The Secret Behind Successful F&B Product Development – The Customer Andrew Spencer, Director Customer Insights DNC Todd Kaplan, Brand Director Mountain Dew S Being Focused on Customer adds Value Innovation Overview There are no new ideas… …yet we are living in an era of perpetual innovation Innovation Overview Why do some succeed? …and others fail? Innovation Overview We know it isn’t as easy as... LANDING ON A KEY INSIGHT HAVING A GREAT TASTING PRODUCT GOING WHERE NOBODY ELSE IS LETTING THE PROPOSITION SELL ITSELF GETTING A NEW LOOK BEING FIRST Innovation is HARD We will continue to learn, try new things, and evolve as we go through the innovation process at PepsiCo Looking at products that have done well, the stars have generally been aligned around 5 core elements… 1. KEY CONSUMER INSIGHT 2. PRODUCT DEVELOPMENT 3. PROPOSITION AND IMAGE 4. MARKETING PLAN 5. EXECUTION 1) Unearthing a Key Insight • Opportunity exists to revive morning occasion at C-Stores • • 2nd largest occasion Trips and $ per trip declining • Millenials not satisfied with current morning offerings • Millenials + Gen X make up more than half of morning occasion • Hot Coffee and Juice account for more than half of occasions • Millenials under-index on hot coffee and juice • CSDs under-index on AM occasion Key Considerations: • • • • Know the consumer Understand the true need Understand the barriers Recognize the current landscape 2) Getting An Optimal Product Kickstart Formula: • • • • • Dew + 5% fruit juice Caffeine > Dew Vitamins C & B Mid-Calorie (80/can) 2 Flavors: • Orange Citrus • Fruit Punch Key Considerations: • • • • • • Taste Efficacy Ingredients Calories COGS Testing 3) Nailing the Proposition and Image Creating a Sub-Brand: • • • Position around AM occasion Establish role of name / Dew Rigorous Consumer Testing • Dew users significantly interested in trying KS • Strong projected repeat • Projected incremental to LRB and CSD category Key Considerations: • • • • • • • • Cannibalization Occasion Package Type Package Size Brand Hierarchy Name Role of Ingredients Graphics 4) The Marketing Tidal Wave Integrated Campaign: • TV, OOH, Digital • PR: Over 500MM+ earned media impressions • March Madness Promo with ESPN • Mike & Mike Integration • Over 2MM+ samples • Digital ‘Dawn Patrol’ Key Considerations: • • • • • • Awareness Trial Creative Media Mix Timing PR 5) Executing with Excellence Getting it on Shelf: • • • • • • Line Priced with 20oz Over 65 ASPs Multiple IRCs for trial Meal Deal Partnerships Right Equipment / Tools Precise System Communication Key Considerations: • • • • • • • Distribution Pricing Bundling On Shelf Execution Equipment Value System Focus The Results • Kickstart is the biggest PepsiCo beverage launch in the last 10 years! • #1 LRB Category Innovation in 2013 • Projected to reach over $180MM in Year 1 • Achieved its distribution targets across all channels in first 2 weeks • In C&G Kickstart dollar sales are bigger than Coke Zero 20oz and 6x bigger than Dr Pepper 10 • Among highest repeat rates of any recent beverage launch – 48% vs. 32% avg • 153 index to LRB, 137 CSD • Highly Incremental: • 85% incremental to TM Dew • 75% incremental to PEP CSDs • 43% incremental to CSDs • 10% incremental to LRB Where do we go from here? Kickstart your Night… …coming soon in 2014! Questions DNC Tools for gathering Voice of the Customer data S Delaware North is investing in processes and systems to capture more VOC more efficiently Internal Total Listening™ process provides us with 360⁰ degrees of gathering customer insights Integrating Multiple Sources - Primary Research - Social - POS - Insights and Trends Delaware North using community panel to talk directly with NHL fans Total Listening™ Community Panel 652 NHL Panel Members • Understand challenges and problem areas 750 500 250 212 242 Nashville Columbus Boston • Direct Feedback on Concepts, food preferences and local options 198 0 Fast • Understand Site by Site what is missing Flexible Focused Highly flexible tool to gather insights... What is most inconvenient about ordering or buying food/ beverage at the arena? “Transporting can be tricky, so I take that into consideration when purchasing my food. Food vendors on the first level, while they have a better variety of food, transporting to get the condiments or to find a place to sit can be tricky.” - Nashville Female STH …and create innovative packaging that solves the problem and captures more of the budget Two Andrew Spencers at DNC Contact: Andrew Spencer (Corp) [email protected] 716 858 5127 Andrew Spencer Thank you very much Todd & Pepsi!