“Foundations of World Class Marketing” Development Review
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Cover Page Mattel Global Marketing Training Training Style Interactive Activity based Flexible Learn from facilitators - and each other Pace Mattel Global Marketing Training Your Expectations These 3 days will have been an outstanding success for me if... ________________________________________________________ ________________________________________________________ ________________________________________________________ ________________________________________________________ ________________________________________________________ ________________________________________________________ Mattel Global Marketing Training Ground Rules… Cell phones / Blackberrys off Everybody participates Keep to time So what? Keep it simple Commitment to action Mattel Global Marketing Training “Foundations Of World Class Marketing” Day 1 OVERVIEW What is Consumer Marketing? Toys & Mattel The Mattel Marketing Process Day 2 The Mattel Product Development Process Product Selection & Quota Setting Day 3 PLACE Brand Strategy & Positioning Using Insights to Understand Consumers & Shoppers Developing a Customer Proposition Media Consumer Promotion Marketing at the POP Public Relations Working with Agencies Integrated Marketing Pulling it all together PRICE PRODUCT Shoppers, Channels & Customers Day 4 Mattel Profit Drivers Managing a Brand P&L Pricing Forecasting Customer Plans (MSAP) and Presentations PROMOTION The Integrated Marketing Plan TV Advertising Mattel Global Marketing Training OVERVIEW Overview of Marketing Fundamentals of Brand Marketing Basic concepts (4P’s) Examples from outside (e.g., Coke, Nike, BMW, Starbucks, Apple) Exercises Toys / Mattel Marketing - Differences Mattel vs. FMCG Mattel Marketing Process Mattel Marketing Roles Who leads Who supports 2 Hours 30 Minutes 1 Hour 1 Hour Mattel Global Marketing Training Marketing Global Brands Global Brand Positioning Product Portfolio Communications Strategy Strategy Insight Pricing Placement Promotions Local Mattel Global Marketing Training The Four “P’s” Of Successful Marketing Product Pricing Placement Promotion Mattel Global Marketing Training Great Brands Which of the four “P’s” have made these brands great: Apple Coke Starbucks Nike Mattel Global Marketing Training Key Differences vs. Other Consumer Products Key differences between Mattel and most other marketers: Unpredictability Massive and rapid SKU churn Need to define and sell the Category proposition to different customers High level of detail planning required Seasonality/Events Sell the portfolio and not just the item Few direct item by item competitors Highly responsive to advertising (“FSI-like” response) Advertise the item, build the brand People like shopping for toys Mattel Global Marketing Training The Mattel Marketing Cycle Aug. ‘05 Spring ‘07 Global Activity Sub Activity Sep ’05 Oct ‘05 Nov ‘05 Dec ‘05 Jan ‘06 Feb ‘06 Mar ‘06 Apr ‘06 May ‘06 Jun ‘06 Jul ‘06 Global Line Review LRP/ BDO Aug ‘06 PreToy Fair Sep‘ 06 Oct ‘06 Ship Spring Nov ‘06 Dec‘ 06 Ja. ‘07 Feb. ’07 Mar. ‘07 Apr ‘07 May ‘07 Jun. ‘07 Jul ‘07 Aug. ’07 Spring Marketing Product Development Input Pricing/Placement LRP/ BDO Fall ‘07 Global Activity Sub Activity Promotion Market Insight – Kids, Trends Execution Global Line Review Toy Fair Ship Fall Fall Marketing Product Development Input Pricing/Placement Promotion Mattel Global Marketing Training Execution The Mattel Marketing Process Key Objectives Toy Fair Advertising Development Line Review Marketing Plan Development Product Development BDO / LRP Brand Strategy Insight Marketing Plan Execution Customer Presentations (Toy Fair) Channel & Customer Plans Integrated Marketing Plan Quota, Pricing, P&L Product Selection Mattel Global Marketing Training The Marketing Cycle Is A Coordinating Framework For Developing The Marketing Mix Toy Fair Marketing Plan Execution Customer Presentations (Toy Fair) Channel & Customer Plans Integrated Marketing Plan Quota, Pricing, P&L Product Selection Mattel Global Marketing Training Advertising Development Line Review Marketing Plan Development Product Development BDO / LRP Brand Strategy Insight Product Pricing Placement Promotion Marketing Roles At Mattel Product Price Placement Promotion Execution Global Local Lead Input Input Lead Input Lead Input Lead Input Lead Mattel Global Marketing Training Key Tasks Within Marketing Mix Product Pricing Insight Pricing Brand Strategy Managing the Brand P&L BDO / LRP Product Development Line Review & Product Selection Placement Shoppers, Channels, Customers Promotion Integrated Brand Plan • Advertising Customer Propositions Customer Presentations • Media • Promotions • Public Relations • Execution Mattel Global Marketing Training Group Exercise Objective To build knowledge of Global and local marketing responsibilities within Mattel Method Working in groups of 3-5 Consider the list of tasks within the marketing mix (previous slide) Discuss and agree which of these should be led by the Global team, or led by the local team Timing 30 minutes Mattel Global Marketing Training Key Tasks Within Marketing Mix “Who Leads?” Product Pricing Insight Pricing Brand Strategy Managing the Brand P&L BDO / LRP Product Development Line Review & Product Selection Placement Shoppers, Channels, Customers Promotion Integrated Brand Plan • Advertising Customer Propositions Customer Presentations • Media • Promotions • Public Relations • Execution Mattel Global Marketing Training Key Tasks Within Marketing Mix “Who Leads?” Product Pricing Insight Pricing Brand Strategy Managing the Brand P&L BDO / LRP Placement Promotion Shoppers, Channels, Customers Integrated Brand Plan Advertising • Advertising Customer Propositions Product Development • Media Customer Presentations Line Review & Line Review & Product Product Selection Selection • Promotions • Public Relations • Execution Global Lead Local Lead Mattel Global Marketing Training Product Mattel Global Marketing Training PRODUCT - Overview Brand Strategy Proposition / Personality / Positioning Examples of Mattel Brand Positionings (Barbie...) 2 Hours Consumer Insights Data vs. insights Overview / Examples of Mattel Research 1 Hour Product Development Brands and products Role of packaging Mattel product development process – follow an example throughout the process 2 Hours 1 Hour Product Selection Product Selection Setting Quota's Exercise Brainstorm “Critical Success Factors” - What makes a successful toy? Mattel Global Marketing Training 1 Hour Brand Strategy – Traditional Versus Mattel Traditional approach Mattel Global Marketing Training The difference at Mattel Defining A Product A product can be defined by set of ATTRIBUTES An attribute is a statement expressing what the product is (Features) or does (Benefits) Attributes (real or perceived) drive a consumers product choice Understanding your product attributes helps identify product improvement areas Mattel Global Marketing Training Attributes - Why Do Consumers Choose The Petrol They Do? The station is on my way to work I don’t have to turn across busy traffic There is a shop The toilets are clean I collect the loyalty points Best for my engine Cleans my engine Improves my car’s performance Gives me the best Fuel economy Seems to be the cheapest How would you improve the product to sell more, for more? (i.e. Add Value) Mattel Global Marketing Training Understanding Your Brand’s Product Attributes Attributes All the characteristics of the product (as defined by the consumer) Important Attributes The characteristics the product must have to be acceptable to the consumer Differentiating Attributes The characteristics that consumers believe make your product different Performance Driver Attributes The characteristics that, if positively improved, would drive greater consumer acceptance, value and usage Where do the Petrol attributes fit? Mattel Global Marketing Training Two Basic Product Types Commodity Added Value Has no value beyond the cost of inputs Has a value greater than the cost of inputs Has a “Name” Can be a “Brand” Mattel Global Marketing Training Effective Marketing Builds Added Value Products And Links Them To A Brand Sugar, Phosphoric Acid, Flavourings, Carbonated Water, Colour Coca-Cola Costs $X per litre Sells for $X+y per litre Mattel Global Marketing Training “Added Value” Can Deliver Tangible or Intangible Benefits Coca-Cola Price per ml (Price of a Can) Coca-Cola Price per ml (2litre Supermarket Price) Coca-Cola Price per ml (Price of 500ml bottle) Coca-Cola Price per ml (Price of 1.5l bottle) Coca-Cola Price per ml (Restaurant Price) Mattel Global Marketing Training Why do consumers pay more for the same “product”? Brand Image, Not Identity, Sets The Consumer’s Value Perception Proposition Perception Communication The BRAND Positioning Brand Identity £$€ Personality Brand Image Mattel Global Marketing Training Brand Value Coke vs Pepsi What the Product does The added value of Coke In the 1980’s Pepsi conducted a huge research project that confirmed, in blind taste tests, 55% of consumers preferred Pepsi to their main competitors In “branded” tests, 65% of respondents preferred Coca-Cola Tangible Benefits Intangible Benefits Mattel Global Marketing Training Benefits Of Added Value Brands Tangible Benefits Real, observable, functional benefits derived from a brand Typically “what the product does” Intangible Benefits Emotional benefits beyond “what the product does” to “What it means to me” Mattel Global Marketing Training Products Must Deliver The Brand Promise, Not Just An Improved Functional Benefit Coca-Cola Consumer Research New Coke Mattel Global Marketing Training Consumer Protest Coca-Cola Classic Consumer Insights – Traditional Versus Mattel Traditional approach Mattel Global Marketing Training The difference at Mattel What’s A Trend? Traditionally: Deducting information about future behaviour and attitude of stakeholders from a series of data In Toys: Combining intuition and fact-based insight to ‘paint the future’ Mattel Global Marketing Training Example: Ford Motor Company Intuition Current trends Henry Ford “What do people need?” Faster horses Cars Mattel Global Marketing Training Sources Of Relevant Market Trends Information Internal / Business Data External / Market Data Lifestyle Social behaviour Family trends / aspirations Play patterns Educational Demographic Economic Fashion Music Home decor Technological development Internet Market / segment sizes Brand health - awareness and equity Company shares and sales - toy & licensing Competitive shares and sales Retailer sales and shares Channel sales Technology trends / products Financial performance Mattel Global Marketing Training Mattel Insights Gathering Include examples of ongoing Mattel research (State of Girls, Stage of Boys, A&U / tracking...) Mattel Global Marketing Training The Difference Between Data And Insight € 1. Data can be used to produce insight Action Insight Data Mattel Global Marketing Training 2. Insight highlights opportunities and leads to action Producing Insight Persuade Chart insight Convert data to insight Process data Gather data Step 5 : Sell it! Step 4: Chart the Data To visually convey the information and its key message Step 3: Convert the Data into insight So we turn the data into information Trends and conclusions Step 2: Process the Data To turn the raw data into something more meaningful – totals, ratios, averages etc. Step 1: Get the right data What is the question we are trying to answer? Select relevant data Mattel Global Marketing Training Product Development – Traditional Versus Mattel Traditional approach Mattel Global Marketing Training The difference at Mattel Product Delivering the Proposition Mattel Global Marketing Training Product Management Product management involves the development, delivery and enhancement of the brand through the real and perceived performance of products and packaging that carries the brand identity Mattel Global Marketing Training Opening Discussion What is a product? Something that can be owned and/or experienced by a consumer What does a product do? Delivers a set of benefits Mattel Global Marketing Training Exercise To identify the 4 levels of PRODUCT attributes for 3 key Mattel brands Mattel Global Marketing Training Role of