PROPANE EDUCATION & RESEARCH COUNCILDALLAS, TEXAS

February 9, 2017

CHAIRMAN’S REPORT

Tom Van Buren

STRATEGY TASK FORCE

Drew Combs

STRATEGIC TASK FORCE UPDATE

Agenda

• Follow-up from “Next Steps”• Staff Activities

• Task Force

• Tool

• Future Activities

STAFF ACTIVITIES

• Initiatives

• Consumer Awareness• Product Development• Safety & Technical Training• Industry Engagement

• Re-calibration of the Strategies

• Alignment of the B2B and B2C Strategies and Tactics• Improved focus on activities: Marketing, Training, etc.

• Staff Organization

TASK FORCE ACTIVITIES

• Strategies

• Several Strategies removed• Need to re-assess ranking• Forced Strategies into

3 segments

• Focus towards Marketing and Outreach

• Short-term focus• Long-term would move to a more balanced approach

• Tool development

TOOL

• Tactic filter to measure Priority

• Strategies and Emphasis given weighting

• Strategy: 1, 5 & 10

• Emphasis: 0 or 10

• Provides 6 distinct segmentations

• Allows more focus towards Emphasis

• Autogas example

• Rifle approach vs Shotgun

• Allows PERC staff & AC to drive and stay focused

Score: 0-10

Lowest scoring Tactics

14 Tactics

$1.86M

Score: 11-14

17 Tactics

$4.3M

FUTURE ACTIVITIES

• Provide Tool to Project Portfolio Committee

• Becomes tool in budgeting process

• Updated Annually as “living-breathing” tool

• Update database with previously funded projects

• Potential July activity

• Task Force officially complete and dissolved

PERC ORG CHART

EXECUTIVE MANAGEMENT TEAM

CEO

Safety & Training, Information

Technology, Industry Programs

Operations, Research & Development,

Business Development

Tucker Perkins Kay Howell

Chief Operating Officer

Chief Information Officer

Roy Willis

Marketing & Corporate

Communications

Chief Marketing Officer

Dennis Vegas

OPERATIONS, RESEARCH & DEVELOPMENT, BUSINESS DEVELOPMENT

Chief Operating Officer

Tucker Perkins

Deputy Director of Business

Development

Director of Agriculture Business

Development

Director of Autogas Business

Development

)Michael Taylor Cinch Munson

Jeremy Wishart

Business Development

Director of Operations

Grace Willis

Senior Market Research Analyst

Rachel Greenberg

R&D

Director of Research and Development

Greg Kerr

Director of Budget and Finance

Michael Eason

Meetings Manager

Anna Lombardo

Senior Contracts Manager and Counsel

John Kerekes

Operations

MARKETING AND CORPORATE COMMUNICATIONS

Chief Marketing Officer

Dennis Vegas

Communications Manager

Deputy Director of Communications

Director of Communications

Gregg Walker

Ingrid Bechard

Emily McComas

Senior Programs Manager

Jesse Marcus

Director of Residential &

Commercial Business Development

)Bridget Kidd

Senior Manager, Social and Digital Media

Ryan Dutcher

Projects Coordinator, Demonstrations &

Tradeshows

Ginna Moseley

Managers

Projects Coordinators

Projects Coordinator, Communications

Marissa Gribb

Safety & Training

SAFETY & TRAINING, INFORMATION TECHNOLOGY, INDUSTRY PROGRAMS

Vice President Safety & Training

Stuart Flatow

Director ofIndustry Programs

Patrick Hyland

Chief Information Officer

Kay Howell

Database Manager

Ambrose Walker

Web Architect

David Harris

IT Analyst

Tameka Bias

Director ofIndustry Engagement

Managers

Senior Programs Manager, CETP

Projects Manager,Industry Programs

Projects Manager, Catalog Fulfillment

Operations

Courtney Gendron Kristen Rice

Programs Manager, MTST

Ashley Bentz Jahnissi Tirado

Paula Wilson

Industry ProgramsInformation Technology

Chief Executive

Officer

ADMINISTRATIVE SUPPORT

Administrative

Support Staff

Vacant Admin

Elena Scott, OA

Sarah Ewing, EA

Roy Willis

Director of Administration and Human Resources

