nielsen basics : cpg and retail material

Confidential & Proprietary • Copyright © 2010 The Nielsen Company

Nielsen Basics

January 19, 2010

Confidential & ProprietaryCopyright © 2008 The Nielsen CompanyFoundation of Analysis: Ret

ail Measurement Data

Today’s Agenda

•NDA• Scanner basics• Form groups•Discuss key readings take-aways–Segmentation

Slide 2


ail Measurement DataSlide 3

Nielsen Collects Data from Retailers & Consumers...

…& sells / trades data to the manufacturer & retailer

Consumer

Manufacturer

Retailer

Data



Data Collection & QualitySource of Information

· Consumer sales· Retail price

Retailer Sample Stores



Data Collection & Quality Source of Information

· Consumer sales · Retail price


ACNielsen’s Field Auditors

· Display presence· Custom observations(inventory

levels, facings, linear shelf measurements, etc.)



Data Collection & Quality Source of Information


ACNielsen's Field Auditors

ACNielsen’s Feature Coders

· Consumer sales (audit or scan)· Retail price

· All retailer print advertising· Standardized ABC feature coding

· Display presence· Custom observations(inventory

levels, facings, linear shelf measurements, etc.)



We Collect Data Across Multiple Outlets ...

Drug Stores

Gas ConvenienceStores

IndependentFood Stores

Supermarkets MassMerchandisers

Chain ConvenienceStores

Supercenters



We Use Two Primary Methods to Collect Raw Data . . .

Scanning

and

In-Store Field Audits

•Retailers provide sales and price data – scanned purchases– all UPC-coded items– each week for every store included in sample

Confidential & Proprietary • Copyright © 2010 The Nielsen Company

Foundation of Analysis – Retail Measurement Data



• Provide an overall approach to analysis of data • Provide analysis tips for using facts in an analysis•Determine the best fact to use in a particular situation

Provide a foundation for understanding some of the common differences in facts and help determine the best choice for an analysis.

Goal and Objectives



Accurate Data Consists of Four Parts

Periods When did it occur?

Markets Where did it happen… geography, sale territory or Retailer

Products What item(s), brand(s), flavor(s) am I interested in?

Facts What type of issue?



Periods



Periods

•Monthly (4 wk) and Weekly hard-coded time periods reside on all Heinz databases–Monthly data goes back 5 years–Weekly data goes back 3 years–We also have stored several years of hard coded 52 week time

periods •Custom time periods have also been created for your use

(Latest 4, 12, 24, & 52 Wks, Fiscal Quarters, etc.), built off of the monthly & weekly periods–When using the custom time periods, be sure to select the correct

ones for the measure you selected–Monthly time periods should be used for all ACV-based measures–Weekly time periods must be used for all promotion-based

measures (including ACV by promo type)



Markets



ACNielsen Total U.S. 52 SCANTRACK Markets

P ortlan d

S eattle

S acram ento

S an F rancisco

L os An geles

S alt Lake C ity /B o ise Denver

P hoenixL as Veg as

S an D iego W est Texas/New M exico

O klah o m a C ity /Tulsa

S an A n tonio

Dallas

Ho usto n

O m ah a Des M oinesM inneapo lis

Tam paKansas C ity

L ittle R ock

M em p his

New O rleans/M ob ile

B irm ing ham

G rand R ap id sM ilw au kee

S t. Lo u isCh icag o

Cleveland

Detroit

In d ian apo lis

C incinn ati

Co lum b usP ittsb u rgh

Bu ffalo /Roch ester

Nash ville

M iam i

Atlan ta

O rland o

L ou isv ille

Ch arlotte

Jackso nville

R ichm o nd

Raleig h/Du rh am

W ash in g to n DC

Baltim o reP hilad elphia

Hartfo rd /New Haven

New Yo rk

Bo sto n

S yracu se

Alban y

• Note: Markets Defined by Nielsen



Maps are a geographic representation at the time of development and may not reflect recent changes. Please refer to the market profile for county listings.

