The Martec Group Confidential

C H I C A G O • D E T R O I T • F R A N K F U R T • S H A N G H A I • B E I J I N G

The Martec Group Confidential

Capabilities Overview

Customer Intelligence Clinics

Product Intelligence Market Intelligence Customer IntelligenceCompetitor Intelligence

The Martec Group, Inc. Enabling Execution Through Insight

The Martec Group Confidential2

When your list of goals looks like a Post-It explosion…

Better marketing and sell-in materials

Support demand

creation at the retailers

Stronger price

positioning

Uncover unique

segmentation perspectives

Optimize product offerings,

placement, and merchandising

support

Provide information to retailers that they may not know about

their customers

Q1 Goals


…Martec has a unique “one-stop shop” solution to gather a range of B2B or B2C buyer/customer insights

Planned vs. Impulse

Purchases

Channel/Store

Selection & Loyalty

Product Attitudes,

Usage

Price Elasticity

Brand Preference, Imagery and

Loyalty

Market Basket

Purchase Occasion

New Product/Concept Testing

Customer Intelligence Clinic

Customer InsightsBuyer Insights


The core process involves multiple steps/methods of gathering information.

Prior to arrival, respondents complete a screening questionnaire

• Serves to recruit and pre-qualify each respondent in terms of demographics and attitudinal/background information

• Respondents can include end-users/customers, dealers, distributors, installers, contractors, etc.

A participant background worksheet is completed upon arrival to more fully understand shopping patterns/behavior

• Preferred channels/stores; frequency of shopping; market basket, etc.

Brand perceptions captured via PC-based exercise

Self-administered surveys are used in the product and simulation rooms

• Simulated aisles; new products; new packaging concepts; new formats; etc.

• Ethnographic• Merchandising and promotions testing

Respondents participate in a group discussion to fully explore attitudes/perceptions regarding the products/issues

PC-basedExercise

DiscussionGroups

Simulation Room

(simulated shopping)

SERVICEAREA

VIEWING14x17 - 6

VIEWING15x26LOUNGE

11x14

CLIENTOFFICE12x10 OFFICE

11x9

AV11x8 RECEPTION

24x18

ENTRY

COPYROOM16x14

CLT VIEWING24x12 - 6

PHONE

Product Room(hands-on product

testing)

ParticipantBackground


Case Study: Customer Intelligence Clinic

- “Product X” in the Automotive Retailer Channel -


Project Background

• Our client sells “Product X” into multiple segments, including manufacturing (food processing, oil/mining, and other areas of manufacturing) and vehicle service and repair, both DIY and DIFM (dealerships, repair shops, etc.).

• Our client was developing marketing and sell-in materials for leading automotive retailers and needed to better understand what was driving customers’ purchase decisions and usage (past, current, and future) of similar products.

• Client management used our information and analysis to more effectively address and impact the customer purchase decision (current and future), ultimately driving growth in this important channel.

• The Martec Group was commissioned to conduct proprietary market research to assist our client with the required customer insights.


Research involved 200 customers of similar products, covering a variety of demographic and behavioral segments.

Conducted in multiple locations.• Selected due to representative mix of demographics along with coverage of key retailers

(Advance, Auto Zone, O’Reilly’s, etc.)

Target audience: Customers who utilize “Product X” and similar products and purchase via “retail” stores

• Auto retailers – Advance Auto, Auto Zone, O’Reilly’s, CARQUEST, NAPA• Mass merchandisers – Wal-Mart, Sam’s Club, Sears, Dollar Stores • Home center/hardware stores – Ace, True Value, Tractor Supply, Home Depot, Lowes• Currently purchasing or recent purchasers of these types of products

Demographics • 75% male/25% female• Variety of occupations (targeted ~25% professional trades/mechanics)

Shopping behavior• 55% of respondents “preferred” retailer = automotive retailer (remainder split between

mass merchandisers and home center/hardware)• Mix of buyers – for work, for home, purchasing for family/business, etc.


