PLMA’s Annual Meeting and Leadership ConferencePLMA’s Annual Meeting and Leadership Conference

8912 East Pinnacle Peak Road #650 • Scottsdale, AZ 85255 Phone (480) 513-0547 • Fax (480) 513-0548 • E-Mail: chrishoyt@hoytnet.com • nancyswift@hoytnet.com

Scottsdale, AZScottsdale, AZ

March 22, 2002March 22, 2002

The Role of Promotion and AdvertisingIn the Store Brand Marketing Mix

The Role of Promotion and AdvertisingIn the Store Brand Marketing Mix

www.hoytnet.com

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How Many of You Remember That Between 1988 and 1993, Supermarket How Many of You Remember That Between 1988 and 1993, Supermarket Store Brands Grew At A Steady Pace of About 1% Per Year?Store Brands Grew At A Steady Pace of About 1% Per Year?

U.S. Supermarket Store Brand Share Growth: 1998 - 1993U.S. Supermarket Store Brand Share Growth: 1998 - 1993

UnitsUnits

DollarsDollars

14%14%

11%11%

19881988

19%19%

15%15%

19931993

+36%+36%

+36%+36%

% +/-% +/-

Source: IRI, 1989 + 1994

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Based On These Trends, the Smart Bets Were That by 2003, Store Based On These Trends, the Smart Bets Were That by 2003, Store Brands Would Control Between 35 and 40% of Industry Unit Sales Brands Would Control Between 35 and 40% of Industry Unit Sales and 30% of Dollars:and 30% of Dollars:

In 1993, David Nichol predicted in his keynote In 1993, David Nichol predicted in his keynote address at this same conference that U.S. address at this same conference that U.S. Supermarket store brand Supermarket store brand UNITUNIT sales would be “in sales would be “in excess of 40%” in 10 years – i.e., by 2003.excess of 40%” in 10 years – i.e., by 2003.

Gary Giblen of Paine Webber added support to this Gary Giblen of Paine Webber added support to this in early 1994 when he predicted a 35% unit share and in early 1994 when he predicted a 35% unit share and a 30% dollar share by 2004 – estimates which he a 30% dollar share by 2004 – estimates which he regarded as conservative.regarded as conservative.

Source: Hoyt & Company Records; David Nichol, PLMA, 3/26/93 and Gary Giblen, Grocery Marketing Magazine, Jan, 1994 - pgs. 44-46

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The Reality Is That Between 1993 and Today, Store Brand Growth The Reality Is That Between 1993 and Today, Store Brand Growth Has Virtually Stalled, Not Only For Supermarkets, But On a Has Virtually Stalled, Not Only For Supermarkets, But On a Marketwide Basis:Marketwide Basis:

Supermarket Store Brand Share Growth: 1993 - 2000Supermarket Store Brand Share Growth: 1993 - 2000

UnitsUnits

DollarsDollars

19.0%19.0%

15.0%15.0%

19931993

20.0%20.0%

15.5%15.5%

20002000

-20%-20%

-15%-15%

Vs. PredictionsVs. Predictions

Source: IRI, PLMA Private Label Yearbook, 2001

Total Food/Drug/Mass Store Brand Shares, 2000Total Food/Drug/Mass Store Brand Shares, 2000

UnitsUnits

DollarsDollars

18.518.5

14.214.2

20002000

-0.5%-0.5%

-0.8%-0.8%

Vs. Supermarkets ‘93Vs. Supermarkets ‘93

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The Key QuestionsThe Key Questions

What happened to grow the category between 1988 What happened to grow the category between 1988 and 1993?and 1993?

Why did it stall-out between 1993 and the present?Why did it stall-out between 1993 and the present?

What needs to be done to re-ignite the growth and What needs to be done to re-ignite the growth and break out of this loop?break out of this loop?

What role does store brand promotion and What role does store brand promotion and advertising play in this? advertising play in this?

