THE ISSUE: How to drive profitable growth

with the Modern Trade

Continued growth of the Modern Trade is unstoppable

The only way for suppliers to consistently grow profitably with Modern Trade customers is to ensure that activities they undertake drive category value. That way, there is an incentive to work together to grow a category profit pool that can be shared

Current performance trackers tell you what results have been achieved and how you are perceived by customers

A new type of diagnostic is required to help your people cut through the complex clutter of results and symptoms to identify and address root causes

Driving profitable growth with the Modern Trade requires world class understanding of performance drivers in the customer P&L

Historical value created

Problems to fix and how to fix them

Advantage Survey/GfK, Competitive Position, Customer P&L

Lack of strategic dialogue, ineffective NPD, trade spend negotiations, support for brand strategies, delisting, negative trading relationship

Are they understood?Do customers & internal stakeholders agree?What actions should be undertaken?

Our 3-D Modern Trade Diagnostic is your essential tool for root cause analysis

Results

Pain felt today

Symptoms

Root Causes

Our 3-D analysis tool ensures that root cause issues are identified, rather than just symptoms

Each dimension (stakeholder perception, data, expertise) provides unique insight into how to drive customer performance

Once root cause issues are agreed, improved performance can be targeted and actions automatically generated to address these issues and deliver real results

3-D root cause analysis defines actions that deliver real results

Root Cause Analysis

Perception

3DModern Trade

Diagnostic

StakeholderReality

Level ofExperience

Quality of Data

DataExpertise

Actions

£ $€¥

The product architecture directly supports

the client’s business planning process

A consistent quantitative research structure is used to collect information, compare benchmarks and create the financial analysis

The 3-D Diagnostic product is unique in the way it step changes productivity in clients’ business planning processes by structuring unstructured information and automating action planning

3DModern Trade

Diagnostic

Circa 30 key stakeholders deliver feedback on customer performance through our web-based quantitative research tool

Existing data (brand plans, customer presentations, raw data) is analysed by CA to understand if stakeholder perception is valid

Nominated experts challenge stakeholder perception and data analysis to create a final 3-D root cause analysis of performance

In each performance area a current and target level of performance is set to define actions to shift customer performance

A valuation model creates a direct line of sight between planned actions, predicted value creation and potential investment scenarios

STEP 1

STEP 2

STEP 3

STEP 4

STEP 5

5 steps are undertaken to create a 3-D Customer

Performance Plan

Stakeholder does not see the question

Stakeholder sees statements to agree

or disagree with

Order of statements is randomised to

increase objectivity

1. Is there a direct line of sight between the supplier's trading plans and the category vision?1 The supplier's trading plans are clearly structured to demonstrate how the category vision is brought to life through activation6 There is no clear link between the category vision and the supplier's trading plans

2. Are objectives, activities and investment within trading plans consistent with each other and in line with the ambition?7 I am confident that all components of trading plans are built in the right way to deliver joint ambition2 Trading plans are rarely designed to really deliver what we are jointly trying to achieve

3. Are the supplier's trading plans realistic and achievable in the context of typical proposed investments?3 The supplier's trading plans are consistently supported with appropriate

investment plans8 The supplier's investment plan is often too weak to make trading plans realistic and

achievable

4. Do the supplier's trading plans contain the appropriate mix of price, promotions, placement and NPD to drive profitable growth for both parties?9 The supplier's trading plans consistently contain the best mix of price, promotions, placement and NPD to drive mutual long term profitable growth4 The planned mix within the supplier's trading plans often fails to make sense in the context of delivering what we're trying to achieve

5. Is planned activation within trading plans suitably differentiated to create a unique value proposition for the shopper?5 Trading plans are tailored exceptionally well by brand and store format10 The supplier's trading plans tend to be 'one size fits all' and deliver little differentiation for shoppers

Web-based quantitative researchcollates rich stakeholder opinionSTEP1Expertly designed web-based quantitative research tool

Seeks degrees of agreement to key statements that indicate performance versus expertly identified customer performance drivers

Drives objectivity:Statements are built to be intuitively understoodProvides positive and negative versions of the same statements to examine consistency of responseAvoids tying statements directly to the customer performance drivers

Users can be any stakeholderAll functionsAll gradesLocal and internationalInternal & external

STEP2Data is reviewed to better understand reality

Data is both deposited on our server by the client team and stakeholders can post documents to the software directly in response to submitting specific opinions.

