How to become a successful supplier in the U.S. market

1. How to become a successful supplier in the U.S. market A presentation to the U.S./China Chamber of Commerce of Dallas November 12, 2004

2. Today’s Presentation: • Background on Eaton & Company • Market Trends in the U.S. • Key Criteria for Success • Recommended Actions for an Aspiring Supplier

3. Who is Eaton & Company? • Established in 1987. • Focus on developing global market opportunities for U.S. and global manufacturers. • Clients include: • Sara Lee • Johnson & Johnson • Procter & Gamble • Kimberly-Clark • Gillette • American Airlines • General Electric • Boeing

4. Who is Eaton & Company? (continued) • Major Successes: • Assessed market opportunities and forged a powerful partnership with Wal-Mart for an electric appliance manufacturer. • Created a distribution network for a U.S. paper manufacturer in Eastern Europe and Russia. • Developed a highly successful marketing strategy for a U.S. baby formula manufacturer in China.

5. Market Trends in the U.S.

6. The retail trade has changed more in the past 10 years than in the previous 30. • Decline in sales per square foot/channel erosion • Consolidation – 4 major chains do 40% of business • Growth of alternate channels: • Clubs, chain drug, convenience & petroleum, dollar stores • Decline of wholesale class of trade • Growth of Wal-Mart as dominant price leader

7. Consumers have also changed… • No longer single mass market • High degree of fragmentation through ethnicity, health-orientation and various groups • Lifestyles have changed consumer shopping behavior • Consumers are more sophisticated • Dual-income families, emphasis on trade, variety and time-saving • More channels fulfill consumer needs • Consumers have more channels where they can purchase food and they explore these channels aggressively

8. Wal-Mart is also under pressure from all sides… Wal-Mart Challenges

9. Support of manufacturers is crucial for Wal-Mart:

10. Given this environment, retailers have developed highly demanding criteria for a successful supplier.

11. Technology becomes a strong weapon in tracking down different tastes of multiple consumer groups. Manufacturers can play a uniquely important role to help retailer achieve this goal.

12. How can a new supplierbecome successful?

13. This effectively breaks the whole marketing exercise into three key stages: I. Learn about your product, your customer, and your market. II. Develop a strategy. III. Execute and evaluate this strategy on its financial results.

14. Learn about your product, your customer, and your market. Product Competitors Customer Your Company Overall Market Conditions

15. - Growth Acquisitions New Product/Service Partnership Loyalty Programs - Increased Customer Base New Market Expansion New Customer Incentives Different Channels Cost-Cutting Programs - Increased Profits Emphasis on High-Margin Products Supply Chain Evaluation Pricing - Defense Against Competition Promotion New Products Once this assessment is done you have to look at yourself and decide what’s your strategy:

16. Key things to remember… • In a new market, look for alliance or partnership: • Distributor • Retailer • Manufacturer • Always try to develop a unique selling proposition: • Product • Terms • Price • On-going monitoring of your activities is key for successful performance