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Project Morgen Optimization – Phase II Summary of Findings Prepared by: FRC Research Corp. June, 2014.

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Presentation on theme: "Project Morgen Optimization – Phase II Summary of Findings Prepared by: FRC Research Corp. June, 2014."— Presentation transcript:

1 Project Morgen Optimization – Phase II Summary of Findings Prepared by: FRC Research Corp. June, 2014

2 2 The Campbell’s Innovation team is exploring the feasibility of introducing a new line of breakfast shakes under the Pepperidge Farm name, currently dubbed Pepperidge Farm Brightside. Research that was conducted in March 2014 explored the optimal positioning for these products and provided an evolved understanding of the effect of various price and package options on its ultimate potential. This phase ultimately yielded TWO potential positionings for the brand – one focusing on taste and another on health. The current phase of the research was conducted to determine the potential of these optimized concepts, each with two alternative flavor lines, when placed in a competitive environment. Additionally, the research will determine:  The relative appeal of potential chocolate, banana and cinnamon flavors as initial offerings for the brand  Product appeal based on differing amounts of two nutritional components – whole grains and fiber – when coupled with 3 grams of protein and a 200 calorie count Background and Objectives

3 3 Online interviews were conducted among a national panel of 506 consumers during the period May 29-June 2, Key question areas of the interview consisted of: A discrete choice exercise to determine the “share of choice” of Pepperidge Farm Brightside among an array of breakfast products in the breakfast aisle Opinion of Pepperidge Farm Brightside based on 3 nutritional profiles (split sample across the 3 profiles) Appeal of potential Pepperidge Farm Brightside chocolate, banana and cinnamon varieties (split sample across the 3 base flavors) Qualified respondents were: Adults ages Primary grocery shoppers for their households 278 consumers of Ready to drink breakfast or protein shakes (such as Kellogg’s Breakfast To Go or Special K protein shakes) in the last 12 months 228 non-users who would consider consuming them in the next 12 months The large sample size also yielded 111 “Busy Solution Seekers” and 50 “Fit & Hip Explorers” (based on Campbell’s Beverage segmentation typing tool) as potential targets for analysis. Method

4 4 Example Of Screen For Choice Exercise NOTE: This is merely one example and does NOT include all products evaluated. Prices were varied along with products, and a range of prices was assigned to each product.

5 5 DETAILED FINDINGS I. Purchase Appeal The purchase appeal is a surrogate measure of monadic appeal. It is the number of consumers who would choose to purchase a given product if it were the only one offered. While theoretically similar to purchase interest, it tends to be much higher than traditional purchase interest levels, as all consumers would need to be considered as having “purchase appeal” is merely to actively decide they would rather buy the product in question than buy nothing.

6 6 Benchmark Product Purchase Appeal A decent estimate of inherent interest in the products can be obtained by modeling the number of consumers who would purchase each product throughout the entire questioning sequence. The products included in the array are accepted by a large number of consumers, ranging from the 70% who would buy the Special K bars down to the 52% who would purchase the BFast shakes. The relative appeal of all of these products seems driven by each ones unique combination of brand name, form and price.

7 7 Purchase Appeal – Benchmark Products AND PF Shakes None of the Pepperidge alternatives generates as much appeal as do the established products. The analytic approach eliminates any possibility of “vote splitting” within the PF alternatives, so it does suggest that the inherent appeal of the Brightside Shakes, at these prices in this context is less than virtually all of the competitors.

8 8 Pepperidge Farms Shakes Purchase Appeal and Preference As noted, about half of all respondents indicated that they might purchase the PF product. Not surprisingly, there is not a tremendous difference between the alternative positionings OR the flavor line up in driving this interest -- but the Taste concept with the Chocolate Mocha flavor line is slightly stronger than the others. And, when consumers’ preferences between the four alternatives is calculated, the same concept is clearly preferred over all the others. Would Buy: Most Likely to Buy:

9 9 With few exceptions, each of the key subgroups operate similarly to the total sample. Interest tends to be higher among users than considerers, and among target consumers than among the total sample. The Taste concept with the Chocolate Mocha flavor lineup is the most preferred of the four alternatives among all groups – but particularly so among women and among the target segment. Total PF "Busy Health" DK PF "Busy Health" ChocMoch PF "Taste" DK PF "Taste" ChocMoch Would BuyPreferred UsersConsiderersMaleFemale Busy Solution Seekers USAGEGENDER Pepperidge Farms Shakes Purchase Appeal and Preference by Subgroups