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1988 - 19931988 - 1993

President’s ChoicePresident’s Choice – Category – Category “News”“News” and and ExcitementExcitement::• TV & Radio – Image AdvertisingTV & Radio – Image Advertising• Big, Colorful Newspaper Inserts 4 x’s/yearBig, Colorful Newspaper Inserts 4 x’s/year• President’s Choice Recipe VideosPresident’s Choice Recipe Videos• InfomercialsInfomercials• SamplingSampling• CookbooksCookbooks• Restaurant Tie-in PromotionsRestaurant Tie-in Promotions

Introduced to U.S. = lots of “juice”/category interest/rallying Introduced to U.S. = lots of “juice”/category interest/rallying pointpoint

• First viable alternative to high priced national brandsFirst viable alternative to high priced national brands

U.S. Supers upgrade “mean and nasty” private label lines to U.S. Supers upgrade “mean and nasty” private label lines to premium store brands – e.g., Safeway Selectpremium store brands – e.g., Safeway Select

Further impetus provided by 1990-1993 recessionFurther impetus provided by 1990-1993 recession

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1993 - Present1993 - Present ECR focus on cost-cutting rather than growing the top line.ECR focus on cost-cutting rather than growing the top line.

Category Management provided National brands with a built-in Category Management provided National brands with a built-in platform to defend against Premium Pvt. Labels.platform to defend against Premium Pvt. Labels.

• Initially, Category Buyers did not have responsibility for store Initially, Category Buyers did not have responsibility for store brands which therefore were excluded from the “mix”.brands which therefore were excluded from the “mix”.

• CatMan enabled Nationals to control the retail selling CatMan enabled Nationals to control the retail selling environment.environment.

Deep-cut price wars between supermarkets & non-food channels Deep-cut price wars between supermarkets & non-food channels depressed national brand prices and made Pvt Labels less attractive.depressed national brand prices and made Pvt Labels less attractive.

To realize their projected potential, store brands required a classic To realize their projected potential, store brands required a classic brand marketing/equity-building strategic approach which retailers brand marketing/equity-building strategic approach which retailers were not culturally or structurally prepared to do.were not culturally or structurally prepared to do.

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Today…Today…

All the pieces and precedents are in place:All the pieces and precedents are in place:

Shaw’s = 40% Shaw’s = 40%

Supermarkets – “stress private label” – now the Supermarkets – “stress private label” – now the #1#1 priority out priority out of 26 on Progressive Grocer’s 2001 priority listof 26 on Progressive Grocer’s 2001 priority list

Consolidation makes it efficient – will force mega-retailers to Consolidation makes it efficient – will force mega-retailers to differentiate on a non-price basis in order to improve profitsdifferentiate on a non-price basis in order to improve profits

Manufacturer trade spending ($109B last year) provides the Manufacturer trade spending ($109B last year) provides the bucksbucks

Mucho quality research from Wharton, Stanford and others Mucho quality research from Wharton, Stanford and others has identified, quantified and prioritized the key components of has identified, quantified and prioritized the key components of a successful store brand programa successful store brand program

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The Big Issues With All This…The Big Issues With All This… Retailer-embedded tactical vs strategic approach to marketing Retailer-embedded tactical vs strategic approach to marketing

and merchandisingand merchandising

An industry habituated to making money on the buy rather An industry habituated to making money on the buy rather than on the sellthan on the sell

A pathological belief that low prices are the answer to A pathological belief that low prices are the answer to everythingeverything

Risk-averse investment mentality – “we’ll do it but it has to be Risk-averse investment mentality – “we’ll do it but it has to be on somebody else’s dollar”on somebody else’s dollar”

Retailer reluctance to take responsibility for their own destinies Retailer reluctance to take responsibility for their own destinies on the demand side of the business:on the demand side of the business:

• Supplier-dependent for information and analyticsSupplier-dependent for information and analytics

• No back-end infrastructure for long term strategic planning No back-end infrastructure for long term strategic planning or to benchmark supplier recommendationsor to benchmark supplier recommendations

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And Then… We Always Get The Following:And Then… We Always Get The Following:

““The U.S. is not Canada or the U.K.”The U.S. is not Canada or the U.K.”

