Growth Strategies in Shelf Stable, Single Serve Meals Lilyn Chang (#0583) Basheera Enahora Cristina Harea Rahcyne Hill Pooja Khatri Jocelyn Wright Team 2, Section 201

Table of Contents Executive Summary Market Analysis Trends in Shelf-Stable Market Consumer Competitors Company Opportunity Identification Nielson Panel Data & Analysis Opportunity Evaluation Matrix Strategy Development Strategy Overview Revenue Forecasts Concept Development Opportunity Assessment Matrix Product Concepts Marketing Plan Summary

Executive Summary Our strategy is to increase both the size of the overall market for shelf-stable products as well as our share of the market. Given the fact that market for shelf-stable products is shrinking, we identified that key growth lies with gaining new users, and driving new usage and new uses. We developed the concepts of Flav-O-Meter and Lunch-Snak-Daily-Pak for General Mills to effectively increase the size of the market and its market share and revenue.

$311 MM Market (Frozen & Shelf Stable) Focus Group insights Market Analysis - Consumers Although the technology to preserve dried meats and vegetables in shelf-stable products has been available for a few years, consumer acceptance of such a concept has been slow. This is evidenced by the failure of the shelf-stable market to keep up with the growth of its frozen food counterpart and confirmed by the participants in our focus group. In addition, we discovered articles that confirmed a newer trend also identified by our focus group: American consumers are slowly yet surely moving more towards spicier, more flavorful foods. This is depicted by the steady increase in the introduction of new spicy food products, generally taking the shape of ethnic varieties in frozen and shelf stable foods. $311 MM Market (Frozen & Shelf Stable) Focus Group insights Convenience, taste, portability, packaging Survey insights Spiciness, premium ok if taste is good

Customer Need (and Importance *****) Market Analysis - Consumers Taste and Price are the two most important attributes in satisfying customers needs. According to our survey, focus group and the Relative Success in Satisfying Customer Needs model, Bowl Appetit! has strong ratings on price, brand image, taste and size, but still ranks behind frozen food on taste. (xxx) (xx) (xxxxx) (xxx) (xxx) Customer Need (and Importance *****)

II I IV III Benefit Price Market Analysis – Competitors Perceptual Mapping: In developing a map of the consumer perception of product benefits versus price (what we defined as product value), we learned that most of the competitive products fall in the “high benefit, high price” quadrant. We decided that we want to continue to operate in Quadrant I of this map, and position ourselves at the lower price point. Price Benefit II I LOWER PRICE HIGH BENEFITS Moderate III IV

Sales of Single Serve Shelf-Stable Products Market Analysis – Competitors Based on Nielson panel data, the market for dry, shelf stable products is saturated by many brands. Bowl Appetit!, Maruchan, and Kraft Easy Mac have similar market share. The Nielson data used for this analysis did not include It’s Pasta Anytime, however. The results may differ significantly with the inclusion of It’s Pasta Anytime. Sales of Single Serve Shelf-Stable Products

Bowl Appetit! Kraft Mac & Cheese Chef Boyardee Maruchan Spice Hunter Market Analysis – Competitors The Three Value Disciplines analysis helped the team to summarize the strategies that each of our competitors in the dry, shelf stable meal category follow. We viewed the brands with the same color codes as having very similar strategies. Bowl Appetit!, Maruchan and It’s Pasta Anytime seem to follow strategies that have not yet been adopted by other major players. Three brands stood on their own: Bowl Appetit!, Maruchan and Pasta Anytime. In our opinion, Maruchan targeted the price sensitive customer first. Operational Excellence Customer Intimacy Product Leadership Bowl Appetit! Moderate Price/Serving Stay-at-home Moms, People on the go Innovative Bowl container Kraft Mac & Cheese Low Price/Serving Kids after school Powdered cheese tech. (no container) Chef Boyardee Kids; Moms; Busy families Meat containing shelf stable products Maruchan Very Low Price/Serving Price sensitive customers Flavor variety; cup; just add hot water Spice Hunter Gourmet; Taste conscious; Healthy Spices; ethnic flavors Knorr Gourmet tastes Ragu Express Quick snack for Kids Powdered pasta sauce (no container) Pasta Anytime! High Price/Serving Quick tasty freshly prepared meal Sealed cooked pasta; sauce pack Hormel Low Price /Serving Quick, classic homestyle meals

Market Analysis – Competitors There is a direct correlation between number of brands and profitability. Companies such as Unilever with a large number of brands have many brands that generate little return on investment, reducing gross margin and lowering net income. Unilever is focused on divesting from unprofitable brands. While Campbell has the resources required to fully support its 15 brands to unsure that the brands are profitable.

