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Confidential & Proprietary Copyright © 2010 The Nielsen Company Nielsen Basics January 19, 2010.

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Presentation on theme: "Confidential & Proprietary Copyright © 2010 The Nielsen Company Nielsen Basics January 19, 2010."— Presentation transcript:

1 Confidential & Proprietary Copyright © 2010 The Nielsen Company Nielsen Basics January 19, 2010

2 Confidential & Proprietary Copyright © 2008 The Nielsen Company Todays Agenda NDA Scanner basics Form groups Discuss key readings take-aways – Segmentation Foundation of Analysis: Retail Measurement Data Slide 2

3 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 3 Nielsen Collects Data from Retailers & Consumers... …& sells / trades data to the manufacturer & retailer Consumer Manufacturer Retailer Data

4 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 4 Data Collection & Quality Source of Information Consumer sales Consumer sales Retail price Retail price Retailer Sample Stores

5 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 5 Data Collection & Quality Source of Information Consumer sales Consumer sales Retail price Retail price Retailer Sample Stores ACNielsens Field Auditors Display presence Display presence Custom observations(inventory levels, facings, linear shelf measurements, etc.) Custom observations(inventory levels, facings, linear shelf measurements, etc.)

6 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 6 Data Collection & Quality Source of Information Retailer Sample Stores ACNielsen's Field Auditors ACNielsens Feature Coders Consumer sales (audit or scan) Consumer sales (audit or scan) Retail price Retail price All retailer print advertising All retailer print advertising Standardized ABC feature coding Standardized ABC feature coding Display presence Display presence Custom observations(inventory levels, facings, linear shelf measurements, etc.) Custom observations(inventory levels, facings, linear shelf measurements, etc.)

7 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 7 We Collect Data Across Multiple Outlets... Drug Stores Gas Convenience Stores Independent Food Stores Supermarkets Mass Merchandisers Chain Convenience Stores Supercenters

8 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 8 We Use Two Primary Methods to Collect Raw Data...Scanningand In-Store Field Audits Retailers provide sales and price data – scanned purchases – all UPC-coded items – each week for every store included in sample

9 Confidential & Proprietary Copyright © 2010 The Nielsen Company Foundation of Analysis – Retail Measurement Data

10 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 10 Provide an overall approach to analysis of data Provide analysis tips for using facts in an analysis Determine the best fact to use in a particular situation Provide a foundation for understanding some of the common differences in facts and help determine the best choice for an analysis. Goal and Objectives

11 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 11 Accurate Data Consists of Four Parts PeriodsWhen did it occur? Markets Where did it happen… geography, sale territory or Retailer Products What item(s), brand(s), flavor(s) am I interested in? Facts What type of issue?

12 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 12 Periods

13 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 13 Periods Monthly (4 wk) and Weekly hard-coded time periods reside on all Heinz databases – Monthly data goes back 5 years – Weekly data goes back 3 years – We also have stored several years of hard coded 52 week time periods Custom time periods have also been created for your use (Latest 4, 12, 24, & 52 Wks, Fiscal Quarters, etc.), built off of the monthly & weekly periods – When using the custom time periods, be sure to select the correct ones for the measure you selected – Monthly time periods should be used for all ACV-based measures – Weekly time periods must be used for all promotion-based measures (including ACV by promo type)

14 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 14 Markets

15 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 15 ACNielsen Total U.S. 52 SCANTRACK Markets Note: Markets Defined by Nielsen

16 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 16 Maps are a geographic representation at the time of development and may not reflect recent changes. Please refer to the market profile for county listings. Example: ACNielsen SCANTRACK ® Atlanta - Food

17 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 17 Trading Areas & Competitive Markets Sample/Census Trading Area: counties it includes are defined by the particular retailer, data reported is for that retailers stores only Competitive Markets: all retailers within the trading area counties that participate in the sample are included in the data reported, this includes the trading area particular retailer sales as well

