Spring Semester 2015 Nielsen Project

2

Agenda

Introduction

Market Analysis

Recommendations

Final Decision

3

INTRODUCTION

4Nielsen Case Deck Slides 12

Overview

Q: Who is the client?

Flamenco Foods

• Popular manufacturer in Spain and European countries, looking to expand into US market

Company

• El Toro Loco! Empanada Kits, a new line of kid-targeted refrigerated lunch kits

New Product

• Hopes to secure El Toro Loco! line in all grocery outlets with Hispanic targeted dominant regionsStrategy

Flamenco Foods should consider the importance of family and culture to succeed in the market.

5Nielsen Case Deck Slides 12 and 15

Flamenco Foods – Initiative

Key Client Business Issue

AnalysisClient’s Situation

Client’s situation dependent on five different factors.Nielsen estimates 3.6 million units must be sold to reach client goals.

• Yet upper management is skeptical the product is competitive enough

Brand managers are confident…

• But it needs more information; contact Nielsen to evaluate proposal

Upper management will invest…

• Nielsen estimates 3.6 million units of empanada kits must be sold in first year

In order to succeed

Economic Implication

s

US Hispanic

landscape

Ethnic food

trends

Consumer behavior

Client’s goals

6Nielsen Case Deck Slides 13

Flamenco Foods – New Product

Q: What is the product?

El Toro Loco! Empanada Kit

3 options of lunch kit contains meals balanced with empanada entrée, dessert, and drink.

Lunch

Kit

• Contains one empanada, pudding cup, and one drink

Easy

• Requires no prep work, which means more time for parents

Variety

• Three varieties with unique flavors; costs $3.89/kit

Lunch kit

Chicken &

Cheese

Ham & Cheese

Black Bean & Cheese

7Nielsen Case Deck Slides 12 and 38

Flamenco Foods – Strategy

Strategy

Flamenco Foods plans to execute a marketing campaign targeted at Hispanic population.

Texas and California (38%)

Florida (22%)

Colorado (21%)

Nevada (17%)

Areas with High Hispanic Percentage of Population

• Flamenco hopes to secure distribution of the El Toro Loco! line in all outlets selling grocery items nationally

• Plans to execute a very targeted marketing campaign in Hispanic-dominant regions throughout the country

Goal & Vision

8

MARKET ANALYSIS

9

Market Analysis – Hispanic Buying Power

• Hispanics have an increased buying power

• Projected to increase by 50% by the year

2015

• Capitalize on growing influence in the

economy

Overall Landscap

e

Statistics

Flamenco Foods should capitalize on 50% growth in population by 2015 by targeting this population.

• Hispanic population has seen an overall larger percent income growth

• Hispanic population is expected to increase its buying power by 50% from 2010 to 2015

10

Marketing Analysis – Hispanic Population Growth

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Share of Population Growth by Race/Ethnicity

White Black Hispanic Asian Other

Hispanics make up 16% of the current nation’s population and will continue driving growth, making them an important target market.

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Marketing Analysis - How Hispanics Shop

Hispanics respond to…DealsAbility to buy

in bulkSamplingTargeted

advertisingNon-Hispanic Spanish-Prefered English Preferred

0

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160Shopping Frequency/Household

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8000Basket Ring Dollars/Household

Hispanics shop less often than other groups, but spend more per trip.Hispanics spend a greater amount annually.

Non-Hispanic Spanish-Prefered English Preferred0

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25% Dollars on Deal

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Marketing Analysis - Where do Hispanics Spend?

% of Total Spending on % of Total

Food Consumed in the Home Income

Black Households 61.5%6.5%

Hispanic Households 61.2%8.2%

Asian Americans HHs 55.6% 5.2%

All US Households 58.1% 5.9%

On average, 42% of all food spending is outside the home.

Source: US Bureau of Labor Statistics, Consumer Expenditure Survey

Hispanic households spend more on food than the average US household.

13

Marketing Analysis - Diversity Among Hispanics

Mexican65%

Puerto Rican9%

Cuban4%

Salvadoran4%

Dominican3%

Guatemalan2%

Colombian2%

Must recognize that the Hispanic culture is diverse and market product to appeal to majority of the population.

14Marketing Kerin, Hanglin Li

Summary

Expected Growth in Hispanic Buying Power

The Hispanic population is

diverse

Hispanic population is comprised of

young families

15

INITIAL DECISION

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El Toro Loco!

