Selling Through Retail in the Age of the Digital Consumer

Selling Through Retail in the Age of the Digital Consumer Keith Henry VP, Global Industry for Manufacturing keith.henry@teradata.com

Discussion Topics for this Presentation The CPG World Today > Massive Investments > Growing channels of consumer engagement > Margin Pressure Rise of the Digital Consumer Understanding the Investment Our Hypothesis for Change How Can Teradata Help? How Can You Get Started? 2 3/12/2014 Teradata Confidential

Spending on and Consumer Insights CPG companies are among the largest mass-market advertisers (spending 15 to 20 percent of revenue on marketing and sales activities). McKinsey Nov. 2012 Coca-Cola plans to increase investments in marketing by $1 billion by 2016, drawing savings from system standardization, supplychain optimization, and industrious resource and cost allocation Recent Earnings Call 4 3/12/2014 Teradata Confidential

Spending on Media Speaking on an earnings call today (24 January), chief finance officer Jon Moeller said P&G is continuing to increase its presence in the digital, social and mobile spaces, with spend close to 30 percent globally. P&G has previously said that it spends around 35 percent of its US media budget on digital. 5 3/12/2014 Teradata Confidential

Trade Spend Dissatisfaction levels remain high across many areas of customer planning and trade spend management...85 percent of respondents felt that current spending is inappropriately high for the long-term health of their business. Overall trade spend levels are constant with 2010 but remain significantly higher than 2008. When it comes to funding allocation, structure design continues to be a key focus area. The customer planning and trade management ecosystem encompasses different systems and tools that require integration. 6 3/12/2014 Teradata Confidential

New Channels When word got out that Proctor and Gamble Co. had allowed Amazon.com to set up shop inside its warehouses, the consumer goods giant found itself in another retailer s crosshairs..target Corp. which retaliated against P&G, according to people familiar with the matter. The Wall Street Journal February 26, 2014 7 3/12/2014 Teradata Confidential

Consumer Package Margins at Risk These trends have left consumer product companies in a profit margin squeeze: much higher costs in terms of commodities crop, packaging, and energy and consumers with a recessionary mindset. The Profit Margin Squeeze Copyright 2011 Deloitte Development LLC. All rights reserved. 8 3/12/2014 Teradata Confidential

In 2014 Consumers expect Let me connect and interact across any channel at any time and get a seamless anywhere anytime experience What s in it for me? Listen to me, then send me relevant offers, when I need them, where I need them and when I want them Give me compelling content that finds me, captures my attention and makes me want to comment and share 10 3/12/2014 Teradata Confidential

Rise of the Digital Consumer 11 3/12/2014 Teradata Confidential

Shopper and the Path to Purchase 12 3/12/2014 Teradata Confidential

Digital Engagement Anytime, Anywhere 13 3/12/2014 Teradata Confidential

Offline and Online Television, Store Display, FSI Digital Channels 14 3/12/2014 Teradata Confidential

Mobility Defines the Modern Consumer 15 3/12/2014 Teradata Confidential

Evolving Model of Shopper Behavior From Data Transformation: Winning and Retaining the Digital Consumer by Accenture, January 2014 16 3/12/2014 Teradata Confidential

Direct Relationships Lead to New Sales Opportunities CPG companies that engage with consumers directly through digital channels and build out their direct-to-consumer processes will have the best advantage for creating new growth, said Steven Barr, PwC s US leader, retail and consumer industry. Fifty-two percent of U.S. consumers are already buying directly online from brands they trust, proving that CPG companies now have far greater opportunities to walk alongside their shoppers in real time while driving sales of existing and new products. 17 3/12/2014 Teradata Confidential

Impact of Digital Consumer As companies rush to engage digital consumers, the CFO wants to know if these investments are incremental to total marketing spend. Is the path to purchase changing and can we measure and track it? How can we link our growing consumer dialogue to our instore investments? Growing direct to consumer digital activities naturally leads to e-commerce selling opportunities > How prepared are you to begin looking at this as a growth opportunity as opposed to some anxiety about its impact on retail channel relationships? 18 3/12/2014 Teradata Confidential