Theresa Ryan

Vacant Admin

CHAIRMAN’S COMMENTS

TREASURER’S REPORT

Rob Chalmers

CHIEF EXECUTIVE OFFICER’S REPORT

Roy Willis

CHIEF MARKETING OFFICER’S REPORT

Dennis Vegas

BUILDING THE PROPANE BRAND 2017

Dennis Vegas, Gregg Walker

BUILDING THE PROPANE BRAND 2017

Dennis D. Vegas, Gregg Walker

WHY BUILD A STRONGER BRAND

• Improve consumer perceptions and make them receptive to marketer sales messages.

• Build trust and increase trial through familiarity.

• Increase loyalty and retention.

• Create easier market penetration and differentiation.

PERC and the states promote the fuel. Marketers promote their companies.

2016 CONSUMER CAMPAIGN DATA

Familiarity Favorability

Feb Nov Feb Nov

All All Saw

Ads

All All Saw

Ads

All

Respondents

75% 75% 81% 48% 53% 61%

Users 93% 91% 93% 64% 69% 81%

Nonusers 48% 52% 64% 26% 30% 35%

2016 KEY LEARNINGS

• For maximum impact use multiple channels simultaneously.

• Create more tools for Marketers to use to drive their business.

• TV has the best recall.

• Print and radio are influential channels for favorability.

• Digital ads significantly increase willingness to consider propane.

• Promotions drive strong engagement.

• Improvements in Find a Propane Retailer will build trust, confidence, and efficiency.

• Enable and convince states to invest.

• Encourage marketers to increase marketing activity.

• Leverage MOT members in development of programs and strategies.

• Look for synergies across product lines to optimize channels and financial

resources.

MARKETER CAMPAIGN PERCEPTIONS

• 95% of marketers indicated being familiar with the campaign.

• 55% of all respondents indicated being highly familiar.

• Marketers rated familiarity on average 5 out of 7.

• 83% found PERC campaign communications to be “just right.”

How familiar are you with the industry’s new national consumer campaign PROUDLY PROPANE Clean American Energy™ with Blue the dog? (Use the scale from 1 to 7 where 1 is “Not at all familiar” and 7 is “Very Familiar”) N=357 High Familiarity defined as top 2 scores.

Did you find PERC's amount of communication about the PROUDLY PROPANE Clean American Energy™ consumer campaign to be… N=340

MARKETERS: CAMPAIGN IMPROVES FAVORABILITY

How much of an impact do you feel the new consumer campaign PROUDLY PROPANE Clean American Energy™ featuring Blue the dog will

have on consumers' perceptions of propane and propane appliances? Impact includes “A lot” or “A little”. N=340

On a scale of 1 to 7, how satisfied are you with the new national campaign PROUDLY PROPANE Clean American Energy™ featuring Blue the

dog? (Use the scale from 1 to 7 where 1 is “Not at all Satisfied” and 7 is “Very Satisfied”.) N=340

Potential Impact on Consumers’ Perceptions of

Propane

74%

12% 14%

Impact No Impact Don't know

On a scale of 1-7 (7=highest rating), marketers rated the campaign a

5

2017 CONSUMEREDUCATION CAMPAIGN

MARKETING MISSION

Create tools that states and marketers can use to grow the safe, efficient use of propane.

OBJECTIVES

• Increase familiarity and favorability.*

• Deepen and strengthen MOT involvement.

• Diversify messaging to promote additional applications.

• Get more marketers to promote their companies as favorability rises.

• Drive greater investment by states and marketers in this campaign.

*Please note: We are not sure how much momentum we may have lost in 5 months which could be a factor as we look to 2017 results.

STRATEGIES

• Data = Power. Deepen collection and utilization for more precise targeting.

• Deploy a marketing automation platform.

• Use an all-channel approach to reach consumers where they are.

• Expand the use of digital.

• Promote appliances.

• Track and measure results.