Overview of General Mills, Inc. Market Analysis – Company Overview of General Mills, Inc. World leader in the manufacture and marketing of consumer foods products. Markets products primarily through its own sales organizations, supported by advertising and other promotional activities, directly to retail food chains, cooperatives, membership stores and wholesalers. Acquired The Pillsbury Company in October 2001 2000 sales of $7 billion, 11,000 employees

Market Analysis – Company GM SWOT: Strengths – General Mills’ strength lies in a portfolio of well known brands that have a history of success and high quality image in the packaged food market. The recent acquisition of Pillsbury brings other strong brands, as well as diversification benefits. The company has strong marketing capabilities and is well viewed by Wall Street. Successful track record in the packaged food market (e.g. flour mixes, cereals, bakery products, convenience food) Reputation - one of the most admired consumer food product companies (ranked 2nd after Nestle USA by Fortune 2001) Established relations with retail channels (e.g. Kroger, Albertson, Wal-Mart, Sam’s Club) High product quality Strong marketing skills – advertising, promotions, pricing (ranked 9th in 1999 by return on advertising expenditures in the food industry) Positive Wall Street ratings – (50% buy, 30% buy/hold, 10% hold – analysts consensus opinions) Strong brands (e.g. Cheerios, Lucky Charms, Betty Crocker, Fruit Roll-ups) Recent diversification with the acquisition of Pillsbury (brand equity and reputation for quality products)

Short-term costs associated with Pillsbury’s acquisition Market Analysis – Company GM SWOT: Weaknesses - The fact that GM is strongly associated with cereals and that it generates 91% of revenue from the US market it will make it vulnerable to changes in the market. The debt associated with the Pillsbury acquisition reduces GM’s financial flexibility in the near term. Short-term costs associated with Pillsbury’s acquisition High leverage ratios (D/E ratio of 42 vs. industry average of 1.4) Low international penetration (91% of sales in US – improving with Pillsbury acquisition) Dependence on the slow growing cereal category (Big G cereals generated $2.6 B out of $7.08 B – about 37%)

International expansion Market Analysis – Company GM SWOT: Opportunities - GM is well positioned to benefit of such trends in consumer preferences for convenience, ethnic and healthy food. Pillsbury acquisition offers the opportunity to tap into new customer segments as well as further diversification into some food categories (e.g. frozen food). Expansion beyond cereals into faster growing food categories (e.g. convenience food) International expansion Pillsbury acquisition – building expertise in new areas Consumer trends towards convenience, ethnic and healthy food Growth of the warehouse distribution channel (e.g. Costco, Sam’s Club, BJ’s)

Increasing competition in the food market Market Analysis – Company GM SWOT: Threats - The main GM’s threat is the intensified competition in the food industry, both from consolidating brand-producing companies and from private label and generics. It is important that GM accurately assesses the trends in consumer preferences in order not to lock itself into slow growing or shrinking categories (e.g. cereals and dry food). Increasing competition in the food market Consolidation of the industry (recent mergers and acquisitions – Unilever & Bestfoods, Kraft & Nabisco, Kellogg & Keebler, ConAgra & IHF) Competition from private labels and generics (e.g. Sara Lee, Safeway Select, Kroger) Failure to achieve synergies with Pillsbury and to successfully incorporate the new acquisition Forecasted shrinkage of the dry food category due to frozen & chilled food category growth (-0.6% total growth 1999/2004 vs. 20.6% frozen and 27%3 chilled growth)

Moderately Priced: Average price is about $1.41. Market Analysis – Company Product SWOT:Strengths – In addition to a corporate SWOT, we also performed a SWOT analysis on the Bowl Appetit! Product. The key product strengths identified are Betty Crocker’s brand equity, the emerging consumer need to conserve freezer space, and the emotional response elicited from eating lunch out of a bowl. Betty Crocker’s Brand Equity: The brand is associated with warmth and quality. It has a very loyal consumer base and is associated with the middle class. Moderately Priced: Average price is about $1.41. Shelf Stable: Our focus group revealed that some consumers (single adults) prefer to conserve freezer and refrigerator space and they value portability. Innovative vehicle: Bowl is associated with having a hearty meal. Portion: Bowl permits more filling servings.

Betty Crocker’s Brand Equity: A strong association with Baked Goods. Market Analysis – Company Product SWOT: Weaknesses - The key product weaknesses identified are Betty Crocker’s brand association with baked goods, limited market segment targeting, the product’s early stage in the Product Life Cycle, and the in-store location of the product. Betty Crocker’s Brand Equity: A strong association with Baked Goods. Early in the Product Life Cycle: Bowl Appetit! is a new product. Evolving brand recognition Limited Targeting: So far in Bowl Appetit! Commercials, only stay-at-home moms have been targeted. In-store Location: Located on dry potato and rice aisle. Location is not located near other shelf stable lunches. Product is at the bottom shelf, and out of customers immediate field of vision.