Packaging Mattel Global Marketing Training What Does Packaging Do? Packaging is a means of: Protection Supply Brand Identity (Why not Image?) Communication Product enhancement ?? What examples do we know of each? Mattel Global Marketing Training Packaging Can Be An Integral Part Of The Brand’s Image Packaging led attributes: Easy to find Easy to use Safe to store Stays fresh for longer Mattel Global Marketing Training Exercise Identify Packaging led attributes from some toy products Discuss the contribution of these to selection / purchase or usage of the toy/brand Mattel Global Marketing Training Product Management Mattel Global Marketing Training Why Products Must Be Managed Brainstorm reasons Mattel Global Marketing Training EXAMPLE Mattel Product Development This section is under development (not complete) but should give you a flavor of how we will work in Mattel examples Mattel Global Marketing Training The Idea – Case Study – Follow A Product Through To Completion General Research (example) Brand Strategy (example) BDO/LRP Explain the BDO – why / what / who Focus on particular segment (e.g., learning) Design & Development Brief to design team need for a toy (age, play pattern, price etc.) Design concepts (photos of 3D models) How many briefs, how many prototypes, how may emerge What products are fully researched (TV Drivers, new brands / products, Qualitative research show how research is conducted & results What is it for - feedback / learning / ideas / “likes”, “don’t likes”) research & results Quantitative research show how research is done and results For - Why girls like / don’t like, how much they like (vs. category benchmarks, vs. competitive products) Where - US, Mexico, Europe.. Viability test Line Review – Frequently Asked Questions Toy Fair Shelf & Results Mattel Global Marketing Training Trends – Research – Insight – Brand Market Insight Marketing Strategy BDO / LRP Product Development Basic Trend – Learning is growing! Mattel Global Marketing Training Line Review Trends – Research – Insight – Brand Market Insight Marketing Strategy BDO / LRP Product Development Basic Trend – Learning is growing! Consumer research - Key Insight = Moms want learning to be fun Mattel Global Marketing Training Line Review Key Product Development Steps 1. MARKETING RESEARCH Confidential 2. COPIES: DATE: July 23, 2003 TO: Dianna Dunn-Graves Gary Weber FROM: Regis O’Connor SUBJECT: Research Review – Infant Learning Toys K. Alexander K. Alfano E. Blatto K. Curran K. Fine K. Gill S. Glick Gryfe M. Kelley L. Krisel L. Mancuso K. Morton T. Murray G. Rainstein C. Scothon S. Schoenfelder G. Sirard C. Spitzer D. Weber M. Weppner T. Zinter-Chahin MRD has reviewed consumer research done over the past two years on infant learning toys and brands. This review covers on-line product reviews, mom talks, focus groups, concept screens, viability tests and segmentation studies. 3. 4. Six themes emerged. Consumers use the term “learning toy” loosely. While ”educational” is a word they may use in place of “learning,” they apply both to developmental toys as well as academic toys. Consumers do not limit the words “learning” or “educational” to toys that feature academic icons like letters, numbers, shapes or colors. Moms define “learning” toys as a range of items, from balls to Sparkling Symphony. Moms even list “educational” and “learning” benefits as the reason why they love basic infant toys like Rock-a-Stack and Snap Lock Beads. Consumer expectations for learning toys extend beyond academic skills. Consumers expect all infant toys to deliver developmental benefits at the onset. Few think academic content is appropriate for infants. Academic learning, however, is a plus because this feature might be explored and appreciated later, by a toddler. In the meantime, moms expect an infant learning toy to entertain baby with stimulating activities that encourage discovery and physical coordination. 5. 6. Consumers use the term “learning toy” loosely. Consumer expectations for learning toys extend beyond academic skills. Successful learning toys have organic play patterns that are recognizable and familiar and will adapt as baby develops Successful learning toys also have warmth or charm Light and sound effects are a cost of entry. Finally, consumer friendly engineering promotes consumer satisfaction and keeps moms and babies interested. Mattel Global Marketing Training Trends – Research – Insight – Brand Market Insight Marketing Strategy BDO / LRP Product Development Basic Trend – Learning is growing! Consumer research - Key Insight = Moms want learning to be fun Mattel Global Marketing Training Line Review Marketing Strategy / BDO-LRP Explanation of the BDO Process Actual Example of an LRP (to be inserted) Mattel Global Marketing Training The Mattel Marketing Cycle Aug. ‘05 Sep ’05 Oct ‘05 Spring ‘07 Global Activity Nov ‘05 Dec ‘05 Jan ‘06 Feb ‘06 Mar ‘06 Apr ‘06 May ‘06 Jun ‘06 Jul ‘06 Global Line Review LRP/ BDO Aug ‘06 PreToy Fair Sep‘ 06 Oct ‘06 Ship Spring Nov ‘06 Dec‘ 06 Ja. ‘07 Feb. ’07 Mar. ‘07 Apr ‘07 May ‘07 Jun. ‘07 Jul ‘07 Aug. ’07 Spring Marketing Product Development Input Sub Activity Pricing/Placement LRP/ BDO Fall ‘07 Execution Market Insight – Kids, Trends Global Activity Sub Activity Promotion Global Line Review Toy Fair Ship Fall Fall Marketing Product Development Input Pricing/Placement Market Insight Marketing Strategy BDO / LRP Product Promotion Development Mattel Global Marketing Training Line Review Execution Typical Research Path Market Insight Marketing Strategy Product Development BDO / LRP Line Review Ideation Exploration Initial Concept Test Market Testing Stimuli Early Stage Concepts Tangible Concepts Developed Concepts Developed Concepts Research “Mom Talk” Focus Groups Axiom Axiom Type Qual Qual Quant + Qual Quant + Qual Output Ideas Insight “some tank” Purchase Intent / Attributes (Like, Fun..) Relative Appeal Stage Mattel Global Marketing Training ( UK, France, Germany, Italy, Spain Mexico) Laugh ‘n Learn House Late Summer 2003 – Spelunker, followed by Mom Talk Mattel Global Marketing Training What Is A Viability Test What – A simulated in-store environment – 200 pairs (moms & kid) – “chips” to simulate shopping – A “more rigorous BASIS test, ” When – Run twice per year (PTF for in/out, Full Year - for priority) Outcomes = – Viability (Yes / No) – Priority – Volume predictions Stimuli = pictures, boards, pricing, ads Where = US, Mexico, Europe Predictability = 70% Mattel Global Marketing Training Fall 2003 – Viability Test & Volumetric Projection Results - Viability Test Table 1 - Liking & Purchase Intent (top box %) Product Liking Purchase Intent Drivers FP Laugh & Learn Home ($59.99) 40 40 16 FP Laugh & Learn Table ($34.99) LeapFrog Pretend & Learn Shopping Cart ($49.99) 38 23 LeapFrog LeapStart Learning Table ($44.99) LT Activity Garden ($69.99) 44 36 21 13 LT Discover Sounds Kitchen ($29.99) 34 32 LT Discover Sounds Workshop ($29.99) 32 19 31 Support Sku’s FP Laugh & Learn Plush Puppy ($19.99) 41 36 FP Laugh & Learn Garden ($19.99) 23 31 FP Laugh & Learn Phone ($12.99) 23 34 LeapFrog Baby Tad ($24.99) 43 28 LeapFrog Learning Drum ($19.99) 26 29 LeapFrog Discovery Ball ($19.99) 30 25 LeapFrog Alphabet Pal ($19.99) 32 29 LT Buzz Mailbox ($19.99) 24 24 LT Discover Sounds Toolbox ($9.99) Table 6 – Median Age Appropriateness (months) Product FP Laugh & Learn Home ($59.99) Youngest Oldest Age Window 8 25 17 FP Laugh & Learn Table ($34.99) 13 37 24 LeapFrog Pretend & Learn Shopping Cart ($49.99) 13 37 24 LeapFrog LeapStart Learning Table ($44.99) 10 37 27 LT Activity Garden ($69.99) 8 29 21 Table 4 – Price Sensitivity ($) Product 22 37 FP Laugh & Learn Home ($59.99) Minimum Optimum Maximum $20.00 $20.00 $27.50 $22.50 $46.00 $42.50 LeapFrog Pretend & Learn Shopping Cart ($49.99) $18.50 $26.00 $39.00 LeapFrog LeapStart Learning Table ($44.99) $19.00 $22.50 $28.50 $34.00 $45.00 $47.50 FP Laugh & Learn Table ($34.99) LT Activity Garden ($69.99) Mattel Global Marketing Training CASE STUDY - Laugh ‘n Learn House International testing, typically UK Germany France Spain Italy Mexico Winter 2003 – Playlab Packaging Interviews European Focus Groups Typical Results Relative appeal of product in market Indications of volume / pricing Insight into attributes Mattel Global Marketing Training Testing In International Markets European Reaction to 2005 Concepts at a Glance Infant Core Concepts France Germany UK Axiom score Crawl 'n Cruise Playwall ? A Peek-A-Blocks Cube ? NA Dance Stand ? NA Crawl 'n Play Tunnel ? ? ? LeapFrog Table ? ? ? Hoptopus ? ? F Infant Learning Table ? ? D Toddler Trampoline B Learning House Mattel Global Marketing Training NA B B Performance Key Star Strong ? Mixed Poor Price Mattel Global Marketing Training PRICE - Overview Profitability Price, Volume or Cost (What’s the best route to profitability) Profit Exercise Understanding the Mattel P&L Structure Key Terms (definitions) Key Calculations Practice exercise 1 Hour 1 Hour Setting the Price Pricing Methodologies (Cost Plus, Marginal. Market based, Value based) Competitive Pricing Strategies (Price leadership, Skimming, Penetration, Follower) The Mattel Pricing Development Process Practice exercise “What should XXX sell for?” Forecasting Key issues at Mattel Forecasting Process Best Practices 1 Hour 1 Hour Mattel Global Marketing Training Focus on Profit Mattel Global Marketing Training Let’s Begin With A Basic Question What causes a stock to rise? Mattel Global Marketing Training More Of What? Sales? Products? Earnings? Good News? Innovation? Customers? Change? People? Mattel Global Marketing Training Consider Company ‘A’ ‘A’ Company Revenue 100.0% Cost of Goods Sold 66.0% Gross Profit 34.0% SG&A 23.9% Depr. & Amort. 2.7% Other Expense 0.0% Operating Income 7.3% Non Op Expense 1.2% Pre-Tax Income 6.1% Mattel Global Marketing Training How Well Is It Performing? Why? Let’s add a few more…who’s performing the best? Why? Company ‘A’ ‘B’ ‘C’ ‘D’ ‘E’ ‘F’ ‘G’ 100% 100% 100% 100% 100% 100% 100% Cost of good sold 66% 76% 77.5% 67.9% 47.3% 38.2% 47.1% Gross profit 34% 24% 22.5% 32.1% 52.7% 61.8% 52.9% SG&A 23.9% 17.5% 17.9% 26.1% 33% 45.6% 30.9% Depr. & Amort. 2.7% 1.5% 23% 3% 3.7% 5.2% 3.9% Other expense 0% 0% - 0.7% 0.1% 0% 0% Operating income 7.3% 4.9% 4.6% 2.3% 15.8% 11% 18.1% Non op expense 1.2% 4% 7% 1.1% 0.9% 3.2% 0.7% Pre-tax income 6.1% 5.5% 4.1% 1.2% 14.9% 7.8% 17.4% Revenue Mattel Global Marketing Training Which Stock Would You Want To Own Now? Company ‘A’ ‘B’ ‘C’ ‘D’ ‘E’ ‘F’ ‘G’ 48,163 256,329 88,474 11,566 4,960 3,139 43,377 Cost of good sold 66% 76% 77.5% 67.9% 47.3% 38.2% 47.1% Gross profit 34% 24% 22.5% 32.1% 52.7% 61.8% 52.9% 23.9% 17.5% 17.9% 26.1% 33% 45.6% 30.9% Depr. & Amort. 2.7% 1.5% 23% 3% 3.7% 5.2% 3.9% Other expense 0% 0% - 0.7% 0.1% 0% 0% Operating income 7.3% 4.9% 4.6% 2.3% 15.8% 11% 18.1% Non op expense 1.2% 4% 7% 1.1% 0.9% 3.2% 0.7% Pre-tax income 6.1% 5.5% 4.1% 1.2% 14.9% 7.8% 17.4% PRE-TAX ($M) 2,960 14,193 3,633 138 741 244 7,530 REVENUE ($M) SG&A Mattel Global Marketing Training And now? Who are these companies? Company ‘A’ ‘B’ ‘C’ ‘D’ ‘E’ ‘F’ ‘G’ 48,163 256,329 88,474 11,566 4,960 3,139 43,377 Cost of good sold 66% 76% 77.5% 67.9% 47.3% 38.2% 47.1% Gross profit 34% 24% 22.5% 32.1% 52.7% 61.8% 52.9% 23.9% 17.5% 17.9% 26.1% 33% 45.6% 30.9% Depr. & Amort. 2.7% 1.5% 23% 3% 3.7% 5.2% 3.9% Other expense 0% 0% - 0.7% 0.1% 0% 0% Operating income 7.3% 4.9% 4.6% 2.3% 15.8% 11% 18.1% Non op expense 1.2% 4% 7% 1.1% 0.9% 3.2% 0.7% Pre-tax income 6.1% 5.5% 4.1% 1.2% 14.9% 7.8% 17.4% PRE-TAX ($M) 2,960 14,193 3,633 138 741 244 7,530 INV TURNS 5.95 7.32 12.4 3.70 6.04 7.10 5.61 BASIC EPS $3.26 $2.21 $3.55 $0.64 $1.18 $1.00 $2.32 REVENUE ($M) SG&A Mattel Global Marketing Training Household names… Company Target Walmart Carrefour TRU Mattel Hasbro P&G REVENUE ($M) 48,163 256,329 88,474 11,566 4,960 3,139 51,407 Revenue 100% 100% 100% 100% 100% 100% 100% Cost of Good Sold 66% 76% 77.5% 67.9% 47.3% 38.2% 45.4% Gross Profit 34% 24% 22.5% 32.1% 52.7% 61.8% 54.6% 23.9% 17.5% 17.9% 26.1% 33% 45.6% 32.1% Depr. & Amort. 