Rick Steinbrenner - The Global Brand Guy - Consolidated Business Case Studies

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Consumer Package Goods Consumer Durables

2060 Queensbury DriveAcworth, GA [email protected]

Rick SteinbrennerThe Global “Brand Guy”The Global “Brand Guy” Business Case Studies

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Rick SteinbrennerRick SteinbrennerGlobal Consumer Brand & Product Marketer

Profit & Loss Responsibility, New Product Development, Marketing CommunicationsConsumer Package Goods; Consumer Durables, B2B Industrials

Consumer focused brand marketer driving business-building initiatives & new product innovations; delivering breakthrough results for challenged global brands.

Returns profitability for declining consumer businesses in commoditized categories. Increased operating income/EBITDA by $25MM.

Discovers unique brand marketing communications leading to increased brand equity and sales. Identified and launched 17 TV commercials/infomercials/QVC, print, digital.

Innovate, patent and market new consumer products from inception through launch - broadening market penetration - marrying consumer insights & new functional technologies.

Developed and launched 20 new products generating over $200MM in sales.

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Case Studies Table Of Contents

Case Study Business Slide #

Developing a $30MM business from zero & turning around a consumer business

Black & Decker’s Garment Care Business 4

Developing a brand new product category in household cleaningTools

Black & Decker’s Cleaning Business 11

Introducing patentable technologies in commoditized categories;assisting a business turnaround

Remington’s Women’s Haircare Business 17

Business expansion through unlocking your brand equity Quickie Manufacturing 22

How to move beyond your core business Tenneco/Monroe Auto Parts 26

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Developing A $30MM Business From Zero& Turning Around A Consumer Business

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Garment Care Business Situation

Business and profit erosion: $140MM to $80MM topline sales; operating income from +$15MM to losing cumulatively -$13MM in 1993-5.

Market share drop from 50% to 30% with Hamilton Beach & Rowenta taking the most of the share.

Premium iron product design/performance lapped by competition and over 20 years old.

Failed on four other occasions to develop a successful premium iron product.

Iron consumer purchase behavior not well understood; Previous research results were focused on entire market vs. understand potential segments.

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There’s a BIG difference between what consumers say and how they think

“Who I Am”

“What ISay”

“How IAct”

“What IFeel”

“How I Think”

High

HighLow

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Consumer Behavior Understanding

Demographics and other traditional segmentation methods

Product usage via informal surveys and other qualitative methods

Observing actual usage behaviors

In-depth discussionson emotions/attitudes

Consumer values viacluster analysis

To substantially impact market share one must need to move the consumer understanding chain through quantitative analysis focused on consumer values.

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Garment Care Actions

Uninvolved/Low End Ironers Working couples on the go Time pressed Hate ironing

Appearance Driven/High End Ironers Family’s appearance is key “One Pass” ironing Likes to iron

ATTITUDINAL CLUSTERS “NEED GAPS” IRON FEATURES

PerformanceMade Simple

ProfessionalPressingResults

Lightweight Sure steam system Auto-clean valve

Maximum steam performance Superior glidability In-use comfort

Instead of focusing on ALL iron users, we learned consumer attitudes/habits about ironing drove usage/purchase behavior

Key learning: appearance driven users were the heavy users – 20% of users, but 40% of ironing activity (Uninvolved ironers were 60% of users, but only accounted for 40% of ironing activity)

This study proved consumer attitudes can drive purchase behavior vs. just what consumers say or do.

Source: 1995 B&D A&U Study

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This was how we communicated our new product line strategies to the trade/consumers

Team obtained $18MM in capital to re-tool and launch this new product line strategy


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Maximum Steam Performance:Maximum Steam Performance:No other premium iron steams more

Professional Pressing Results at Home - just like a dry cleaner!!Professional Pressing Results at Home - just like a dry cleaner!!

Superior Non-Stick Glide:Superior Non-Stick Glide:New “space age” soleplate coating

Comfortably Designed:Comfortably Designed:Comfort Grips & Unique Control Design

(New feature for the category)


ProFinish had 21 utility and design patents, the first iron to launch “comfort grips” into the market

Voted a Consumer Digest “best buy” in 1998, achieved 100% distribution in all retail channels

Developed and Launched New Premium Iron in the >$30 price point segment

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ProFinish premium irons became a $30MM franchise from zero. Exceeded all expectations and paid out original capital investment.

Total Garment Care was “right-sized” in 1998 to $90MM with $7MM of operating income – a $20MM operating income swing.

B&D total iron share moved up from 30% to ~40%

Eliminated/consolidated over 60 sku’s enhancing product cost and working capital efficiencies.

