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The Role of Marketing Research In the CPG Industry

Rob RiesterMarch 18, 2004

2

Overview

Intro Who is ConAgra? Role of Marketing Research

Product Price Placement Promotion The 5th P???

Kickstarting your Marketing Research Career

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The 5th P: Paige

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ConAgra Foods

• 2003 Sales $19.8 Billion2003 Sales $19.8 Billion

• 63,000 employees63,000 employees

• In business since In business since 18741874

• Headquartered in Headquartered in Omaha, NEOmaha, NE

• 80+ Brands80+ Brands

• 33 Brands with annual sales 33 Brands with annual sales exceeding $100 Million eachexceeding $100 Million each

• Food supplier in more than 70 Food supplier in more than 70 countries around the worldcountries around the world

• 2003 #50 in Fortune 5002003 #50 in Fortune 500

• 2003 #3 Consumer Food 2003 #3 Consumer Food Company in US and #5 in the Company in US and #5 in the worldworld

Apply footer in View-Header and Footer5

Our Products

$29,

723

$25,

112

$19,

839

$17,

628

$9,4

31

$8,3

04

$7,9

49

$7,3

56

$6,1

33

$5,8

47

0

5000

10000

15000

20000

25000

30000

$ M

illio

ns

Top 10 Consumer Food Companies

#3 Consumer Food Company in the U.S.

Fortune Magazine, April, 2003

*FY 2003 Revenues

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Role of Marketing and Market Research

Finance

Operations

Marketing/Market Research

Sales

R&D/Packaging

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Role of Marketing Research

Product

Price

Placement

Promotion

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Product

What is positioning?

How do you position a brand? Strategic

A&U, Segmentation, Market Structure

Qualitative research

Quantitative research

Example:

Product Positioning:

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Product Positioning – Knott’s Berry Farm

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Product Positioning – Knott’s Berry Farm

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Product Positioning – Knott’s Berry Farm

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Product

Product formula

Taste & texture

Ingredients

Preparation

Packaging Container type Graphics

Cost of goods

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Price

Value = Benefits

Price

How do you determine price?

Benchmarking

Consumer testing

Price elasticity

Thresholds

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Price

Example Base Price Elasticities

Pri

ce E

last

ic/S

ensi

tive

Price In

elastic/Insen

sitive

Cooking Oil-2.08

Dry Dog FoodDry Cat Food

-1.9

Coffee-1.5

TomatoSauce-1.25

FrozenBreakfast

-1.1

Baking MixIngredients

-1.0

Cough/ColdMedicine

-0.9

AdultToothbrushes

-0.65

NicheProducts

-0.6

Decongestants-0.4

-1Canned

Dog Food-2.0

Cat Litter-1.8

CannedTomatoes

-1.6Mustard

-1.3

BabyFood-1.2

Shampoo-1.1

InternalAnalgesic

-0.9

HouseholdCleaners

-0.8

Dry Soup-0.7

Mouthwash-0.5

Men’sFragrance

-0.3

Mid-Tier Sensitive

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Price

$-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

1.49 1.59 1.69 1.79 1.89 1.99 2.09 2.19

-

200

400

600

800

1,000

1,200

1,400

1,600

Profit

Vol(cases)

Price elasticity analysis helps identify the volume and profit relationship to price

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Placement

Power shift to retailers

Outlet landscape is diverging

In-store placement is key

Shelf space – slotting

Store location

Arrangement

Out of stocks

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Form

The “Tomato Matrix” shelf set simplifies the shopping experience

Brand-block set led by store brand, then followed by Hunt’s Horizontal form set with Whole and Diced on top, Sauce and Puree on the bottom

The Tomato Matrix Set simplifies the shopping experience bybest reflecting the category market structure

Tomato Matrix SetTomato Matrix Set

Specialty

Ro*Tel

Sauce/Puree

Paste/Crushed

Whole/Specialty

Diced

Diced/Stewed

Store Brand Hunt’sHunt’sDel Monte/Del Monte/ContadinaContadina

Bra

nd

Re

gio

na

l/B

ran

ds

Shelving

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Promotion

Trade promotions

Advertising TV, radio, print, outdoor, internet

Example . . .

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Chef Boyardee

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Promotion (continued)

Consumer promotions Coupons

Free Standing Inserts, in store

Sponsorships

Measuring ROI Event to event

Across a portfolio of products

Across geographies

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Volume Decomposition

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

6/3/

2001

6/17

/200

1

7/1/

2001

7/15

/200

1

7/29

/200

1

8/12

/200

1

8/26

/200

1

9/9/

2001

9/23

/200

1

10/7

/200

1

10/2

1/20

01

11/4

/200

1

11/1

8/20

01

12/2

/200

1

12/1

6/20

01

12/3

0/20

01

1/13

/200

2

1/27

/200

2

2/10

/200

2

2/24

/200

2

3/10

/200

2

3/24

/200

2

4/7/

2002

4/21

/200

2

5/5/

2002

5/19

/200

2

Total Core Non ASM Trade

ASM Trade Consumer Promotion (FSI and ICM)

Total Advertising (TV and Radio)

Marketing Mix Modeling can break down incremental volume driven by different marketing activities.

Source: IRI Mix Drivers Model, Total US Food

Vo

lum

e S

ales

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Kickstarting your Marketing Research Career

CPG companies often look for experience How do you get experience?

Start off at a research supplier Doesn’t have to be CPG focused

Or, pursue an internship Work at a research field site, even if it’s part

time while in school What qualities do they look for?

Intellectual curiosity Analytical mindset Able to challenge the status quo Action oriented Good juggler People person

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Summary

Role of Marketing Research Product Price Placement Promotion

Kickstarting your Marketing Career