New consumer taste trends: More consumers prefer spicy foods. Market Analysis – Company Product SWOT: Opportunities - The key opportunities identified are diversification beyond current offerings, bundling products to serve customers more than once a day, identification of a new consumer demographic base, and recognition of changing trends in American consumers’ taste preferences (greater inclination towards spicy, more flavorful foods). Diversification: Continuing to develop shelf stable products leverages GM’s competencies and allows it to diversify into categories beyond baked goods. Brand Equity: The Betty Crocker brand offers consumers the “red-spoon promise” that they value. Extend customer relationships: Now Betty Crocker can feed consumers in the mid day occasion in addition to the supper time and dessert occasions. Variety: The Bowl Appetit! Offering provides a variety of platforms and flavor that can be altered to satisfy a variety of consumer tastes. Bundling: Coupling the broad GM portfolio and lunch occasion provides opportunities for GM to pair some of products to conveniently feed consumers throughout the day. New consumer demographic base: The Nielson panel data suggests that opportunities for Bowl Appetit! exist in the South, among ethnic minority groups, and among older adults. New consumer taste trends: More consumers prefer spicy foods.

Market Analysis – Company Product SWOT: Threats - The key threats identified were the well-established presence of formidable competitors in the shelf-stable market and the established, slow-to-change, consumer mindset about shelf stable meals (in terms of the suitability of frozen products as opposed to shelf-stable products). Incumbents: There are a number of formidable competitive products with an established presence in shelf-stable lunch market place. Many of the products have recognizable brand names (ie. Campbells, Maruchan, Chef Boyardee, etc.) Frozen foods: After more than fifty years on store shelves, frozen foods are established in the minds of consumers as suitable shelf stable meals. (ie. Healthy Choice, Lean Cuisine, Uncle Ben’s Rice Bowls, etc.) Fresh/Shelf Stable Technologies: New technologies that improve the stability of frozen or refrigerated meals at room temperature could pose a threat to the shelf stable category of shelf stable meals.

Competitor with very high Index Opportunity Identification – Nielson Data We classified “opportunities” as groups in which Betty Crocker Bowl Appetit! performed poorly (100 index or less) and in groups where a competitor had an index of 200 or greater. Bowl Appetit! Low Index Competitor with very high Index Low Income households (<$40,000) New Families Households with 1-2 members Poor, maturing families Households with older female head (ages 55+) Households with no female head Middle aged singles Empty Nesters Part-time or Unemployed Households with children under the age of six Minorities Poor South

Opportunity Estimated Market Size 6.7 MM 34.6MM 25MM 34.9MM 7.4+MM Opportunity Identification – Nielson Data The next step of our analysis was to identify the size of each opportunity. For this task, we utilized the US Census data. We eliminated “Poor families” because we didn’t want to risk damaging our image with our more affluent customers and did not feel that there was sufficient customer motivation to purchase in the shelf stable category. We combined Middle-aged and Older Singles and Older Adults because of the similar interests of this age-group. We decided not to focus on “Small Families” because this segment was too broad. Opportunity Estimated Market Size Poor families 6.7 MM Small families 34.6MM Older singles 25MM Middle-aged singles 34.9MM Part-time or Unemployed 7.4+MM Minorities 83MM South 100 MM New Families 82.2MM Older adults 59.3MM Empty Nesters 29.7MM Households with children under the age of six 23.3MM

Market Niche Criterion Opportunity Identification Using the Opportunity Evaluation Matrix, we identified those market segments which appear to be underserved by the shelf-stable market for lunch. We then examined how the competition was responding, if at all, to the ever-changing consumer needs and the dynamics of external forces. We predict that the unmet needs for flavor-control and the greater convenience are attractive opportunities to pursue within our identified market segments. Market Niche Criterion Competitive Activity Buyer Require-ments Demand/ Supply External Forces Organizational Capabilities Buyer Type: Professionals   Busy Families  Stay-at-home Moms (BA only) There are 8 competitors in the shelf stable lunch food market. Most shelf stable and frozen lunch products are competing for this market segment Taste Convenience Quality Healthy Filling Value Rich/Spicy Flavors Meat Mixed flavor preferences Similar lunch-time motivations Little discrepancy in amount of time available for lunch Socioeconomic: In a bad job market, there are less people working (i.e. less people eating at work). All consumers are also more price-sensitive. GM and Betty Crocker already have access to these buyers and are supplying them currently. Buyer Needs: Taste See Relative Success in Satisfying Customer Needs and Perceptual Mapping Healthy Food Rich Flavor at a Value Need to conserve freezer space Combination Packets Need for a tasty, flavorful, filling, quick, health, quality lunch is a long-term consumer need. Have to provide variety so that consumers don’t switch when they get tired of a particular flavor. Eating lunch is a basic need not likely to be effected by external forces, unlike luxury food items (for example, desert products). However, willingness to pay is correlated with job market conditions. Also, for those customers in the busy professionals segment, the need to purchase will change with their employment status GM can satisfy: Need for Quality Need for Health Need for Taste (Rich Flavor and Ethnic Diversification). Need for Convenience (5-minute prep and snack-packs) Need for Value Filling (Effects of Packaging) example: deep dish bowl vs. flat tray Means for Satisfying Buyer Needs: Dehydrated Vegetables in a Shelf-Stable Product Spicy Flavors Meat products/Sauces Consumer acceptance of shelf-stable products is slow. Demand for shelf-stable lunch products is decreasing Supplier Forces* Technological: The technology to preserve meat and vegetables in shelf-stable form is available. However, consumer acceptance of such products is slow. The GM corporation has the financial, human, technological, and marketing expertise to satisfy consumer needs. *Although we did discuss the potential effects of supplier forces on buyer needs (for example the availability and costs associated with certain spices or platforms (i.e. rice, pasta), we assumed that such supplier products were commoditized (in terms of price) and readily available.