Today, Garment Care is a $100MM business for Spectrum Brands. (the subsequent owner of Garment Care after B&D divestiture/Applica).

The consumer segmentation study is still quoted in trade publications as how consumer really buy irons.

Garment Care Results

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Developing A Brand New Product CategoryIn Household Cleaning Tools

“The Buster” Family Of Cleaning ToolsDustbuster, Scumbuster, Floorbuster

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Black & Decker invented the Dustbuster franchise in 1979.

Dustbusters had eroded from $100M to only $35MM by 1996.

Handheld vac competition – (Royal, Hoover, Eureka, China imports) was mainly responsible.

Moreover, there had not been any real innovation in handheld vacs for years. i.e. corded or cordless , amps and accessories.

Strategic Imperatives: Re-vitalize Dustbusters Expand into new “non-served” adjacent product categories exploiting “need gaps”.

Cleaning Tools Business Situation

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Consumer lifestyle shifts were driving changes in traditional household cleaning behaviors.

Key Consumer Trends:Key Consumer Trends:

Help consumers clean faster & better with less time & effort

Speed Bumps

Speed Bumps

Cleaning Business Actions

Working parents & single parent householdsWorking parents & single parent households Time constraintsTime constraints Casual living attitudes & priorities - “I can live with some dirtCasual living attitudes & priorities - “I can live with some dirt””

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Consumer Household Cleaning Tasks/Markets

VacuumVacuum Manual Wet MopsManual Wet Mops

Sweep/Dry MopSweep/Dry Mop

DustingDusting

Wet CleanWet Clean

Upholstered furniture Wall-to-wall carpeting Area rugs

Major/small kitchen appliances Heater, radiator Window coverings Woodwork Electronic equipment Light fixtures/ceiling fans

Hardwood floors Tile floors Linoleum Entry way/ mud room

Major/small kitchen appliances Sink, toilet, tub& tile walls Windows Kitchen countertops Glass/wood tops Shower doors Sliding glass doors

Fireplace/hearth Hardwood floors Tile floors Cement floors

OutdoorOutdoor

Deck and patio Outdoor furniture BBQ Siding Gutters Fences Driveways/sidewalks

Source: 1994 B&D Cleaning A&U Study


These tasks were already beingaddressed by current products

Opportunities existed to “Invent& Market” In Adjacent Categories

Traditional Served Cleaning Markets Unserved, Adjacent Markets

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Cleaning Category Consumer Segmentation

Consumer attitudinal segmentation showed both an emotional and rational need for new cleaning solutions beyond handheld vacs.

Convenient hard surface floor and wet cleaning needs were not being addressed.Source: 1994 Cleaning A&U Study

Sweeping/Dry Mop

Sweeping/Dry Mop

Corded/CordlessHandheld Vacs

Corded/CordlessHandheld Vacs

Wet CleaningTools

Wet CleaningTools

Dirt/Messes are important to clean up - emotional

Th

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Anti-CleanersAnti-CleanersCleaningCleaningFanaticsFanatics

TolerantTolerantCleanersCleaners

DiligentDiligentCleanersCleaners


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Scumbuster invented the “wet cleaning” category – $60MM business – single largest $ SKU in Black & Decker’s 100 year history.

Unique product design/manufacturing processresulted in a waterproof product up to 3 feet in water – competition couldn’t duplicate it. First to market.

Scumbuster was the first Black & Deckerproduct on QVC – result $1MM of sales in one day

Floorbuster was the first cordless stick vac usingthe patented versapack rechargeable battery technologyand new bagless technologies before Dyson vacs.- $5MM business

Achieved highest profitability return in historyof the business - $100MM with >20% ROS.

Cleaning Business Results

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Women’s Haircare Business

Introducing Patentable Technologies Into Commoditized Categories;

Assisting A Business Turnaround

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Background: Victor Kiam of Remington bought the Clairol women’s haircare business in the mid 90’s (without the Clairol brand)

Haircare business eroded from ~$40MM to <$25MM (1998) (post-Clairol acquisition)

Market ranking: # 5 player - #5 player in hair dryers, #2 player in hot rollers, no presence at all in curling irons (source: NPD).

Conair and Helen of Troy (#1 and #2) had 100% distribution due to full line of haircare products and strong brand equity.

Remington products were essentially “me-too” with the exception of some key sku’s in Hot Rollers. Could only compete on price.

Consumer understanding of haircare purchase behavior not well understood – by Remington or the competition.