““The U.K. would fit in Rhode Island.”The U.K. would fit in Rhode Island.”

““Bears and Beavers buy store brands, not Americans!”Bears and Beavers buy store brands, not Americans!”

““Americans are too heterogeneous, homogeneous, Americans are too heterogeneous, homogeneous, religious, atheist, rich, poor, fragmented, segmented, religious, atheist, rich, poor, fragmented, segmented, rural, urban, conservative, liberal, brand loyal, disloyal, rural, urban, conservative, liberal, brand loyal, disloyal, pacifist, war-like, smart and dumb to buy store brands pacifist, war-like, smart and dumb to buy store brands like the British or Canadians do…”like the British or Canadians do…”

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Truth Is…Truth Is… Americans are actually Americans are actually much bettermuch better than others when it comes than others when it comes

to recognizing a good deal.to recognizing a good deal.

For U.S. store brands to reach the penetration benchmarks For U.S. store brands to reach the penetration benchmarks established in the U.K. and Canada, they have to be established in the U.K. and Canada, they have to be marketedmarketed just like National brands.just like National brands.

This, in turn, requires a comprehensive This, in turn, requires a comprehensive strategicstrategic approach to approach to the entire proposition.the entire proposition.

Despite mucho effort – Few U.S. retailers have developed a Despite mucho effort – Few U.S. retailers have developed a strategic approach to strategic approach to marketingmarketing their store brand program: their store brand program:

• Investing in packaging, superior ingredients and in-house Investing in packaging, superior ingredients and in-house manufacturing is only the first stepmanufacturing is only the first step

• The clincher is in building the information base, The clincher is in building the information base, infrastructure and know-how to market one’s store brands infrastructure and know-how to market one’s store brands on a head-to-head level with the nationalson a head-to-head level with the nationals

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Assuming Profit Pressures Will Eventually Change This, Here Are Assuming Profit Pressures Will Eventually Change This, Here Are The Top Ten Key Components That Must Be Considered When The Top Ten Key Components That Must Be Considered When Building A Strategic Store Brand Marketing Program:Building A Strategic Store Brand Marketing Program:

1.1. National brand competition in categoryNational brand competition in category

2.2. Average # SKUs in categoryAverage # SKUs in category

3.3. Private Label promotion and advertisingPrivate Label promotion and advertising

4.4. Private Label quality assurance programPrivate Label quality assurance program

5.5. Optimum store brand vs national brand price differentialOptimum store brand vs national brand price differential

6.6. Category growth potential “CDI”Category growth potential “CDI”

7.7. EDLP vs Hi-Lo merchandising strategyEDLP vs Hi-Lo merchandising strategy

8.8. National brand promotion in categoryNational brand promotion in category

9.9. Home values/income considerationsHome values/income considerations

10.10. Ethnicity/lifestyles of surrounding populationEthnicity/lifestyles of surrounding population

TOTALTOTAL

8.06%8.06%

5.53%5.53%

3.28%3.28%

3.10%3.10%

2.93%2.93%

1.82%1.82%

1.80%1.80%

1.71%1.71%

1.27%1.27%

1.00%1.00%

30.50%30.50%

+/- “Swing Factor” Impact+/- “Swing Factor” ImpactOn Store Brand Market ShareOn Store Brand Market Share

Source: Stephen J. Hoch and S. Dhar: Why Store Brand Penetration Varies By Retailer, Wharton, Feb, 1996

ComponentComponent

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29.03%

18.45%21.41%

11.15%

15.78%

29.47%

24.67%

35.16%

9.32%

20.23%

11.93%

22.36%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

Winn-Dixie Publix Kroger A&P

Overall Dairy Edible Grocery

It Is Based Upon How Different Retailers Blend And Prioritize These It Is Based Upon How Different Retailers Blend And Prioritize These Components That We Get The Following Differences In Store Brand Components That We Get The Following Differences In Store Brand Performance For Retailers Competing In The Same MarketPerformance For Retailers Competing In The Same Market

