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Advanced product portfolio
management capability
Genesis
Strategy& | PwC USDP-0067252_v1.0.pptx
Traditional portfolio capabilities have run their course
Confidential property 1
Setting the context
Challenging market forces Obsolete CPG strategies
• Consumer dynamics are changing, to
create new and large segments with
different needs and preferences
• Shopper behavior is continuing to
bifurcate based on enduring
economic/behavioral “new norms”
• Channels are fragmenting and leading to
more diverse retailer requirements
• Competition is intensifying as smaller
players are outcompeting the larger and
more established brands
• Digital is unlocking new marketing
avenues and creating market disruptions
• Long (and expensive) product
development cycles limit the agility
needed to respond to fast-changing
consumer tastes
• Undifferentiated value propositions
and products aimed at a small sub-set
of shoppers
• Misaligned product offerings to shopper
needs and their willingness to pay
• Limited assortment and price point
variance across channels creates cycle
of discounting
• Over-reliance on promotions to maintain
unit volumes are creating margin pressures
Strategy& | PwC USDP-0067252_v1.0.pptx
The size of the prize is significant
Confidential property 2
“CPG companies don’t have a clear grasp of which combinations of features,
packaging, price, and even labeling will persuade consumers to make a purchase”
Setting the context
… of newly
introduced
CPG products
fail
… of new
product
concepts
never launch
… of new
product sales
cannibalize
existing brand
purchases
66% 65% 50%
Sources: ”Creating what Consumers Want”, Strategy+Business, Spring 2015; Affinova
Strategy& | PwC USDP-0067252_v1.0.pptx
The insights toolkit is long overdue for innovation…
Confidential property 3
Setting the context
?
?
In-home
Product
Testing
Psychographics
Market
Structure
Nielsen
POS & MMM
Millward Brown
Ad Tracking
1960 1970
1980
1990
2000
2015
BASES
Conjoint/
Discrete Choice
Strategy& | PwC USDP-0067252_v1.0.pptx
…forcing companies to piece together incomplete “answers”
Confidential property 4
Setting the context
Intro Cast
Launch
Henry Rak
Hendry
Market
Structure
×Disconnected from in-market
results and subject to “irrelevant
alternatives”
×Can’t look beyond “today” and
simulate new products or claims
×Limited in testing multiple
scenarios due to timing and cost
×Too much emphasis on short-term
effects; little strategic insight
$
Genesis
Strategy& | PwC USDP-0067252_v1.0.pptx
Action
Introduced a series of new products
across the price spectrum to capture
premium and value shoppers
Genesis – Case study (Price-Pack architecture)
Confidential property 5
Analytics
1. Create market response
simulation model given
consumer preference and
willingness to pay
2. Calibrate model to real-world
purchase behaviors
3. Incorporate client and retailer
profitability
Data
Retail
Consumption
Data
Company
Financials
Consumer Preference
& Willingness to Pay
Behavioral
Market
Structure
Visualization
Easy to use web interface to
simulate market share and financial
impact of product portfolio changes
Business problem
A food manufacturing client
experienced multi-year market share
erosion in a $400M category
Impact
Incremental operating income
opportunity of >$50M
What Genesis Is and What It Does
Strategy& | PwC USDP-0067252_v1.0.pptx
Genesis accurately simulates the market and financial
impact of product portfolio changes…
Confidential property 6
Dashboard
Dashboard allows user to easily define and edit products
settings and visualize high-level results
Deep-dives
User chooses product attributes from a drop-down menu
Output visualization
Genesis summarizes and visualizes output and key
metrics organized by category
Deep-dives
Output includes in-depth analysis of the impact of
changes to a base case scenario
What Genesis Is and What It Does
Strategy& | PwC USDP-0067252_v1.0.pptx
…using a cutting edge approach
Confidential property 7
Data Analytics
Retail Consumption Data
Company Financials
Consumer Preference &
Willingness to Pay
Behavioral Market Structure
1. Design and administer survey to test for
product portfolio hypotheses
2. Determine utilities to each attribute
3. Price utility curve derivation
4. Respondent-level share of preference
5. Market-level share of preference
6. Calibrate to consumption data
7. Incorporate market structure
8. Simulate market share for product portfolio
hypotheses
9. Translate into financial impacts
Source: Strategy& analysis
What Genesis Is and What It Does
Strategy& | PwC USDP-0067252_v1.0.pptx
Genesis applies a robust market structure methodology to
avoid common pitfalls of discrete choice modeling
Confidential property 8
• Genesis incorporates a robust market structure design to ensure that model behavior
reflects observed market dynamics
• Our flexible design allows us to either incorporate existing views of the Consumer
Choice Hierarchy, or to develop new hierarchies using the conjoint utilities themselves
• We can overlay up to 5 layers of market structure to account for the hierarchy of
attributes that shapes the consumer decision-making process; this design replicates the
varying level of “substitutability” between and within sub-categories
• We use syndicated data on cross-price elasticities to adjust the strength of the
“boundaries” between the various sub-categories of products in a simulated market
The need for
market structure
• Product categories contain groups of products (i.e., subcategories) that are
close substitutes
• Changes to the design or price of a certain product will have a greater affect on the
performance of direct substitutes than on other products in the broader category
• Unstructured discrete-choice models tend to redistribute share proportionally in
response to changes in price or product offerings; this is unrealistic
• To overcome this difficulty, choice models need to incorporate a Consumer Choice
Hierarchy that incorporates the various layers of market structure along each relevant
product dimension
Our approach
What Genesis Is and What It Does
Strategy& | PwC USDP-0067252_v1.0.pptx
Genesis translates Share of Preference output into concrete
predictions of market share, volume, revenue, and margin
Confidential property 9
Share of preference
From To
• Market share
• Volume
• Revenue
• Gross marginIncorporate company financials to simulate gross margin
Define market structure to replicate cross-price elasticities
Calibrate price curves to match observed elasticities
Calibrate utilities to match real market shares
Adjustments for pack size
• In fixed consumption categories, demand is
expressed in terms of number of units
• If the model predicts a shift to smaller pack sizes,
it automatically accounts for the fact that more of
those packs will be purchased to meet the total
demand for units.
