SIMON FOSTER
Marketing & Sales Director
RACHAEL EDMONDSON-CLARKE
Marketing Strategy Manager
Why are we here and what’s in it for you?
Share real business challenges
Gain practical, marketing experience
Build your knowledge, skills and confidence
Help you prepare for your Brand Strategy Exams
Practice principles and skills that you will need to use in your Brand Strategy & Advertising Strategy Coursework AND get feedback from people at the coalface!
Have fun!
Get rewarded for great work!
Here’s what we’ll cover today
Thorntons – a potted history
Thorntons strategy
Brand Plans for 2015/2016
Brief
Practical advice
Q&A
And we will be back on the 25th March
Our History
104 Years Of Making Customers Smile
1911 Founded in Sheffield by Joseph Thornton
1922 Famous Easter Eggs began
1931 First chocolate enrober in Sheffield factory
104 Years Of Making Customers Smile
1948 Moved production to Belper
1954 Thorntons first Master Chocolatier
By 1967 Thorntons had nearly 90 shops making a profit of £250k on a turnover of £1.7m
104 Years Of Making Customers Smile
1985 Production moved to Alfreton
1987 Full listing on London Stock Exchange
1997 Turnover exceeds £100m
2008 Turnover exceeds £200m
2011 Guinness World Record holders
Our Strategy
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Where We’ve Come From
Where We Are NowOur Strategy
Rebalance Ensuring our products are available where our shoppers want to buy them
Revitalise Clarifying our brand position, improving the in-store experience, coordinating product ranges across channels with renewed visual identity
RestoreImproving profitability towards industry competitive returns
Our Shoppers Our Shoppers
Overview – Significant progress in the first three years
Next stage – An emerging international FMCG business
Where We’ve Come From Where We Are Now
Where We’re Going
Our Shoppers
Our Shoppers Our Shoppers
Use strength of our brands to:- retain the No.1 premium
brand position in the UK- attain leadership in the
premium sector in the grocery market
NPD focused on fewer, stronger product launches
Continue to invest in:- brand communications- driving loyalty and frequency
through inspirational shopper experience
Create stronger year-round relevance while retaining strength at key seasons
Continue to grow higher contribution margin FMCG division whilst reducing lower contribution margin Retail divisionStrengthen our margins through clearly established brand position and disciplined pricing strategySupply chain strategy designed to support margin growthStrong and disciplined culture of cost controlInvest in our brand, people and business infrastructureFunding in place to support future growth
UK Commercial targeting further continued growth
International to become an important contributor to the long term growth of the business
Retail will be FMCG Co.’s largest customer and a profitable showcase for the brand
Investment in manufacturing capacity and capability to support growth
Rebalance & Grow……FMCG as our core business & retail its
largest customer by 2017
Revitalise our Brand……by putting the shopper at the heart of our business
Restore……our profitability to industry competitive
levels
The next 3 years – Sticking to our strategy
Where we play – The gifting opportunity
Leadership through clear market positioning
Understanding our consumers drives effective product development
The Boxed Chocolate Category has grown £38m over the last 5 years with Inlaid Boxed a key driver with £27m growth
Boxed Chocolate – Our core market remains resilient
713.0 722.7698.7
718.2751.9
193.7 198.9 198.9209.8
220.5
£m
Value Sales £m Boxed Chocolate Category and Inlaid Boxed Sub Category 52w – Total Coverage
Source: Nielsen Scantrack to WE 13th September 2014
Market share – Strength and opportunity
9.5%
Thorntons % Value Market Share by Category and Category Size £M – Total Coverage
Source: Nielsen Scantrack to WE 13th September 2014
11.6% 11.9% 12.0% 11.4%
30.0%
34.9%
33.1%
34.3%34.7%
1.5% 1.8%
3.5%
4.4%
6.3%
1.9%
2.9%
4.0%
4.9% 4.9%
CHRISTMAS SPECIALITIES £155M EASTER SPECIALITIES £356M
TOTAL BOXED £752M INLAID BOXED SUB CATEGORY £221M
Thorntons continue to hold a leading share in Inlaid Boxed and have significantly grown share across Easter and Christmas in the last 5 years
Thorntons brand - Strong and further improving
Leading in brand awareness
Highest advocacy in the sector
Broadening distribution has increased brand advocacy
Market leading brand values
Highest consideration for gifting
Brand Revitalisation – Spontaneous awareness remains strong
Source: HPI Brand Tracker 2014
• Thorntons spontaneous awareness is more than double that of other premium brands, and is matched only by Cadbury
1 2 3 4 5 6 7 8 9 10
Brand Health: Thorntons leads on key values & gifting fit
Source: HPI Brand Tracker 2014
Excellence
Creativity
Togetherness
Consideration for gifting
1 2 3 4 5 6 7 8 9 10
1 2 3 4 5 6 7 8 9 10
1= 1= 3 4 5 6 7 8 9 10
Creating a platform for international growth – Targeted international opportunities
Retail - Building the brand profitably – Continued ‘right sizing’ of the estate
‘World-class’ manufacturing – Evolving a flexible and efficient operation
Building brand equity – Broadening brand investment
