DemandTec and IBM Enterprise Marketing Management Business...

© 2012 IBM Corporation

DemandTec and IBM Enterprise Marketing Management Business Partner Webcast

August 15, 2012


DemandTec is a leading provider of cloud-based price, promotion, assortment, and shopper insight solutions for retail and consumer packaged goods industries

DemandTec is now fully part of the IBM Enterprise Marketing Management (EMM) portfolio of Solutions

– DemandTec offerings are available thruIBM Passport Advantage customer agreements

DemandTec is one of the EMM offerings available for the Smarter Commerce SaaS Referral Incentive

– DemandTec is not available at this time for Software Value Incentive (SVI) or for resell thru Software Value Plus (SVP) programs

1

Price, promotion,

product


Agenda

DemandTec and IBM Enterprise Marketing Management

Partner Opportunities with DemandTec in Retail

Partner Opportunities with DemandTec in CPG

Where to go for more information


Today’s “empowered customer” puts businesses to the test

44% of companies

use crowd sourcing from

customers

4 in 10Smart phone

users search for an item in a store

86%use multiple

channels

4-5xmore than average is

spent by multi-channel buyers

61%trust friends’ reviews more than experts’

78%of consumers

trust peer recommendations

4

58%are more price-conscious today than they were a

year ago

75%do not believe

companies tell the truth

in ads

80%of CEOs think they deliver a

superior customer

experience

8%of their

customers agree

© 2012 IBM Corporation5

Meeting the needs of Empowered Customers means marketers must integrate all aspects of marketing

Earned media

PR

Owned media

Price, promotion,

product

Paid media

ad

ad


complete UNDERSTANDINGof each customer

1

6

What makes this hard?

Earned media

PR

Owned media

Price, promotion,

product

Paid media

ad

ad

Most marketers lack:



1

7

What makes this hard?

Earned media

PR

Owned media

Price, promotion,

product

Paid media

ad

ad

Most marketers lack:

platform to take

coordinatedACTION

2


Enterprise Marketing Management (EMM) is the platform

EMM: a comprehensive suite that improves and integrates five critical processes

Manageprocesses and

measure results

Decideon the best action or communication

Deliverengaging messages and capture reactions

Collectdata that augments

each customer profile

Analyzedata to find

actionable insights

8


EMM flexibly addresses the needs of specific user groups

USER GROUP NEED EMM SOLUTION

Digital Marketing

Optimization

Digital marketers and eCommerce execs

Turn online prospects into repeat customers and loyal advocates

Marketing Interaction

Optimization

Customer relationship marketers

Engage each customer and prospect in a one-to-one dialogue across communication channels

Marketing Performance Optimization

Marketing leaders & planners

Improve marketing operations and planning to maximize marketing ROI

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Merchandising & sales planners

Price, Promotion, and Product Mix

Optimization

Align prices, promotions and product offerings to increase customer loyalty and profit


Price, Promotion, and Product Mix Optimization

Align prices, promotions and product offerings to increase customer loyalty and profit

ManageBusiness rules and conflicts

Collaboration within and across business partners

DecideBest prices, promotions and product mix based on algorithms, goals, and constraints

CollectTransaction &

loyalty card data

Competitive data

Sales data

AnalyzePrice elasticity & promotion lifts

Cross plan interactionsShopper behavior

Forecasts & historical performance

Deliver Business plans, prices, promotions, and assortments to downstream systems


Today

DemandTec combined to drive efficiencies and improve profitability across the marketing mix

Brick-

And-

Mortar

Truly

Omni-

Channel

Product- &

Category-

centric

Truly

Customer-

centric

SILOED

RETAIL Merchandising Marketing

Trade Consumer

COLLABORATIVE

Merchandising and Marketing

Trade and Consumer



1

12

Earned media

PR

Owned media

Price, promotion,

product

Paid media

ad

ad

platform to take

coordinatedACTION

2

With EMM, marketers get:


