Introduction to OBPPCArchitectureOCCAsIOn / BrAnd / PACkAge / PrICe / ChAnnel
shelF-sAVVY TOOls
3OBPPC – Occasion Brand Package Price Channel ArchitectureBook Cover, Spine and Back
OB
PP
C A
rchitecture
FOR INTERNAL USE ONLY.Copyright© 2010 The Coca-Cola Company. DNA: The Coca-Cola Way of Marketing, Brand Value | Brand Love and the Dynamic Ribbon are all trademarks of the Coca-Cola Company.
Introduction to OBPPCArchitectureOccASION / BRANd / PAckAgE / PRIcE / chANNEL
global Customer & shopper Marketing Converting shoppers to Buyers
shelF-sAVVY TOOls
Driving profitability by creating and capturing value for the Coca-Cola System.
An Introduction to OBPPc ArchitectureOccasion Brand Package Price Channel
7OBPPC – Occasion Brand Package Price Channel Architecture
Metrics
The Shelf-Savvy Tools Series is intended to provide you with information about the different ways we create value at retail for all the stake-holders in our System.
Each book explores a different topic in depth, and provides you with resources and tools to help you put the content into action.
Use these books as a reference, as a repository for global best practices, and as a refresher.
DifferentiatingBrand / Pack
Strategy
Commercializing with Customers
Activating for Retail Impact
Prioritizing Shopper Opportunities
Picture of Success
Shelf-Savvy Tools Series
9OBPPC – Occasion Brand Package Price Channel Architecture
All shoppers are different. They have different values and different preferences, which lead to different price elasticities. We can create value by recognizing the differences in purchase occasions, and by offering a unique assortment of brands, packages and price points for each channel they are served by.
We design OBPPC architectures to create value by considering three core principles:Define distinct package roles Each package plays a distinct role in driving Incidence, Transactions, or the Amount of a transaction. By defining roles for each package, we can build a proposition to grow our holistic business.
Capture unique shopper needs Shoppers have different motivations at each occasion and channel. We can capture the value of each occasion by defining the package roles to best serve each unique shopper need.
Differentiate across channels Each of our customers serve different shoppers with a unique retail experience. We can help them to be more effective by differentiating our OBPPC offering across channels and customers.
An Introduction to OBPPc Architecture:Overview
WhAT is OBPPC?1
11OBPPC – Occasion Brand Package Price Channel Architecture
WhAT
13
OBPPC is a critical element of shelf-savvy marketing.
For each Occasion, it defines the optimal Brands, in the appropriate Packages, at the right Prices, in the target channels.
OBPPC – Occasion Brand Package Price Channel Architecture
WhY is OBPPC critical to System success?
215OBPPC – Occasion Brand Package Price Channel Architecture
OBPPc enables us to move the demand curve and sell more products at higher prices through segmentation and differentiation.
WhY
pric
e/L
volume
Before
After
17OBPPC – Occasion Brand Package Price Channel Architecture
OBPPC Impact on Demand Curves
19OBPPC – Occasion Brand Package Price Channel ArchitectureWhY
OBPPc captures value by considering consumer, shopper and customer motivations.It provides different packages, at different prices, for different segments to the extent that it can be executed by our System.
Limited assortment and price point variance
Unique needs only met for some shoppers
Some consumers paid less $/L than they were willing to
WhY
good OBPPc drives both volume and value by aligning offerings with shopper needs.
21OBPPC – Occasion Brand Package Price Channel Architecture
Before OBPPC
Shelf
Volu
me
Price
/L
differentiated assortment, with segmented price points
Needs of all key shoppers are met, incidence up
The price requirement of all shoppers is met
After OBPPC
Shoppers drive volume
by making purchases.
We optimize value through segmentation,
driving price/L.
good OBPPc offers both short and long term benefits.
