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Copyright © IRI, 2005. Confidential and proprietary.
“So you want to be a Rocket Scientist?” How to understand success in multinational launches
Re-inventing CPG & Retail Summit 2005
Janey Pearson - VP J&J Consumer Services EAME Ltd.Tim Eales - Industry Insights, IRI International Services
2Copyright © IRI, 2005. Confidential and proprietary.
Lack of category growth Drive for greater volumes
and higher profits Greater competition:
Crowded shelves Bigger ‘value-added’
claims Higher costs of NPD
Key Challenges facing J&J European business today
Leading to…
Strategies for big multinational launches
How to make your big bangs bigger!
How do we know when we have a Rocket?
3Copyright © IRI, 2005. Confidential and proprietary.
4Copyright © IRI, 2005. Confidential and proprietary.
Huge differences across different countries…
Sale
sSe
ason
ality
Item
s pe
r sto
reD
istr
ibut
ion
5Copyright © IRI, 2005. Confidential and proprietary.
Sale
s
Seas
onal
ityIte
ms
per s
tore
Dis
trib
utio
n
€ 138.9m€ 105.1m € 101.5m
€ 265.1m
GERMANY (Sep 03) GB (Feb 04) SPAIN (Oct 03) ITALY (Jan 04)
39 weeks from launch, the German market is 2.5X bigger than Italy
Body Cream Category Value Sales
Huge differences across different countries…
6Copyright © IRI, 2005. Confidential and proprietary.
Sale
s
Seas
onal
ity
Item
s pe
r sto
reD
istr
ibut
ion
Body Cream Seasonality Index
Huge differences across different countries…
40
80
120
160
sep oct nov
dec jan feb mar apr
may jun julau
gse
p oct
Germany GBSpain Italy
xmassummer
Based on average weekly value sales per month
7Copyright © IRI, 2005. Confidential and proprietary.
Sale
sSe
ason
ality
Item
s pe
r sto
re
Dis
trib
utio
n
Body Cream No of Items per Store
127.2
23.8
78.8
110.4
GERMANY GB SPAIN ITALY
Huge differences across different countries…
Expected share given average sales & distribution0.9% 0.8% 4.2% 1.3%
8Copyright © IRI, 2005. Confidential and proprietary.
0
20
40
60
80
100
4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76
ITALY
UK
GERMANY
SPAIN
Sale
sSe
ason
ality
Item
s pe
r sto
re
Dis
trib
utio
n
Body Cream Distribution Build
Retailer concentration and practices largely govern the achievement of
distribution in each country
Huge differences across different countries…
Product availability - By Country - Best
9Copyright © IRI, 2005. Confidential and proprietary.
What is No Deal Sales Rate Index?
Sales rate of new product vs. Sales rate of average item in category
And therefore accounts for ‘noise’ from…
Shows effect of…
Item level analysis Adjusted for distribution Non-promoted volume only
10Copyright © IRI, 2005. Confidential and proprietary.
A purely hypothetical example…Where is this brand going?
0
50000
100000
150000
200000
250000
0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 640
0.5
1
1.5
2
2.5
3Value ShareValue Sales
Weeks from launch
11Copyright © IRI, 2005. Confidential and proprietary.
0
50000
100000
150000
200000
250000
0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 640
0.5
1
1.5
2
2.5
3Value ShareValue Sales
A purely hypothetical example…Sales to date would suggest a continued rise
Weeks from launch
12Copyright © IRI, 2005. Confidential and proprietary.
A purely hypothetical example…But underlying the value trend, SRI is going down
0
20
40
60
80
100
120
140
160
0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64
Value shareof category
Distribution
Volume priceindex
No dealvolume SRI
Media TVRs
Weeks from launch
13Copyright © IRI, 2005. Confidential and proprietary.
A purely hypothetical example…And would usually continue to fall
0
20
40
60
80
100
120
140
160
0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64
Value shareof category
Distribution
Volume priceindex
No dealvolume SRI
Media TVRs
Weeks from launch
14Copyright © IRI, 2005. Confidential and proprietary.
A purely hypothetical example…In fact, sales will fall when distribution stabilises
0
50000
100000
150000
200000
250000
0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 640
0.5
1
1.5
2
2.5
3Value ShareValue Sales
Weeks from launch
15Copyright © IRI, 2005. Confidential and proprietary.
A purely hypothetical example…Sales will be 24% lower than projected
0
50000
100000
150000
200000
250000
0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 640
0.5
1
1.5
2
2.5
3Value ShareValue Sales
Weeks from launch
16Copyright © IRI, 2005. Confidential and proprietary.