10 10 DETAILED FINDINGS II. Share of Choice The main reason that consumers were asked to complete a simulated shopping exercise (where respondents were shown screens with a number of products on them and asked to allocate 10 purchases across the array) was to allow the estimates “Share of Choice”. This measure is used on the next few charts is SHARE OF CHOICE. Note that this modeled estimate of share potential assumes that all of the products in question have universal awareness, distribution and shelf set. It provides some advantages to a new product because of this. Also, it is purely a conceptual estimate as respondents have not tried the product. They are often unwilling to make a strong commitment to a new product until they experience the product. This has a depressing effect on share of choice. For these reasons, SHARE OF CHOICE does not equate to market share – it is merely one component of what ultimately would be share of market. While it can’t predict ABSOLUTE shares, it CAN be used to predict RELATIVE ones

11 11 Share of Choice Estimated “Share of Choice” for existing competitors reflects the same factors as does the purchase appeal. A large number of alternatives are succeeding in slicing up the pie, with the largest competitor (Special K Bars) having less than a 14% share of choice. Probably driven in part by pricing, the RTD shakes tend to have lower shares of choice than alternative forms. None Kellogg's RTD Shakes Carnation RTD Shakes Quaker RTD Shakes BFAST RTD Shakes Special K RTD Shakes Kellogg's Shake Mix Carnation Shake Mix Special K Bars BelVita Biscuits Quaker Hot Cereal Kellogg's Cold Cereal Total RTD Shakes – 28.7% Total Shake Mixes – 16.6% “Other” – 41.6%

12 12 Share of Choice Against this already fragmented backdrop, the Brightside shakes generate share of choice estimates ranging from 2.7% to 3.1% depending on product line and positioning, larger than only BFast. Consistent with the purchase appeal measure, the “Taste” positioning is slightly better than the alternative, and the flavor set including Chocolate Mocha is stronger than the other flavor set. None of the Brightside alternatives seems to have much potential to grow this large complex category. None Kellogg's RTD Shakes Carnation RTD Shakes Quaker RTD Shakes BFAST RTD Shakes Special K RTD Shakes PF Brightside Shakes Kellogg's Shake Mix Carnation Shake Mix Special K Bars BelVita Biscuits Quaker Hot Cereal Kellogg's COLD Cereal With the addition of….

13 13 Share of Choice – RTD Shakes An alternative way of looking at the potential of the PF product limits the competitive array to other RTD shake products. Obviously, the PF product would have a larger share of this smaller category. But this approach serves to highlight the strength of the Chocolate Mocha flavor line over the other one – with the flavor line having a greater impact on share of choice than the positioning. Note that, even in the strongest scenario, the PF product would be the smallest RTD Shake in the category. None Kellogg's RTD Shakes Carnation RTD Shakes Quaker RTD Shakes BFAST RTD Shakes Special K RTD Shakes PF Brightside Shakes

14 14 Share of Choice by Price Point Diff vs. Medium +75% +54% +39% -32% -31% -28% -23% Retail pricing has a powerful impact on the ultimate success of the Brightside product. Reducing the price from $6.49 for a multipack of 4 bottles to $5.99 results in a share of choice increase between 39% and 75%! Conversely, INCREASING the price from $6.49 to $6.99 suppresses share of choice by about one third. Note that the Taste positioning coupled with the Chocolate Mocha flavor line results in much less price sensitivity than the alternatives.

15 15 DETAILED FINDINGS III. Flavor and Nutritional Profile Explorations Respondents were shown an array of names for one of three potential PF Brightside flavors -- chocolate, banana and cinnamon -- and asked to rate and rank them in terms of their appeal. Respondents were additionally exposed to one of three potential nutritional profiles for the brand and asked to evaluate them assuming PF Brightside had the respective profile.