2.7% 1.5% 2.3% 3% 3.7% 5.2% 3.4% Other Expense 0% 0% 0.7% 0.1% 0% 0% Operating income 7.3% 4.9% 4.6% 2.3% 15.8% 11% 19.1% Non Op Expense 1.2% 0.4% 0.7% 1.1% 0.9% 3.2% 1.2% Pre-Tax Income 6.1% 5.5% 4.1% 1.2% 14.9% 7.8% 18.2% PRE-TAX ($M) 2,960 14,193 3,633 138 741 244 9,350 INV TURNS 5.95 7.32 12.4 3.70 6.04 7.10 11.7 BASIC EPS $3.26 $2.21 $3.55 $0.64 $1.18 $1.00 $2.32 SG&A 2003 Fiscal Year Mattel Global Marketing Training Source: Company Reports and Hoovers Once Upon a Time, Two Partners Went Into the Watermelon Business… Mattel Global Marketing Training Managing Profitability Mattel Global Marketing Training Profit Improvement Strategies Profit = (Volume x Price) - Costs Increase Price Increase Volume Reduce Costs Mattel Global Marketing Training What Route To Profit? Consider a business that Sells 100 000 toys At a price of €1 each That cost €0.75 each What’s required to improve profits by 15%? Mattel Global Marketing Training Comparing the Options Current Business Option 1 Drive Volume Option 2 Raise Price Option 3 Reduce Costs Sales Units 100000 115000 100000 100000 Price per unit €1 €1 €1.0375 €1 Cost per unit €0.75 €0.75 €0.75 €0.7125 Profit per unit €0.25 €0.25 €0.2875 €0.2875 Total Sales €100000 €115000 €103750 €100000 Total Profit €25000 €28750 €28750 €28750 Increase Volume by 15% Increase prices by 3.75% Reduce Costs by 5% Profit Strategy Options Mattel Global Marketing Training “Ready Reckoner” What price increase is needed to deliver the same profit improvement as a given volume increase? What volume increase will bring the same profit improvement as a given price increase? % Gross Margin x % Volume Increase 100 % Price Increase x 100 % Gross Margin = % price increase required = % Volume Increase required Mattel Global Marketing Training In Real Life, These Options Are Interrelated To drive volume Do we need to reduce price Do we need to invest ( raise costs) Will the additional volume reduce our costs? To raise price Will we lose volume To reduce costs Will this reduce volume (Why would this happen? Mattel Global Marketing Training Mattel Finance & Performance Measures Mattel Global Marketing Training The Pressure On Mattel Is Immense Adapting to Modern Trade Powerful Multiples Other Brands Ill Disciplined Non Branded Retailers Customer Specific Promotion More Margin Own Label Implementation of Agreements No.3 Brands Mattel Pressure Points Better Service Stockholding Legislation High Production Costs Changing Consumers J.I.T. Space Productivity Economy Channel Balance Shareholders Extended Credit Bad Debts Mattel Global Marketing Training The Mattel Brand P&L Structure – Managed at Two Levels – By Country / By Brand International International MUSA Europe Asia Mattel Brands Boys UK Boys Fisher Price Girls France Girls Hot Wheel P&L FP Hot Wheels SKU SKU Mattel Global Marketing Training Mattel P&L (TLP to Props) Gross Sales FP Pre-School 14500 Net Sales 13274 Prime Cost Prime % (of Net) 8034 60.5% Total Royalty Marketing Contribution MC% (of Net) D&D 24 4942 37.2% 250 Advertising ADV% (of Net) 1068 8.0% Overhead OH% (of Net) 1626 12.2% Operating Income OI% (of Net) 1837 13.8% Mattel Global Marketing Training At several levels (Subsidiary, Boys, Brand, sub-brand, SKU Sales at list - DFI - Accrued Customers - MDF = Net Sales Manufactured Cost Allocated Brand Managed Managed at Sub Level Mattel P&L (TLP to Props) FP Pre-School 14500 Gross Sales Net Sales 13274 Prime Cost Prime % (of Net) 8034 60.5% 24 Total Royalty Marketing Contribution MC% (of Net) 4942 37.2% 250 D&D Advertising ADV% (of Net) 1068 8.0% Overhead OH% (of Net) 1626 12.2% Operating Income OI% (of Net) 1837 13.8% TLP to Props Mattel Global Marketing Training Brand Managed • Advertising Media (typically at Director level) • • • • • • Promotion Public Relations Program Development Internet Events .... Local Systems Placeholder page for one level down of report (per Wody’s note) Mattel Global Marketing Training Mattel P&L (TLP to Props) Gross Sales FP Pre-School 14500 Net Sales 13274 Prime Cost Prime % (of Net) 8034 60.5% Total Royalty Marketing Contribution MC% (of Net) D&D TLP Primarily a Planning tool Full Year & YTD 24 To 4942 37.2% 250 Advertising ADV% (of Net) 1068 8.0% Overhead OH% (of Net) 1626 12.2% Operating Income OI% (of Net) 1837 13.8% PROPS Full Year, YTD & Monthly Planning & Management Tools What ifs? Added dimensions Mattel Global Marketing Training Mattel Financial Planning Milestones Mattel International Key Business Planning Milestones "Before" Apr 05 May 05 Jun 05 Jul 05 Aug 05 Sept 05 Oct 05 Nov 05 Dec 05 Jan 06 Feb 06 Mar 06 Apr 06 May 06 Jun 06 Jul 06 Aug 06 Sept 06 Oct 06 Nov 06 '05 Planning Submissions Internal Product Rvw FCST2 FCST3 FCST4 '06 Planning Submissions Internal Product Rvw Strat Plan Pre Plan Pricing/Margin Spr Line Rvw PTF Pricing/Margin Fall Line Rvw Toy Fair PLAN/FCST1 FCST2 FCST3 FCST4 NY/HK TF '07 Planning Submissions Internal Product Rvw Strat Plan Pricing/Margin Spr Line Rvw [BDO] PTF Pricing/Margin Fall Line Rvw Need to fix this graphic Mattel Global Marketing Training Toy Fair Dec 06 We may move the selection suggestions) and quota section here (as per Mattel Global Marketing Training What is Direct Import? Mattel Global Marketing Training What Is A Direct Import? A Technical Definition Sold directly to the customer Asia. FOB Hong Kong/China Customer pays supplier on Letter of Credit: Payment in US Dollars Payment at time of shipment Customer owns the inventory Customer is responsible for all costs and managing all logistics from China to their stores. Mattel Global Marketing Training Framework Cost to Serve Direct Warehouse (DW/DDI) Domestic/Trade REVENUE BY CATEGORY US JIT Direct Import HIGH COST FOB/Import Orient LOW COST Non-Ad Trade: DI: DW: FOB: $ 1,200 million $ 150 million $ 150 million $ 20 million EARLY $ Ad Mattel Global Marketing Training Cost to Sell Direct Imports Come in Two Varieties - Branded and Unbranded Unbranded Branded (e.g., Mattel) Strong, well known brand High consumer recognition and appeal Top quality product Strong features Media and promo support Complements TV Drivers Good turns Unknown Brand Little consumer recognition and appeal Variable quality Few features No support No link to TV Drivers Slower turns Mattel Global Marketing Training Direct Import Exercise Break into to 2 groups Group 1 = the retailer Group 2 = Mattel •15 Minutes in groups •15 minutes review and discussion Brainstorm – why (Branded) Direct Imports? Group 1 from Retailer perspective Group 2 from Mattel perspective On a flip chart, list the reasons for selling / carrying Direct Imports Mattel Global Marketing Training DI Shared Benefits For Retailer For Mattel Makes product mix more profitable for customers = more support for Mattel brands Incremental space / market share Extends Brand presence on shelf Rounds out product line Competes with Private Label, unbranded DI, knock- offs Competes for lower “price points” Captures more “Open to Buy” dollars No Inventory costs / risk No bad debt High % gross margins on branded toys / brand support from Mattel Combine with to TV Drivers to create profitable mix Fill out product lines with complementary items – (Barbie clothes with Barbie dolls) Ability to hit key retail price points Price/Value for consumers Better “trip capture” Direct Imports often perceived as a better deal Mattel Global Marketing Training Selling Items DI allows Mattel To Tap Into Two Sources Of The Retailer’s Budget Domestic Open to Buy Direct Import Open to Buy $ $ Mattel Global Marketing Training Direct Import – A Definition Direct Imports are a marketing strategy that enables Mattel to provide retailers with a better margin mix and extend our brand presence. Mattel Global Marketing Training Direct Import vs. Domestic Distinctions Domestic Direct Imports Brand Stronger Strong Media Support Media Support Items not supported but supported by brand advertising Turns Better Good Features Unique Features Strong Features Differentiation Yes+ Yes Retailer Margin Medium/Low High Mattel Margin Very High / High High / Medium Domestic / Direct Imports vary by brand and by market but, in general, have these distinctions. Mattel Global Marketing Training Why Are DI Product Higher Margin For The Retailer? Retailer buys directly from Asia Mattel takes mark-up off a lower base Retailer pays all shipping costs Lower Handling Costs Domestic Cost in Asia DI % $10.00 $10.00 -- $2.00 Ocean Ship $3.00 $3.00 Domestic Ship $4.00 $2.00 Mattel Markup $3.50 -- $20.50 $17.00 Mattel Mark-up Cost to Retailer Mattel Global Marketing Training 20% 20% Pricing & Selection Mattel Global Marketing Training Product Selection – Traditional Versus Mattel Traditional approach Mattel Global Marketing Training The difference at Mattel Product Selection & Quota Line Review – Total Line Global Line • Research Results • global • region • Volume Estimates • TV Support Options • Global priorities Local Line • History •category / brand in this market (>=< than ROW) •History of price point in local market •Size / strength of local Sub •CDI • BDI • Region / Market priorities • Sales goals • Distribution • Marketing Support Levels No tools identified, more judgments • Local Product Line • Quota Mattel Global Marketing Training Global TV Drivers Local • Market conditions •Legal considerations • Business goals • Media Budget Line Pricing Vs. SKU Pricing Mattel Global Marketing Training Euro N pricing model Mattel Global Marketing Training Tips On Selection of Line & TV Drives & Setting Quotas Groups make better decisions than individuals Perennial slots (segment / price) as a guide Coverage of key segments & price points How do will I support Umbrella strategy (e.g., “Hot 100” Flagship (e.g. Accelerators) What are my business priorities? Andres is getting some examples Mattel Global Marketing Training Different Market Approach to Line Selection Global Line Global Line Global Line US / Canada Europe LATAM Global Line Country Line Region Line Must Carry Option to Carry Not in Region Country Line Mattel Global Marketing Training Finding The “Right Price” Cost Plus Pricing Marginal Pricing Market Based Value Pricing Define and discuss the pros and cons of these different pricing strategies Mattel Global Marketing Training Setting The Price Global price, based on research “A” Price Local Market Landed Cost Local Trade Spend Structure Competition Mattel Margin Mix Retailer Margin Local Price Mattel Global Marketing Training Need to Add TV Drivers vs. Non-Driver / DI Local Pricing Models Mattel Global Marketing Training Managing - POS - Need to add this section Mattel Global Marketing Training Forecasting Processes Mattel Global Marketing Training Refresher: Lead Time Summary Material 60 Production 30 Transit 30 120 days Mattel Global Marketing Training How Mattel Manages Demands Demand Forecasts Monthly quantity requirements submitted to manufacturing sources Quota Reviews Monthly review of demand forecasts by item Measurements Demand Measurements Inventory Measurements Mattel Global Marketing Training Planning And Forecasting: The Ideal Forecasting Process! Marketing (Top Down) Sales (Bottom Up) Planning Fulfillment Quota Forecast Marketing Sales Reconciled Production Plan Production Mattel Global Marketing Training Retailer Consumer Planning and Forecasting: A process perception? Marketing (Top Down) Sales (Bottom Up) Planning Fulfillment Quota Forecast Marketing Sales Reconciled Production Plan Production Mattel Global Marketing Training Retailer Consumer Exercise: Forecasting Process Objective Method Timing To discuss the subtle process nuances between desired forecasting process and perceived forecasting reality • Beak into groups of three (3) • Compare and contrast the forecasting process diagrams, discuss • How are they different? • Is perception reality? • Is the ideal possible? • What should change? • What is Sales role in change? • Capture team thoughts on flipcharts 30 min to discuss and prepare 15 min to present Mattel Global Marketing Training Create a Bridge from Base Plan to Forecast Market Forecast Base Plan + Add Events / Activities = Custome r Specific Forecast Spread Forecast over time Agree with customer Mattel Global Marketing Training Monitor and Manage Quantify the Impact of Events and Activities Market Forecast Base Plan + Add Events / Activities = Custome r Specific Forecast Spread Forecast over time Agree with customer Mattel Global Marketing Training Monitor and Manage Events and Activities RETAILER Product in stock Product to support promotions Coordinate with TV Advertising Helps Control Retailer Inventory Costs Measure Retailer Performance