Pillsbury Cookie Challenge

Rashmi Agrawal Misty Hayden Datta Koshti Sun Ah Park Pramod Rao Arthur Thomas Pat Tramonte

Agenda
Company Background Financial History Challenges Quantitative and Qualitative Analysis Alternative Solutions Recommendation Q&A

Company Background

GMCC is the second largest of the General Mills international divisions GMCC is a leader in the Canadian packaged foods market

Company Background Cont.

RBG is the fourth largest category in GMCC Pillsbury dominates 85% of RBG s market share Pillsbury refrigerated cookie product line generates 75% of the category s profit

Financial History
Zero volume growth for RBG between 2004 & 2006 1% annual volume growth for RBG for the last 3 years

Marketing Challenges
Promotional Product Price Place

Promotional Challenges
Prior Market campaigns developed in US and adapted to Canadian market failed to generate the desired 5 7% annual growth for the RBG category

Product Challenges
Household penetration reduced to 24% ONLY 15% of Canadian customers surveyed believed that the cookies were sized appropriately

Price Challenges
Average retail price is 63% higher than feature price Only 32% of customers perceive value for the price of the Pillsbury refrigerated cookie product

Place Challenges
No challenges related to Place
Channels Coverage Assortment Inventory Transport Locations

Quantitative Analysis
Impulse Buy
They are easy to make They are quick to make Can make them at the spur of the moment Easier than baking cookies from scratch Good Value for the Price For my own indulgence Canada US Difference 4% 4% 0% 7% 1% -9%

79% 79% 68% 59%

32% 30%

75% 75% 68% 52%

31% 39%

Quantitative Analysis
Kids
The kids like to eat them As a special treat for the kids Fun thing to bake with the kids The kids like to make them Fun activity with the kids My child(ren) requests them Is an opportunity to teach the kids how to bake Canada 47% 42% 42% 42% 41% 28% 19% US 37% 34% 29% 30% 28% 20% 15% Difference 10% 8%

13% 12% 13%

8% 4%

Quantitative Analysis
Scratch/Quality
Easier than baking cookies from scratch Canada US Difference

59%

52%

7%

It's similar to homemade cookie dough

31%

36%

-5%

Is a high-quality cookie dough

29%

41%

-12%
-7%

Is like homemade cookie dough

28%

35%

Qualitative Analysis
Easy, Quick, Practical, Affordable, and Pleasing to Children Brings Smile, Feels Good to Make Difference Special: Sharing, Eating Cookie not Baking All Devoted Mothers Love for Pillsbury : Little Secret

Alternatives: Placement in Refrigerated Section

Reasoning: Eye Level placement is ideal for the impulse buy. Pros Makes Product More Accessible More noticeable for impulse buy Cons May Cost More for Premium Eye-Level Shelf-placement

Alternatives: Baking Aisle Product Placement

Reasoning: Cookie dough purchase is impulsive. Pros Increases the opportunity for impulse buy Greater exposure to scratch buyers Cons Additional expense required associated with location May not be feasible for some retailers Increased inventory expense for retailers

Alternatives: Create a Box-Top Initiative For Schools

Reasoning: Establishes a new channel for marketing brand while maintaining the target involvement of children. Pros Increase goodwill (CSR) Expands Market (Day-Care, etc.) Cons Additional Expense to promote to schools Possible Push-back from parents/teachers (nonhealthy product)

Alternatives: Right Message on Packaging for Kids & Mothers

Reasoning: To focus more on quality for mothers and attractive packaging for kids. Pros Appeals to the scratch users on quality of the product Appeals to the kids to associate Pillsbury as a fun product Cons Expense to License the Characters, e.g. Tigger Possible Increase in unit Price, Lower Sales

Alternatives: Create Rewards/Incentives for Children

Reasoning: Use Stickers/Tokens/Codes to increase the awareness, brand loyalty and attract customers with children Pros Increase brand loyalty Use influence of children to increase sales Cons Additional expenses to run the program

Alternatives: Develop New Product for Kids

Reasoning: Kids play a larger role as purchase driver in Canada than US. Pros Potential higher volume of sales due to influence of children Establish brand loyalty Cons Possibility of missing the segment of target market which is scratch users Negative media exposure regarding childhood obesity Specialized product development costs for Canadian market alone

Alternatives: Develop a New High Quality Product

Reasoning: To target scratch users. Pros Quality ingredients are more in line with made from scratch cookies Higher profit margin opportunity Cons Higher price point Cannot replicate the user experience of making a cookie from scratch Development costs for premium product for Canadian market alone

Alternatives: Develop Marketing Ad-campaign

Reasoning: To target scratch users. Pros Increased customer value perception Refrigerated cookie is just like homemade Reduced time and effort involved in baking Increased market share Cons Large expense of the advertisement development Cannot compete with freshness or experience of scratch cookies

Recommendations
Create Target Market Campaign Restructure Product Placement Restructure Packaging Create a Rewards Program

Target Market Campaign

Television Ad Campaign Aimed at Untapped Scratch-Users Segment
61% of the Canadian Market Scratch Taste= RBG Taste
Development Expense for New TV Advertisement

TV Advertising Expense Regular Retail Price Required Unit Sales for ROI (Breakeven)

$200,000 $500,000 $2.99 $4.99 per package 66,890 100,200 packages

Product Placement
Eye Level Product Placement Easy Access for Impulse Buyer

Packaging
Influential Message Cater to Target Market
Kids(Biggest Growth Opportunity) Mothers

Rewards Program
Catered to Children Creates Brand Awareness Sticky Customer

Q&A
Thank you for your time!

We would like to welcome your questions at this time.