Becoming an FMCG Company – Transforming the organisation
Continued growth of UK Commercial – Building on strengths and exploiting market opportunities
The next 3 years – Key strategic drivers
Creating a platform for international growth – Targeted international opportunities
Retail - Building the brand profitably – Continued ‘right sizing’ of the estate
‘World-class’ manufacturing – Evolving a flexible and efficient operation
Building brand equity – Broadening brand investment
Becoming an FMCG Company – Transforming the organisation
The next 3 years – Key strategic drivers
Continued growth of UK Commercial – Building on strengths and exploiting market opportunities
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UK Commercial – Developing our FMCG capabilities
39.5%22.7%
35.4%
27.3%7.9%
11.2%9.7% CAGR 5-10%
Sales
Differentiated Products
In-house Warehousing and Distribution
Account Management
Common Platforms
Out-sourced Warehousing and Distribution
Trade Marketing
Category Management
FMCG NPD
Unified Warehousing
FMCG Systems Investment
2011 2014 2017 (Est)
Broadening of distribution set to continue
% of sales
Response to changing shopper behaviour
Reducing dependency on Top 6 UK Grocers
26
UK Commercial – Building on strengths & exploiting opportunities
InlaidBoxed Chocs
(Market £215m)
Current Share 35%
Each 1% = £2m RSV
Single Flavour(Market £205m)
Current Share 1%
Each 1% = £2m RSV
Twist-Wrap
(Market £250m)
Current Share 2%
Each 1% = £2.5m RSV
Chocolate Blocks(Market £580m)
Current Share 0%
Each 1% = £6m RSV
Christmas(Market £155m)
Current Share 6.3%
Target 10%
£6m RSV opportunity
Easter(Market £355m)
Current Share 4.9%
Target 9%
£14m RSV opportunity
Key Seasons
We are the leading premium chocolate brand in the UK, with shopper spend exceeding £300m
Our ambition is to become the leading premium chocolate brand in UK Commercial
We will succeed by growing in 5 key areas:
Creating a platform for international growth – Targeted international opportunities
‘World-class’ manufacturing – Evolving a flexible and efficient operation
Building brand equity – Broadening brand investment
Becoming an FMCG Company – Transforming the organisation
Continued growth of UK Commercial – Building on strengths and exploiting market opportunities
27
The next 3 years – Key strategic drivers
Retail - Building the brand profitably – Continued ‘right sizing’ of the estate
Continued growth of UK Commercial – Building on strengths and exploiting market opportunities
Building brand equity – Broadening brand investment
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Building our brand equity
Investing in our brand to deliver a clear and consistent premium market position through products sought after by our shoppers and consumers
Optimising our marketing mix and investment levels by channel to maximise ROI, differentiate, and build shopper affinity to our brand
Retail investment
Progressive investment in store refurbishment
and merchandising
Product development
Leverage our competitive advantage to deliver a pipeline of product development
Brand positioning
Optimise our brand positioning to drive
relevance and credibility as the gifting
chocolate experts
Channel focused investment
Drive incremental purchase around peak
seasons and new product launches
Brand footprintDeepen penetration
through channel diversification
Broaden brand through licensing
partnerships
We will achieve this through 5 key areas
Creating a platform for international growth – Targeted international opportunities
‘World-class’ manufacturing – Evolving a flexible and efficient operation
Building brand equity – Broadening brand investment
Becoming an FMCG Company – Transforming the organisation
Continued growth of UK Commercial – Building on strengths and exploiting market opportunities
29
The next 3 years – Key strategic drivers
Retail - Building the brand profitably – Continued ‘right sizing’ of the estate
Continued growth of UK Commercial – Building on strengths and exploiting market opportunities
Becoming an FMCG Company – Transforming the organisation
One Customer(Retail)
Many SKUs
Seasonal Refresh & NPD
Over 100 Customers(including Retail)
Fewer SKUs
Focused FMCG Development & Support
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Transforming the organisation
FROM
BUSINESS PEOPLE
TO
People ORG Design
Process CapabilitySystems Communication
Becoming an FMCG Company (with Retail as its biggest customer)
Through a business change programme that encompasses
Our Brand Plans for 2016
Inlaid (Thorntons), perceived as the most ‘special’
According to shoppers,Inlaid Chocolate is the most ‘special’ offering within Boxed Chocolate category*
Thorntons lead this category with a 31.9% market share**
Its the core of what Thorntons offer, and crucial that we add value to the category
Inlaid are losing shoppersto Single Flavour
We need to ensure products are perceived as worth paying more for
Anchored in Sharing Anchored in Formal Gifting
Anchored Self Treat & Special
Sharing
Twistwrap ££
Inlaid££££
Single Flavour£££
We need to address some key challenges
Source: SBXL December 2014
Do Shoppers Notice our Brand
Do Shoppers understand our Offering
?