Specific insights gathered…

Understand typical usage and purchase patterns for these products, brand(s) purchased• Preferred retailers and brands – with reasons (why do you shop at _____?)• Purchase frequency and occasion• Intended place of use and frequency

Understand the customer Decision Tree• Key purchase criteria and importance (brand, make-up/format, container size, price, etc.) • What does the end customer know about the product, how do they get their information?

Measure brand perceptions and performance• What are the drivers or triggers that cause a Customer to consider and purchase specific

brands?

Evaluate new products/concepts• Current competitive set of products on hand for evaluation by respondents• Included product trial and fragrance testing

Measure price elasticity for current competitive set as well as product concepts


Sample Insights

Key takeaways/ insights are highlighted


There is significant cross-over between product usage at home and at work, particularly among men (~48%).

Predominantly an “individual” purchase – not a significant share for “family use” or “employee use”.

• Also evident in attitudinal responses – don’t see much reliance on “others” for advice, etc.

Overall Male Female0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

49% 45%59%

5%5%

4%

40% 48% 18%

5% 2%

15%

0.01 0.04

Use at Home Use at work Use at home & workFamily Use Employee Use

Perc

ent o

f Res

pond

ents

Which of the following best describes your purchases of these types of products within the past 12 months?


Purchase Occasion Insights

Weekly Monthly Every 2-3 months 2-3 times per year

About once per year

Less than once per year

0%

5%

10%

15%

20%

25%

30%

35%

40%

19%

36%

21%

16%

7%

1%

Perc

ent o

f Res

pond

ents

How often do you purchase for home/work?

The more frequent buyers (weekly/monthly) are less prices sensitive, more brand loyal and prefer to shop at auto retailers.


Shopping Behavior Insights

I find these products are the same so it makes sense to buy the cheapest

There is a large difference among brands

I want to be able to try samples before buying a new brand or type

Once I find a product or brand I like, I stick with it

I am familiar with several different brands

I check the prices on what I purchase

I often take samples of these types of products, when they are available

I buy from more than one store

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Top 2 Box (6 or 7) Bottom 2 Box (1 or 2)

Percent of Respondents

Please rate your level of agreement with each of the following statements regarding your purchase, and usage, of the product. One to seven scale – where one indicates completely disagree and seven indicates completely agree.

Although familiar with many brands, they seem to be fairly brand loyal.

Customers are purchasing from multiple stores.


Purchase Insights(e.g. “Impulse” and “Planned”)

I decided to purchase this product when I saw it on the shelf

I decided to purchase this product while I was shopping, but before I reached the aisle/display

I decided/planned this purchase at home or before I entered the store

0% 20% 40% 60% 80%

Which of the following best describes your purchase?


Planned buyers tend to buy less frequently; tend to shop more often at auto retailers; buy larger sizes; are more loyal to a “store” and brand

Impulse buyers tend to buy more frequently; shop more often at mass merchandisers; buy smaller sizes; are not as loyal to a “store” or brand


Store/Brand Selection and Loyalty Insights

CARQUEST

Ace Hardware

Tractor Supply

Other

Sam's Club

Home Depot

O'Reilly's

Dollar Stores

NAPA

Lowes

Advance Auto

Wal-Mart

AutoZone

0% 10% 20% 30% 40% 50% 60% 70%

Purchased past 12 months Preferred


From which of the following places have you purchased within the past 12 months?Which is your preferred source?

Approximately 55 percent of the participants “preferred” purchasing at auto retailers (AutoZone, Advance, O’Reilly’s, NAPA and CARQUEST).

Many retailers widely shopped, but a couple of clear favorites.

Client didn’t realize non-auto (i.e. Wal-Mart) was so prominent.


Market Basket Insights

Brake parts

Fluids

Oil change products

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Rarely/Never Sometimes Often/Regularly


@ Auto Parts Retailers

When you are purchasing, how frequently do you purchase the product categories below at the same time as the product in question?

