[Client] Global Segmentation by RI

[Client] Global Segmentation

Research International

April 2003

2

Our Objective is to deliver new insight to [Client] by

Establishing the need, occasion and people variables that

drive drink category choice

Delivering an understanding of how the needs vary across

countries

where are they most developed / relevant today?

where are they emerging and likely to be key to success

tomorrow?

Identifying at a country level (to reflect the different levels of

development by country) which categories best deliver against

each of the Need-states

Highlighting the local country cells we believe will be most

attractive to [Client] for future targeting

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Taking previous research to the next level

Within previous research we explored important determinants

of drink category choice, as well as key consumption occasion

characteristics and target demographics

Our key criteria in revisiting the analysis are

To develop a global segmentation that gives a deeper

understanding of the drivers of drink category choice

while

Keeping the solution as simple and clear as possible

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[Client] Global Issues

[drink type] shares are being squeezed by growth in functional

beverages and becoming increasingly reliant on heavy users

How can we protect and develop this significant category?

[drink type] is a well developed market where the opportunity is to

grow share of throat by increasing consumption and, in select markets,

stealing share

What are the key opportunity Need-states?

[drink type] categories are big global opportunities but there are major

differences across markets

How can we consider these categories globally?

Strategically, how can these be positioned to maximize the opportunity

for both?

The [drink type] category is small but growing, and shows signs of

increased competitive activity and NPD

How can these drinks be positioned for maximum advantage?

Where are the strongest opportunities for [Client] growth in the category?

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[Client] Global Issues (2)

[drink type] are very small but also growing

Do they satisfy the same or different needs than [drink type]?

Are there noteworthy opportunities for new products?

The [drink type] category is driven by success in a few key countries,

but there is no clear global picture

Can we understand why?

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Overview

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Developing the CELLULAR framework

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Our segmentation approach

This approach focuses on developing a segmentation which explains

and understands relevant category behavior, i.e. drink choice

We recognize that people’s needs may change from one

consumption occasion to the next

We recognize that the same need can lead to different drink choice

for different people or the same people on different occasions

Drink Choice is Not One-dimensional

Therefore, to really understand what is driving drink category choice,

we must consider who has what set of needs in what occasion

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Approach

The CELLULAR framework is developed to help understand

what determines category relevant behaviour – in this case

what drives drinks choice

In deciding on the distinct need-states, we conduct statistical

analyses to ensure the need-states are associated with

different drinks choice (using CHAID and chi-square)

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Approach

The same is true for both the other dimensions of the

CELLULAR structure

From the following occasion variables we were able to identify

a smaller number of dimensions that account for drinks choice (using CHAID and chi-square)

Activity when drink was consumed

Time of day

Who the person was with when he/she consumed drink

Where the person was when he/she consumed drink

What the drink was consumed with (on its own, snack, meal etc.)

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Approach

The same process was followed for our person (socio-

demographic) variables

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Using this statistical approach we identified the most

discriminating splits within the three dimensions of our

CELLULAR segmentation

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Who

Occasion

Need-mode

1 = 18-34

2 = 35+

1 = Need-state 1

2 = Need-state 2

3 = Need-state 3

4 = Need-state 4

5 = Need-state 5

6 = Need-state 6

7 = Need-state 7

1 = Alone, no meal

2 = With friends, no meal

3 = Breakfast

4 = Lunch

5 = Evening meal

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Three Dimensional Segmentation Solution Criteria

(but we can analyze the data using any or all dimensions)

Who - what are the “people”

variables that influence category behavior

Occasions -

Aspects of the occasion

that influence category behavior

Needs - What are the

consumer’s needs

when making the

consumption choice

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Key Need-states

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What is a Need-state?

