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Kraft Foods at Walmart

Kraft Foods at Walmart. Partnering with Walmart to Build Kraft Brands March, 2009. Customer Marketing Best Practices. 1. Collaboration and retailer understanding

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Kraft Foods at Walmart

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  1. Kraft Foodsat Walmart Partnering with Walmart to Build Kraft Brands March, 2009

  2. Customer Marketing Best Practices 1. Collaboration and retailer understanding Strong collaboration between manufacturer and retailer ensures that the needs of both are met and results in mutually beneficialand actionable programs 2. Meeting retailers goals and initiatives The most successful programs leverage manufacturer and retailer equities and assets, address the retailer’s key initiatives, and deliver on the retailer’s marketing priorities. 3. Retailer differentiation and added value Retailer-specific solutions strengthen shopper loyalty by creating value for the retailer and shoppers. Manufacturers can help the retailer better understand shoppers’ needs by sharing and applying research and insights from their respective categories. 4. Retailer specific solutions based on shopper insights The most relevant solutions come from understanding how demographic and lifestyle trends and the changing needs and attitudes of consumers effect shopping behavior. 5. Effective in-store execution and measurement Developing a cross-functional team and working closely with marketing and operations helps ensure flawless execution. Formalizing objectives and setting evaluation metrics for measuring program performance is essential for evaluation and evolution. 2

  3. Walmart’s Marketing Programs are Based on 3 Beliefs: • Save Money, Live Better is a key principle from Sam Walton that is relevant today • “Brand Aspirationals” are the core growth consumer Looking for good brands at great prices • Food & Beverage is a key growth opportunity

  4. Understanding the Grocery Opportunity • Food and beverage is a key conversion opportunity for Walmart, as it brings in more shoppers with greater frequency, and attracts a greater share of their spending than other merchandise categories • Walmart is experiencing success in the current economic downturn, as consumers spend more of their food dollars at Walmart Supercenter • The key to sustaining this success is to develop solutions-based programs to meet shopper needs

  5. Leading with Food & Beverage • Food is a frequent destination category that can be leveraged to drive cross-box shopping • Compared to other merchandise categories offered at WMSC, Food & Beverage brings in more shoppers, with greater frequency and attracts a greater share of Walmart spending Share of Shoppers Share of Trips Share of Dollars Trips / HH Food & Beverage 94% 80% 62% 22% General Merchandise 87% 35% 13% 10% Health & Beauty 86% 40% 13% 12% Non-food 87% 44% 13% 13%

  6. Following Grocery Division Principles • Price Image • Value • Prominent displays with clear pricing signage • Provide solutions delivering consistent platforms that meet shoppers’ needs • Meal Solutions • Health & Wellness • Seasonal • Align with In-Store Presentation • Advertising focused on affordability and “saving people money in the shopping basket” • Clarity of Offering • “Good, Better, Best” in ranges • SKU rationalization helps shoppers navigate through the store (average shopper spends 21 minutes in WMSC) • Aligned with solution • Seasonal Opportunity • Consistency in packaging (i.e. Halloween) • Blocks of products with common price points

  7. Developing Successful Marketing Programs Concept Testing Among WM Shoppers Program Concept Ideation Refined Program Elements In-depth Research Foundational Insights Platform Development Execution Walmart Touch Points Integrated Throughout The Process

  8. Focusing on Shopper Segments with the Greatest Growth Potential • Common thread among key shopper segments at Walmart is that they are all value driven – best opportunity for mutual growth is with Brand Aspirationals Price Value Shoppers Brand Aspirationals Price Sensitive Affluents • Mature, empty-nester HHs • Educated, affluent, employed • Younger, family households • Many unemployed and/or homemakers • Mature households, only 1/3 have kids at home • Less affluent and educated Lifestyle & Attitudes Lifestyle & Attitudes Lifestyle & Attitudes • Time-constrained, never have enough time • Pride themselves on being ‘smart shoppers’, getting the best deal whatever it takes • Social and community-involved • Focused on financial security • Traditional values, family a top priority • Live paycheck to paycheck, many have experienced financial crises • First to cut back when times are tough • Brand-conscious, they seek brand name products • Trust brands for quality • Simplifies shopping • Not loyal to any retailer • Shop wherever they need to, to get desired brands within budget