Example: ACNielsen SCANTRACK®

Atlanta - Food

WhitfieldMurray

Gilmer

Fannin UnionTowns

White

Clay

Lumpkin

DawsonPickensGordon

BartowFloyd

Chattooga

Cherokee

Cleburne

Polk

Carroll

HeardRandolph

Chambers

Harris

Troup

Meriwether

CowetaFayette

ClaytonHenry

Spalding

Pike

Upson

Lamar

MonroeJones

Baldwin

Hancock

PutnamJasper

Morgan

Greene

OglethorpeClarke

Oconee

Walton

Gwinnett

RockdaleNewton

De KalbFulton

Fulton

Douglas

PauldingCobb

CherokeeForsyth

HallBanks

Jackson

Barrow

Haralson

Butts

Talbot

Alabama

TennesseeSouth Carolina

Georgia



Trading Areas & Competitive Markets

• Sample/Census Trading Area: counties it includes are defined by the particular retailer, data reported is for that retailer’s stores only

• Competitive Markets: all retailers within the trading area counties that participate in the sample are included in the data reported, this includes the trading area particular retailer sales as well



Maps are a geographic representation at the time of development and may not reflect recent changes. Please refer to the market profile for county listings.

Example: Custom SCANTRACK® Trade Area - Cub Minneapolis

St. C ro ix

W right

Sherburne Isanti C hisago

Anoka

H ennepin

C arver

Scott D akota

R am sey

W ashington

Minnesota

W isconsin

Counties within the circle make up the trading area, all participating retailer stores falling within those counties make up the data reported for Cub Minneapolis



Products



Product Overview

• Industry Subtotals– Heinz defined aggregates based on how company views the category– Only available on custom databases

• Hierarchy– Nielsen defined department, category and brand aggregates across the

grocery store– Only available on Strategic Planner

• Characteristics– Ability to filter through all database UPCs based on unique characteristics

of products– Ex: size, flavor, meat type, container type

– Characteristic availability differs by category– Uses: UPC level output, need to create custom aggregates based on

product characteristics when not available via Industry Subtotals– Available on all databases



Facts



• There are a tremendous number of facts• The difference between similar

facts is important• The application drives the

correct choice of fact• There is never any one correct

fact• There is always a best fact for

the specific application in question

Why is it important to understand facts?



Analytical Thinking

Certain mathematical tools and calculations can be very helpful, but...

knowing how to use them, more so than actually deriving them, is most important.



Analysis Tip – The Analytic PathMost issues can be addressed by drilling down this path

Issue

Base Volume Incremental Volume

Distribution Velocity

% ACV(Breadth)

# of Items(Depth)

Base Price

Competitive Activity

Other Factors

Promotion Support

(Quantity)

Promotion Effectiveness

(Quality)

Level of Support

Promo Mix

Promo Price

Price Discount

Competitive Activity



Analysis Tip – Prioritize Key Issues

To set up a logical flow and to avoid “analysis paralysis”, start with the higher level trends then work into the individual drivers

Level of Detail Category

. Segments

Manufacturers

Competitive Brands

Your Brand

DistributionEveryday

Pricing

Trade SupportDiscount

Total Volume Trends

Base vs

Incremental

Base & Increme

ntal Drivers

Recommended Level of Detail

Dependent upon level of chg

Incremental

Base



Volume and Share



Sales Volume

•Measures the amount of product sold over a given time period

• Sales Dollars – Dollar value of total sales• Sales Units – Total package sales• Equivalent Unit Sales – Total sales on an equivalized

basis (pounds, cases, servings, etc.)

•Uses–Tracking–Ranking–Share calculations–Show a brand’s importance to the category



Share

•Measures the % of sales that a product accounts for

• Influenced by two different measures–Brand Sales and

Category Sales



•What do the following sales scenarios have in common?–Brand sales flat, category

declines–Brand sales up, category

flat–Brand sales up a lot,

category up a little

Share Activity



When to Use – Volume and Share

When concerned with… Use…

Absolute volume;Absolute volume change

Unit, Dollar, Eq Sales volume

Comparing performance relative to the category or segment

Unit, Dollar, Eq Share

Relating volume to profit;Comparing across different categories

Dollar Sales

Controlling for disparate package sizes Equivalized Sales

Absolute item movement;Comparing sales to shipments

Unit Sales




Analyzing category growth in a retailer or channel that is growing significantly.Example: Category B grew 16% in Kroger last year. However, since Kroger grew its total $ sales by 22%, Category B is not keeping pace with its potential growth in Kroger.

