Nielsen Training Katz Graduate School of Business January

Agenda • Overview of Nielsen • Data Collection • Foundation of Analysis – 4 Dimensions – Overview of terms, definitions • Nitro training / demonstration Foundation of Analysis: Retail Measurement Data Slide 2 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Company Overview Confidential & Proprietary • Copyright © 2008 The Nielsen Company

The World Leader in Understanding Consumer Behavior Who We Are We are the world’s leading provider of marketing and media information, leading publisher of business-to-business magazines and e-media and leading producer of trade shows and conferences. What We Do We harness the power of our information and the expertise of our people to help businesses of all kinds discover their growth opportunities through better understanding of consumers, markets and industry trends. Why We Do It We’re in business to serve business and aim to provide our clients with superior service and value, to grow our business profitably, and to deliver superior returns to our shareholders. Foundation of Analysis: Retail Measurement Data Slide 4 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Nielsen Global Reach Services in over 100 countries Europe, Middle East and Africa Wavre, Belgium The Americas Schaumburg, Illinois Asia Pacific World HQ New York, NY Hong Kong, China ACNielsen Presence Foundation of Analysis: Retail Measurement Data Slide 5 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Quick Facts – The Nielsen Company Provides millions of people around the world with business and professional intelligence Market leader with premium brands New York (USA) 42, 000 employees worldwide $4. 3 billion (2005) Foundation of Analysis: Retail Measurement Data Slide 6 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Our History • Founded in 1923: Arthur C. Nielsen, Sr. • Pioneered retail, media measurement disciplines • Developed concept of ‘market share’ • Developed original television & radio ratings business: Nielsen Families Foundation of Analysis: Retail Measurement Data Slide 7 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Our Assets & Brands are Leveraged to Support and Grow our Partners businesses Client Business Partner Foundation of Analysis: Retail Measurement Data Slide 8 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Nielsen Client Partners …Many of the World’s Best-Known Brands Confidential & Proprietary Copyright ©

Data Collection & Quality Source of Scanning Information Confidential & Proprietary • Copyright ©

A Look at the Consumer Packaged Goods [CPG] Industry Manufacturer Retailer Foundation of Analysis: Retail Measurement Data Consumer Slide 12 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Nielsen Collects Data from Retailers & Consumers. . . Manufacturer Data Retailer Foundation of Analysis: Retail Measurement Data Consumer Slide 13 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Nielsen Collects Data from Retailers & Consumers. . . Manufacturer Data Retailer Consumer …& sells / trades data to the manufacturer & retailer Foundation of Analysis: Retail Measurement Data Slide 14 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Data Collection & Quality Source of Information Retailer Sample Stores Foundation of Analysis: Retail Measurement Data · Consumer sales · Retail price Slide 15 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Data Collection & Quality Source of Information Retailer Sample Stores ACNielsen’s Field Auditors Foundation of Analysis: Retail Measurement Data · Consumer sales · Retail price · Display presence · Custom observations(inventory levels, facings, linear shelf measurements, etc. ) Slide 16 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Data Collection & Quality Source of Information Retailer Sample Stores · Consumer sales (audit or scan) · Retail price ACNielsen's Field Auditors · Display presence · Custom observations(inventory ACNielsen’s Feature Coders Foundation of Analysis: Retail Measurement Data levels, facings, linear shelf measurements, etc. ) · All retailer print advertising · Standardized ABC feature coding Slide 17 Confidential & Proprietary Copyright © 2008 The Nielsen Company

We Collect Data Across Multiple Outlets. . . Supermarkets Gas Convenience Stores Mass Merchandisers Independent Food Stores Supercenters Chain Convenience Stores Foundation of Analysis: Retail Measurement Data Slide 18 Drug Stores Confidential & Proprietary Copyright © 2008 The Nielsen Company

We Use Two Primary Methods to Collect Raw Data. . . In-Store Field Audits Scanning and • Retailers provide sales and price data – scanned purchases – all UPC-coded items – each week for every store included in sample Foundation of Analysis: Retail Measurement Data Slide 19 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Foundation of Analysis – Retail Measurement Data Confidential & Proprietary • Copyright © 2008

Goal and Objectives Provide a foundation for understanding some of the common differences in facts and help determine the best choice for an analysis. • Provide an overall approach to analysis of data • Provide analysis tips for using facts in an analysis • Determine the best fact to use in a particular situation Foundation of Analysis: Retail Measurement Data Slide 21 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Accurate Data Consists of Four Parts Periods When did it occur? Markets Where did it happen… geography, sale territory or Retailer Products What item(s), brand(s), flavor(s) am I interested in? Facts What type of issue? Foundation of Analysis: Retail Measurement Data Slide 22 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Periods Foundation of Analysis: Retail Measurement Data Slide 23 Confidential & Proprietary Copyright ©

Periods • Monthly (4 wk) and Weekly hard-coded time periods reside on all Heinz databases – Monthly data goes back 5 years – Weekly data goes back 3 years – We also have stored several years of hard coded 52 week time periods • Custom time periods have also been created for your use (Latest 4, 12, 24, & 52 Wks, Fiscal Quarters, etc. ), built off of the monthly & weekly periods – When using the custom time periods, be sure to select the correct ones for the measure you selected – Monthly time periods should be used for all ACV-based measures – Weekly time periods must be used for all promotion-based measures (including ACV by promo type) Foundation of Analysis: Retail Measurement Data Slide 24 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Markets Foundation of Analysis: Retail Measurement Data Slide 25 Confidential & Proprietary Copyright ©

