Bowl Appétit! Marketing Strategy

1. Bowl Appétit!Marketing Strategy Brian Bolten Pat Campbell Elizabeth Chang Trent Edwards Todd Federman Butch Lincoln

2. Outline • Data Collection & Analysis • Strategy Development • Concept Development

3. Data Collection & Analysis

4. Data Collection & Analysis Insights from Lifestyle Trends • Insight: Shelf stable lunches need to be quick to prepare • Trend: Busy professionals and moms have less time • Trend: Increase of take-out-food • Average American willing to spend no more than 15 minutes preparing a meal • Insight: Food should be balanced and nutritious as much as possible • Trend: Growing awareness of “wellness” • Trend: Attention on organic foods and alternative medicine

5. Data Collection & Analysis Insights from Lifestyle Trends • Insight: There exists a market for “meal preparation kits” for busy working people who enjoy some amount of preparation • Trend: Industrial appliances and professional cookware – “must haves” for kitchens • Trend: Home as sanctuary – People enjoy being home and like people to see their homes • Insight: Products need to be simple to understand • Trend: Clutter – too many choices, too much info

6. Data Collection & Analysis Learnings from Retail Trends • Learning: Convenient meal category is highly competitive but growing • 9,248 new products introduced in 2000; 550 in the meal/meal center category • Continued increase in private label spending (20.1% market share, 15.7% dollar share) • Innovations increasing • Healthy ingredients such as calcium and fiber are being added • Organic and all natural products • Convenience foods such as meal kits

7. Data Collection & Analysis Learnings from Retail Trends • Currently, Bowl Appetit! is not displayed in a consistent fashion across retail locations • Soup aisle, pasta aisle • Canned dinners/boxed dinners aisle • Insight: Optimal positioning may be in a prepared foods aisle (not currently in many stores) • GM should work with retailers to share best practices as to display and promotion • Additional placement option • Free-standing display only, e.g. DiGiorno’s

8. Data Collection & Analysis Learnings from Retail Trends • Learning: Conventional grocery store has a reduced dominance. Need to reach consumers through other channels as well

9. Data Collection & Analysis Industry Insights • The workforce: • 50% spend 15 minutes on lunch • 66% skip lunch at least twice a week • 40% eat at their desk • Movement from meal components to finished meals • Diet positioned brands falling

10. Data Collection & Analysis Industry Insights • Brand extension have higher success rate and require less investment which suggests leveraging an existing brand • Pricing Power • Mature food industry limits pricing flexibility • Pricing power and margins enhanced by developing customer loyalty through brand awareness • Development of multi-million products that can be sold nationally to create economies of scales

11. Data Collection & Analysis Competitor Products *No Financial Data Available

12. Data Collection & Analysis Competition Financials

13. Data Collection & Analysis Competitive Activity • Feb 2000: It’s Pasta Anytime - $15.9MM • Aug 2000: Uncle Ben’s - $20MM • Oct 2000: Healthy Bowl - $6 MM ($14.7 MM in 1997)

14. Data Collection & Analysis Competitor - Campbell’s • 2001 U.S. operations slumping: effect on 9% decline in overall net income • “Ready to Serve” soups focus on convenience • Marketing and sales were 25.9% of sales (focused on Godiva, V8 Splash, Chunky) • CEO Johnson returns from retirement

15. Data Collection & Analysis Competitor - ConAgra • 2001 Package food sales $8,681 account for 31% of total revenue • Includes shelf-stable, frozen, agriculture and dairy • Acquisitions illustrate shift toward brand and value-add products • Banquet and Healthy Choice brands suffering • Analysts bullish on Marie Callender’s • Double digit gains called for a 12 item entrée line • 2001 acquisitions totaling $1,107.2 MM including Chef Boyardee

16. Data Collection & Analysis Competitor - Hormel • Increased pork and turkey business through “Fully Cooked Meal Solutions” • Favorable historic 3 year performance: • Rev growth 149% higher than industry average • ROE is 55% higher than industry average • ROA is 86% higher than industry average • Limited rice and pasta entrees