TAGABLE TV COMMERCIALS

Window :30 Livin’ Free :30

DIGITAL VIDEOS

Dog House :20 Good Boy :30

Pool :16

Running :23

PROUDLYPROPANE.COM

FACEBOOK

CONSUMER SWEEPSTAKES

• 71,000 entries received.

• Partners: Generac and The Home Depot

• Boosted awareness, education, differentiation.

• Marketed through Facebook.

2017 INDUSTRY OUTREACH

MARKETERS

SOCIAL AND

DIGITAL

EMAIL

ONE-ON-ONE

OUTREACH

PRINT

PUBLICATIONS

VIDEO

ONLINE CATALOG

ONLINE CATALOG

FIND A PROPANE RETAILER

• Working with states and marketers to update records.

• Rolling out outbound calling campaign.

• Capturing company contacts for product sectors, e.g., autogas, outdoor power equipment.

Benefits:

• Improve segmentation.

• Build trust.

• Enhance search results.

• Support marketer acquisition.

SHARE WITH INDUSTRY COLLEAGUES

SHARE WITH EMPLOYEES

CAMPAIGN HELP DESK

bluethedog@propane.com

724-I-AM-BLUE

PREPARING FOR SUCCESS

• Creating new marketer materials.

• Producing and disseminating new product images and videos.

• Coordinating a consumer promotion.

• Launching a market survey.

• Preparing for NPGA Southeastern Convention.

• Consumer safety videos.

• Expanding Industry outreach.

BILLBOARDS

2017 FACEBOOK PROMOTION

FACEBOOK POSTS

NEW PHOTOGRAPHY

INDUSTRY COMMITMENT

2017 CAMPAIGN INVESTMENT

• Spring investment $5 million

• Fall investment $1.5 million • To avoid going totally dark for

nearly a year, and test a digital-dominant flight.

THE 2017 MEDIA PLAN

MEDIA PLAN

Please note: Fall media channel selection, timing, and details are TBD pending Spring results.

Chart reflects paid media only. Website and Facebook operate throughout the year.

MEDIA MIX COMPARISON

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

2016 Fall 2017 Spring

TV Print Radio Digital

CHANNEL STRATEGY

TV

Strongest driver of ad recall in

2016. Exposure to ads increased favorability and

familiarity

Continue to use national TV and local news to drive reach,

including home renovation

content and consumer

passion points where possible

Print

Second highest ad recall in 2016 with significant

impact on familiarity, loyalty,

and intent

Increase presence in print,

emphasizing shelter and DIY

titles to align with spring home remodeling

season. Maintain stronghold in C&D counties

Radio

Significant impact on familiarity,

loyalty and intent in 2016

Increase exposure to national and

Propane Country radio audiences

to continue driving

awareness and familiarity

Digital

2016 campaign drove

consideration of propane and overall brand

trust and familiarity

Continue with highest

performing 2016 tactics to

increase national reach and drive

engaged users to microsite

HOME

SPRING TV

·164 index

· 21% more likely to listen to faith-based music

R ET U R NIN G

N E T W O R K S

N E W IN

2 0 1 7· 113 index

· News program that reaches female

target

· 107 index

· Inspirational military content

Scripps programming will prioritize shows

with home renovation content where

possible

RETURNING

NETWORKS

LIFESTYLE

NEW IN 2017

Source:Nielsen2015DemographicSegmentation

REGIONAL

SPRING TV

R ET U R NIN G

N E T W O R K S

N E W IN

2 0 1 7

RETURNING

NETWORKS

NEWS & SPORTS

NEW IN 2017

Source:Nielsen2015DemographicSegmentation

• High-profile spot to kick-off

2017 plan

• High-profile event to maximize reach

among DISH subscribers leading up to

final four championship games• Mass coverage of NASCAR

on FOX

LIFESTYLEGENERAL INTEREST

SPRING PRINT

R ET U R NIN G

N E T W O R K S

N E W IN

2 0 1 7

RETURNING

MAGAZINES

SHELTER & DIY

NEW IN 2017·Focus on titles serving the mid-market

home enthusiast aligning with core target

and spring home renovation season. Titles

provide equitable coverage in the US.

·HGTV aligns with Scripps’ TV and digital

presence.