ACV growth / Total $ Ring Growth

Analyzing mature categories that have not seen significant innovationExamples: Categories that are considered “staple” items. If population is growing at 3% a year, a staple category should see growth just by maintaining its penetration and buying rate.

Population Growth

Evaluating categories that have restricted shelf spaceExamples: Frozen departments, Checkout-aisle racks, coolers

Department Growth

Macro consumer trends affecting your category and related categoriesExamples: Categories affected by Low Carb diets, Convenience, Trans-fats

Equivalized Sales

When To Use – Volume Benchmarks

Use Benchmarks to compare category and brand trends



Different Ways to Look at Volume

TOTAL VOLUMETOTAL VOLUME

+PromotedVolume

PromotedVolume

Non-Promoted Volume

Non-Promoted Volume

+BaselineVolume

BaselineVolume

Incremental Volume

Incremental Volume



The Benefits of Identifying Promoted Vs. Non-Promoted Volume

• Provides an indication of what percent of a brand’s volume came from stores with a promotion.

• Provides an indication of what percent of a manufacturer’s deal was passed on to the consumer by the retailer.

•Retailers’ trade promotion execution can be observed.



Analysis Tip – Promoted Volume

Promoted volume is useful for determining how deal reliant a brand is

Interpretation:• Our brand receives a higher share of category promoted volume compared to it’s

share of sales• Our competitor’s promoted volume share is under-indexed relative to it’s market share

Brand Share Trend

17.5

13.1

19.7

11.2

Our Brand Competitive Brand

Total Volume Share Promoted Volume Share



Baseline Volume

•Normal expected everyday sales in the absence of any store-level promotion

• A statistically calculated measure NOT adjusted for FSIs, print, TV and market-level affects

•Uses–Track the underlying health of a brand and compare it

to its competition–Analyze merchandising effectiveness in conjunction

with incremental volume



Baseline Calculation

week 1 week 2 week 3 week 4 week 5

170

Unit Sales

75 75 75 75

DisplayWeek



Baseline Calculation

170


Unit Sales

75 75 75 75

In Week 4 Baseline estimate would be 75 units based on pre and post week sales

75

DisplayWeek



Baseline Volume Includes Marketplace Conditions that Affect Sales of a Product

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

CategoryTrends Long-Term

SeasonalityMarket-Level

Effects

BrandTrends

Baseline



• Total volume below baseline–Competitive activity–Out of stock–Seasonal/holiday

• Total volume above baseline–Promotions or advertising not

captured by regular means–Market-level influences (e.g.,

battery sales during a hurricane in Miami)

Reasons for Total/Baseline Volume Differences



Incremental Volume

•Represents the additional predicted volume that results from in-store promotion

•Calculation:Total Actual Volume - Baseline

Volume = Incremental Volume



Incremental Volume

Unit Sales

In Week 4 Incremental volume would be 95 units

170


75

DisplayWeek

95

75 75 75 75



How Can Incremental Volume Be Negative?

• If actual sales are less than expected sales– Out-of-stocks– Competitive activity


Unit Sales

75 75

75

75

Actual sales are below estimated Base – Incremental is negative 15 units

75

170

60



Analysis Tip - Base and Incremental Volume

Category Volume TrendCurrent 12 Weeks vs. Year Ago

(25,000)

(12,500)

0

12,500

25,000

37,500

Total FDM exWM

Food Drug Target K-Mart

Total EQ Base EQ Incr EQ

Interpretation:• For the Food and Drug channels, an increase in Incremental EQ volume is not enough

to offset a decline in Base EQ volume.• Target is showing significant growth, driven by both base and incremental volume.