Discussion Topics for this Presentation The CPG World Today > Massive Investments > Growing channels of consumer engagement > Margin Pressure Rise of the Digital Consumer Understanding the Market Investment Our Hypothesis for Change How Can Teradata Help? How Can You Get Started 19 3/12/2014 Teradata Confidential

Old World of Trade Execution.. Frequency Incidence Transaction Size The Supplier Share Cash Flow Frequency Basket Ring Basket Margin Category Growth The Retailer 20 3/12/2014 Teradata Confidential

.And the Necessary CPG Supporting Investments Shopper Brand Trade Consumer 21 3/12/2014 Teradata Confidential

Typical Example: Trade Levers E X E C U T E Advertising Shopper Trade Spend Creative On premise POP Availability National Buy Racks/Shelving Position Local Buy Digital Signage In-Store Impressions Merchandising Features DMA TRP s Packaging Costs Pricing Custom Research Coupons P L A N ERP System Ops Other Legacy Companies plan and execute without real visibility. A lack of information forces them to sub-optimize the overall brand investment Strategy. 22 3/12/2014 Teradata Confidential

Variety of Shopper Tactics 23 3/12/2014 Teradata Confidential

The New CPG Spend Ecosystem Shopper Digital and Social Brand Customer Trade 24 3/12/2014 Teradata Confidential

Example: The Marketer s World Today E X E C U T E Advertising Creative Shopper On premise POP Trade Spend Availability Digital Branded Websites National Buy Racks/Shelving Position Social Media Local Buy Digital Signage In-Store Mobile Impressions Merchandising Features Opted-in Consumer DMA TRP s Packaging Costs Custom Research Pricing Coupons Shopper Card Campaigns ERP System Ops Other Legacy P L A N CFO: Is this new area of digital investment just incremental? 25 3/12/2014 Teradata Confidential

Questions Marketers Still Need to Answer Is my brand relevance increasing in my key regions? I have incremental marketing investment next year targeted for growth. What are the most effective options? Is my Social Media investment defensive? Or does it really drive additional revenue? Can I move 10% of my Trade Spend to Digital? Will I harm my revenue? 26 3/12/2014 Teradata Confidential

But Complexity Makes it Difficult to Understand Performance Where is your marketing data? In silos? Are apples to apples metric comparisons possible for investments across brands? Is it possible to measure cause/effect across marketing investments? Does IT struggle to support marketing measurement and oversight? Does your enterprise marketing analysis live in spreadsheets? What would you say about the accuracy of that data? 27 3/12/2014 Teradata Confidential

Discussion Topics for this Presentation The CPG World Today > Massive Investments > Growing channels of consumer engagement > Margin Pressure Rise of the Digital Consumer Understanding the investment Our Hypothesis for Change How Can Teradata Help? How You Get Started 28 3/12/2014 Teradata Confidential

Our Hypothesis: A Data Driven Strategy Stabilize your Operations transactional data Bring together all the data at the heart of all your marketing spend Implement a consistent enterprise data governance process Apply advanced analytics to understand cause/effect of investments on sales results Develop a consumer and shopper communications strategy across marketing silos focused on dialogs not one-time campaigns or promotions Activate metrics across all your investments and hold the organization accountable Drive continuous improvement through data driven insight 29 3/12/2014 Teradata Confidential

Some costs and measures are within ERP Advertising Creative Shopper On premise POP Trade Spend Availability Digital Branded Websites National Buy Racks/Shelving Position Social Media Local Buy Digital Signage In-Store Mobile Impressions Merchandising Features Opted-in Consumer DMA TRP s Packaging Costs Custom Research Pricing Coupons Shopper Card Campaigns ERP System Ops Other Legacy No existing ERP s manage the marketing data 30 3/12/2014 Teradata Confidential

Some are spread across siloed Systems Advertising Creative Shopper On premise POP Trade Spend Availability Digital Branded Websites National Buy Racks/Shelving Position Social Media Local Buy Digital Signage In-Store Mobile Impressions Merchandising Features Opted-in Consumer DMA TRP s Packaging Costs Custom Research Pricing Coupons Shopper Card Campaigns ERP System Ops Other Legacy 31 3/12/2014 Teradata Confidential