16 16 Flavor Appeal ChocolateBananaCinnamon Extremely Appealing Extremely/Very Appealing Dark Chocolate * Chocolate Almond Chocolate Vanilla Swirl Chocolate Truffle Chocolate Caramel Dark Chocolate Fudge Chocolate Mocha ** Dark Chocolate Cocoa Dark Chocolate Swirl Chocolate Swirl Chocolate Crème Chocolate Cocoa Chocolate Cream Chocolate Peanut Chocolate mint Chocolate Banana Chocolate Raspberry Salted Chocolate Caramel Chocolate Coconut Chocolate Orange Chocolate Oat Banana Strawberry Banana Nut Bread Banana Bread Banana Pnt Bttr Banana * Banana Nut Banana Vanilla Banana Crème ** Banana Cream Banana Caramel Banana Swirl Banana Oat Cinnamon Roll Brown Sugar Cinn. Apple Cinnamon Cinnamon Swirl * Cinnamon Vanilla ** Cinn. French Toast Cinnamon Toast Cinnamon Cinnamon Oat Respondents were shown one of three flavor arrays – one each for chocolate, banana and cinnamon varieties. Chocolate and banana varieties are more appealing than cinnamon ones. The strongest banana flavor is a banana/strawberry combination. In all three flavors the LEAST appealing variety is one combining the hero flavor with oats. * ** Included in the concept flavor array labeled DK Included in the concept flavor array labeled ChocMoch

17 17 Perceptions of Nutritional Profile Based on Claims Overall Amount of protein Amount of whole grain Amount of fiber Number of calories Comparison vs. others Exc. Very Good. Good Fair/ Poor Much Btr. SameWorseLittle Btr. 45% Excellent/Very good 56% 66% 30% 36% 62% 45% 60% 63% 29% 31% 47% 46% 47% 53% 38% Better 47% 51% 8g Whl Grn; 5g Protein* 16g Whl Grn 5 g Protein 8g Whl Grn; 8 g Protein * All 3 had 3g Fiber and under 200 calories Either increasing the amount of whole grains (from 8 – 16 g/serving) OR the amount of protein (from 5g to 8g) would enhance nutritional perceptions – and between the two, increasing the amount of protein has a greater impact than increasing the amount of whole grains. While none of the three alternatives seem to have weak profiles (particularly in the context of the brand’s taste strengths), perceptions of the base scenario (8g whole grains and 5g protein) seems somewhat soft and any effort to improve beyond it will probably enhance overall appeal.

18 18 Key Takeaways Of the two positionings tested, the “Taste” approach has more potential than the “Busy Health” approach previously thought to be the best approach for the brand. Two flavor lines were tested -- o Dark Chocolate/Cinnamon Swirl/Banana (labeled as DK), and o Chocolate Mocha/Cinnamon Vanilla/Banana Crème (labeled as ChocMoch) The Chocolate Chocolate Mocha/Cinnamon Vanilla/Banana Crème consistently generates greater appeal than the alternative. In a competitive environment Brightside seems as if it would be smallest of the 6 RTD shake brands explored – more similar to BFast than to the stronger Special K or Quaker entries. Given that it is, in fact, the 6 th entry into an already fragmented category, it faces an already difficult task getting sold in, attracting consumer attention and convincing them to purchase. In order to succeed it will need to do everything right to generate awareness and interest, Not surprisingly in what is such a competitive category, pricing has a large effect. Lowering the price seems to result in a major increase in potential,

19 19 Key Takeaways What the flavors are called have a meaningful impact on consumer interest. Of the two flavor sets that were testing as part of the simulated shelf array, the flavors in the array marked DK (Dark Chocolate/Cinnamon Swirl/Banana (labeled as DK) were said to be more appealing than the same three flavors when articulated Chocolate Mocha/Cinnamon Vanilla/Banana Crème in the alternative array – but the DK array ended up generating less consumer interest than did the ChocMoch alternative which, although constructed from less compelling individual piece parts results in a MORE compelling consumer communication. Care needs to be take in deciding what to call the component flavors…merely being appealing on their own seems insufficient, on its own, to generate share of choice. Compared to the currently anticipated nutritional claim of 8 grams of whole grains and 5 grams of protein, increasing EITHER of these two key nutrients will enhance appeal. Notable, increasing protein to 8 grams from 5 seems as if it will have a greater impact than would be the case if protein were kept at 5 grams but the amount of whole grain increased to 16 grams.

