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Management Science Associates, Inc. Market Basket Analysis of Magazine Purchasers in the Grocery Channel November, 2002 GROCERY CHANNEL MARKET BASKET ANALYSIS AGENDA Study Methodology Who is the Magazine Newsstand Purchaser?

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Management science associates inc l.jpg

Management Science Associates, Inc.

Market Basket Analysis of Magazine Purchasers in the Grocery Channel

November, 2002


Slide2 l.jpg

GROCERY CHANNEL MARKET BASKET ANALYSIS

AGENDA

  • Study Methodology

  • Who is the Magazine Newsstand Purchaser?

  • What is the value of the Magazine Newsstand Purchaser to the Retailer?

  • What is the Shopping Behavior of the MagazineNewsstand Purchaser?

  • What is the Value of the Magazine NewsstandPurchaser to the Publisher and Advertiser?

  • What are the Opportunities?

Copyright © 2002, MANAGEMENT SCIENCE ASSOCIATES, INC. BMH10/02


Market basket study methodology l.jpg

Market Basket Study Methodology

  • Analyzed blind loyalty card data for over one million households and over 285 million purchase transactions

  • Covered a full year of purchases, September ‘01 through August ‘02

  • Involved ten stores at each of two mid-sized, regional grocery chains

  • Cleansed data to eliminate:

    • Shopping trips resulting in a purchase of under five dollars

    • Negative purchase values

    • Cards that showed over thirty-five scans in a one-week period

    • Cards that did not show at least one shopping occasion during the last three quarters of the study period

Copyright © 2002, MANAGEMENT SCIENCE ASSOCIATES, INC. BMH10/02


Who is the magazine newsstand purchaser l.jpg

Who is the

Magazine

Newsstand

Purchaser?


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Magazine Purchasers

Non-Magazine Purchasers

30%

26%

24%

23%

25%

21%

21%

21%

20%

Percent of Households

14%

13%

15%

10%

9%

8%

8%

10%

5%

0%

18 - 24

25 - 35

36 - 45

46 - 55

56 - 65

66 - 75

Note: Data provided by one chain

Age


Education level l.jpg

Magazine Purchasers

Non-Magazine Purchasers

40%

34%

35%

31%

30%

28%

30%

25%

20%

Percent of Households

18%

20%

15%

14%

15%

10%

6%

5%

5%

0%

Grade School

HighSchool

Some College

4-Yr College

Post Graduate

Note: Data provided by one chain

Education Level


Education level by category l.jpg

Education Level by Category


Income level l.jpg

Magazine Purchasers

Non-Magazine Purchasers

33%

35%

32%

31%

28%

30%

25%

22%

18%

20%

Percent of Households

15%

11%

10%

9%

10%

6%

5%

0%

< $20,000

$20,000-

$40,000-

$60,000-

$80,000+

$39,999

$59,999

$79,999

Note: Data provided by one chain

Income Level


Household size l.jpg

Magazine Purchasers

Non-Magazine Purchasers

40%

35%

35%

31%

30%

25%

22%

20%

Percent of Households

19%

19%

20%

16%

13%

15%

9%

8%

10%

3%

3%

5%

1%

1%

0%

One

Two

Three

Four

Five

Six

Seven +

Note: Data provided by one chain

Household Size


Household size by category l.jpg

Household Size by Category


What is the value of the newsstand purchaser to the retailer l.jpg

What is the Value of the Newsstand Purchaser to the Retailer?


Significance of magazine purchasers l.jpg

Magazine Purchasers

Non-Magazine Purchasers

76%

80%

70%

58%

58%

60%

50%

42%

42%

40%

24%

30%

20%

10%

0%

% of Shoppers

% of Total Retail

% of Total Grocery

Grocery Dollars

Items Purchased

Significance of Magazine Purchasers


Annual shopping weeks l.jpg

Annual Shopping Weeks


Average dollars spent per shopping week l.jpg

Average Dollars Spent Per Shopping Week


Average number of items purchased per shopping week l.jpg

Average Number of Items PurchasedPer Shopping Week


Grocery spending definitions l.jpg

Grocery Spending Definitions


Percent of households by grocery spending level l.jpg

Percent of Households by GrocerySpending Level


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What is the Shopping Behavior ofthe Magazine Newsstand Purchaser?