Identifying whether a volume change is coming primarily from base or incremental volume is a good way to start an analysis



Analysis Tip - Base and Incremental Volume

Base and Incremental trends will determine potential strategies



Base Volume = Non-Promoted Volume

Base vs. Non-Promoted• Base volume estimates sales in all stores•Non-Promoted volume is measured only in stores that

did not run a promotion–Subset of stores

Incremental vs. Promoted• Incremental volume estimates additional sales due to

promotions–Volume sold above the base

• Promoted volume measures all volume sold on deal

Incremental Volume = Promoted Volume




Understanding the underlying health and trends of a brand

Baseline Volume

Measuring the effectiveness and efficiency of trade promotions

Incremental Volume

Quantifying the importance of promotional activity to a brand

Promoted Volume

Quantifying the amount of volume sold in stores that did not provide trade support

Non-Promoted Volume

When to Use – Base, Incremental, Promoted, Non-Promoted Volume



Sales Volume is influenced by Seasonality

•Consumers value certain products more (or less) during the year.

• Examples of seasonality–Holidays or “event” driven: 4th of July,

Thanksgiving, Cinco de Mayo, Back to School, etc.–Seasonal: BBQ sauce and ice cream

during the summer or soup and crackers in the winter



Seasonality Calculation

1. Divide annual base volume by 52 to get expected weekly sales (in the absence of seasonality and promotion).

2. Divide actual base weekly volume by expected weekly sales (just calculated in step 1) to derive a seasonality index

Battery Powered Toothbrushes

75

100

125

150

175

200

225

Jan

Feb Mar Apr

May Ju

nJu

lAug

Sep OctNov

Dec

Sea

son

alit

y In

dex TOTAL BASELINE-UNITS



Analysis Tips - Seasonality

•Use Base Volume when calculating seasonality to negate promotion-driven volume spikes• Be careful of moving holidays and market level effects• In a category that has encountered a lot of activity 2 years

of history should be used•Compare versus the year-ago period rather than a prior

period• For categories with extreme seasonality look at “on

season” versus “off season” periods



ACV Distribution and Velocity



Velocity

Baseline Volume

Distribution

Base PriceSeasonality*Advertising Support*Manuf. Coupons/FSI’s*Brand Awareness/Image*Product Quality*Weather*Consumer Promotions*Sampling

Competitive: Distribution Price Merchandising *Advertising *Coupons

% ACV(Breadth)

# of ItemsCarried(Depth)

* Non-Nielsen measures

Baseline sales can be impacted by different market factors.

Understanding the “Whys” to Changes in Baseline Volume



How Is Distribution Measured?



ACV Distribution

• ACV Distribution is a measure of a product’s availability

•Can be measured in terms of breadth and depth –Breadth: percent of All Commodity

Volume that carries your brand–Depth: number sku’s that are carried

in the stores that sell your brand



What is Distribution?

•Distribution is the measure of the availability of a product. For an individual item, distribution depends on two basic variables:

–How many stores stock the item?

–How large are those stores?



All Commodity Volume $ (ACV)

• An individual store’s/market’s ACV is the dollar volume of everything the store sold during a period—all the merchandise that passed over the scanner (or was rung on the register)

• The sum of the ACVs of all the stores within a given channel is the ACV for the channel. Likewise, the sum of the ACVs for all the stores in a market is the ACV for the market (Market ACV $ fact on database)



The 7 Food StoresIn This Market Sell$300,000 Per Week

JONES’s

D) $36,000 (12%)

JONES’s

A) $60,000 (20%)

SMITH’s

B) $48,000 (16%)

SMITH’s

C) $48,000 (16%)

SMITH’s

A) $36,000 (12%)

JONES’s

B) $36,000 (12%) JONES’s

C) $36,000 (12%)

SMITH’s Grocery Chain* Has 3 stores in the market doing $132,000 per week

for a total of 44% of the ACV

JONES’s Grocery Chain* Has 4 stores in the market doing $168,000 per week

for a total of 56% of the ACV

All Commodity Volume $ (ACV) Explanation



If These 3 Stores Sold YourProduct This Week,What Would The %ACV Be?

