1. Bowl Appétit! Marketing Strategy Brian Bolten Pat Campbell Elizabeth Chang Trent Edwards Todd Federman Butch Lincoln

2. Outline Data Collection & Analysis Strategy Development Concept Development

3. Data Collection & Analysis

4. Insights from Lifestyle Trends Insight: Shelf stable lunches need to be quick to prepare –Trend: Busy professionals and moms have less time –Trend: Increase of take-out-food –Average American willing to spend no more than 15 minutes preparing a meal Insight: Food should be balanced and nutritious as much as possible –Trend: Growing awareness of “wellness” –Trend: Attention on organic foods and alternative medicine Data Collection & Analysis

5. Insights from Lifestyle Trends Insight: There exists a market for “meal preparation kits” for busy working people who enjoy some amount of preparation –Trend: Industrial appliances and professional cookware – “must haves” for kitchens –Trend: Home as sanctuary – People enjoy being home and like people to see their homes Insight: Products need to be simple to understand –Trend: Clutter – too many choices, too much info Data Collection & Analysis

6. Learnings from Retail Trends Learning: Convenient meal category is highly competitive but growing –9,248 new products introduced in 2000; 550 in the meal/meal center category –Continued increase in private label spending (20.1% market share, 15.7% dollar share) –Innovations increasing Healthy ingredients such as calcium and fiber are being added Organic and all natural products Convenience foods such as meal kits Data Collection & Analysis

7. Learnings from Retail Trends Currently, Bowl Appetit! is not displayed in a consistent fashion across retail locations –Soup aisle, pasta aisle –Canned dinners/boxed dinners aisle Insight: Optimal positioning may be in a prepared foods aisle (not currently in many stores) –GM should work with retailers to share best practices as to display and promotion Additional placement option –Free-standing display only, e.g. DiGiorno’s Data Collection & Analysis

8. Learnings from Retail Trends Learning: Conventional grocery store has a reduced dominance. Need to reach consumers through other channels as well Data Collection & Analysis

9. Industry Insights The workforce: –50% spend 15 minutes on lunch –66% skip lunch at least twice a week –40% eat at their desk Movement from meal components to finished meals Diet positioned brands falling Data Collection & Analysis

10. Industry Insights Brand extension have higher success rate and require less investment which suggests leveraging an existing brand Pricing Power –Mature food industry limits pricing flexibility –Pricing power and margins enhanced by developing customer loyalty through brand awareness –Development of multi-million products that can be sold nationally to create economies of scales Data Collection & Analysis

11. Competitor Products Shelf-StableFrozen Campbell’s SoupsReady To Go ConAgraChef BoyardeeHealthy Choice Marie Callender’s HormelChili Dinty Moore Kraft*Easy Mac Mars, Inc*Uncle Ben’s *No Financial Data Available Data Collection & Analysis

12. Competition Financials Data Collection & Analysis

13. Competitive Activity Feb 2000: It’s Pasta Anytime - $15.9MM Aug 2000: Uncle Ben’s - $20MM Oct 2000: Healthy Bowl - $6 MM ($14.7 MM in 1997) Data Collection & Analysis

14. Competitor - Campbell’s 2001 U.S. operations slumping: effect on 9% decline in overall net income “Ready to Serve” soups focus on convenience Marketing and sales were 25.9% of sales (focused on Godiva, V8 Splash, Chunky) CEO Johnson returns from retirement Data Collection & Analysis

15. Competitor - ConAgra 2001 Package food sales $8,681 account for 31% of total revenue –Includes shelf-stable, frozen, agriculture and dairy Acquisitions illustrate shift toward brand and value-add products Banquet and Healthy Choice brands suffering Analysts bullish on Marie Callender’s –Double digit gains called for a 12 item entrée line 2001 acquisitions totaling $1,107.2 MM including Chef Boyardee Data Collection & Analysis

16. Competitor - Hormel Increased pork and turkey business through “Fully Cooked Meal Solutions” Favorable historic 3 year performance: –Rev growth 149% higher than industry average –ROE is 55% higher than industry average –ROA is 86% higher than industry average Limited rice and pasta entrees Data Collection & Analysis

17. Strategy Development

18. SWOT Analysis of Bowl Appétit Strengths –Quick preparation –Simple instructions –Betty Crocker brand (trust, recognized,easy to prepare foods) –Single serving Weaknesses –Quality variability –Small quantity –Limited variety (starches only) –Dehydrated food –Betty Crocker brand (primarily associated with baking) Strategy Development

19. SWOT Analysis of Bowl Appétit Opportunities –Ownership of segment –Other segments to focus on - workplace –Additional channels – food service & vending –Pillsbury technology and distribution capabilities to new channels Threats –Comparison to frozen food quality –Relatively easy market entry –High educational needs –Cannibalizing existing brand –Damaging Betty Crocker name –Competitive response Strategy Development

20. Marketing Strategy Become product leader in shelf-stable single-serve meals category focusing on the attributes of: –On-the-go Convenience –Good Taste Strategy Development

