Purchase Trends Measures and Usage

1. Purchase Trends Measures and Usage

2. Components of Sales • Sales are a function of Household Penetration and Buying Rate fewer are buying Sales are X X because: down and/or buyers buying less X

3. % Households Buying - Penetration • Percent of all households that bought the product at least once over the analysis period Penetration = 40% 4 of 10 of all households purchased Pillsbury Brownies

4. Marketing Elements that influence Penetration • Availability • Price • Couponing • Trial Packs • Displays • In Store Sampling • Media • Advertising Theme • Cross Promotions Penetration (% of HH’s Buying)

5. Sales per Buyer - Buying Rate • Average amount (volume, dollars, units) of product purchased by each household that purchased the product over the analysis period. HH #1 2 Units HH #2 6 Units Average Unit Sales per Buyer = 4 Units

6. Purchase Occasions Per Buyer (Purchase Frequency) • Average number of shopping trips in which the product was purchased HH #1 2 occasions HH #2 4 occasions Average Purchase Occasions per Buyer = 3 occasions Purchase Occasions per Buyer X Sales per Purchase Occasion =Buying Rate

7. Elements that influence Purchase Frequency • Pack Size • More Product Uses • Product Quality • Cents Off Label • Featuring • Greater Variety • Displays • Coupons • Advertising Purchase Frequency

8. Sales Per Purchase Occasion (Transaction Size) • Average sales (EU, Units or dollars) purchased per trip in which the product was purchased. HH #1 2 Units per Trip HH #2 1 Unit per Trip Units per Purchase Occasion = 1.5 Units Purchase Occasions per Buyer X Sales per Purchase Occasion = Buying Rate

9. Marketing Elements that influence purchase size • Pack Size • More Product Uses • 2 for Pricing • Bonus Packs • Aisle Displays • Features • Coupons Transaction Size

10. How can you use Purchase Dynamics to develop Strategies? high buying rate Increase Users Maintain/Protect - monitor and track- create alerts- understand how competition reacting- continually innovate- improve profitability - advertise/feature/display to increase awareness - promo support to encourage trial coupons sampling trial sizes low penetration high penetration Increase Usage Niche Marketing Opportunities - display large sizes - advertising aimed at new product usage occasions - bonus/special packs/”2 for” deals - repeat oriented promotions including on-pack coupons - focus on marketing to target buyers - capitalize on opportunities to bring new buyers to the franchise - focus on sourcing purchase occasions from other niche brands low buying rate

11. % Buyers Repeating (Repeat Rate) Among buyers of an item, the % of buyers who make at least 1 repeat purchase during the analysis period Smuckers Repeat Rate = 40% Repeat Rate helps to understand the proportion 1 time buyers vs repeat buyers in your franchise. A buyer need only repeat 1 time (2 total purchases) to be counted. Multiple repeats are not shown with this measure.

12. Purchase Cycle The average number of days between purchase pairs among 2+ time buyers of the product Purchased on: Day 10 Day 20 Day 60 Day 5 Day 40 Purchase Cycle Pair 1 (20-10) = 10 Pair 2 (60-20) = 40 HH #1 Avg is 25 Pair 1 (40-5) = 35 HH #2 Avg is 35 The average among both HH’s is 30 (25+35)/2 = 30

13. Share of Requirements (Loyalty) Among buyers of an item, the % of their total category/type volume allocated to that brand …or the brand’s share among its buyers. Smuckers Share of Requirements = 50% Loyalty helps us understand what percentage of a brand buyer’s total category needs are being satisfied by a particular brand. In the example above Smuckers Fruit Spreads buyers satisfy half (50%) of their category requirements with Smuckers, 25% with Welch’s and 25% with Cascadian Farms.

14. Elements that can influence Loyalty • Number of competitive brands in category • Example: There tends to be low loyalty among softdrink brands -- lots of variety seeking. • Category Purchase Cycle • Example: Drain Cleaners has a very long purchase cycle - buyers tend to make only 1 purchase in a year. 1-time buyers are by definition 100% loyal. Look at longer time frame – if your product has a long purchase cycle. • A Decline in Penetration • Example: When a brand’s sales are down, a brand’s loyalty among its remaining franchise may actually rise as less loyal buyers drop out.

15. Deal Measures • % Volume any Deal • The percentage of volume sold on any feature, display, price reduction of at least 5% or manufacturer coupon. Because of couponing, this measure may be higher than a store data measure • % Volume by Merchandising Condition • Manufacturer Coupon • Feature • Display • Price Reduction

16. In Basket and Out of Basket In Basket - The average dollar amount spent on total basket when an item is included in the market basket When consumers purchase Hungry Jack their market basket is worth $102 Out of Basket - The average dollar amount spent on total basket when an item is not included in the market basket When consumers do not purchase Hungry Jack their market basket is worth $47 Market Basket is a retailer measure used to determine if buyers of a particular brand are more valuable when they are purchasing the brand than when they are not purchasing the brand.

17. Store and Panel Data – optimal uses for both Panel Scanner/Store Data • What is happening in the store:Sales TrackingDistributionPrice PromotionsBase vs Incremental • What is driving Store Sales:How many HH's buyPurchase FrequencyPurchase SizeHousehold SpendingBuyer DemographicsLoyalty CouponsRepeat PurchasingConsumer attitudes

18. Measure Definitions available in Purchase Trends

19. Measure Definitions available in Purchase Trends

20. Additional Analyses • Retailer Distribution Tool – Consumer Segmentation • Demographic Tools – Annual Panel and Retailers • Retailer Purchase Trends – Delivered every other month • J:\Sales_Category Development\Category Development Perm20\Category Management Tools\Open Access Deliverables • Leakage Tree - As needed • Times and Trends – IRI Corporate Analyses • http://www.iriworldwide.com/Insights/Publications/TimesTrends.aspx