JONES’s

A) $60,000 (20%)

SMITH’s

C) $48,000 (16%)

SMITH’s

B) $36,000 (12%)

JONES’s

B) $36,000 (12%)

SMITH’s

B) $48,000 (16%)

JONES’s

D) $36,000 (12%)

JONES’s

B) $36,000 (12%)




JONES’s

D) $36,000 (12%)

SMITH’s

B) $48,000 (16%)

JONES’s

A) $60,000 (20%)

ANSWER: 20% ACV +16% ACV +12% ACV = 48% ACV




Breadth of Distribution -- % ACV

•% ACV Selling serves as a good weighting factor when measuring distribution. • All stores are not created equal•Higher ACV stores serve more consumers

A measure of breadth, or reach, indicates how many consumers have the opportunity to buy the product



% ACV Selling is NOT Distribution

•Real on-shelf distribution is almost always higher–Most products do not

sell in every store every week –Out-of-stocks can

happen

One other point to remember…Just because an item is authorized at Chain Headquarters does not mean that every store actually stocks it.



Analysis Tip - % ACV Selling

Brand A Sales

Week 1

Week 2

Week 3

Week 4

4-Week Total

Store A (40% ACV)

X X

Store B (35% ACV)

X X X X

Store C (25% ACV)

X X X

Total 40% 60% 60% 35% 100%

Average Weekly % ACV = 48%

Use longer timeframes to get the

best picture of “distribution”

Use 4 Wk Periods only!



Analysis Tip - % ACV Selling

In most cases, use the latest period when analyzing % ACV Selling

% ACV Selling75

70

5567

4 wks endingApr

4 wks endingMay

4 wks endingJun

Latest 12 wksAVG

• Represents the current state of the business• Averaging longer time periods may mask more recent trends



Depth of Distribution

Depth assesses the variety of different items being sold

• Cumulative Distribution Points (CDP) or Total Distribution Points (TDP)

–Measures both the number and size of stores that carry your brand and the number of sku's each store carries

• Average Number of Items Handled–On average, the number of sku's carried in the

stores that sell your brand




Cumulative Distribution Points (CDP)

• Also called Total Distribution Points (TDP) • Calculated by adding the %ACV of each individual sku

%ACV CDP

BRAND X 98% 295

Flavor 1 95% 95Flavor 2 90% 90Flavor 3 80% 80Flavor 4 30% 30

}Sum =295




Difference from %ACV

CDP shows us that while Brand A and Brand B are both sold in 100% of the stores in this market, Brand A has more items available in each of the stores.

% ACV CDP

Brand A 100% 2100Brand B 100% 990

%ACV tells us breadth of distribution

CDP tells us depth of

distribution



Average Number of Items Handled

•Dividing Cumulative Distribution Points by %ACV gives the Average Number of UPC's Carried within those stores selling the brand.–The average store in this market carries 21 upc’s of

Brand A.

AVG # % ACV CDP Items

Brand A 100% 2100 21.0Brand B 100% 990 9.9




Analysis Tip – Average Number of Items Handled

Use Average Number of Items Handled to compute a Fair Share index comparing share of items to share of sales

AVG # Items

Share of Items

Share of Sales

Fair Share Index

Category 57.5 100.0 100.0

Brand A 21.0 36.5 31.0 117

Brand B 9.9 17.2 27.0 64

Interpretation: Brand B’s share of items is underdeveloped relative to it’s share of sales. Potential to add additional Brand B items to the shelf



Analysis Tip – Cumulative Distribution Points

CDP’s may explain volume changes that might not be seen when looking at % ACV

690 685 693 658 609 584

100 100 100 100 100 100

1 2 3 4 5 6Period

Distribution Points % ACV

Interpretation; The brand’s base sales began eroding in period 4, yet % ACV remained at 100%. However, depth of distribution declined as the brand lost the equivalent of one item.