17

El Toro Loco Will Not Reach Goal Sales

- Price is the number one concern among consumers

- 71.4% (25 of 35) of surveyed consumers disliked the price post-use of the product

- 78.2% (36 of 46) of surveyed consumers disliked the price post-use of the product

- Current price is at $3.89- US consumer confidence improves, yet still

below pre-recession levels

Problem Analysis

- Current price is at $3.89- The meal set includes a two-flavored

empanada, one type of pudding, and one drink

- Unit sales of ready-to-serve meals have declined from 2.10 billion to 1.97 billion units (2009-2012)

- Average consumer buys 1.5 units per transaction

- Total year 1 unit transactions = 3.0 million

Pre-Use Post-Use0

10203040

10 10

25

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Price – Like and Dislike

Like Dislike

18

RECOMMENDATIONS

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PRODUCT ALTERATIONS

20Nielsen Case Deck Slides

Product Alterations - Overview

Q: What are ways we can improve the product?

El Toro Loco! Empanada Kits

• Economic recession is a major factorPrice

• The price to make products is highIngredients

• Cut back on how many flavors offeredFewer

Options

Flamenco Foods should consider changing the price, changing the ingredients, or cutting a product.

21Nielsen Case Deck Slides 32 ,33, and 34 School Nutrition Association, http://www.nbcnews.com/business/economy/meat-prices-expected-keep-climbing-2015-n276906

Product Alterations - El Toro Loco Proposals

Product Improvement

Analysis Problem

Price is a major concern.Current economic situation appears unfavorable.

• Families resort to cooking for basic needs

In tough times…

• US consumer confidence rates are still below pre-recession rates

Price is number one concern

• Driving consumers to make trade-offs or buy less

Current economic situation

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School Lunche

s

• The average price of a school lunch meal is $2.70 and $3.10

• Lunch kit currently costs $3.89

22Nielsen Case Deck Slides 52 and 55, http://www.bls.gov/regions/mid-atlantic/data/AverageRetailFoodAndEnergyPrices_USandMidwest_Table.htm

Product Alterations - Product Proposals

Analysis

Price of ham is increasing.Cut ham – have one veggie option and one meat option.

Usage

• Black bean least popular pre-use

• Post-use, ham least popular

Ingredients

• Price of ham ($2.331/lb) more expensive than chicken ($1.544/lb)

Options

• Have one vegetarian option

• Have one meat option instead of two

Chicken & Cheese

Empanada

Ham & Cheese Empanada

Black Bean & Cheese Em-

panada

80 7159

82

55 60

Chicken & Cheese

Empanada

Ham & Cheese Empanada

Black Bean & Cheese Em-

panada

69 62 6072 63

33

Pre-Use

Post-Use

Parents of Kids Ages 6-12

Kids Ages 6-12

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BRANDING

24http://academic.mintel.com.proxy.library.nd.edu/display/708453/?highlight#hit1

Branding - Overview

Effective branding leads to greater brand awareness and in turn, increased market share.

To be effective:• Identifiable logo • Distinct brand

message• Good exposure• PACKAGING

28%

34%

38%

Informed Buyers

Convenience Connoisseurs

Skeptical Shoppers

Food Packaging Clusters

The Convenience Connoisseur shopping group values the package design, sometimes more than the product itself. Unique shapes and colors typically grab their attention.

25http://academic.mintel.com.proxy.library.nd.edu/display/708450/

Branding - Packaging Trends

• Packaging attributes influence purchase• Older generations care more about practical use of packaging• Younger generations care more about package design itself

iGeneration/Millen-nials (Generation Y) (1977-1994) (18-37)

Generation X (1965-1976) (38-49)

Baby Boomers (1946-1964) (50-68)

Swing Generation/World

War II (69+)

0

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Includes recipes

Unique package design

Labeled with an associated chari-table activity

Geared toward specific de-mographic

Interactive

Has a celebrity, character, TV show, musician, or sports team that I/we like on it

Other

None of the above

Statistics on Packaging

Millennials put an emphasis on unique package design as well as a package labeled with an associated charitable activity.

26Nielsen Case Deck Slides

Branding – Use Family and Cultural Ties

Q: What are ways we can increase the potential success of Flamenco Foods?

Family Culture

• A child’s interest in an item impacts the likelihood of buying product

Children

• Wants to appease child’s desires; make family happy

Parents

• Easy for families on the go; requires minimal preparation

Utility

Flamenco Foods should consider the importance of family and culture to succeed in the market.

