ACNielsen Data Basics Beacon United

Agenda Retail Sales Basics Fact Review Data Collection Understanding the Data Dimension Review Fact Review Volume Sales ACV Velocity Merchandising Pricing

Retail Sales Basics

ACNielsen Data Sources Bob’s Grocery Retail Sales Information: Retail sales environment What’s selling, how is it selling, etc Consumer Information: Consumer behavior Who’s buying, how are they buying, etc

ACNielsen Data Collection & Processing Scanner Data Items scanned at Checkout via UPC code Price, Quantity, UPC and Item Description Recorded Scanner Tape and Price Tape Sent to ACNielsen or Data Sent via Modem Causal Data Displays - Collected by Store Auditors once a week Features - Centrally Collected and Coded Daily ACNielsen Data Processing Census and Sample based data are integrated for respective markets DATA DATA DATA DATA DATA

ACNielsen Data Collection & Processing Census Sample Integration (CSI) means enhanced consistency and accuracy

ACNielsen Service Offerings ACNielsen collects data from the following channels: Grocery – Food $2MM+ Drug Mass Merchandisers Walmart Warehouse Clubs including Sam’s Club Dollar stores Military outlets Other Retail Measurement Services: Convenience Stores Liquor Stores Ethnic Markets .

Data Collection

Data Collection: Volume & Price Data is collected by UPC Units Price Characteristics allow UPC’s to be aggregated Categories Segments SKU’s

Understanding the Data Markets Products Facts Periods

Four Data Dimensions Market Product Period Fact Where did the Purchases Occur? Product What Level are You Interested In? (Category, Segment, Manufacturer, Brand, UPC) Period When did the Sales Take Place? Fact How will You Measure Performance? 2004

Beacon United Databases PLN_Full_L2 47 Retailer Trading Areas with Remaining Markets Meijers_Cat0009 Walgreen_Cat0006 Target_Cat7

Retailer Markets

Market Dimension Retailer Offerings: Trading Area Retailer defined geography Census Based For example, Total Stop & Shop If Trading Area’s are available it is the preferred view Remaining Markets are all of an accounts competitors in a specified geography 24

What’s the difference between a Market and a TA? Market Dimension What’s the difference between a Market and a TA? Stop & Shop Trading Area ACNielsen Boston 2MM+ Food Market

Product Dimension

Product Dimension Products are built from the lowest level possible - the individual UPC - which serves as the primary building block for all other product levels

Period Dimension

Data Delivery: Periods PLN_Full_L2, Meijers_Cat0009, Walgreen_Cat0006, Target_Cat7 Weekly Data Updated Monthly 2 Years Weekly/Monthly History Approximately 2 Weeks Delivery from Close of Period

Fact Review Actual Volume Percent Change Share ACV Velocity Merchandising Pricing

ACNielsen Collects Two Scanned Facts... Units SMITH’s $.74 $1.99 $2.86 Price

Fact Dimension Units Equivalent Units Dollars Number of packages scanned for a product class or item during a specific time period projected to the respective universe Equivalent Units Same as above with the exception that each scanned package is exploded by a conversion rate i.e. Pound Basis, Ounce Basis Dollars The measurement of the dollars spent by the customer on items during a specific time period Calculated not collected Computation: Projected item sales X Item selling price in each store

Volume Share Share is a Calculation Based on Unit volume, Eq. Volume or Dollar Volume. Think of Share as a “Subset” of Volume. Share Enables You to Answer the Question: HOW IMPORTANT IS MY PRODUCT TO THE CATEGORY?

Percent Change vs. Point Change Fact Dimension Percent Change vs. Point Change Product A Product B Product C Product B’s Dollar Volume increased 13.3% over YAG. Product B’s Dollar Share increased 1.4 points over YAG. Percent change is used when comparing VOLUME growth across periods/products/markets. Point change is used when comparing SHARE growth across periods/products/markets.

