Product Sales Remaining Opportunity November,

Objectives Form the ranked list of ZIP codes from states with reasonable remaining product sales opportunity and determine ZIP’s that have the highest expectation of additional generation of revenue Estimate cost-effectiveness of product in-person promotion to generate additional sales in selected ZIP’s 2

Findings / Conclusion Selected 15 states with reasonable remaining opportunity: AL, CA, FL, IL, KY, MO, MS, NC, NY, OH, OK, SC, TN, UT, VA can produce additional 4 MM units (57%) sales Selected fifteen hundred ZIP’s (about 20%) can generate additional 2 MM units sales (50%) of remaining opportunity from selected states Available data does not support in-person promotion as cost-efficient/effective promotion channel Non-in-person promotion is recommended Controlling for all predictors (ZIP Level Projected number of customers, ZIP Level Number of Units Sold in Pre Period, ZIP Level Number of in-person Promotions, State, and ZIP Level Remaining Opportunity), the following states: – Alabama, Kentucky, Mississippi, Oklahoma, and Tennessee have the highest propensity to increase of sales revenue – Florida, Missouri, New York, Ohio, and South Carolina are the next group of states – California, Illinois, North Carolina, Utah, and Virginia have the lowest propensity to increase of sales revenue 3

Number of ZIP’s by State (Data generated graph) 4 Number of ZIP’s

Remaining Opportunity by State (Data generated graph) 5

ZIP Level Response Curve Method: Stochastic Gradient Boosting Model: Non-Parametric Robust Data Mining Regression Dependent Variable: ZIP Level Unit Change ZIP Level Unit Change = ZIP Level Unit Count in Current Period - ZIP Level Unit Count in Previous Period – Current period: recent 12 month – Previous period: previous 12 month Predictors (in order of importance on 100-point scale): – ZIP Level Projected Number of Customers (Score = 100) – ZIP Level Unit Count in Previous Period (Score = 69) – Number of ZIP Level In-person Promotions (Score = 41) – State (Score = 22) – ZIP Level Remaining Opportunity (in units) (Score = 14) 6

ZIP Level Unit Change Response Curve, controlling for all other predictors in the model (Model generated graph) 7 Impact of in-person promotion starts from 25 visits Diminishing returns starts about 55 visits Controlling for all other predictors in the model, each in-person promotion in interval 25 – 55 visits generates approximately one additional Unit ZIP Level Unit Change Number of ZIP Level In-person Promotion in Current Period Response curve Noise

Impact of State on ZIP Level Unit Change, controlling for all other predictors in the model (Model generated graph) 8 ZIP Level Unit Change Cluster of States Number of ZIPs Total Remaining Opportunity (MM) Projected Number of Customers Total Number of Units (MM) Total Dollars (MM) Total Number in- person Promotions Preferred ,998 Neutral1, ,454 Problematic5, ,892 Total 7, ,344 Tree clusters of states: Preferred: Alabama, Kentucky, Mississippi, Oklahoma, and Tennessee -Neutral: Florida, Missouri, New York, Ohio, and South Carolina -Problematic: California, Illinois, North Carolina, Utah, and Virginia