The Way of Shopper Marketing Classified - Internal use 1

Defining Opportunities for the Drug Store Shopper

Info.shoppermarketing@coca-cola.com

Kelly Marr – Group Director, Commercial Strategy NRS, Small Store Channel Strategy & Marketing

DRUG

Agenda

Why the Drug Channel

SHOPPER

BASKET

TRIPS

Agenda

Why the Drug Channel

SHOPPER

BASKET

TRIPS

108Index 12% of HH’s

Source: Spectra March 2011 data

Who is the Drug Channel Shopper?

13% African-

American108 index

31% Age 55+

108 index

107Index 15% of HH’s

Cosmopolitan Center

Struggling Urban Core

55%

45%

Gender

2 Member Households33% 105 index

INTERNAL USE Classified - Internal use

of Drug Shoppers Said They Were Influenced by Marketing

Uniquely, Drug Shoppers Are Most Influenced by In-Store Coupons

55%

IN STORE Drug Value Conv Retail Grocery SC

In-Store Coupon 21% 4% 1% 12% 5% In-Store Advertisement 12% 5% 3% 9% 4% Product display within an aisle 4% 7% 2% 5% 5% Product display at end of aisle 3% 5% 2% 5% 5%

PRICE Drug Value Conv Retail Grocery SC

Temporary Price Reduction 17% 8% 4% 20% 14% Buy 1 get 1 free offer 12% 2% 2% 14% 4% Price comparison 11% 19% 6% 15% 17%

Q37: While you were shopping at [INSERT STORE], please indicate if any of the following influenced one or more of your purchases. (Select all that apply)

AA & Hispanics are making more trips to purchase beverages in smaller channels

% of Beverage Shopping Trips

Total Grocery$2MM+

DrugMass w/o

SuperCentersMass

SuperCentersDollar Stores

All other Channels

Total HH`s 61.4 5.4 5.2 13.6 3.3 11.1

African American HH`s

57.3 6.7 4.7 12.3 5.5 13.5

Hispanic HH`s 59.1 5.4 6.3 12.5 3.2 13.6

Agenda

Why the Drug Channel

SHOPPER

BASKET

TRIPS

Baskets up in all channels but Supercenters & Warehouse Clubs

$97.64

$63.25

$48.21

$41.91

$24.50

$20.27

$14.51

$63.71

$48.14

$41.44

$23.96

$19.48

$98.21

$14.09

Warehouse

Supercenters*

Mass Merch

Grocery

Drug

Conv/Gas

Dollar 20092010

Average $ Basket Ring

**

Source: Nielsen Homescan, excludes gas-only or Rx-only trips

*Includes Kmart, Target & Walmart** Note: Conv/Gas channel behaviors understated because of the high level of gasoline-only buys & purchases of immediate consumables

