5 Year Strategic Plan for Growth at Progresso Soup

Progressing Progresso:5 Year Consumer-Focused Strategy for Market LeadershipTeam C6:Margaret GentileSatoko HiraiChristopher PowersMatthew RedmondAlex SirkinSteven Wang

December 17, 2008

2

•Executive Summary & Overview

•Online Community

•Product Line Expansion

•The Progresso SoupServer

•Advertising

•Strategic Pricing

•Implementation

•Conclusion

Agenda

3

•Executive Summary & Overview

•O n l i n e C o m m u n i t y

•P r o d u c t L i n e E x p a n s i o n

•T h e P r o g r e s s o S o u p S e r v e r

•A d v e r t i s i n g

•S t r a t e g i c P r i c i n g

•I m p l e m e n t a t i o n

•C o n c l u s i o n

Agenda

Executive Summary4

Implementation of our recommendations will increase our Net Present Value 19% to $2.7 billion

Implementation Process5

Strategy1

Establish a Sense of Urgency2

• Opportunity to gain market share and connect with consumers

Planning for and Creating Short-term Wins2

• Implementation of Balanced Scorecard

Structure1

Forming a Powerful Guiding Coalition2

• Executive buy-in to vision and opportunity

Empowering Others to Act on the Vision2

• Two-way communication with customers

Shared Values1

Creating a Vision2

• Customer-centric thinking and action

Institutionalizing New Approaches2

• Co-branding work with other GIS brands

Systems1

Communicating the vision2

• Use of online community

Improvements and Producing More Change2

• Enhancements to online community

1 Johnson, Leonard. “A Note on the 7-S Model”2 Kotter, John P. “Leading Change: Why Transformation Efforts Fail”

Industry Overview6

Campbell's; 49%

Progresso; 35%

Heal-thy Choice; 5%

Private

La-bel; 5%

Other; 7%

2

Progresso is a strong #2 competitor in $1.6 B Ready-to-Serve (RTS) wet soup industry1

Low Sodium11%

Light12%

Veg-etable Clas-sics19%

Rich and Hearty15%

Traditional43%

Progresso Soup Sales byProduct Line3

4 weeks ending 12/01/07

RTS Sales by Brand2

1 Calculated with equivalent unit data from AC Nielsen 2 Mintel Report: Soups – US – 20083 JP Morgan Analyst Report from Jan 08, 2008

• Partnerships/first mover on trends

• Product innovation• Good turn-over on booked

sales1

7

• Build brand preference• Continue exploring

healthy eating options targeted towards women

• Targeted ethnic-based marketing programs

Strengths Weaknesses• Brand indifference of

consumer− Customers purchase based on:

1. Taste2. Health3. Price4. Brand

Opportunities Threats• Campbell’s push into

healthy offerings through Select Harvest brand (Healthy Request line)2

• Private label growth• Commodities prices and

effects on inventory

1 AC710 Presentation by Six Sigmas on General Mills; GIS: Financial Ratios. investing.businessweek.com2 Campbell’s Select Harvest Website URL: http://www.campbellsoup.com/select.aspx

The Road Behind, The Road Ahead

8

•E x e c u t i v e S u m m a r y & O v e r v i e w

•Online Community







Agenda

9

What Are Our Touch Points?

“Each branding campaign should seek to identify ‘touch points’ — the media or location where it makes the most sense to locate and contact the target consumer.”

Mark AddicksCMO, General Mills1

1 Knowledge@Wharton, November 20, 2008, http://knowledge.wharton.upenn.edu/article.cfm?articleid=2097Emphasis added

Online Community Plan10

• Goal: ▫Engage Progresso consumers in two-way

communication via the launch of an online community

• Action:▫ Introduce integrated marketing▫Provide a space for promoters to celebrate the brand