AtlantaAtlantaStore Brand Penetration Differences Among Major SupermarketsStore Brand Penetration Differences Among Major Supermarkets

Market Average = 23.74%

Source: Stephen J. Hoch and S. Dhar: Why Store Brand Penetration Varies By Retailer, Wharton, Feb, 1996

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Our Job TodayOur Job Today To address the To address the promotionpromotion and and advertisingadvertising component of store component of store

brand marketing.brand marketing.

• This is the component that enabled President’s Choice to This is the component that enabled President’s Choice to rocket to prominence and build Loblaw Stores as a rocket to prominence and build Loblaw Stores as a recognizable “brand”.recognizable “brand”.

In addressing this, we will assume that all other components are In addressing this, we will assume that all other components are in place and integrated:in place and integrated:

• One cannot plan and implement an effective store brand One cannot plan and implement an effective store brand promotion and advertising program unless one has first promotion and advertising program unless one has first determined the optimum on-shelf price gaps.determined the optimum on-shelf price gaps.

• Stephen Hoch of Wharton has done extensive research on Stephen Hoch of Wharton has done extensive research on this and spoke about this at the PLMA 2000 March this and spoke about this at the PLMA 2000 March Conference in Miami.Conference in Miami.

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Store Brand Promotion and Advertising Strategy

Store Brand Promotion and Advertising Strategy

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The Job Of Store Brand Promotion & The Job Of Store Brand Promotion & AdvertisingAdvertising

#1#1 Increase Increase profitable salesprofitable sales by leveraging by leveraging existing store existing store traffictraffic

#2#2 Build Build equity for the brandequity for the brand – sets it apart on a non-price – sets it apart on a non-price basis from other brandsbasis from other brands

#3#3 Build Build equity for the storeequity for the store – i.e., contribute to, or help – i.e., contribute to, or help create, a differentiated image that eventually becomes a create, a differentiated image that eventually becomes a draw in itself.draw in itself.

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Store Brand Promotion GuidelinesStore Brand Promotion Guidelines

Resist the temptation to deep price cut a store brand on Resist the temptation to deep price cut a store brand on promotion:promotion:

The price/value relationship is The price/value relationship is alreadyalready established by the established by the factfact of the of the brand’s existence in the first place.brand’s existence in the first place.

Reducing further cheapens the brand’s image and dilutes equity.Reducing further cheapens the brand’s image and dilutes equity.

Many studies clearly show that reductions beyond the optimum shelf Many studies clearly show that reductions beyond the optimum shelf price gap create consumer credibility problems and can actually price gap create consumer credibility problems and can actually reducereduce sales. sales.

What, when and where to promote and advertise must be a What, when and where to promote and advertise must be a consumer-drivenconsumer-driven vs a vs a deal-drivendeal-driven decision: decision:

Right product, right time, right placeRight product, right time, right place

Create a solution or be part of a solutionCreate a solution or be part of a solution

Forget about making money on the buy – this is Forget about making money on the buy – this is YOURYOUR brand!brand!

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What to Promote and Where To Promote – What to Promote and Where To Promote – Taking A Strategic ApproachTaking A Strategic Approach

Median HH IncomeMedian HH IncomeIndex to AverageIndex to Average

Median Home ValueMedian Home ValueIndex to AverageIndex to Average

Median AgeMedian AgeIndex to AverageIndex to Average

55+ (% of Pop.)55+ (% of Pop.)Index to AverageIndex to Average

$40.5$40.5(100)(100)

$110.9$110.9(100)(100)

37.937.9(100)(100)

21.121.1(100)(100)

TotalTotalAlbertson’sAlbertson’s

ArizonaArizona

$71.4$71.4(176)(176)

$229.3$229.3(207)(207)

44.844.8(118)(118)

23.923.9(113)(113)