4 Regions & 9 Divisions for Census Mountain West North Central New England East North Central Mid. Atlantic Pacific South Atlantic West Central East South West South Central Foundation of Analysis: Retail Measurement Data East South Central Slide 26 26 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Census Regions & Divisions • West • Central – Pacific – West North Central – California – Oregon – Washington – Mountain – Arizona – Colorado – Idaho – Montana – Nevada – New Mexico – Utah – Wyoming – Iowa – Kansas – Minnesota – Missouri – Nebraska – North Dakota – South Dakota – East North Central – Illinois – Indiana – Michigan – Ohio – Wisconsin • • East South – West South Central – New England – Connecticut – Maine – Massachusetts – New Hampshire – Rhode Island – Vermont – Mid Atlantic – Pennsylvania – New Jersey – New York – Arkansas – Louisiana – Oklahoma – Texas – East South Central – Alabama – Kentucky – Mississippi – Tennessee – South Atlantic – Delaware – Florida – Georgia – Maryland – North Carolina – South Carolina – Virginia – West Virginia • Note: Markets Defined by US Government 27 Foundation of Analysis: Retail Measurement Data Slide 27 Confidential & Proprietary Copyright © 2008 The Nielsen Company

ACNielsen Total U. S. 52 SCANTRACK Markets • Note: Markets Defined by Nielsen Foundation

Example: ACNielsen SCANTRACK® Atlanta - Food Maps are a geographic representation at the time of development and may not reflect recent changes. Please refer to the market profile for county listings. Foundation of Analysis: Retail Measurement Data Slide 29 Confidential & Proprietary Copyright © 2008 The Nielsen Company

________________________ ATLANTA _____________________________ | Supermarket Composition and | Claritas Estimates NSUS Sample Representation | as of January 1, 2004 as of Mar 04 | % US Number NSUS | TOTAL POPULATION 5, 905, 600 2. 0% Over Sample | TOTAL HOUSEHOLDS 2, 163, 200 2. 0% $2 MM Cooperation | EFFECTIVE BUYING INCOME($000) 119, 291, 928 2. 2% |__________________________________ Major Retail Chains | KROGER 143 YES | ACNielsen Type Food Stores PUBLIX 135 YES | ACNielsen Control Estimates INGLES 70 YES | as of December 31, 2001 SAVE RITE 43 YES | Number % US ACV ($000) % US BI LO 17 YES | TOTAL FOOD STORES 2, 592 1. 6% $ 9, 258, 802 1. 9% FOOD LION 13 YES | QUALITY FOODS 12 NO | STORES $4 MM AND OVER 555 7, 892, 907 WAYFIELD FOODS 12 NO | STORES $2 MM AND OVER 623 8, 103, 955 |__________________________________ | | Market by County Wholesaler Representation | CHAMBERS AL CHEROKEE AL CLEBURNE AL RANDOLPH AL SUPERVALU YES | BALDWIN GA BANKS GA BARROW GA BARTOW GA PIGGLY WIGGLY ALABAMA DIS YES | BUTTS GA CARROLL GA CHATTOOGA GA CHEROKEE GA MERCHANTS DISTRIBUTORS YES | CLARKE GA CLAYTON GA COBB GA COWETA GA MITCHELL GROCERY YES | DAWSON GA DE KALB GA DOUGLAS GA FANNIN GA ASSOC WHOLESALE GROCERS YES | FAYETTE GA FLOYD GA FORSYTH GA FULTON GA | GILMER GA GORDON GA GREENE GA GWINNETT GA | HALL GA HANCOCK GA HARALSON GA HARRIS GA Wholesaler Information from | HEARD GA HENRY GA JACKSON GA JASPER GA Trade Dimensions' Store File | JONES GA LAMAR GA LUMPKIN GA MERIWETHER GA | MONROE GA MORGAN GA MURRAY GA NEWTON GA | OCONEE GA OGLETHORPE GA PAULDING GA PICKENS GA | PIKE GA POLK GA PUTNAM GA ROCKDALE GA | SPALDING GA TALBOT GA TOWNS GA TROUP GA | UNION GA UPSON GA WALTON GA WHITE GA | WHITFIELD GA CLAY NC | | | COPYRIGHT 2004 A. C. NIELSEN COMPANY 04/12/04 Foundation of Analysis: Retail Measurement Data Slide 30 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Trading Areas & Competitive Markets • Sample/Census Trading Area: counties it includes are defined by the particular retailer, data reported is for that retailer’s stores only • Competitive Markets: all retailers within the trading area counties that participate in the sample are included in the data reported, this includes the trading area particular retailer sales as well Foundation of Analysis: Retail Measurement Data Slide 31 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Example: Custom SCANTRACK® Trade Area Cub Minneapolis Maps are a geographic representation at the time of development and may not reflect recent changes. Please refer to the market profile for county listings. Counties within the circle make up the trading area, all participating retailer stores falling within those counties make up the data reported for Cub Minneapolis Foundation of Analysis: Retail Measurement Data Slide 32 Confidential & Proprietary Copyright © 2008 The Nielsen Company