A Need-state is a frame of mind

Need-states are strongly influenced by our specific needs in a

given set of circumstances (an occasion)

We change our Need-state in different circumstances to meet

different needs

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The Global Drink Need-state landscape

1

3

5

6

Need-state 5

Need-state 2

Need-state1

Need-state 6

7

Need-state 4

Need state 7

Need-state 3

Refreshes me

Is not bad for me

Is fashionable

Revitalises me

Satisfies my thirst

Is a change

It combats dehydration

Is a pick-me-up

Is a good alternative to alcohol

Sociable drink

Is becoming acceptable

Quenches thirst

Is good for me

Is a treat

Has few additives

Is organic

Is sugar-free

Is sweet Contains vitamins

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Global Need-state share of occasions studied*

9%9%

22%

7%25%

16%

12%

Need-state 1 Need-state 2 Need-state 3 Need-state 4

Need-state 5 Need-state 6 Need-state 7

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Water CSDs

RTD Sports

Energy

Cola

Lemon-Lime

Orange

Key categories on the Need-state landscape

100% Juice

Juice

Drinks

Refreshes me

Is not bad for me

Is fashionable

Revitalises me

Satisfies my thirst

Is a change

It combats dehydration

Is a pick-me-up

Is a good alternative to alcohol

Sociable drink Is becoming acceptable

Quenches thirst

Is good for me

Is a treat

Has few additives

Is organic

Is sugar-free

Is sweet Contains vitamins

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These are the basic needs that define all LRB categories

Needstate 1 - Need-state profile mean scores

8.7

8.4

8.3

8.1

7.9

6.1

5.8

5.7

3.5

3.3

Quenches thirst

Refreshes me

Combats dehydration

Is a treat

Is a pick-me-up

Revitalises me

Is good for me

Is sugar-free

Is a good alternative

to alcohol

Is organic

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Because these needs are common to all drinks they are not

highly differentiating Need-state 1 - Need-state profile

jeremyh@hhclredcell.com

It combats

dehydration

Refreshes me

Is a treat

Is not bad for me

Contains caffeine

Is a good alternative

to alcohol

Quenches my thirst

Is low in calories

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Need-state Bubble Map – Interpretation (1)

Relative Category Share

Within each Need-state, we can look at the relative share of

each drink category versus share of the category at a total

study level

This is shown as a % difference

A positive score (to the right of the x-axis) means the category

has greater share in this need state versus average

A negative score (to the left of the x-axis) means the category has

a smaller share in this need state versus average

The y axis shows the category image profile against the key

needs of the segment – above the horizontal line indicates a

better match against these needs than against the other need-

states

The size of the bubble is the actual share of penetration in that

need-state

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Juice Drink

Bottled Water

Sports Drink

Energy Drink

RTD Iced Tea

Cola

Flavored CSD

100% Juice

Relative Share of Category In This Need-State Versus Average (All Need-States)

-30.0 -25.0 -20.0 -15.0 -10.0 -5.0 0.0 5.0 10.0 15.0 20.0

RTD Ice Tea has a good match with the needstate, but relative less

penetration – potential growth opportunity

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% Of Occasions

In This Need-

State

Index Vs. Total

Need-States

Morning / No Meal 17% 96

Breakfast 4% 70

Lunch / Dinner 17% 82

PM/No Meal… 62% 145

Passive 37% 74

Active 63% 130

100%

Occasion Distribution Within The Need-State

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Summary of Key Attributes, Categories, and Occasions for

Needstate 1

Need State 1

Key Benefits Sweet

Nutrients

Energy

Tastes Good

NOT… Replenish

Improves mood

Relaxes

Indulgent

Key Categories Energy Drinks

Juice Drinks

Minor Categories Flavored CSD

Juice 100%

Sports Drinks

Occasions Breakfast

Active/Passive Active

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How the Need-state Landscape

changes across countries

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Needs State Segments within Country

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Brazil Italy Saudi S. Africa Thailand Poland Malaysia UK France Total

Needstate 7

Needstate 6

Needstate 5

Needstate 4

Needstate 3

Needstate 2

Needstate 1

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Cellular Opportunity Analysis