20 20 APPENDIX

21 21 Brands/Pricing for Share of Choice Exercise NOTE: Visual representations of the stimuli are appended to this report

22 22 Pepperidge Farm Brightside Breakfast Shakes Even on your busiest days you want a breakfast that keeps you going strong without weighing you down. Shakes in unique flavors with a special blend of whole grains, protein and fiber to get your morning started right Now, there’s always time for breakfast, even while on-the-go with these ready-to- drink shakes Available in flavors such as:  Dark Chocolate  Cinnamon Swirl  Banana Morning energy in under 200 calories You struggle to find a breakfast that you look forward to eating but that gets your day started right. Now you can enjoy the flavors you love in a delicious and wholesome shake Each shake is made with real, simple ingredients of whole grains, protein, and fiber in flavors you’ll crave Available in flavors such as:  Chocolate Mocha  Cinnamon Vanilla  Banana Crème Delicious, nutritious, and under 200 calories Pepperidge Farm Brightside Breakfast Shakes Even on your busiest days you want a breakfast that keeps you going strong without weighing you down. Shakes in unique flavors with a special blend of whole grains, protein and fiber to get your morning started right Now, there’s always time for breakfast, even while on-the-go with these ready-to- drink shakes Available in flavors such as:  Chocolate Mocha  Cinnamon Vanilla  Banana Crème Morning energy in under 200 calories You struggle to find a breakfast that you look forward to eating but that gets your day started right. Now you can enjoy the flavors you love in a delicious and wholesome shake Each shake is made with real, simple ingredients of whole grains, protein, and fiber in flavors you’ll crave Available in flavors such as:  Dark Chocolate  Cinnamon Swirl  Banana Delicious, nutritious, and under 200 calories Kellogg’s To Go Ready to Drink Breakfast Shakes Get the bright start you deserve even on your busiest days with Kellogg’s To Go. The portability of a great tasting shake, with the fiber and protein of a complete breakfast Each shake provides the energy you need to get up and keep going throughout the morning Available in flavors such as:  Milk Chocolate  Vanilla  Strawberry Make the most of each and every day and be off to a great start in no time. Carnation Breakfast Essentials Ready to Drink Breakfast Shakes Your morning may be demanding – make sure you start the day with a balanced breakfast. Carnation Breakfast Essentials Complete Nutritional Drinks provide great nutrition at home or on-the-go to help you start the day right! Available in flavors such as:  Rich Milk Chocolate  Classic French Vanilla  Strawberry Sensation Good nutrition, from the start.

23 23 Quaker Breakfast Shakes Ready to Drink Breakfast Shakes Bfast Breakfast Shakes Ready to Drink Breakfast Shakes There’s a lot to do in this world. But doers know that you can’t start on an empty stomach. That’s where we come in. Start you day with Bfast, the nutrition of a bowl of cereal and milk in the ultimate breakfast on the go. Available in flavors such as:  Chocolate  Vanilla  Berry When it comes to Bfast, its how you start. Special K  Breakfast Shakes Ready to Drink Breakfast Shakes Looking for another way to start your day with Special K  ? Grab a Special K  Breakfast Shake and double down on breakfast packed with flavor. Each shake is complete with 10g of protein and 5g of fiber to help you keep on track during your day. Available in flavors such as:  Double Chocolate  French Vanilla  Red Berries  Chocolate Mocha  Vanilla Cappuccino Shake Up Your Morning. No time to eat in the morning? Try a wholesome Quaker Breakfast Shake to go. With 8g of whole grain oats, 10g of protein, 6g of fiber and 200 calories, it’s a tasty and convenient way to get your day moving. Available in flavors such as:  Chocolate  Vanilla  Strawberry Boost your morning with the goodness you want. Kellogg’s To Go Ready to Mix Breakfast Shakes Make the most of each and every day. With new Kellogg’s To Go breakfast shake mixes you’ll be off to a great start in no time. You get the power of protein and fiber in a delicious breakfast shake. Just add milk and shake for convenient, on-the-go nutrition to get you up and keep going throughout the morning. Available in flavors such as:  Milk Chocolate  Vanilla  Strawberry Rise and Shine in No Time. Carnation Breakfast Essentials Ready to Mix Breakfast Shakes Your morning may be demanding – make sure you start the day with a balanced breakfast. Carnation Breakfast Essentials Complete Nutritional Drinks provide great nutrition at home or on-the-go to help you start the day right! Just add milk, shake it up, and you have a perfect start to the day Available in flavors such as:  Rich Milk Chocolate  Classic French Vanilla  Strawberry Sensation Good nutrition, from the start. Special K  Cereal Bars When you’re on a mission to look and feel great, you need a few secret weapons. Such as Special K  Cereal Bars! These delicious cereal bars are made to satisfy with rice and whole grain wheat flakes, sweet fruit, energy packed nuts or a layer of chocolate. Each one is 90 calories! Available in flavors such as:  Honey Nut  Blueberry  Red Berries  Vanilla Crisp A delicious way to curb those cravings and stay on track.