The strategy will be accomplished in two phases: Growth Strategy Three Year Growth Strategy: Become the market leader in the ready-to-eat meals category by increasing market share through introduction of a new Bowl Appetit! product innovation and a bundled offering. The strategy will be accomplished in two phases: Phase 1 Gain Market Leadership Phase 2 Maintain Market Share Splitting Efforts Evenly between gaining and sustaining market share.

Phase I--Market leadership will be accomplished through: Growth Strategy Three Year Growth Strategy: The successful implementation of the two-phase growth strategy encompasses several key elements. Year 1 Year 2 Year 3 Phase I--Market leadership will be accomplished through: New product introduction Target untapped market segments Phase II--Maintain market share through: Investment in well-planned promotions Invest in product pipeline Blocking access to distribution Signaling to competitor (commitment to play in the shelf stable market) Relationship Marketing Strong distributor relationships Gain Market Share Maintain Market Share

Synergies Bowl Appetit! General Growth Mills Strategy Growth Strategy The Three Year Growth Strategy is synergistic with the current GM growth strategy of product innovation. Additionally, it leverages the current GM competencies including a strong sales force and expanded supply chain. Synergies Bowl Appetit! General Growth Mills Strategy

Growth Strategy Growth Strategy: One new Bowl Appetit! product offering is forecasted to enter the market with $49.2M sales in year 1. Sales are projected to grow 7% in the second year and 8% in the third, which is in line with the current 8% GM revenue growth goal.

Marketing Plan Target Customer Product Concepts Placement Price Promotion Competitive Response

Segmentation – Target Audience Marketing Plan - Target Customer We evaluated the Nielsen Panel and Scanner data to determine market opportunities. We then considered the value proposition and the results of our Focus Group and Survey, and selected target customers. Segmentation – Target Audience South We will expand into this segment thru the promotion strategy Working people Ethnic, African Americans Middle-aged, Older adults Kids Eliminated due to scalding hazard and inappropriateness for school environment

Target Customers – Market Segmentation Marketing Plan - Target Customer All of the customer segments identified fit under the category busy adults, which is the target customer we selected. Target Customers – Market Segmentation Busy adults Segments for promotional consideration Working folks (white and blue collar) College students Stay-at-home Moms (Flav-O-Meter only) People who are busy at home (Flav-O-Meter only) Travelers (people who frequent extended stay hotels)

Concept development ideas centered around: Marketing Plan - Concept Development-Options considered We generated ideas for new product concepts around providing convenience, high quality, improving taste, increasing flexibility and customization. Concept development ideas centered around: Flavor Changes Platform Changes (main ingredient – ie rice, pasta, potatoes) Packaging Changes

Ethnic/Spicy Flavors Flavor Variability Thai Mexican Cajun Marketing Plan - Concept Development-Options considered We considered adding ethnic/spicy flavors to the existing Bowl Appetit! Brand, in addition to providing the consumer with the ability to control the level of flavor of the product. Ethnic/Spicy Flavors Thai Mexican Cajun Flavor Variability Separate flavor pack with a measure to control the flavor or spiciness of the product - “Flav-O-Meter" Platform & flavor pack interchangeability

Platform change proposals: Marketing Plan - Concept Development-Options considered We also considered changing the main platform or main ingredient in our concept development stage. Platform change proposals: Soups Leverage the Progresso brand New starches Couscous Asian Noodles

Package change proposals: Marketing Plan - Concept Development-Options considered Understanding that packaging is important to our customers, we considered changing the packaging in our concept development stage. Package change proposals: Bundling with other product in GM portfolio A snack with a Bowl Appetit! product for a lunch-snack daily pack A cereal with a Bowl Appetit! product for a lunch-breakfast daily pack