• Hispanics will be #1 contributor to US population growth

Growth

• Spending power has increased from $1 trillion to $1.5 trillion

Money

• No Hispanic-styled lunch in current market; little competition

Niche

27http://academic.mintel.com.proxy.library.nd.edu/display/696017/?highlight

Branding - Why Hispanic Culture Focused?

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• Hispanics have an increased buying power, projected to increase by 50% by the year 2015.

• About 61.2% of Hispanic households’ total spending (8.2% of their total income) is used on food consumed in the home

• Hispanic households spend more on categories of products for young families.

Share of Population Growth by Race/Ethnicity

• 76% of Hispanics shop for groceries once or more a week.

It is likely Hispanics will spend the majority of their income on food for their children, thus making the Hispanic Culture a primary focus for product branding and packaging.

28http://academic.mintel.com.proxy.library.nd.edu/display/715814/?highlight

Branding – Towards Hispanics

Main focus for Hispanic branding is authentic packaging tying in the Hispanic culture and tradition.

• Hispanics believe it is important for family to hold onto its heritage

• 75% of Hispanic moms try to keep their culture and family traditions alive

• Food is an integral part of the Hispanic cultural identity

• Hispanic moms will respond to food brands that celebrate heritage

29http://academic.mintel.com.proxy.library.nd.edu/display/583043/

Branding - Why Child Focused?

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Likely %

Not likely %

My kid never asks me for this %

85% of parents with kids aged 6-11 are likely to purchase food to pack for a school lunch if their child requests it.

Likelihood of Purchasing Child’s Request at Grocery Store

57% of mom’s shop for groceries with their kids aged 6-11

Kids have a significant influence over parents in repeat purchasing

30http://academic.mintel.com.proxy.library.nd.edu/display/703659/?highlight#hit1

Branding - Towards Children

Competition Leading the Market

Lunchables Packaging Features:• Bright and colorful• Kid-friendly• Feature games• Easy to read• Various fonts • Describes what’s inside

• Use interactive games or activities on packaging

• Kids are attracted to packaging with characters from TV or movies.

Marketing Trends Toward Kids

El Toro Loco should focus on tailoring packaging towards kids through similar Lunchable tactics, as well as introducing familiar characters or cartoons to attract children.

31Nielsen Case Deck Slide

Branding - Summary

Family and Culture Important for Flamenco Foods

Family

• Child’s interest is paramount in purchase decision

• Parents need quality and convenience• If these benefits are met, they are willing to

buy what their children desire

Culture

• Hispanics will drive US’s population growth; currently, 16% are Hispanic citizens

• Buying power increasing from $1 trillion (2010) to $1.5 trillion (2015)

32

RETAIL

33http://www.dailyyonder.com/rural-america-2000s-population/2010/07/12/2834

Retail – Focus on Urban Areas

7.2% 18.8% 6%

Rural Urban Exurban

Top 6 States by Hispanic Population

Proportion of Hispanic Population

California14.4 Millions

Texas9.8 Millions

Florida4.4 Millions

New York3.5 Millions

Illinois2.1 Millions

Arizona1.9 Millions

Recommendation for El Toro Loco

Target urban markets upon market entry

Focus on major urban areas in California, Texas, Florida, and New York

Hispanic Non-Hispanic

4.7

0.9

3.6

0.6

2.1

0.6

Hispanic and Non-Hispanic Population Change in Urban

Areas

1990-2000

Source: Nielsen Homescan AND US Census Bureau Population Projections

$0 Billion

$100 Billion

$200 Billion

$300 Billion

$400 Billion

$500 Billion

$600 Billion

Today 2020 2050

AsianBlack/African AmericanHispanic

$299 Billion

+25%$373 Billion

+74%$520 Billion

Retail – Hispanic Population Growth

The Hispanic food market has a huge potential given the size of the consumer base, most of which is located in urban areas.

35

Huge Increase in

Multicultural Ad Spending

AHAA Marketer of

the Year

Leader in Targeting

Latino Consumers

Retail - Supermercado de Walmart 

Texas171

California126

Florida 50

Arizona36

New Mexico

33

Walmart's Major Hispanic Stores

$ 10.3 billion - Direct spend with women and people of color suppliers

$ 2.6 billion - Second tier spend with women and people of color suppliers

Hispanics Per Store

Texas: ~57,310

California: ~119,008

Florida: ~196,000

Supplier Diversity at Walmart

In the initial stage of market entry, launch first products in Walmart’s Hispanic stores in urban areas in TX, CA, FL,NY, IL, and AZ.

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Retail - Target

54% 38%

Is Target Your Favorite Store?