____________________CUB TWIN CITIES TRADING AREA________________________ | Supermarket Composition and | Claritas Estimates NSUS Sample Representation | as of January 1, 2003 as of Jan 04 | % US Number NSUS | TOTAL POPULATION 3, 021, 600 1. 1% Over Sample | TOTAL HOUSEHOLDS 1, 161, 800 1. 1% $2 MM Cooperation | EFFECTIVE BUYING INCOME($000) 73, 989, 445 1. 3% |__________________________________ Major Retail Chains | CUB FOODS 48 YES | ACNielsen Type Food Stores RAINBOW (ROUNDY'S) 31 YES | ACNielsen Control Estimates BYERLYS 11 NO | as of December 31, 2001 | Number % US ACV ($000) % US | TOTAL FOOD STORES 881 0. 5% $ 5, 124, 729 1. 1% | Wholesaler Representation | STORES $4 MM AND OVER 214 4, 569, 714 SUPERVALU YES | STORES $2 MM AND OVER 252 4, 679, 638 NASH FINCH YES |__________________________________ | | Market by County Wholesaler Information from | ANOKA MN CARVER MN CHISAGO MN DAKOTA MN Trade Dimensions' Store File | HENNEPIN MN ISANTI MN RAMSEY MN SCOTT MN | SHERBURNE MN WASHINGTON MN WRIGHT MN ST CROIX WI | | | COPYRIGHT 2004 A. C. NIELSEN COMPANY 01/23/04 Comp Market data is composed of the Major Retail Chains that cooperate in the sample in these counties. They include only Rainbow and Cub Foods for the Minneapolis Cub Comp Market Foundation of Analysis: Retail Measurement Data Slide 33 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Products Foundation of Analysis: Retail Measurement Data Slide 45 Confidential & Proprietary Copyright ©

Product Overview • Industry Subtotals – Heinz defined aggregates based on how company views the category – Only available on custom databases • Hierarchy – Nielsen defined department, category and brand aggregates across the grocery store – Only available on Strategic Planner • Characteristics – Ability to filter through all database UPCs based on unique characteristics of products – Ex: size, flavor, meat type, container type – Characteristic availability differs by category – Uses: UPC level output, need to create custom aggregates based on product characteristics when not available via Industry Subtotals – Available on all databases Foundation of Analysis: Retail Measurement Data Slide 46 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Facts Foundation of Analysis: Retail Measurement Data Slide 47 Confidential & Proprietary Copyright ©

Why is it important to understand facts? • There a tremendous number of facts • The difference between similar facts is important • The application drives the correct choice of fact • There is never any one correct fact • There is always a best fact for the specific application in question Foundation of Analysis: Retail Measurement Data Slide 48 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Analytical Thinking Certain mathematical tools and calculations can be very helpful, but. . . knowing how to use them, more so than actually deriving them, is most important. Foundation of Analysis: Retail Measurement Data Slide 49 Confidential & Proprietary Copyright © 2008 The Nielsen Company

So, What Do I Do With the Numbers? • Numbers tell you little by themselves. • Usually you look at numbers in terms of other reference points • Or you combine them with other information to form a conclusion, answer questions, set objectives, make plans, etc. Foundation of Analysis: Retail Measurement Data Slide 50 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Analysis Tip – The Analytic Path Most issues can be addressed by drilling down this path Issue Base Volume Distribution Velocity % ACV (Breadth) # of Items (Depth) Incremental Volume Base Price Promotion Support (Quantity) Promotion Effectiveness (Quality) Competitive Activity Level of Support Promo Mix Promo Price Other Factors Price Discount Competitive Activity Foundation of Analysis: Retail Measurement Data Slide 51 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Analysis Tip – Prioritize Key Issues To set up a logical flow and to avoid “analysis paralysis”, start with the higher level trends then work into the individual drivers Base vs Increm ental Total Volume Trends Recommended Level of Detail Base & Increme ntal Drivers Distribution Everyday Pricing se Ba In Dependent upon level of chg Level of Detail cr e m en t al Trade Support Discount Category. Segments Manufacturers Competitive Brands Your Brand Foundation of Analysis: Retail Measurement Data Slide 52 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Volume and Share Foundation of Analysis: Retail Measurement Data Slide 53 Confidential & Proprietary

Sales Volume • Measures the amount of product sold over a given time period • Sales Dollars – Dollar value of total sales • Sales Units – Total package sales • Equivalent Unit Sales – Total sales on an equivalized basis (pounds, cases, servings, etc. ) • Uses – Tracking – Ranking – Share calculations – Show a brand’s importance to the category Foundation of Analysis: Retail Measurement Data Slide 54 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Share • Measures the % of sales that a product accounts for • Influenced by two different measures – Brand Sales and Category Sales Foundation of Analysis: Retail Measurement Data Slide 55 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Share Activity • What do the following sales scenarios have in common? – Brand sales flat, category declines – Brand sales up, category flat – Brand sales up a lot, category up a little Foundation of Analysis: Retail Measurement Data Slide 56 Confidential & Proprietary Copyright © 2008 The Nielsen Company

When to Use – Volume and Share When concerned with… Use… Absolute volume; Absolute volume change Unit, Dollar, Eq Sales volume Comparing performance relative to the category or segment Unit, Dollar, Eq Share Relating volume to profit; Comparing across different categories Dollar Sales Controlling for disparate package sizes Equivalized Sales Absolute item movement; Comparing sales to shipments Unit Sales Foundation of Analysis: Retail Measurement Data Slide 57 Confidential & Proprietary Copyright © 2008 The Nielsen Company

When To Use – Volume Benchmarks Use Benchmarks to compare category and brand trends When concerned with… Use… Analyzing category growth in a retailer or channel that is growing significantly. Example: Category B grew 16% in Kroger last year. However, since Kroger grew its total $ sales by 22%, Category B is not keeping pace with its potential growth in Kroger. ACV growth / Total $ Ring Growth Analyzing mature categories that have not seen significant innovation Examples: Categories that are considered “staple” items. If population is growing at 3% a year, a staple category should see growth just by maintaining its penetration and buying rate. Population Growth Evaluating categories that have restricted shelf space Examples: Frozen departments, Checkout-aisle racks, coolers Department Growth Macro consumer trends affecting your category and related categories Examples: Categories affected by Low Carb diets, Convenience, Trans -fats Equivalized Sales Foundation of Analysis: Retail Measurement Data Slide 58 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Different Ways to Look at Volume Promoted Volume + Non-Promoted Volume TOTAL VOLUME Baseline Volume Foundation of Analysis: Retail Measurement Data + Incremental Volume Slide 59 Confidential & Proprietary Copyright © 2008 The Nielsen Company