StoreStore969969

$37.4$37.4(92)(92)

$77.9$77.9(70)(70)

28.328.3(75)(75)

10.410.4(49)(49)

StoreStore945945

$36.9$36.9(91)(91)

$108.3$108.3(98)(98)

42.942.9(113)(113)

30.930.9(146)(146)

StoreStore955955

Source: Spectra

Albertson’s, Scottsdale, 3 Different Stores – 2001Albertson’s, Scottsdale, 3 Different Stores – 2001

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The Job Of Store Brand PromotionThe Job Of Store Brand Promotion

#1Increase Profitable Sales By

Leveraging Existing Store Traffic

#1Increase Profitable Sales By

Leveraging Existing Store Traffic

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To Be Effective, The Store Brand Promotion You Develop Must To Be Effective, The Store Brand Promotion You Develop Must Help Retailers Achieve At Least One Of the Following Objectives Per Help Retailers Achieve At Least One Of the Following Objectives Per Event:Event:

Provide incentive to Provide incentive to buy for the buy for the first timefirst time

Provide incentive to Provide incentive to switchswitch

Incent to repeatIncent to repeat Buy store brand Buy store brand

whenever they buy whenever they buy the categorythe category

Get customers to Get customers to buy more than they buy more than they need between tripsneed between trips

Take out of market Take out of market for longer periodsfor longer periods

Circulars/ROPCirculars/ROP CatalinaCatalina In-store samplingIn-store sampling In-store demosIn-store demos Cross-promote as part of a Cross-promote as part of a

solutionsolution On-pack guaranteesOn-pack guarantees

Retailer FSPs/point programsRetailer FSPs/point programs Mail-in offersMail-in offers Next purchase cents offNext purchase cents off Set-building premiumsSet-building premiums

Bonus packsBonus packs Multiple purchase incentives (“2 Multiple purchase incentives (“2

fors”)fors”) In-store displaysIn-store displays Larger sizesLarger sizes

1.1. TrialTrial (most expensive)(most expensive)

2.2. ContinuityContinuity (least expensive)(least expensive)

3.3. VolumeVolume (middle)(middle)

StrategyStrategy VehicleVehicleObjectivesObjectives

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Trial Solution – Leveraging Leading National Brand Beer To Sell Trial Solution – Leveraging Leading National Brand Beer To Sell Store Brand Chips At Regular Shelf Prices During Super Bowl WeekStore Brand Chips At Regular Shelf Prices During Super Bowl Week

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Volume – Creating a Low Price Image Via a Free Standing Self-Volume – Creating a Low Price Image Via a Free Standing Self-Shipper Display (Which Is Actually Priced At Higher Than Normal Shipper Display (Which Is Actually Priced At Higher Than Normal Shelf Prices)Shelf Prices)

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Volume – 24 Rolls At Only a 4% Price Volume – 24 Rolls At Only a 4% Price ReductionReduction

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Trial – Integrating Store Brand Cooking Oil With the National Trial – Integrating Store Brand Cooking Oil With the National Brand Ingredients and a Recipe For Time-Pressured Consumers to Brand Ingredients and a Recipe For Time-Pressured Consumers to Whip Up Some CookiesWhip Up Some Cookies

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The Job Of Store Brand PromotionThe Job Of Store Brand Promotion

#2Build Equity For The Brand

#2Build Equity For The Brand

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EquityEquity Equity is the value one builds into one’s store brand’s nameEquity is the value one builds into one’s store brand’s name

Equity is a combination of Equity is a combination of ACTACT::

• AAttributes – A blending of features, benefits ttributes – A blending of features, benefits and priceand price that provides a that provides a viable alternative to national brandsviable alternative to national brands

• CConnection – Marketing and merchandising the product in ways to let onnection – Marketing and merchandising the product in ways to let the consumer know you are in touch with her lifestyle and lifestage needs the consumer know you are in touch with her lifestyle and lifestage needs (e.g. – Pepsi – Britney Spears/Michael Jackson)(e.g. – Pepsi – Britney Spears/Michael Jackson)