Expansion/contraction of category
• In variable consumption categories, Genesis
allows for the introduction of external parameters
to account for the expansion or contraction in the
total number of units demanded
• These external parameters are set according to
observable patterns of substitution
(i.e., elasticities)
What Genesis Is and What It Does
Strategy& | PwC USDP-0067252_v1.0.pptx
Genesis allows us to simulate any combination of shelf price
and count change using threshold price points
Confidential property 10
Four-Stage calibration process
Respondent-level
weighting algorithm to
align sample
demographics with
target population
Individual-level
adjustments to
attribute-level utilities,
focusing on consumers
at the cusp of choice,
to align output with real
market shares
Individual-level
adjustments to product
utilities to account for
differences in
distribution,
awareness, and
product maturity
Iterative adjustments
to price-utility curves to
match elasticities and
market shares from
independent
econometric analyses
1 2 3 4
Our approach
• Our survey methodology measures each individual’s utility curves at a number of key intervals
along the price-count spectrum, and then interpolates between those points to enable
continuous interpretation.
• This methodology has the dual advantage of capturing the varying, non-linear nature of the
demand curve while at the same time allowing the user to model any desired price change,
not only those used in the initial survey.
• Consumers react differently to changes in shelf price than to changes in count, even when
unit prices are the same. To capture this, we include a hidden interaction term. This allows us
to disaggregate the effect of price and count changes on the back-end, and enables us to
realistically test any price-count combination.
What Genesis Is and What It Does
Strategy& | PwC USDP-0067252_v1.0.pptx
Genesis is flexible enough to address a variety of business
questions in different industries
Confidential property 11
Representative sample of Genesis use cases
• Genesis was used to develop a simulated Affordable Care Act (ACA) exchange,
allowing client to assess the effectiveness of different plan options
• Incorporated exchange-specific market conditions, such as subsidies, age-band
pricing, and customizable products for competitor companies
National Health
Insurance
Company
Health
Insurance
Portfolio
Planning
• Genesis simulated a variety of scenarios involving product intros and pricing by both
Client and competitors in order to optimize the client’s price-pack architecture
• The results informed the identification of innovation-drill sites aligned with company
strategy/capabilities and consumer preferences
Food
Manufacturing
Company
Price-Pack
Architecture
• Genesis helped a leading for-profit university test a range of disruptive value
propositions and pricing strategies
• In parallel, we segmented the student market and matched different pricing models to
the appropriate segment, improving conversion rate and lowering acquisition costs
For Profit
Education
Provider
Pricing
Strategy
• Genesis was used to quantify the financial impact of narrowing the provider network
• It also enabled the client to assess different approaches for compensating patients for
the narrower network
Major Health
Insurance
Company
Network
Strategy
• Genesis evaluated a set of viable scenarios developed with marketing, product
engineering, and sales to identify a path forward to turnaround an eroding business
• The results defined the product changes (pricing and features) required to drive
growth in a two-tier consumer market seeking either better value or differentiated
premium benefits
Consumer
Products
Company
Price-Pack
Architecture
What Genesis Is and What It Does
Strategy& | PwC USDP-0067252_v1.0.pptx
Genesis delivers immediate impact and supports the longer
term growth agenda
Confidential property 12
Near Term
Defend brand’s
market/competitive position
• Evaluation and
prioritization of price-
pack-channel and
feature attributes
• Understand sources of
volume and profitability
– across client’s
portfolio and
competitors
• Identify the appropriate
product-price
architecture for Brand
to establish a winning
positioning and
strengthen the
overall portfolio
Medium Term
Inform brand’s
innovation agenda
• Refine the innovation
agenda with precise
understanding of
consumer feature values
• Refresh channel
strategies to identify
winning positions by
channel type and specific
major accounts
• Define the accompanying
cost agenda to deliver
feature/price combinations
to deliver consumer
value, profitably
Long Term
Develop a sustainable
growth capability
for Client
• Establish a differentiated
capability at Client that
can help respond to
changes in market
dynamics (around
competition, price,
consumer behavior,
etc.), even after the
project ends
What Genesis Is and What It Does
Strategy& | PwC USDP-0067252_v1.0.pptx
Genesis demo
Confidential property 13
Strategy& | PwC USDP-0067252_v1.0.pptx Confidential property 14
Introductions and Context Setting
What Genesis is and what it does
Genesis demo
Case studies
Strategy& | PwC USDP-0067252_v1.0.pptx Confidential property 15
Case Study 2 – Diversified CPG company
Case study 1 – Food manufacturer
Strategy& | PwC USDP-0067252_v1.0.pptx
Recently, a food manufacturer found itself at a price-product
architecture disadvantage vs. the category leader
Confidential property 16
ILLUSTRATIVE
Category price dispersion in grocery channel
Initial observations
• Brand D, the category leader, has a
full lineup, emphasizing the highest
volume places on the ladder
• Smaller competitors have chosen
defensible niches
– Brands A & B are premium
– Brand E has an effective
flanking strategy
– Brand F is a value player
• Our client had a relatively narrow
spectrum, going head-to-head with
the category leader
Source: Client example
Strategy& | PwC USDP-0067252_v1.0.pptx
We leveraged the baseline analysis to fix the price-value
relationship in the current base portfolio
Confidential property 17
ILLUSTRATIVE
Pricing playbook for client’s current portfolio
Sample recommendations
• Developed pricing-playbook to
optimize portfolio pricing based
on client, competitor, and key
retailer economics
• Optimized channel price-gaps
based on cross-channel
elasticities, retailer strategies
and client economics
• Evaluated regional pricing
opportunities
• Developed sell-in strategies for
executing pricing actions at key
retailers
Example insights
• Company will recoup
40% of volume in
Channel B, within 6
weeks of taking pricing
in Channel A
• Increasing price of large
pack by 10% is
beneficial to all players
• Downsizing mainstream
generates profits, but
results in significant
volume decline
• …
Low attractiveness High attractivenessMedium attractiveness
Source: Client example
Strategy& | PwC USDP-0067252_v1.0.pptx
Consumer research enabled scenario simulations and financial
forecasts down to the retailer level to test practicality
Confidential property
ILLUSTRATIVE
New product summary
Description • Offer new packaging
targeted at need-offer gap
Target
Shopper
• XXX
• XXX
Consumer
Needs met
• XXX
• XXX
Scenarios
assumptions
• Channels: XXX, XXX
• Brand: XXX
• Product Attribute: XXX
• Size: XXX oz.