with Mattel Drives the replenishment plan Identify and Act on issues early Developed Through Dialog With Your Customers! MATTEL Products in-stock Product to support promotion Coordinate with TV Advertising Helps Control Mattel Inventory Costs Measure Mattel’s performance Drives the replenishment plan Identify and Act on issues early Allocate the ‘HITS’ Move the ‘DOGS’ out early Estimates that impact production Information to Marketing Timely information that you need to manage your account Am I going to make my target? Is there a gap? What can I do to close the gap Mattel Global Marketing Training Quantify the Impact of Events and Activities Market Forecast Base Plan + Add Events / Activities = Custome r Specific Forecast Spread Forecast over time Agree with customer Mattel Global Marketing Training Monitor and Manage Base Plan and Events/Activities Drive the Forecast! Estimate Volume impacts by Customer by SKU by EVENT Base New Item Lost Space Hot Wheels Extra Ad Store Closings Mattel Global Marketing Training Extra Space Barbie End Cap Hot Wheels Customer Forecast Account for Timing Market Forecast Base Plan + Add Events / Activities = Custome r Specific Forecast Spread Forecast over time Agree with customer Mattel Global Marketing Training Monitor and Manage Spread The Forecast Jun Jul 1 POS 2 Shipments Initial Fill Aug Sep Oct White Space Nov Display Dec TV Replenishment Seasonality Trends Mattel Global Marketing Training Jan Include the Customer and Monitor Accuracy Market Forecast Base Plan + Add Events / Activities = Custome r Specific Forecast Spread Forecast over time Agree with customer Mattel Global Marketing Training Monitor and Manage Managing Forecast Changes Mattel Global Marketing Training Planning and Forecasting: A process perception? Marketing (Top Down) Sales (Bottom Up) Planning Fulfillment Quota Forecast Marketing Sales Reconciled Production Plan Production Mattel Global Marketing Training Retailer Consumer Planning and Forecasting: A process perception? Marketing (Top Down) Sales (Bottom Up) Planning Fulfillment Quota Forecast Marketing Sales Faster, Furious Reconciled Production Plan Production Mattel Global Marketing Training Retailer Consumer Planning and Forecasting: A process perception? Marketing (Top Down) Quota Marketing Slower, Powerful Sales (Bottom Up) Planning Fulfillment Forecast Sales Reconciled Production Plan Production Mattel Global Marketing Training Retailer Consumer Planning and Forecasting: A process perception? Marketing (Top Down) Quota Marketing Slower, Powerful Sales (Bottom Up) Planning Fulfillment Forecast Sales Faster, Furious Reconciled Production Plan Production Mattel Global Marketing Training Retailer Consumer Forecasting Can Be Like a Hurricane… …As the season progresses, the storm builds! Month 0 Month 3 Mattel Global Marketing Training Month 5 Focus on the Slower, More Powerful “Winds of Change” WEEKLY FOCUS Slower, Powerful MONTHLY FOCUS Faster, Furious Mattel Global Marketing Training Exercise: Supply Chain Objective Method Timing To better appreciate the impact schedule changes have on Mattel supply chain performance and overall financials • • • • • Beak into groups of three (3) Review the 2x2 forecasting matrix Identify market rationale behind each scenario (4 total) Assess each scenarios impact on Mattel Present views to group 15 min to discuss 30 min to present Mattel Global Marketing Training Inaccurate Forecasts: Reasons & Reaction Over Planned RATIONALE? IMPACT? RATIONALE? IMPACT? RATIONALE? IMPACT? RATIONALE? IMPACT? LT 4 Months GT 4 Months Initial Forecast Under Planned Adjustment Lead Time Mattel Global Marketing Training Inaccurate Forecasts Cost Everyone • • Impact Excess Inventory Excess Warehouse WIP/Interest $ Cutbacks • • • • Impact Production $ Logistics $ Raw Material $ Crowding Out • Over Planned Initial Forecast Under Planned • LT 4 Months Remember… FREE FREE Inaccurate forecasting costs Lost revenue Increase costs Lower margin Lower EPS Focus on improving upfront accuracy Keep large changes to a minimum When in doubt, ASK GT 4 Months Adjustment Lead Time Mattel Global Marketing Training Forecast Changes Are Ripples… They Most Often Start Out Small… Mattel Global Marketing Training That Quickly Grow Out-of-Control! How to stop the wave? Proactively manage change Constantly monitor customer expectations Communicate changes both externally AND internally Mattel Global Marketing Training Do’s and Don’t DON’T DO Use prior year data as a reference/starting point Reconcile quota gaps to improve accuracy Focus on BIG changes first and frequently Pay attention to details Update forecasts based on consumer demand AND customer interests Create a logical rationale to guide customer discussions Wait until the last minute to input changes Take the easy way by assuming others have a better view of YOUR customers needs Be too risk adverse, rather learn by embracing the forecasting challenge Begin with a self-constrained forecasts, then “lead the customer” to this view Mattel Global Marketing Training Place Mattel Global Marketing Training PLACE - Overview Shoppers, Channels, Customers The Occasion, The Shopper, The Channel, The Outlet, The Customer Shoppers vs. Consumers Mattel Channel Examples Developing a Customer Proposition Customer Needs Retail Economics The Commercial Proposition Customer Plans & Presentations Plans vs. presentations MSAP / GAP Plans – process / example Exercise “Persuasive Presentation” (turning an existing “deck” into a simple but effective presentation) Supporting the Sales Team - checklist of what Sales need from Marketing to do their job Mattel Global Marketing Training 1 Hour 1 Hour 2 Hours Taking The Insight And Proposition To The POP Is Critical Aware Above The Line Intention To Purchase Understand Believe Cost New Users Total Target Market Point Of Purchase Experience Trial Find Buy Repeat Revenue Like Prefer Mattel Global Marketing Training Profit Loyal Users Want Shoppers vs. Consumers Mattel Global Marketing Training Identified Shopping Habits Will Change Planned Immediate Expert Social Constrained Opportunistic I need to get / we always buy I need it now I need something special I want something more It’s all I can get I might as well buy % 40 35 30 25 Planned Immediate 20 Opportunistic 15 Expert Constrained 10 5 Social 0 2000 2015 Source: Research International, The Store 2001 Mattel Global Marketing Training Mattel Global Marketing Training Driving The Need For Effective Management Of Consumer And Shopper Dynamics Recognize that shoppers differ from consumers Understand the differences Understand the similarities Ensure that there are strategies for both Ensure that these strategies are complementary Consumers Shoppers Mattel Global Marketing Training The Shopper Understanding Decision Model Who? A profile of the purchaser of the category (demographics, lifestage, lifestyle, composition of shopping party) and whom they purchase for What? Identification of products and quantities purchased, amount spent, product switching and price paid When? Identification of purchase frequency, seasonality, time spent in store / at fixture, time of purchase Where? Identification of which stores the purchaser shops for the category (could be channel, banner, or outlet specific, e.g. Discount channel, Wal-Mart banner, or Store No. 486 How? Description of how the purchaser responds to various stimuli in the purchase environment (assortment, price, promotion, shelf presentation and location) Why? Understanding the motivations of why the purchaser shops, responds, and makes decisions as identified above e.g. includes shopper attitudinal typologies, need states segments, etc.) Mattel Global Marketing Training Shopper Exercise / Discussion Mattel Global Marketing Training The Role And Importance Of Channels Mattel Global Marketing Training The routes to the final consumer are made up of many different channels Distribution Cash & Carry Retail Toy shop Planned Wholesaler Department Store Seasonal Special Occasion Mass / Grocery Mattel Global Marketing Training But what is a channel? A group of points of purchase that satisfy the same consumer/shopper needs or requirements. Mattel Global Marketing Training For example… Shops Markets Kiosks Theatres Cinemas Bars Restaurants Airports Bus stations Railway stations Factories Mattel Global Marketing Training Internet Mail order Newspapers Magazines Vending machines Private houses Offices Aeroplanes Buses Trains Street vendors Why do we need channels? Treating them all the same however would not allow our brands to reach their full potential In an ideal world we would manage every POP individually. However, in reality this would not be cost effective So, we create channels so that we can manage them in groups! Mattel Global Marketing Training Why do we need channels? Channels provide a convenient and effective way of grouping points of purchase so that we can Assess their size and growth potential Assess their opportunity for the company’s brands Produce strategies to develop these opportunities Maximise the use of our resources … but only if we define our channels correctly! Mattel Global Marketing Training What is an accurate channel definition? Reflects consumer/shopper usage, needs and/or requirements Considers the total universe Not just channels that currently sell the company’s brands Not just channels that the company calls on currently Provides tangible information that can be translated into actions Will change over time Mattel Global Marketing Training Commercial Benefits Of A Channel Strategy Better return on human and financial investment Competitive advantage - focusing on big wins Barriers to entry for competition Sustainable growth strategy Mattel Global Marketing Training Channel Strategies Case Study MUSA - CDO Workshop We will need to get an updated version Mattel Global Marketing Training Background Wal-mart Target TRU Kmart ‘The Full Line’ Marketing Driven ‘Big Five’ KB Everyone Else! Mattel US had not traditionally taken a channel-oriented approach to managing customers It has been a marketing – driven process - They created the full line - most appropriate for a dedicated toy store (e.g., TRU) - and support program to drive line But that wasn’t working any more! Our business was increasingly concentrated with the big 4 customers and yet they didn’t feel that we gave them a program tailored to their needs Meanwhile – we weren't getting much traction with the other channels Mattel Global Marketing Training Roles CONSUMER CHANNEL CUSTOMER BRAND MARKETING CUSTOMER MARKETING SALES CONSUMER INSIGHT CHANNEL SHOPPER INSIGHT ACCOUNT SHOPPER INSIGHT CATEGORY STRATEGY CHANNEL STRATEGY CUSTOMER STRATEGY BRAND STRATEGY CHANNEL IN-STORE BRAND STRATEGY ACCOUNT PLAN BDO CDO ADO BRAND DIRECTIONAL OUTLINE CHANNEL DIRECTIONAL OUTLINE ACCOUNT DIRECTIONAL OUTLINE Mattel Global Marketing Training But What Is A Channel? Definition of a Channel A group of points of purchase that satisfy the same consumer / shopper needs or requirements What is an accurate channel definition? Reflects consumer / shopper usage, needs and / or requirements Considers the total universe – Not just channels that currently sell the company’s brands – Not just channels that the company calls on currently Provides tangible information that can be translated into actions Will change over time Mattel Global Marketing Training We Knew The Alternative Channels Were A Big Opportunity For Mattel US Toy Market The Alternative or “Growth Channels” represent 1/3 of the toy market – but only 15% of MUSA’s business Big Five 66% Big 5 66% Alternate channel 34% Alternate Channel 34% To these channels, which included Grocery, Drug, Department and Dollar Stores among others, had different needs and requirements than our traditional customers. Mattel Global Marketing Training But there were obstacles! Best Practice Approach We wanted to work against a best practice approach – but we did not have a fully developed understanding of the category and our knowledge of shoppers was patchy - particularly in regard to the ‘growth’ channels Channel Definition • Agree category definition • Agree channel definitions • Produce Channel Reference Guides • Validate channel definitions Consumer Category Strategy Shopper Channel Strategy Customer Customer Strategy Point Of Purchase Build New Channel