Competitive Intensity Marketing Plan - Concept Development-Options considered If we were to rank opportunity attractiveness, according to this Opportunity Assessment matrix, the “Flav-O-Meter” concept and the Lunch-Snack-MulitiPak are superior to other concepts. We predict that developing ethnic flavors and introducing couscous as a platform would only generate minimal additional sales. We believe the Asian noodle market is too fragmented and too niche for GM to be successful. The soup market is dominated by Campbell's, and they can afford to innovate far more than we can (Campbell's is spending $300M-400M on capital improvements in 2002). We abandoned the platform/flavor interchangeability idea because we weren’t convinced that consumers would make two purchases to create one meal in the lunchtime motivation. Ethnic Tastes Flav-O-Meter Platform + Flavor Inter-change-able Soup Cous-cous Asian Noodles Lunch-Snak-Daily-Pak Competitive Intensity Spice Hunter; Frozen Meals; Knorr; Take out Maruchan packaged Ramen; Pasta Anytime Its Pasta Anytime; Campbell’s supper bakes Campbell's; Maruchan; SpiceHunter; Knorr Hormel (Marrakesh Express); Near East Maruchan; Spice Hunter No one. Customer Dynamics Growing Customizability favorable Are consumers receptive to 2 pieces? Warm weather food; customers demanding healthy; flavors Acceptance of couscous is growing, but slowly Consumed as dry snack, in soup or with other add ins Do customers like bundles? Which GM products work well. Technological Vulnerability Taste innovations will have positive impact on segment Technologically. Easy to duplicate Dual packaging; no real technological consideration Flavor innovations positive impact Rapid cooking couscous? Low fat product positive None. Micro-economics Minimal profitability; Incremental sales 100 MM pp; Minimal profitability—may increase penetration Can charge premium $3B total soup industry(including wet, dry, and chilled) Small Premium area is fragmented Premium possibility in club channels

Existing Bowl Appetit! SKUs: Marketing Plan - Concept Development – New Concepts Our proposed concepts leverage the existing strengths of the Bowl Appetit! product and Betty Crocker brand, while addressing the unmet consumer need for better tasting and customizable shelf-stable single serve lunch products. Existing Bowl Appetit! SKUs: Satisfy lunch needs of busy people by offering a convenient, quality tasty meal Proposed Product concepts offering convenience, quality, taste and customization: Flav-O-Meter Provide tastier lunches to more people by offering customized flavor choices Lunch-Snak-Daily-Pak A complete solution for all your away-from-home needs

Product Concepts: Flav-O-Meter Marketing Plan - Concept Development – New Concepts Product Concepts: Flav-O-Meter Description: Bowl of rice/noodle/pasta, with mild essential flavor Packaging contains a “Flav-O-Meter” flavor packet and guide that customers can use to vary intensity of the flavor & spice mix. New Flavors: Cajun(jambalaya, red beans and rice), Thai (roasted curry rice and vegetables), Mexican (Roasted Poblano Corn Chowder, Black Bean with Orange Chipotle and rice) Definitions (based on personal interviews): Flavor – smell, taste Spicy – To make hotter when adding additional pepper or increasing intensity by adding curry, pepper or other spice.

Marketing Plan - Concept Development – New Concepts Flav-O-Meter front package drawing features flavor control while leveraging the Betty Crocker brand. Flav-O-Meter! With New “Add Spice to Your Life…” Spicy! Spicier! Mildly pleasant! Enjoyably pleasing! Whoa, baby! No pack One pack Two packs

Convenient shelf stable Lunch Marketing Plan - Concept Development – New Concepts Flav-O-Meter provides the consumer with more flavor, variety, and flexibility to season their food just the way they like it. Value Proposition: Spice up your lunch and your life with tastier lunches with customized flavor. Convenient shelf stable Lunch Customizable level of spice/flavor intensity Additional varieties of flavor (ethnic) Like a home-cooked meal

Product Concepts: Lunch-Snak Daily Pak Marketing Plan - Concept Development – New Concepts Product Concepts: Lunch-Snak Daily Pak Description: Offering is a single package bundle of GM Bowl Appetit! Flav-O-Meter & one of GM snacks Note: we conducted a simple survey to determine consumer preference of GM snacks. The consumer preference is Pop Secret popcorn or Nature Valley Granola bars.

Lunch-Snak Daily Pak front package drawing and packaging schematic Marketing Plan - Concept Development – New Concepts Lunch-Snak Daily Pak front package drawing and packaging schematic PopSecret PopCorn Bowl Appetit! Extended Tabs For better heated handling Bowl Appétit! Lunch-Snak-Daily Pak!

Convenient solution to daily away from home food needs Marketing Plan - Concept Development – New Concepts The Lunch-Snak Daily Pak provides the consumer with lunch and a snack in one package, eliminating the need to carry multiple food packages for the day. Value Proposition: A complete solution for all your away-from-home nutritional needs. Convenient solution to daily away from home food needs Lunch & Snack together-all in one package Convenience of grabbing and carrying one package for the day Simplifies the purchase process Note: we conducted a simple survey to determine consumer preference of GM snacks. The consumer preference is Pop Secret popcorn or Nature Valley Granola bars.