21. Critical Success Factors Convenience 1.Reduced preparation time (two minute target) 2.Simple preparation process 3.Include all items necessary for at work usage (utensil) Taste 1.Must approach taste performance of consumer’s existing options (restaurant, packed lunch) 2.Packaging and promotion must convey this Channel 1.Work with retailers to gain favorable shelf space 2.Help to create a “prepared foods” isle (optimal store positioning) Price 1.Although conjoint analysis indicates that consumers were not sensitive to the prices provided in the survey, product would ideally be priced below frozen meal alternatives Strategy Development

22. Segment Layout Convenience Quality/Taste Bowl Appétit! “Flavor Meals” “Flavor Bowls” Pasta Anytime Strategy Development Ready to Go Cup of Noodles Chef Boyardee Marie Callender’s Ragu Express Uncle Ben’s Easy Mac Home-cooked meal Fast Food Buffet restaurant Sit-down restaurant Homemade Sandwich

23. Target Consumer Primary: White collar professional worker –Prepared in the workplace –Kept in stock at home for quick meals Secondary: Stay-at-home mom with little time to cook Strategy Development

24. Target Consumer Similar to current Bowl Appetit purchaser based on Nielsen panel data Strategy Development

25. Target Justification Busy professionals value attributes of the quick preparation - 40% of the workforce eat at their desk Women growing percentage of work force (in 1999 46.5% versus 34% in 1964) Women buy or influence the purchase of 80% of consumer goods so their needs must be addressed Demand demographics – Baby boomers –Baby boomers (37 to 55 years old) account for 30% of population –Focus on nutrition and weight maintenance –Rising average age of US residents Strategy Development

26. Surveys Surveys undertaken –Qualitative discussions –Competitive Analysis on four key attributes –Conjoint Analysis Given target consumer, selected Harris Teeter as survey location Strategy Development

27. Qualitative Discussions Revealed two key concerns: Overall Product Quality –Skeptical about taste of microwaved dry noodles –Serving size may be too small Convenience –Some not comfortable boiling food in microwave –Not convenient for home users –“Why not just buy frozen” Strategy Development

28. Consumer Insights Consumers are in search of a product that is more: –Substantial “I need more than potatoes or rice for lunch” –Balanced “It would be nice if it could have chicken and vegetables” –Flavorful “The taste is important to me” Strategy Development

29. Competitive Analysis Bowl Appetit VS. competition Price:Average Taste:Poor Nutrition:Average Convenience: Poor Survey asked consumers to compare Bowl Appetit to four “quick preparation” competitors based on price, taste, nutrition and convenience Strategy Development

30. Conjoint Analysis Sample survey form: Evaluate meat additive, wet noodles, price sensitivity Strategy Development

31. Conjoint Analysis Survey Results: Wet noodles are significantly preferred to dry. Price and meat packages not significant. Strategy Development

32. Pricing Analysis $- $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 Cup Noodles Chef Boyarde Pasta Tuna with Crackers Bowl Appetit Stoufers Uncle Ben's Rice Bowl DiGiorno Small Pizza Conjoint analysis and qualitative discussions indicate that consumers are willing to pay between $2.50 and $3.00 for a high quality shelf-stable product Current Bowl Appetit! product is priced between other shelf-stable products and frozen foods Strategy Development

33. Key Consumer Takeaways Bowl Appetit compares unfavorably on three of four key attributes Consumers receptive to “wet” pasta option Must improve perceptions of taste Convenience for home and work use are not the same Strategy Development

34. Concept Development

35. Targeting Unmet Consumer Needs - Faster prep time - Utensil included - Self-contained meal Convenience - Wet noodles - Sauces included - Greater variety Quality/Taste Concept Development

36. Introduction of New Brand Create new sub-brand and image to target “at work” segment –Leverage strength of existing GM brand equity (such as Betty Crocker) –A focus on “on the go” convenience may jeopardize home use if introduced under Bowl Appetit brand Possibility of transferring wet noodle technology to “at home” Bowl Appetit brand Concept Development

37. Concept #1 – Flavor Bowls Bowl of wet pasta or rice or dry potatoes is packaged together with a seasoned sauce (i.e. marinara, meat sauce, cheese sauce, chicken in teriyaki sauce, gravy) –Add seasoned sauce to the bowl & heat Included utensil will add convenience The sauce and larger portion size will enhance quality and hunger satisfaction Improved graphic design of the product will signal convenience and quality Concept Development

38. Flavor Bowl Mock-up Bowl would contain noodle package and seasoned sauce

39. Concept #2 – Flavor Meals A three-section bowl includes a seasoned sauce, wet pasta/rice or dry potatoes, and dry vegetable product –Sauce is a hearty blend of spices, vegetables and seasoning –Empty pouch contents, add water to vegetable & heat Included utensil will add convenience The hearty sauce and larger portion size will enhance quality and hunger satisfaction Improve the graphic design of the product to promote convenience and quality Concept Development