The Benefits of Identifying Promoted Vs. Non -Promoted Volume • Provides an indication of what percent of a brand’s volume came from stores with a promotion. • Provides an indication of what percent of a manufacturer’s deal was passed on to the consumer by the retailer. • Retailers’ trade promotion execution can be observed. Foundation of Analysis: Retail Measurement Data Slide 60 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Analysis Tip – Promoted Volume Promoted volume is useful for determining how deal reliant a brand is Interpretation: • Our brand receives a higher share of category promoted volume compared to it’s share of sales • Our competitor’s promoted volume share is under-indexed relative to it’s market share Foundation of Analysis: Retail Measurement Data Slide 61 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Baseline Volume • Normal expected everyday sales in the absence of any store-level promotion • A statistically calculated measure NOT adjusted for FSIs, print, TV and market-level affects • Uses – Track the underlying health of a brand compare it to its competition – Analyze merchandising effectiveness in conjunction with incremental volume Foundation of Analysis: Retail Measurement Data Slide 62 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Baseline Calculation 170 Unit Sales 75 75 Display Week week 1 week 2 Foundation of Analysis: Retail Measurement Data week 3 week 4 Slide 63 week 5 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Baseline Calculation 170 In Week 4 Baseline estimate would be 75 units based on pre and post week sales Unit Sales 75 75 75 Display Week week 1 week 2 Foundation of Analysis: Retail Measurement Data week 3 week 4 Slide 64 week 5 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Baseline Volume Includes Marketplace Conditions that Affect Sales of a Product Baseline Category Trends Long-Term Seasonality Foundation of Analysis: Retail Measurement Data Market-Level Effects Slide 65 Brand Trends Confidential & Proprietary Copyright © 2008 The Nielsen Company

Reasons for Total/Baseline Volume Differences • Total volume below baseline – Competitive activity – Out of stock – Seasonal/holiday • Total volume above baseline – Promotions or advertising not captured by regular means – Market-level influences (e. g. , battery sales during a hurricane in Miami) Foundation of Analysis: Retail Measurement Data Slide 66 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Incremental Volume • Represents the additional predicted volume that results from in-store promotion • Calculation: Total Actual Volume Baseline Volume = Incremental Volume Foundation of Analysis: Retail Measurement Data Slide 67 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Incremental Volume 170 In Week 4 Incremental volume would be 95 units 95 Unit Sales 75 75 75 Display Week week 1 week 2 Foundation of Analysis: Retail Measurement Data week 3 week 4 Slide 68 week 5 Confidential & Proprietary Copyright © 2008 The Nielsen Company

How Can Incremental Volume Be Negative? • If actual sales are less than expected sales – Out-of-stocks – Competitive activity Actual sales are below estimated Base – Incremental is negative 15 units Unit Sales 170 75 75 75 week 1 week 2 Foundation of Analysis: Retail Measurement Data 60 week 3 75 75 week 4 week 5 Slide 69 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Analysis Tip - Base and Incremental Volume Identifying whether a volume change is coming primarily from base or incremental volume is a good way to start an analysis Interpretation: • For the Food and Drug channels, an increase in Incremental EQ volume is not enough to offset a decline in Base EQ volume. • Target is showing significant growth, driven by both base and incremental volume. Foundation of Analysis: Retail Measurement Data Slide 70 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Analysis Tip - Base and Incremental Volume Base and Incremental trends will determine potential strategies Foundation of Analysis: Retail Measurement Data Slide 71 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Base Volume = Non-Promoted Volume Incremental Volume = Promoted Volume Base vs. Non-Promoted • Base volume estimates sales in all stores • Non-Promoted volume is measured only in stores that did not run a promotion – Subset of stores Incremental vs. Promoted • Incremental volume estimates additional sales due to promotions – Volume sold above the base • Promoted volume measures all volume sold on deal Foundation of Analysis: Retail Measurement Data Slide 72 Confidential & Proprietary Copyright © 2008 The Nielsen Company

When to Use – Base, Incremental, Promoted, Non-Promoted Volume When concerned with… Use… Understanding the underlying health and trends of a brand Baseline Volume Measuring the effectiveness and efficiency of trade promotions Incremental Volume Quantifying the importance of promotional activity to a brand Promoted Volume Quantifying the amount of volume sold in stores that did not provide trade support Non-Promoted Volume Foundation of Analysis: Retail Measurement Data Slide 73 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Sales Volume is influenced by Seasonality • Consumers value certain products more (or less) during the year. • Examples of seasonality – Holidays or “event” driven: 4 th of July, Thanksgiving, Cinco de Mayo, Back to School, etc. – Seasonal: BBQ sauce and ice cream during the summer or soup and crackers in the winter Foundation of Analysis: Retail Measurement Data Slide 74 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Seasonality Calculation 1. Divide annual base volume by 52 to get expected weekly sales (in the absence of seasonality and promotion). 2. Divide actual base weekly volume by expected weekly sales (just calculated in step 1) to derive a seasonality index Foundation of Analysis: Retail Measurement Data Slide 75 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Analysis Tips - Seasonality • Use Base Volume when calculating seasonality to negate promotion-driven volume spikes • Be careful of moving holidays and market level effects • In a category that has encountered a lot of activity 2 years of history should be used • Compare versus the year-ago period rather than a prior period • For categories with extreme seasonality look at “on season” versus “off season” periods Foundation of Analysis: Retail Measurement Data Slide 76 Confidential & Proprietary Copyright © 2008 The Nielsen Company

