Catalyst: the inspiration company Email: nick.cloke@catalystmarketing.co.uk

1. Owners’ Conference Innovation – why bother? 13th November 2008 Prepared by: Catalyst: the inspiration company Email: nick.cloke@catalystmarketing.co.uk 86, Gloucester Place, London W1U 6HP Tel: + 44 (0) 207 935 7616 Web: www.catalystmarketing.co.uk

2. Why bother? “Within small and medium sized businesses, when things are going badly and cut backs are being made, innovation is the first thing to go. Most people don’t realise how crucial it is to be innovating throughout tough times to ensure the prosperity of your business.” 2

3. What’s coming up • 3 ways to innovate • What does Rigour look like? • Examples of Rigour • Needn’t cost the earth • Benefits of innovation

4. 3 Ways to Innovate 1.Instinct 2. Copycat 3. Rigour 4

5. 3 Ways to Innovate: Pros & Cons 1. Instinct • You know your business • You understand your customers • You are aware of your competitors • You may know best • Too close to it? • Selective hearing? • How much do you look around? • What do you know? N.B. Mostly works fine, if your market is immature 5

6. 3 Ways to Innovate: Pros & Cons 2. Copycat • It’s working for them • It’s easy to adapt • Can do it quickly • Can do it cheaper • Your business is not the same • There’s no point of difference • It’s yesterday’s news • Your customers take it for granted “90% of businesses are average, doing average marketing, achieving average profits. To be ultra successful you need to avoid what everyone else does and do the extraordinary! “ 6

7. 3 Ways to Innovate: Pros & Cons 3. Rigour • Researched thoroughly • Analysed the results • Carefully developed • Properly launched • Time consuming • Might not like what you see • Costs money • A real commitment 7

8. What does Rigour look like?

9. STAGE 1: GATHERING SEEDS & PREPARING GROUND STAGE 2: GERMINATION STAGE 3: NURTURING What does Rigour look like? – the process OBJECTIVEIdentify target markets and provide seeds for ideas. This is about knowledgeMETHODAnalyse overall consumer trends, direct observation, competitor visits and sampling OBJECTIVEDeveloping a range of ideas against target marketsMETHODCreative workshop to take the seeds and grow them (reject old thinking!) OBJECTIVEBuild and develop the ideas to realityMETHODDevelop and refine the best ideas and then research with consumers and go with strongest for launch

10. Examples of Rigour • Hoseasons - creating a targeted offer • Butlins – sizing the market opportunity • Barr – retro positioning 10

11. Examples of Rigour • Hoseasons - creating a targeted offer So, who was the target and what did they want? 11

12. OLDER COUPLES ACTIVE

13. Most important Less important Most important factors in choosing a Lodge Holiday OLDER ACTIVES LOCATION COST (ABSOLUTE) STANDARD OF ACCOMMODATION LEISURE ACTIVITIES (POOL & TENNIS) CHILDRENS FACILITIES

14. YOUNGER COUPLES PASSIVE

15. Most important factors in choosing a Lodge Holiday YOUNGER PASSIVES Most important STANDARD OF ACCOMMODATION LOCATION COST (ABSOLUTE) SIZE (FOR GROUPS OF PEOPLE) CREATURE COMFORTS less important CONVENIENT ACCESS TO LOCAL SHOPS

16. ACCOMMODATION

17. SERVICES & OTHER

18. Must Haves Nice to Have Not Needed Welcome Pack Concierge Service Welcome Host Newspaper Delivery Next Day Grocery Deliveries Information Pack Daily Maid Service Key: Luxury Cotton Bathrobes Presented as Free-Services Presented as Paid-for-Services Room Service Not presented On-Site Services: Free

19. Premium Lodges WHERE DOES THE PREMIUM LODGE OFFER FIT? Facilities/ activities Less Expensive More Expensive No facilities/ activities

20. Autograph 2009

21. Butlins – sizing the market opportunity Examples of Rigour So, how big was the market and how much would they spend? 27

22. Objectives To identify top revenue generating customers who demonstrate greatest potential for the Butlins hotel

23. Butlins Data Analysis Bookings data split by Mosaic groups PHASE ONE: External Data Analysis Sources: Mintel – British on Holiday at Home 2002 Short Breaks 2000 UK Tourist Board - UK Tourist Statistics 2002 PHASE TWO: Analysis Methodology ACTIVITY

24. As % of total 2001 Butlins bookings (227,911) 1.2% 1.1% 1.0% 1.0% 1.0% 1.0% 0.9% 0.9% 0.8% 0.8% 0.7% 10.1% Top Customers Profiling – Butlins Analysis Mosaic Group Higher Priority G30 Bijou Homemakers G31 Market Town Mixture B8 Pebble Dash Subtopia C10 30’s Industrial Spec C11 Lo-rise Right To Buy C9 Affluent Blue Collar D13 Coalfield Legacy J44 Maturing Mortgagers E12 Smokestack Shift Work A2 Rising Materialists Lower Priority D16 Low Rise Subsistence