• Price: $XX (Grocery); $XX
(Walmart), $XX (Other)
• ACV: XXX% (Grocery)
One-time
investment
• Cap-Ex: $XXMM
• Slotting: $XXMM
Annualized
benefits
(Total & Incremental)
• Volume (total):
XXMM lbs.
• Net Sales: $XXMM
• Gross Margin: XX%
• Op. Income: $XXMM
Volume (MM lbs.)
Sales ($MM)
With
New Product
Current
Portfolio
With
New Product
Current
Portfolio
Operating Income ($MM)
With
New Product
Current
Portfolio
New Product. (Grocery)
Product A. (Grocery)
Product B. (Grocery)
New Product (Walmart)
Product A (Walmart)
Product B. (Walmart)
Volume
(M lbs.)
Source
30% Client Product A
7% Client Product B
21% Primary Competitor
Product B
12% Primary Competitor
Product A
7% Value Competitor
Product B
22% Others
Source: Client example
Economics
21
Strategy& | PwC USDP-0067252_v1.0.pptx
Client used insights to develop a differentiated new
product roadmap…
Confidential property 19
Category Price-Product architecture vision
ILLUSTRATIVE
Avg.
Price/Unit FROM (Current) TO (by Channel)
$X.XX-$X.XX
$X.XX-$X.XX “Micro Brew” Claim Product (Large-New pack)
$X.XX-$X.XX
$X.XX-$X.XX
$X.XX-$X.XX
$X.XX-$X.XX Current Product (X. Large pack)
$X.XX-$X.XX
$X.XX-$X.XX
$X.XX-$X.XX
Current Product
(X Large pack)
Premium Brand
(Medium pack)
Healthy Claim Product (Large-New pack)
$X.XX-$X.XX
$X.XX-$X.XX Premium Brand (Medium-New pack)
$X.XX-$X.XX
$X.XX-$X.XX
$X.XX-$X.XX
$X.XX-$X.XX Value Product (Large-New pack)
$X.XX-$X.XX
Current Product (Medium pack)
Taste Claim Product (Medium
pack)
$X.XX-$X.XX
$X.XX-$X.XX Current Product (Medium pack)
$X.XX-$X.XX
$X.XX-$X.XX
$X.XX-$X.XX
$X.XX-$X.XX Healthy Claim Product (Small-New pack)
$X.XX-$X.XX Current Product (Small-New pack)
Source: Client example
• Differentiated positions in on-trend segments, enabling company to win with consumers
and customers
• Multi-tier pricing, with well defined roles for different channel-product-packages
• Ability to portfolio manage and optimize overall share and profit impact
• Undifferentiated positions in limited segments
• Limited portfolio breadth limits ability to compete against competitors, esp. primary
competitor
• Lack of investment, sub-par innovations and quality challenges are eroding
credibility with customers and shoppers
Strategy& | PwC USDP-0067252_v1.0.pptx
… and came away with some practically useful insights
Confidential property 20
Key learnings Implications
• Deep understanding of consumer
preferences, willingness to pay and
trade-offs
• Knowledge of which specific points on the
price ladder yield the best results
• Knowledge of which specific price gaps
between quality tiers and competition yield
the best results
• Knowledge of channel dynamics and
how best to manage price gaps
across channels
• Quantified insights about consumer
switching and source of volume in
response to price moves
• Sustainable response to challenges in
category requires a comprehensive
understanding of winning price/feature
propositions and their interactions across
the category
• Answer must be based on rigorous
understanding of consumer preferences,
channel dynamics and cost/margin
implications, recognizing the limitations
on the breadth of viable propositions
• Ultimately, pricing architecture should
facilitate trading up/down within the
franchise as a result of our own actions
• Answers must be adapted to each
competitive channel/key customer
environment
Source: Client example
Strategy& | PwC USDP-0067252_v1.0.pptx Confidential property 21
Case study 1 – Food manufacturer
Case study 2 – Diversified CPG company
Strategy& | PwC USDP-0067252_v1.0.pptx
Our client, a diversified CPG manufacturer was facing
long-term sales erosion due to shifting consumer behaviors
Confidential property 22
ILLUSTRATIVE
33% 34% 32% 29% 26% 25% 23% 22% 20%
29% 30% 31% 31% 31% 31%
49%47%46%45%43%42%39%37%38%
29%29% 29%
2016
Value
2017
Mass
Premium
2010 2012 20152011 20132009 2014
Volume share by Tier
All channels, US
Extrapolated based on 2009-2013 CAGR
Premium
Product 1
$2
Mass
Product
Premium
Product 2
$339
$5
$18
20132012
$350 -9% +8% +3% -3%
9% 10% 10%Retailer Margin:
Our client did not
operate in the
value segment
Net sales ($M)
Channel example, US
Client’s mass offering was undifferentiated versus cheaper value competitors, in both actual
and perceived performance, and was rapidly losing share
Source: Strategy& analysis
Strategy& | PwC USDP-0067252_v1.0.pptx
We used Genesis to identify an end-state portfolio to stabilize
share and outperform the base OP forecast
Confidential property 23
ILLUSTRATIVE
• Current mainstream product moved into value space to serve the growing pool of ‘value’ consumers – enables
product to more effectively compete vs. similar & cheaper options
• ‘Better for you’ mass entrant (optimized COGS structure identified) that offers functional differentiation and
serves unmet consumer needs at mass price point
Value Entrant
(Stabilize share)
New Product
(Recoup OP)
$30
2013 New ProductValue Entrant
$380
New Scenario
$50
$400
$300
$400
$320
201820162013
Forecast
VCM scenario evaluation
Key channels, $MM, 2013 – 2018
New scenario projection
Lower price
stabilizes share
and realigns
proposition with
new market
equilibrium, but
requires OP