Product Concepts: Packaging Marketing Plan - Concept Development – New Concepts Product Concepts: Packaging Single packs (Flav-O-Meter & Daily-Pak) Multi-pack bundles (e.g. 6-pack Daily-Paks)

Market Opportunity Flav-O-Meter Daily Pak IMITATION SUBSTITUTION SLACK Marketing Plan - Concept Development – New Concepts - Sustainability Response to Threats of Sustainability: General Mills can add value to the organization by capitalizing on market penetration opportunities through innovative new product introductions. The challenge in the 3-year horizon is to gain and maintain market leadership. This position will be threatened externally by competitors attempting to Imitate the Bowl Appetit! products and by substitutes (such as frozen meals, home-cooked meals and restaurants). GM must guard against the internal threats of “Slack” in “sub-optimizing” or underutilizing the organization potential and “Holdup” in failing to ensure synergies between the entire value chain. IMITATION Trademark Patent technology Strengthen Brand equity SUBSTITUTION Placement Awareness Loyalty Market Opportunity Flav-O-Meter Daily Pak SLACK Invest in Pipeline Market Research--pulse of market and customer HOLDUP Build Channel Relationships

Place: Channel Flav-O-Meter Primary: Marketing Plan - Placement Place: Channel Flav-O-Meter Primary: Large national grocery store chains (e.g. Kroger, Harris Teeter, Albertson’s…) Regional grocery stores Mass Merchandisers (e.g. Target, Wal-Mart, K-Mart…) Secondary: Warehouse stores (e.g. Sam’s, Costco…)

Placement: Location – Flav-O-Meter Marketing Plan - Placement Placement: Location – Flav-O-Meter With shelf stable foods Not on bottom shelf Promotional stands or end caps near the frozen lunch foods and at end frozen aisles End cap near the shelf stable aisle

With shelf stable foods Not on bottom shelf Marketing Plan - Place Marketing Plan: Place Flav-O-Meter With shelf stable foods Not on bottom shelf Promotional stands or end caps near the frozen lunch foods and at end frozen aisles End cap near the shelf stable aisle Note:

Marketing Plan: Place - Channel Daily Pak Primary: Warehouse stores (e.g. Sam’s, Costco…) Mass Merchandisers (e.g. Target, Wal-Mart, K-Mart…) Secondary: Large national grocery store chains (e.g. Kroger, Harris Teeter, Albertson’s…) Regional grocery stores Convenience Stores

Marketing Plan: Place Daily-Pak With shelf stable lunch foods At eye level Promotional stands near the frozen lunch foods and at end frozen aisles End cap near shelf stable and snack food aisle End of aisle promotions in grocery stores and bundling in warehouses

Value Pricing – warehouses Prices Marketing Plan - Price Marketing: Price Value Pricing – warehouses Prices Note: The Flov-O-Meter pricing strategy is designed to place the Bowl Appetit! Flav-O-Meter and Daily Pak competitively with existing shelf stable and frozen competitor products. Additionally, the price of the Daily Pak was determined considering the individual prices of the components and the results of the online survey as listed below. 30.5% of respondents would pay $1.51 to $2.00 per single unit of this type of product (excluding Daily Pak) 38.5% of respondents would pay $2.01 to $2.50 per single unit of this type of product (excluding Daily Pak) The current retail price for the existing Bowl Appetit! products is $1.41 based on the Nielsen scanner data. Please note that survey results may be biased in terms of “willingness to pay” due the high number of respondents in the higher income bracket, 65% had income above $40k. Considering this we priced the new products in the lower price preference range. We developed two multi-pack choices for promotional and/or warehouse distribution. Based on our personal conversation with General Mills management, warehouses prefer bundled products that can be priced at a premium.

Price: The Flav-O-Meter pricing strategy continued. Marketing Plan - Price Price: The Flav-O-Meter pricing strategy continued. Survey Results: 30.5% of respondents would pay $1.51 to $2.00 per single unit of this type of product (excluding Daily Pak) 38.5% of respondents would pay $2.01 to $2.50 per single unit of this type of product (excluding Daily Pak) The current retail price for the existing Bowl Appetit! products is $1.41 based on the Nielsen scanner data. Please note that survey results may be biased in terms of “willingness to pay” due the high number of respondents in the higher income bracket, 65% had income above $40k. Considering this we priced the new products in the lower price preference range. We developed two multi-pack choices for promotional and/or warehouse distribution. Based on our personal conversation with General Mills management, warehouses prefer bundled products that can be priced at a premium.

Promotion – Advertising Message Marketing Plan - Promotion Promotion – Advertising Message Flav-O-Meter “Spice up your lunch and your life.” Important message to consumers: Customizable (Consumers with different tastes can enjoy the same product) Convenient Warm and tasty like a real home-cooked meal $7-10 MM Advertising cost (GM earns $9.53 for every dollar spent on advertising (“Companies with the Greatest Return on Advertising in the Food Industry”(2000)). We plan to generate $63 MM in revenue our first year, and therefore forecast that we will need approximately $7 in advertising dollars.)

