Applying CatMan 2.0 to Target ConfectioneryApplying CatMan 2.0 to Target ConfectioneryApplying CatMan 2.0 to Target ConfectioneryApplying CatMan 2.0 to Target Confectionery

May 15, 2017May 15, 2017May 15, 2017May 15, 2017

CatMan 2.0 FrameworkCategory Assessment: Who buys the category and why? How is the category performing?

We research along the entire path to purchase

Total Confection

Demand

Purchase

Need/Trip

Retailer/Outlet

Selection

Store Shopping/

Navigation

Item/Quantity

Selection

Retailer Selection Drivers

Purchase Quantity Drivers

Confection Missions Purchase Location Insights

Demand Segments

Hershey’s approach is to be an indispensable consultative partner to our retail customers

Tactical Excellence

P&L

Mindset

Insight

Driven

Performance

Effectively employ analytical tools to

drive superior tactical solutions

Understand customer financial objectives

and value creation levers

Understand shopper behavior drivers

Develop compelling strategies to

achieve customer financial objectives

Definition

Shopper

Mindset

Target Confectionery Background

• Confectionery has historically performed very well

at Target, especially seasonal candy

• Target’s share of candy sales across xAOC has

consistently grown, driven in part by exclusive items

• Target has identified candy as a Signature Category

oBe famous with Guests

oDrive sales

oBe a clear market leader

• Signature categories are expected to drive

improved Guest experience, traffic, and loyalty

Target Confectionery Background

• In 2016 there were several key personnel changes

on category desks

• In addition, Target’s SVP for Grocery departed

• In 2016 category performance lagged vs. total store,

and lagged vs. competitive set

• Causal Factors

oTraffic

oConversion

oLess Promotions/Displays

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

Target Confectionery Background

• Hershey’s Category Advisor Team and the Target

Candy Buying Team agreed on need to elevate

discussion around improving category performance

• In late 2016 we aligned on an initiative to restart

growth and build a long-term strategy for success

oEducate internal Target KDMs on the role and

importance of the category

oLeverage insights at a higher rate

o Implement Best Demonstrated Practices with regard to

planogram creation, adjacencies, merchandising, etc.

oProvide a scorecard to assist internal decision-making in

awarding promotional and ad space

oBring joy back to the candy shopping experience

Assessment What & Why –CatMan 2.0 FrameworkCategory Assessment: Who buys the category and why? How is the category performing?

CatMan 2.0 and Target Confectionary Action Plan

1) Guest Research

◦ Path to Purchase

◦ Consumer Decision Tree

◦ When the product sought is not available, shoppers will:

Step 1: Navigating the Aisle

Improving Noticeability and Engagement

tactics will drive shoppers into aisle

Step 2:

Finding the right Items

Step 3:

Choosing the Items

USAGE OCCASION (by Segment)

PACKTYPECHOCOLATE OR

SWEET? (Flavor)BRAND

KEEP FLAVOR, SWITCH BRANDKEEP FLAVOR, SWITCH BRAND

KEEP BRAND, SWITCH FLAVORKEEP BRAND, SWITCH FLAVOR

BUY NOTHINGBUY NOTHING

LOOK IN ANOTHER AREA OF STORELOOK IN ANOTHER AREA OF STORE

WAIT UNTIL NEXT VISITWAIT UNTIL NEXT VISIT

SWITCH PACK SIZESWITCH PACK SIZE

GO TO ANOTHER STOREGO TO ANOTHER STORE

Almost half of shoppers

WILL WALK AWAY WILL WALK AWAY WILL WALK AWAY WILL WALK AWAY from the

aisle if desired candy is not

available

CatMan 2.0 and Target Confectionary Action Plan

2) Playbook – Compiled insights and category data in support of:◦ Gaining Target leadership support

◦ Communicating role and importance of category

◦ Winning more promotions/displays

◦ Training new team members

3) Accelerating Candy Growth Initiative◦ Opportunity Framework and Pillars

◦ Aligned on Problem Statement and Opportunity Statement

◦ Project management to deliver on each pillar of growth

PILLAR 1 PILLAR 2 PILLAR 3 PILLAR 4

IMPROVE COLLABORATION

and

INFLUENCE DECISIONS

ALIGN PHYSICAL/DIGITAL MAXIMIZE ASSETSIMPROVE GUEST

EXPERIENCE

CatMan 2.0 and Target Confectionary Action Plan

4) Category Metrics and Scorecard

◦ All major performance metrics included; adding internal metrics for all KDM

Priority Success Metrics 2017 2018 2019

1 Sales $ TBD TBD TBD

2 Market share TBD TBD TBD

3 Profit TBD TBD TBD

4 Rate TBD TBD TBD

CatMan 2.0 Next Steps1H 2017

◦ Buying Team and Advisor Team are aligned on role of the category for shoppers

◦ Working to educate all KDMs on role of category and its importance to sales, margin, and loyalty

◦ CatMan 2.0 process included leveraging Shopper Insights and research to insure we have up-to-date Guest data, including demographics, CDT, and store clusters

Ongoing◦ Aligning support model to new organizational structure

◦ Continuing education of leadership

◦ Continue to refine the data set to remain on-point regarding key trends and insights

◦ Leverage all of the above against the online environment to insure a seamless Guest experience as they shop the endless candy aisle

Target Confectionery and CatMan 2.0

Questions?