23OBPPC – Occasion Brand Package Price Channel Architecture
Short termEliminates short term price fluctuations by increasing pack/price diversity
Reduces risk of commoditization
Reduces reliance on few packs
Long termBuilds a long term franchise by capturing unique needs for multiple shoppers
Addresses customer pricing differentiation needs
Reduces channel leakage by providing specific Pack/Price architecture by channel
WhY
good OBPPc consistently delivers strong results.
25OBPPC – Occasion Brand Package Price Channel Architecture
Profitability
Volume share
Revenue share
Revenue / uc growth
Number of transactions
Source: Selected data from over 25 internal case studies 2003-2008, AC Nielsen
WhY
good OBPPc is strategically planned for the short and long term.
27OBPPC – Occasion Brand Package Price Channel Architecture
Short term
Meets today’s execution capability
Reflects today’s retail reality and shopper landscape
Focuses on quick wins with existing packages plus price point changes
WhY
Long term
Plans for enhanced execution capability
Anticipates tomorrow’s retail reality and landscape
Plans innovation for tomorrow’s packages including consid-erations of capital, Route to Market, and staged price increases
hOW do we develop a good OBPPC strategy?
329OBPPC – Occasion Brand Package Price Channel Architecture
31OBPPC – Occasion Brand Package Price Channel ArchitecturehOW
OBPPc planning is an integral element in dNA: The coca-cola Way of Marketing.The goal of marketing at TCCC is to combine art and science to build Brand Love and Brand Value. From a marketing perspective, OBPPC starts with the occasion. From a commercial perspective, it starts with the channel or customer.
We use elements from Brand and Portfolio Plans to tailor the OBPPC to accomplish both our marketing and commercial objectives.
OPPORTUNITY IdENTIFIcATION
Prioritize channels, categories, and occasions via Profit Mapping
OBPPc ARchITEcTURE
Defined category and channel architecture according to occasions
IN-OUTLET PIcTURE OF SUccESS
Customized with marketing elements and Customer sell in story
33OBPPC – Occasion Brand Package Price Channel Architecture 33OBPPC – Occasion Brand Package Price Channel Architecture
Away from home Meals
Channel
On The go
At homeLeisure
grocery convenience hOREcA
$XX billion opportunity
Occ
asio
n
OBPPc commercializes the priority opportunities in store.
hOW
OBPPc work starts with the
highest leverage opportunity.
35OBPPC – Occasion Brand Package Price Channel ArchitecturehOW
good OBPPc incorporates three key principles.
differentiate across channels
(& customers)
capture unique shopper needs
(within a channel or customer)
OBPPc Architecture
Segmented by pack role, consumption occasions, and socioeconomic level
Segmented by pack role, consumption occasions, and socioeconomic level
Define distinct package roles
1 2 3
37OBPPC – Occasion Brand Package Price Channel ArchitecturehOW
differentiate across channels
capture unique shopper needs
Define distinct package roles
1 2 3
First principle:OBPPC defines distinct package roles.
OBPPc Architecture (by category and channel)
(within a channel or customer)
(& customers)
39OBPPC – Occasion Brand Package Price Channel Architecture 39OBPPC – Occasion Brand Package Price Channel ArchitecturehOW
Entry Frequency Upsize Upscale
Entry price point Frequent usage size
Value convenience
IncidenceRecruit new category
consumers or competitive users
TransactionsDrive frequency among
existing consumers
Amount Increase purchase
amount
AmountOptimize valueon less elastic
purchases
1.0L (PET)$0.99$0.99/LValue Index 106
1.5L(RefPet)$1.40 $0.93/LValue Index 100
2.5L (RefPet)$1.99$0.80/LValue Index 86
2x 0.75L (PET)$2.25$1.50Value Index 161
Obj
ectiv
eR
ole
Exa
mpl
ec
ore
d
iffer
entia
tor
Define package roles consistent with PITA objectives.