17. Strategy Development

18. Strengths Quick preparation Simple instructions Betty Crocker brand (trust, recognized,easy to prepare foods) Single serving Weaknesses Quality variability Small quantity Limited variety (starches only) Dehydrated food Betty Crocker brand (primarily associated with baking) Strategy Development SWOT Analysis of Bowl Appétit

19. Opportunities Ownership of segment Other segments to focus on - workplace Additional channels – food service & vending Pillsbury technology and distribution capabilities to new channels Threats Comparison to frozen food quality Relatively easy market entry High educational needs Cannibalizing existing brand Damaging Betty Crocker name Competitive response Strategy Development SWOT Analysis of Bowl Appétit

20. Strategy Development Marketing Strategy • Become product leader in shelf-stable single-serve meals category focusing on the attributes of: • On-the-go Convenience • Good Taste

21. Strategy Development Critical Success Factors

22. Strategy Development Segment Layout Quality/Taste • Marie Callender’s • Home-cooked meal • Uncle Ben’s • “Flavor Bowls” • Sit-down restaurant • “Flavor Meals” • Pasta Anytime • Ragu Express • Buffet restaurant • Homemade Sandwich • Easy Mac Convenience • Bowl Appétit! • Fast Food • Chef Boyardee • Ready to Go • Cup of Noodles

23. Strategy Development Target Consumer • Primary: White collar professional worker • Prepared in the workplace • Kept in stock at home for quick meals • Secondary: Stay-at-home mom with little time to cook

24. Strategy Development Target Consumer • Similar to current Bowl Appetit purchaser based on Nielsen panel data

25. Strategy Development Target Justification • Busy professionals value attributes of the quick preparation - 40% of the workforce eat at their desk • Women growing percentage of work force (in 1999 46.5% versus 34% in 1964) • Women buy or influence the purchase of 80% of consumer goods so their needs must be addressed • Demand demographics – Baby boomers • Baby boomers (37 to 55 years old) account for 30% of population • Focus on nutrition and weight maintenance • Rising average age of US residents

26. Strategy Development Surveys • Surveys undertaken • Qualitative discussions • Competitive Analysis on four key attributes • Conjoint Analysis • Given target consumer, selected Harris Teeter as survey location

27. Strategy Development Qualitative Discussions Revealed two key concerns: • Overall Product Quality • Skeptical about taste of microwaved dry noodles • Serving size may be too small • Convenience • Some not comfortable boiling food in microwave • Not convenient for home users • “Why not just buy frozen”

28. Strategy Development Consumer Insights • Consumers are in search of a product that is more: • Substantial • “I need more than potatoes or rice for lunch” • Balanced • “It would be nice if it could have chicken and vegetables” • Flavorful • “The taste is important to me”

29. Strategy Development Competitive Analysis Survey asked consumers to compare Bowl Appetit to four “quick preparation” competitors based on price, taste, nutrition and convenience Bowl Appetit VS. competition Price: Average Taste: Poor Nutrition: Average Convenience: Poor

30. Strategy Development Conjoint Analysis • Sample survey form: Evaluate meat additive, wet noodles, price sensitivity

31. Strategy Development Conjoint Analysis • Survey Results: Wet noodles are significantly preferred to dry. Price and meat packages not significant.

32. Strategy Development $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $- Stoufers Cup Noodles Bowl Appetit Tuna with Crackers Chef Boyarde Pasta DiGiorno Small Pizza Uncle Ben's Rice Bowl Pricing Analysis Current Bowl Appetit! product is priced between other shelf-stable products and frozen foods Conjoint analysis and qualitative discussions indicate that consumers are willing to pay between $2.50 and $3.00 for a high quality shelf-stable product

33. Strategy Development Key Consumer Takeaways • Bowl Appetit compares unfavorably on three of four key attributes • Consumers receptive to “wet” pasta option • Must improve perceptions of taste • Convenience for home and work use are not the same

34. Concept Development

35. Concept Development Targeting Unmet Consumer Needs - Faster prep time - Utensil included - Self-contained meal • - Wet noodles • - Sauces included • - Greater variety Convenience Quality/Taste

36. Concept Development Introduction of New Brand • Create new sub-brand and image to target “at work” segment • Leverage strength of existing GM brand equity (such as Betty Crocker) • A focus on “on the go” convenience may jeopardize home use if introduced under Bowl Appetit brand • Possibility of transferring wet noodle technology to “at home” Bowl Appetit brand