Kitchen/bathroom repair products

Landscaping/gardening materials

Paint supplies

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

@ Home Centers/Hardware Stores

@ Mass Merchandisers

Paint & paint supplies

Automotive repair products

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Customers often bundled the subject product with other products.


Quantitative Usage Insights

Predominantly an “individual” purchase – not a significant share for “family use” or “employee use”.

Overall Male Female0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Use at Home Use at work Use at home & workFamily Use Employee Use

Perc

ent o

f Res

pond

ents

Which of the following best describes your purchases within the past 12 months?


0% 50% 100%0%

50%

100%

Quantitative Usage Insights

Leading activities where the product is used…

Restore classic cars

Auto repair

Furniturerefinish Plumbing

Painting

Home repair

Snowmobiling

Hunting

Ceramics/pottery

4x4off road

Motorcycles/dirt bikes

Boating/Jet ski

Hiking

Arts &crafts

Camping

Biking

Appliancerepair

Fishing

Gardening

Landscaping

Percent of respondents that “sometimes” or “often/regularly” participate in…

Per

cent

of r

espo

nden

ts th

at “

regu

larly

” us

e af

ter

this

act

ivity

Frequency of Activity

Usa

ge

Automotive

Home Improvement

Initial focus was on Automotive Retailers only…research highlighted need for a dual channel strategy


Key Purchase Criteria Insights

Stat

ed Im

port

ance

– T

op 2

-Box

Rati

ngs

Derived Importance (based on overall satisfaction)

Entry Tickets Critically Important

Undeveloped Intrinsically Important

16

15

2

14

3

22

1718

25

4

8

11

24

1321

5

1

26

20

23

67

19

12

910

Stated vs. Derived Importance Quadrant Analysis

Several purchase criteria were classified as “critically important” that were previously thought to be “entry tickets”


Price Elasticity Insights

$0.50$1.00

$1.50$2.00

$2.50$3.00

$3.50$4.00

$4.50$5.00

$5.50$6.00

$6.50$7.00

$7.50$8.00

$8.50$9.00

$9.50

$10.00

$10.50

$11.00

$11.50

$12.00

$12.50

$13.00

$13.50

$14.00

$14.50

$15.00 0

10

20

30

40

50

60

70

80

90

100

Inexpensive Expensive Too expensive Too inexpensive

Optimal Price

~$5.75

PME

PMC

Acceptable Price Range~$4.25 to $6.50

Analysis of multiple brands

Customers consistently had higher acceptable price ranges for client brand vs. competition


Additional merchandising and improved packaging for the offering are needed.

Merchandising is required to take advantage of the high percentage of impulse purchases.• Merchandising issues seem to focus less on deals (coupons, sales, etc.) and more on

samples ("get them to try it")

• Bundling with other products could improve top-of-mind awareness in general and specifically for our client

Multiple “baskets” are possible – automotive (cleaning, oil change, etc.); indoor home; outdoor home

“I would consider purchasing a package with oil, an oil filter and a small bottle of heavy-duty hand cleaner.”

• Samples are essential – meet customers at the door of the retailer with opportunities to try product

Most arrive in need of your product


Purchase Intention Insights

1 - Not at all likely

2 3 4 5 6 7- Extremely likely

11%

5%

9%

15%

24%24%

12%

36%16%

Bottom 2 - Box Top 2 - Box


How likely would you be to purchase the brand/product at the price you identified as “expensive, but still a possible purchase”?

Confirmed that there was purchase activity at the high end


Contacts

Thank you for this opportunity.

martecgroup.com

Chicago105 West Adams StreetSuite 2125Chicago, Illinois 60603(312) 606-9690

Detroit27777 Franklin RoadSuite 1600Southfield, Michigan 48034(248) 327-8000

EuropeBerliner Strasse 21963067Offenbach/MainGermany+ 49 69 80903 60

China 121 Yanping RoadSanhe Plaza 10BShanghai 200042 China +86 (21) 6246-2121

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