ACV How Is Measured? 39

Fact Dimension All Commodity Volume A measure of the total DOLLAR volume of retail sales for a particular outlet or channel type. It includes all items that are sold in that store type %ACV serves as a good weighting factor when measuring distribution. It indicates how many consumers have the opportunity to purchase the product. Higher ACV stores serve more consumers All stores are NOT created equal. 43

All Commodity Volume $ (ACV) Example Fact Dimension All Commodity Volume $ (ACV) Example The 7 Food Stores In This Market Sell $300,000 Per Week SMITH’s Grocery Chain * Has 3 stores in the market doing $132,000 per week for a total of 44% of the ACV JONES’s Grocery Chain * Has 4 stores in the market doing $168,000 per week for a total of 56% of the ACV JONES’s JONES’s SMITH’s SMITH’s A) $60,000 (20%) B) $36,000 (12%) A) $36,000 (12%) JONES’s JONES’s SMITH’s B) $48,000 (16%) C) $36,000 (12%) D) $36,000 (12%) C) $48,000 (16%) 40

All Commodity Volume $ (ACV) Example Fact Dimension All Commodity Volume $ (ACV) Example If these 3 stores sold your product during the week, what percent of the total ACV sold your product? JONES’s JONES’s SMITH’s A) $60,000 (20%) B) $36,000 (12%) B) $48,000 (16%) 40

All Commodity Volume $ (ACV) Example Fact Dimension All Commodity Volume $ (ACV) Example If these 3 stores sold your product during the week, what percent of the total ACV sold your product? And the answer is… SMITH’s $48,000 (16%) ACV + B) $48,000 (16%) JONES’s $60,000 (20%) ACV + A) $60,000 (20%) JONES’s $36,000 (12%) ACV = B) $36,000 (12%) $144,000 or 48% ACV 40

Example Of % ACV (3 Stores) Fact Dimension Example Of % ACV (3 Stores) Item A Sales Week 1 X 40% Week 2 X 60% Week 3 X 60% Week 4 X 35% 4 Weeks X 100% Store A (40% ACV) Store B (35% ACV) Store C (25% ACV) % ACV Selling ACV is non-additive (unless averaging) - 40% + 60% + 60% + 35% = 195% Average ACV = 195/4 = 48.8% ACV cannot be greater than 100% 45

A Review Of “% Of ACV Selling” The Percent of the ACV That Sold at Least One Unit of an Item During a Weekly or Monthly Time Period as Predefined on Your Database. It Does Not Account for Items That Are Stocked in the Store During the Period, But Did Not Scan (Sell) During The Period.

How Do I Know Which %ACV Measure To Use? When Concerned With . . . Use . . . Out of Stocks Average Weekly %ACV Short-Term Events What is Highest Distribution Achieved in a Mkt or Acct? Max %ACV During a Given Period (New Items) Here are some examples of the appropriate use of % ACV. Tracking Long-Term Distribution Trends Monthly %ACV

Velocity Facts

Another Way To Look At A Sales Rate Is With Sales Per Million Dollars Of ACV Definition: The Sales Of A Product For Every $1,000,000 Of All Commodity Volume To Which That Product Is Exposed At Retail. Since “Sales Per Million” Is A Sales Rate Based On Activity Only In Stores Handling, There Are Several Useful Applications Of This ACNielsen Measure.

Sales Per Million Dollars Of ACV Brand Y Annual Sales: $ 5,834,936 Annual Market ACV : $3,240,000,000 To Compute Sales Per Million Dollars Of ACV... $5,834,936 _________ = $1,801 $ 3,240 This Means That For Every $1,000,000 In Food Store Sales, A Typical Store Sells $1,801 Of Brand Y.

Fact Dimension Sales per MM $ ACV/SS Example Volume 2000 3000 4000 5 10 20 Sales / $MM 400 300 200 My Brand Competitor A Competitor B ACV (MM$) A competitive item may have more sales overall, but this may be a function of its ACV Exposure...Your item may actually sell faster than the competition in a head-to-head comparison of the size of stores selling the products. 49

Sales Per Point of Distribution Allow for a fair comparison of the sales performance of products with different levels of distribution. Eliminates distribution as a factor to equalize sales levels Can not use to compare across markets Sales per Point of Distribution $ Sales per Point Unit Sales per Point Eq Sales per Point Sales %ACV Selling

Merchandising Facts

Feature & Display Volume Temporary Price Reduction Breaking Down Promoted Volume By Merchandising Condition Allows You To Explain Sales Peaks Feature Volume 70% Display Volume 30% No Promo Volume Promo Volume Feature & Display Volume Temporary Price Reduction