18 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 18 Maps are a geographic representation at the time of development and may not reflect recent changes. Please refer to the market profile for county listings. Example: Custom SCANTRACK ® Trade Area - Cub Minneapolis Counties within the circle make up the trading area, all participating retailer stores falling within those counties make up the data reported for Cub Minneapolis

19 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 19 FYI – store inclusion within TAs Census trading areas do include ALL stores within the retailer-defined area, but the area may not encompass all of the retailers stores, therefore the CTA might only be a percentage of that retailers volume – Example: Schnucks Core Census Trading Area Sample trading areas project to the Total number of stores within a retailers definition of its trading area Trading areas that are pieces of a Total Trading Area may not be additive to that Total TA – Example: Giant Eagle Cleveland plus Giant Eagle Pittsburgh does not equal Giant Eagle Total

20 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 20 Maps are a geographic representation at the time of development and may not reflect recent changes. Please refer to the market profile for county listings. rl_gnt02.ppt Last Updated: 02/04 Example: Custom SCANTRACK® Trade Area Giant Eagle Cleveland

21 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 21 Maps are a geographic representation at the time of development and may not reflect recent changes. Please refer to the market profile for county listings. rl_gnt01.ppt Last Updated: 02/04 Example: Custom SCANTRACK® Trade Area Giant Eagle Pittsburgh

22 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 22 Maps are a geographic representation at the time of development and may not reflect recent changes. Please refer to the market profile for county listings. rl_gnt03.ppt Last Updated: 02/04 Example: Custom SCANTRACK® Trade Area Giant Eagle Total

23 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 23 Products

24 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 24 Product Overview Industry Subtotals – Heinz defined aggregates based on how company views the category – Only available on custom databases Hierarchy – Nielsen defined department, category and brand aggregates across the grocery store – Only available on Strategic Planner Characteristics – Ability to filter through all database UPCs based on unique characteristics of products – Ex: size, flavor, meat type, container type – Characteristic availability differs by category – Uses: UPC level output, need to create custom aggregates based on product characteristics when not available via Industry Subtotals – Available on all databases

25 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 25 Facts

26 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 26 There are a tremendous number of facts The difference between similar facts is important The application drives the correct choice of fact There is never any one correct fact There is always a best fact for the specific application in question Why is it important to understand facts?

27 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 27 Analytical Thinking Certain mathematical tools and calculations can be very helpful, but... knowing how to use them, more so than actually deriving them, is most important.

28 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 28 Analysis Tip – The Analytic Path Most issues can be addressed by drilling down this path Issue Base VolumeIncremental Volume DistributionVelocity % ACV (Breadth) # of Items (Depth) Base Price Competitive Activity Other Factors Promotion Support (Quantity) Promotion Effectiveness (Quality) Level of Support Promo Mix Promo Price Price Discount Competitive Activity

29 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 29 Analysis Tip – Prioritize Key Issues To set up a logical flow and to avoid analysis paralysis, start with the higher level trends then work into the individual drivers Level of Detail Category. Segments Manufacturers Competitive Brands Your Brand Distribution Everyday Pricing Trade Support Discount Total Volume Trends Base vs Incremen tal Base & Increme ntal Drivers Recommended Level of Detail Dependent upon level of chg Incremental Base

30 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 30 Volume and Share

31 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 31 Sales Volume Measures the amount of product sold over a given time period Sales Dollars – Dollar value of total sales Sales Units – Total package sales Equivalent Unit Sales – Total sales on an equivalized basis (pounds, cases, servings, etc.) Uses – Tracking – Ranking – Share calculations – Show a brands importance to the category

32 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 32 Share Measures the % of sales that a product accounts for Influenced by two different measures – Brand Sales and Category Sales

33 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 33 What do the following sales scenarios have in common? – Brand sales flat, category declines – Brand sales up, category flat – Brand sales up a lot, category up a little Share Activity