25. Top Customers Profiling – External Analysis Socio Economic Groups Priority mosaic groups most closely associated with C1 demographic which accounted for 27% of UK population. 21% 27% % UK Population 22% 29% Source: Holiday Tourism in the UK, UKTS 2000

26. C1 27% 2.7m 2.6m 5.3m Top Customers Profiling – External Analysis Very similar percentage to Butlins data. Likely to represent UK population with the most interest in the Butlins hotel. Socio-Economic Groups vs Lifestages AB C2 DE % Population 21% 22% 29% 16-34 married or single with kids under 16 (17%/10 million) 2.1m 2.2m 2.9m 35-54 married or single with kids under 16 (16%/9.5 million) 2.0m 2.1m 2.7m 4.1m 4.3m 5.6m 8.9% of Total Population Source: Holiday Tourism in the UK, UKTS 2000

27. %/£ of Total Spent on Serviced Accommodation by 16-34 with kids %/£ of Total Spent on Serviced Accommodation by 35-54 with kids 13% (£922m) 18% (£1276.6m) 15% (3.66m) 21% (5.12m) £252 £249 £1763 (£441 per person in family of 4) £1745 (£436 per person in familyof 4) Top Customers Profiling – External Analysis Spend levels of the 16-54 with kids group were in line with forecast prices for Butlins ‘Hotel’ accommodation. Total UK Holiday Expenditure %/£ Spent on Serviced Accommodation (i.e. hotels, motels, B&Bs) Spend* £16,494m 43% (£7092.42m) Nights 106m 23% (24.38m) £/night £156 £291 £/week (7 nights) £1089 £2036 Source: Holiday Tourism in the UK, UKTS 2000

28. Butlins Shoreline Hotel

29. Barr – retro positioning Examples of Rigour So, how best to deliver nostalgia in adult soft drinks? 36

30. Developing the Adult Soft Drinks Category • Objectives • Understand adult nostalgia for soft drinks • Generate ideas that closely reflect that need 37

31. Creative Workshop to generate the ideas New Products Research to test soft drink ideas Recommending the strongest idea for launch Process Overview Exploratory Research to understand the opportunity 38

32. Perceptions of the market ‘Adult Sparkling’ ‘Diet / Low Cal’ pop Pepsi Max; Diet Coke etc Good for you Adult nostalgia ‘Traditional’ Sparkling (adult/family) ‘Traditional’ Pop (adult/family) ‘Family’ pop ‘Energy Drinks’ ‘Child’ pop Not good for you Adult Pop Bigger bubbles Sparkling Smaller bubbles Child

33. Feeling Rooted 40

34. HIT Popularity: 1st(out of 18) It is what we have been brought up with. But they are re-launching them by using nostalgia and natural They have updated it – made it a bit more modern which is good to keep things interesting They are sticking with the classics and bringing them up to date…good They are like the old bottles – good, safe and traditional GP 1 Older Women GP 4 Younger Women GP 2 Younger men GP 1 Older Women Barr Originals Barr’s Originals “Where have all the great soft drink flavours gone? The ones you used to drink when you were a child? You just don’t see them anymore.” Barr’s have been making soft drinks for over 100 years. We’ve taken classic recipes and made them even better. Using 100% natural ingredients, we’ve made Cream Soda with real vanilla extract, Ginger Beer with real root ginger, Real Lemonade and original Dandelion & Burdock. Always bottled in glass to ensure the finest quality, taste and freshness. 41

35. NEW Barr Originals – Summer 2008 Stocked in Tesco, Sainsbury’s, Morrisons and Asda

36. Needn’t cost the earth 1.DIY 3. Ask customers 2. Friends & family 43

37. Needn’t cost the earth 1.DIY – it’s free! • Analyse your sales and customer data – be honest • Get hold of published research from the web – be open • Share the findings with staff and draw conclusions – listen • Run a Creative Workshop with team – don’t judge! • Pick the best ideas - agree selection criteria • Develop and launch 44

38. Needn’t cost the earth 2. Friends & family – costs little • They know what you’re trying to achieve • You can trust them and they’ll be honest! • They can try out your product and your competitors’ • Listen to their ideas and build on them • Agree the best ones, develop and launch 45

39. Needn’t cost the earth 3. Ask customers – small cost • They like to be heard, they’re experiencing it • You always learn something you didn’t know • Share the findings with staff and draw conclusions • Agree the best ideas • Develop and launch 46

40. Improved Margins New Customers Increased Sales Stronger Business Benefits of innovation So, what are the benefits? 47

41. Thank you! INSPIRING ACTION