Promotion – Advertising Message Marketing Plan - Promotion Promotion – Advertising Message Lunch-Snak Daily Pak “A complete solution for all your away-from-home nutritional needs.” Important message to consumers: Convenience (carry just one pack for the day) All at your desk (accessible throughout the day) More efficient use of time $7-10 MM Advertising cost (GM earns $9.53 for every dollar spent on advertising (“Companies with the Greatest Return on Advertising in the Food Industry”(2000)). We plan to generate $63 MM in revenue our first year, and therefore forecast that we will need approximately $7 in advertising dollars.)

Promotion: Merchandising Monthly to quarterly in-store specials and free standing inserts (coupons, 2-for-1 deals…) to respond to competitive actions Estimating 600 K- $0.50 coupons distributed. In-store taste tests Total Cost: $2.5 MM

Promotion – Advertising Venues Marketing Plan - Promotion Promotion – Advertising Venues National General Awareness television National magazines (e.g. Reader’s Digest, Working Woman, and GQ) Local newspapers Billboards Corporate/Brand sponsorships of community–centered organizations

Promotion - Positioning Marketing Plan - Promotion Promotion - Positioning Flav-O-Meter Premium high quality shelf stable meal Daily Pak Convenient multi-product meal package

Promotion - Timeline Launch – 1st quarter Marketing Plan - Timeline Promotion - Timeline Launch – 1st quarter Build awareness through extensive frequent ad campaigns (3 spots per prime time period) In-store promotions to generate trial Couponing Sustaining – 2nd quarter & beyond Maintain target market share through continued TV and magazine advertising Regular in-store promotions (e.g. 2-for-1 specials and coupons) Promotions in partnership with store loyalty programs Increase trials through FSI’s

Marketing Plan– Revenue Projections Revenue/Growth Projections:We decided to use the BASES model to calculate revenue for our two new concepts. The next two slides show our assumptions for each of these variables and our volume, revenue and share calculations. Target Customers Trial Units Purchased Concept Purchase Intent Adjusted Trial Assumed no seasonality Advertising Adjustment Projected Volume Trial Units Purchased Repeat Rate # Repeat Occasions Avg. Repeat Transaction Amount

Marketing Plan– Revenue Projections Revenue projection for Flav-O-Meter: Using the assumptions explained below, we forecasted sales in the first year at $63MM, with a 20% dollar share in the shelf stable, shelf stable category.

Marketing Plan– Revenue Projections Yearly Revenue Projections for Flav-O-Meter. The graph below represents the revenues forecasted if the product has a mediocre performance (lows), average performance (middle) or excellent performance (highs). Excellent Product Mediocre Product

Marketing Plan– Revenue Projections Revenue projection for Lunch-Snak-Daily-Pak: Using the assumptions explained below, we forecasted sales in the first year at $63MM, with a 20% dollar share in the shelf stable, shelf stable category.

Marketing Plan– Revenue Projections Yearly Revenue Projections for Lunch-Snak-Daily-Pak. The graph below represents the revenues forecasted if the product has a mediocre performance (lows), average performance (middle) or excellent performance (highs). Excellent Product Mediocre Product

Cannibalization considerations. Marketing Plan– Revenue Projections Cannibalization considerations.

Cannibalization considerations. Marketing Plan– Revenue Projections Cannibalization considerations.

j Future Goals Current Strategy Response Profile Assumptions Marketing Plan– Competitor Strategy Our competitors make both dry shelf-stable products (Campbell and Kraft) and frozen food products (ConAgra, Unilever, & Uncle Ben’s) as lunch selections. Dry food competitors will react to our new products by introducing similar products, while Frozen food competitors will continue to focus on enhancing taste and adding more variety to frozen products. All competitors are focused on increased promotion and advertising in addition to continued product development. j Future Goals Increased advertising & promotion New packaging & product innovation New tastes & varieties Current Strategy Growth by acquisition and alliance Extension of newly acquired lines into related areas Product development Response Profile Competitors react with “me too” products in this market Increased promotion, new innovation, and increased variety are likely moves High debt and lack of international sales will hurt some competitors A new product introduction will elicit a response from dry food competition Frozen competitors will continue focus on new varieties and tastes Assumptions High brand equity leverage Frozen addresses unmet consumer needs Capabilities Superior packaging technology Current market leader Significant financial resources Too many brands Too many varieties Dry Food: Kraft & Campbell Frozen Food: Unilever, ConAgra & Uncle Ben’s

Competitive Response Offensive Strategies Marketing Plan– Competitive Response Competitive Response Offensive Strategies Trademark “Flav-O-Meter” and “Daily Pak” Copyright Daily Pak packaging Placement near frozen food aisle Placement in shelf stable aisle at “eye level” End cap displays In-store coupons In-store taste tests Continue product development to ensure new products and line extensions are in the pipeline

Competitive Response Defensive Strategies Marketing Plan– Competitive Response Competitive Response Defensive Strategies Engage in competitive advertising positioning Bowl Appetit! as the premier shelf stable meal. Establish long-term contracts with mass merchandisers and warehouses. Based on competitor moves and resources, focus on gaining market share from weaker competitors’ most profitable segments (don’t provoke stronger competitors) as a tactic to discourage entrance into our target market. Respond to competitor move with in-store promotion blitz to gain and reinforce product awareness and incent on-the-spot product purchase.