• TTrust – Quality control that assures consumers that your store brands rust – Quality control that assures consumers that your store brands (all of them!) will perform as advertised every time(all of them!) will perform as advertised every time

Equity is why consumers will pay a 15-20% premium for Tide, Coke Equity is why consumers will pay a 15-20% premium for Tide, Coke or Dog Chow vs store brand equivalentsor Dog Chow vs store brand equivalents

The stronger one’s brand equity becomes, the less dependent on price The stronger one’s brand equity becomes, the less dependent on price one becomes, although price is always importantone becomes, although price is always important

Conversely, the more one uses Conversely, the more one uses deep discount pricingdeep discount pricing to sell store to sell store brands, the more one degrades the brand’s equitybrands, the more one degrades the brand’s equity

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It Is the It Is the EquityEquity That National Brands Have Built in the Top 15 That National Brands Have Built in the Top 15 Edible Food Categories That Primarily Accounts for the Difference Edible Food Categories That Primarily Accounts for the Difference in Store Brand Penetration in These Categoriesin Store Brand Penetration in These Categories

2001 Store Brand Penetration – Top 15 Edible Food Categories2001 Store Brand Penetration – Top 15 Edible Food Categories(U.S. Supermarkets)(U.S. Supermarkets)

Beer & AleBeer & AleWineWineFrozen Dinners/EntreesFrozen Dinners/EntreesSalty SnacksSalty SnacksSoupSoupCold CerealCold CerealCookiesCookiesCarbonated Soft DrinksCarbonated Soft DrinksLuncheon MeatsLuncheon MeatsJuice/Beverage - RefJuice/Beverage - RefBottled JuicesBottled JuicesIce Cream/SherbetIce Cream/SherbetCheeseCheeseFresh Breads & RollsFresh Breads & RollsMilkMilkAvg. Food PL Share in GroceryAvg. Food PL Share in Grocery

Cat $ (MM)Cat $ (MM)% Share % Share PL UnitsPL Units

Source: PLMA: 2001 Private Label Yearbook

Top 15 Food Items In GroceryTop 15 Food Items In Grocery

$6,600$6,6003,4003,4005,6005,6006,4006,4003,6003,6006,7006,7003,8003,800

13,10013,1003,1003,1004,5004,5003,3003,3004,4004,4007,8007,8007,6007,600

$10,200$10,200

0.1%0.1%0.3%0.3%1.6%1.6%7.2%7.2%9.3%9.3%9.9%9.9%

11.4%11.4%13.7%13.7%17.5%17.5%19.2%19.2%19.3%19.3%26.8%26.8%34.8%34.8%39.6%39.6%60.1%60.1%20.7%20.7%

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Smart! Building One’s Store Brand Equity Via Smart! Building One’s Store Brand Equity Via Non-Price AdvertisingNon-Price Advertising

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Not So Smart! Heavy Price Promotion On A Not So Smart! Heavy Price Promotion On A Store Brand Premium ProductStore Brand Premium Product

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Smart! Building One’s Store Brand Equity Smart! Building One’s Store Brand Equity Through Non-Price-Based Print Ad AdvertisingThrough Non-Price-Based Print Ad Advertising

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The Job Of Store Brand PromotionThe Job Of Store Brand Promotion

#3Build Equity For The Store

#3Build Equity For The Store

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Store EquityStore Equity The reason why shoppers will drive 100 miles round trip from The reason why shoppers will drive 100 miles round trip from

NYC to Norwalk every week to shop at Stew Leonard’sNYC to Norwalk every week to shop at Stew Leonard’s

Sets one retailer apart from another on a basis other than price:Sets one retailer apart from another on a basis other than price:

Is totally corporate driven, not category drivenIs totally corporate driven, not category driven

Can be continually leveraged in different ways to attract and Can be continually leveraged in different ways to attract and hold new consumers while retaining current customershold new consumers while retaining current customers