investment
New compelling
mass proposition
with ‘better for you’
features partially
recoups OP impact
from pricing move
and captures
additional share
Source: Strategy& analysis
Strategy& | PwC USDP-0067252_v1.0.pptx
… as well as simulate the effect of potential competitive
responses
Confidential property 24
Competitor
launches new
entrant
Competitor
lowers prices to
protect share
Competitor
increases
couponing and
in-store support
Description Likelihood
Higher
cannibalization
than expected
OP Impact
Competitive intel
suggested that key
competitor would launch
a new product into the
market
High High
Key competitor could
lower prices to recoup
share losses from
client’s value entrant
Low Medium-Low
Key competitor could
spike couponing activity
and in-store support to
protect market position
Medium Low
Cannibalization of
client’s premium
offerings could be
higher than expected
Medium-Low Low
ILLUSTRATIVE
Strategy& | PwC USDP-0067252_v1.0.pptx
Additionally, we trained the client team, developing a
long-standing capability to inform the innovation process
Confidential property 25
Strategy& | PwC USDP-0067252_v1.0.pptx
Appendix/Extra slides
Confidential property 26
Strategy& | PwC USDP-0067252_v1.0.pptx
The combination of Strategy& and PwC has created a new
kind of consulting business – a Category of One
Confidential property 27
Introduction
Scale, quality, prominence and
deep relationships, skills and
insights
Global strategy model,
leading foresight
capabilities positioning
Our vision
The pre-eminent strategy
through execution firm that
delivers superior value, offers
premium talent and is
differentiated by its ability to help
clients build their own
capabilities on a global scale
Strategy& | PwC USDP-0067252_v1.0.pptx
Strategic Customer Analytics is a broad-based, industry-
leading capability
Confidential property 28
Dedicated team of experts Our global reach A multi-disciplinary view
Access to best practices Focus on organization enablers
SCA has deep expertise in applying
advanced research and
analytics techniques
• Propensity modeling
• Artificial neural networks
• Advanced cluster analysis
• Market basket analysis
• Text mining
• Conjoint/discrete choice
• Purchase intent models
• Agent-based models
We are a network of experts located in 6
hubs across the globe
Understanding of the linkages
between Insights and rest of Sales &
marketing disciplines
A vast set of best practices in analytics
documented with multiples clients
Experience and proven success
building sustainable capabilities by
addressing all critical component of the
operating model
London
AmsterdamNew York
Sydney
Los Angeles Mumbai
Consumer insight
Sales
GTM
Mkt
Brand
Digital
Promotions
Incentives Metrics TI Org
Strategy& | PwC USDP-0067252_v1.0.pptx
We provide a bridge between strategic insights and analytics
Confidential property 29
Integration of strategy & analytics
• Tight alignment between business
objectives and analytical findings leads
to practical, implementable
recommendations
• Increased likelihood that the
organization will embrace
recommendations and
take action
• Analytical outputs remain relevant and
continuously inform marketing, pricing
and product decisions
• Analytics are baked in to the
day-to-day decision making process
Market &
media mix
modeling
Principal
components
& factor
analysis
Agent-
based
models
Text
Mining
Classification
& regression
trees
Association
rules
Cluster
analysis
Logistic
regression
Anomaly
detection
Splines &
GAMs
Generalized
linear
models
Support
vector
machines
Web
analytics
Survival
analysis
Voice of
customer
analytics
Artificial
neural
networks
Social
media
analytics
Conjoint
analysis
Strategy& | PwC USDP-0067252_v1.0.pptx
Genesis calibrates baseline to retail scan data; outputs
match reality and are expressed in terms of market share
Confidential property 30
Respondent-level
weighting algorithm to
align sample
demographics with
target population
Individual-level
adjustments to
attribute-level utilities,
focusing on consumers
at the cusp of choice,
to align output with real
market shares
Individual-level
adjustments to product
utilities to account for
differences in
distribution,
awareness, and
product maturity
Iterative adjustments
to price-utility curves to
match elasticities and
market shares from
independent
econometric analyses
1 2 3 4
Common methods and pitfalls
• Some commonly-used “calibration” approaches use
crude aggregate adjustment factors to account for
unequal distribution and awareness
• These approaches appear to match simulation
output with reality, but this is purely cosmetic
• Such aggregate approaches do not improve upon
the conjoint utilities, and do not modify the
underlying structure of the model to replicate
observable market dynamics (e.g., cross-
price elasticities)
• Aggregate approaches often lead to contradictory
results that are inconsistent with basic economic
theory and management intuition
Out approach
• Genesis performs a rigorous, multi-stage calibration
process to align not only simulation output but also
model behavior with real-world outcomes
• This enables us to translate model output from
“Share of Preference” to concrete predictions of