This is existing data only - no new analysis needs to be undertaken by the client. =

Data is evidenced against the quantitative research structure to assess the validity of differing stakeholder perceptions

1. Is there a direct line of sight between Trading Plans and the Category Vision?

Market & category analysis+Advantage Group / GfK survey+Consumer & shopper research+Innovation pipeline+

+Organisation structure+Sales fundamentals+Operational performance+Financial performance

Trading & activation plans

STEP3Expert opinion challenges data and perception

Specific client experts are nominated to work with our experts to provide opinion on stakeholder perception and available data in order to create a final 3-D conclusion on each area of performance

We agree upfront who the client experts will be for each area of subject matter e.g. ‘Relevant Category Opportunity’ = Category Strategy Director, ‘Trading Plan’ = Grocery Trading Director, ‘Supply Chain Execution’ = Logistics Manager and build on their input to create the expert view

As you can see, root cause analysis only works in 3-D

Customers can’t see the category vision coming through the Trading Plans, but the supplier believes they have embedded the vision effectively

Examination of the category vision suggest that low priority opportunities have been incorporated into the Trading Plans, based on the suppliers own short term limitations

The final conclusion is that there is not a direct line of sight between the Trading Plans and Category Vision

Examination of the trading plans themselves suggest that they do reference many category opportunities

1. Is there a direct line of sight between Trading Plans and the Category Vision?

Perception

3DModern Trade

Diagnostic

DataExpertise

NO

NO YES

NO / YES

STEP4Actions to improve performance are agreed with key stakeholders

Once the 3-D analysis is complete, we then work with the client experts to conduct a final interpretation of the results

In each performance area a level of current performance is agreed using 3-D insight and a target level of performance is set, using the structure on the page opposite

Actions are then automatically generated to shift to a higher level of performance

AUTOMATICALLY GENERATED ACTION:Undertake a structured review of the detail that supports the category vision to identify all appropriate activation opportunities and incorporate these into trading plans

DESIRED FUTURE PERFORMANCE

CURRENT PERFORMANCE

1. Is there a direct line of sight between the supplier's trading plans and the category vision?4. Each component of the Trading Plan is clearly structured around the category vision3. Trading Plans reference all of the opportunities identified within the category vision, but could be structured better to create a direct line of sight2. Trading plans reference some of the opportunities identified within the category vision1. There is no clear link between the category vision and trading plans

2. Are objectives, activities and investment within trading plans consistent with each other and in line with the ambition?4. Trading plan objectives are directly derived from the joint ambition and activities & investment are developed in a highly structured and consistent way to deliver trading plan objectives3. Trading plan objectives are broadly in line with the joint ambition and activities & investment are mostly supportive of trading plan objectives2. Trading plan objectives are broadly in line with the joint ambition, but activities & investment are not consistent with delivering trading plan objectives1. Trading plan objectives are not in line with the joint ambition

3. Are the supplier's trading plans realistic and achievable in the context of typical proposed investments?4. Each individual component of each trading plan is supported by an appropriate level of investment to make trading plans realistic and achievable3. The investment plans effectively support overall trading plans2. Investment plans are broadly based on trading plans, but are usually too low to deliver trading plans effectively1. There is no clear link between the overall trading plan and the investment to support it

STEP5 The final step is a valuation of improved performance

Our valuation model uses an algorithm to create a direct line of sight between planned actions to shift performance, predicted value creation and potential investment scenarios

Current revenue & profit delivered through current performance

Current revenueIncremental

Revenue Derived From Performance Improvement

Incremental Profit Derived From Performance Improvement

Improvement Fund @ 1:2 Ratio

To Profit

Planning Fund At 1:4 Ratio To Improvement Fund

Incremental revenue & profit delivered through improved performance

1. Is there a direct line of sight between the supplier's trading plans and the category vision?4. Each component of the Trading Plan is clearly structured around the category vision3. Trading Plans reference all of the opportunities identified within the category vision, but could be structured better to create a direct line of sight2. Trading plans reference some of the opportunities identified within the category vision1. There is no clear link between the category vision and trading plans

PLANNED PERFORMANCE SHIFT VALUE DRIVING ALGORITHM INVESTMENT PLANNING

£ $€ ¥

Confirmation of areas of strong performance

Root cause analysis for critical areas of underperformance

Improvement actions defined to shift current performance to future desired performance

Planned financial outcome

As more of these are conducted, comparative internal benchmarks can be run across performance components, customers, markets and stakeholder communities

3-D Modern Trade Performance Plan

Comprehensive report

Web-based survey can be delivered in any language in any country

* = Incremental Annual Revenue / Contribution = From Lagging To Driving Category1 4

Portfolio Proposition

Joint Ambition

Relevant Category Opportunity

Instore Activation

Strategic Initiatives

Operating Model

Cost Pricing, Terms & Conditions

Trading Plan

Supply Chain Execution

-

3.1

3.0

4.0

Planned Value* Planned Contribution*

2.9

2.0

3.2

Planned Value*Planned Contribution*

2.4

2.0

3.1

Planned Value* Planned Contribution*

2.8

2.3

3.5

Planned Value* Planned Contribution*

2.5

1.8

3.3

Planned Value*Planned Contribution*

2.5

2.2

3.0

Planned Value* Planned Contribution*

2.7

1.2

2.7

Planned Value* Planned Contribution*

2.5

1.4

3.3

Planned Value* Planned Contribution*

2.5

2.8

4.0

Planned Value* Planned Contribution*

Performance Component Questions

1.5 Level 1 Level 3

Stakeholder Perception

Split by Stakeholder Group

Current Performance

Target Future Performance

Improvement Action

1. Is there a direct line of sight between Trading Plans and the Category Vision?

2. Are objectives, activities and investment within Trading Plans consistent with each other and in line with the ambition?