34 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 34 When to Use – Volume and Share When concerned with…Use… Absolute volume; Absolute volume change Unit, Dollar, Eq Sales volume Comparing performance relative to the category or segment Unit, Dollar, Eq Share Relating volume to profit; Comparing across different categories Dollar Sales Controlling for disparate package sizesEquivalized Sales Absolute item movement; Comparing sales to shipments Unit Sales

35 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 35 When concerned with…Use… Analyzing category growth in a retailer or channel that is growing significantly. Example: Category B grew 16% in Kroger last year. However, since Kroger grew its total $ sales by 22%, Category B is not keeping pace with its potential growth in Kroger. ACV growth / Total $ Ring Growth Analyzing mature categories that have not seen significant innovation Examples: Categories that are considered staple items. If population is growing at 3% a year, a staple category should see growth just by maintaining its penetration and buying rate. Population Growth Evaluating categories that have restricted shelf space Examples: Frozen departments, Checkout-aisle racks, coolers Department Growth Macro consumer trends affecting your category and related categories Examples: Categories affected by Low Carb diets, Convenience, Trans-fats Equivalized Sales When To Use – Volume Benchmarks Use Benchmarks to compare category and brand trends

36 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 36 Different Ways to Look at Volume TOTAL VOLUME + Promoted Volume Promoted Volume Non-Promoted Volume Non-Promoted Volume + Baseline Volume Baseline Volume Incremental Volume Incremental Volume

37 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 37 The Benefits of Identifying Promoted Vs. Non-Promoted Volume Provides an indication of what percent of a brands volume came from stores with a promotion. Provides an indication of what percent of a manufacturers deal was passed on to the consumer by the retailer. Retailers trade promotion execution can be observed.

38 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 38 Analysis Tip – Promoted Volume Promoted volume is useful for determining how deal reliant a brand is Interpretation: Our brand receives a higher share of category promoted volume compared to its share of sales Our competitors promoted volume share is under-indexed relative to its market share

39 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 39 Baseline Volume Normal expected everyday sales in the absence of any store-level promotion A statistically calculated measure NOT adjusted for FSIs, print, TV and market-level affects Uses – Track the underlying health of a brand and compare it to its competition – Analyze merchandising effectiveness in conjunction with incremental volume

40 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 40 Baseline Calculation week 1 week 2 week 3 week 4 week Unit Sales 75 Display Week

41 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 41 Baseline Calculation 170 week 1 week 2 week 3 week 4 week 5 Unit Sales 75 In Week 4 Baseline estimate would be 75 units based on pre and post week sales 75 Display Week

42 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 42 Baseline Volume Includes Marketplace Conditions that Affect Sales of a Product Category Trends Long-Term Seasonality Market-Level Effects Brand Trends Baseline

43 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 43 Total volume below baseline – Competitive activity – Out of stock – Seasonal/holiday Total volume above baseline – Promotions or advertising not captured by regular means – Market-level influences (e.g., battery sales during a hurricane in Miami) Reasons for Total/Baseline Volume Differences

44 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 44 Incremental Volume Represents the additional predicted volume that results from in-store promotion Calculation: Total Actual Volume - Baseline Volume = Incremental Volume

45 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 45 Incremental Volume Unit Sales In Week 4 Incremental volume would be 95 units 170 week 1 week 2 week 3 week 4 week 5 75 Display Week 95 75

46 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 46 How Can Incremental Volume Be Negative? If actual sales are less than expected sales – Out-of-stocks – Competitive activity week 1 week 2 week 3 week 4 week 5 Unit Sales 75 Actual sales are below estimated Base – Incremental is negative 15 units

47 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 47 Analysis Tip - Base and Incremental Volume Interpretation: For the Food and Drug channels, an increase in Incremental EQ volume is not enough to offset a decline in Base EQ volume. Target is showing significant growth, driven by both base and incremental volume. Identifying whether a volume change is coming primarily from base or incremental volume is a good way to start an analysis

48 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 48 Analysis Tip - Base and Incremental Volume Base and Incremental trends will determine potential strategies

