KOHAGeneralIdeaStudy done by Marriott School of Management using GroupSolverTM

AllRightsReserved.GroupSolver,Inc.2017

BACKGROUND

KOHAexiststopreservethehealthandvitalityofthousandsofneighborhoodcommunitiesnationwidebylinking independentsmall-businessownersdirectlytokeylocalconsumerpopulationsthroughameaningful,comprehensiverewardsincentivessystem.

• Approximately100Knewbrick&mortarsmallbusinessesopeneachyearintheUS,with6-7millionbrick&mortarsmall-businessownersatanyonetime.

• 2015:around70%ofthesebusinessownersexploredatleasttwoDigitalCustomerLoyaltysolutionstohelpdrivemoresalesrevenue.

• 78%ofconsumerswithhouseholdincomesof$100k(+)reportedusinga“digital”deviceatleasttwiceduringeachbrick&mortartransactionin2015toeitherassisttheirdecision-makingortoexecutetheirpurchase.

SITUATION

SurveyTool:GroupSolverSurveycontained

1qualifyingquestion- RespondentswereaskediftheyhadchildrenathomeandifnotthesurveywasterminatedKOHAexplainervideo2open-endedquestions7exitquestionsforsegmentationandmarketsizingpurposes

Totalof175generalpopulationrespondents

METHODOLOGY

SURVEYDEMOGRAPHICS

IDEACLOUD

AfterwatchingavideoexplainingwhatKOHAwasrespondentswereaskedtosharetheirthoughtsaboutKOHA.Totheleftisanideacloudhighlightingsomeoftheresponses

TheanswerswereoverwhelminglypositiveRespondentscitedseveralreasonsfortheirapproval including:

• Easyincomparisontotraditionalfundraisingefforts

• Everyonewins• Twobirdswithonestone

“Ithinkthatthisisanexcellentideathatwouldbesupportedbythecommunityingeneral.”100%support

“Thisisasmartwaytogetpeopletoparticipate”93%support

“Betterthanbuyingcheapjunkfromacatalog.”89%support

“Snappingpicturesofreceiptsiseasyandissaferthanaskingthekidstogodoortodoor.”87%support

“Thisisagreatidea.Thissupportsboththeschoolandlocalbusinesses.”91%

LikelihoodScore=5.89 outofpossible7

~74%likely to

use

Very Likely Somewhat Neither Somewhat Unlikely Verylikely likely likely nor unlikely unlikely

unlikely

LIKELINESSTOUSEKOHARespondentswereaskedtoevaluatetheirlikelihoodofusingKOHAandwhetherornotthey

supportedalistofstatements

LikelinesstouseKOHA %likelytouse #ofhouseholdsineachcategory(%x39,411,765)

Verylikely 40.57% 15,989,916

Likely 32.57% 12,836,975

Somewhatlikely 16.00% 6,305,882

Neitherlikelynorunlikely 4.57% 1,801,681

Somewhatunlikely 1.71% 675,630

Unlikely 1.14% 450,420

Veryunlikely 3.43% 1,351,261

ThetotaldomesticmarketsizeforKOHA,measuredinhouseholds,isabout39,411,765,or34%ofallhouseholds.

Accordingtoourstudy,28,826,891 ofthosehouseholdsare“veryormoderatelylikely”tousetheapp

CUSTOMERDEMAND:SizableDemandExistsinTargetSegment

KOHAUniversalRewardsStudy done by GroupSolverTM

AllRightsReserved.GroupSolver,Inc.2017

Proposed loyalty donation network system is more than twice as influential on customer behavior as traditional loyalty programs are

The target demographic (parents with children in school) also shows a sizable difference in likelihood of being influenced by loyalty donation networks over regular loyalty programs

Individuals with no children at home are actually more likely than parents with children at home to have their shopping/dining habits influenced by KOHA

Respondents expect to use KOHA to buy more products than services

Respondents may be more likely to use KOHA for larger purchases

87.4% of respondents would be willing to use KOHA if the donation percentage were 5% or greater on a $40 purchase

EXECUTIVESUMMARY

116%morerespondents“stronglyagree”thatwheretheyshopanddinewouldbeinfluencedbyacooperative+donatingloyaltyprogramthanbyatraditionalloyaltyprogram

INFLUENCEOFLOYALTYPROGRAMS

INFLUENCEOFLOYALTYPROGRAMSIndependently, the cooperative rewards program seems to have a greater impact than the donation program

When the two concepts are combined, the effect of each is compounded

The primary effect of increasing program value is to change respondents who are “somewhat likely” to “very likely.”

