1. Some Prospects are Easier to Convert Than Others

2. The two targeting criteria that matter most 2 1.Category potential –A customer’s potential for using products or services in your defined category 2.Brand share –The market share that your product or service enjoys with each customer 1.Category potential –A customer’s potential for using products or services in your defined category 2.Brand share –The market share that your product or service enjoys with each customer

3. The two targeting criteria that matter most 3 1.Category potential –A customer’s potential for using products or services in your defined category 2.Brand share –The relative market share that your product or service enjoys with each customer 2. Propensity for adopting new products

4. New product adoption pattern for a late entrant into the US diabetes market Source: IMS New Prescription Audit 4 Adoption of product by physicians

5. Groups 1 3 2 4 TRx Share 36% 10% 20% 2% Analysis of Customers revealed four distinct product adoption patterns Source: IMS New Prescription Audit 10x 12x 5

6. Could these early adopters have been identified prior to the launch?

7. A key learning about new product adoption behavior is that it’s not brand specific* So, early adopters for products in one category also tend to be early adopters for products in other categories that are relevant to them Propensity for adopting new products appears to customer dependent rather than category or brand dependent We can leverage past behavior in one category to predict the future adoption behavior of the same customer in another category 7 Note: Learning from pharmaceutical industry. Data not available for other industries

8. One method for scoring adoption propensity is to average performance on other recent launches 8

9. We then segment customers into quartiles based on their market shares @ month 6 9 4 3 2 1

10. We then average customer scores for other recent launches to develop a single adoption score 10

11. 11 To develop a single score for each customer, we need to convert the two variables to a similar scale Custome r Category Potential Adoption Ranking 120,0004.0 275,0003.7 3150,0003.3 ……… Average62,0002 Raw data Zip Code Category Potential Brand Share Avg. 10.32.0 1.2 2 1.9 1.6 32.41.7 2.1 ……… Average11 Normalized Score

12. Caveats related to use of adoption criteria Tendency for early adopters in one category to be early adopters in other categories should be validated before using this approach You need the market share by customer from previous new product launches to establish an accurate ranking of adoption potential Absolute usage of a new product can be valuable directionally but without a denominator can be misleading –Customer A: 5 purchases out of 10 total purchases (50%) –Customer B: 5 purchases out of 100 total purchases (5%) If your ranking of adoption potential is more directional in nature, you may want to apply a lower weighting to this criteria (e.g. 25% vs. 50%) 12

13. Alternative approach 1.Rely exclusively on category potential criteria to guide promotional efforts at launch 2.Survey actual customer market share at month 6, reprioritize customers and adjust promotional efforts accordingly 13

14. Summary The two targeting criteria that matter most are a customer’s category potential and brand share Brand share cannot be predicted at launch but a customer’s propensity for early adoption can You need the market share by customer from previous new product launches to establish an accurate ranking of adoption potential If this data is not available, you may want to profile customers again shortly after launch to include actual adoption behavior as a valuable second targeting criteria 14