Business Review
The Context
All Great Marketing Plans
Begin Here
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Business Review Module - Presentation
Flow
1. What is a Business Review/Why Bother
2. Structuring the Business Review Analysis
3. Translating Data into Key Issues and Opportunities
4. Opportunity Synthesis and Prioritization
5. Developing the Business Review “Story”
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1. What is a Business Review?
 The opportunity to stand back and evaluate your total
market, business situation and activity.
 The process of identifying opportunities to move the
business forward and achieve competitive advantage in
the marketplace.
 The all-important first step in preparing a “great”
marketing plan.
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What is a Business Review?
The link in the planning process that drives insights for all types
of plans.
Business Reviews
Long Term Plan
Jan./Feb.
Marketing Plan
August
Category Plan
September
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What is the Business Review End-Point?
 Synthesis and prioritization of facts and data into a
singular focus area for the brand.
 Identification of concrete, actionable opportunities to
build the business.
Foundation for the objective, marketing strategy,
substrategy and key program development decisions.
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Analysis is not an end in itself,
it’s a means to an end
The End Is
OPPORTUNITY IDENTIFICATION
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Examples of Opportunities
 Implement an integrated communication campaign to
build awareness of new Nestlé Classic confections.
 Test an in-store sampling program on Frutips.
 Explore launching a dehydrated dessert range.
 Develop an in-store cross-merchandising program
between Nescafe and Coffee-mate.
 Test increased coverage in the Pharmacy channel.
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2. Structuring the Business Review Analysis
 To stay focused on the most important issues for the
business.
 To reduce dead-end “number-tumbling”.
 To increase analysis productivity/ effectiveness.
If only we knew the answer to ...
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Structuring the Business Review Analysis
 Conduct a scan of the critical questions to identify the key issues to
analyze in greater depth.
 Look for specific issues and opportunities on your brand relative to the
most critical questions.
What are the Opportunities to Build the Business?
Based on:
The
Market
The
Consumer
Our
Competitors
Our Channel
Customers
Our Business
Performance
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The Critical Questions
The Market
 What is the definition of the market we compete in (from a consumer
standpoint)?
 What are market trends within key segments?
 Is the market growing or declining; is the trend consistent for sales
Taka, volume and profitability?
 How can the size of the market be explained in terms of consumer
purchase behavior?
 What underpins category, segment and brand volumes in this market
(i.e. high purchase frequency, purchases of large quantities, etc.)?
 What are related/complementary category trends?
 What is the market outlook?
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The Critical Questions
The Consumer
 What are critical consumer needs in this category? Which represent
unmet needs?
 What are usage and habit trends amongst consumers?
 What consumer perceptions exist about this category and our brand?
 Who is our consumer target (influencer, purchaser, user, etc.)?
 What is the most relevant consumer segmentation in this category?
 What is the composition of our consumer base relative to this
segmentation?
 How does our consumer base break down in terms of usage (heavy,
medium, light users)?
 What behavior change amongst which target consumer is most important
to building our brand?
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The Critical Questions
The Consumer
 What is the flow of the consumer purchase decision in this category?
 Where in the consumer purchase decision process can consumers be
most influenced?
 What environmental factors trigger consumer need for the category (e.g.
media, special occasion, on shopping list, family input, price incentive)?
 What specific factors trigger selection of our brand (i.e. what makes our
target consumer want to buy)?
 What are household penetration, purchase frequency, purchase units/
buyer and share of requirement trends for our brand?
 How would we categorize the level of loyalty in this category?
 How do consumers shop this category (e.g. price hunters, passive, etc.)?
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The Critical Questions
Our Competitors
 Who is our competition (from a consumer standpoint)?
 What are key competitors’ business trends?
 What are key competitors’ strengths and weaknesses?
 How do we perform versus competition in key areas (e.g. product,
package, pricing, availability, etc.)?
 What are price/unit (or per serving) trends for key competitors
relative to our brand?