“Disagree” respondents tend to move to neutral territory

MOSTPOPULARKOHASPENDINGCATEGORIES“PleaseselectthestorecategoriesatwhichyouwouldmostlikelyuseKOHA(i.e.toreceivepersonalrewardsANDcontributionsforyourlocalschoolornon-profit)”

Themost-usedcategorieswillhavetodowithnecessitiessuchascategorieslikegroceries,drugstores,andclothing

“Fun&Entertainment”and“DiningOut”arealsolikelytobehighlyused

KOHAcustomersimaginetheywouldusetheplatformwhenpurchasingnecessitiesandentertainment

“PleaseselectthestorecategoriesatwhichyouwouldmostlikelyuseKOHA(i.e.toreceivepersonalrewardsANDcontributionsforyourlocalschoolornon-profit)”

KOHA customers would be interested in using the platform at a wide array of shopping categories

Several “other spending” categories attracted more attention than the “frequent spending” categories of the previous slide

Customers seem most willing to use KOHA if the dollar amount of the purchase is greater

MOREINFREQUENTKOHASPENDINGCATEGORIES

INFLUENCEOFKOHA:TARGETMARKET(PARENTS)

Parentswithchildrenathomeare82%morelikelyto“stronglyagree”thattheirbehaviorwillbeinfluencedbyloyaltyprogramsiftheprogramisaloyaltydonatingnetwork

“Pleaseconsidertraditionalloyaltyprogramsatlocalbusinesses(Notlargebig-box,departmentorgrocerystores)youmayhaveheardoforparticipatedin.Whatmakesyouwanttoparticipateinsuchrewards/loyaltyprograms?”

“Earningpointsorhavinglowerprices”87%support

“Theabilitytosavemoneybybecomingaloyalcustomer”84%support

“Helpslocalschools.”70%support

“Ihelpoutalocalbusiness.”79%support

“Igetinsiderdealssuchasearlypurchases.”71%support

“Itypicallyhavenointerestinparticipatinginloyaltyprograms.”12%support

Respondentswithnochildrenathomearemoreinfluencedbythecombinationofrewardsnetworksanddonationnetworksthanparentswithchildrenathomeare

Agreaterpercentageofthosewithnochildrenathomestronglyagreethattheirbehaviorwouldbeinfluencedbyaloyaltydonatingnetwork

Whenitcomestoordinaryloyaltyprograms,relativeparityexistsbetweenthosewhohavekidsathomeandthosewhohavenokidsathome

N(kids at home)=80 N(nokidsathome)=71

COMPARISON:KIDSATHOMEVS.NOKIDSATHOME

N(kids at home)=80

N(no kids at home)=71

Whileagreaterpercentageofthosewithchildrenathomestronglyagreethattheirbehaviorwouldbeinfluencedbyacooperativerewardsnetwork,thereisaverylargecontingentofthosewithnokidsathomewhoareattractedbythecooperativenetwork.

Thosewithchildrenathomearemorelikelytobeinfluencedbydonationnetworksthantheircounterpartswhohavenokidsathome

COMPARISON:KIDSATHOMEVS.NOKIDSATHOME

Thosewithlowerincomes(below75K)aremorelikelytosupportstatementsaboutsavings,suchas“offerdiscount”(statementI)Womenaremorelikelythanmentosupportsomestatementsaboutwantingtohelpthecommunity,suchas“Ihelpoutalocalbusiness”(statementC)

N=151

Lower-incomehouseholdsaremoremotivatedbysavings;womenaremorelikelytohavecharitablemotivations “Pleaseconsidertraditional

loyaltyprogramsatlocalbusinesses(Notlargebig-box,departmentorgrocerystores)youmayhaveheardoforparticipatedin.Whatmakesyouwanttoparticipateinsuchrewards/loyaltyprograms?”

INTELLISEGMENT:LOYALTYPROGRAMMOTIVATIONS

LoyaltyDonationNetworks(rewardsnetworksthatofferoneloyaltyprogramacrosslocationsanddonatetolocalschoolsorcharities)aremuchmorelikelytobeinfluentialonwhereconsumersshopanddinethanaretraditionalloyaltyprograms

Thiseffectisparticularlynoticeableinhowthe“verystronglyagree”segmentgrows.Thisisparticularlytelling,giventhat“verystronglyagree”isthesegmentmostlikelytotranslateintoactualaction

Thecooperativerewardsnetworkseemstohaveagreaterimpactonrespondents’likelihoodstobeinfluencedthanthedonating

Whenthe“donations”and“rewardsnetwork”ideasarecombined,theeffectisgreaterthaneitherofthemalone

Thedifferenceinrespondentreactionsbetweenordinaryrewardsprogramsandloyaltyrewardsnetworksarestatisticallysignificant

RespondentsexpecttouseKOHAtobuymoreproductsthanservices

Necessitiessuchasfoodandclothingmakeupalargeportionoftheseproducts

Fun&EntertainmentandEatingOutarealsosettobebigsituationsforKOHAusage

Thetargetdemographic(parentswithchildreninschool)alsoshowsasizabledifferenceinlikelihoodofbeinginfluencedbyloyaltydonationnetworksoverregularloyaltyprograms

DETAILEDSUMMARYOFFINDINGS

AbriefexplanationofGroupSolver’squalitativemethodology

• Allowingrespondentstointeractwiththeideasofothersgivesusquantitativesupportbehindthoseanswers,therebyallowingustogaugetherelativeimportanceofeachstatement

• Thetoolis,ineffect,aself-buildingsurveyplatformthatincorporateselementsofcrowdintelligence,machinelearning,andadvancedstatisticalmodelling

• Moreinformationcanbefoundatwww.groupsolver.com