ACV Distribution and Velocity Foundation of Analysis: Retail Measurement Data Slide 77 Confidential &

Understanding the “Whys” to Changes in Baseline Volume Baseline sales can be impacted by different market factors. Baseline Volume Distribution % ACV (Breadth) # of Items Carried (Depth) * Non-Nielsen measures Foundation of Analysis: Retail Measurement Data Velocity Base Price Seasonality *Advertising Support *Manuf. Coupons/FSI’s *Brand Awareness/Image *Product Quality *Weather *Consumer Promotions *Sampling Slide 78 Competitive: Distribution Price Merchandising *Advertising *Coupons Confidential & Proprietary Copyright © 2008 The Nielsen Company

How Is Distribution Foundation of Analysis: Retail Measurement Data Measured? Slide 79 Confidential &

ACV Distribution • ACV Distribution is a measure of a product’s availability • Can be measured in terms of breadth and depth – Breadth: percent of All Commodity Volume that carries your brand – Depth: number sku’s that are carried in the stores that sell your brand Foundation of Analysis: Retail Measurement Data Slide 80 Confidential & Proprietary Copyright © 2008 The Nielsen Company

What is Distribution? • Distribution is the measure of the availability of a product. For an individual item, distribution depends on two basic variables: – How many stores stock the item? – How large are those stores? Foundation of Analysis: Retail Measurement Data Slide 81 Confidential & Proprietary Copyright © 2008 The Nielsen Company

All Commodity Volume $ (ACV) • An individual store’s/market’s ACV is the dollar volume of everything the store sold during a period—all the merchandise that passed over the scanner (or was rung on the register) • The sum of the ACVs of all the stores within a given channel is the ACV for the channel. Likewise, the sum of the ACVs for all the stores in a market is the ACV for the market (Market ACV $ fact on database) Foundation of Analysis: Retail Measurement Data Slide 82 Confidential & Proprietary Copyright © 2008 The Nielsen Company

All Commodity Volume $ (ACV) Explanation JONES’s The 7 Food Stores SMITH’s In This Market Sell $300, 000 Per Week A) $36, 000 (12%) SMITH’s JONES’s B) $36, 000 (12%) B) $48, 000 (16%) SMITH’s JONES’s C) $48, 000 (16%) SMITH’s Grocery Chain * Has 3 stores in the market doing $132, 000 per week for a total of 44% of the ACV Foundation of Analysis: Retail Measurement Data A) $60, 000 (20%) JONES’s C) $36, 000 (12%) D) $36, 000 (12%) JONES’s Grocery Chain * Has 4 stores in the market doing $168, 000 per week for a total of 56% of the ACV Slide 83 Confidential & Proprietary Copyright © 2008 The Nielsen Company

All Commodity Volume $ (ACV) Explanation If These 3 Stores Sold Your Product This Week, What Would The %ACV Be? SMITH’s B) $36, 000 (12%) SMITH’s B) $48, 000 (16%) JONES’s A) $60, 000 (20%) JONES’s B) $36, 000 (12%) JONES’s SMITH’s C) $48, 000 (16%) Foundation of Analysis: Retail Measurement Data B) $36, 000 (12%) D) $36, 000 (12%) Slide 84 Confidential & Proprietary Copyright © 2008 The Nielsen Company

All Commodity Volume $ (ACV) Explanation ANSWER: 20% ACV + 16% ACV + 12% ACV = 48% ACV JONES’s A) $60, 000 (20%) SMITH’s B) $48, 000 (16%) JONES’s D) $36, 000 (12%) Foundation of Analysis: Retail Measurement Data Slide 85 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Breadth of Distribution -- % ACV A measure of breadth, or reach, indicates how many consumers have the opportunity to buy the product • % ACV Selling serves as a good weighting factor when measuring distribution. • All stores are not created equal • Higher ACV stores serve more consumers Foundation of Analysis: Retail Measurement Data Slide 86 Confidential & Proprietary Copyright © 2008 The Nielsen Company

% ACV Selling is NOT Distribution • Real on-shelf distribution is almost always higher – Most products do not sell in every store every week – Out-of-stocks can happen One other point to remember… Just because an item is authorized at Chain Headquarters does not mean that every store actually stocks it. Foundation of Analysis: Retail Measurement Data Slide 87 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Analysis Tip - % ACV Selling Use 4 Wk Periods only! Use longer timeframes to get the best picture of “distribution” Brand A Sales Week 1 Store A (40% ACV) X Week 2 Week 3 X X Store C (25% ACV) X X 60% 40% 4 -Week Total X Store B (35% ACV) Total Week 4 X X X 35% 100% Average Weekly % ACV = 48% Foundation of Analysis: Retail Measurement Data Slide 88 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Analysis Tip - % ACV Selling In most cases, use the latest period when analyzing % ACV Selling • Represents the current state of the business • Averaging longer time periods may mask more recent trends % ACV Selling 75 70 67 55 4 wks ending Apr 4 wks ending May Foundation of Analysis: Retail Measurement Data 4 wks ending Jun Slide 89 Latest 12 wks AVG Confidential & Proprietary Copyright © 2008 The Nielsen Company