 What is the price elasticity for our brand versus competition?
 What is the consumer’s perception of our brand’s value equation
versus key competitors?
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The Critical Questions
Our Channel Customers
 What are category sales trends by channel? Have there been any
important shifts?
 Which segments and brands are winning/losing & why?
 Which channels are most important for us and the competition?
 What is the trend in level of support for this category by customers?
(display, merchandising, pricing, etc.)
 What role does our category play for customers; how does this differ
by channel?
 What are availability trends for our brand? How do our trade margins
compare versus competition in the key channels?
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The Critical Questions
Our Business Performance
 What are historical sales, market share and profit trends for our brand;
what are the drivers of these results?
 What are the key financial and operating ratios on the brand?
 Where have we sourced our volume; how will we create growth? (i.e.
growing the category vs. growing share within the category)?
 What has been the historical effectiveness of our marketing
activity/spending and specific programs?
 What has been the success rate of new products? What are the key
drivers of these results?
 How are we performing versus our key substrategies (e.g. product and
packaging, integrated communication, customer business development)?
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So How Do I Apply these Critical Questions?
 A guide to focus data collection in the initial
development stages of a Business Review.
 A tool to finetune and build on the existing Business
Review as input to the Marketing Plan.
What are the Opportunities to Build the Business?
Business Reviews
Category Review
Long Term Plan
Marketing Plan
Category Plan
The
Market
The
Consumer
Our
Competitors
Our Channel
Customers
Our Business
Performance
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3. Translating Data into Key Issues and Opportunities
 For each of these critical questions, we want to answer:
 What’s happening?
 Why? “I’ll bet ......”
 What are the opportunities?
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Translating Data into Key Issues and Opportunities
Opportunity
Identification
Why?
What’s Happening?
Gather Business
Performance
Data
Determine
“What’s
Happening?”
Don’t
Provide
Rationale
Hypothesize
“Why?
“I’ll bet ...“
Identify
“What are the
opportunities?”
here
Gather Causal
Data
Don’t
here
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Translating Data into Key Issues and Opportunities
What’s Happening?
Why? … I’ll Bet
 Collect and analyze the
 Purpose is to focus
relevant data to answer
the questions
 Examples:
–
–
–
share/volume is
down
why is East higher
than West
why did we achieve
these sales results
analysis and gather/
analyze causal data to
address your
hypotheses
What are the Opportunities?
 So what?
 What should we do
about it?
– action orientation
 Long list and prioritize
your “bets” so data
search is limited to
proving/disproving your
hypotheses
 Ask a series of
questions until there are
no more to ask!
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Translating Data into Key Issues and Opportunities
What’s Happening?
 Nestlé Milo is
stagnating in growth
while the category
grows at 5% per
annum.
Why? … I’ll Bet
 A key barrier to Nestlé
Milo is that the
perception that Nestlé
Milo offers little
nutritional value
What are the Opportunities?
 Explore the launch of an
intensive sampling and
communication
campaign that focuses
on the nutrition of Milo
and a means of getting
kids to drink milk.
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Documenting the Key Issues and Opportunities
Example
Statement of key  Reversing the trend on the Nestlé Milo is critical to the long-term
issue or problem
viability of the brand.
plan must address
Summary of
quantitative,
factual support
Statement of
preliminary
opportunity
 Nestlé Milo has stagnated at 50 tonnes for 4 years with extensive
PFME funding.and the category continues to grow.
 Within the category, Milo decline\ have been offset by growth in
Horlicks and Ovaltine.
 "Restage" the Nestlé Milo brand including product improvements to
achieve 60/40 preference, new communication message to
increase relevance, and reformulation. Intensive sampling
campaign.
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Which Are Good Key Issue/Opportunity Statements?