Breadth of distribution – the number of stores carrying your product

% ACV Selling

Trending overall depth or quality of distribution over time

Cumulative Distribution Points;Total Distribution Points

How many sku’s are carried in stores that sell your brand;Fair Share Analysis – comparing share of shelf to share of sales

Average Number of Items Handled

When To Use - ACV facts



Velocity

Measures brand strength while controlling for distribution

• Sales Per Million ACV–Average sales of a product for every million dollars of

ACV that is scanned–Comparisons across and within markets

• Sales Per Point–Average sales of a product for every percentage point

of ACV distribution –Comparisons within markets only



Uses of Velocity

• Marketing– Is my growth distribution driven or velocity driven?– Velocity driven growth can be long term,

signaling consumers like your product and are buying more.– Distribution driven growth can be limited

because soon you will run out of new stores to carry your product.

• Sales– Prove your product sells faster than the competition

and deserves shelf space.



Analysis Tips - Velocity

•When comparing brands with differing numbers of UPC's, use Sales Per Cumulative Points of Distribution–Divide sales by CDP–Brands with a greater number of UPC's will tend to

have stronger turns as more items contribute to overall sales

•Use caution when tracking Sales Per Point of Distribution for a new product–Distribution will be growing as the product gains

distribution in new retailers and markets, resulting in fluctuating turns



Comparison of CDI and BDI identifies product opportunity or vulnerability by geographic area.

• Category Development Index– Category volume indexed to the population index

in relation to the United states norm. (TTL US = 100)

• Brand Development Index– Brand volume indexed to the population index in

relation to the United states norm. (TTL US = 100)

CDI/BDI MEASURES



% of Total U.S. Population in Chicago: 7%% of Total U.S. Brand A $ Sales in Chicago: 13%

% of Sales: 13%% of Population: 7% = 1.86, then multiply by 100 to derive an index = 186

This means that for every person in Chicago, Brand A $ sales are almost twice as important as the average market.

CDI/BDI MEASURES

Population Development Index—The importance of product sales compared to the importance of the population in a market.

How to calculate a Development index...



Analysis Tip – CDI/BDI

Use CDI/BDI’s to prioritize market opportunities



Analysis Tip – CDI/BDI

Calculate an Opportunity Index to further prioritize markets

CDI BDIOppy Index

Chicago 106 95 112

Indianapolis 159 116 137

How to calculate an Opportunity index...

CDIBDI

X 100 = Opportunity Index

Interpretation—The brand has a larger opportunity gap in Indianapolis even though both the category and brand indices are above 100, compared to Chicago where the category is over 100 and the brand is under 100



Promotion, Promotion Effectiveness and Pricing



Understanding the “Whys” to Changes in Incremental Volume

Incremental sales can be impacted by different merchandising factors.

Promotion Support(Quantity

Incremental Volume

Promotion Effectiveness(Quality)

Level of Support • Promotion Mix

• Level of Price Discount• Competitive Conditions in Promoting Stores

• Promotion Price




Week 1 Week 2 Week 3 Week 4 Week 5 Week 6

Sales

What could cause this spike in sales?

Promotions



Promotion Types

• Temporary Price Reductions (TPR)–A 5% discount (or more) off a

product's regular price

• Features–Print ad placed by the retailer

used to promote a specific product

•Displays–Temporary secondary stocking

location for a product

Nielsen measures three types of trade promotions



Features

• Features are retailer print advertisements or other special printed promotions:–Ads inserted in Newspapers–Store Flyers / Circulars

•Nielsen Feature Coders collect and classify all retailer features from the entire Nielsen store sample.

• The features are classified into A, B, C or Coupon Ads, based on the size of the ad

• FSIs (Free Standing Inserts) are excluded since they are manufacturer promotions



Displays

• Information collected for all Nielsen sample stores every week

• Three conditions to be considered a display:–Temporary secondary location–Special effort by the retailer to attract attention and to

boost sales of the item–Contain actual merchandise accessible to the customer.



Temporary Price Decrease (TPR)

•Consists of those Stores/Weeks where a Price Decrease of at Least 5% is present, but no Feature Ad, Coupon Ad or Display accompanies the Price Decrease (TPR)

• Lower price becomes new base price after 7 weeks



Promotion Conditions

Promotional Conditions are mutually exclusive at the UPC level. A UPC is either Promoted or Not Promoted.