24 24 Kellogg’s Good Food to Go Favorite Cereals in Individual Servings A good addition to almost any breakfast. Easy to carry easy to open bowls Vitamin fortified with whole grains Available in varieties such as:  Frosted Mini Wheats  Raisin Bran  Fruit Loops There’s a lot to do in this world. But doers know that you can’t start on an empty stomach. belVita Breakfast Biscuits Let’s face it. Mornings are crazy. That’s why each pack of crunchy belVita breakfast biscuits includes four lightly sweetened crunchy biscuits, baked to release steady energy to fuel you all morning long. The baked-in grains release energy regularly and continuously to fuel your body throughout the morning. Available in blended flavors such as:  Golden Oat  Blueberry  Apple Cinnamon  Cinnamon Brown Sugar Nutritious, Steady Energy All Morning. Quaker Real Medleys Hot Cereal Made with real fruit pieces and nuts, Quakers Real Medleys Oatmeal+ offer unique flavor combinations that will be irresistible to your taste buds. Wholesome multigrains and real fruits and nuts. Are a convenient and delicious way to start your day. Available in flavors such as:  Apple Walnut  Cherry Pistachio  Peach Almond  Summer Berry Try Real Medleys and Quaker up!

25 25 Share of Choice RTD Shake Users vs. Considers None Other RTD Shakes Total Dry Mixes Total Non-Shake Products PF Brightside Shakes -0.2% -0.3% -0.8% -0.1%* USERS CONSIDERERS -0.2% -0.3% -1.1% -0.1%* -1.4% -0.4% -1.1% -0.1%* -1.4% -0.3% -1.0% -0.1%* None Other RTD Shakes Total Dry Mixes Total Non-Shake Products PF Brightside Shakes -1.6% -0.2% -0.9% -0.4%* -1.6% -0.2% -1.0% -0.3%* -1.8% -0.2% -0.7% -0.3%* -1.8% -0.2% -1.0% -0.3%*

26 26 None Kellogg's RTD Shakes Carnation RTD Shakes Quaker RTD Shakes BFAST RTD Shakes Special K RTD Shakes PF Brightside Shakes -0.7% -0.9% -1.4% -0.8% -1.4% -0.4%* USERS None Kellogg's RTD Shakes Carnation RTD Shakes Quaker RTD Shakes BFAST RTD Shakes Special K RTD Shakes CONSIDERERS -0.9% -1.5% -1.1% -1.7% -0.5%* -0.8% -1.0% -1.5% -1.2% -1.7% -0.5%* -1.0% -1.5% -0.9% -2.0% -0.4%* PF Brightside Shakes -0.8% -1.9% -0.7% -1.4% -0.9%* -0.9% -1.9% -0.8% -1.5% -0.8%* -0.7% -0.8% -1.6% -0.6% -1.3% -0.7%* -1.0% -1.9% -0.7% -1.8% -0.9%* Share of RTD Shake Choice RTD Shake Users vs. Considers

27 27 USERSCONSIDERERS Low ($5.99) Medium ($6.49) High ($6.99) PF "Busy Health" DKPF "Busy Health" ChocMochPF "Taste" DKPF "Taste" ChocMoch Share of RTD Shake Choice by Price Point RTD Shake Users vs. Considers


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