market shares, volumes, and revenues
• We use syndicated data and independent
econometric analyses to establish baselines for
market shares, competitive trends, velocities, and
own- and cross-price-elasticities
• At each state, we make direct, individual-level
adjustments to the underlying data and structure
of the model
Four-Stage calibration process
Strategy& | PwC USDP-0067252_v1.0.pptx
Key Genesis activities and deliverables
Confidential property 31
Key activities & deliverables
Hypothesis
definition
Consumer
research
Topline
findings
Simulator
development
Scenario
analysis
Key activities
• Key imperatives
from stakeholders
• Category
definition
(competitive set)
• Market position
baseline (trends,
segments, share)
• Competitive
pricing analysis
• Hypothesis
generation
• Questionnaire
development,
review, and
iteration
• Conjoint design
(aligned to
hypotheses)
• Survey
programming and
testing
• Survey fielding
(management)
• High-level
consumer
segmentation
• Analysis of
consumer
behavior and
preferences
• Need-offer gap
assessment
• Initial testing and
refinement of
hypotheses
• Product feature/
attribute utility
estimation
(conjoint)
• Category baseline
incorporating
market structure
• Market share/
elasticity
calibration
• Simulator
development
• Scenario/hypothe
sis testing
(simulator)
• Evaluation of
near-term
profitability impact
(COGS and share
changes)
• High-level
assessment of
capability fit and
implications
Key
deliverables
• Category analysis
and initial product
portfolio change
hypotheses
• Consumer survey
and conjoint
optimized to test
key hypotheses
• Initial consumer
survey findings
including behavior
and preferences
by segment
• Customized
Genesis simulator
• Scenario analysis
of hypotheses
• Portfolio change
recommendations
• Action plan
Strategy& | PwC USDP-0067252_v1.0.pptx
Genesis delivers immediate client impact and supports the
longer term growth agenda
Confidential property 32
About Genesis
Near
term
Medium
term
Long
term
Defend brand’s market/
competitive position
• Evaluation and prioritization of
price-pack-channel and feature
attributes
• Understand sources of volume and
profitability – across client’s portfolio
and competitors
• Identify the appropriate product-price
architecture for Brand to establish a
winning positioning and strengthen
the overall portfolio
Develop a sustainable growth
capability for Client
• Establish a differentiated capability
at Client that can help respond to
changes in market dynamics
(around competition, price,
consumer behavior, etc.), even
after the project ends
Inform brand’s innovation agenda
• Refine the innovation agenda with precise
understanding of consumer feature values
• Refresh channel strategies to identify winning
positions by channel type and specific major accounts
• Define the accompanying cost agenda to deliver
feature/price combinations to deliver consumer value,
profitably
Strategy& | PwC USDP-0067252_v1.0.pptx
…forcing companies to piece together “answers” from
existing capabilities
Confidential property 33
Setting the Context
Discrete choice model
Disconnected from in-market results and subject to
“irrelevant alternatives”
New product forecasting
Limited in testing multiple scenarios due to timing
and cost
Market structure
Can’t look beyond “today” and simulate new
products or claims
Pricing & Promotion
Too much emphasis on short-term effects; little
strategic insight
Henry Rak
Hendry Market
Structure
Intro Cast Launch
X
X X
X
Strategy& | PwC USDP-0067252_v1.0.pptx
Option 1 – Standalone Genesis project (9 weeks)
Confidential property 34
Genesis-Led Price-Product architecture work plan
Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9Work Steps
Final Alignment
Scenario Analysis
Simulator Development
Topline Analysis
Research Fielding
Research Design
Category Baseline
Final
readout
Discuss
prelim. results
Review category baseline/
Sign-off on survey design
Review topline findings/
Align on scenario list
Survey
vendor
Staffing/Fees
Team
Fees
• 30% Partner
• 60% Principal
• 100% Senior Associate
• 100% Lead Associate
• 100% Consultant
• $700k plus research
and expenses
Source: Strategy& analysis
Strategy& | PwC USDP-0067252_v1.0.pptx
Option 2 – “Genesis Lite” (8 weeks, leaner senior team)
Confidential property 35
Genesis-Led Price-Product architecture work plan Staffing/Fees
Team
Fees
• 20% Partner
• 100% Senior Associate
• 100% Lead Associate
• 100% Senior Consultant
• $460k plus research
and expense
Survey
vendor
Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8
Topline Analysis
Simulator Development
Simulator Cleanup/ Training
Scenario Analysis
Work Steps
Research Fielding
Research Design
Category Baseline
Final
readout
Discuss
prelim. results
Align on scenario listSign-off on survey design
Option 2 only offered to clients who
have done Option 1 at least once
Source: Strategy& analysis
Strategy& | PwC USDP-0067252_v1.0.pptx
© 2015 PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC
network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.
This content is general information purposes only, and should not be used as a substitute for consultation with professional advisors.