Real results reported by EMM users

13

Better top and bottom-line results:

Revenue: up 1-3%Margin: up 2-5%

More efficient marketing:

Cycle times: down 40-80%Marketing costs: down 20-40%Campaign volume: up 2-5x

Better customer relationships:

Customer value: up 5-10%Loyalty and retention: up 10-15%Acquisition cost: down 25%-75%

More effective marketing:

Response rates: up 10-50%Campaign ROI: up 15-30%Online marketing ROI: up 15-25x

Improved transactional results:

Sales volume: up 0.5-1%Average order value: up 15-20%Trade ROI: up 15-20%


IBM leads the market for marketing technology solutions

IBM: LeaderThe Forrester Wave™: Web Analytics, Q4 ‘11

IBM: LeaderThe Forrester Wave™: Cross-Channel Campaign Management, Q1 ‘12

IBM: LeaderMagic Quadrant: Integrated Marketing Management, October 2011

IBM: LeaderMagic Quadrant: Multi-channel Campaign Management, May 2012

IBM: LeaderMagic Quadrant: Marketing Resource Management, February 2012

14


Agenda






Capabilities: Econometric demand modeling, shopper insights and analysis, and collaborative business process software applications

Business Model: Software-as-a-Service

Average Deal Size: Deals vary by product/market but average ~ $1M / year

Markets Served: Fast Moving Consumer Goods (FMCG) retail and manufacturers (grocery, mass, drug, convenience), specialty retail (e.g., electronics, apparel), department store. > $500M revenues.

Key Buyer: VP of Merchandising (Retail), VP of Sales or Trade (CP), CMO (CP & Retail)

Customers: Approximately 500 retail and consumer products customers worldwide.

DemandTec Overview

Leading provider of cloud-based price, promotion, and product mix solutions for retail and consumer products companies


Retailers are faced with more challenging pricing, promotion and product decisions than ever before

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Traditional Price

Competition Online/Mobile Price

Transparency

Increased Targeting and

PersonalizationEconomic Impact on

Price Sensitivity

New Price Models

Endless Aisles

Available Online


DemandTec’s solutions helps retailers improve performance across merchandising tactics

Pricing and Promotion

Evaluate millions of alternatives

to profitably define the right

pricing and promotion approach in

response to changing shopper and/or

segment behavior, supply chain

dynamics, etc.

Assortment

Ensure item assortments

are relevant to target

customer segments and maximize

store/space profitably by region and

category

Supplier Collaboration

Improve negotiation

processes and collaboration

between retailers and manufacturers

Shopper Insights

Customer insights delivered

through interactive dashboards

help retailers make merchandising decisions

that align with customer objectives,

improving both category performance and

customer loyalty.


Price ($)

Volume

eba +•+= PriceDawnVolume

1.35

1.45

1.55

1.65

1.75

1.85

0 50 100 150 200 250

Foundation of Price Optimization is an Understanding of Price Elasticity


DemandTec customers improve price perception, compliance, operational efficiency, and profits

Efficiently Manage Price Rules

Grocer automated the management of their

competitive pricing rules, reducing effort from

2-3 hours to 15 minutes, and increasing

cycles from monthly to bi-weekly

Improve Price Perception

Gained ability to fully control price

positioning across all its franchisees,

which had not been possible with previous

manual systems.

Improve Store Price Compliance

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Mass Merchant Example: Across entire

Oral Care category, 13% of prices

increased, 78% s of prices remained the

same

Improved price perception and increased

Gross margin dollars 2.01%

Unit volume 1.02%

Revenue 0.76%

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$40M in Benefits from Price and Promotion Optimization Mentioned in DemandTec Customer’s Earnings Call

“..we have realized…approximately $40 million in benefits from pricing and promotional effectiveness.”