CVS and Walgreens Pursuing Divergent Strategies, Reflect Core Focus

2011 % Total YOY Chg 2011 % Total YOY Chg 2011 % Total YOY Chg 2011 % Total YOY Chg 2011 % Total YOY ChgHealth Care 2,276 21.3% 271 1,480 15.3% (32) 2,280 23.0% 330 156 4.1% 31 308 2.5% (4) Dry Grocery 2,188 20.5% 698 2,144 22.1% 698 1,913 19.3% 749 389 10.2% 99 1,295 10.5% 230 Personal Care 1,955 18.3% 111 2,480 25.6% 66 2,234 22.5% 285 219 5.7% 66 856 7.0% 44 Household Products 844 7.9% 51 664 6.9% 30 601 6.1% 160 184 4.8% 91 594 4.8% 9 Electronics 547 5.1% 36 379 3.9% (94) 283 2.9% (131) 431 11.3% 149 2,229 18.2% 31 Cosmetics, Fragrance & Bath 457 4.3% 13 677 7.0% (20) 566 5.7% 37 74 1.9% (2) 109 0.9% (5) School & Offi ce Supplies 390 3.7% (10) 196 2.0% (81) 230 2.3% 2 332 8.7% 145 382 3.1% (9) Housewares 342 3.2% (48) 329 3.4% (76) 357 3.6% 8 332 8.7% (25) 1,834 14.9% (34) Hardware 286 2.7% (23) 251 2.6% (5) 215 2.2% 2 30 0.8% 10 230 1.9% 1 Holidays 259 2.4% (84) 126 1.3% (75) 280 2.8% 33 37 1.0% (22) 101 0.8% (24) Grocery Perishable 254 2.4% 33 260 2.7% 75 72 0.7% 35 215 5.6% 46 350 2.9% 67 Toys 252 2.4% - 185 1.9% (53) 158 1.6% 5 577 15.1% 176 1,567 12.8% 280 Apparel 184 1.7% 6 153 1.6% (24) 152 1.5% (4) 203 5.3% (30) 1,442 11.7% (18) Outdoor 97 0.9% (17) 107 1.1% (75) 214 2.2% 22 98 2.6% 37 236 1.9% (5) Pharmacy 68 0.6% 14 33 0.3% (19) 79 0.8% 44 21 0.6% 14 48 0.4% 24 Fresh 62 0.6% 19 - 0.0% (4) 24 0.2% 9 176 4.6% (51) 43 0.4% (36) Home Entertainment 59 0.6% 3 28 0.3% (32) 26 0.3% 14 10 0.3% (32) 18 0.1% (5) Pet Supplies 57 0.5% 17 119 1.2% 15 130 1.3% 55 81 2.1% 22 153 1.2% 10 Sports Equipment 31 0.3% (2) 29 0.3% (13) 25 0.3% 3 87 2.3% 11 190 1.5% (16) Automotive 20 0.2% 10 16 0.2% (9) 21 0.2% 5 19 0.5% (3) 73 0.6% 3 Home Recreation&Fitness 18 0.2% 8 14 0.1% 2 8 0.1% 3 20 0.5% (8) 64 0.5% (2) Tobacco Products 12 0.1% 3 3 0.0% (1) 9 0.1% 8 - 0.0% - - 0.0% - Infant Accessories 6 0.1% 5 11 0.1% 5 35 0.4% 20 30 0.8% 22 109 0.9% (9) Miscellaneous - 0.0% - 1 0.0% 1 - 0.0% - 89 2.3% 77 47 0.4% 39 *Ad Block Count 10,115 94.9% 1,031 9,195 94.9% 442 9,104 91.8% 1,489 3,693 96.9% 813 12,058 98.2% 590 *Shared & Single Ad Block Count 10,664 100.0% 1,114 9,685 100.0% 279 9,912 100.0% 1,694 3,810 100.0% 823 12,278 100.0% 571

CVSWalgreens Rite Aid Walmart Target

Source: Kantar Retail research and analysis, ECRM Marketgate 52 Week Period

Snacks 48%Candy, Gum, Mints 44%

Personal Care 20%

The Drug Shopper is Stopping at CR to Purchase a Beverage for Immediate Consumption

% of Trips with Departments Purchased

The MFS Drug Shopper In that Channel for an Immediate Consumption trip

Source: 2011 Landmark Shopper Study

Value7%

103 index

Immediate Consumption

(6% of Trips)

Beverages 73%Snacks 32%

Candy, Gum, Mints 25%

CR45%

729 index

CVS M+ F

WalgreenM+ F

Rite Aid M+ F

37% 28% 33%

63% 72% 67%

% Mix of Planned vs. Unplanned Beverage Purchases

Unplanned Purchase Bought as Planned

UnplannedBought as Planned

CVS higher IC Beverage Impulse purchases

Over-Index 115Under-Index 85

30a. What are the top products that BROUGHT you to the store? (Select up to 3 items.)31a. What types of products did you BUY at [INSERT STORE] on this occasion? (Select all that apply.)