  9. Meeting Walmart Shoppers’ Needs • Walmart Shoppers are concerned about the economy and are changing their behaviors accordingly • Preparing more food at home - cooking and eating at home, eating leftovers, brown-bagging  • Staying home more - entertaining at home more now vs. going out • Walmart Shoppers have some key needs that have been around for a while, and there is new news on each: • Convenience: Needs expanding as consumers adapt to economic hardship, but time pressures still present • Quality: Staying at home more, entertaining at home demands quality brands and experiences • Health & Wellness: Shoppers seek to achieve health & wellness goals within constrained budgets • Walmart Shopper Segments are all value-driven, for different reasons • Shopper Marketing programs must meet the unique needs of each segment by offering value to help build loyalty

  10. Shoppers Say Walmart is Ideally Suited to Provide Solutions “They stand for convenience and low price and this is just the next logical evolutionary step in their growth.” “They are really geared towards families and making things easy… you come here and everythingyou need is in one spot.” “Because you depend on Walmart for convenience and you need their help … I need these ideas.” • “People are coming to shop in bulk … meal ideas would give more people a reason to come to Walmart …”

  11. Walmart Shoppers Need Convenient Meal Solutions My Ideal Meal Solution Has … Ideal Meal Solution Program My Challenges … Creative Meal Ideas Quick & Convenient Shopping Simple, Easy Preparation Limited Time to Shop, Prep and Cook “People get home, and don’t want to spend 3 hours cooking. I need ideas requiring just a few ingredients.” Need Creative Ideas “I’m tired of eating the same old boring thing … my kids say, Mom, can we eat something different?” Lack Cooking Skills “You don’t think about making a kabob because it seems such a fancy, big presentation, but they look so easy to put together …” Q: How strongly do you agree or disagree …? (Top 3 box %- 1-10 scale)

  12. Walmart Shoppers are Concerned About the Economy • Walmart Shoppers are adjusting their behaviors in tough economic times • Compared to other consumers, WMSC shoppers are more likely to… • Say their financial situation has “gotten worse” in the last year • Be “extremely concerned” about the economy • Overall • 90% have cut back on non-essentials • 49% stick to a budget “Within the past 3 months how has your spending changed?” • At Home • 59% use AC/heat less • 4% have moved to a less expensive home Spending More or No Change Cutting Back On Spending • Dining • 86% eat at home more • 42% eat at less expensive restaurants 28% • Leisure • 38% entertain at home more vs. go out • 32% have stopped taking vacations • 25% rent movies vs. go to the theatre 72% • Driving • 9% have sold their car/bought more fuel-efficient car • 5% are carpooling

  13. Walmart Shoppers Are Finding Ways to Make Meals More Affordable • Making meals more affordable by sourcing food at home is a key strategy for stretching budgets ”We're eating out less so we can afford to buy groceries.” • Among WMSC Shoppers… • 74% say they have avoided going out to eat and ordering in carry out food over the past three months* • 65% look for recipes that fill up the family for less • 81% say they are making meals that provide leftovers • 68% are brown-bagging lunch • 76%limit the purchase of non-meal food items (e.g., vending, c-store, movie theatre, etc.) ” Packing lunches for school and work has saved us a lot of money. Also, making meals from scratch enables us to save more.” ” I tend to make foods that are good as leftovers, spaghetti, things like that... in larger quantities.”

  14. Walmart Shoppers Seek Ideas While In- and Out-of-Store • In keeping with their value-consciousness, Walmart Shoppers are significantly more likely to review sale items in a store circular or ad In-Store Out-of-Store Both In & Out-of-Store 71% look at store circulars in-store to plan shopping trip 63% look in the store for affordable solutions to meal planning 90% of WMSC Shoppers look at store circulars received by mail or in newspapers* 74% are spending time thinking through meals/ menus before shopping 63% look for recipes on-line* 53% look at store circular deals on-line 58% look on-line for manufacturer coupons or other deals* 67% are planning meals around what’s on sale

  15. Meal Solutions Opportunity at Walmart • Help Shoppers “Save Money, Live Better” by providing AFFORDABLE solutions focused on convenience, quality and health & wellness from Kraft and Walmart • Identify shopper centric marketing platforms that enable Kraft to most effectively leverage portfolio depth and breadth, creating volume growth for both Kraft and Walmart • Build a program to fully meet consumers’ needs by analyzing category interactions across the store and bringing different categories together for one stop shopping • Enhance Walmart’s positioning as a solutions resource with a complete meal solutions destination that delivers relevant food ideas and ingredients in a convenient format

  16. Kraft’s Meal Solution Equities Bring Important Advantages Vast portfolio of popular American brands, breadth of product portfolio enables full meal solutions (beverages, sides, desserts, etc.) 16