Database Channel Opportunity Assessment • Agree channel evaluation criteria • Identify data requirements • Source data and create database • Generate key insights from channel database • Develop top line channel prioritisation Channel Strategy • Channel SWOT • Set channel objectives • Develop strategic options • Develop channel POP vision • Develop channel action plan Mattel Global Marketing Training Sales Strategy • Consolidate channel strategies into sales strategy • Organisation • Coverage • Capability • Technology • Customer service • Customer development plans Implementation Implementation • Develop channel implementation plans The CDO Process Mattel US’ ultimate objective was to develop a comprehensive channel strategy that cascades into specific customer strategies. Our immediate objective was to use the existing research and information on channel and customers to develop a channel strategy that can be used as a guideline for the fall 05 line selection by customer and also to help define the right: customized product line lists space planning recommendations merchandising and promotional programs packaging and case packs decisions Mattel Global Marketing Training Channels (Traditional Definition) Supermarkets / Grocery Kroger, Safeway, Albertson's Electronic Stores Best Buy, Circuit City, Fry’s Drug Walgreen’s, CVS, Rite Aid DIY Hardware Home Depot, Lowe’s, Ace Super Centers & Mass Discount Wal-mart, Target, Kmart Office Supply Staples, Office Depot Convenience Discount Dollar General, Family Dollar, Freds Department Kohl’s, Sears, Nordstroms Dollar Stores (.99 & lower) Dollar Tree, 99¢, Supervalu Auto AutoZone, Advance, Pep Boys Club Stores Costco, Sam’s, BJ’s Large Toys TRU, Kaybee, Learning Express C-Stores & Gas 7-11, AM-PM, Wawa Small Toy Independents Craft / Hobby Hobby Town, Micheals, Jo-Ann Stores Discount Outlets Big Lots, Value City Mattel Global Marketing Training CDO Process AUG 04 Channel Definition and Segmentation • Matrix of Channels vs. Differentiators (data input) • Channel and Customer Attractiveness and Prioritization SEP 04 Channel Summary • Channel Role for the Category • Mattel Role for the Channel • Line Selection Principles • Opportunity Assessment • Outline Channel Strategies (1st Cut) OCT 04 Top Line Customer Strategies Fall 05 Mattel Global Marketing Training Channel Differentiators Shoppers’ Propensity to Buy Toys Retail Experience Primary / Secondary / Impulse Poor / Average / Good / Great Perception of Price / Value Service High / Medium / Low Poor / Average / Good / Great Range of Toys Toy Transaction Size Minimum / Low / Medium / High Low / Medium / High / V. High (<100) / (100-400) / (400-700) / (700-1,000) Type of Trip Store Image Convenience / Bulk / Recreational / Replenish Basic-Boring / Average / Hot-Cool Seasonality of Toys Promotion All Year / Hols-Season / Other Low / Medium / High How did we select these Channel Differentiators? • Materially distinguish the reason shoppers chose certain channels to buy toys • Rated low medium high etc. by group • Based on available data / judgment of team Mattel Global Marketing Training Channel Database – CDO Matrix Created For All Channels CDO Matrix 1 2 Supermarket (Grocery Stores) Drugstores Channel Directional Outline 05-06 CHANNE August 26, 2004 Top 10 (MVI 80/20) Toys Margin Current/Go al DOM/DI Stores 04 04 Sales 05 Plan var 0405 Top 10 Kroger Publix Albertsons 35%-45% 35%-45% 35%-45% 100/0 95/5 3,700 800 2,500 $ 9,300,000 $ 750,000 $ - $10,695,000 15% $ 937,500 25% $ - #DIV/0! 1 Walgreens 2 CVS 3 Rite Aid and the Total Store across ALL channels 4 Safeway 35%-45% 90/10 1,800 $ 3,400,000 $ 3,910,000 15% 4 Brooks 5 Ahold (Stop&Shop) 35%-45% 90/10 1,500 $ 3,800,000 $ 4,370,000 15% 5 Longs 6 H. E. Butt (HEB) 35%-45% 85/15 300 $ 4,000,000 $ 4,600,000 15% 6 Albertsons/Sav On 7 Delhaize Group (Food Lion) 35%-45% 85/15 1,100 $ 811,000 $ 932,650 15% 7 Happy Harry Notes: 8 Winn Dixie 35%-45% 85/15 1,050 $ 1,300,000 $ 1,495,000 15% 8 Bartell Open Large Toys / Small Toys 9 Wakefern Food Corp. (Shop Rite) 35%-45% 90/10 200 $ 1,400,000 $ 1,610,000 15% # Customize Items divided by: merchandising product, etc. 10 A&P 90/10 600 13,550 $ 1,800,000 $ 26,561,000 $ 2,070,000 $30,620,150 15% 15% Top 10 is MVI 80/20 and Mattel TOP 25 based CUSTOMERS Criteria Selection is Based on the Shopper Perspective & Perception of the Toy Category 1 2 3 35%-45% TOTAL PRICING LIMITS Footage Channel Summary 9 Duane Reade 10 Marcs TOTAL PRICING LIMITS Slim Low Med High Frequent Shopper Visits, large format stores, small toy section, clean/bright enviroment, love hate relationship, in-stock-availability, merchandise by inmediate demographics, food focus, ancilliary business, competition is supercenters, getting into other categories, operate in low margins. Footage High Frequency of Visists, Impulse Purchase Oriented, L Basket, Large # of Doors, Highly Promotional, Replenish & Hibrid, Low to Medium Price Value Perception, Predomina Toys (-$9.99), 40% Marging Expectation, Destination Sto Categories, Younger Age, Grading, Smaller Packages, Abu Time, Seasonal Merchandise, Very Topical SHOPPER CRITERIA CRITERIA DESCRIPTION Propensity to Buy Toys How probable? Its toys the primary purchase? WEIGHT H Please color the appropiate criteria box for each customer Scott, Data Check at Channel Level SCALE Impulse SCALE Secondary Primary 1 Kroger 2 Publix 1 Walgreens 2 CVS 3 Albertsons 3 Rite Aid 4 Safeway 4 Brooks 5 Ahold (Stop&Shop) 5 Longs 6 H. E. Butt (HEB) 6 Albertsons/Sav On 7 Delhaize Group (Food Lion) 7 Happy Harry 8 Winn DixieFood Corp. (Shop Wakefern 9 Rite) 8 Bartell 10 A&P Mattel Global Marketing Training 9 Duane Reade 10 Marcs Channel Differentiators Shoppers’ Propensity to Buy Toys Primary / Secondary / Impulse Retail Experience WALGREENS KROGER Poor / Average / Good / Great COSTCO Perception of Price / JC Value PENNY High / Medium / Low Service Poor / Average / Good / Great SAMS Range of Toys Toy Transaction Size SEARS Minimum / Low / Medium / High Low / Medium / High / V. High (<100) / (100-400) / (400-700) / (700-1,000) TRU Type of Trip Store Image WAL-MART Convenience / Bulk / Recreational / Replenish HOBBY Basic-Boring / Average / Hot-Cool TARGET K-MART Seasonality of Toys Promotion All Year / Hols-Season / Other Low / Medium / High How did we select these Channel Differentiators? • Materially distinguish the reason shoppers chose certain channels to buy toys • Rated low medium high etc. by group • Based on available data / judgment of team Mattel Global Marketing Training Channel Priority – Focus On A&B Channel Toys Mattel Growth Fit Profit Priority Super Centers & Discount 10,650 2,035 + = + A Large Toys 3,050 640 - + - A Department Stores 376 60 = + = A Super Market / Grocery 143 17 + = = B Hi – Po 28 + = + B Drug 365 33 + = = B Club 281 25 + + + A Hi - Po 7 + = + B Small Toys 411 50 = + - C Electronic Stores 398 6 = = - C Auto Stores Low Low = + = C Dollar Stores Low/Med 2 + = + C DIY & Hardware Low Low + = = C Office Supply Low Low - - = D C-Store & Gas Low Low = - - D Craft & Hobby 665 3 + - = C Discount Outlets Convenience Discount Mattel Global Marketing Training Mattel Channel – Account Quadrant . STUDENTS PARTNERS LARGE TOYS TRU TOYS KAY BEE DEPARTMENTJC PENNY MASS WAL-MART NORDSTROM, MERVINS, MAY, SAKS INC. SCALE MILITARY AAFES, US NAVY TRANSACTIONAL PARKS AND AIRPORTS HARDWARE TOY DISTRIBUTORS TOYS FAO INC. CONVENIENCE GIFT STORES MEDIA & QVC COLLECTOR HOBBY FRONT LINE B2B SPECILATY DIST. TARGET K-MART MEIJER DRUG WALGREENS, LONGS DEPARTMENT KOHLS, SEARS DISCOUNT BIGLOTS GROCERY KROGER TEACHERS CLUBS SAMS, BJS, COSTCO GROCERY FRED MAYER, RALPHS, HEB DRUG RIGHT AID, CVS CATALOGUES AVON, JC PENNY ELECTRONICS RADIO SHACK, CIRCUIT CITY, BEST BUY DISCOUNT VALUE CITY, ODD JOB, DLL STORES FAMILIY$, $ GRL. AUTOMOTIVE AUTOZONE DEPARTMENT SHOPKO, BOSCOVS, PAMIDA INTERNET KAY BEE, TRU, WM Mattel Marketing Training Growth =Global Capabilities (With Mattel) Based on MVI Quadrant Shopper Modes Opportunistic… “I might as well” Social… “I want something more than just shopping” WALGREENS The Treasure Hunt! KROGER COSTCO JC PENNY SAMS SEARS TRU WAL-MART HOBBY TARGET K-MART Planned… “We always buy” Mattel Global Marketing Training Expert… “I need something special” Shopper Modes Opportunistic… “I might as well” Social… “I want something more than just shopping” WALGREENS The Treasure Hunt! KROGER COSTCO JC PENNY SAMS SEARS TRU WAL-MART HOBBY TARGET K-MART Planned… “We always buy” Mattel Global Marketing Training Expert… “I need something special” Mass Merchandising Solutions Mattel Global Marketing Training Channel Database Summary – Initial Definitions Indicate Distinct Channel Channel SC & Mass Large Toys Dept Grocery Disc Outlets Drug Club Conv. Disc. Example Target TRU Kohl’s Kroger Big Lots CVS Costco Dollar General Buy Toys Second Primary Impulse Impulse Impulse Impulse Impulse Impulse Price/ Value High Medium Medium/ Low Medium High Medium High High Range Medium High Low Medium Medium Low Low Low Replenish Replenish Recreation Replenish Replenish Convenience Replenish Replenish All Year All Year / Full Holidays / Seasonal All Year All Year All Year Holidays / Seasonal All Year Good Average Good Good Average Average Good Average Service Average Poor Good Good Poor Average Average Poor Ticket Medium High High Low Medium Low High Low Image Basic/ Boring Average Average Average Basic / Boring Basic/ Boring Basic/ Boring Basic/ Boring Promo Low & High High Medium High Low High Medium Low Trip Season Experience Notes - Some similarities in Drug / Grocery. Potential to look split Department Stores. Mattel Global Marketing Training Channel Strategy Summary Channel SC & Mass Large Toy Department Grocery Disc. Outlets Drug Club Example Target TRU Kohl’s Kroger Big Lots CVS Costco Dollar General Line Main Line Full Line Theme / Fashion Gift / Holiday + Impulse Value at low price point Gift Special Select Value Main Line Full line “Brought to Life” / Innovation Depth not breadth Gift coverage + S.U.T. (price point / age) Full DI + “Stripped down” exclusives Gift Coverage (price point, age, gender) Narrow - Special Packs Narrow Secondary Items/Low Price/Small Size Full Line & Push the Limits Up Add on + higher end ($15 - $30+) $5 - $15 Focus on $10 and below $5 - $15 Big Ticket $10 and below Full Year planned purchases, Enhanced Toy Experience, Platform for Innovation Showcase Frequency / share of pocket money purchases Reach specific consumer segment / Volume at low cost to serve Frequency Share of $ wallet Reach Consumer Segment Where They Shop + Volume Support strategies for differentiation on selection & merchandising / Profit Enhance family shopping experience Margin / basket opportunities, upgrade toy selection to be more in line w/store image Brands at value reinforces value / treasure hunt strategies Support “Gift Destination” Strategy Support Treasure Hunt Strategy Brands at value for their Shopper (Family / Hispanic shoppers) Selection Criteria Price Main Line Channel Role for Mattel Volume / Profit / Growth Mattel role for Channel Seasonal Category Growth / Basket Mattel Global Marketing Training Conv. Discount The Benefits Of A Channel Strategy for Mattel Clarity on highest priorities Sustainable growth strategy More balance against the top 4 accounts A more focused, effective organization Guidelines for line selection and promotional activities Efficiency - better return on human and financial investment Improved communication - a common language for strategic planning Mattel Global Marketing Training Results (add the latest) What Was Accomplished What still needs to be done.... Mattel Global Marketing Training Games Sold Where we Sell our Toys - A Little Less Toy Channel -A Little More Mass Channel UK France Germany Italy Total Toy Games Total Toy Games Total Toy Games Total Toy Games 28% 20.3% 43.3% 42.3% 41.7% 42.3% 28.4% 24.0% Catalogue/Mail Order 26.1% 28.3% 4.0% 4.9% 7.2% 4.8% Department Store 3.2% 4.3% 2.4% 2.0% 15.8% 17.3% 7.5% 10.0% Mixed 27% 30.8% 9.4%* 8.3%* 39.4% 42.1% 0.4% 0.3% 4.5% 5.3% 10.2% 10.0% Toy Shop Hyper/Super 42.7% Grocery 9.8% 10.9% Electr&VideoGames 0.2% 0.4% Internet 1.3% 1.3% Discounter 2.5% 47.6% 1.2% Cash & Carry Book/Gift Stores All Other 4.3% 3.7% 0.9% 0.6% 4.3% 1.3% 14.9% 4.6% 4.6% 0.9% 1.0% 14.9% *Includes Clothing and Toys shop in Italy Distribution of sales by channels