Color coding reflects over/under index to Drug MFS

101 115 108

98 76 87

Source: 2011 Coca-Cola Landmark Study

DESTINATION & BASKET ITEMS: Candy, Gum, Mints are high impulse items

Q30a. What are the top products that BROUGHT you to the store? (Select up to 3 items). Q31a. What types of products did you BUY at [INSERT STORE] on this occasion? (Select all that apply)

Drug MFS

CVS MFS

WAG MFS

Rite Aid MFS

Personal Care Personal Care Personal Care Personal Care

Health Care Health Care Health Care Health Care

Beauty Care Beauty Care Pharmacy Beauty Care

Pharmacy Pharmacy Beauty Care Candy, Gum, Mints

Candy, Gum, Mints Home Care Candy, Gum, Mints Pharmacy

Home Care Candy, Gum, Mints Snacks Home Care

Snacks Beverages Home Care Snacks

Beverages Snacks Beverages Beverages

Drug MFS

CVS MFS

WAG MFS

Rite Aid MFS

Personal Care Personal Care Personal Care Personal Care

Health Care Health Care Health Care Health Care

Beauty Care Beauty Care Pharmacy Candy, Gum, Mints

Pharmacy Pharmacy Candy, Gum, Mints Beauty Care

Candy, Gum, MintsCandy, Gum, Mints Beauty Care Home Care

Home Care Home Care Home Care Pharmacy

Snacks Beverages Snacks Snacks

Beverages Snacks Beverages Beverages

Source: 2011 Coca-Cola Landmark Study

What (products) brought you to the store? (Q30a)

What types of products did you buy? (Q31a)

Drug Responding to Value Channel Competition Big 3 Introducing OPP Brands to Compete

WAG CVS FDO RADEggs 1.69$ 2.49$ 1.90$ 1.79$ Eggs 1.69$ Pasta Sauce 3.29$ 2.49$ 1.00$ 1.99$ Pasta Sauce 1.00$ Canned Veg 1.69$ 1.27$ 0.65$ 1.59$ Canned Veg 0.65$ Ketchup 3.79$ 1.00$ 1.00$ 1.99$ Ketchup 1.00$ Canned tuna 1.49$ 1.49$ 0.75$ 1.49$ Canned tuna 0.75$ Cereal 4.79$ 1.00$ 2.00$ 1.00$ Cereal 1.00$ Dry pasta 1.79$ 1.49$ 1.00$ 1.99$ Dry pasta 1.00$ 11.80$ 1/2 g milk 1.79$ 2.49$ 2.95$ 2.79$ 1/2 g milk 1.79$ 9.43$ Macaroni & Cheese 1.29$ 0.99$ 0.55$ 1.99$ Macaroni & Cheese 0.55$ Total 21.61$ 14.71$ 11.80$ 16.62$ Total 9.43$ 2.37$

Toilet Paper 0.89$ 1.19$ 1.00$ 1.00$ Toilet Paper 0.89$ Paper Towel 0.99$ 1.00$ 1.00$ 1.00$ Paper Towel 0.99$ Dishwashing Soap 1.99$ 1.37$ 1.00$ 1.49$ Dishwashing Soap 1.00$ Liquid Laundry Soap 3.49$ 2.99$ 2.00$ 3.49$ Liquid Laundry Soap 2.00$ Blue Window Cleaner 3.49$ 3.39$ 1.00$ 2.79$ Blue Window Cleaner 1.00$ 13.50$ Diapers 8.99$ 8.49$ 6.50$ 7.29$ Diapers 6.50$ 13.38$ Trash Bags 4.29$ 5.79$ 1.00$ 1.00$ Trash Bags 1.00$ Total 24.13$ 24.22$ 13.50$ 18.06$ Total 13.38$ 0.12$

Bar Soap 0.89$ 0.67$ 1.00$ 2.49$ Bar Soap 0.67$ Toothpaste 1.00$ 1.67$ 1.00$ 1.00$ Toothpaste 1.00$ Shampoo 1.00$ 0.99$ 1.00$ 0.99$ Shampoo 0.99$ Family Dollar Basket 4.55$ Asprin 1.29$ 0.99$ 1.00$ 2.29$ Asprin 0.99$ 4.46$ Disposable Razor 2.00$ 1.27$ 1.00$ 4.49$ Disposable Razor 1.00$ Total 6.18$ 5.59$ 5.00$ 11.26$ Total 5.00$ 0.09$