37. Concept Development Concept #1 – Flavor Bowls • Bowl of wet pasta or rice or dry potatoes is packaged together with a seasoned sauce (i.e. marinara, meat sauce, cheese sauce, chicken in teriyaki sauce, gravy) • Add seasoned sauce to the bowl & heat • Included utensil will add convenience • The sauce and larger portion size will enhance quality and hunger satisfaction • Improved graphic design of the product will signal convenience and quality

38. Flavor Bowl Mock-up • Bowl would contain noodle package and seasoned sauce

39. Concept Development Concept #2 – Flavor Meals • A three-section bowl includes a seasoned sauce, wet pasta/rice or dry potatoes, and dry vegetable product • Sauce is a hearty blend of spices, vegetables and seasoning • Empty pouch contents, add water to vegetable & heat • Included utensil will add convenience • The hearty sauce and larger portion size will enhance quality and hunger satisfaction • Improve the graphic design of the product to promote convenience and quality

40. Concept Development Value Proposition • Develop the first shelf-stable products that match the taste requirements of white collar workers, while providing the speed & convenience demanded by a growing portion of this group

41. Concept Development Unique Selling & Value Proposition • Complete understanding of competitive landscape • Provide product that consumers say they need, not one that the company thinks they need • Ensure that the product is truly convenient • Ensure that the product truly tastes good • First-to-market advantage • Priced competitively with respect to quality of convenience and taste

42. Concept Development Switching Logic • At Work Preparers • Consumers who prepare frozen food or soup/noodles at work (easiest target) • Lunch Packers • Consumers who require speed and convenience, but have been unable to find products with desired quality/taste • Restaurant Goers • Consumers who desire speed and convenience, but go out to lunch because they require better quality/taste (most challenging target)

43. Concept Development Promotion Strategy • Free samples in urban areas & offices to increase “word of mouth” advertising • Celebrity chef spokesperson to promote its convenience and quality taste • Money back guarantee to encourage first-time buyers to purchase the product • Billboard ads on subways and buses to target the busy white-collar professional • Trade promotions (e.g. end-of-aisle displays) during the product’s introduction phase

44. Concept Development Promotion Results • Targets busy white-collar professional • Promotes themes of convenience and quality taste • Encourages trial • Achieves reach and distribution • Builds repeat purchase and loyalty • Increases “word of mouth” advertising

45. Concept Development Distribution Strategy • Rank of importance: • [1] Supermarkets • [2] Mass merchandisers (multi-pack) • [3] Drug and convenience stores • Educate the grocer of industry “best practices” • Convince grocers to introduce a “prepared food” aisle (e.g. “Convenience Aisle”) to improve convenience for the shopper • Leverage supplier power • Secondary, utilize GM Foodservice’s advantages to bring product to targeted customer’s environment: • Corporate cafeterias and vending machines

46. Concept Development Distribution Results • Own new “Prepared Food” aisle • Achievement of favorable shelf space • Strengthened customer relationship • First-mover advantage • Increased profits for customers (stores) • Potential unique reach: cafeterias and vending

47. Concept Development Pricing Strategy • Position the product as the premium shelf-stable product in terms of quality, convenience and portion size • Set selling price higher than Bowl Appétit! • Position the product as a convenient and less expensive alternative to frozen lunches with minimal difference in quality of taste • Set the selling price slightly lower than the floor price for frozen foods. Target Price $2.69

48. Concept Development Pricing Results • Not “caught in the middle” • Charge for value: convenience & taste • No exact competition • Premium for brand value • Higher margins for customers and GM

49. Concept Development Concept Fit with General Mills • Continue to leverage Betty Crocker brand • Current Bowl Appétit! serves a base for new product (brand name, bowl concept, etc.) • Consistent with existing consumers and distribution channels • Leverage marketing experience/expertise • Consistent with current offerings • Leverage manufacturing experience/expertise • Utilize Foodservice to enter unique channels

50. Concept Development Potential Concept Limitations • Technology • No similar product currently being manufactured by General Mills • According to GM, patents for technology are readily available • Operations • If expertise is unavailable in house, GM can and does outsource certain manufacturing processes