40. Value Proposition Develop the first shelf-stable products that match the taste requirements of white collar workers, while providing the speed & convenience demanded by a growing portion of this group Concept Development

41. Unique Selling & Value Proposition Complete understanding of competitive landscape –Provide product that consumers say they need, not one that the company thinks they need –Ensure that the product is truly convenient –Ensure that the product truly tastes good First-to-market advantage Priced competitively with respect to quality of convenience and taste Concept Development

42. Switching Logic At Work Preparers –Consumers who prepare frozen food or soup/noodles at work (easiest target) Lunch Packers –Consumers who require speed and convenience, but have been unable to find products with desired quality/taste Restaurant Goers –Consumers who desire speed and convenience, but go out to lunch because they require better quality/taste (most challenging target) Concept Development

43. Promotion Strategy Free samples in urban areas & offices to increase “word of mouth” advertising Celebrity chef spokesperson to promote its convenience and quality taste Money back guarantee to encourage first-time buyers to purchase the product Billboard ads on subways and buses to target the busy white-collar professional Trade promotions (e.g. end-of-aisle displays) during the product’s introduction phase Concept Development

44. Promotion Results Targets busy white-collar professional Promotes themes of convenience and quality taste Encourages trial Achieves reach and distribution Builds repeat purchase and loyalty Increases “word of mouth” advertising Concept Development

45. Distribution Strategy Rank of importance: –[1] Supermarkets –[2] Mass merchandisers (multi-pack) –[3] Drug and convenience stores Educate the grocer of industry “best practices” –Convince grocers to introduce a “prepared food” aisle (e.g. “Convenience Aisle”) to improve convenience for the shopper Leverage supplier power Secondary, utilize GM Foodservice’s advantages to bring product to targeted customer’s environment: –Corporate cafeterias and vending machines Concept Development

46. Distribution Results Own new “Prepared Food” aisle Achievement of favorable shelf space Strengthened customer relationship First-mover advantage Increased profits for customers (stores) Potential unique reach: cafeterias and vending Concept Development

47. Pricing Strategy Position the product as the premium shelf-stable product in terms of quality, convenience and portion size –Set selling price higher than Bowl Appétit! Position the product as a convenient and less expensive alternative to frozen lunches with minimal difference in quality of taste –Set the selling price slightly lower than the floor price for frozen foods. Concept Development Target Price $2.69

48. Pricing Results Not “caught in the middle” Charge for value: convenience & taste No exact competition Premium for brand value Higher margins for customers and GM Concept Development

49. Concept Fit with General Mills Continue to leverage Betty Crocker brand Current Bowl Appétit! serves a base for new product (brand name, bowl concept, etc.) Consistent with existing consumers and distribution channels –Leverage marketing experience/expertise Consistent with current offerings –Leverage manufacturing experience/expertise Utilize Foodservice to enter unique channels Concept Development

50. Potential Concept Limitations Technology –No similar product currently being manufactured by General Mills –According to GM, patents for technology are readily available Operations –If expertise is unavailable in house, GM can and does outsource certain manufacturing processes Concept Development

51. Impact on Competitors Initial market share gains likely from “at- work preparer” segment GM’s scope defends against initial price & promotion response There is little long-term competitive recourse Secondary gains expected from converting restaurant goers and lunch packers Significant competitive response is unlikely Concept Development

52. Competitive Response Most likely scenario –Frozen food competitors re-emphasize quality –Shelf-stable competitors commit to improve quality (through acquisitions or increased R&D) –Successful introduction may attract new players General Mills’ strategy –Quickly attract & earn consumer loyalty in target segment –Focus on leading taste and convenience factors –Plan new flavors and combinations on regular basis to maintain trial & meet consumer’s changing tastes Concept Development

53. Fit with Industry or Environmental Issues Slumping economy results in less eating out, consumers looking for cheaper alternatives –Concepts cheaper than eating out but provide similar experience (it isn’t leftovers) –Also less expensive than frozen competition Scope of GM & firm’s aggressive acquisition strategy leads to competitive advantages –Economies of scale –Technology and R&D leadership Concept Development

54. 3-Year Pro Forma Revenue Step #1: Develop Assumptions –Identify potential buyers: Professionals & At-home moms –Determine the market size for potential buyers using census data –Project usage rates: Trial and Repeat Step #2: Project Year 1 Revenue for target buyers Step #3: Assume an annual growth rate to project Year 2 & 3 revenue Concept Development

55. Pro Forma: Model Assumptions Census data used to project market size for professional and at-home buyers Concept Development

56. Pro Forma: Year 1 Projections for Professionals Concept Development

57. Pro Forma: Year 1 Projections for At-home Concept Development

58. Pro Forma: Year 1 Calculations for Professionals Concept Development

59. Pro Forma: Year 1 Calculations for At-home Concept Development

60. Pro Forma: Year 2 & 3 Revenue Projections Annual Growth Rate: 6% Year 1 Market Size: $550,000 (in MM) Concept Development