November 2012

Retailer Collaboration Category Leadership Insights & Strategies to Win

Rob Colarossi VP Category Leadership

Hostess Brands

2

Retailer Collaboration

Starts and end with the “Consumer”

• Understand how their consumer ”thinks”

• Understand how their consumer ”purchases”

Collaboration is looking at business thru retailer’s lens

• Deep dive in Facts & Insights

• Understanding our customer’s objectives, wants & needs

• Category Strategies & Category Solutions that deliver results!

3

Category Leadership Process – How we do it?

WHERE TO FOCUS HOW TO WIN RESULTS

INSIGHTS STRATEGY ACTIVATION

Assessment Discovery Aligned

Planning Action

Planning Execution

Measure Results

• Consumer Trends • Category Trends • Market Trends • Competitive Assessment • Shopper Behavior • Research / Modeling • Finance / IT / Supply Chain

• Guiding Principles to Win

• Customer’s Corp Strategies/ Platforms

• Category Strategies/ Needs

• Custom Programs • Assortment/ Space • Price/ Promotion • Sponsorships • Innovation • Scorecard/ Measure • Finance / IT Solutions

CUSTOMER-CENTRIC Current Volume Initiatives (1 yr) Future Volume Initiatives (2+ yrs)

Developing Stronger Relationships

4

Insight Generation Process

CONSUMER

WHAT they buy –

“natural groups”?

WHO are

they?

WHERE do they shop?

HOW do we

merchandise?

Market Structure/ Purchase Decision

Data/ HB & Industry

Assortment/ Space Planning/ Merchandising

Principles/ HB & Industry

Opportunity Gap & Leakage Chart/

IRI Panel Data

Demographic Data/ SPECTRA

How the consumer

think about

category?

How the consumer

purchase

category?

5

Five Mega Trends – Shopper Behaviors

Quest for Value “Budget Consciousness”

• Coupon use exploding +67% vs 2007

• Net worth declined -17% since 2007

• Gasoline +130% increase since 2008

Demand for Convenience “Value / Cost of my time”

• +300% increase in single parent families

• 50% growth fresh convenient food

• (-59%) chg in time spent cooking / cleaning

• $250 bil US on line sales by 2014

Personalization ”Value of doing things my way”

• Facebook 900mil = 3rd largest country

• +5000% 2010 Black Friday sales using mobile device vs 2009

• +60% cons <45 online ads as source to find bargins over TV/ Print

• 29% coupon users exclusively digital

Age & Health “Value / Cost of my well-being”

• 77% consumers believe healthy food is more expensive

• share of US pop over 65 will double by 2030; 13% today

Ethnicity “Values of My culture / lifestyle”

• Hispanic 50mil in US (50% of growth)

• Buying Power over $1trillion

6

Retailer E – Conversion Shopper Behavior – Fresh Bread

Increase Conversion Leader?

National Best-in-Class

Source: Builders Suite – Calendar Year 2011

7

Best in Class - Bread Consumer Behavior Panel Data

Source: Builders Suite – Mid-Year 2012

8

Account E - Bread Consumer Behavior Panel Data

Source: Builders Suite – Mid-Year 2011

Current: 62% $32mil - Leader: 80% $41mil +9mil - BIC: 93% $48mil +$16mil

T

How the Consumers thinks about bread . . . . How the Consumer purchases bread . . .

Bread Insights

7 Segments–3 Key Factors Define Consumption Decision Tree: Bread Type, Flavor/Variety . . .

Source: Consumer Market Structure Study

• Fresh bread/rolls 3rd Largest Category

• 1/3 of all bread consumers looking for better for you +12%

• Fiber is important, Sodium is a concern

7 Consumer Segments Define the Category

Source: 2008 NPD Eating

Patterns of America

T

Proprietary Research that deliver Category Solutions

Shopper Preference on Aisle Flow Unified Research Approach: Retailer + Mfr

Category Reinvention Solutions

Source: 2008 NPD Eating Patterns of America

10

Shopper Preference by Product type & brand

T

Marketing Tools “4-P’s” that deliver Category Results

Assortment Tool – Acct vs ROM Diagnostic Tool / Scorecard – Acct / Market

Price / Promo Tools

Source: 2008 NPD Eating Patterns of America

11

Planogram capabilites JDA, Apollo

12

Insights, Strategies & “Best in Class” Solutions

1. Category Insights

3. Category Solutions BIC (Best in Class)

Bus Review vs ROM

Panel Data – Conversion vs Competiton

Consumer Research

Segmentation Studies / Decision Trees

Spectra, Simmons, IRI

4 P’s of Marketing

1. Assortment / Space

2. Best in Class POG Flow

3. Best in Class Merchandising

4. Price Promo Tool

5. Finance / IT Solutions

6. Supply Chain / Operations

Product Assortment

Placement / Merchandising

Price

Promotion

Collaborative Solutions

2. Category Strategies