0307-43-001Product Promotions Effectiveness

Chris TantakisCanada

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Background – Current Process

Product Promotions: Product Price Discounts Rep / Manager Commission incentives Direct Customer incentives

Origin of promos Corporate objectives / focus Marketing objectives / focus Vendor objectives / focus

Analysis Run Rate Trend Analysis Product life cycle / replacement Response to Competition

More effective measurement, analysis, and

benchmarking will improve

effectiveness

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Background – Current Process

Currently: A significant portion of our promotions are applied after the

sale is complete (Survey to determine current %) Creating a commission enhancement Increasing Selling Expense Adversely affecting ROI

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Project Definition

Problem Statement: Total INA Marketing Spend requires greater impact assessment.

Track $ spent to benefits realized … Canada Region product specific marketing promotions for IBS sales reps.

Project Definition: Summarize and define current marketing spend and re-align it to maximize

benefit … identify Key Input Process Variables effect on sales success rate (close rate)…

Project Metric “Y”: Big Y = Effectiveness of Marketing Spend 2nd Level Y = Product Promotions Effectiveness 3rd level Y = ROI from Product Promotions Y1 = closing rate per proposal

Y2 = number of proposals per promo

Scope All product promotions for Canada (including Canon / Ricoh dealer channel promos)

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Project Evolution

Mkting SpendEffectiveness = f (Promos Effectiveness, Advertising Effectiveness, x3, x4,...xn)

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Promo Effectiveness = f (ROI, Inventory adjusted, Branding, x4, x5,...xn)

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ROI = f(Cost, Return)

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Return = (Close rate, number of proposals, size, x4,...xn )

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Project Definition

Project Benefits: Operating Income will improve by $402k in the 12 months following

project completion, through an improved closing rate per promotion Close rate will increase by 15%

Financial Benefit: Every current new product is eligible for some kind of promotion

only 65% of all sold products are billed with a promo $129M FY04 Equipment budget Canada @ 65% of deals apply promos = $83.85M eligible product sales @ 15% improved close rate = $12.57M incremental Revenue @ OI from Eqmt Rev @ 3.2% = $402k incremental OI

Leveragability: Project can be leveraged across the balance of INA through the

Malvern Marketing team.

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Process Map – High Level

Page 1

03-07-43-001 Tantakis MarketingHigh Level Process Map

Wednesday, September 24, 2003

Recognize Needor Desire for

ProductPromotion

PromotionCreated / Modified

Communicated toSales and Admin.

Sales Results

Feedback Loop Collect andAnalyze Data

Decide to continue,change, or discontinue

Promotion

End Promo

Project focus

Spin off benefits

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Potential Inputs “X’s”

Y1 = Close Rate (per proposal)

Close Rate = f(price discount, customer direct incentive, rep commission incentive, rep training, x5,...xn)

Y2 = Number of proposals (per promo)

Number of Proposals = f(rep commission incentive, market need, price discount, x4,...xn)

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Measurement System for Y

Track success rate of proposals with a cross section of the sales force: Different Success levels:

5 reps above 100% of Plan 5 reps between 80% - 100% of Plan 5 reps above 60 - 80% of Plan 5 reps below 60% of Plan

A Mix of Rep Types: 4 AE3

8 AE2

4 AE1

4 ASR Other considerations:

Reps and Teams with higher forecast accuracy vs. On Target

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Measurement System for Y

Data Collection Methodology: Collect Data by e-mail

Develop operational definitions for the reps Reps to complete a convenient tic box survey weekly

Validation methods for rep data Proposals written (& on file with Admin assistant) On Target Phase 3 Sales Commission System Data

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iR5000 Survey (Draft) 0 1 2 3 4 5 6

Questions iR5000 iR5000 iR5000 iR5000 iR5000 iR5000 iR5000How many different customers received proposals from you this week, on this

products:

iR5000 iR5000 iR5000 iR5000 iR5000 iR5000 iR5000How many different customers signed contracts with you this week for this product (regardless of units sold per

customer)

For each deal please check the appropriate boxes below

Revenue* Gross Profit*Deal 1Deal 2Deal 3Deal 4Deal 5

For each customer check off which promo was required and used to

develop the proposal

For each customer contract which promo will be used to bill the deal

0 Customers 1 Customers 2 Customers 3 Customers 4 Customers 5 Customers 6 Customers

Promo B

Promo A

Promo E

Promo D

Promo C

Promo A Promo A Promo A Promo A Promo A Promo A

Promo B Promo B Promo B Promo B Promo B Promo B

Promo E Promo E Promo E Promo E

Promo C Promo C Promo C Promo C Promo C Promo C

Promo D Promo D Promo D Promo D Promo D Promo D

Promo E Promo E

0 Customers 1 Customers 2 Customers 3 Customers 4 Customers 5 Customers 6 Customers

Promo B

Promo A

Promo E

Promo D

Promo C

Promo A Promo A Promo A Promo A Promo A Promo A

Promo B Promo B Promo B Promo B Promo B Promo B

Promo E Promo E Promo E Promo E

Promo C Promo C Promo C Promo C Promo C Promo C

Promo D Promo D Promo D Promo D Promo D Promo D

Promo E Promo E

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Next Steps

Sept 21 – Oct 3 Set Survey Questions based on FMEA

Oct Collect data on inputs

Oct End Identify “Key Process Inputs” from data

Nov Week 1 Build test promos based on “Key Process Inputs”

Nov Collect data on inputs Analyze data

Dec Provide guidance for future promo design Provide revised process map