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Genesis_LinkedIn_v2

  • 2. Strategy& | PwC USDP-0067252_v1.0.pptx Traditional portfolio capabilities have run their course Confidential property 1 Setting the context Challenging market forces Obsolete CPG strategies • Consumer dynamics are changing, to create new and large segments with different needs and preferences • Shopper behavior is continuing to bifurcate based on enduring economic/behavioral “new norms” • Channels are fragmenting and leading to more diverse retailer requirements • Competition is intensifying as smaller players are outcompeting the larger and more established brands • Digital is unlocking new marketing avenues and creating market disruptions • Long (and expensive) product development cycles limit the agility needed to respond to fast-changing consumer tastes • Undifferentiated value propositions and products aimed at a small sub-set of shoppers • Misaligned product offerings to shopper needs and their willingness to pay • Limited assortment and price point variance across channels creates cycle of discounting • Over-reliance on promotions to maintain unit volumes are creating margin pressures
  • 3. Strategy& | PwC USDP-0067252_v1.0.pptx The size of the prize is significant Confidential property 2 “CPG companies don’t have a clear grasp of which combinations of features, packaging, price, and even labeling will persuade consumers to make a purchase” Setting the context … of newly introduced CPG products fail … of new product concepts never launch … of new product sales cannibalize existing brand purchases 66% 65% 50% Sources: ”Creating what Consumers Want”, Strategy+Business, Spring 2015; Affinova
  • 4. Strategy& | PwC USDP-0067252_v1.0.pptx The insights toolkit is long overdue for innovation… Confidential property 3 Setting the context ? ? In-home Product Testing Psychographics Market Structure Nielsen POS & MMM Millward Brown Ad Tracking 1960 1970 1980 1990 2000 2015 BASES Conjoint/ Discrete Choice
  • 5. Strategy& | PwC USDP-0067252_v1.0.pptx …forcing companies to piece together incomplete “answers” Confidential property 4 Setting the context Intro Cast Launch Henry Rak Hendry Market Structure ×Disconnected from in-market results and subject to “irrelevant alternatives” ×Can’t look beyond “today” and simulate new products or claims ×Limited in testing multiple scenarios due to timing and cost ×Too much emphasis on short-term effects; little strategic insight $ Genesis
  • 6. Strategy& | PwC USDP-0067252_v1.0.pptx Action Introduced a series of new products across the price spectrum to capture premium and value shoppers Genesis – Case study (Price-Pack architecture) Confidential property 5 Analytics 1. Create market response simulation model given consumer preference and willingness to pay 2. Calibrate model to real-world purchase behaviors 3. Incorporate client and retailer profitability Data Retail Consumption Data Company Financials Consumer Preference & Willingness to Pay Behavioral Market Structure Visualization Easy to use web interface to simulate market share and financial impact of product portfolio changes Business problem A food manufacturing client experienced multi-year market share erosion in a $400M category Impact Incremental operating income opportunity of >$50M What Genesis Is and What It Does
  • 7. Strategy& | PwC USDP-0067252_v1.0.pptx Genesis accurately simulates the market and financial impact of product portfolio changes… Confidential property 6 Dashboard Dashboard allows user to easily define and edit products settings and visualize high-level results Deep-dives User chooses product attributes from a drop-down menu Output visualization Genesis summarizes and visualizes output and key metrics organized by category Deep-dives Output includes in-depth analysis of the impact of changes to a base case scenario What Genesis Is and What It Does
  • 8. Strategy& | PwC USDP-0067252_v1.0.pptx …using a cutting edge approach Confidential property 7 Data Analytics Retail Consumption Data Company Financials Consumer Preference & Willingness to Pay Behavioral Market Structure 1. Design and administer survey to test for product portfolio hypotheses 2. Determine utilities to each attribute 3. Price utility curve derivation 4. Respondent-level share of preference 5. Market-level share of preference 6. Calibrate to consumption data 7. Incorporate market structure 8. Simulate market share for product portfolio hypotheses 9. Translate into financial impacts Source: Strategy& analysis What Genesis Is and What It Does
  • 9. Strategy& | PwC USDP-0067252_v1.0.pptx Genesis applies a robust market structure methodology to avoid common pitfalls of discrete choice modeling Confidential property 8 • Genesis incorporates a robust market structure design to ensure that model behavior reflects observed market dynamics • Our flexible design allows us to either incorporate existing views of the Consumer Choice Hierarchy, or to develop new hierarchies using the conjoint utilities themselves • We can overlay up to 5 layers of market structure to account for the hierarchy of attributes that shapes the consumer decision-making process; this design replicates the varying level of “substitutability” between and within sub-categories • We use syndicated data on cross-price elasticities to adjust the strength of the “boundaries” between the various sub-categories of products in a simulated market The need for market structure • Product categories contain groups of products (i.e., subcategories) that are close substitutes • Changes to the design or price of a certain product will have a greater affect on the performance of direct substitutes than on other products in the broader category • Unstructured discrete-choice models tend to redistribute share proportionally in response to changes in price or product offerings; this is unrealistic • To overcome this difficulty, choice models need to incorporate a Consumer Choice Hierarchy that incorporates the various layers of market structure along each relevant product dimension Our approach What Genesis Is and What It Does