And some are from Syndicated sources Advertising Creative Shopper On premise POP Trade Spend Availability Digital Branded Websites National Buy Racks/Shelving Position Social Media Local Buy Digital Signage In-Store Mobile Impressions Merchandising Features Opted-in Consumer DMA TRP s Packaging Costs Custom Research Pricing Coupons Shopper Card Campaigns ERP System Ops Other Legacy 32 3/12/2014 Teradata Confidential

You can solve this problem! Integrate the Data Advertising Shopper Trade Spend Digital Creative On premise POP Availability Branded Websites National Buy Racks/Shelving Position Social Media Local Buy Digital Signage In-Store Mobile Impressions Merchandising Features Opted-in Consumer DMA TRP s Packaging Costs Pricing Shopper Card Custom Research Coupons Campaigns Our Enterprise Platform Products Analytic Partnerships and Products Security Services Data Services 33 3/12/2014 Teradata Confidential

Integrate the Data! Advertising Shopper Trade Spend Digital Creative On premise POP Availability Branded Websites National Buy Racks/Shelving Position Social Media Local Buy Digital Signage In-Store Mobile Impressions Merchandising Features Opted-in See across all marketing investments for all brands and all regions. Consumer Understand the inter-relationships between all marketing activities. DMA TRP s Packaging Costs Pricing Shopper Card Custom Research Coupons Our Enterprise Platform Products Analytic Partnerships and Products Security Services Data Services Campaigns 34 3/12/2014 Teradata Confidential

Discussion Topics for this Presentation The CPG World Today > Massive Investments > Growing channels of consumer engagement > Margin Pressure Rise of the Digital Consumer Understanding the investment Our Hypothesis for Change How Can Teradata Help? How You Get Started 35 3/12/2014 Teradata Confidential

Integrated Solution Framework Strategic Insight and Processes Seamless Consumer Engagement Source Data Analytics Channels Customers Web Product/ SKU Sales/ POS/ Franchise Consumer Data Warehouse Mining Modeling Reporting Trending Profiling Segmenting Operations Call Center Events Consumer Nielsen IRI Profiles & Loyalty ERP Pre-engineered consumercentric data management assets Integration of relevant big data Workflow & Rules Digital Plan Spend Assets & Offers Multi-channel Campaign Management Campaign Automation Leads Email Social Media Mobile Retailer Partner Closed Loop Link interactions and Retail transactions at the speed of business 36 3/12/2014 Teradata Confidential

DATA-DRIVEN MARKETING PROCESS mobile social Integrate and Understand Develop a Full Perspective of the Business. Analyze and Discover Use analytics to detect consumer behavior and investment efficiency. Explore the business opportunities 37 3/12/2014 Teradata Confidential Act and Optimize Segment consumers; Understand your marketing levers; Adjust operational performance based upon consistent data. Execute and Deliver Personalized and communicate based on consumer insights and retail strategies.

STITCH CONSUMER EVENTS TO BUYING DECISION Purchase In Store or via Mobile or Via Web. Current Challenges Channel & Data Explosion Integration data types & formats View of consumers across formats Analytic Requirements Speed - Quickly use new data Easy testing- across multiple types Prebuilt, integrated big data analytics 38 3/12/2014 Teradata Confidential

DISCOVERY & ADVANCED ANALYTICS TO DRIVE RELEVANT AND TIMELY OFFERS Consumers expect you to be relevant by talking about products and services they are interested in right now Identify intention and desire and drive sales or brand affinity Segment consumers rapidly so you are always relevant to what they need now Determine the best tactics and channel strategies to improve ROI Model to identify channel preference Link digital to in-store investments Improve conversion Deliver dynamic personalised content Increase Consumer understanding Mine social data to inform consumer attitudes and sentiment, hot topics, influence & advocacy Link consumers and brands to retailers 39 3/12/2014 Teradata Confidential