1. We need to increase consumer top-of-mind awareness of Nestlé
core chocolate brands to drive consumption
 Nestlé confectionery brands have low consumer awareness
versus competition
Opportunity: Increase advertising investment on core brands and
increase in-store visibility
2. Weaker distribution and sales in the Pharmacy channel of
Nutrition products indicate a serious area of underdevelopment
for Nestlé
 Only 2% of Nestlé Nutrition sales come from Pharmacy
Opportunity: Support medical detailing strategy with increased
distribution and facings in the Drug channel
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Which Are Good Key Issue/Opportunity Statements?
3. Nestlé GUM is over-reliant in the Central Region
 80% of sales in Central region
Opportunity: Develop a specific initiative for the East
and West Region
4. A key issue for Nescafe is maintaining distribution in
small grocery stores
 200g and 50g are not maintaining distribution and
does not offer a one time consumption
Opportunity: Develop a specific product for the small
grocery outlets
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4. Opportunity Synthesis And Prioritization
Purpose: Isolate key drivers of a brand’s sales to
enable prioritization of strategic options/
opportunities and focus of effort
1. Volume Modeling
2. Brand Strategic Gap Scorecard
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Volume Modeling
Target Segment Population
x
Awareness
x
Distribution
=
Household Base
x
Trial Rate (Household Penetration)
=
Number of Trier Households
x
Retained User Rate/Repeat Rate
=
Retained User Households
x
Average Annual Volume/Frequency of Purchase
=
Total Annual Sales
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Volume Model - Nestlé Milo Example
Target Segment
x
Awareness
x
Distribution
=
Household Base
x
Trial Rate
=
Number of Households
x
Repeat Rate
=
Average Annual Volume
1.75MM households
Total Sales
45,660M drinks consumed
80%
80%
1.12MM households
70% (user rate)
784M user households
70%
1.6 200ml/week
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Volume Modeling - Example
Alternate
Opportunity Area(s)
Incremental
Sales
Marketing
Spend
Risk/Degree
of Difficulty
A) Expand target segment
population by 50% (to 2.6MM)
?
?
High
B) Increase usage rate from 70% 80%
?
?
Medium
C) Increase consumer usage
frequency (+1
drink/year/consumer)
?
?
Medium
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Volume Modeling - Key Variables
Influenced by:
Target Segment  size of target market
Population
 awareness rate
 trial rate
 distribution
Awareness
 based on media spend and reach/frequency delivery
Distribution
 perceived product relevance/uniqueness
 investment in listings
Trial Rate*






relevance of positioning and product
product uniqueness
degree of unsatisfied needs
perceived value
price acceptability
expected product quality
* can be substituted by household penetration or usage rate
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Volume Modeling - Key Variables
Retained User
Rate/Repeat
Purchase
Average
Annual
Volume/
Frequency of
Purchase
Influenced by
 product delivery matches consumer expectations
 consumer acceptability (taste, performance, …)
 price/value acceptability




establishment of habit
meaningful product advantage
integration into consumption pattern
price advantage/acceptability
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Volume Modeling - So Where Does This Get
Us?
Prioritization of Brand Focus of Effort:
expand target segment(s)?
or
increase awareness?
or
increase distribution?
or
increase trial?
or
improve product performance?
or
increase frequency of purchase?
Based on:
 incremental sales
 incremental marketing spending
 risk/degree of difficulty
What If?
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Brand Strategic Gap Scorecard
 A tool to assess the gap in our performance in key
strategic areas of the brand’s business.
Are we actually
executing our strategic
intent?
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Brand Strategic Gap Scorecard
Area
Desired Performance
Actual
Performance
Competitive
Position
Identify 2-3 areas of
superiority or uniqueness vs.
competition
How are we
performing
Focus of
Effort
Trial, re-trial, continuity,
increased consumption
frequency, etc.
Quantitative
level achieved
Value
Proposition
Benefit/price relationship
How are we
performing
Effort
Priorities
List of 5-6 strategic
initiatives
How many
completed
Product and
Packaging
Target performance (e.g.