Depth of Distribution Use 4 Wk Periods only! Depth assesses the variety of different items being sold • Cumulative Distribution Points (CDP) or Total Distribution Points (TDP) –Measures both the number and size of stores that carry your brand the number of sku's each store carries • Average Number of Items Handled –On average, the number of sku's carried in the stores that sell your brand Foundation of Analysis: Retail Measurement Data Slide 90 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Cumulative Distribution Points (CDP) • Also called Total Distribution Points (TDP) • Calculated by adding the %ACV of each individual sku %ACV CDP BRAND X 98% 295 Flavor 1 Flavor 2 Flavor 3 Flavor 4 95% 90% 80% 30% 95 90 80 30 } Sum =295 Use 4 Wk Periods only! Foundation of Analysis: Retail Measurement Data Slide 91 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Difference from %ACV CDP shows us that while Brand A and Brand B are both sold in 100% of the stores in this market, Brand A has more items available in each of the stores. Brand A Brand B % ACV CDP 100% 2100 990 %ACV tells us breadth of distribution Foundation of Analysis: Retail Measurement Data CDP tells us depth of distribution Slide 92 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Average Number of Items Handled • Dividing Cumulative Distribution Points by %ACV gives the Average Number of UPC's Carried within those stores selling the brand. – The average store in this market carries 21 upc’s of Brand A. % ACV Brand A Brand B 100% Foundation of Analysis: Retail Measurement Data CDP 2100 990 AVG # Items 21. 0 9. 9 Slide 93 Use 4 Wk Periods only! Confidential & Proprietary Copyright © 2008 The Nielsen Company

Analysis Tip – Average Number of Items Handled Use Average Number of Items Handled to compute a Fair Share index comparing share of items to share of sales AVG # Items Share of Sales Fair Share Index Category 57. 5 100. 0 Brand A 21. 0 36. 5 31. 0 117 Brand B 9. 9 17. 2 27. 0 64 Interpretation: Brand B’s share of items is underdeveloped relative to it’s share of sales. Potential to additional Brand B items to the shelf Foundation of Analysis: Retail Measurement Data Slide 94 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Analysis Tip – Cumulative Distribution Points CDP’s may explain volume changes that might not be seen when looking at % ACV Distribution Points % ACV 100 100 100 690 685 693 658 609 584 1 2 3 4 5 6 Period Interpretation; The brand’s base sales began eroding in period 4, yet % ACV remained at 100%. However, depth of distribution declined as the brand lost the equivalent of one item. Foundation of Analysis: Retail Measurement Data Slide 95 Confidential & Proprietary Copyright © 2008 The Nielsen Company

When To Use - ACV facts When concerned with… Use… Breadth of distribution – the number of stores carrying your product % ACV Selling Trending overall depth or quality of distribution over time How many sku’s are carried in stores that sell your brand; Fair Share Analysis – comparing share of shelf to share of sales Cumulative Distribution Points; Total Distribution Points Average Number of Items Handled Foundation of Analysis: Retail Measurement Data Slide 96 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Velocity Measures brand strength while controlling for distribution • Sales Per Million ACV – Average sales of a product for every million dollars of ACV that is scanned – Comparisons across and within markets • Sales Per Point – Average sales of a product for every percentage point of ACV distribution – Comparisons within markets only Foundation of Analysis: Retail Measurement Data Slide 97 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Uses of Velocity • Marketing – Is my growth distribution driven or velocity driven? – Velocity driven growth can be long term, signaling consumers like your product and are buying more. – Distribution driven growth can be limited because soon you will run out of new stores to carry your product. • Sales – Prove your product sells faster than the competition and deserves shelf space. Foundation of Analysis: Retail Measurement Data Slide 98 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Analysis Tips - Velocity • When comparing brands with differing numbers of UPC's, use Sales Per Cumulative Points of Distribution – Divide sales by CDP – Brands with a greater number of UPC's will tend to have stronger turns as more items contribute to overall sales • Use caution when tracking Sales Per Point of Distribution for a new product – Distribution will be growing as the product gains distribution in new retailers and markets, resulting in fluctuating turns Foundation of Analysis: Retail Measurement Data Slide 99 Confidential & Proprietary Copyright © 2008 The Nielsen Company

CDI/BDI MEASURES Comparison of CDI and BDI identifies product opportunity or vulnerability by geographic area. • Category Development Index – Category volume indexed to the population index in relation to the United states norm. (TTL US = 100) • Brand Development Index – Brand volume indexed to the population index in relation to the United states norm. (TTL US = 100) Foundation of Analysis: Retail Measurement Data Slide 100 Confidential & Proprietary Copyright © 2008 The Nielsen Company

CDI/BDI MEASURES Population Development Index—The importance of product sales compared to the importance of the population in a market. % of Total U. S. Population in Chicago: % of Total U. S. Brand A $ Sales in Chicago: 7% 13% How to calculate a Development index. . . % of Sales: 13% % of Population: 7% = 1. 86, then multiply by 100 to derive an index = 186 This means that for every person in Chicago, Brand A $ sales are almost twice as important as the average market. Foundation of Analysis: Retail Measurement Data Slide 101 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Analysis Tip – CDI/BDI Use CDI/BDI’s to prioritize market opportunities Foundation of Analysis: Retail

Analysis Tip – CDI/BDI Calculate an Opportunity Index to further prioritize markets How to calculate an Opportunity index. . . CDI X 100 = Opportunity Index BDI Oppy CDI BDI Index Chicago 106 95 112 Indianapolis 159 116 137 Interpretation—The brand has a larger opportunity gap in Indianapolis even though both the category and brand indices are above 100, compared to Chicago where the category is over 100 and the brand is under 100 Foundation of Analysis: Retail Measurement Data Slide 103 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Promotion, Promotion Effectiveness and Pricing Foundation of Analysis: Retail Measurement Data Slide 104 Confidential