3. Are Trading Plans realistic and achievable in the context of typical proposed investments?

4. Are the brand’s products of a superior quality to competitor brands’ products?

5. Do Trading Plans contain the appropriate mix of price, promotions, placement and NPD to drive profitable growth for both parties?

6. Is planned activation within Trading Plans suitably differentiated to create a unique value proposition for the shopper?

Scored 1 (low) to 4 (high) in terms of agreement with supporting statements to question (as explained in pages 14 - 15 )

Agreed current and target performance (as explained in pages 16 - 21)

The appendix delivers rich detail on the perception of stakeholders, data reviewed and the expert opinion provided.

This creates a direct line of sight between the summary conclusions and detailed analysis

Undertake a structured review of the detail that supports the category vision to identify all appropriate activation opportunities and incorporate these into trading plansRich detail provides

supporting insight into required action

The bespoke software solution has been specifically designed to help our corporate clients analyse business performance

It allows stakeholders to provide their opinion and back it up with fact, for example by attaching files that they believe are relevant

The same analysis structure is then used for the data analysis and expert opinion

As root cause issues and levels of current and desired performance are agreed, actions are automatically generated to shift performance

On the basis of these agreed actions, a valuation of improved performance is automatically generated

The software itself has been built

exactly for the purpose

Customer Plan

The diagnostic is deployed annually

across each keycustomer

Suitable for deployment annually as part of the business planning process

Can be used adhoc for customers that require remedial attention

Fact based analysis of reality

6 Week Process

Completion of web based quantitative research by agreed stakeholder community

Write-up of the 3-D Customer

Performance PlanSet-up

ClientTailoring

3-D Modern TradeDiagnostic

Business PlanningJBP

Investment Agreement

ExecutionPlanning

Execution

Client time commitment on each diagnostic

is minimal

Circa 30 key stakeholders deliverfeedback on customerperformance through our web-basedquantitative research tool

Existing data (brand plans, customer presentations, raw data) is analysed by CA to understand if stakeholder perception is valid

Nominated experts challenge stakeholder perception and data analysis to create a final 3-D root cause analysis of performance

In each performance area a current and target level of performance is set to defines actions to shift customer performance

A valuation model creates a direct line of sight between planned actions, predicted value creation and potential investment scenarios

STEP1 STEP2 STEP3 STEP4 STEP5

20 minutes per survey respondent

Total of 3 hours for the data co-ordinator and 30 minutes per data provider (typically 5-7 data providers) – no new analysis needs to be done by the client

Total of 3 hours for the expert reviews with each of the typically 4 individual client experts

All activities are delivered online through the web-based survey, teleconference calls and videoconferences

There are 2 levels at which the diagnostic

can operate

Stakeholders typically include 5 Regional respondents and 5 Local respondents in each country or market cluster

Ideally, cross-functional representatives from the chosen customer are also recruited to give direct feedback using the software

Fact based analysis is conducted from International data

Stakeholders typically include 5 local Leadership Team members and 25 cross-functional local representatives

Ideally, cross-functional representatives from the chosen customer are also recruited to give direct feedback using the software

Fact based analysis is conducted from Local data

The diagnostic is run individually for each specific Modern Trade customer

Typically a combination of 30-35 internal and external respondents per diagnostic

£35,000 fee* as a one-off or less for a 3 year programme or multiple diagnostics

* = excludes out of pocket charged at cost and VAT charged at the applicable rate

INTERNATIONAL

1

2

LOCAL

50% - 70% reduction in requirement for face-to-face meetings drives e.g. - Lower T&E expenses - Better resource utilisation

Understanding the root cause problem cuts £250k-£1m+ of unnecessary spend on addressing symptoms e.g. - Shopper research - Packaging redesign - Promotions - Terms & conditions

Transformed clarity and strong stakeholder alignment around what problems need to be solved uplifts revenue by 25% - 50% - Better customer relationships - Truly ‘joint’ JBPs - Improved support for - Sales fundamentals - NPD - Through the line activity

* = subject to customer profile

Customer revenue growth, profit growth and improved ROI

COST SAVING* REVENUE GROWTH*

The business case for deploying the diagnostic

is compelling

470 firms assessed . . . 6 firms selected as Partners . . . New Partners coming on-board . . . 500+ employees . . . The leading specialists at delivering real results . . .

Our System can help you build exceptional solutions

Example Results

- £50m of incremental profit in Year 1 of a world class JBP- 357% brand growth over a 3 year period- €10m of trade spend cut- $100m of incremental brand profit- +40% YOY revenue growth through improved trading plan- $20m cost avoidance

Example Suppliers & Retailers

World class experience in consumer goods