49 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 49 Base Volume = Non-Promoted Volume Base vs. Non-Promoted Base volume estimates sales in all stores Non-Promoted volume is measured only in stores that did not run a promotion – Subset of stores Incremental vs. Promoted Incremental volume estimates additional sales due to promotions – Volume sold above the base Promoted volume measures all volume sold on deal Incremental Volume = Promoted Volume

50 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 50 When concerned with…Use… Understanding the underlying health and trends of a brand Baseline Volume Measuring the effectiveness and efficiency of trade promotions Incremental Volume Quantifying the importance of promotional activity to a brand Promoted Volume Quantifying the amount of volume sold in stores that did not provide trade support Non-Promoted Volume When to Use – Base, Incremental, Promoted, Non-Promoted Volume

51 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 51 Sales Volume is influenced by Seasonality Consumers value certain products more (or less) during the year. Examples of seasonality – Holidays or event driven: 4th of July, Thanksgiving, Cinco de Mayo, Back to School, etc. – Seasonal: BBQ sauce and ice cream during the summer or soup and crackers in the winter

52 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 52 Seasonality Calculation 1.Divide annual base volume by 52 to get expected weekly sales (in the absence of seasonality and promotion). 2.Divide actual base weekly volume by expected weekly sales (just calculated in step 1) to derive a seasonality index

53 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 53 Analysis Tips - Seasonality Use Base Volume when calculating seasonality to negate promotion-driven volume spikes Be careful of moving holidays and market level effects In a category that has encountered a lot of activity 2 years of history should be used Compare versus the year-ago period rather than a prior period For categories with extreme seasonality look at on season versus off season periods

54 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 54 ACV Distribution and Velocity

55 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 55 Velocity Baseline Volume Distribution Base Price Seasonality *Advertising Support *Manuf. Coupons/FSIs *Brand Awareness/Image *Product Quality *Weather *Consumer Promotions *Sampling Competitive: Distribution Price Merchandising *Advertising *Coupons % ACV (Breadth) # of Items Carried (Depth) * Non-Nielsen measures Baseline sales can be impacted by different market factors. Understanding the Whys to Changes in Baseline Volume

56 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 56 How Is Distribution Measured?

57 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 57 ACV Distribution ACV Distribution is a measure of a products availability Can be measured in terms of breadth and depth – Breadth: percent of All Commodity Volume that carries your brand – Depth: number skus that are carried in the stores that sell your brand

58 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 58 What is Distribution? Distribution is the measure of the availability of a product. For an individual item, distribution depends on two basic variables: – How many stores stock the item? – How large are those stores?

59 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 59 All Commodity Volume $ (ACV) An individual stores/markets ACV is the dollar volume of everything the store sold during a periodall the merchandise that passed over the scanner (or was rung on the register) The sum of the ACVs of all the stores within a given channel is the ACV for the channel. Likewise, the sum of the ACVs for all the stores in a market is the ACV for the market (Market ACV $ fact on database)

60 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 60 The 7 Food Stores In This Market Sell $300,000 Per Week JONESs D) $36,000 (12%) JONESs A) $60,000 (20%) SMITHs B) $48,000 (16%) SMITHs C) $48,000 (16%) SMITHs A) $36,000 (12%) JONESs B) $36,000 (12%) JONESs C) $36,000 (12%) SMITHs Grocery Chain * Has 3 stores in the market doing $132,000 per week for a total of 44% of the ACV JONESs Grocery Chain * Has 4 stores in the market doing $168,000 per week for a total of 56% of the ACV All Commodity Volume $ (ACV) Explanation

61 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 61 If These 3 Stores Sold Your Product This Week, What Would The %ACV Be? JONESs A) $60,000 (20%) SMITHs C) $48,000 (16%) SMITHs B) $36,000 (12%) JONESs B) $36,000 (12%) SMITHs B) $48,000 (16%) JONESs D) $36,000 (12%) JONESs B) $36,000 (12%) All Commodity Volume $ (ACV) Explanation