Respond "Yes"

Target is re-defining its “core consumers”

Suburban Mom

More Diverse Population, Particularly

Young Latinos

March 2015: Sin Traducción (No Translation)

• Target's first-ever advertising campaign focused solely on Latinos

• A series of Spanish-language ads highlighting phrases that don’t have an English equivalent

Strengths and Weaknesses vs. Walmart

Strength

More attractive to young Latinos/Millennial Latino moms

Active reaching out to Latino population via social media and Spanish-language ads

Weaknesses

No Latino-focused supermarkets like Supermercado de Walmart

Less multicultural investment than Walmart

Less well-known commitment to multicultural marketing than Walmart

Launch products in urban and suburban Targets. Place products with attractive packages on shelves of similar heights to those of Millennial Latino moms.

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Retail - Summary

Focus initial locations for launch on urban areas

Launch products in Walmart’s Latino-focused Stores in urban areas

Launch products in urban and suburban Target stores

El Toro Loco

38

IN STORE DISPLAYS

39Wikispace picture, Marketing Kerin 11 th edition, Hanglin Li

In Store Display - Overview

One-third of consumer’s buying decisions are made in the store

High traffic areas: cash register, end of an aisle

Draws customer attention while providing storage space for product

Contests

Sweepstakes

Samples

Why In Store Displays

Encourage new product trial and consumer involvement.

40Slidedeck, Hanglin Li

Optimal Display for El Toro Loco

Optimum

point

• Highest 3.6% increase In unit sales is when there is 7.7% increase in F&D

Options

• F&D>Display> Feature

Pros of

display

• Much less expensive compared to feature

Positive correlation between % change in F&D on % change Unit sales.

41Slidedeck, Hanglin Li

Strategies of Competition: Why Display?

0% 5% 10% 15% 20%

TPR(26.7) 0 10 14 18 24

Display(15.2) 8 15 19 23 27

Feature(12.9) 11 15 17 20 21

F&D(8.9) 20 23 27 30 39

2.5

17.5

32.5

Oscar Meyer Lunchables

0% 5% 10% 15% 20%

TPR(29.1) 0 7 13 15 23

Display(11.6) 12 17 22 24 27

Feature(7.2) 12 19 21 25 27

F&D(6.7) 25 29 33 41 46

2.517.532.547.5

Armour LunchMakers

0% 5% 10% 15% 20%

TPR(15.7) 0 8 11 17 19

Display(8.1) 6 12 19 20 24

Feature(14.7) 7 13 15 18 20

F&D(9.1) 9 17 23 27 31

2.5

12.5

22.5

32.5

Bumble Bee

F&D

Display

When there is more than 5% discount, display tend to obtain a greater lift than feature.

Feature

42Reuters, Report on In-store Sampling Effectiveness

In Store Sampling

Average cumulative repeat purchase• For sampled items: +11%• For brand franchise: +6% over 20 weeks

Sales lift• For sampled items: +177% on day of event• For sampled items: +57% over 20 week• For line extension product: +919% on day of event• For line extension product: +107% after a 20 week period

Average cumulative new buyers• For sampled items: +85%• For the brand franchise: +23% over a 20 week period

43Marketing Kerin, Hanglin Li

Summary

In store displays:Contests

SweepstakesSamples

Inexpensive compared to

other methodsDraws

attention

Encourage trialEncourage

involvement

44

FINAL DECISION

45Marketing Kerin, Hanglin Li

New Strategy

Product alterations• Increases consumer satisfaction

Adjustments in packaging• Increase in the number of first time purchases

Altering retail strategies• Make product more accessible to the target market

In store displays will encourage sampling• Sampling drives up likelihood of product purchases

46

Old Strategy v. New Strategy

El Toro Loco!

Total Year 1 Spending ($ millions) $4.40 US Households (thousands) 123,058.00 Trial Rate (%) 70 Average Units per Trial Transaction 1.20 Repeat Rate (%) 42.30 Repeats Per Repeater 3.60 Average Units Per Repeat Transaction 1.50

Total Year 1 Unit Volume (millions) 3.00

El Toro Loco!

Total Year 1 Spending ($ millions) $4.40 US Households (thousands) 123,058.00 Trial Rate (%) 75Average Units per Trial Transaction 1.20 Repeat Rate (%) 46.30 Repeats Per Repeater 3.60 Average Units Per Repeat Transaction 1.65

Total Year 1 Unit Volume (millions) 3.65

If recommendations are implemented, Flamenco Foods should enter into the US market.

47

QUESTIONS?