CFO & EVP, Q3 2011 Earnings Call (10/25/11)

"What we've been doing over the last several months is really spending a lot of time being much more strategic and thoughtful about how we price….not only with regard to the price-volume relationship but also with regard to where those stores are located, whether they're in suburban … [or] … urban markets, the competitive set …in the market, as well as a … categories we want to lead and gain share in versus categories that we just want to maintain. So a lot of the benefit that we’re beginning to see in terms of our margin improvement has come from specific actions that we’ve taken with regard to pricing

President, NA Retail Div, Earnings Call (10/25/11)


DemandTec customers improve promotion effectiveness and efficiency Increase marketing capacity

Over 100 concurrent campaigns per

month and hundreds of digital assets

managedStreamlined process of managing vendor negotiations

Grocery Chain

Manage 500,000 deals a year

Gained 3% in billing efficiencies

Reduced errors in the allowance process

Reduced post-audit recovery fees

Improved internal collaboration around promotional planning

Specialty Chain

Streamlined production and proofing

process and shortened from 5+ proofing

cycles to 2 saving labor and enabling them

to get promotions to market more quickly.

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. .

DemandTec Assortment Optimization Drives Measurable Improvements

.

Private Label ValidationFrozen Food Categories

• Multiple optimization scenarios reveled that

Private Label deserved an increased

presence at shelf

Identifying New Opportunities

Home Care Categories

• Showed opportunity in niche sub-category,

which the buyer had previously eliminated

from the assortment

Across several categories, a mass merchant

• Grew top line sales by 3-10%

• Improved inventory productivity by increasing

turns and reducing out-of-stocks

Top line Sales Growth 3-10%

Frozen Food Categories

• Optimizations revealed that shoppers

wanted more variety in some sub-

categories and less in others.

• SKU Optimization efforts helped to realign

appropriate mix

Determining Variety vs. Duplication

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Spotting a Good DemandTec Retail Opportunity

> $500M revenues

Price, Promotion and Assortment Analytics – Expressed willingness to apply analytics (sometimes seen via having centralized

merchandising/ pricing analytics functions). – Broad selection of products with substitutes, different pack sizes, brands, etc. – Category management approach with defined category/product roles

Markdown Analytics – Significant revenue tied up with short lifecycle products (consumer electronics,

seasonal items).

Shopper Insights– Has loyalty program or other way of tracking customer purchases

Promotion Planning and Promotion Execution – Complex, product level promotions and highly versioned ads

Deal Management– Significant vendor participation


Agenda






Revolutionizing Trade and Marketing Decision Making

PR

Trade

Budget

Marketing

Budget


Consumer Goods Manufacturers are faced with more challenging pricing, promotion and product decisions than ever before

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More Cost: “My trade spend gets larger every year, how do I reduce it but still grow the business”

Empowered: “Consumers are 58% more price-conscious today than they were a year ago”

Less Time: “It’s now March and I’m still trying to finish my annual plan”

More Growth: “How am I going to grow the business by 7% with the same budget?”

Less Control: “There are thousands of promotions going on, but I don’t have any visibility or if we are even aligned”

More Customer Challenges: “How do I get the customer to buy into my plan?”


DemandTec’s solutions helps consumer goods manufacturers improve performance

Strategic Trade Planning

Optimizes trade promotion

spend across accounts,

geographies, and tactics

Advanced Deal Management

Drive consistency and lower cost

to serve for retailer deal

execution

Customer Trade Planning

Optimize trade plans and

events at the account

(retailer) level

Strategic Marketing

Planning

Optimizes marketing

investment across brands

and tactics


DemandTec Strategic Marketing Planning™ Optimizes Your Marketing Investment Across Brands and Tactics

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Reach annual goals through better marketing investment decisions by

leveraging continuously updated insights and decision optimizationBenefits

Decomposition of volume into marketing drivers and inhibiters

Transforms marketing mix analysis from static to continuous

Predicts and optimizes scenarios with financials

Tracks sales and assists with course corrections


DemandTec Strategic Trade Planning™ Optimizes Your Trade Promotion Spend Across Accounts, Geographies, and Tactics