62 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 62 JONESs D) $36,000 (12%) SMITHs B) $48,000 (16%) JONESs A) $60,000 (20%) ANSWER: 20% ACV + 16% ACV + 12% ACV = 48% ACV All Commodity Volume $ (ACV) Explanation

63 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 63 Breadth of Distribution -- % ACV % ACV Selling serves as a good weighting factor when measuring distribution. All stores are not created equal Higher ACV stores serve more consumers A measure of breadth, or reach, indicates how many consumers have the opportunity to buy the product

64 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 64 % ACV Selling is NOT Distribution Real on-shelf distribution is almost always higher – Most products do not sell in every store every week – Out-of-stocks can happen One other point to remember… Just because an item is authorized at Chain Headquarters does not mean that every store actually stocks it.

65 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 65 Analysis Tip - % ACV Selling Brand A Sales Week 1 Week 2 Week 3 Week 4 4-Week Total Store A (40% ACV) XX Store B (35% ACV) XXXX Store C (25% ACV) XXX Total40%60% 35%100% Average Weekly % ACV = 48% Use longer timeframes to get the best picture of distribution Use 4 Wk Periods only!

66 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 66 Analysis Tip - % ACV Selling In most cases, use the latest period when analyzing % ACV Selling % ACV Selling wks ending Apr 4 wks ending May 4 wks ending Jun Latest 12 wks AVG Represents the current state of the business Averaging longer time periods may mask more recent trends

67 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 67 Depth of Distribution Depth assesses the variety of different items being sold Cumulative Distribution Points (CDP) or Total Distribution Points (TDP) –Measures both the number and size of stores that carry your brand and the number of sku's each store carries Average Number of Items Handled –On average, the number of sku's carried in the stores that sell your brand Use 4 Wk Periods only!

68 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 68 Cumulative Distribution Points (CDP) Also called Total Distribution Points (TDP) Calculated by adding the %ACV of each individual sku %ACV CDP BRAND X98%295 Flavor 195%95 Flavor 290%90 Flavor 380%80 Flavor 430%30 } Sum =295 Use 4 Wk Periods only!

69 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 69 Difference from %ACV CDP shows us that while Brand A and Brand B are both sold in 100% of the stores in this market, Brand A has more items available in each of the stores. % ACV CDP Brand A100% 2100 Brand B100% 990 %ACV tells us breadth of distribution CDP tells us depth of distribution

70 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 70 Average Number of Items Handled Dividing Cumulative Distribution Points by %ACV gives the Average Number of UPC's Carried within those stores selling the brand. – The average store in this market carries 21 upcs of Brand A. AVG # % ACV CDPItems Brand A100% Brand B100% Use 4 Wk Periods only!

71 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 71 Analysis Tip – Average Number of Items Handled Use Average Number of Items Handled to compute a Fair Share index comparing share of items to share of sales AVG # Items Share of Items Share of Sales Fair Share Index Category Brand A Brand B Interpretation: Brand Bs share of items is underdeveloped relative to its share of sales. Potential to add additional Brand B items to the shelf

72 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 72 Analysis Tip – Cumulative Distribution Points CDPs may explain volume changes that might not be seen when looking at % ACV Period Distribution Points% ACV Interpretation; The brands base sales began eroding in period 4, yet % ACV remained at 100%. However, depth of distribution declined as the brand lost the equivalent of one item.

73 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 73 When concerned with…Use… Breadth of distribution – the number of stores carrying your product % ACV Selling Trending overall depth or quality of distribution over time Cumulative Distribution Points; Total Distribution Points How many skus are carried in stores that sell your brand; Fair Share Analysis – comparing share of shelf to share of sales Average Number of Items Handled When To Use - ACV facts

74 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 74 Velocity Measures brand strength while controlling for distribution Sales Per Million ACV – Average sales of a product for every million dollars of ACV that is scanned – Comparisons across and within markets Sales Per Point – Average sales of a product for every percentage point of ACV distribution – Comparisons within markets only

75 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 75 Uses of Velocity Marketing – Is my growth distribution driven or velocity driven? – Velocity driven growth can be long term, signaling consumers like your product and are buying more. – Distribution driven growth can be limited because soon you will run out of new stores to carry your product. Sales – Prove your product sells faster than the competition and deserves shelf space.