A Strong Brand that people want to buy
There is too much considered behaviour not enough grab and go behaviour
of peoplewalk away 50%
We need to maximise our strength in Inlaid
We need the very best
execution to work in each
of these segments
Entry Level Premium
Premium PremiumPlus
We need to improve our offering with aclear positioning in each segment
We need to ensure we have offerings for the key ‘token gift’ and ‘sharing’ price points
Anchored in Sharing
Anchored in Formal Gifting
Anchored Self Treat & Special Sharing
Twistwrap ££
Inlaid££££
Single Flavour£££
Moments Re-energise, focus and
grow
2015
July2015
Aug2015
Sept2015
Oct2015
Nov2015
Dec2016
Jan2016
Feb2016
Mar2016
April2016
May2016
June
Inlaid
Twistwrap
Timings
Moments Re-energise
Moments is worth
£7.7mtotal market
with 2%
market share
Source: Neilson MAT to 27th Dec 2014
To the busy mum who loves spending Saturday nights in with her family, Moments are the premium sharing chocolates that makes that time even more special. Because Moments are the nation’s favourite flavours, made with all of Thorntons know-how.
Moments Brand Position
INSPIRING PURCHASE
ENGAGE OUR SHOPPERS
DELIGHTING SHOPPERS
Moments FY15 Brand Plan
Drive brand engagement
through added value on-pack
licensed partnership for Christmas 15
Increase sales and margin at Christmas with a
large format pack
Delighting shoppers through X Factor
partnership
Partnership objectives for Thorntons
Key Objective
To drive increased distribution and volumes of Moments across Commercial accounts at Christmas 15
Secondary Objectives
To drive brand engagement
Reposition the Moments brand with ‘Moments Mums’
Why X Factor?
167m series views, 3.29m subscribers
Live Final was watched by
13m viewers in 2014
9m Facebook likes5.4m followers on twitter
6m tweets across the series
Factor is the biggest show on
81% above ITV’s prime time average
Moments will partner with the X Factor Live Tour for Christmas 15
Prizes for shoppers – Live Tour tickets plus Live Tour ‘ backstage meet and greets’
2.9 million Thorntons X Factor packs out in the trade
X Factor finalist meet and greetappearances at retailer of Thorntons’choice
X Factor goodies as additional prizes
Use of X Factor assets for POS and on-pack
A partnership offering the following:
Moments Role
Chance to win X Factor Experience with Thorntons
Driving sales back into the category through engaging shopper activity.
Improved margin in the category versus competitors.
Net sales and margin from a category with limited transferable sales
SHOPPERCATEGORY THORNTONS
Moments summary
Moments is in growth! +46% sales at Christmas 14
Moments Pouch at Christmas 15 will drive
incremental sales for Thorntons
X Factor partnership at Christmas 15 is
shopper led activity designed to
drive early season sales
Source: Neilson MAT to 27th Dec 2014
Moments is worth
£7.7m total market
with 2% market share
Summary
46
47
Summary
British company with over 100 years of heritage & expertise in premium chocolate
A transforming business from Retail to FMCG
We’ve got some challenges - 50% of shoppers walking away empty handed from the
boxed chocolate fixture.
X Factor partnership planned with Moments for winter 2015
Let’s play!
48
49
THE PROBLEM:
Thorntons has a small share of the chocolate twistwrap (sharing) market (with Moments) and struggles to get presence in store especially during the early winter season (Sept – Oct). The Brand has less affinity in the South East and with 18-24 year olds.
THE OPPORTUNITY:
Thorntons has an X Factor partnership for 2015 which includes media rights to the X Factor Brand assets for use on pack, on-line and in store.
YOUR CHALLENGE:
Put together a proposal (the maths and the magic) to Simon & Rachael on how you can leverage the X Factor partnership to drive a positive Brand relationship and profitable sales with 18-24 year olds in the South East.
The Game
50
Your target audience
51
Your tools
ASSETS
X Factor logos & imagesX Factor finalist meet &
greet25 X Factor VIP experiencesTickets to X Factor Live Tour
X Factor goodies
MEDIA CHANNELS
Consider all media channels except TV
BUDGET
Flexible dependant on ROINo more than £250k
Return must be >£250k
52
Moments Financials (numbers are fictional for the game)
52 WK VOLUME 2m units
RRP £4.29
PROMOTION Price down to £2.50
VOLUME ON DEAL 50%
AVERAGE UNIT PRICE £3.40
MARGIN 50%
Some practical tips
53
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Worked example
Who can we reach?
UK population 64m
UK population living in the South East 25.6m
UK population living in the SE agued 18-24 2.6m
Assume 20% of population buy a Moments pack 520k units
Assume 5% enter our on-pack competition 26k entries
Viral campaign assume 50% participate, spreads to 16 new leads 208k people
Send new leads a voucher, assume 5% redemption 10k redemptions
Each redemption worth £1.70 gross margin £17k
Assume investment £10k, ROI +70%
Questions and Answers
55
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