• Expectation:▫ Increase Net Promoter Score▫Build brand preference

11Importance of Women on RTS Purchases

Diet ProgramsGeneration Z

Decider

ApproverBuyer

Baby BoomersGeneration XGeneration YGeneration Z

12

Integrated Marketing

•Open Brand

•Engage consumers

•Two-way communication

PRODUCT

PACKAGING

CONSUMER

ADVERTISING

CRM

DISTRIBUTION

Chart from Professor Melvyn Menezes‘s Course Materials

13

Engage Promoters

•Small groups of enthusiasts dominate online conversations1

•New community website will include:▫Recipe forum for including Progresso as

part of a home-cooked meal▫Weight-loss community▫Customer feedback on new product

introductions

1 Marketing VOX Magazine

14



•Product Line Expansion






Agenda

15

Progresso Light: Opportunity

“The sharp increase in those claiming to be watching their weight suggests a cultural shift to more awareness of food and relationship to overall health. There is a great opportunity for marketers, food retailers, and restaurants to focus on healthy eating—for the sake of overall health.”1

Mintel – Marketing Health to Women

1 Mintel – Marketing Health to Women – US July 2007Emphasis Added

Progresso Light Product Plan16

• Goal: ▫Expand into the women’s Weight Watchers and self-

designed diet markets

• Action:▫ Increase number of SKUs by 10 each in 2010 and

2011

• Expectation:▫Gain 42% of diet segment by 2013▫Win over early adopters and early majority▫New product lines account for $342 million per year

in additional retail sales

17

Current Diet Demographic Share

Projected Share 2008

Women on Weight Watchers and Self-Designed Diets

13 million1&2

Current Progresso Light Consumers 1.1 million / 7%3

Inno

vato

rs

Early

Adopt

ers

Early

Majo

rity

Progresso Light Adoption CurveCurrent4

1 & 2 Estimated through “Interest in Dieting Slims Down; More Accepting the Extra Pounds,” The Boston Globe & http://factfinder.census.gov/servlet/STTable?_bm=y&-geo_id=01000US&-3 Estimated through Mintel - Soup - US – September 2008 , and 1 & 2 4 Estimated through http://www.quickmba.com/marketing/product/diffusion/

18

Entrance into Early Majority

1 http://www.progressofoods.com2 Findings through primary survey data3 Estimated through http://www.quickmba.com/marketing/product/diffusion/

11Progresso

Light SKUs1

20Light SKUs

introduced by 2011

4:1Meat +

Feature to Vegetable2

$342 M

Anticipated Yearly Sales 2010-2013

Inno

vato

rs

Early

Adopt

ers

Early

Majo

rity

Progresso Light Adoption CurveProjected 20133

19


•C r e a t e a n O n l i n e C o m m u n i t y


•The Progresso SoupServer





Agenda

20

Which Do You Prefer?

Images: Margaret Gentile

SoupServer Plan21

•Goal: ▫Improve relationships with both retailers and

consumers

•Action:▫Introduce SoupServers to 500 stores per

year

•Expectation:▫Increase in sales of 5% in each store that

installs the SoupServers1

1 Campbell’s Comes Out, http://www.strategymag.com/articles/magazine/20060701/biz.html

Campbell’s IQ Maximizer22

• Represents a shift in advertising philosophy

• Makes it easier to keep product organized on shelves1

• Improves shoppers’ perception of the brand▫ 79% of consumers say it

makes shopping for soup easier2

▫ Reduces shopping time from 58 seconds to 8 seconds3

▫ Improves soup sales by 3.5 - 7% in any store in which it is installed4

1 Supermarket Displays '05, http://www.creativemag.com/supermktdisp1105.html2 Forum for Consumer Products and Retail Leadership, Vol. 7, No. 4, http://www.gmabrands.com/awardssurvey/campbellcpgaward.pdf3 Supermarket Displays '05, http://www.creativemag.com/supermktdisp1105.html4 Campbell’s Comes Out, http://www.strategymag.com/articles/magazine/20060701/biz.html5 Image Source Campbell’s Soup Display, http://www.retailpowerhouse.com/gallery/main.php?g2_itemId=673

5

How Progresso Can Compete23

• Contract with outside firm to produce our own plan-o-gram, the SoupServer

• Introduce SoupServers at a rate of 500 stores per year

SKUs

Cost per SoupServer

SKUs per SoupServer

SoupServers per Store

Estimated Cost

2009

74 $501 61 13 $325,000

1The CanSolidator: http://www.shelfreliance.com/product/view/p79#Image: Margaret Gentile