76 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 76 Analysis Tips - Velocity When comparing brands with differing numbers of UPC's, use Sales Per Cumulative Points of Distribution – Divide sales by CDP – Brands with a greater number of UPC's will tend to have stronger turns as more items contribute to overall sales Use caution when tracking Sales Per Point of Distribution for a new product – Distribution will be growing as the product gains distribution in new retailers and markets, resulting in fluctuating turns

77 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 77 Comparison of CDI and BDI identifies product opportunity or vulnerability by geographic area. Category Development Index – Category volume indexed to the population index in relation to the United states norm. (TTL US = 100) Brand Development Index – Brand volume indexed to the population index in relation to the United states norm. (TTL US = 100) CDI/BDI MEASURES

78 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 78 % of Total U.S. Population in Chicago:7% % of Total U.S. Brand A $ Sales in Chicago:13% % of Sales: 13% % of Population: 7% = 1.86, then multiply by 100 to derive an index = 186 This means that for every person in Chicago, Brand A $ sales are almost twice as important as the average market. CDI/BDI MEASURES Population Development IndexThe importance of product sales compared to the importance of the population in a market. How to calculate a Development index...

79 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 79 Analysis Tip – CDI/BDI Use CDI/BDIs to prioritize market opportunities

80 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 80 Analysis Tip – CDI/BDI Calculate an Opportunity Index to further prioritize markets CDIBDI Oppy Index Chicago Indianapolis How to calculate an Opportunity index... CDI BDI X 100 = Opportunity Index InterpretationThe brand has a larger opportunity gap in Indianapolis even though both the category and brand indices are above 100, compared to Chicago where the category is over 100 and the brand is under 100

81 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 81 Promotion, Promotion Effectiveness and Pricing

82 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 82 Understanding the Whys to Changes in Incremental Volume Incremental sales can be impacted by different merchandising factors. Promotion Support (Quantity Incremental Volume Promotion Effectiveness (Quality) Level of Support Promotion Mix Level of Price Discount Competitive Conditions in Promoting Stores Promotion Price Use 1 Wk Periods only!

83 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 83 What could cause this spike in sales? Promotions

84 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 84 Promotion Types Temporary Price Reductions (TPR) – A 5% discount (or more) off a product's regular price Features – Print ad placed by the retailer used to promote a specific product Displays – Temporary secondary stocking location for a product Nielsen measures three types of trade promotions

85 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 85 Features Features are retailer print advertisements or other special printed promotions: – Ads inserted in Newspapers – Store Flyers / Circulars Nielsen Feature Coders collect and classify all retailer features from the entire Nielsen store sample. The features are classified into A, B, C or Coupon Ads, based on the size of the ad FSIs (Free Standing Inserts) are excluded since they are manufacturer promotions

86 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 86 Displays Information collected for all Nielsen sample stores every week Three conditions to be considered a display: – Temporary secondary location – Special effort by the retailer to attract attention and to boost sales of the item – Contain actual merchandise accessible to the customer.

87 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 87 Temporary Price Decrease (TPR) Consists of those Stores/Weeks where a Price Decrease of at Least 5% is present, but no Feature Ad, Coupon Ad or Display accompanies the Price Decrease (TPR) Lower price becomes new base price after 7 weeks

88 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 88 Promotion Conditions Promotional Conditions are mutually exclusive at the UPC level. A UPC is either Promoted or Not Promoted. Price Decrease (TPR) Feature w/out Display Display w/out Feature F&D

89 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 89 Promotion Support % ACV Promoted – % of ACV that sold at least one unit on deal during the time period Store Weeks of Support – Number of weeks a product is on deal weighted by the ACV of the stores participating in the promotion % Base Support – How much of a brand's everyday business (baseline volume) is exposed to a deal Three ways to view Quantity of trade support Use 1 Wk Periods only!