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Continuously grow sales by adapting to macro marketplace changes

by selecting the best optimized scenario and

aligning with customer strategiesBenefits

Understanding of volume drivers

Optimization of scenarios

Common science and analytics platform between HQ and field sales

Alignment of targets and objectives across the enterprise

Continuous analytics to adapt to marketplace changes


DemandTec Customer Trade Planning™ Optimizes Trade Plans and Events at the Account Level

Enable collaboration and deliver better plans that include category

impacts necessary for retailer decisionsBenefits

Simulate promotion & pricing hypotheses

Predict volume, spending & margin impacts

Incorporate events into category plan

Leverage category metrics to understand impacts


Advanced Deal Management ™ Drives Consistency and Lower Cost to Serve for Retailer Deal Execution

Drives efficiency in deal management and streamlines

audit compliance processBenefits

Customized item catalog for a manufacturer-centric view of the business

Long-term deal archive supporting regulatory requirements such as Sarbanes-Oxley

Advanced data reporting to support better business decisions

Special productivity features and valuable add-on services

Role-based access for rapid and more effective user adoption


Increased marketing ROI by 40% vs. prior year

Aligned leadership around one version of the plan

Enabled faster, disciplined decisions based on market shifts

Optimize portfolio investment in brands and marketing vs. trade

Determine optimal timing to move from 30 second to 15 second TV campaigns

Evaluate the impact of moving strong Spot TV campaigns between regional and national

Develop optimal trade and pricing strategies to address private label competitors

CPG had experienced multiple years of declining

sales. CPG rebranded itself and re-launched their

market positioning.

Driven by innovation and channel expansion, they

need to establish their marketing and trade strategies

– and quickly evaluate and adjust their plans based on

customer reaction

Business Challenge

CPG Juice Case Study: Optimizing Market Planning

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The Approach

Benefits


Collaboration Today

Retailer suggested a Brand A/

Brand B combo promotion CPG thought a Brand A / Brand C

event would be more effective

Retailer suggested $3.99 price pt for

Brand A and $2.98 for Brand B CPG believed the Brand A price pt

was too aggressive

CPG’s Retailer team leveraged

DemandTec to simulate and make

a analytical, fact-based

recommendation to Retailer

CPG determined

Brand A / Brand B combo

was a viable option

Also determined higher Brand A price point

was a ‘win-win’ proposition

CPG’s Retailer team then developed a ‘sell-in’ sheet to help reestablish Retailer

guidelines and gain support for the event with a higher price point

- 15.6% increase in CPG Revenue

- 11.5 % increase in retailer

Major US Grocery

Retailer

Large CPG Manufacturer

(LCPG)


Spotting a Good DemandTec CP Opportunity

CP Manufacturers

Branded Fast Moving Consumer Goods (FMCG), selling through retail channels (food, drug, mass, club)

At least $500M in revenue and Average Trade Spend (15%+ of sales)

Initiatives to improve trade spend ROI or return on marketing investment in general

Country has Syndicated Sales Data (e.g. Nielsen or IRI)

Key Customers Make up Disproportionate Amount of Sales

Companies investing heavily in using analytics in merchandising and marketing disciplines. Our diagnostic sales process can often uncover/define opportunities during discovery.


POS Data

Syndicated data

Product information

Store information

Competitor prices

Loyalty/frequent shopper

T-log data

Customer Delivers Data

DemandTec Platform Cleanses and Models Data

Coefficients

Customer Implements Optimized Plan

Store-SKU price file sent to price hosting system

Volume, sales, and profit forecasts

Customer Uses DemandTec Software

Input business rules and strategies

Generate optimal prices

Analyze forecasted

results

Identify alternative rules and objectives

• Attributing

• Consumer Decision Trees

• Econometric modeling

• Basket analysis

• Segmentation, cluster

analysis

• Forecasting

• Decomposition analysis

1. Enabling access to

clean, usable, granular

data: retailer–specific,

competitive, and by

market or segment

Partner Opportunities with DemandTec Implementations

3. Consulting services to

reengineer business

processes and enable

change management

4. Ongoing consulting

services to monitor ROI

and deploy additional DT

modules

2. Providing ETL products or services accelerating

data load and implementation schedules


Ideal DemandTec Partner Profile and Complementary Skills

Deep, working knowledge of:– Retail merchandising and marketing business processes including pricing,