Entry Frequency Upsize Upscale
hOW 41OBPPC – Occasion Brand Package Price Channel Architecture
Strategic Package Roles
Customer Objectives*
Incidence Number Of Trips
Size Of Purchase
Retail Price/L
* Customer objectives translate into PITA formula
Package roles can then be linked to customer objectives.
43OBPPC – Occasion Brand Package Price Channel Architecture 43OBPPC – Occasion Brand Package Price Channel ArchitecturehOW
Second principle:OBPPC should capture unique shopper and consumer needs within a channel or customer.
OBPPc Architecture (by category and channel)
Define distinct package roles
1 2 3
differentiate across channels
capture unique shopper needs
(within a channel
or customer)(& customers)
45OBPPC – Occasion Brand Package Price Channel ArchitecturehOW 45OBPPC – Occasion Brand Package Price Channel Architecture
“ We want coke, but at the best price to meet my family’s needs.”
She buys primarily for: home Meals
She buys primarily for: home Meals
She shops primarily at: Mass
A pack she might buy:4x2L (PET)
$9.50$1.20/L
A pack she might buy:1.25L (PET)$1.75$1.40/L
OBPPC meets shopper need and optimizes profitability
She shops primarily at: drug Stores
“ We want coke, but I’m time pressed – I’ll pick it up when I can.”
consider two mothers shopping for the same occasion:Susana Mary
dRUgcO pharmacy
higher Price Elasticity
Lower Price Elasticity
47OBPPC – Occasion Brand Package Price Channel Architecture
“ I want a coke, but I have a daily budget that I need to stick to.”
He buys primarily for: On the go
She shops primarily at: Traditional He shops primarily at: Traditional
A pack she might buy:1.25L (RgB)
$1.70$1.36/L
A pack he might buy:0.5L (PET)$0.99$1.98/L
“ I want a coke, and I want it now for the commute home.”
Corner Mart Corner Mart
hOW
And two workers shopping the same channel:
47OBPPC – Occasion Brand Package Price Channel Architecture
Lina Robert
higher Price Elasticity
She buys primarily for: home Meals
Lower Price Elasticity
OBPPC meets shopper need and optimizes profitability
hOW 49OBPPC – Occasion Brand Package Price Channel Architecture
OBPPc meets shopper needs and optimizes profitability by occasion.
On the go
SUPERMARkETS IN cOUNTRY A
At home meals
0.33L (can)$0.43
$1.30/L
0.5L (PET)$0.86
$1.72/L
1.5L (PET)$1.55
$1.03/L
2x1.5L (PET)$2.94
$0.98/L
4x0.5L (PET)$2.98
$1.49/L
Meets Susana’s needs:
Value
Meets Mary’s needs:
Convenience
Could meet Robert’s needs: Convenience
Example: Sparkling Soft Drink Category Entry Frequency Upsize Upscale
hOW 51OBPPC – Occasion Brand Package Price Channel Architecture
Entry Frequency UpsizeSUPERMARkETS IN cOUNTRY B
At home meals
OBPPC reflects the elasticities of different income groups.In this example, the same packs are sold at different prices in different neighborhoods.
High IncomeNeighborhood
Mid IncomeNeighborhood
Low IncomeNeighborhood
1.25L (RGB)$1.19
$0.95/L
1.25L (RGB)$1.09
$0.87/L
1.5L (PET)$2.09
$1.39/L
1.5L (PET)$1.99
$1.32/L
1.5L (PET)$1.99
$1.32/L
2.00L (PET)$2.69
$1.35/L
2.00L (PET)$2.59
$1.30/L
2.00L (PET)$2.39
$1.20/L
Meets Lina’s needs:
Daily Budget
Example: Sparkling Soft Drink Category
53OBPPC – Occasion Brand Package Price Channel ArchitecturehOW
Third principle:OBPPC differentiates across channels and customers.