Price Decrease

(TPR)

Feature w/out

Display

Displayw/out

FeatureF&D



Promotion Support

•% ACV Promoted–% of ACV that sold at least one unit on deal during the

time period

• Store Weeks of Support–Number of weeks a product is on deal weighted by the

ACV of the stores participating in the promotion

•% Base Support–How much of a brand's everyday business (baseline

volume) is exposed to a deal

Three ways to view Quantity of trade supportUse 1 Wk

Periods only!



% ACV Support

•How much support did I receive on this event?•How much of each type of support was received?•Did the retailer execute as agreed to?•Did the sales force or broker support and/or merchandise

the promotion as required?

Measures the amount of consumer traffic exposed to a promotion




Store Weeks Support

Measures the quantity of weeks the brand was on promotion

Actual % ACV ANY DSP

Week 1 20%Week 2 100%Week 3 60%Week 4 30%Week 5 50%

260% /100 = 2.6 weeks

Interpretation - Brand received the equivalent of 2.6 weeks of Display activity in the five-week period



% Base Support

•Weights the importance of the store to the brand.•Gives more credit for an important SKU• Is additive/combinable across markets, time, products

and retail conditions

Measures the % of Base business exposed to a particular promotion type



% Base Support Calculation Example

Base Sales Promotion?

Store 1 10 No

Store 2 10 Feature

Store 3 25 Feature

Store 4 20 No

Store 5 15 Feature

Total Base Volume = 80Feature Base Volume = 50% Base Support = 50/80 = 63%

Interpretation – 63% of the brand’s base volume was exposed to a feature during the promotion period




Level of trade participation in an event;Amount of consumer traffic exposed to promotions

% ACV Support

Duration of support Store Weeks Support; Cume Weighted Weeks

How much of a brand’s base volume was exposed to a promotion

% Base Support

When To Use – Promotion Support facts




Measures how much incremental volume each promotion generated

• Percent Lift• Promotion Effectiveness Index (PEI)• Incremental Weeks • Efficiency



Promoted Baseline Volume

Promoted

Non- Promoted

Incremental

Base Non-Promoted Base

Promoted Base

Incremental that is a result of promotion

Also Known as

Subsidized Base



Promoted Baseline Volume

In Week 4 all the volume is promoted, but only 95 units are incremental; 75 units are subsidized base

170


Unit Sales

75 75 75 7575

DisplayWeek

95



Promotion Efficiency

• Percent of promoted sales that were incremental

• Tells how efficient was the promotion–What percent was incremental to baseline?–What percent was subsidized?

• Note: The more subsidized volume that is generated during a promotion the less efficient that promotion will be!

Incremental SalesPromoted Sales

x100




• Promotion Effectiveness Index (PEI)– Indexes Total volume to Base volume

• % Lift– Similar to PEI but expressed as a

percentage

• Incremental Weeks– Similar to Lift but expressed as a number

of weeks

Measures how much incremental volume each promotion generated

Promoted SalesPromoted Base Sales

x 100


- 1


x 100 - 100



Analysis Tips - Interpreting Promotion Response

PEISales indexed at 227 vs. base during the promotion week

% LiftThe promotion drove a127% increase in sales

Incremental WeeksThe promotion generated1.3 additional weeks of sales

Promotion Efficiency56% of the promoted volumewas incremental to the brand

170

17075

x 100 - 100 = 127%

17075

- 1 = 1.27

week 4

75

DisplayWeek

95

95170

x 100 = 56%

17075

x 100 = 227



Analysis Tips – Promotion Effectiveness

• Promotions will yield different results depending on:–Type of merchandising occurring in the store - ads,

displays, TPR's–Depth of discount offered to consumers–Competitive activity

•When reviewing promotion effectiveness, take into account the size of the brand–Smaller players, with small base businesses, have a

much easier time generating big lifts




Measuring the increase in volume due to promotions;Determining which promotions generate the largest incremental gains