90 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 90 % ACV Support How much support did I receive on this event? How much of each type of support was received? Did the retailer execute as agreed to? Did the sales force or broker support and/or merchandise the promotion as required? Measures the amount of consumer traffic exposed to a promotion Use 1 Wk Periods only!

91 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 91 Store Weeks Support Measures the quantity of weeks the brand was on promotion Actual % ACV ANY DSP Week 120% Week 2100% Week 360% Week 430% Week 550% 260%/100 = 2.6 weeks Interpretation - Brand received the equivalent of 2.6 weeks of Display activity in the five-week period

92 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 92 % Base Support Weights the importance of the store to the brand. Gives more credit for an important SKU Is additive/combinable across markets, time, products and retail conditions Measures the % of Base business exposed to a particular promotion type

93 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 93 % Base Support Calculation Example Base SalesPromotion? Store 110No Store 210Feature Store 325Feature Store 420No Store 515Feature Total Base Volume= 80 Feature Base Volume=50 % Base Support= 50/80 = 63% Interpretation – 63% of the brands base volume was exposed to a feature during the promotion period

94 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 94 When concerned with…Use… Level of trade participation in an event; Amount of consumer traffic exposed to promotions % ACV Support Duration of supportStore Weeks Support; Cume Weighted Weeks How much of a brands base volume was exposed to a promotion % Base Support When To Use – Promotion Support facts

95 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 95 Promotion Effectiveness Measures how much incremental volume each promotion generated Percent Lift Promotion Effectiveness Index (PEI) Incremental Weeks Efficiency

96 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 96 Promoted Baseline Volume Promoted Non- Promoted Incremental BaseNon-Promoted Base Promoted Base Incremental that is a result of promotion Also Known as Subsidized Base

97 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 97 Promoted Baseline Volume In Week 4 all the volume is promoted, but only 95 units are incremental; 75 units are subsidized base 170 week 1 week 2 week 3 week 4 week 5 Unit Sales 75 Display Week 95

98 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 98 Promotion Efficiency Percent of promoted sales that were incremental Tells how efficient was the promotion – What percent was incremental to baseline? – What percent was subsidized? Note: The more subsidized volume that is generated during a promotion the less efficient that promotion will be! Incremental Sales Promoted Sales x100

99 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 99 Promotion Effectiveness Promotion Effectiveness Index (PEI) – Indexes Total volume to Base volume % Lift – Similar to PEI but expressed as a percentage Incremental Weeks – Similar to Lift but expressed as a number of weeks Measures how much incremental volume each promotion generated Promoted Sales Promoted Base Sales x 100 Promoted Sales Promoted Base Sales - 1 Promoted Sales Promoted Base Sales x

100 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 100 Analysis Tips - Interpreting Promotion Response PEI Sales indexed at 227 vs. base during the promotion week % Lift The promotion drove a 127% increase in sales Incremental Weeks The promotion generated 1.3 additional weeks of sales Promotion Efficiency 56% of the promoted volume was incremental to the brand x = 127% = 1.27 week 4 75 Display Week x 100 = 56% x 100 = 227

101 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 101 Analysis Tips – Promotion Effectiveness Promotions will yield different results depending on: – Type of merchandising occurring in the store - ads, displays, TPR's – Depth of discount offered to consumers – Competitive activity When reviewing promotion effectiveness, take into account the size of the brand – Smaller players, with small base businesses, have a much easier time generating big lifts

102 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 102 When concerned with…Use… Measuring the increase in volume due to promotions; Determining which promotions generate the largest incremental gains % Lift; Promotion Effectiveness Index (PEI); Incremental Weeks Measuring the ability of a promotion to minimize subsidizing existing volume Promotion Efficiency When to Use – Promotion Effectiveness Facts

