1. Marketing spend optimization Driving marketing value Marketing Executives Council Meeting March 17, 2009

2. Page 2 Agenda ► Introductions ► Today’s marketing landscape ► Marketing excellence capabilities model ► The Marketing Lifecycle ► Case study

3. Page 3 Today’s marketing landscape ► Price pressure and margin erosion ► Increased scrutiny and accountability on investments ► Increasing regulatory barriers to traditional approaches ► Expanding number of possible channels ► Marketing effectiveness and productivity in decline ► Intelligent competition Marketing Channels PriceNewspaperMagazineOut-of-HomeDigitalDirect MailSponsorshipTVRadio

4. Page 4 Marketing excellence capabilities take time to evolve Organizations must utilize solutions that increase marketing performance through the enhancement of spend effectiveness and channel optimization across all phases of the process: from initial analyses to the rigorous execution of tactical plans and monitoring of results. Short-term activities (Basic) Long-term activities (Leading) Mid-term activities (Enhanced) Increase brand awareness Utilize inexpensive but efficient marketing tactics Study the market, customer and competition Measure surrogate markers Track sales to quantify the impact of marketing initiatives Utilize market research to understand customer behavior Optimize the marketing mix Compare the ROI of marketing channels Understand marketing effectiveness by channel, geography and customer segment Measure the incremental impact each marketing initiative has on volume sales Copy-test a portion of the marketing budget in non-traditional/innovative media Level of sophistication High Low Long-term Mid-term Short-term Effort to implement High Low

5. Page 5 Are we getting the most bang for our marketing buck? Do we have the ability to evaluate marketing effectiveness rapidly and make adjustments accordingly? Are we in a position to translate effective marketing initiatives into opportunities? Do we have the data and tools to allocate our marketing spending and evaluate the value of our marketing with new metrics? What is the contribution, effectiveness, cost-efficiency, and payback of each marketing tactic and program? Which core and incremental initiatives are driving volume and to what degree? What is working, what is not, and why? How does current performance compare to the norm (or the industry)? How can we use marketing mix analysis to optimize our marketing strategy and dollars? The Marketing Lifecycle is a process of continuous improvement What does our marketing mix look like? What could it look like? What should it look like? Do we have a flexible planning model that allows us to take advantage of changes in the performance of campaigns or tactics? How can we integrate the most effective tools to optimally value our customer? Are we looking at the right metrics to evaluate marketing performance? Are there different metrics that could better capture new tendencies? Strategy Planning Evaluation Execution Marketing Lifecycle How does the changing marketing landscape affect our marketing efforts and decisions? What marketing mix best drives incremental sales and captures the core customer? How does new technology affect the interpretation of our message? How do we best integrate traditional and new media?

6. Page 6 Case study ► Ernst & Young was engaged to assist an automotive manufacturer in reviewing marketing strategies with respect to Brand A ®. ► The success and future growth of this brand may rely heavily on the level and appropriate allocations of marketing spend to the available channels. ► Ernst & Young was tasked with two primary objectives: ► Calculate the impact marketing performance has on Brand A, for all geographic markets (where statically significant), across all available marketing channels (TV, radio, internet, among others). ► Calculate an optimized marketing mix based on the information provided by the Client and deliver the functional form of the model and its outputs to the Client. Business issue

7. Page 7 A Marketing Spend Effectiveness and Channel Optimization Analysis helps marketers answer pressing questions concerning their business. Some of the most popular questions are: ► How important is base (volume generated in the absence of any marketing activity) and incremental volume to my overall volume? ► What has driven volume changes year to year? ► What was the relative effectiveness of marketing activity year to year? ► How did specific campaigns contribute? ► Which advertising campaigns are most effective? ► What trade tactics should be pursued for greatest effectiveness? ► What marketing spending shifts, if any, should be considered? Case study Business issue (cont.)

8. Page 8 Case study Scope: This analysis utilized the following parameters: Brand A Geographic areaCountry X (96 Markets)* Dealership count175 (2006-2007), 170 (January–August 2008) Analysis periodJanuary 2006 – August 2008 Marketing channelsNational Open TV, National Paid TV, Local Open TV, Radio, Newspaper, Magazine, Out of Home, Cinema, Internet, Alternative Events * markets with dealerships

9. Page 9 Case study Marketing activity generated roughly 26% of the incremental volume during the analysis period. Open TV, Paid TV, and Newspaper accounted for the majority of incremental volume. National Open TV Newspaper National Paid TV Local Open TV Magazine Radio Out of Home Cinema Marketing incremental volume 26% Base incremental volume 74% 16.4% 2.4% 2.3% 2.2% 0.9% 0.4% 0.2% Findings — incremental volume decomposition

10. Page 10 Case study Average ROI* Open TV generated the highest ROI for Brand A during the analysis period, followed by Paid TV and Newspaper. * Revenue generated by each marketing channel is based on average dealer price multiplied by volume sales contributions. $0 $5 $10 $15 $20 $25 $30 $35 $40 National Open TV Local Open TV National Paid TV NewspaperMagazineRadioCinemaOut of Home Incremental $ revenue per $ spent Findings (cont.) — marketing efficiency

11. Page 11 Case study Based on ROI estimates, additional funds to the marketing budget should be allocated across marketing channels in the following proportions. While marketing channels such as Alternate Events and Internet were insignificant in the statistical model, Client should allocate budget to these activities to maintain brand awareness and equity. National Open TV 26% National Paid TV 19% Newspaper 18% Local Open TV 15% Magazine 12% Out of Home 6% Cinema 2% Radio 2% * Based on the most recent 12 months of data Findings (cont.) — optimized marketing mix*

12. Page 12 Case study The total units sold peaked at the end of each calendar year, even though the average price was not at its lowest during this period, and dropped during April/May of each year. Total Units Sold Average Selling Price Average Dealer Price - 5,000 10,000 15,000 20,000 25,000 30,000 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 $- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 Units Sold Findings (cont.) — annual volume topline

13. Page 13 Case study -0.036 -0.038 -0.043 -0.089 -0.123 -0.719 -0.76 -0.78 -0.931 -0.964 Market A Market B Market C Market D Market E Market V Market W Market X Market Y Market Z Overall National Price Elasticity = -0.395 Price elasticity (sensitivity) Most Elastic Markets Least Elastic Markets Brand A ® is not price elastic. Changing price alone does not yield significant changes in unit volume sales. However, price changes coupled with TV or Newspaper campaigns could generate significant ROIs. Findings (cont.) — price elasticity

14. Page 14 Case study Alternative Internet Cinema Out of Home Magazine Newspaper Radio National Paid TV Open TV $0 $5 $10 $15 $20 $25 $30 $35 $40 20062007 2008 (January-August) Investment Level (MM) Marketing investments in Paid and Open TV represented 59% of all marketing investments in 2006, 51% in 2007 and 54% until end of August 2008. Findings (cont.) — annual topline spending

15. Page 15 ► Allocations across different channels can be adjusted to optimize overall return on each Brand ► Further internal analysis can be performed on each marketing channel at the geographic or customer class level to optimize overall return on each channel ► Similar modeling for other Brands can be conducted in other key countries ► Learnings can be used as a planning tool (benchmark) for new launches in similar categories ► Learnings can be applied to decision making on marketing channel activity for other Brands Value Creation Case Study

16. Page 16 Thank you David Baron Senior Manager, Advisory Services Chicago, Illinois +1 312 879 2764 david.baron@ey.com © 2009 Ernst & Young LLP. All rights reserved.