USE ANALYTICS TO IMPROVE OPERATIONAL EFFICIENCY Positioning real-time actionable information for operational efficiency Store operational intelligence Real time information on product availability and current deal structures Store relevance Customised merchandise assortment at store level to reflect local demographics Price optimisation Analyse elasticity to determine optimum pricing Attribution Understand the unique effects of marketing investment levers 40 3/12/2014 Teradata Confidential

ACT ON INSIGHTS TO OPTIMIZE MARKETING SPEND FOR BEST PERFORMING INITIATIVES Marketers must determine what does and does not work and quickly adapt to market changes across a variety of channels Allocate and adjust spend across channels of engagement Understand the current status of spend and be able to nimbly adjust throughout the year Align messaging across all channels to ensure consistency Understand the marketing calendar across all channels and products to eliminate conflicting messages Be more agile in the development of marketing message Streamline work and review efforts to ensure the proper content is being reviewed and delivered in a timely fashion 41 3/12/2014 Teradata Confidential

ENGAGE THE CUSTOMER WITH RELEVANT MESSAGES ACROSS ALL CHANNELS Marketers must take the key insights to predict and deliver relevant message to the consumer based on their interests Determine the approach for engagement based on the consumer response Identify paths for communications as the customer engages with you Link offers to in-store investments and plans Predict the best contact channel and strategy to improve ROI Leverage models based on performance to predict the best strategy for engagement Engage with a relevant content Deliver dynamic personalized content 42 3/12/2014 Teradata Confidential

Discussion Topics for this Presentation The CPG World Today > Massive Investments > Growing channels of consumer engagement > Margin Pressure Rise of the Digital Consumer Understanding the investment Our Hypothesis for Change How Can Teradata Help? How You Get Started 43 3/12/2014 Teradata Confidential

Enhanced Data-Driven : Enabling Deeper Understanding of Customer Journeys Through Big Data-Analytics. Integrate & Discover Segmentation Insight Act & Optimize Personalize & Execute Data Infrastructure & Purchase Patterns Theme Phase 0 Discover Customer & Consumer Segmentation & Personas Dynamic Segments Channel Capabilities & Management Customer Touch points Interactive Messaging Personalizing Content Business Focus & Strategy Identify Data, data types, Consumers, Customers & Channels - Identify what data matters - Organize by various types of data - investment data - Basket Demographics - Behavioral Segmentation - Geo-location information (store clusters, personas) - Not average but by season - Store, Mobile and/or WIFI messaging - Resources linked to buying profiles - Deliver relevant offers - Personalized and tailored content to the individual - Based upon buying phase and desired engagement levels Deliverable Develop plan for analysis and implementation - Purchase Patterns - Customer Investments - Initial Behavioral Profiles - Integrated Profile of Customer - Dynamic Segmentation - BI Reporting Layer - Channel and location messaging - Social Dialogue - Geo-Location Activation - Inbound & Outbound messages - Interaction & Engagement - Customer loyalty Business Capabilities Link analytic insight to business objectives - Identify most valuable patterns, where they shop, and what drives them to buy - Activate insight into consumer behavior at retail - ID most important segments - Promotion management - Ability to contact customers with specific offers and through a variety of channels - Activate best marketing levers - Ability to engage the consumer for multi-purposes including driving convenience, entertainment & transaction Teradata Enabling Technology N/A - Teradata Aster - Advanced analytics w/ SAS, Fuzzy Logic, or R - BI visualization - Celebrus - Hadoop - Teradata Platform - Advanced Analytics w/ SAS, Fuzzy Logic, or R - In Database Modeling - Hadoop - Teradata Applications - Real Time Interaction Manager - Resource Management - Teradata Applications, - Celebrus - Real Time Interaction Manager 44 3/12/2014 Teradata Confidential

Spend Optimization Drive the Integrated Data Roadmap Mass Media Spend + Digital Spend + Shopper Spend + Trade Promotion Spend + Customer Spend Return Return Compounds Exponentially Trade Promotion Customer Trade Promotion Value Shopper Shopper Shopper Digital Digital Digital Digital Effort Mass Media Mass Media Mass Media Mass Media Mass Media The Value of Spend Optimization Greatly Outpaces the Effort to Integrate 45 3/12/2014 Teradata Confidential

Questions? 46 3/12/2014 Teradata Confidential