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Relevancy through Data Driven Insight

The Science of Key Consumer Segments

22 © dunnhumby 2014 | Confidential

Customer Science

NationallyMarketing Decisions

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Customer ScienceBzzAgent Platform

Sustainable brand growth

our Brand Consulting Team brings an entirely unique approach to the most important marketing decisions


with consumer-based insights

WHY THIS MATTERS

THE SCIENCE BEHIND SEGMENTS

BRINGING IT TO LIFE


WHY THIS MATTERS


New in Technology

Topping the Charts

“

JOHN D. LOUTHThe changing face of marketing

McKinsey Quarterly, 1966

It is a gross error to develop a marketing program aimed at the “average customer.” Today, such a consumer hardly exists. In short, the company that is not alert to the customers’ needs and the changing complexities of marketplaces is inviting disaster.

Top TV Show

the year is 1966 Time Person of the Year


“

JOHN D. LOUTHThe changing face of marketing

McKinsey Quarterly, 1966

It is a gross error to develop a marketing program aimed at the “average customer.” Today, such a consumer hardly exists. In short, the company that is not alert to the customers’ needs and the changing complexities of marketplaces is inviting disaster.

Time Person of the Year: The

Generation 25 & Under --- Baby

Boomers

the year is NOW

New in Technology

Topping the Charts

Top TV Show

Time Cover Feature


17%

13%

5%

while the concept is not new, the paradigms continue to shift

29%

15%8%

2015 Projections 2060 Projections

US Census Projections

our population is changing and the majority is shifting

12%

1965 Actuals


Millennials want more involvement in meal preparation; FastCasual.com

MAY 2014

Millennials and Hispanics will be the driving force behind America's eating behaviors in the next five years

THE END OF MAINSTREAM



MILLENNIALS


MILLENIALSthe world is click away, so is the competition

While estimates vary, Millennials are believed to have $200 billion of direct purchasing power and $500 billion of indirect spending

IN-STORE TRENDS

• Visit the store more frequently but have smaller baskets

• Strongest dollar growth per household year over year

US Chamber of Commerce Foundation


Millennial shoppers still have strong center store engagement

Traditional, center store categories still have strong engagement with Millennial shoppers:

● Breakfast

● Dinner Mixes and Sides

● Condiments and Sauces


Millennials will comprise more than one in three of adult Americans by 2020

Brookings Institute


inside the head of a Millennial Momideals and aspirations meet the reality of budget constraints and varied household needs

THE IDEAL THE REALITY

I value organic offerings for myself and my kids.


true, connected insight emerges at the intersection of consumer psychology & behavioral science

A FEEL THINK DO framework enables going beyond attitudes and perceptions to

understand how that translates into behavior

This focus on gaining a 360 view of the consumer enables development of tailored

strategies and relevant activation

FEEL

THINK

DO


Millennials’ perceptions of their choices compared to their behavior enhance and challenge established beliefs

BELIEF

DINNER MIXES AND SIDES

Branded processed food manufacturers will be “losers” in the new food paradigm

Forbes; “How 'Millennials' Are Changing Food as We Know It”



BELIEF

DINNER MIXES AND SIDES +17%

Branded processed food manufacturers will be “losers” in the new food paradigm

REALITY Millennials spend 17% more per household than all shoppers with 14% of baskets containing a dinner mixes and sides item

Forbes; “How 'Millennials' Are Changing Food as We Know It”



Hartman Research

BELIEF

NATURAL FOODS

Millennials believe they consume healthier, more expensive, more natural/organic, less processed and better tasting foods than their parents



BELIEF

NATURAL FOODS +13%

IT’S TRUE…BUT

Millennial shoppers have higher spend within Natural Foods than all shoppers

However, 65% of Millennials have zero to limited engagement with Natural Foods

Millennials believe they consume healthier, more expensive, more natural/organic, less processed and better tasting foods than their parents

Hartman Research


this relationship between perception and behavior also extends into growth trends in store

GROWTH RATES



BELIEF

CANNED GOODS

Time-tested package designs like cans, jars and bottles do not jive with the Millennial lifestyle and this generation’s unique attitudes towards food, health, and the environment

Brand Amplitude; Millennials Increasingly Judge Food by its Cover



BELIEF

CANNED GOODS

REALITY Canned Goods are experiencing stronger growth rates than the rest of shoppers; Millennials offset unit per trip declines with increased visit frequency

163 INDEX

Time-tested package designs like cans, jars and bottles do not jive with the Millennial lifestyle and this generation’s unique attitudes towards food, health, and the environment

Brand Amplitude; Millennials Increasingly Judge Food by its Cover



BELIEF

FROZEN FOODS

Millennials are seeking value and convenience in their food, but they increasingly opt for fresher and healthier food

Food Processing; Frozen Food Sales' Decline Paves the Way for Fresh Food Innovation



BELIEF

FROZEN FOODS

Millennials are seeking value and convenience in their food, but they increasingly opt for fresher and healthier food

Food Processing; Frozen Food Sales' Decline Paves the Way for Fresh Food Innovation

IT’S TRUE Frozen Foods are declining faster with Millennials than the broader segment, especially among African American Millennials

115 INDEX


IMPLICATIONthose that balance aspiration and reality will win

There is not a center store exodus.

Are you positioning your brands to meet Millennial needs?