  17. Kraft Brings Strong Meal Solutions Expertise and Assets Kraft Kitchens • Customized, consumer-tested food ideas, including relevant BFY ideas • Superb culinary expertise from full-time experts: • Lever latest food trends and knowledge of food AFH • New, consumer-endorsed food idea communication strategy Marketing Assets • Customized content in Food & Family magazine • Digital content on Walmart.com

  18. “Simple Mealtime Ideas” by Kraft • As part of a 2008 CSI, Kraft partnered with Walmart to execute a Simple Mealtime Ideas program in Walmart Supercenters • Walmart’s positioning as a solutions resource was enhanced with a complete meal solutions destination that delivered relevant food ideas and ingredients in a convenient format • The promotion was executed July 15th – September 2nd, 2008 and effectively drove significant incremental volume for both Kraft and Walmart • Simple Mealtime Ideas was featured in the Seasonal Aisle in 1,700 Walmart Supercenters • The program included 51 Kraft brands and nearly 200 SKUs • Products were grouped by breakfast, lunch, dinner, and snacks

  19. Simple Mealtime Ideas Program Overview • Walmart’s Seasonal Aisle was transformed into a destination area for shoppers to find simple, easy, affordable, and delicious mealtime ideas using their favorite Kraft brands • Mealtime ideas aligned with consumer needs across breakfast, lunch, dinner and snacking occasions • Merchandising layout provided clarity of offerings across meal occasions • In-aisle signage featured Kraft food photography to entice shoppers • An integrated 360°communication plan included multiple touch points to provide strong consistent messaging across tactics

  20. The Simple Mealtime Ideas Seasonal Aisle

  21. Simple Mealtime IdeasIntegratedCommunication Plan Print Ads Sampling Events PR walmart.com Tab Simple Mealtime Ideas Aisle In-Store TV Spots #MEALS Recipes Email Blasts Recipe Booklets 360° marketing programs are important as Walmart Shoppers seek ideas for meeting needs both in and out-of-store

  22. Simple Mealtime Ideas Effectively Reached Walmart Shoppers • Although they may come into WMSC with ideas and lists, Walmart Shoppers seek solutions while they are in the store • Solutions included products and easy, compelling ideas • Shoppers navigate using signage and products in tandem • Overhead signage helped direct shoppers when viewing from across aisles, or from front or back of store • Looked to endcaps to get an idea of what was in the aisle • Product selection is key to compelling solutions • Popular, high-penetration products drew shoppers in • Products best ‘fit’ with theme • Mix of complementary items rounded out assortment against theme and could highlight lower-penetration products • Clear communication is critical in busy store environment • Clear, consistent, compelling messages delivered across touch points • Marketing collateral used to support theme and drive key behaviors – e.g. recipe cards to serve as shopping list

  23. Orchestrated Interaction of Key Elements to Achieve Success

  24. Simple Mealtime Ideas Summary • This is an example of a promotion recognized by Walmart. It’s a unique collaborative effort that was carried out flawlessly, and on a scale and scope that neither company had attempted: the “Simple Mealtime Ideas” event.  Quick. Convenient. Affordable • The inspiration for this in-store experience started with consumers’ needs  • The display conveniently brought our products together with engaging photography and delicious recipes to get people cooking • Easy meal ideas helped families plan breakfast, lunch, dinner or snacks • Simple Mealtime Ideas was featured in stores across the country for seven weeks, in total, 66,000 displays each featuring 190 products • That’s the equivalent of 176 miles of four-foot displays

  25. Customer Marketing Best Practices 1. Collaboration and retailer understanding Strong collaboration between manufacturer and retailer ensures that the needs of both are met and results in mutually beneficialand actionable programs 2. Meeting retailers goals and initiatives The most successful programs leverage manufacturer and retailer equities and assets, address the retailer’s key initiatives, and deliver on the retailer’s marketing priorities. 3. Retailer differentiation and added value Retailer-specific solutions strengthen shopper loyalty by creating value for the retailer and shoppers. Manufacturers can help the retailer better understand shoppers’ needs by sharing and applying research and insights from their respective categories. 4. Retailer specific solutions based on shopper insights The most relevant solutions come from understanding how demographic and lifestyle trends and the changing needs and attitudes of consumers effect shopping behavior. 5. Effective in-store execution and measurement Developing a cross-functional team and working closely with marketing and operations helps ensure flawless execution. Formalizing objectives and setting evaluation metrics for measuring program performance is essential for evaluation and evolution. 25

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