HOMEVARIETY

SPRING RADIO

R ET U R NIN G

N E T W O R K S

N E W IN

2 0 1 7

NATIONAL

COUNTRY

REGIONAL

Example radio stations shown; buy is across several syndicated networks

SPRING DIGITAL

Use online video to drive

awareness and

favorability of propane

Target based on

demographics and third-

party data to find users

with the ideal mindset

using pre-roll inventory

High-impact units stand out

and drive engagement

Larger, interactive units

draw attention to content

within the unit, increasing

engagement, and driving

traffic to site

Emphasis on propane

country geography to

increase impact

Strategy will follow 2016

approach of Awareness,

Optimization, Retargeting

Messaging will include

appliance giveaway and

campaign extension imagery

to increase engagement

Educate in-market

searchers about the

benefits of propane

Drive propane

purchasers to FPR tool

to increase activations

and submissions

New keywords targeting

home remodeling and

home renovation

SEARCHSOCIALHIGH-IMPACTVIDEO

Video completion rateVideo completion rate, time

spent, engagement rateView rate, engagement rate CTR, cost per click

SEARCHSOCIALHIGH-IMPACT*

SPRING DIGITAL – PARTNER SET

R ET U R NIN G

N E T W O R K S

N E W IN

2 0 1 7

VIDEO

Out of all 2016 digital partners,

averaged the longest session on

ProudlyPropane.com

Drove the most traffic to site in

the pre-roll category in 2016

Native experience leveraging

existing assets

Highest video completion rate of all

2016 videopartners (HGTV.com,

DIY.com, foodnetwork.com, etc.)

High impact unit had the highest

engagement rate in2016

Drove the most users to

ProudlyPropane.com

SPRING MEDIA PLAN1Q 2017 2Q 2016 3Q 2016

January February March April May June July

Broadcast Calendar 26 2 9 16 23 30 6 13 20 27 6 13 20 27 3 10 17 24 1 8 15 22 29 5 12 19 26 3 10 17 24

Key Dates

Holidays

V IDEO ( : 3 0 s)

Propane Country Focus

News Content 1 1 1 1 1 1 1 1 1 1 1 1 1

Local News (Top Propane DMAs) 1 1 1 1 1 1 1 1 1

RFD-TV 0 0 0 0 0 0 0 0 0 0 0 0 0

Lifestyle Content 1 1 1 1 1 1 1 1 1 1 1 1 1

National

News Content

Home Content 1 1 1 1 1 1 1 1 1 1 1 1 1

Lifestyle Content 1 1 1 1 1 1 1 1 1 1 1 1 1

DIGITAL

Propane Country Focus

Paid social Facebook

Paid search Google, Bing

National

Pre-Roll video Viant, Yume, YouTube

High-profile executions Scripps, Haven Home, Undertone

AUDIO ( : 3 0 s)

National

Country Music Shows

Music Variety Shows

Home Improvement Shows

PRIN T

Propane Country Focus

Midwest Living Full Pg 4C Full Pg 4C + Bonus 1/ 3

Real Simple Full Pg 4C Full Pg 4C

TIME (C+D counties only) 1 1 BONUS

National

Guideposts Full Pg 4C Spread 4C Full Pg 4C BONUS

HGTV Magazine Spread 4C Full Pg 4C

House Beautiful Full Pg 4C Full Pg 4C

This Old House Spread 4C Full Pg 4C

Traditional Home Full Pg 4C Full Pg 4C

NATIONWIDE RESEARCH

• Wave 1 baseline study

(February 2016)

• Wave 2 tracking study

(September 2016)

• Wave 3 tracking study

(February 2017)

• Wave 4 tracking study

(June 2017)

• Wave 5 tracking study

(November 2017)

CHIEF OPERATING OFFICER’S REPORT

Tucker Perkins

2017 INTERNATIONAL BUILDERS SHOW

• 80,000 + Show Attendees

• Over 10,000 leads

• Propane Energy Pod, Builder Incentive Program Modular Home Construction

• Show Partners:

OVERVIEW OF PROPANE DISTRIBUTION SYSTEMS FOR HVAC AND PLUMBING PROFESSIONALS

• Plumber/HVAC Training Course

• PERC & Rinnai Training

• February 20-22, 2017 in Peachtree City, GA

• 15 Attendees (VoTech Instructors, Propane Industry Employees, Inspector, and Installers)

• Testimonials and Training will be captured.