% Lift;Promotion Effectiveness Index (PEI);Incremental Weeks

Measuring the ability of a promotion to minimize subsidizing existing volume

Promotion Efficiency

When to Use – Promotion Effectiveness Facts



Pricing

Nielsen databases track pricing in four ways:

• Average Retail Price–Weighted price of a product, representing both non-

promoted and promoted prices

•Non-Promo Price–Average scanned price of a product in stores where

there was no promotion

• Any Promo Price–Average scanned price of a product in stores where

there was a promotion

• Base Price–Estimate of the normal, non-discounted price of a

product in a store



Base Price = Non-Promoted Price

•Non Promoted Price is based solely on stores where the item in not being promoted

• Base Price is based on all stores, not just non-promoted stores



Price Discount

•Measures the difference between Base Price and Promoted Price

• The deeper the price discount the greater the expectation that consumer sales will increase



Average Retail Price - Precautions

• Think when you average across:– Products: (10, 26 and 51 oz. sizes)–Markets: (Los Angeles vs. Boston)– Promotions (display price vs. feature price)

• Aggregate price is one big average… beware!!!– $2.99 =Average of $1.99 & $3.99– $2.99=Average of $0.99 & $4.99– $2.99=Average of $2.98 & $3.00



Analysis Tips - Pricing

• Analyze price at the SKU level–Prices at the brand level are an average of all sizes and

multi-pack counts

•Match like items when comparing price to competition–Select similar-sized competitive items for comparison–Or use equivalized price

•Use the most recent period to measure base price–Longer timeframes may mask recent trends



When to use – Pricing Facts


What consumer is paying on average Average Retail Price

What is the average price for an item when not on promotion

No Promo Price

What the consumer is paying on promotion/deal

Any Promo Price

Tracking price trends;Impact of price on baseline volume

Base Price

Magnitude of savings passed on to the consumer

% Price Discount



Analysis Tips - Recommendations If Volume Change is driven by:

Potential Actions

An increase in Base Price

• Increase perceived value of product– Decrease price– Increase package size– Increase use of bonus packs, special packs– Launch a product or package innovation– Improve communication of product benefits– Improve product quality

A decrease in Base Velocity

• Improve advertising– Weight, Target, Message, Media

• Improve consumer promotion– Frequency, Values, Types

• Increase shelf presence, change item mix

A decrease in %ACV

• If base velocity is competitive with brands on the shelf, conduct a distribution drive• If base velocity is low, improve velocity (see point above) to justify increased distribution

A decrease in Average Items Carried

• Introduce new products• Change item mix• Address any Out-of-Stock issues



Analysis Tips - Recommendations

If Volume Change is driven by:

Potential Actions

An increase in Promoted Price

• Reduce promoted price• Implement a price multiples strategy (e.g. 2 for $5)

A decrease in the %ACV with Quality Merchandising

• Increase number of stores with features or displays–Determine which promotion condition works best for each brand / segment

• Improve event timing / frequency

A decrease in the # of Promoted Items

• Identify targets for number of items on feature or display• Provide consumer incentives for purchase of multiple items

A decrease in Promoted Velocity

• Improve event timing / frequency • Coordinate & integrate trade promotion with other mix elements

(e.g., advertising, coupons, consumer events)• Identify stronger items for promotion• Develop promotion themes

A decrease in Promotion Efficiency

• Improve event timing / frequency • Improve Customer Targeting (loyals vs. switchers)


ail Measurement Data

Thoughts

• Sorensen– Trade promotion $ focus (p. 18)– Table I.1 (p. 9)– Trip types– Reach,stop,close–Money, time, angst– Table 1.1 (p. 26) and 1.2 (32)– Promoted baseline (p. 31)– Top category locations (Fig 1.2)– Danger of focusing on quick trips?– Tyranny of choice (p. 61)– Time measures (65)

• Underhill– Conversion rate 48% (p. 29)– Importance of shopping time (32)– Confusion index (33)– Transition zone (44)

Slide 111



Whew!

nielsen basics : cpg and retail material

Documents

retail measurement dataslide

individual retail stores

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scan retail price

trades data

raw data

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