Women’s Haircare Business Situation

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Haircare Business Actions

Consumer Segment

Frustrated/Skeptical Users

46% of Users

Appearance Driven Users

29% of Users

Self-Reliant Users

25% of Users

Consumer Profile

Problem hair Not confident about getting salon-style results Haircare appliances rarely “work” Willing to get it right, but easily frustrated

Hair enthusiast Invests lots of time styling Will pay premiums for new ideas/solutions Changes hair style to match latest trends

Uninvolved – low fuss Low maintenance styling No time for styling Looking for good value Doesn’t change hair style much

Positioning Tools for Problem Hair Tools for Today’s Hair Styles

Tools for Style N’ Go Hair

Salon-style resultsdespite problem hair

Professional salonresults at home

Get fast stylesConsumerBenefit:

Haircare Market Segmentation

Source: 2000 Haircare A&U Study

Women had differing attitudes about their hair and how much time/effort they were willing to spend to get the results they wanted.

Most competitive products focused on appearance driven users – only1/3 of the market.

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Women’s Haircare Business Actions

Consumer Problem: Conventional 1875W dryers blew hair everywhere leaving “problem hair”. Result:

Takes a much longer time to dry Potentially damages hair due to overheating

The Vortex Jet Speed Dryer solved this problem: Patented cyclonic airflow technology lifted up hair at the roots and dried it from the “inside-out” vs. blowing from the “outside-in”. Result:

Dried hair in ½ the time Made hair more manageable Protected hair from overheating/damage

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The Vortex became the #1 hair dryer for two years in a row in the single largest category in Haircare (over 400 SKU’s).

The Vortex forced the exit of Applica, Inc. from Haircare.

Doubled sales/profits (15% ROS, 10% $ share) to $45M restored Remington to Clairol pre-acquisition sales levels.

Moved overall Remington haircare share from #5 in the category to #3.

Haircare study also resulted in new insights in other new products and merchandising.

New planogram consistent with study was tested at Wal-Mart for potentialrollout nationwide.

Women’s Haircare Business Results

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Business Expansion Through UnlockingBrand Equity

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Quickie Business Situation Quickie - #1 manufacturer of hand cleaning tools* - invented the butterfly

sponge mop and other mop/broom/brush innovations.

* Source: IRI 52 weeks ending 4/20/’03

However, other companies encroaching on Quickie’s core business – cannibalizing core butterfly sponge mop sales -33% vs. year ago.

Orange Glo

Hand cleaning tools – including Quickie - started to take on “commodity” status – retailers driving down retail and acquisition pricing.

Floor Mate

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Quickie Business Actions Need to expand scope of business beyond hand cleaning tools – move into more “integrated” cleaning solutions.

Invent new product innovation and technology – meeting consumer “needs” not addressed by competition.

Move into higher retail price points beyond $20-$50 but not avoid traditional corded vacs and sweepers

Identify various combinations ofhand tools, chemicals and powerInside the “Cleaning Triangle”

Hand Tools

CleaningChemicals

Electrical/Hydro Power

Strategy:Strategy:surround the consumersurround the consumerwith “total” cleaningwith “total” cleaningsolutionssolutions

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Launched JetSweep - the first spray water powred push broom that swept dirt away in one pass - 15,000 retail outlets distribution, $1.2MM in year one sales.

Developed Quickie Quick Mop with Spic and Span Household Cleaner – first quick cleaning mop with scrubber feature plus branded disinfectant cleaner - $11MM annualized opportunity.

Developed a brand new cleaning tool line exclusively for Target – a major distribution void. Result 25 store test in Q2 ’03, Annualized opportunity - $8MM.

Quickie Business Results

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How To Move Beyond Your Core Business

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Tenneco NAAM Business Situation

1. Exhaust systems & shocks/struts have relatively low service interval rates: #3/#6 rankSource: AAIA

1) Engine tune-ups – 33.5%

2) Brake jobs – 21.7%

3) Exhaust system job – 6.6%

4) Radiator/Cooling Flush – 5.1%

5) Ignition Wire – 4.6%

6) Shocks & Struts – 3.6%

7) Fuel Injection – 2.2%

2. Shock/Strut market stagnant/declining due to better quality original equipment driving lower service replacement rates for aftermarket shocks.Source: IMR

3. Exhaust market declining due to better quality original equipment – i.e. aluminum to stainless steel exhaust systems.Source: IMR

North American Aftermarket Business Profile:• Sales: ~$500MM• Core businesses: Ride Control & Emission Control - #1 brands • Brands: Monroe Shocks & Struts, Walker Exhaust• 15% of total corporate revenue, balance – original equipment parts