PROPANE AND ELECTRIC FORKLIFT FACTORY ORDERS 2013-2016

*Electric includes only forklifts where Propane competes

14,546 15,658 15,441 16,175

59,78967,033 67,586 64,653

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

2013 2014 2015 2016

Electric Propane

PROPANE AUTOGAS VEHICLE SALES

147,000

161,000173,100

185,600

199,800

223,300

+1

4,0

00

+1

2,1

00

+1

2,5

00

+1

4,2

00 +23

,50

0

2012 2013 2014 2015 2016 2020

2016 PROPANE SALES

33%

67%

OEM

Aftermarket

NEW PROPANE SALES 2016

62%

38%

Light Duty

Medium & Heavy Duty

VW ENVIRONMENTAL MITIGATION TRUST FUND

• $2.7B available.

• EMT Fund Goal: Achieve reductions of NOx emissions in the

United States.

• Beneficiaries: States, Indian Tribes, D.C., Puerto Rico.

• Opportunity for propane school buses.

• Class 4-7 trucks

• Airport Ground Support Equipment

• Forklifts

*infrastructure for alt fuels, not eligible.

2017 PROFESSIONAL AND SUPPORT SERVICES

Docket 21190

PROGRAM SUPPORT INITATIVES ($1,790,000)

DOCKET BUDGETED REQUESTED TOTAL REMAINING

2017 Professional and

Support Services$243,000 $243,000 $126,340

DOCKET 21190

• Docket 20360 – $416,000 (January 2015 – April 2016)

• Docket 20881 – $237,900 (May – December 2016)

• Docket 21190 – $243,000 (January – December 2016)

2017 PROFESSIONAL & SUPPORT SERVICES

Amount $243,000

DOCKET 21190

This request reflects PERC efforts to engage with DOE, use outsideconsultants to engage on project tasks, and staff travel for businessdevelopment.

• $28,000 – Technical Subject Matter Experts• $200,000 – Industry and Regulatory Expert• $15,000 – Staff Travel on Business Development

2017 PROFESSIONAL & SUPPORT SERVICES

Amount $243,000

PROGRAM SUPPORT INITATIVES ($1,790,000)

DOCKET BUDGETED REQUESTED TOTAL REMAINING

2017 Professional and

Support Services$243,000 $243,000 $126,340

CHIEF INFORMATION OFFICER’S REPORT

Kay Howell

PARTNERSHIP WITH STATES PROGRAM, $1.5M

• Approved at Council’s November 2016 meeting

• Council requested the Market Outreach & Training Working Group review the match requirement for the National Consumer Education Campaign and Safe Installation of Appliances Rebates activities

2017 PARTNERSHIP WITH STATES PROGRAM MOT RECOMMENDATION

Advisory Committee MOT Recommendation:

• Maintain a 1 to 1 match for National Consumer Education Campaign and

Safe Installation of Appliances Rebates activities.

PWS Project Team Members:

Mike Gioffre, Paraco Gas, Chairman

Aaron DeWeese, Illinois PGA

Deb Grooms, Iowa PGA

John Jessup, North Carolina PGA

Randy Warner, Ferrellgas

Jim Van Uden, RH Foster

Matt Kumm, CHS Inc.

Josh Simpson, Kamps Propane

REBATE REQUEST 21092

• Provide support for the Carbon Monoxide Alliance of NH & VT for development of PSA’s, educational videos and print materials, and a community event kit for distribution and use in the community.

• Fund the installation of CO alarms as the vehicle to support research on human behaviors around using and responding to CO alarms in the home, as well as a stakeholder summit for communication with other groups about how CO accidents and deaths can be prevented.

State Rebate Program New Concept:

Carbon Monoxide Education and Prevention

State New England Propane Foundation

Amount $25,000

INDUSTRY & PUBLIC COMMENTS

OLD BUSINESS

NEW BUSINESS