103 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 103 Pricing Nielsen databases track pricing in four ways: Average Retail Price – Weighted price of a product, representing both non- promoted and promoted prices Non-Promo Price – Average scanned price of a product in stores where there was no promotion Any Promo Price – Average scanned price of a product in stores where there was a promotion Base Price – Estimate of the normal, non-discounted price of a product in a store

104 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 104 Base Price = Non-Promoted Price Non Promoted Price is based solely on stores where the item in not being promoted Base Price is based on all stores, not just non- promoted stores

105 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 105 Price Discount Measures the difference between Base Price and Promoted Price The deeper the price discount the greater the expectation that consumer sales will increase

106 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 106 Average Retail Price - Precautions Think when you average across: – Products: (10, 26 and 51 oz. sizes) – Markets: (Los Angeles vs. Boston) – Promotions (display price vs. feature price) Aggregate price is one big average… beware!!! – $2.99 =Average of $1.99 & $3.99 – $2.99=Average of $0.99 & $4.99 – $2.99=Average of $2.98 & $3.00

107 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 107 Analysis Tips - Pricing Analyze price at the SKU level – Prices at the brand level are an average of all sizes and multi-pack counts Match like items when comparing price to competition – Select similar-sized competitive items for comparison – Or use equivalized price Use the most recent period to measure base price – Longer timeframes may mask recent trends

108 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 108 When to use – Pricing Facts When concerned with…Use… What consumer is paying on averageAverage Retail Price What is the average price for an item when not on promotion No Promo Price What the consumer is paying on promotion/deal Any Promo Price Tracking price trends; Impact of price on baseline volume Base Price Magnitude of savings passed on to the consumer % Price Discount

109 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 109 Analysis Tips - Recommendations If Volume Change is driven by: Potential Actions An increase in Base Price Increase perceived value of product – Decrease price – Increase package size – Increase use of bonus packs, special packs – Launch a product or package innovation – Improve communication of product benefits – Improve product quality A decrease in Base Velocity Improve advertising – Weight, Target, Message, Media Improve consumer promotion – Frequency, Values, Types Increase shelf presence, change item mix A decrease in %ACV If base velocity is competitive with brands on the shelf, conduct a distribution drive If base velocity is low, improve velocity (see point above) to justify increased distribution A decrease in Average Items Carried Introduce new products Change item mix Address any Out-of-Stock issues

110 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 110 Analysis Tips - Recommendations If Volume Change is driven by: Potential Actions An increase in Promoted Price Reduce promoted price Implement a price multiples strategy (e.g. 2 for $5) A decrease in the %ACV with Quality Merchandising Increase number of stores with features or displays – Determine which promotion condition works best for each brand / segment Improve event timing / frequency A decrease in the # of Promoted Items Identify targets for number of items on feature or display Provide consumer incentives for purchase of multiple items A decrease in Promoted Velocity Improve event timing / frequency Coordinate & integrate trade promotion with other mix elements (e.g., advertising, coupons, consumer events) Identify stronger items for promotion Develop promotion themes A decrease in Promotion Efficiency Improve event timing / frequency Improve Customer Targeting (loyals vs. switchers)

111 Confidential & Proprietary Copyright © 2008 The Nielsen Company Thoughts Sorensen – Trade promotion $ focus (p. 18) – Table I.1 (p. 9) – Trip types – Reach,stop,close – Money, time, angst – Table 1.1 (p. 26) and 1.2 (32) – Promoted baseline (p. 31) – Top category locations (Fig 1.2) – Danger of focusing on quick trips? – Tyranny of choice (p. 61) – Time measures (65) Underhill – Conversion rate 48% (p. 29) – Importance of shopping time (32) – Confusion index (33) – Transition zone (44) Foundation of Analysis: Retail Measurement Data Slide 111

112 Confidential & Proprietary Copyright © 2008 The Nielsen Company Foundation of Analysis: Retail Measurement Data Slide 112 Whew!


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