promotion, assortment and shopper marketing– CP marketing and trade promotion business processes including pricing

and promotion

Experience and demonstrated track record of selling solutions to the Merchandising and or Marketing organization at large national retailers and or Marketing and Sales/Trade organizations at CP firms (annual revenues greater than $1B)

Demonstrated ability to provide counsel to and influence the VP Merchandising (retail), VP Marketing (retail and CP) and or VP Sales/Trade (CP) and other line of business executives

Global SIs, Regional SIs, as well as strategic management and business process consultants in Retail and CP with complimentary skills …


Smarter Commerce SaaS Referral Incentive for Business Partners:

www.ibm.com/partnerworld/wps/servlet/ContentHandler/swg_com_sfw_sc_saas/lc=en_ALL_ZZ

Eligible deals incentive = 15% of

Annual Contract Value (ACV)

Single fee for identifying and co-

selling an opportunity that IBM

closes

• Applies to all customer segment

accounts – Integrated / Aligned /

General Business / GB Midmarket

– Exclusion = Public Sector and

Public Sector majority-owned

• Fees available on all SaaS subscription

Passport Advantage (PA) part numbers

– Overages excluded

– Provisioning services or labour-

related part numbers excluded

Getting started is simple.

• Enroll in IBM PartnerWorld®

• Signing a PartnerWorld Attachment

for a Smarter Commerce SaaS

offering

• Achieving one Sales Mastery in the

product area being sold (e.g. EMM)

Available Today in:

• North America (US & CA)

• All EMEA countries

• Latin America (Argentina,

Bolivia, Brazil, Chile, Colombia,

Ecuador, Mexico, Paraguay,

Peru, Uruguay, Venezuela)

• And additional as announced


Agenda






Partner Assistance & Resources DemandTec Business Partner's Sales Kit on IBM PartnerWorld:

Data Sheets, Sales Guide, Customer Presentations, and White PapersFor Retail Market: https://www-304.ibm.com/partnerworld/wps/servlet/mem/ContentHandler/O703078B51893G01

For CP Mfgr Market: https://www-304.ibm.com/partnerworld/wps/servlet/mem/ContentHandler/F412926V07385G70

EMM Business Partner Resources on IBM PartnerWorldhttps://www-304.ibm.com/partnerworld/wps/servlet/ContentHandler/swg_com_sfw_is_emm_resourcesAll EMM Partner Sales Kits, Education Offerings, Sales and Tech Mastery Information

DemandTec Education/Training – 123 Classeswww.ibm.com/training Search for DemandTec

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Solution Segments

WW LeadMajor Markets Growth Markets

NA Europe Japan AP, LatAm, CEE, MEA

EMM BP Sales

Carol [email protected]

Fred [email protected]

Graeme [email protected]

Akemi [email protected]

Amita [email protected]

DemandTec BP Sales

Will [email protected]

Walt [email protected]

Walt [email protected]

Eric [email protected]

Who do you Contact for Sales Assistance?

https://www-304.ibm.com/partnerworld/wps/servlet/mem/ContentHandler/O703078B51893G01



https://www-304.ibm.com/partnerworld/wps/servlet/mem/ContentHandler/F412926V07385G70



https://www-304.ibm.com/partnerworld/wps/servlet/ContentHandler/swg_com_sfw_is_emm_resources



http://www.ibm.com/training

mailto:[email protected]











Thank You!

DemandTec and IBM Enterprise Marketing Management Business...

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