OBPPc Architecture (by category and channel)
Define distinct package roles
1 2 3
Define distinct package roles
differentiate across channels
capture unique shopper needs
(within a channel
or customer)(& customers)
hOW 55OBPPC – Occasion Brand Package Price Channel Architecture
different channels will have different package offerings for the same occasion.
Primary consumption Occasions
At home MealsOn the go
At home MealsAt home Leisure
Shopper behavior in this channel
daily tripshigher rate of impulse buysLower price points
Weekly stock-up tripsLower rate of impulse buyshigher elasticity
Channel Differentiator
convenienceProximity
PriceAssortment Breadth and depth
OBPPC Strategy Frequency size packsRgB for lower price point
Upsize packs in addition to entry size packs Large PET to drive down price/L
Traditional Trade Grocery
hOW 57OBPPC – Occasion Brand Package Price Channel Architecture
Primary Consumption Occasions
At home MealsAt Work Meals
At home MealsAt home Leisure
Shopper Behavior in this Customer
Smaller householddaily trips Lower price sensitivity
Larger household2 trips/weekhigher price sensitivity
Customer Differentiator
Breadth of assortment convenienceLarge footprint
compact assortment Proximity to neighborhoodSmall footprint
OBPPC Strategy Over-index in single serveFocus on frequency and convenience pack role
Over-index in multi serve and multipacksFocus on frequency and upsize pack role
“Customer A” “Customer B”
different customers will have different package offerings for the same occasion.
59OBPPC – Occasion Brand Package Price Channel ArchitecturehOW
hOW do these three OBPPc principles come together?
59OBPPC – Occasion Brand Package Price Channel Architecture
61OBPPC – Occasion Brand Package Price Channel ArchitecturehOW
A holistic OBPPc model incorporates multiple channels, occasions and shopper segments.
AOccASION
1
Immediate consumption
Future consumption
OccASION 3
OccASION 2
OccASION 2
A
A
A
B
B
B
B
_0.33l can @ $ 0.49_chilled_3 SKU traffic driver
chANNEL: SUPERMARkETS
Occasions can be further segmented by:
_Shopping missions_customer clusters_Socio economic level_Region/Location
BUSINESS OBjEcTIVE
Entry Frequency Upsize Upscale
For each segment, we will define:
_Pack size, type_Price point_Number of items_Placement_Equipment_customer objectives
BRANd:
63OBPPC – Occasion Brand Package Price Channel ArchitecturehOW
Individual OBPPcs are integrated into one portfolio OBPPc for each channel.
Individual Category OBPPC Example: Traditional Channel
Integrated Portfolio OBPPC Example: Traditional Channel
e.g. MyCoke e.g. Flavors e.g. Water
ENTRY FREQUENcY UPSIZE UPScALE
ON ThE gO
SNAckS
WaterFlavorcola
WaterFlavorcola
65OBPPC – Occasion Brand Package Price Channel ArchitecturehOW
The complexity of an OBPPc is dependent on the capability to segment and execute.
convenience On the go
convenience Snacks
Traditional On the go, Snacks
hypers On the go, Snacks
hypers On the go, Snacks
Supers On the go, Snacks
convenience On the go, Snacks
Traditional On the go, Snacks
Supers On the go, Snacks
convenience On the go, Snacks
Traditional On the go, Snacks
hypers On the go, Snacks
Supers On the go, Snacks
convenience On the go, Snacks
Water / Flavor / cola
Brand level
cOMPLEXITY: ILLUSTRATIVE EXAMPLE
Channel level Region level Total market
REgION ONE REgION TWO
OBPPc Architecture
Driving profitability by creating and capturing value for the TCCC System.
global Customer & shopper Marketing Converting shoppers to Buyers
FOR INTERNAL USE ONLY.Copyright© 2010 The Coca-Cola Company. DNA: The Coca-Cola Way of Marketing, Brand Value | Brand Love and the Dynamic Ribbon are all trademarks of the Coca-Cola Company.