Provides a strategic framework for all advertising and Provides a strategic framework for all advertising and promotion activitiespromotion activities

The retailer’s signature – his core reason for beingThe retailer’s signature – his core reason for being

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Building Equity For Building Equity For The StoreThe Store by Creating A by Creating A Differentiated Image Via Targeted Print AdsDifferentiated Image Via Targeted Print Ads

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Promotions That Help Build Total Store Equity Promotions That Help Build Total Store Equity All Aim to Accomplish One thingAll Aim to Accomplish One thing

The end result of these types of promotions is to:The end result of these types of promotions is to:

RewardReward

SurpriseSurprise

PamperPamper

It is in the context of these types of promotions that store It is in the context of these types of promotions that store brands can best achieve their core objectives of trial, brands can best achieve their core objectives of trial, continuity and volume.continuity and volume.

Give The Customer An Emotional Reason to ReturnGive The Customer An Emotional Reason to ReturnGive The Customer An Emotional Reason to ReturnGive The Customer An Emotional Reason to Return

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Trial Promotions That Reward, Or Surprise Trial Promotions That Reward, Or Surprise Or PamperOr Pamper

Spend $100/trip and spin the Wheel Of Fortune for a free store Spend $100/trip and spin the Wheel Of Fortune for a free store brand productbrand product

Spend $100/trip and get a next trip checkout “surprise” coupon Spend $100/trip and get a next trip checkout “surprise” coupon for a free store brand productfor a free store brand product

Demo store brand franks, buns, condiments, chips, soda and Demo store brand franks, buns, condiments, chips, soda and crackers at a Saturday summer parking lot barbecuecrackers at a Saturday summer parking lot barbecue

Friday night in-store singles nights with branded wine and Friday night in-store singles nights with branded wine and store brand cheese and crackersstore brand cheese and crackers

Sample store brand ice cream and cookies at all Grand Sample store brand ice cream and cookies at all Grand Openings, give coupons for repeat purchaseOpenings, give coupons for repeat purchase

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Continuity Programs That Reward, Or Continuity Programs That Reward, Or Surprise Or PamperSurprise Or Pamper

Save UPCs from PL products and get cosmetic/bath itemsSave UPCs from PL products and get cosmetic/bath items

Buy 10 PL products each week for 6 weeks and get flowers Buy 10 PL products each week for 6 weeks and get flowers from retailer’s floral shop for Mother’s Day (tracked by from retailer’s floral shop for Mother’s Day (tracked by Frequent Shopper Card)Frequent Shopper Card)

Earn airline or hotel points with purchase of PL itemsEarn airline or hotel points with purchase of PL items

Earn phone card minutes with purchase of PL itemsEarn phone card minutes with purchase of PL items

Earn local restaurant discounts with purchase of PL items (is Earn local restaurant discounts with purchase of PL items (is trialtrial for the restaurant!) for the restaurant!)

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Volume Programs That Reward, Or Surprise Volume Programs That Reward, Or Surprise Or PamperOr Pamper

Buy 20 PL products and get a coupon for $5.00 off your next Buy 20 PL products and get a coupon for $5.00 off your next shopping trip or gas purchaseshopping trip or gas purchase

Buy 10 PL products for entry in a store sponsored sweepstakes Buy 10 PL products for entry in a store sponsored sweepstakes for a trip to Irelandfor a trip to Ireland

Buy PL franks, buns, chips, pickles, ketchup & napkins and get Buy PL franks, buns, chips, pickles, ketchup & napkins and get a free “Picnic Special” desserta free “Picnic Special” dessert

Buy PL pasta, PL pasta sauce & PL parmesan cheese and get Buy PL pasta, PL pasta sauce & PL parmesan cheese and get PL garlic bread for freePL garlic bread for free

Bundle 6 PL cleaning supply SKUs into a free cleaning bucketBundle 6 PL cleaning supply SKUs into a free cleaning bucket

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Your Role As A Private Label Manufacturer In Your Role As A Private Label Manufacturer In Doing All ThisDoing All This

Think strategically – e.g., not price but Think strategically – e.g., not price but demographicsdemographics

Think category – e.g., how to co-promote with Think category – e.g., how to co-promote with nationals for a mutual win-winnationals for a mutual win-win

Provide solutions – e.g., how store brands can add Provide solutions – e.g., how store brands can add to the “quick, easy, convenient” consumer mind-to the “quick, easy, convenient” consumer mind-setset

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All this is wonderful but where do we get the money?