SoupServer in Action24

Images: Margaret Gentile

25





•Advertising




Agenda

Advertising Plan26

•Goal: ▫Persuade customers to buy on brand

•Action:▫Increase 2009 advertising budget to $50

million (20% over 2007) 1

▫Annual 10% increases to budget (2010 – 2013)▫Balance advertising mix

•Expectation:▫Estimated 2009 sales increase $80.3 million

1 Facenda, Vanessa L. "General Mills Outlook 'Healthy' with New Products, Increased Ad Spend." Brandweek, 2/22/2008Primary research by Team Six Sigmas, soup survey conducted October 17 – 25 Soups – US – September 2008, via Mintel

Getting Customers to Buy on Brand27

Purchase Intent/ Consideration

Brand Favorability

-1 1 3 5 7 9 11 13 15

3.5

2.6

2.5

2

6.6

7.1TVOnlineMagazines

1MPA “Accountability II: How the Media Drive Results and Impact Online Success,” p. 24.

•Magazine advertisements are more effective at:▫Building brand favorability▫Increasing purchase intentions

Effect of Medium on CPG Brand Metrics – Average Percentage Point Increase

(Exposed/Controlled)1

Advertising Mix Reallocation28

1Estimated from data by TNSMI Multi-Media Service and Facenda, Vanessa L. "General Mills Outlook 'Healthy' with New Products, Increased Ad Spend." Brandweek, 2/22/2008MPA “Accountability II: How the Media Drive Results and Impact Online Success,” p. 24.

Tele-vision56%

Online22%

Magazine22%

Proposed Reallocation

Tele-vision69%

Online16%

Magazine15%

Current Allocation

•We will rebalance our mix to emphasize▫Magazine advertising▫Online advertising

1

Expected Return on Investment29

1The DMA 2004 Response Report, p. 256.2Estimated using data fromThe DMA 2004 Response Report, p. 256 and MPA “Accountability II: How the Media Drive Results and Impact Online Success,” p. 24.3Estimated using data from TNSMI Multi-Media Service and Facenda, Vanessa L. "General Mills Outlook 'Healthy' with New Products, Increased Ad Spend." Brandweek, 2/22/2008

Medium Budget3 ROI IndexIncrease in

Sales (in $M)

TV1 $28.0 1.0 $28.0

Magazines1 $11.0 3.7 $40.7

Online2 $11.0 1.1 $11.6

Total $50.0 1.6 $80.3

Marketing Mix30

1 “Chef Michael Chiarello,” http://progressofoods.com/?View=CelebrityChef/ChefMichael2 “Semi-homemade Cooking with Sandra Lee,” http://www.foodnetwork.com/3 Websites of respective magazines4 MRI database5 Soup – US -- September 2008, via Mintel6 Commercial Weight Loss Programs – US – November 2005,‖ via Mintel

Position Taste Health

Target Audience Men and Women5 Women Primarily6

Television• Food Network

−Easy Entertaining with Michael Chiarello1

• Food Network−Semi-Homemade with

Sandra Lee2

Magazine 3,4

• Gourmet• Newsweek• Time

• Weight Watcher’s• Self• Shape

InternetCorresponding websites of networks and magazines above

Corresponding websites of networks and magazines above

“All in Good Taste” Campaign31

1 http://www.students.sbc.edu/kitchin04/artandexpression/contemporary%20art.html2 http://avline.abacusline.co.uk/pictures/jpeg/pics/mona.jpgProgresso logos: General Mills website

Taste1,2 Health

32






•Strategic Pricing



Agenda

33

Macro and Micro Pricing Impact

“CPG manufacturers and retailers will at worst successfully weather today’s difficult economic environment. At best, these companies will both reinforce their relationships with shoppers as well as implement price increase strategies that stick.”