Percent of shoppers within each business line that are magazine purchasers l.jpg

Percent of Shoppers Within Each Business Line that are Magazine Purchasers

24% of Total Grocery Store Shoppers Purchase Magazines

57%

60%

54%

52%

50%

45%

44%

42%

41%

41%

38%

40%

34%

34%

33%

31%

28%

30%

25%

20%

10%

0%

HBC

DELI

MEAT

VIDEO

PHOTO

FLORAL

BAKERY

SEAFOOD

TOBACCO

PRODUCE

GROCERY

PHARMACY

GREETING CARDS

PREPARED FOODS

GENERAL MERCHANDISE


Coupon usage among magazine purchasers and non magazine purchasers l.jpg

Coupon Usage Among Magazine Purchasers and Non-Magazine Purchasers

Note:Data provided by one chain


Percent of magazine titles vs percent of magazine dollars by category l.jpg

Percent of Magazine Titles vs. Percent of Magazine Dollars by Category


Average yearly magazine spending by purchase frequency l.jpg

Average Yearly Magazine Spending By Purchase Frequency

$140

$121.12

$120

$100

$80

$55.13

$60

$38.62

$40

$25.82

$16.15

$16.11

$20

$5.35

$0

TOTAL

1 - 3

4 - 6

7 - 9

10 - 15

16 - 20

21+

Purchase Frequency


Percent of households vs percent of dollars by purchase frequency l.jpg

80%

68%

70%

% of Households

% of Magazine Dollars

60%

50%

40%

35%

30%

23%

20%

14%

14%

13%

9%

7%

10%

6%

5%

5%

2%

0%

1-3

4 - 6

7 - 9

10 - 15

16 - 20

21+

Purchase Frequency

Percent of Households vs. Percent of Dollarsby Purchase Frequency


Percent of households by purchase frequency within each magazine category l.jpg

Percent of Households by Purchase Frequency Within Each Magazine Category


Percent of magazine dollars by purchase frequency within each magazine category l.jpg

Percent of Magazine Dollars by Purchase Frequency Within Each Magazine Category


Percent of magazine dollars spent by month l.jpg

Percent of Magazine Dollars Spent by Month


Magazine shopper s average basket expenditure by number of magazines in basket l.jpg

Magazine Shopper’s Average Basket Expenditure by Number of Magazines in Basket

$100

$92.26

$90

$81.96

$80

$73.65

$70

$62.79

$60

$50

$45.14

$40

$30

$20

$10

$0

0 Magazines

1 Magazine

2 Magazines

3 Magazines

4+ Magazines


Percent of magazine dollars by purchase frequency and store location l.jpg

Main Line

Front End

80%

60%

% of Magazine Dollars

40%

20%

0%

Total

1-3

4-6

7-9

10-15

16-20

21+

Magazine Purchase Frequency

Percent of Magazine Dollars by Purchase Frequency and Store Location


Percent of total magazine dollars by grocery spending level and store location l.jpg

High Grocery Spending

Medium Grocery Spending

Low Grocery Spending

50%

41%

40%

33%

30%

20%

11%

11%

10%

2%

2%

0%

Main Line

Front End

Percent of Total Magazine Dollars by Grocery Spending Level and Store Location


What is the value of the magazine newsstand purchaser to the publisher and advertiser l.jpg

What is the Value of the Magazine Newsstand Purchaser to the Publisher and Advertiser?


Percent of households that purchase advertised products l.jpg

Percent of Households that Purchase Advertised Products

Magazine Purchasers

Non-Magazine Purchasers

76%

80%

70%

62%

58%

56%

60%

44%

50%

42%

38%

40%

24%

30%

20%

10%

0%

Total

Advertised

Advertised

Advertised

Households

Cookies

Crackers

Cereal


Category development index for advertised products by magazine purchasers and non purchasers l.jpg

Category Development Index for Advertised Products by Magazine Purchasers and Non-Purchasers

Magazine Purchasers

Non-Magazine Purchasers

200%

182%

174%

159%

150%

100%

81%

77%

74%

50%

0%

Advertised

Advertised

Advertised Cereal

Cookies

Crackers


Propensity to purchase by business line for magazine buyers within a category l.jpg

Propensity to Purchase by Business Line for Magazine Buyers within a Category


Average number of basket items l.jpg

Average Number of Basket Items


Average of items purchased by business line when a magazine is in the basket l.jpg

Average # of Items Purchased by Business Line When a Magazine is in the Basket


What are the opportunities l.jpg

What are the Opportunities?


Opportunities l.jpg

Opportunities

  • Broad-scale approach to better merchandising

  • Cross-merchandising between magazines and high-margin or high-ticket items

  • Magazine department located near high-margin departments and seasonal or impulse items

  • Placement of magazine racks within related grocery departments

Copyright © 2002, MANAGEMENT SCIENCE ASSOCIATES, INC. BMH10/02


Opportunities38 l.jpg

Opportunities

  • Business line product mix adjustments based on magazine sales or Magazine category adjustments based on business line sales

  • Multiple magazine purchase incentives managed through loyalty card program

  • Coupon effort or other trial or continuity promotional programs

  • On-product subscription premiums or copy offers with the purchase of advertised product

Copyright © 2002, MANAGEMENT SCIENCE ASSOCIATES, INC. BMH10/02


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