All this is wonderful but where do we get the money?

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The Optimum Funding Solution Will Materialize When One of The Optimum Funding Solution Will Materialize When One of Today’s Current Mega Retailers Finally Decides to Get Serious Today’s Current Mega Retailers Finally Decides to Get Serious About Building About Building ANDAND MarketingMarketing a Strong Store Brand Program a Strong Store Brand Program

This will generate the funding, just like a new store openingThis will generate the funding, just like a new store opening

Because of the industry’s penchant for “competition-watching”, Because of the industry’s penchant for “competition-watching”, every other retailer who wants to survive and thrive will do the every other retailer who wants to survive and thrive will do the same in an instantsame in an instant

The key to all this will be CEO determination and commitment The key to all this will be CEO determination and commitment which, in turn, will engender total organization focus down and which, in turn, will engender total organization focus down and throughoutthroughout

There are many forces at work in the current environment in There are many forces at work in the current environment in this country which make Hoyt & Company think that this this country which make Hoyt & Company think that this breakout will happen sooner than laterbreakout will happen sooner than later

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Until This Does Happen, What You Can Do As Store Brand Until This Does Happen, What You Can Do As Store Brand Manufacturers To Fund Your Promotion Initiatives Is One Or All Of Manufacturers To Fund Your Promotion Initiatives Is One Or All Of The Following:The Following:

Work in conjunction with your accounts to develop a store-Work in conjunction with your accounts to develop a store-specific strategy designed to maximize ROI – á la the specific strategy designed to maximize ROI – á la the Albertson’s example cited earlierAlbertson’s example cited earlier

Develop a core of national brand manufacturers with whom Develop a core of national brand manufacturers with whom you can umbrella-promote on a rotating basisyou can umbrella-promote on a rotating basis

Collaborate to share costs of group promotions with other Collaborate to share costs of group promotions with other private label manufacturersprivate label manufacturers

Sell your accounts on the benefits of cost-sharing: After all, it’s Sell your accounts on the benefits of cost-sharing: After all, it’s theirtheir brands and brands and theirtheir stores who have the most at stake in stores who have the most at stake in creating a meaningful differentiated imagecreating a meaningful differentiated image

42PLMA0302.ppt

Changing Established Behavior and Attitudes is Tough But The Changing Established Behavior and Attitudes is Tough But The Bright Side Is What Change Has Done For Us Over The Last 100 Bright Side Is What Change Has Done For Us Over The Last 100 YearsYears

In 1900:In 1900:

Life expectancy was 47Life expectancy was 47

Only 14% of homes had bathtubsOnly 14% of homes had bathtubs

Only 8% had a telephoneOnly 8% had a telephone

There were only 8,000 cars and 144 miles of paved roadsThere were only 8,000 cars and 144 miles of paved roads

Maximum speed limit was 10 mphMaximum speed limit was 10 mph

Average wage was 22¢ per hour and the average worker made Average wage was 22¢ per hour and the average worker made between $200 and $400 per yearbetween $200 and $400 per year

95% of all births occurred at home95% of all births occurred at home

Sugar cost 4¢/lb, eggs were 14¢/dozen and coffee 15¢/lbSugar cost 4¢/lb, eggs were 14¢/dozen and coffee 15¢/lb

Marijuana, heroin and morphine were all available over the counter Marijuana, heroin and morphine were all available over the counter in corner drug storesin corner drug stores

Thank You So Much For Your Time Thank You So Much For Your Time and Attention Today!and Attention Today!

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