for Total Traditional Toys and Games FY 2004 Source: NPD Consumer Panel Mattel Global Marketing Training 15.8% 14.2% In the UK, Argos(20.6%) and Woolworths(22.1%) are the leading retailers for Games, while the Hyper/Supermarkets, Carrefour(13.0%) and Leclerc(13.3%) are the most important channels in France. Karstadt(7.4%) and Kaufhof(6.0%) represent important channels in Germany 333 % of Sales Toy Shop ELC Toymaster Toys R US All Other 20.3% 2.1% 2.4% 7.2% 8.6% Catalog Showrooms Argos Index All Other 24.6% 20.6% 3.7% 0.3% Department Store Debenhams John Lewis All Other 4.3% 0.9% 1.0% 2.4% Mixed WH Smith Woolworths All Other 30.8% 4.9% 22.1% 3.8% Super/Cash & Carry Asda Tesco All Other 10.9% 3.4% 6.2% 1.3% Internet 1.3% All Other 7.8% % of Sales % of Sales Hyper/Super Auchan Carrefour Leclerc All Other 47.6% 9.0% 13.0% 13.3% 12.3% Toy Shop Toys R Us Rofu Spiele Max All Other 42.3% 7.9% 2.7% 1.4% 30.3% Toy Specialists Jouet Club Grande Recre Maxi Toys Toys R Us King Jouet All Other 42.3% 5.9% 5.6% 1.6% 12.8% 3.8% 12.6% Department Store Karstadt Kaufhof Woolworth All Other 17.3% 7.4% 6.0% 1.3% 2.6% Mail Order Eveil et Jeux All Other 4.9% 3.7% 1.2% Discounter Aldi All Other 4.6% 1.4% 3.2% All Other 5.2% Cash & Carry Metro All Other 1.0% 0.7% 0.7% Mail Order Quelle All Other 4.8% 1.4% 3.4% All Other Buchhandel All Other 14.2% 3.9% 10.3% Distribution of sales by retailer for Games FY 2004 Mattel Global Marketing Training Customer Marketing Mattel Global Marketing Training It Used To Be Simple! Sales Marketing Sales Planning owns owns Customers Mattel Global Marketing Training Consumers Customers Have Become Bigger And More Sophisticated; The Lines Become Less Clear Tasks Account Management Category Management Space Planning Merchandisers Channel Strategy Shopper Research Promotions Sales support materials Promotion evaluation… owns Customers Marketing owns “The Shopping Experience For Our Brands” Mattel Global Marketing Training Consumers Appendix - Defining The Evolution Of Customer Marketing Evolutionary Development Service Provide Sales Support Material Supply Information Administer Budgets Firefight Logistics Issues Advisory Provide Trade Feedback On Needs Interpret Market Research Data and Provide Directional Advice Communication of Brand / Sector Plans To Sales in Functional Format Evaluate Promotions Provide Business Analysis Produce Generic and Key Customer Planograms Planning Design Customer Specific Activity Develop Quality New Product Introduction Methodologies Formulate Merchandising Strategies Develop Systems Strategy Short/Medium Term Tactical Planning Strategic Channel Brand / Segment Volume, Value, Profit Management Insights to Medium / Long Term Demand Strategy Development Evaluate Category Performance at Channel and Customer levels Implement strategies via Joint Working and In-Store Initiatives Lead Role in Strategic Category Marketing The speed of development is conditioned by the pace of development in the market place and among key customers As roles are developed, these are additional to the existing activities. There should be no implication that roles are dropped as the function evolves Mattel Global Marketing Training The Customer Business Team - From Bow Tie Approach To... Logistics Marketing Services Logistics Sales Buyer Marketing Stock Levels Finance Finance Sales Logistics Logistics Marketing Marketing Services Buyer Stock Levels Finance Finance T Specialists Buyer E A Specialists Seller M Joint Working Mattel Global Marketing Training Retail Economics Mattel Global Marketing Training Levels Of Product Performance Assessment Level 3 Level 2 Level 1 Conventional Productivity Comprehensive Profitability Space & Inventory Financial Gross Profit / Unit (Cash Profit) % Gross Margin (POR) Gross Profit / Wk Adjusted Gross Profit (Net Net) $ Sales / Foot Gross Profit / Foot Day's Supply Turns GMROI Mattel Global Marketing Training RONA Level 1 Conventional Profitability Measurements Gross Profit / Unit ($ Profit ) Gross Margin % (POR) Gross Profit / Week Adjusted Gross Profit (Net Net) Mattel Global Marketing Training Clarifying Terminology Gross PROFIT is measured in dollars $ $ per unit Total $ (price x volume) Unit Gross Profit will differ from Total Gross Profit Gross MARGIN is calculated as a % % per unit % total $ (volume impacted) Unit Gross Margin is the same as Total Gross Margin Mattel Global Marketing Training Conventional Profitability Gross Profit / Unit (Cash Profit) % Gross Margin Gross Profit / Week Retail Price $12.00 Gross Profit $2.00 Gross Profit $2.00 Minus - Divided By ÷ Times x Cost $10.00 Retail Price 12.00 Movement / Wk Equals = Equals = Equals $2.00 Gross Margin % Gross Profit Baseline Metrics: – 100 Retail Price - $ 12.00 16.7% Gross Profit / Wk List Price - $ 10.00 Mattel Global Marketing Training 100/Wk = $ 200 Wkly Unit Volume Conventional Profitability (cont.) Adjusted Gross Profit Retail Price 12.00 Minus Cost 10.00 Plus + Allowances Discounts 0.48 Equal s = Adjusted Gross Profit 2.48 Per Unit View Mattel Global Marketing Training Baseline Metrics Retail Price COGS Net A&D $ 12.00 $ 10.00 $ .48 - Retail Measures - Fill In The Blanks Selling Price Cost Price 1.49 .97 .99 .52 % Margin 1.79 30.1% 2/$3.00 17.0% Cash Margin 1.25 0.44 1.25 0.74 22.0% 0.44 50.0% 0.50 Mattel Global Marketing Training Level 2 Productivity, Space & Inventory Measurements $ Sales / Foot Gross Profit / Foot Day's Supply Turns Gross Margin Return on Inventory Investment (GMROI) Mattel Global Marketing Training Productivity, Space & Inventory $ Sales / Foot Important Measurement to maximize Sales to Space performance Improve sales per foot by Sales / Wk Divided By Item's Shelf Ft Baseline Metrics Retail Price Weekly Vol. Facing $ 12.00 100 8 ft $ 1,200 Driving more volume from same space ÷ 8 ft Equals = Sales / Ft. $ 150 Maintaining volume using less space Increase prices and maintain volume and space Reduce space and do not lose volume pro-rata Mattel Global Marketing Training Productivity, Space & Inventory $ Gross Profit / Foot Improve profit per foot Important Measurement to maximize Profit to Space performance by Gross Profit / Wk $ 200 Divided By ÷ Item's Shelf footage 8 Increasing gross margin per unit and maintain volume and space Increase volume at Baseline Metrics Retail Price COGS Weekly Vol. Facing $ 12.00 $ 10.00 100 8 ft Equals = Gross Profit / Ft. $ 25 same margin through same space Reduce space and maintain volume at same margin Mattel Global Marketing Training Productivity, Space & Inventory Days Of Supply Important Measurement to maximize Profit to Space performance Baseline Metrics Full Shelf Inv. 300 units Weekly Vol. 100 units Full Shelf Inventory Improve days of supply by 300 Divided By ÷ Unit Movement/Wk 100 Times x 7 (days/wk) 7 Equals = Days of Supply 21 Mattel Global Marketing Training Reduce full shelf inventory and maintain sales Increase movement per week from same full shelf inventory Increase full shelf inventory and increase unit movement per week by a higher factor Productivity, Space & Inventory Turns Improve turns by Important Measurement to manage Inventory and Cash Flow performance Unit Movement / Yr 5,200 Divided By ÷ Full Shelf Inventory Baseline Metrics Full Shelf Inv. 300 units Weekly Vol. 100 units 300 Equals = Turns / Yr 17.3 Mattel Global Marketing Training Increase movement per year from same full shelf inventory Reduce full shelf inventory and maintain movement per year Increase movement per year and increase full shelf inventory by a lower factor Exercise: Metric Analysis Objective Method Timing Demonstrate understanding of metrics and associated customer applications Break into (4) four teams Team 1 – Gross Sales/Foot Team 2 – Gross Profit/Foot Team 3 – Days Supply Team 4 – Turns Describe metric in words Define levers for customer with “issue” Analysis & Preparation – 15 min Presentation – 15 min Mattel Global Marketing Training Productivity Exercise Example A Example B Retail Price 2.69 1.21 Cost 1.63 0.93 18 47 Gross Profit / Unit Gross Margin % Unit Movement / Wk Gross Profit / Wk Gross Profit / Yr. Full Shelf Inventory 30 Days of Supply Inventory ( At Retail) Unit Movement / Yr. Turns NB 6 days / week Mattel Global Marketing Training 22 Productivity, Space & Inventory Definition GMROI Gross Profit / Yr Divided By The Customer's gross profit return on each Dollar invested in inventory per year (assuming full shelf inventory) $10,400 Profit ÷ Notes: Full Shelf Inventory 300 Times x Cost / Unit $10.00 Equals = GMROI 3.47 Inventory Investment * Shaded area equals brackets, therefore do this calculation first. GMROI is affected positively by • Low shelf inventory • High gross profit / unit • High unit movement • High inventory turns This one measure alone helps the customer assess the productivity of space, inventory and gross profit contribution Mattel Global Marketing Training Gross Margin Return On Inventory Investment GMROI measures how much gross profit is generated per year compared to the money invested in stock In the last example GMROI is 433%. This means for each $ of stock held, the business makes $ 4.33 profit per year. Mattel Global Marketing Training Productivity Measures - Retailer Applications Items with High GMROI Space Productivity • • • Preferred shelf position Additional display support Greater promotional support The business manager helps the retailer improve total category productivity through • Proper balance of inventory • Sale of high profit items Mattel Global Marketing Training Category Based Commercial Arguments Mattel Global Marketing Training The Commercial Argument Definition : A Commercial Argument is (usually) a data based sales proposition with a numeric value which should help to satisfy the commercial criteria and the required performance levels of the customer. Customers will make decisions based on how supplier proposals influence these commercial criteria. The Commercial Argument should look at steal versus incremental performance from a category and customer perspective. Mattel Global Marketing Training Steal Versus Incremental Category Today Size of Initiative Steal Category Tomorrow Incremental Look at the incremental impact on Revenue, Profit, etc Mattel Global Marketing Training The Impact On A Customer’s Business Mattel Proposal:- _______________________ Measurement RSP Volume Revenue Current Category 46.0 100 4600 25.0 1150 47.0 25 1175 23.0 270.25 A 30.0 5 150 24.0 36 B 55.0 5 275 25.0 68.8 C 40.0 10 400 27.0 108 41.3 20 825 25.8 212.80 +5 +350 105 4950 Steal Effect Proposed Initiative % Margin Cash Margin D Total Steal Incremental Category Forecast 47.1 Mattel Global Marketing Training +57.2 24.4 1207.2 The Impact On A Customer’s Business Mattel Proposal:_______________________ Measurement RSP Volume Revenue Current Category 20 200 4000 30 1200 Proposed Initiative 30 40 1200 31 372.0 A 15 5 75 35 26.25 B 25 15 375 32 120.0 35 15 525 28 147 27.86 35 975 30.1 293.25 +5 +225 205 4225 Steal Effect C % Margin Cash Margin D Total Steal Incremental Category Forecast 20.6 Mattel Global Marketing Training +78.75 30.3 1278.75 The Impact On A Customer’s Business Mattel Proposal:_______________________ Measurement RSP Volume Revenue Current Category 20 200 4000 30 1200 Proposed Initiative 16 40 640 32 204.8 A 19 25 475 31 147.25 B 21 15 315 30 94.5 19.75 40 790 30.6 241.75 - -150 200 3850 Steal Effect % Margin Cash Margin C D Total Steal Incremental Category Forecast 19.75 Mattel Global Marketing Training -36.98 30.2 1163 Demonstrating Commercial Arguments Mattel Proposal Cash Margin 120 The numeric 100 value of the 80 Proposition will be 60 somewhere on 40 the line 20 0 Worst Case 100% Steal 5% Incremental 10% Incremental Mattel Global Marketing Training Best Case 20% Incremental Commercial Argument Golden Rules Your argument will have the best chance of success if: It helps to satisfy the customer needs. It meets the performance levels of the Customer Decision Making Criteria. It is important therefore that you constantly cross check your argument against the Driving Needs and the Decision Making Criteria. Quantify the customer benefits of your proposal from a category perspective. Mattel Global Marketing Training MSAP Mattel Global Marketing Training The MSAP concept Negotiation Negotiating Selling Selling Planning Planning Mattel Global Marketing Training The