Appendices Focus Group Results (Video Clip & Hard Copy) Surveys (Hard Copy) Works cited (Attached)

Appendices-Focus Group Video clip (separate)

Works Cited “Campbell Soup Announces Initiatives” FOOD INGREDIENT NEWS, August 2001, Vol. 9, No. 8 . Rayport, Jeffrey F. and Bernard J. Jaworski (2001), e-Commerce, New York: McGraw Hill Higher Education, pp 25-30. Jain, Subhash C. (2000). Marketing: Planning & Strategy (6th ed.), Cincinnati: South-Western College Publishing, pp 23-27. Treacy, Michael and Fred Wiersma (1993), “Customer Intimacy and Other Value Disciplines,” Harvard Business Review, 71 (Jan/Feb), 84-94. Schnaars, Steven P. (1998), Marketing Strategy: Customers & Competition, 2nd ed., New York: Free Press, pp 65-67. McDonald, Malcolm and Adrian Payne (1996), Marketing Planning for Services, Oxford: Butterworth-Heinemann, pp 77-117. Kerin, Roger A and Robert A. Peterson (1998), Strategic Marketing Problems: Case and Comments, Upper Saddle River, NJ: Prentice Hall, pp 59-61. “Airtight Pouches Separate Classico Pasta, Sauce” BRAND PACKAGING, May 2000, Vol. 4, No. 3, p 43. Brubaker, Harold “Campbell Tries to Get in Touch with its Culinary Roots”, The Philadelphia Inquirer , September 5, 2001. Vierhile, Tom “SOUP: A NEW CONVENIENCE” Health Products Business, March 2001 pp 54. “Spice” Refrigerated & Frozen Foods, September 2001, Vol. 12, No. 9, p 44. Ghemawat, Pankaj. (2001), Strategy and the Business Landscape, Upper Saddle River, NJ: Prentice Hall, pp 67, 106. “Ready Meals in the United States”, June 2000, Euromonitor - Global Market Information Database

Works Cited, cont. “Foods and Nonalcoholic Beverages” Industry Survey, June 7, 2001, Standard & Poor Equity Research Department “Retail Food Digest” 2001, Technomic Information Services General Mills’ 10K report ???? M. Fischer “Ramen Noodle Company Plans $31 Million Expansion in Chesterfield County, VA”, April 20, 2001, Tribune Business News T. Poter “Something About Betty”, February 7, 2000, HFN, Vol.74, No. 6, Pg. 39 S. Thompson “Steady Spending, New Products Keep General Mills Cooking” June 12, 2000, Advertising Age, Pg. 4 Wright Investors’ Service-“General Mills Inc” Company research report, November 2001 Multnex Professional Investment Review on General Mills, Inc., November 10, 2001, www.multnex.com Morningstar Stock Research Review on General Mills Inc, November 9, 2001 Fitch press release “ Fitch Initiates Coverage of General Mills”, www.fitchratings.com JM Lafferty Associates Inc. Capital Market Intelligence “General Mills Inc” Analytical Digest, November 10, 2001 Fortune rankings on “Most Admired Consumer Food Products Companies 2001” (Fortune, February 19, 2001), “Top Consumer Food Products Companies in the Fortune 1000, 2000” (April 16, 2001, p.52)

Works Cited, cont. “Companies with the Greatest Return on Advertising in the Food Industry” Advertising Age, September 2, 2000. Kotler (1994), Chapter 15: “Designing Marketing Strategies for Market Leaders, Challengers, Followers, and Nichers,” Marketing Management, 8th edition, Prentice Hall, 381-407. Schnaars, Steven P. (1998), Marketing Strategy: Customers & Competition, 2nd ed., New York: Free Press, pp 129-143. Uncle Ben’s, Inc. One Stop Report. “State of the Industry 2001: Frozen Dinners, entrees: Adding value, dollars”, Refrigerated & Frozen Foods. June 2001, p 42. “Frozen Assets”, Refrigerated & Frozen Foods. March 2001, p 16. “Uncle Ben’s Frozen Super Bowls”, Lookout- Foods. April 24, 2001, p 080F-2001. http://investor.generalmills.com/ireye/ir_site.zhtml?ticker=gis&script=700 2001 Annual Report 2001 Investor Conference Presentation General Mills 2001 Annual 10-K SEC Filing ConAgra 2001 Annual 10-K SEC Filing Kraft 2001 Annual 10-K SEC Filing Unilever 2001 Annual 10-K Filing Campbell 2001 Annual 10-K Filing