2.58$

Combined Basket

Total

Total Savings

OPP Basket StudyEdible

Non- Edible

HBA

Non-Edible

Family Dollar BasketCombined Basket

Total

HBA

Edible

Family Dollar BasketCombined Basket

Total

Source: Kantar Retail ShopperScape™, April 2011

Agenda

Why the Drug Channel

SHOPPER

BASKET

TRIPS

Sun Mon Tues Wed Thur Fri Sat0

5

10

15

20

GroceryMassSupercentersDrugConv/GasClubDollar

Sunday is the most important shopping day!Share of trips by day of week

Source: Nielsen Homescan, Total U.S., 52-weeks ending 12/25/2010

Source: Nielsen’s U.S. Retail Trends deck, March 2011 Update Expected share (if trips were evenly distributed by day of week) would be 14.3%

Competition at the CornersThe Challenge and the Opportunity in Drug

Walgreens CVS Rite Aid Other DrugWalgreens 100% 45% 43% 25%CVS 38% 100% 42% 20%Rite Aid 17% 19% 100% 21%Other Drug 2% 2% 5% 100%

Source: Kantar Retail ShopperScape™, April 2011

Cross-Shopping Other Drug Store Retailers during Past Four Weeks

Drug MFS Trips in All Channels

Household Stock-Up

Just-in-Time (Meals)

SELF

Immediate Consumption

TIME

Urgent ItemMONEY

Everyday Savings

FAMILY

Browsing

Speedy Fill-In

Bargain Hunting

8 Trip Mission Segments

13%

8%

16%

6%

16%

11%

18%

11%

21%

22%

27%

29% 1

2

3

4

Source: 2011 Landmark Shopper Study

% of Trips % of Trips

Trip Missions Across Channels

Source: 2011 Landmark Shopper Study

Grocery

Club

CR

Super-centerMass

Drug

Value

Drug MFS Trips

MONEY

TIME

FAMILY

SELF

Drug shoppers’ trips are shifting from Urgent Item to become more Speedy Fill In and Bargain Hunting

Drug MFS % of Trips 2011 % Chg vs. YA Avg $

Household Stock Up 1% 62% n/a

Just-In-Time 10% -12% $19

Browsing 14% 4% $25Immediate Consumption 5% -5% $17

Speedy Fill-In 13% 17% $27

Urgent Item 20% -15% $23

Bargain Hunting 33% 8% $20

Everyday Savings 4% -1% $24

Drug

Maximize the shift in trends to capture the more valuable Speedy Fill In Basket

SHOPPER TRIP MISSION TRENDS

MONEY

TIME

FAMILY

SELF

TRIP MISSIONS - % OF TRIPS % Change Retailers

Drug MFS

CVS MFS

WAG MFS

Rite Aid MFS

Groc MFS

Household Stock Up 62% - - - 8%

Just-In-Time -12% -13% -7% -20% -8%

Browsing 4% -2% 4% 18% -4%

Immediate Consumption -5% 2% 5% - -1%

Speedy Fill-In 17% 7% 36% 9% -2%

Urgent Item -15% -19% -12% -11% -5%

Bargain Hunting 8% 17% -2% 9% 2%

Everyday Savings -1% -13% 8% - 8%

Percent Change > 10%Percent Change < -10%

Threshold for Color coding <=10% of Trips

Percent change 2011 Vs. 2010

Shopper Trip Mission Trends By RetailerCompared to Drug Competitors, Rite Aid Most Frequent

Shoppers are shifting more of their trip missions to Browsing

CVS’s heavy shoppers’ basket size continues to increase as CVS continues to focus on up selling and cross selling

CVS: HEAVY SHOPPERS’ $ PER TRIP

22.1

25.123.723.6

2724.6

23.3

2826.5

0

5

10

15

20

25

30

Walgreens CVS Rite Aid

2009

2008

2007

Source: Mid year 2009 IRI Panel Data

23INTERNAL USE

The Way of Shopper Marketing Classified - Internal use

THANK YOUFor additional information please visit the Shopper/Customer Marketing

Community at www.KOSCMarketing.com