strategic account planning and selling business model Not for presentation; may help trainers articulate the flow How can I integrate brand and customer opportunities DRIVEN BY INSIGHT to beat my objectives? Why is our category unique? How have I done? How is my customer doing? CATEGORY INSIGHT STRATEGIC PLANNING CUSTOMER INSIGHT What is my customer’s strategy? How do they operate? SELLING TO CUSTOMERS MONITOR AND REVIEW FEEDBACK LOOP What skills and tools will help me SELL THE PLAN to the customer? Mattel Global Marketing Training Strategy development overview 1 Data gathering 2 Identifying vision 3 Analysis / interpretation of information 8 Implementation 7 Creating Action Plans 6 Evaluating strategic options 9 Performance Review Mattel Global Marketing Training 4 Objective setting 5 Developing strategic options Case Study (I have several good ones) Mattel Global Marketing Training Presentations Storyboarding Mattel Global Marketing Training Set up a storyboard Purpose Background Message Message Message Message Message Message Mattel Global Marketing Training Message Set up a visual outline of your presentation and build the storyboard as you complete the analysis Identify the topics to be analyzed Keep track of what remains to be done summarize each section Roadmap Draw a key message Fill in the blanks as you obtain the required information Extract a message for each visual Message Message Message Summary Message Message Message Message Message Prepare an extra visual to summarize long sections SUMMARY NEXT STEPS Prepare “back-ups” to anticipate questions or discussion Mattel Global Marketing Training Global Sales Training 11 Commandments of Customer Presentations Mattel Global Marketing Training The 11 Commandments Of Customer Presentations The 11 Commandments 1 2 3 Logical Structure And Flow Compelling Customer, Shopper, Category Insights Re-enforce The Brand’s Needs Keep it simple, straightforward and understandable for the customer Base your arguments on compelling consumer shopper / category insights Move from background through objectives to actions Build your arguments on a platform of customer and shopper insight Demonstrate your understanding of bra nd needs early in the presentation Profit Primary Need Action Plan Background Customer Understanding Presentation Objectives Why we are here? Why you should listen? What is the point of today? Brand Opportunities Demonstrate our unique insight – Channel – Customer – Shopper – Category How do we realize this opportunity together? Next steps Close What is in it for the brand? Identify where the greatest opportunities lie Supplier Maximise Returns Supporting Needs Penetration Loyalty Consumer The 11 Commandments Efficiency The 11 Commandments The 11 Commandments 6 7 The Consumer / Shopper Is King Insight Not Data © G lendinning Management Consult ants 2002 Ref: Unilever/US /001 (P S-m w) Keep It Real For The Brands Identify The Opportunities For Brands Demonstrate the link betwee n your propos als and bra nd nee ds Strategic Drivers 5 4 75 Link insights and opportunities to the Brand drivers Bra nds buy opportunities! Identify oppor tunity by sizing the prize Increase Revenue Demonstrate your unique knowledge of consumer, shopper category and customer Retailer Foc us on the k ey insights for the brand What are the implications / indicated actions for Sell brands on the opportunity for them and they are far more like ly to support y our propos als – The prize m us t be a c redible, logical and supported by Category / Consume r and Shopper Insight The consum er (not S ales ) sa ys …….. Promotions – Innovation – Distribution Involve the bra nd in developing indicat ed actions According to the c onsumer (not Sales) …… … Involve the brand in the discussion Formulate an action plan designed to build brand sales and profit Highlight opportunities for increm ent al sales and profit s Use da ta to support the conclusions Our ins ight (not S ales ) sugge sts ……… From our res earch (not Sales) we have learned tha t … ….. Identify areas for joint working Eac h chart m ust pass the “so what test” Provide the brand with insight on their pe rformance within the customer © G lendinning Management Consult ants 2002 Ref: Unilever/US /001 (P S-m w) The 11 Commandments The 11 Commandments 76 © G lendinning Management Consult ants 2002 Ref: Unilever/US /001 (P S-m w) The 11 Commandments © G lendinning Management Consult ants 2002 78 Ref: Unilever/US /001 (P S-m w) The 11 Commandments 79 11 8 9 10 Don’t Forget The Sizzle Focus On Benefits Not Features Don’t Forget The Close Deliver With Impact You are still s elling! Agree next steps with deadlines a nd responsibilities Talk brand, not Sa les language Com municate with style and flair Sugges t some thing sma ll and simple as a next step Link the benefits of your proposals to customer nee ds Make it me morable, stand out from the crowd © G lendinning Management Consult ants 2002 Ref: Unilever/US /001 (P S-m w) Cre ate a joint action plan Bra nds buy be nef its not feat ures Visualise and dra matise your key insights Re-cap to check for understanding Follow- up w ith written confirmation © G lendinning Management Consult ants 2002 Ref: Unilever/US /001 (P S-m 80 w) © G lendinning Management Consult ants 2002 Ref: Unilever/US /001 (P 81S-m w) Mattel Global Marketing Training © G lendinning Management Consult ants 2002 Ref: Unilever/US /001 (P S-m w) 82 Plan for success – Materials – Attendance – Roles – Venue Rehearse / edit Consider – Smartmaster, typeface – Style – Tone – Speed – Delivery style – Props Manage discussion – Listen – Rephrase / recap – Capture action points 83 The 11 Commandments 1 Logical Structure And Flow Keep it simple, straightforward and understandable for the customer Move from background through objectives to actions Action Plan Background Presentation Objectives Customer Understanding • • • • Why we are here? Why you should listen? What is the point of today? Brand Opportunities Demonstrate our unique insight • What is in it for the brand? • Identify where the greatest opportunities lie – Channel – Customer – Shopper – Category Mattel Global Marketing Training • How do we realize this opportunity together? • Next steps • Close The 11 Commandments 2 Compelling Customer, Shopper, Category Insights Base your arguments on compelling consumer shopper / category insights Retailer Supplier Build your arguments on a platform of customer and shopper insight Demonstrate your unique knowledge of consumer, shopper category and customer Consumer Mattel Global Marketing Training The 11 Commandments 3 Re-enforce The Brand’s Needs Demonstrate your understanding of brand needs early in the presentation Profit Primary Need Increase Revenue Supporting Needs Penetration Maximize Returns Loyalty Efficiency Strategic Drivers Mattel Global Marketing Training Demonstrate the link between your proposals and brand needs The 11 Commandments 4 Identify The Opportunities For Brands Brands buy opportunities! Identify opportunity by sizing the prize Sell brands on the opportunity for them and they are far more likely to support your proposals The prize must be a credible, logical and supported by Category / Consumer and Shopper Insight Highlight opportunities for incremental sales and profits Provide the brand with insight on their performance within the customer Mattel Global Marketing Training The 11 Commandments 5 Keep It Real For The Brands Link insights and opportunities to the Brand drivers What are the implications / indicated actions for Promotions Innovation Distribution Involve the brand in the discussion Formulate an action plan designed to build brand sales and profit Identify areas for joint working Mattel Global Marketing Training The 11 Commandments 6 The Consumer / Shopper Is King The consumer (not Sales) says …….. Our insight (not Sales) suggests ……… According to the consumer (not Sales) ……… From our research (not Sales) we have learned that …….. Mattel Global Marketing Training The 11 Commandments 7 Insight Not Data Focus on the key insights for the brand Use data to support the conclusions Involve the brand in developing indicated actions Each chart must pass the “so what test” Mattel Global Marketing Training The 11 commandments 8 Don’t Forget The Sizzle Visualize and dramatize your key insights Communicate with style and flair Make it memorable, stand out from the crowd Mattel Global Marketing Training The 11 Commandments 9 Focus On Benefits Not Features Brands buy benefits not features Talk brand, not Sales language Link the benefits of your proposals to customer needs Mattel Global Marketing Training The 11 Commandments 10 Don’t Forget The Close You are still selling! Create a joint action plan Agree next steps with deadlines and responsibilities Suggest something small and simple as a next step Re-cap to check for understanding Follow-up with written confirmation Mattel Global Marketing Training The 11 Commandments 11 Deliver With Impact Plan for success Materials Attendance Roles Venue Rehearse / edit Consider Smartmaster, typeface Style Tone Speed Delivery style Props Manage discussion Listen Rephrase / recap Capture action points Mattel Global Marketing Training The Presentation Scorecard (Worksheet 13) Commandment Where Are We? Logical Structure And Flow Compelling Customer, Shopper, Category Insights Re-enforce The Brand’s Needs Identify The Opportunities For Brands Keep It Real For Your Brands The Consumer / Shopper Is King Insight Not Data Don’t Forget The Sizzle Focus On Benefits Not Features Don’t Forget The Close Deliver With Impact Mattel Global Marketing Training Exercise “Persuasive Presentation” turning an existing “deck” into a simple but effective presentation Mattel Global Marketing Training Supporting the Sales Team Discussion of how Sales needs from Marketing very by market Mattel Global Marketing Training Promotion Mattel Global Marketing Training PROMOTION – The Integrated Marketing Plan Overview Examples throughout What an Integrated Marketing Plan? Marketing objectives Integrated Communications Role of Message, Medium and Mechanic TV Advertising – Global development and testing – Local do and don’ts Media Media Choice – Pro’s and Con’s Media Exercise The Role of Entertainment Consumer Promotions Marketing at the POP 1.5 Hours Public Relations 30 Minutes Working with Agencies / the Brief Potential Integrated Marketing Case Study 2 Hour 30 Minutes 2 Hours 1.5 Hours Mattel Global Marketing Training 1 Hour ?? Promotion What is Promotion? Promotions objectives Integrated Communications Role of Message, Medium and Mechanic Advertising – Global development and testing – Local do and don’ts Media Choice – Pro’s and Con’s Working with Agencies Integrated Marketing Plan Setting Clear Objectives Developing the message Selecting Media Consumer Promotions Communicating the Plan Will need lots of market examples to bring to life Mattel Global Marketing Training “Promotion” covers all forms of Brand communication and interaction with the Market Insert the Mattel Integrated Communications model Mattel Global Marketing Training There are a number of levels at which the integrated communications model must succeed Target Market Aware Understand Believe Want Find Buy Use Prefer Mattel Global Marketing Training Why Promote? Grow the category Grow brand volume Grow brand share Improve distribution Build awareness etc Brainstorm exercise Mattel Global Marketing Training The Ultimate Purpose Of Promotions Is To Drive Sales A promotions campaign can have multiple objectives, which result in a desired sales impact A promotions activity SHOULD, ideally, have one clear objective which results in a sales impact Mattel Global Marketing Training Successful Promotions A clear objective Target a specific market (consumer, shopper, customer) Simple, motivating message Effective and efficient use of media Simple, engaging mechanics The right time period A measurable, positive result Mattel Global Marketing Training What People Hear Is More Important Than What You Say What a pushy, arrogant …… Buy ME!! Mattel Global Marketing Training ..And A Lot Of Other Messages Are Trying To Get Through Buy ME!! What a bunch of pushy, arrogant …… Buy ME!! Buy ME!! Buy ME!! Mattel Global Marketing Training Promotions Require Effective Communication Reaches the target audience Captures their