3.3%

2.8%2.9%

2.5%2.6%

2.4%

2.6%

2.4%2.2%

2.1%2.0%

1.8%1.7%

1.6%

1.4%1.3%

1.2%

1.0% 1.0%0.9%

1.2%1.2% 1.2%

1.3%1.4%

1.6%

1.8%

2.1%

0.0%

1.0%

2.0%

3.0%

4.0%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Shock Absorbers (actual) Struts (actual)

6.06.6

7.48.0

9.210.7

11.8

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6.0

8.0

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Tenneco NAAM Business Actions #1

Dirt and Mud have a hard time sticking – for a clean/shine that

really last Black waxes highly rated by Consumer Reports Black Waxes were “best sellers” at key customers Ion Car Polish – next generation polish – repels dirt/mud

Non-greasy shine Unique 2-sided wipe

Tire Shine – No sling vs. competition Wheel Cleaner – Spray On, Hose Off “Best Sellers” at key customers

Protect and coats critical engine

parts for better gas mileage

Fuel Cleaners help improve fuel flow efficiency Engine Treatment help protect critical engine parts

Spray on, wipe off Formula similar to wheel clr. Carpet Clr. was best seller

Spot Free Shine Helps keep car cleaner longer “Best Sellers” at key customers

Licensed Product Opportunity with DuPont & Motorsports DuPont wanted a new licensee to help re-enter Car Care market adjacent to their paint line. NASCAR “Free” access to Jeff Gordon & 24 Car as an endorser in marketing communications Tenneco had independently developed new “best in class” formulations in a water-based format Identified/developed new “wear shield” friction modifier for performance chemical products

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Brakes Parts – attractive category #2 service item behind engine tune-ups Very large/growing market – Friction: $1.1B++ All brake components (i.e. rotors, calipers) - $2.2BSource: IMR/Frost & Sullivan

Market not heavily concentrated – top 3 brands only account for 60% of sales

Top 3 brands at the time were weak: - Wagner: owned by Federal Mogul: No innovation - Raybestos: Sold by Dana to Affinia – restructuring - Bendix: Owned by Honeywell – tried to sell business to Wagner. No investment.

Monroe equity extension beyond Shocks - logical and easy to understand

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Brakes Pads/Shoes

64 62

5761 62

65 63 6263

$938 $939$865

$950 $969$1,029

$1,130$1,123$1,126

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New Category Opportunity: Brakes

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PREMIUM PRICE POINT

Part Numbers: 642

Applications: Mid 60’s - 2010; Pass Car, Lt. Truck SUV, Med-Duty, some heavy duty

Formulation Type: Semi Metallic

Attributes: Hardware in box (e.g. Wire Wear Sensors, Noise Reduction Kits, Rubber coated shims, Lube)

Part Numbers: 391

Applications: Mid 60’s - 2010; Pass Car, Lt. Truck, SUV

Formulation Type: Ceramic/Non Asbestos Organic blends

Attributes: Hardware in box (e.g. Wire Wear Sensors, Noise Reduction Kits, Rubber coated shims, Lube)

Monroe premium brake pads were first OE replacement application - engineered product – including all the hardware in box to do job right

Post Launch - Brake Packaging Structure & Line Graphic Change

Before: After:

1) Original Packaging Design: 1000+ SKU’s spread among two friction types – Semi Metallic (DX) & Ceramics (CX)

Product packed in very expensive and non-customer friendly vacuum form “skin tight” configuration

2) Packout & Design Changes: Shifted to easy to remove and simpler shrink wrap design

Consolidated dual friction type design into one product line look – similar to competitive packaging designs

Savings: ~$300M/yr.


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Tenneco NAAM Business ResultsDuPont Car Care: Introduced 17 new products that generated over $5MM+ in annualized sales.

Obtained distribution in 15,000+ retail outlets: Mass Merchants/Home Centers & Automotive retailers.

Sold Tenneco/DuPont into brand new customers: Wal-Mart, Wal-Mart-Mexico, Lowe’s, Target and Auto-Zone.

Spray Wax, Tire Shine & Wheel Cleaner – top 10 best selling SKU’s in NPD; Wax received #5 rating out of 28 total waxes tested in 6/’06 Consumer Reports test.

Monroe Brakes: Achieved $20MM in sales with 100+ new customers against entrenched competitors.

Developed “best practice” new product development process resulting in $500M in new brake pad SKU’s including a new brake shoe line in just two years.

Grew margins and supply chain effectiveness – in house manufacturing program vs. third party suppliers. Reduced product cost by 25% and increased margin % by +8.3 ppts.