Understanding the “Whys” to Changes in Incremental Volume Incremental sales can be impacted by different merchandising factors. Use 1 Wk Periods only! Incremental Volume Promotion Support (Quantity Promotion Effectiveness (Quality) Level of Support • Promotion Mix • Promotion Price • Level of Price Discount • Competitive Conditions in Promoting Stores Foundation of Analysis: Retail Measurement Data Slide 105 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Promotions What could cause this spike in sales? Foundation of Analysis: Retail Measurement Data

Promotion Types Nielsen measures three types of trade promotions • Temporary Price Reductions (TPR) – A 5% discount (or more) off a product's regular price • Features – Print ad placed by the retailer used to promote a specific product • Displays – Temporary secondary stocking location for a product Foundation of Analysis: Retail Measurement Data Slide 107 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Features • Features are retailer print advertisements or other special printed promotions: – Ads inserted in Newspapers – Store Flyers / Circulars • Nielsen Feature Coders collect and classify all retailer features from the entire Nielsen store sample. • The features are classified into A, B, C or Coupon Ads, based on the size of the ad • FSIs (Free Standing Inserts) are excluded since they are manufacturer promotions Foundation of Analysis: Retail Measurement Data Slide 108 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Displays • Information collected for all Nielsen sample stores every week • Three conditions to be considered a display: – Temporary secondary location – Special effort by the retailer to attract attention and to boost sales of the item – Contain actual merchandise accessible to the customer. Foundation of Analysis: Retail Measurement Data Slide 109 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Temporary Price Decrease (TPR) • Consists of those Stores/Weeks where a Price Decrease of at Least 5% is present, but no Feature Ad, Coupon Ad or Display accompanies the Price Decrease (TPR) • Lower price becomes new base price after 7 weeks Foundation of Analysis: Retail Measurement Data Slide 110 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Promotion Conditions Feature Display w/out F&D w/out Display Feature Promotional Conditions are mutually exclusive at the UPC level. A UPC is either Promoted or Not Promoted. Price Decrease (TPR) Foundation of Analysis: Retail Measurement Data Slide 111 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Promotion Support Three ways to view Quantity of trade support Use 1 Wk Periods only! • % ACV Promoted – % of ACV that sold at least one unit on deal during the time period • Store Weeks of Support – Number of weeks a product is on deal weighted by the ACV of the stores participating in the promotion • % Base Support – How much of a brand's everyday business (baseline volume) is exposed to a deal Foundation of Analysis: Retail Measurement Data Slide 112 Confidential & Proprietary Copyright © 2008 The Nielsen Company

% ACV Support Measures the amount of consumer traffic exposed to a promotion Use 1 Wk Periods only! • How much support did I receive on this event? • How much of each type of support was received? • Did the retailer execute as agreed to? • Did the sales force or broker support and/or merchandise the promotion as required? Foundation of Analysis: Retail Measurement Data Slide 113 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Store Weeks Support Measures the quantity of weeks the brand was on promotion Week 1 Week 2 Week 3 Week 4 Week 5 Actual % ACV ANY DSP 20% 100% 60% 30% 50% 260% /100 = 2. 6 weeks Interpretation - Brand received the equivalent of 2. 6 weeks of Display activity in the five-week period Foundation of Analysis: Retail Measurement Data Slide 114 Confidential & Proprietary Copyright © 2008 The Nielsen Company

% Base Support Measures the % of Base business exposed to a particular promotion type • Weights the importance of the store to the brand. • Gives more credit for an important SKU • Is additive/combinable across markets, time, products and retail conditions Foundation of Analysis: Retail Measurement Data Slide 115 Confidential & Proprietary Copyright © 2008 The Nielsen Company

% Base Support Calculation Example Base Sales Store 1 10 Store 2 10 Store 3 25 Store 4 Store 5 20 15 Total Base Volume = Feature Base Volume = % Base Support = Promotion? No Feature 80 50 50/80 = 63% Interpretation – 63% of the brand’s base volume was exposed to a feature during the promotion period Foundation of Analysis: Retail Measurement Data Slide 116 Confidential & Proprietary Copyright © 2008 The Nielsen Company

When To Use – Promotion Support facts When concerned with… Use… Level of trade participation in an % ACV Support event; Amount of consumer traffic exposed to promotions Duration of support Store Weeks Support; Cume Weighted Weeks How much of a brand’s base volume was exposed to a promotion % Base Support Foundation of Analysis: Retail Measurement Data Slide 117 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Promotion Effectiveness Measures how much incremental volume each promotion generated • Percent Lift • Promotion Effectiveness Index (PEI) • Incremental Weeks • Efficiency Foundation of Analysis: Retail Measurement Data Slide 118 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Promoted Baseline Volume Promoted Incremental that is a result of promotion Also Known Promoted Base as Subsidized Base Non. Promoted Foundation of Analysis: Retail Measurement Data Base Non-Promoted Base Slide 119 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Promoted Baseline Volume 170 In Week 4 all the volume is promoted, but only 95 units are incremental; 75 units are subsidized base 95 Unit Sales 75 75 75 Display Week week 1 week 2 Foundation of Analysis: Retail Measurement Data week 3 week 4 Slide 120 week 5 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Promotion Efficiency • Percent of promoted sales that were incremental Incremental Sales x 100 Promoted Sales • Tells how efficient was the promotion – What percent was incremental to baseline? – What percent was subsidized? • Note: The more subsidized volume that is generated during a promotion the less efficient that promotion will be! Foundation of Analysis: Retail Measurement Data Slide 121 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Promotion Effectiveness Measures how much incremental volume each promotion generated • Promotion Effectiveness Index (PEI) – Indexes Total volume to Base volume Promoted Sales x 100 Promoted Base Sales • % Lift – Similar to PEI but expressed as a Promoted Sales x 100 - 100 Promoted Base Sales percentage • Incremental Weeks – Similar to Lift but expressed as a number Promoted Sales - 1 Promoted Base Sales of weeks Foundation of Analysis: Retail Measurement Data Slide 122 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Analysis Tips - Interpreting Promotion Response 170 PEI 95 Sales indexed at 227 vs. base during the promotion week % Lift The promotion drove a 127% increase in sales 75 Display Week week 4 170 x 100 - 100 = 127% 75 Incremental Weeks The promotion generated 1. 3 additional weeks of sales Promotion Efficiency 56% of the promoted volume was incremental to the brand Foundation of Analysis: Retail Measurement Data 170 x 100 = 227 75 170 - 1 = 1. 27 75 95 x 100 = 56% 170 Slide 123 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Analysis Tips – Promotion Effectiveness • Promotions will yield different results depending on: – Type of merchandising occurring in the store - ads, displays, TPR's – Depth of discount offered to consumers – Competitive activity • When reviewing promotion effectiveness, take into account the size of the brand – Smaller players, with small base businesses, have a much easier time generating big lifts Foundation of Analysis: Retail Measurement Data Slide 124 Confidential & Proprietary Copyright © 2008 The Nielsen Company