- Thom BlischokPresident, Consulting and Innovation

Information Resources, Inc. (IRI)1

1 Blischok, “Successful Pricing Strategies: A Strategic Look Through the Affordability Lens”Emphasis added

Pricing Plan34

•Goal: ▫Build on success of recommendations to achieve

a net increase in prices in a flat-growth industry

•Action:▫2009: Lower average retail price to $1.70/can▫2010-2011: 6% total increase to $1.80/can

•Expectation:▫Increase contribution 3X in conjunction with

other recommendations

2009 Plan35

Realize $20.6 million – 15.4% – increase in profits through strategic pricing1

Price: $1.70Volume: 49 million cansMargin: $20.6 million

1 Data from AC Nielsen used to conduct sensitivity analysis

Going-Forward Plan36

Leverage success of other initiatives to increase prices 6% total to $1.80 and maximize contribution

Year Price Volume1 Contribution Margin

2010 $1.75 95.4 M $41.9 M

2011 $1.80 133.8 M $58.9 M

2012 $1.80 133.8 M $58.9 M

2013 $1.80 133.8 M $58.9 M

1 Data from AC Nielsen used to estimate volume responsiveness

37







•Implementation


Agenda

Timeframe for Execution38

Implementation Process39

Strategy1

Establish a Sense of Urgency2

• Opportunity to gain market share and connect with consumers

Planning for and Creating Short-term Wins2

• Implementation of Balanced Scorecard

Structure1

Forming a Powerful Guiding Coalition2

• Executive buy-in to vision and opportunity

Empowering Others to Act on the Vision2

• Two-way communication with customers

Shared Values1

Creating a Vision2

• Customer-centric thinking and action

Institutionalizing New Approaches2

• Co-branding work with other GIS brands

Systems1

Communicating the vision2

• Use of online community

Improvements and Producing More Change2

• Enhancements to online community

1 Johnson, Leonard. “A Note on the 7-S Model”2 Kotter, John P. “Leading Change: Why Transformation Efforts Fail”

Measuring with the Balanced Scorecard1

40

Area Metric Goal

Financial

ROI on online community

Establish and then increase number of blogger promoters

ROI on advertisingMeet ROI Index of 1.6 or higher

ROI on SoupServersImprove channel relationships and sales 5%

Customer

10% improvement on Net Promoter Score

Build brand equity and increase loyalty

Implementation of customer-requested feature enhancements to online community

Create and foster dialogue with customers and increase utility of community

Internal Processes

Increase revenues from new products

Cross-functional reliance on insights from community and introduction of demanded products

Improve time to introduce new products

Gain first-mover advantage in market and increase perception of responsive brand

Learning & Growth

Quality suggestions per employee

Engage employees in dialogue with customers and increase attentiveness to voice of customer

1 Kaplan and Norton, “Using the Balanced Scorecard as a Strategic Management System”

Competitive Responses41

Recommendation Campbell’s Private LabelProgresso’s

Counter Response

Online Community

Initiative would be viewed as unoriginal

Lacks funding and brand-backing

Continue with strategy

Increased Number of Light SKUs

Expand Select Harvest Healthy Request Line

Lacks funding and resources


SoupServers Legal actionPrepare and align legal resources

Advertising – Women’s Health

May attempt to partner with diet organization


Strategic Pricing

Bottom-line driven strategy of company will inhibit response

Offer lower prices

Leverage community and new product offerings to support increases

42








•Conclusion

Agenda

Conclusion43

•NPV of Progresso soup brand: $2.7 billion− Increase of $454 million, or 19%

•Recommendations are within the capabilities of both General Mills and Progresso to execute successfully

•Performance will be measured regularly using the Balanced Scorecard

Appendix

NPV Analysis45

46

Corporate Social Responsibility1

2

1 http://www.yoplait.com2 http://www.progressofoods.com

Customer Preference and Promotion

47

Brand

Health

Price

Flavor

0% 10% 20% 30% 40% 50% 60%

Criteria by Gender1

All Female Male

Brand

Health

Price

Flavor

0% 10% 20% 30% 40% 50% 60%

Criteria by Age1

All Baby BoomersGeneration X Generation Y

Chunky

Campbell's

Progresso

0% 20% 40% 60% 80% 100%

Promoter PassiveDetractor

• Flavor carries the day in soup selection criteria

• Net Promoter Scores for major labels/brands demonstrate consumer’s “brand agnostic” selection criteria

NPS-57

-62

-85

1Mintel Report: Soups – US -- 2008

Works Cited and Referenced48

AC Nielsen Database - Soup

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