Copyright © IRI, Confidential and proprietary. “So you want to be a Rocket Scientist?” How to understand success in multinational launches Re-inventing CPG & Retail Summit 2005 Janey Pearson - VP J&J Consumer Services EAME Ltd. Tim Eales - Industry Insights, IRI International Services

Copyright © IRI, Confidential and proprietary. 2  Lack of category growth  Drive for greater volumes and higher profits  Greater competition:  Crowded shelves  Bigger ‘value-added’ claims  Higher costs of NPD Key Challenges facing J&J European business today Leading to…  Strategies for big multinational launches  How to make your big bangs bigger! How do we know when we have a Rocket?

Copyright © IRI, Confidential and proprietary. 3

4 Huge differences across different countries… Sales Seasonality Items per store Distribution

Copyright © IRI, Confidential and proprietary. 5 Sales Seasonality Items per store Distribution 39 weeks from launch, the German market is 2.5X bigger than Italy Body Cream Category Value Sales Huge differences across different countries…

Copyright © IRI, Confidential and proprietary. 6 Sales Seasonality Items per store Distribution Body Cream Seasonality Index Huge differences across different countries… xmas summer Based on average weekly value sales per month

Copyright © IRI, Confidential and proprietary. 7 Sales Seasonality Items per store Distribution Body Cream No of Items per Store Huge differences across different countries… Expected share given average sales & distribution 0.9% 0.8% 4.2% 1.3%

Copyright © IRI, Confidential and proprietary. 8 Sales Seasonality Items per store Distribution Body Cream Distribution Build Retailer concentration and practices largely govern the achievement of distribution in each country Huge differences across different countries… Product availability - By Country - Best

Copyright © IRI, Confidential and proprietary. 9 What is No Deal Sales Rate Index? Sales rate of new product vs. Sales rate of average item in category And therefore accounts for ‘noise’ from… Shows effect of… Item level analysis Adjusted for distribution Non-promoted volume only

Copyright © IRI, Confidential and proprietary. 10 A purely hypothetical example… Where is this brand going? Weeks from launch

Copyright © IRI, Confidential and proprietary. 11 A purely hypothetical example… Sales to date would suggest a continued rise Weeks from launch

Copyright © IRI, Confidential and proprietary. 12 A purely hypothetical example… But underlying the value trend, SRI is going down Weeks from launch

Copyright © IRI, Confidential and proprietary. 13 A purely hypothetical example… And would usually continue to fall Weeks from launch

Copyright © IRI, Confidential and proprietary. 14 A purely hypothetical example… In fact, sales will fall when distribution stabilises Weeks from launch

Copyright © IRI, Confidential and proprietary. 15 A purely hypothetical example… Sales will be 24% lower than projected Weeks from launch

Copyright © IRI, Confidential and proprietary. 16 Case Study

Copyright © IRI, Confidential and proprietary ml Body Lotion pricing & distribution Average price (€) per litre  39 weeks from launch  Prices varied by 20% Index Category weighted distribution  39 weeks from launch  Distribution achievement was much higher in GB and Germany

Copyright © IRI, Confidential and proprietary ml Body Lotion promotional activity % Volume sales with any trade promotion  39 weeks from launch  Nearly 6 times more promotional activity in Spain as in Germany Incremental share  Incremental share varied by 4 times Media  TV support varied significantly. by country

Copyright © IRI, Confidential and proprietary ml Body Lotion sales performance Value sales  39 weeks from launch  Value sales are highest in the largest country Value share of category  39 weeks from launch  Despite high sales in Germany, this equates to the lowest share

Copyright © IRI, Confidential and proprietary. 20

Copyright © IRI, Confidential and proprietary. 21 Brand A 250ml Body Lotion - GB Weeks from launch

Copyright © IRI, Confidential and proprietary. 22 Brand A 250ml Body Lotion - Spain Weeks from launch

Copyright © IRI, Confidential and proprietary. 23 Brand A 250ml Body Lotion - Germany Weeks from launch

Copyright © IRI, Confidential and proprietary. 24 Brand A 250ml Body Lotion - Italy Weeks from launch

Copyright © IRI, Confidential and proprietary. 25 Sales rate index by country – 250ml Body Lotion Weeks from launch

Copyright © IRI, Confidential and proprietary. 26 Brand A – pre/during/post advertising NDSRI Volume

Copyright © IRI, Confidential and proprietary. 27 Critical learnings & actions from our case study  Sales Rate Index is predictable  Critical variations in price sensitivity by market  Action: Pricing Strategy  Advertising driving peaks  Action: Advertising deployment  This launch has performed exactly the same in each of the four markets  Brand proposition not selling off the shelf  Action: Communicating the message at shelf

Copyright © IRI, Confidential and proprietary. 28 Summary  SRI is a way of normalising these differences to allow a direct comparison  SRI identifies total launch achievements and the underlying consumer trends  Using this knowledge from all major launches in the category, J&J can now interpret the early signs to spot their rockets  Traditional measures do not allow consistent comparison of launches between different categories, markets and seasons