Case Study
17Copyright © IRI, 2005. Confidential and proprietary.
250ml Body Lotion pricing & distribution
8555 50
84
GERMANY GB SPAIN ITALY
Average price (€) per litre
39 weeks from launch Prices varied by 20%
21.520.725.5
19.0
GERMANY GB SPAIN ITALY
159 162 154 115Index
Category weighted distribution
39 weeks from launch Distribution achievement was much higher in GB and Germany
18Copyright © IRI, 2005. Confidential and proprietary.
250ml Body Lotion promotional activity
57.9 59.9 46.912.2
GERMANY GB SPAIN ITALY
32 3325
7GERMANY GB SPAIN ITALY
516 550
89
559
GERMANY GB SPAIN ITALY
% Volume sales with any trade promotion 39 weeks from launch Nearly 6 times more promotional activity in Spain as in Germany
Incremental share Incremental share varied by 4 times
Media TV support varied significantly . by country
19Copyright © IRI, 2005. Confidential and proprietary.
€ 1.4m€ 0.9m € 0.9m
€ 1.7m
GERMANY GB SPAIN ITALY
250ml Body Lotion sales performance
1.0 0.8 0.90.6
GERMANY GB SPAIN ITALY
Value sales 39 weeks from launch Value sales are highest in the largest country
Value share of category 39 weeks from launch Despite high sales in Germany, this equates to the lowest share
20Copyright © IRI, 2005. Confidential and proprietary.
21Copyright © IRI, 2005. Confidential and proprietary.
Brand A 250ml Body Lotion - GB
2.5 2.7
1.30.7
0.30.4 0.30.60
50
100
150
200
250
300
350
Pre 4 9 13 17 22 26 30 35 39 43 48
Value share oftotal category
Volume priceindex
No dealvolume SRI
Media TVRs
% volume ondeal
Weeks from launch
22Copyright © IRI, 2005. Confidential and proprietary.
Brand A 250ml Body Lotion - Spain
1.7
0.30.40.3 0.40.61.42.0
1.01.7
0
20
40
60
80
100
120
140
160
180
200
Pre 4 8 13 17 21 26 30 34 39 43 47 52 56 61 65
Value share oftotal category
Volume priceindex
No dealvolume SRI
Media TVRs
% volume ondeal
Weeks from launch
23Copyright © IRI, 2005. Confidential and proprietary.
Brand A 250ml Body Lotion - Germany
0.2
1.6
1.31.2
0.8
0.40.30.20.20.2 0.3
1.5
1.0
0.2 0.20
50
100
150
200
250
300
Pre 5 9 13 18 22 26 31 35 39 44 48 52 57 61 65 70
Value share oftotal category
Volume priceindex
No dealvolume SRI
Media TVRs
% volume ondeal
Weeks from launch
24Copyright © IRI, 2005. Confidential and proprietary.
Brand A 250ml Body Lotion - Italy
1.2
0.50.7
0.4
1.8
0.6
0.2 0.2
1.8
0.40
50
100
150
200
250
300
350
Pre 4 8 13 17 21 26 30 34 39 43 47 52
Value share oftotal category
Volume priceindex
No dealvolume SRI
Media TVRs
% volume ondeal
Weeks from launch
25Copyright © IRI, 2005. Confidential and proprietary.
Sales rate index by country – 250ml Body Lotion
0255075
100125150175200225250275300
4 8 13 17 21 26 30 34 39 43 48 52 56 61 65 69
GB
Spain
Germany
Italy
Weeks from launch
26Copyright © IRI, 2005. Confidential and proprietary.
Brand A – pre/during/post advertisingNDSRI Volume
0
20
40
60
80
100
120
140
160
Phase 1 - PRE Phase 2 - DURING Phase 3 - POST
Germany
GB
Spain
Italy
27Copyright © IRI, 2005. Confidential and proprietary.
Critical learnings & actions from our case study
Sales Rate Index is predictable
Critical variations in price sensitivity by market Action: Pricing Strategy
Advertising driving peaks Action: Advertising deployment
This launch has performed exactly the same in each of the four markets
Brand proposition not selling off the shelf Action: Communicating the message at shelf
28Copyright © IRI, 2005. Confidential and proprietary.
Summary
SRI is a way of normalising these differences to allow a direct comparison
SRI identifies total launch achievements and the underlying consumer trends
Using this knowledge from all major launches in the category, J&J can now interpret the early signs to spot their rockets
Traditional measures do not allow consistent comparison of launches between different categories, markets and seasons