Feature Collection Features are defined as retailer printed advertisements or other special printed promotions. Sources Include: Newspapers Flyers In-store circulars Mailers Supplements Because FSIs are manufacturer features, they are not included in feature measures Central Processing done in Omaha, Nebraska Features collected through subscriptions, field auditors, and special arrangements with retailers Coders receive, review and code 3,000 separate pieces of advertising each week (one newspaper supplement = 1 piece) Features coded on an ongoing basis, 7 days per week

Where does Display Information Come From? Each week the Field Auditors gather display information on: Location Selling Price Merchandising Information ACNielsen Display Conditions: Retailer must participate It must be temporary It must be situated in a secondary selling location It must contain actual product available to consumers for self-service

Pricing

Some Facts on Pricing Retail price facts are gathered from: Retailer’s Price Files Retail Displays Feature Ads Price data is NOT collected on the same tape as store volumetric data.

Price Facts Average Price Weighted average price for all scanned sales of product Non-Promoted Price Estimated Product Price in the Absence of Promotion Promoted Prices Prices recorded by stores with: Feature Display Feature & Display Temporary Price Reduction.

NOW... Let’s Discuss Some Other Important Promotional Facts, Events & Evaluations

Different Ways To Look At Volume Promoted vs. Non-Promoted Baseline vs. Incremental 52

Retail Sales Are Also Divided Into: TOTAL VOLUME = Baseline Volume Incremental Volume +

Baseline Volume The Baseline Volume Is The Normal Expected Everyday Sales In A Specific Store In The Absence Of Any Promotion. It Is Used As An Indicator Of The Fundamental Vitality Of A Brand/Item. The Difference Between Actual Volume Versus Baseline Volume Can Be Attributed To Promotional Activity.

We First Measure The Actual Volume For A UPC In A Store Over Time Week: Feature Display TPR X X X X X X X

The Creation Of A Baseline Allows Us To Measure Incremental Volume Week: Feature Display TPR X X X X X X X

The Creation Of A Baseline Allows Us To Measure Incremental Volume Week: Feature Display TPR X X X X X X X

Baseline Volume Includes Marketplace Conditions That Affect Sales of a Product Category Brand Long Term Market Level Trends Trends Seasonality Effects

Incremental Volume “Incremental” Means Volume Sold Above And Beyond What Normally Would Have Been Expected (Above Baseline). Generally, Incremental Volume Is Generated By Trade Support.

Retail Sales Are Divided Into Two Basic Components: TOTAL VOLUME = Promoted Volume Non Promoted Volume +

Promoted vs. Non Promoted Volume Volume in those stores/weeks where NO promotion (feature, display, TPR) is present Promoted Volume in those stores/weeks where a promotion (feature, display, TPR) is present These measures are projected from actual store data, unlike baseline volume, promoted/non promoted volume are not calculations

Keep in Mind... BUT Non-Promoted + Promoted = Total Volume Baseline + Incremental = Total Volume BUT Promoted  Incremental Non-Promoted  Baseline Promoted and Non-Promoted Volume are actual, measured results Baseline and Incremental Volume are expected, modeled results

Total Brand A San Francisco - 52 Week Period Subsidized Volume Total Brand A San Francisco - 52 Week Period 95.8% 4.2% 88.3% 11.7% 7.4% Base vs Inc Promo vs Non Subsidy Incremental Promoted Non-Promoted Baseline 7.4% of the pound volume sold on promotion, but would have sold even without the promotion...

Promotional Evaluation Measures

Promotion Effectiveness Index (PEI) PEI measures total volume relative to what would have normally been sold in the absence of any store level promotional activity (Baseline) (Total Volume / Baseline Volume) x 100 = PEI Examples: A PEI of 100 means that Total Volume was equal to Baseline Volume A PEI of 350 means that Total Volume was 3.5 times greater than Baseline Volume 71

Definition of Lift Percent Lift = X 100 Lift is the interaction between Baseline and Incremental volume expressed as a percent. Calculation: Incremental Volume Baseline Volume Provides a relative gauge of promotion effectiveness when comparing events. Lift is a relative measure. You should always look at your actual volume and compare it against other Lifts for your brand or competitors brands where conditions are comparable. Percent Lift = X 100