GLOBAL VIEW

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Exploring the CELLs

Need-states only tell part of the story

People & Occasions are also key…

Next stage is to identify and explore key CELLs

In understanding the key dimensions that determine drink

choice, we developed a framework with 70 marketing cells

(Age x Occasion x Need-state)

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Key CELLs in terms of GLOBAL category opportunity -

Top 20 CELLs account for >70% of global occasions

Cell Share of

Occasions

Who When Need-state

225 (6.0%) 35+ With friends/No Meal Needstate 5

213 (5.9%) 18-34 Alone/No meal Needstate 3

125 (5.2%) 18-34 With friends/No Meal Needstate 5

111 (3.8%) 18-34 Alone/No meal Needstate 1

215 (3.5%) 35+ Alone/No meal Needstate 5

153 (3.1%) 18-34 Dinner Needstate 3

247 (2.7%) 35+ Lunch Needstate 7

241 (2.7%) 35+ Lunch Needstate 1

135 (2.6%) 18-34 Breakfast Needstate 5

153 (2.6%) 18-34 Dinner Needstate 3

Clearly, there is significant global opportunity for Needstate 5/ non-meal

occasions.

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Exploring the CELLs

In diverse markets with different category and brand

penetration, it is more meaningful to explore cells at a country

level

We identify the local country cells we believe will be most

attractive to [client] for future targeting

The following charts profile key opportunity cells in BRAZIL

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Cellular Opportunity Analysis

BRAZIL

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XXXX categories are not yet developed in Brazil

Population 176,029,560

0-14 years: 28% (male 25,140,954; female 24,199,276)

15-64 years: 66.4% (male 57,424,151; female 59,409,928)

65 years and over: 5.6% (male 3,992,017; female 5,863,234) (2002 est.)

LRBs – 26% share of throat

CSDs – 86% of LRBs

GDP - per capita:

purchasing power parity - $7,400 (2000 est.)

Population below poverty line:

22% (1998 est.)

Inflation rate (consumer prices):

7.7% (2001) (2001)

Household income or

consumption by percentage share:

lowest 10%: 1%

highest 10%: 47% (1997) (1997)

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[client] Issues - Brazil

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Need-States in Brazil

The most prevalent Need-States in Brazil are:

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xxxxxxxxxxxx

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Overall, Need-state distribution in Brazil is similar to the

average across all countries studied, with these

exceptions:

More Need-state 1

But not the highest (S.Africa)

Less Need-state 2

But not the lowest (UK and Malaysia)

Slightly less Need-state 6

But not the lowest (China)

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Needs States by Category in Brazil

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Brazil

Total

100%

Juice Juice

Drink

Energy

Drink RTD

Iced Tea

CSD Cola Flavored

CSD

Sports

Drink All LRBs/

Countries

Needstate 7

Needstate 6

Needstate 5

Needstate 4

Needstate 3

Needstate 2

Needstate 1

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Profile of cell 225

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CELL 225 – differentiating needs

Is indulgent

Improves my mood –

how I am feeling

Provides specific

nutrients/vitamins/flui

ds

Contains beneficial

additives

Good to drink in

company/socially

Is fun to drink

Mixes well with

alcoholic beverages

It has caffeine

Is sweet

Relaxes me

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Single

65%

Married

31%

Other

4%

CELL 225

2

8

24

27

15

14

3

4

2

1

2

3

4

5

6

7

8

11

male

65%

female

35%

Gender

Marital Status

Children

43%

No

children

57%

Have children under 18

in household

Household Size (Mean = 4.3)

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49

10

7

1

<900

901-1,800

1,801-2,700

2,701-3,600

3,601-4,500

Monthly Household Income (Mean = 1,345)

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Top 5 brands drunk in Cell 225

58%

6%

6%

7%

7%

16%Brand A Brand B

Brand C Brand D

Brand E Other

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