  • 10. Strategy& | PwC USDP-0067252_v1.0.pptx Genesis translates Share of Preference output into concrete predictions of market share, volume, revenue, and margin Confidential property 9 Share of preference From To • Market share • Volume • Revenue • Gross marginIncorporate company financials to simulate gross margin Define market structure to replicate cross-price elasticities Calibrate price curves to match observed elasticities Calibrate utilities to match real market shares Adjustments for pack size • In fixed consumption categories, demand is expressed in terms of number of units • If the model predicts a shift to smaller pack sizes, it automatically accounts for the fact that more of those packs will be purchased to meet the total demand for units. Expansion/contraction of category • In variable consumption categories, Genesis allows for the introduction of external parameters to account for the expansion or contraction in the total number of units demanded • These external parameters are set according to observable patterns of substitution (i.e., elasticities) What Genesis Is and What It Does
  • 11. Strategy& | PwC USDP-0067252_v1.0.pptx Genesis allows us to simulate any combination of shelf price and count change using threshold price points Confidential property 10 Four-Stage calibration process Respondent-level weighting algorithm to align sample demographics with target population Individual-level adjustments to attribute-level utilities, focusing on consumers at the cusp of choice, to align output with real market shares Individual-level adjustments to product utilities to account for differences in distribution, awareness, and product maturity Iterative adjustments to price-utility curves to match elasticities and market shares from independent econometric analyses 1 2 3 4 Our approach • Our survey methodology measures each individual’s utility curves at a number of key intervals along the price-count spectrum, and then interpolates between those points to enable continuous interpretation. • This methodology has the dual advantage of capturing the varying, non-linear nature of the demand curve while at the same time allowing the user to model any desired price change, not only those used in the initial survey. • Consumers react differently to changes in shelf price than to changes in count, even when unit prices are the same. To capture this, we include a hidden interaction term. This allows us to disaggregate the effect of price and count changes on the back-end, and enables us to realistically test any price-count combination. What Genesis Is and What It Does
  • 12. Strategy& | PwC USDP-0067252_v1.0.pptx Genesis is flexible enough to address a variety of business questions in different industries Confidential property 11 Representative sample of Genesis use cases • Genesis was used to develop a simulated Affordable Care Act (ACA) exchange, allowing client to assess the effectiveness of different plan options • Incorporated exchange-specific market conditions, such as subsidies, age-band pricing, and customizable products for competitor companies National Health Insurance Company Health Insurance Portfolio Planning • Genesis simulated a variety of scenarios involving product intros and pricing by both Client and competitors in order to optimize the client’s price-pack architecture • The results informed the identification of innovation-drill sites aligned with company strategy/capabilities and consumer preferences Food Manufacturing Company Price-Pack Architecture • Genesis helped a leading for-profit university test a range of disruptive value propositions and pricing strategies • In parallel, we segmented the student market and matched different pricing models to the appropriate segment, improving conversion rate and lowering acquisition costs For Profit Education Provider Pricing Strategy • Genesis was used to quantify the financial impact of narrowing the provider network • It also enabled the client to assess different approaches for compensating patients for the narrower network Major Health Insurance Company Network Strategy • Genesis evaluated a set of viable scenarios developed with marketing, product engineering, and sales to identify a path forward to turnaround an eroding business • The results defined the product changes (pricing and features) required to drive growth in a two-tier consumer market seeking either better value or differentiated premium benefits Consumer Products Company Price-Pack Architecture What Genesis Is and What It Does
  • 13. Strategy& | PwC USDP-0067252_v1.0.pptx Genesis delivers immediate impact and supports the longer term growth agenda Confidential property 12 Near Term Defend brand’s market/competitive position • Evaluation and prioritization of price- pack-channel and feature attributes • Understand sources of volume and profitability – across client’s portfolio and competitors • Identify the appropriate product-price architecture for Brand to establish a winning positioning and strengthen the overall portfolio Medium Term Inform brand’s innovation agenda • Refine the innovation agenda with precise understanding of consumer feature values • Refresh channel strategies to identify winning positions by channel type and specific major accounts • Define the accompanying cost agenda to deliver feature/price combinations to deliver consumer value, profitably Long Term Develop a sustainable growth capability for Client • Establish a differentiated capability at Client that can help respond to changes in market dynamics (around competition, price, consumer behavior, etc.), even after the project ends What Genesis Is and What It Does
  • 14. Strategy& | PwC USDP-0067252_v1.0.pptx Genesis demo Confidential property 13
  • 15. Strategy& | PwC USDP-0067252_v1.0.pptx Confidential property 14 Introductions and Context Setting What Genesis is and what it does Genesis demo Case studies
  • 16. Strategy& | PwC USDP-0067252_v1.0.pptx Confidential property 15 Case Study 2 – Diversified CPG company Case study 1 – Food manufacturer
  • 17. Strategy& | PwC USDP-0067252_v1.0.pptx Recently, a food manufacturer found itself at a price-product architecture disadvantage vs. the category leader Confidential property 16 ILLUSTRATIVE Category price dispersion in grocery channel Initial observations • Brand D, the category leader, has a full lineup, emphasizing the highest volume places on the ladder • Smaller competitors have chosen defensible niches – Brands A & B are premium – Brand E has an effective flanking strategy – Brand F is a value player • Our client had a relatively narrow spectrum, going head-to-head with the category leader Source: Client example