attention Communicates the intended message Ties the message to the brand Achieves the desired response Mattel Global Marketing Training Key Components Market Who the brand wants to talk to Message What the brand wants to say and how the brand talks to the market Medium How, when and where the message is delivered Mechanic How the market is engaged Mattel Global Marketing Training The Market Who does the brand need to communicate with? Consumers? Shoppers? Customers? Suppliers? Competitors? Mattel Global Marketing Training Mattel Target Markets Show the consumer, shopper, customer target markets for Barbie, Hot Wheels and F-P Mattel Global Marketing Training The Message Proposition What do we need to say? How should we say it? The BRAND Positioning Personality Brand Identity Brand Image Mattel Global Marketing Training Mattel Examples Show / play recent brand Messages (TV, Audio, Print etc) Ask participants to Identify the brand Identify the message Identify what it makes them think about the brand What would they do? Mattel Global Marketing Training TV Advertising Role of TV Advertising and how it is different at Mattel “instant response” vs. steady brand build Why TV – analysis of effectiveness / efficiency Case Study development of a TV Ad (Lisa G is getting this) Product Concept Strategy Agency Brief Story Board Testing (and results / benchmarks Shooting Board TV Commercial On-Air Testing (& Results / benchmarks) Mattel Global Marketing Training TV Ads - Local Do’s & Don’ts Legal Changes - Yes Translation – Yes Cultural Adaptation – If Necessary Other Edits – No We may want to support this position with data / anecdotes / examples Mattel Global Marketing Training The Medium How, where and when should the message be delivered? TV Radio Print (National, Specialist, Trade) Outdoor Direct Mail Internet Tele Sales Exhibitions Sponsorship Product Placement PR Point of Sale Direct Sales Mattel Global Marketing Training Media Strengths and Weaknesses Identify Strengths and Weaknesses of each Brainstorm / moderated discussion I can provide a “model” answer if needed Mattel Global Marketing Training Evaluating Media How is media measured Insert how Mattel do this (Chris is developing this) – Efficiency Measures – Effectiveness Measures Mattel Global Marketing Training The Mechanic How will the market be engaged? An event? An activity? An offer? A once off? A loyalty programme? What do they have to do? Buy? Recommend? Tell? Understand? Believe? Mattel Global Marketing Training Evaluating Mechanics Show recent mechanics used in different markets Ask What was the objective? How else might you have achieved the objective? What would make you choose this mechanic? Mattel Global Marketing Training Evaluating Mechanics Draft example of 3 / 4 mechanics showing impact on a particular objective ( sales?), and cost associated What are the total costs associated with each mechanic? What mechanic offers the best ROI Mattel Global Marketing Training Defining The Promotion Why Why do you want to run the promotion? Who Who do you want to achieve this with? When When do you need to achieve this What What do you need to tell them Where Where do you need to tell them How How will you engage them? This should form the basis of the agency brief Mattel Global Marketing Training Opening Exercise Objective: Define “Integrated” Marketing Method: Group Discussion Facilitator captures comments on a flip charts Timing: 10 Minutes Mattel Global Marketing Training Why Integrated Marketing? The Whole > the Sum! “Fragmented” Marketing TV Impact 2 Promotion Impact + 2 PR Impact + POP Impact 2 + 2 = 8 Integrated Marketing TV Impact 2 Promotion Impact X 2 PR Impact X 2 POP Impact X Mattel Global Marketing Training 2 = 16 The Mattel Integrated Marketing Plan TV Advertisin g Retail Promotion Consumer Promotion Brand Entertainment Internet Public Relations Licensing Mattel Global Marketing Training Integrated Marketing Communications Model Succeeds At Several Levels Target Market Aware Understand Believe Want Find Buy Use Prefer Mattel Global Marketing Training Integrated Marketing Exercise Objective: Identify how different elements of an integrated marketing plan impact a consumer Method: In small groups – review the steps in communicating a brand message Discuss how different methods (e.g., TV, promotions, etc.) impact different steps in the “persuasion” process Construct an integrated marketing plan for a new Girls brand Timing 30 Minutes Mattel Global Marketing Training Hot Wheels™ Licensing Advertising and Promotion, Plans 2004 Public Relations: HWCP product focused press releases • Summer Fun • Holiday Retail Promotions: • Zellers • Wal*Mart • Sears • SDM Licensee Support: • Summit • Sales sheets • VIL meetings • Trade shows Promotional Partnerships: Family Channel HWCP promotion • Home furnishings In-store Merchandising: • All retailers – signage refresh • Canadian Tire – Sporting goods Mattel Global Marketing Training Integrated Communications Objectives Target Market Aware Understand Believe Want Find Buy Use Prefer Mattel Global Marketing Training Exercise Referencing Integrated Communications objectives slide Put actual numbers into the chart (% of Target Market) – one each for Barbie, Hot Wheels, F-P Set up teams to consider each scenario Ask them to draft a Promotions definition for their scenario Mattel Global Marketing Training Working With Agencies Mattel Global Marketing Training Selecting and Briefing Evaluating Responses Mattel Global Marketing Training Why Do You Work With The Agency You Do? Reputation Price Size Personal Chemistry Experience Mattel Global Marketing Training The One Fundamental Trust You must believe the agency can deliver the assignment to the standard your brand needs Mattel Global Marketing Training What The Agency Needs To Know Context Specifics Trends, Dynamics, Issues – The Market – The Category – Consumers – Shoppers – Customers – Competitors – Previous activity – Brand Identity Proposition Personality Positioning – Brand Image Mattel Global Marketing Training Target Market (Who) Objective (Why) Proposition (What) Timing (When) Preferred Media (Where) Preferred Mechanics (How) Budgets Requirements of the Agency Briefing the Agency Allow sufficient time Provide written copies Be specific on all key points What is information What is pre determined What you want them to do When you expect their response In what form they should respond Encourage questions Check for understanding Ensure you are “Helping” not “Testing” Mattel Global Marketing Training Exercise Could role play this, and the next section Mattel Global Marketing Training Agency Responses Allow the time needed Restate the objectives Ask the agency to show how their proposals would achieve your objectives What you “like” is not important – what you think will work or nor is critical Clarify critical success factors Confirm cost estimates (Design, Production, Placement) Revise the brief to include what is already agreed and what still needs to be done Mattel Global Marketing Training Could role play a debrief Mattel Global Marketing Training Integrated Marketing Plans Mattel Global Marketing Training Show what they look like Show the development process (i.e. typical Mattel approach) Walk through, highlighting the key components discussed in the materials Mattel Global Marketing Training Integrated Marketing plans could be discussed at the beginning of the promotions section – and used to define the issues that are covered in more detail in this presentation ( Best Practice) Mattel Global Marketing Training Opening Exercise Objective: Define “Integrated” Marketing Method: Group Discussion Facilitator captures comments on a flip charts Timing: 10 Minutes Mattel Global Marketing Training Why Integrated Marketing? The Whole > the Sum! “Fragmented” Marketing TV Impact 2 Promotion Impact + 2 PR Impact + POP Impact 2 + 2 = 8 Integrated Marketing TV Impact 2 Promotion Impact X 2 PR Impact X 2 POP Impact X Mattel Global Marketing Training 2 = 16 The Mattel Integrated Marketing Plan TV Advertisin g Retail Promotion Consumer Promotion Brand Entertainment Internet Public Relations Licensing Mattel Global Marketing Training Integrated Marketing Communications Model Succeeds At Several Levels Target Market Aware Understand Believe Want Find Buy Use Prefer Mattel Global Marketing Training Integrated Marketing Exercise Objective: Identify how different elements of an integrated marketing plan impact a consumer Method: In small groups – review the steps in communicating a brand message Discuss how different methods (e.g., TV, promotions, etc.) impact different steps in the “persuasion” process Construct an integrated marketing plan for a new Girls brand Timing 30 Minutes Mattel Global Marketing Training Hot Wheels™ Licensing Advertising and Promotion, Plans 2004 Public Relations: HWCP product focused press releases • Summer Fun • Holiday Retail Promotions: • Zellers • Wal*Mart • Sears • SDM Licensee Support: • Summit • Sales sheets • VIL meetings • Trade shows Promotional Partnerships: Family Channel HWCP promotion • Home furnishings In-store Merchandising: • All retailers – signage refresh • Canadian Tire – Sporting goods Mattel Global Marketing Training Next Steps Mattel Global Marketing Training What’s Missing? Examples of Brand Strategies Example of BDO / LRP Examples of Mattel Marketing Positioning Statements Best Practice examples from different markets – in particular, integrated marketing plans, visual merchandising... Mattel Global Marketing Training Proposed Pilot Objective: Validate Foundations of Marketing Training Program Approach: Working session / Interactive Review / Challenge / Revise Attendee's Small Group (8 – 10) 50% Senior Marketers 50% Target (Brand Managers / ABMs) Nominees? Where: Amsterdam or London When: Sept 26 - 29 Mattel Global Marketing Training Appendix Module Examples Mattel Global Marketing Training EXAMPLE Mattel Marketing Process Mattel Global Marketing Training Draft for IMC Aug 12 “Foundations of World Class Marketing” Objective: To provide an overview of all the marketing tools and processes used at Mattel Target Audience: Assistant Managers, Brand Managers and New Hires Day 1 OVERVIEW What is Consumer Marketing? Toys & Mattel The Mattel Marketing Process Day 2 The Mattel Product Development Process Product Selection & Quota Setting Day 3 PLACE Brand Strategy & Positioning Using Insights to Understand Consumers & Shoppers Developing a Customer Proposition Media Consumer Promotion Marketing at the POP Public Relations Working with Agencies Integrated Marketing Pulling it all together PRICE PRODUCT Shoppers, Channels & Customers Day 4 Mattel Profit Drivers Managing a Brand P&L Pricing Forecasting Customer Plans (MSAP) and Presentations PROMOTION The Integrated Marketing Plan TV Advertising Mattel Global Marketing Training EXAMPLE MODULE Integrated Marketing Plans Mattel Global Marketing Training Draft for IMC Aug 12 “Foundations of World Class Marketing” Objective: To provide an overview of all the marketing tools and processes used at Mattel Target Audience: Assistant Managers, Brand Managers and New Hires Day 1 OVERVIEW What is Consumer Marketing? Toys & Mattel The Mattel Marketing Process Day 2 The Mattel Product Development Process Product Selection & Quota Setting Day 3 PLACE Brand Strategy & Positioning Using Insights to Understand Consumers & Shoppers Developing a Customer Proposition Media Consumer Promotion Marketing at the POP Public Relations Working with Agencies Integrated Marketing Pulling it all together PRICE PRODUCT Shoppers, Channels & Customers Day 4 Mattel Profit Drivers Managing a Brand P&L Pricing Forecasting Customer Plans (MSAP) and Presentations PROMOTION The Integrated Marketing Plan TV Advertising Mattel Global Marketing Training Mattel Lingo Quota MARKETING estimate of full year quantity per item Forecast SALES estimate of customer shipments by item Demands quantity PLANNING asks to receive each month Avails quantity SOURCE plans to deliver each month PS Short /Shortage AVAILS less than DEMANDS Excess / Overage AVAILS greater than DEMANDS Pull Forward quantity produced ahead of DEMANDS Allocation worldwide capacity cannot meet worldwide DEMANDS CIT (Company Inv. Transfer) Finished goods transfer between markets production start Mattel Global Marketing Training
