Criterion/Level of criterion has the highest impact ? How am I performing when... Eg. I have less than 7 facings in channel ABC?

Insert client logo in master here 29 Copyright © 2002 ACNielsen Copyright 2005 ACNielsen a VNU business For example, Brand X In Hyper/supers the optimal merchandising mix includes: ­ In Category section: Floor Display (2 stands) Shelf Liner min 10 facings placed in brand block at eye level and next to key competitor, price communicated ­ paired with a Second Placement in Main Traffic. The impact range is: 8.9% to 18.9% more volumes, depending on the store size and competitive activity On main competitor the impact is – 5% to – 8.9% less volumes At the end of the analysis, the most effective standard for a specific channel is determined (based on past record)

Insert client logo in master here 30 Copyright © 2002 ACNielsen Copyright 2005 ACNielsen a VNU business Thank you for your attention!