When to Use – Promotion Effectiveness Facts When concerned with… Use… Measuring the increase in volume due to promotions; Determining which promotions generate the largest incremental gains Measuring the ability of a promotion to minimize subsidizing existing volume % Lift; Promotion Effectiveness Index (PEI); Incremental Weeks Promotion Efficiency Foundation of Analysis: Retail Measurement Data Slide 125 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Pricing Nielsen databases track pricing in four ways: • Average Retail Price – Weighted price of a product, representing both nonpromoted and promoted prices • Non-Promo Price – Average scanned price of a product in stores where there was no promotion • Any Promo Price – Average scanned price of a product in stores where there was a promotion • Base Price – Estimate of the normal, non-discounted price of a product in a store Foundation of Analysis: Retail Measurement Data Slide 126 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Base Price = Non-Promoted Price • Non Promoted Price is based solely on stores where the item in not being promoted • Base Price is based on all stores, not just nonpromoted stores Foundation of Analysis: Retail Measurement Data Slide 127 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Price Discount • Measures the difference between Base Price and Promoted Price • The deeper the price discount the greater the expectation that consumer sales will increase Foundation of Analysis: Retail Measurement Data Slide 128 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Average Retail Price - Precautions • Think when you average across: – Products: (10, 26 and 51 oz. sizes) – Markets: (Los Angeles vs. Boston) – Promotions (display price vs. feature price) • Aggregate price is one big average… beware!!! – $2. 99 =Average of $1. 99 & $3. 99 – $2. 99=Average of $0. 99 & $4. 99 – $2. 99=Average of $2. 98 & $3. 00 Foundation of Analysis: Retail Measurement Data Slide 129 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Analysis Tips - Pricing • Analyze price at the SKU level – Prices at the brand level are an average of all sizes and multi-pack counts • Match like items when comparing price to competition – Select similar-sized competitive items for comparison – Or use equivalized price • Use the most recent period to measure base price – Longer timeframes may mask recent trends Foundation of Analysis: Retail Measurement Data Slide 130 Confidential & Proprietary Copyright © 2008 The Nielsen Company

When to use – Pricing Facts When concerned with… Use… What consumer is paying on average Average Retail Price What is the average price for an item No Promo Price when not on promotion What the consumer is paying on promotion/deal Any Promo Price Tracking price trends; Impact of price on baseline volume Base Price Magnitude of savings passed on to the consumer % Price Discount Foundation of Analysis: Retail Measurement Data Slide 131 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Analysis Tips - Recommendations If Volume Change is driven by: Potential Actions An increase in Base Price • Increase perceived value of product – Decrease price – Increase package size – Increase use of bonus packs, special packs – Launch a product or package innovation – Improve communication of product benefits – Improve product quality A decrease in Base Velocity • Improve advertising – Weight, Target, Message, Media • Improve consumer promotion – Frequency, Values, Types • Increase shelf presence, change item mix A decrease in %ACV • If base velocity is competitive with brands on the shelf, conduct a distribution drive • If base velocity is low, improve velocity (see point above) to justify increased distribution A decrease in Average Items Carried • Introduce new products • Change item mix • Address any Out-of-Stock issues Foundation of Analysis: Retail Measurement Data Slide 132 Confidential & Proprietary Copyright © 2008 The Nielsen Company

Analysis Tips - Recommendations If Volume Change is driven by: Potential Actions An increase in Promoted Price • Reduce promoted price • Implement a price multiples strategy (e. g. 2 for $5) A decrease in the %ACV with Quality Merchandising • Increase number of stores with features or displays –Determine which promotion condition works best for each brand / segment • Improve event timing / frequency A decrease in the # of Promoted Items A decrease in Promoted Velocity A decrease in Promotion Efficiency • Identify targets for number of items on feature or display • Provide consumer incentives for purchase of multiple items • Improve event timing / frequency • Coordinate & integrate trade promotion with other mix elements (e. g. , advertising, coupons, consumer events) • Identify stronger items for promotion • Develop promotion themes • Improve event timing / frequency • Improve Customer Targeting (loyals vs. switchers) Foundation of Analysis: Retail Measurement Data Slide 133 Confidential & Proprietary Copyright © 2008 The Nielsen Company