60/40, taste profile)
Test results
Gap
Root Cause
for Gap
Indicated Action
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Brand Strategic Gap Scorecard
Area
Desired Performance
Actual
Performance
Integrated
Communication
Image/equity
Image scores
Media
Reach/frequency/GRPs,
share of voice, awareness
level
Actual results
of media plan
Pricing
Avg. price vs. competition
Feature price vs. competition
Channel price targets
Actual pricing
gaps versus
target
Availability
Distribution targets
Actual results
In-Store
Effectiveness
Display targets
Shelving targets
Merchandising targets
Actual results
by channel
Gap
Root Cause
for Gap
Indicated Action
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Brand Strategic Gap Scorecard - Example
Area
Competitive
Position
Desired Performance
Actual
Performance
Gap
• (20)
points
Root Cause
for Gap
Indicated Action
• Milo is not being
prepared correctly
• High spend in
Sponsorship
• Intensive
sampling
• Focus on
sampling / SOV
• 60/40 product preference
• 55% leadership share of
voice
• 40/60
• 30% share of
voice
Focus of
Effort
30% trial level through
sampling
Sampling to
achieve 10%
Availability
75% distribution at grocery
channel
80% achieved
plus
NA
NA
NA
Value
Proposition
Superior rich chocolate
delivery at parity with other
single serve beverages on
per serving basis
Parity price
achieved;
product not
60/40 preferred
Product/
Package
• Consumer
preparation
• Lack of single
serve
• Awareness
• Introduce RTD
Pricing
Competitively priced versus
other value-added value
beverages on a per serving
basis
Achieved
• (25)
points
20 points
NA
Ineffective
sampling
program
NA
Refocus
sampling effort
and tie in to
outlet coverage
NA
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Brand Strategic Scorecard - Gap Analysis
Alternate
Opportunity Area(s)
Incremental
Sales
Marketing
Spend
Risk/Degree
of Difficulty
A) Improve product performance
ratio to 60/40
?
?
High
B) Invest in increased media
support (build SOV to 55%)
?
?
Low
C) Increase sampling effort
?
?
Low
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5. Developing The Business Review “Story”
 Synthesis of business overview: how’s business on
the brand and why
 explains key reasons for results
 Can be tackled as a “news story”



headline concept
sub-headlines
text
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The Business Review Story - Coffee-Mate Example
2000 was another disappointing performance year for
Coffee-Mate with sales down -10% and profit flat versus
1999.
Over the past 4 years, the brand has experienced a rapid
decline in household penetration (a loss of approximately
40% of our user base) as consumers have shifted away from
the static powder segment of the whitening market into the
growing liquid segment. On a combined powder and liquid
basis, our brand share has declined from 34% in 1999 to
27% in 2000, and within powder, share has declined from
45% to 40%.
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The Business Review Story - Coffee-Mate (cont’d.)
Beyond losing share to other whitening occasions (e.g.
liquid), Coffee Mate is also being hurt by the continued
growth of Private Label powders (19% share), driven by
aggressive pricing. Average selling prices for Control Label
were up to 40% less than those for Coffee-Mate in 2000.
Critical to the long-term reversal of this business
performance is consideration of a launch into the liquid
segment followed by a plan to minimize losses on powder
including product reformulation, aggressive product cost
savings and targeted investment in PFME support.
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Characteristics of a Good Business Review
“Story”
Provides sufficient business context (past year,
history).
Sufficiently explains the “why” behind business
performance.
Identifies how the reader should be thinking about the
brand’s performance (is this good/bad/indifferent).
Self contained (like newspaper headlines)
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Business Review Module - Presentation
Flow
1. What is a Business Review/Why Bother
2. Structuring the Business Review Analysis
3. Translating Data into Key Issues and Opportunities
4. Opportunity Synthesis and Prioritization
5. Developing the Business Review “Story”
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