Packaging alone is not causing migration.

How are you appealing to the experience seeking, health aware Millennial?

There is a constant struggle between fresh and convenient.

Where does your brand fall?

CONNECTED SHOPPERS SEEKING FRESHNESSMillennials believe they consume healthier, more expensive, more natural/organic, less processed and better tasting foods and brands than their parents

The Hartman Group



HISPANICS


HISPANIC CONSUMERScelebrate nuances - with true authenticity

Hispanic consumers in the US were estimated at a $1.2 trillion market in 2013 — a figure higher than the entire economy of Turkey

IN-STORE TRENDS

• While dollars per visit is lower than total population, Hispanics do have stronger per trip growth

• As acculturation increases, so does the size of Hispanics’ baskets

Selig Foundation; Multicultural Economy ReportHispanic Retail 360; Liz Sanderson VP at Univision


Hispanic shoppers lack strong engagement in traditional, center store categories

With the exception of produce, fresh, perimeter items have a stronger engagement across Hispanic shoppers:

● Dairy

● Meat and Seafood

● Bakery

2828 © dunnhumby 2014 | ConfidentialAdAge “US Hispanic Population is Growing, but this isn’t your Abuela’s Latino Community

Limited marketing has been directed

toward the evolved Latino

mindset


HISPANIC CONSUMERSseeking a multisource, multisensorial & multigenerational experience

MediaPost; Hispanics Lead Stats In Social Media UsageYouTube; Reaching Hispanics on YouTube

SOCIAL ENGAGEMENT

Non Hispanics Hispanics

59%



Pew Research; Internet and American Life Project

PRIMARILY GO ONLINE VIA MOBILE PHONE

60%



Twice as likely to share opinions and write reviews

1.7 times more likely to shop via their mobile or tablet

Nearly 3 times more likely to immerse themselves in the store atmosphere

Leo Burnett; Latino Shop

30% higher engagement with digital coupon and 50% more likely to share digital coupons via social media


growth trends across the store also diverge from the total population

GROWTH RATES25% GREATER THAN TOTAL POPULATION

SALES DECLINES

Similar to Millennials, Hispanic shoppers are showing more marked decline in Frozen

engagement than the total population at a 150 index


engagement varies across acculturation levels, calling for even more tailored strategies

HISPANIC ACCULTRUATION

AMERICANIZADOHIGH ACCULTURATION

LATINOAMERICANOLEAST ACCULTURATED

More acculturated Hispanics are engaged in center store areas is 1.5x compared to the least acculturated households


knowing similarities is as important as knowing differences

HISPANIC ACCULTRUATION

AMERICANIZADOHIGH ACCULTRUATION

LATINOAMERICANOLEAST ACCULTURATED

Despite differences, engagement for several categories remains consistent across the acculturation spectrum


IMPLICATIONcultural intelligence: relevancy beyond language

Language is just one component behind Hispanic relevancy.

How are your brand messages targeted?

Hispanics consume and engage with media differently .

How do your plans account for that?

Engagement in store varies widely within this segment.

Do you have an Hispanic plan?

Do you differentiate your strategies within that plan?

LEADING SOCIAL MEDIA, MOBILE, & E-COMMERCE ADOPTIONCultural intelligence must replace the misguided notion that simply translating English copy into someone’s native language is all you need to do to reach them.

Glenn Llopis; Forbes

MediaPost; Hispanics Lead Stats In Social Media Usage


BRINGING IT TO LIFE


ASIAN AMERICANSfastest growing minority group in the US

Business Need“

JEFF HUMPHRIES2013 Multicultural Buying Report

Selig Center, 2013

“The thing that strikes me over the last several years is the growth and resiliency of the Asian consumer market.”

Despite growth and buying power, limited insights into this key segment

Infuse the needs and trends within this key segment into upfront innovation evaluation

Objective

Example Insight

ApplicationShort Term: Assess opportunities across Nestlé's global product portfolio

Within the beverage space, Asian shoppers gravitate to more flavor oriented offerings


HISPANIC CONSUMERScommitting to Hispanic Marketing

Business Need“

AYRIE ARANDA-MORIDigital Marketing for the US Hispanic & Latin American Markets

alcance Media Group

“Connecting Hispanics online is not merely a matter of language anymore: It’s about connecting culturallyand becoming a catalyst in the community.”

Hispanic shoppers are seeking a multifaceted experience in-store

Assess the impact of varying tactics in a test environment prior to national launch

Objective

Example Insight

Application

Response was most significant with family oriented brands that had moderate Hispanic engagement

Evaluate the content, medium, and relevancy across their brand portfolio

CENTER STORE CPG


MILLENNIALSshifting social dynamics

Business Need

Objective

Example Insight

Application “

ALEXA DiBENEDETTOMaking Cards Cool Again

The Wall Street Journal, 2011

“My friends don't expect me to get them a paper card, but they'd be offended if I didn't wish them 'Happy Birthday' on Facebook"

GREETING CARDS

Millennials social interaction diverges from historic traditions

Assess the impact to greeting card engagement across different holidays and price points

While Millennials still engage in traditional holidays – Mothers and Father’s Day – the 99 cent price point is required for everyday engagement

Uncover the relevant ways to engage the Millennial shopper to improve category health


41

QUESTIONS

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