  • 18. Strategy& | PwC USDP-0067252_v1.0.pptx We leveraged the baseline analysis to fix the price-value relationship in the current base portfolio Confidential property 17 ILLUSTRATIVE Pricing playbook for client’s current portfolio Sample recommendations • Developed pricing-playbook to optimize portfolio pricing based on client, competitor, and key retailer economics • Optimized channel price-gaps based on cross-channel elasticities, retailer strategies and client economics • Evaluated regional pricing opportunities • Developed sell-in strategies for executing pricing actions at key retailers Example insights • Company will recoup 40% of volume in Channel B, within 6 weeks of taking pricing in Channel A • Increasing price of large pack by 10% is beneficial to all players • Downsizing mainstream generates profits, but results in significant volume decline • … Low attractiveness High attractivenessMedium attractiveness Source: Client example
  • 19. Strategy& | PwC USDP-0067252_v1.0.pptx Consumer research enabled scenario simulations and financial forecasts down to the retailer level to test practicality Confidential property ILLUSTRATIVE New product summary Description • Offer new packaging targeted at need-offer gap Target Shopper • XXX • XXX Consumer Needs met • XXX • XXX Scenarios assumptions • Channels: XXX, XXX • Brand: XXX • Product Attribute: XXX • Size: XXX oz. • Price: $XX (Grocery); $XX (Walmart), $XX (Other) • ACV: XXX% (Grocery) One-time investment • Cap-Ex: $XXMM • Slotting: $XXMM Annualized benefits (Total & Incremental) • Volume (total): XXMM lbs. • Net Sales: $XXMM • Gross Margin: XX% • Op. Income: $XXMM Volume (MM lbs.) Sales ($MM) With New Product Current Portfolio With New Product Current Portfolio Operating Income ($MM) With New Product Current Portfolio New Product. (Grocery) Product A. (Grocery) Product B. (Grocery) New Product (Walmart) Product A (Walmart) Product B. (Walmart) Volume (M lbs.) Source 30% Client Product A 7% Client Product B 21% Primary Competitor Product B 12% Primary Competitor Product A 7% Value Competitor Product B 22% Others Source: Client example Economics 21
  • 20. Strategy& | PwC USDP-0067252_v1.0.pptx Client used insights to develop a differentiated new product roadmap… Confidential property 19 Category Price-Product architecture vision ILLUSTRATIVE Avg. Price/Unit FROM (Current) TO (by Channel) $X.XX-$X.XX $X.XX-$X.XX “Micro Brew” Claim Product (Large-New pack) $X.XX-$X.XX $X.XX-$X.XX $X.XX-$X.XX $X.XX-$X.XX Current Product (X. Large pack) $X.XX-$X.XX $X.XX-$X.XX $X.XX-$X.XX Current Product (X Large pack) Premium Brand (Medium pack) Healthy Claim Product (Large-New pack) $X.XX-$X.XX $X.XX-$X.XX Premium Brand (Medium-New pack) $X.XX-$X.XX $X.XX-$X.XX $X.XX-$X.XX $X.XX-$X.XX Value Product (Large-New pack) $X.XX-$X.XX Current Product (Medium pack) Taste Claim Product (Medium pack) $X.XX-$X.XX $X.XX-$X.XX Current Product (Medium pack) $X.XX-$X.XX $X.XX-$X.XX $X.XX-$X.XX $X.XX-$X.XX Healthy Claim Product (Small-New pack) $X.XX-$X.XX Current Product (Small-New pack) Source: Client example • Differentiated positions in on-trend segments, enabling company to win with consumers and customers • Multi-tier pricing, with well defined roles for different channel-product-packages • Ability to portfolio manage and optimize overall share and profit impact • Undifferentiated positions in limited segments • Limited portfolio breadth limits ability to compete against competitors, esp. primary competitor • Lack of investment, sub-par innovations and quality challenges are eroding credibility with customers and shoppers
  • 21. Strategy& | PwC USDP-0067252_v1.0.pptx … and came away with some practically useful insights Confidential property 20 Key learnings Implications • Deep understanding of consumer preferences, willingness to pay and trade-offs • Knowledge of which specific points on the price ladder yield the best results • Knowledge of which specific price gaps between quality tiers and competition yield the best results • Knowledge of channel dynamics and how best to manage price gaps across channels • Quantified insights about consumer switching and source of volume in response to price moves • Sustainable response to challenges in category requires a comprehensive understanding of winning price/feature propositions and their interactions across the category • Answer must be based on rigorous understanding of consumer preferences, channel dynamics and cost/margin implications, recognizing the limitations on the breadth of viable propositions • Ultimately, pricing architecture should facilitate trading up/down within the franchise as a result of our own actions • Answers must be adapted to each competitive channel/key customer environment Source: Client example
  • 22. Strategy& | PwC USDP-0067252_v1.0.pptx Confidential property 21 Case study 1 – Food manufacturer Case study 2 – Diversified CPG company
  • 23. Strategy& | PwC USDP-0067252_v1.0.pptx Our client, a diversified CPG manufacturer was facing long-term sales erosion due to shifting consumer behaviors Confidential property 22 ILLUSTRATIVE 33% 34% 32% 29% 26% 25% 23% 22% 20% 29% 30% 31% 31% 31% 31% 49%47%46%45%43%42%39%37%38% 29%29% 29% 2016 Value 2017 Mass Premium 2010 2012 20152011 20132009 2014 Volume share by Tier All channels, US Extrapolated based on 2009-2013 CAGR Premium Product 1 $2 Mass Product Premium Product 2 $339 $5 $18 20132012 $350 -9% +8% +3% -3% 9% 10% 10%Retailer Margin: Our client did not operate in the value segment Net sales ($M) Channel example, US Client’s mass offering was undifferentiated versus cheaper value competitors, in both actual and perceived performance, and was rapidly losing share Source: Strategy& analysis
  • 24. Strategy& | PwC USDP-0067252_v1.0.pptx We used Genesis to identify an end-state portfolio to stabilize share and outperform the base OP forecast Confidential property 23 ILLUSTRATIVE • Current mainstream product moved into value space to serve the growing pool of ‘value’ consumers – enables product to more effectively compete vs. similar & cheaper options • ‘Better for you’ mass entrant (optimized COGS structure identified) that offers functional differentiation and serves unmet consumer needs at mass price point Value Entrant (Stabilize share) New Product (Recoup OP) $30 2013 New ProductValue Entrant $380 New Scenario $50 $400 $300 $400 $320 201820162013 Forecast VCM scenario evaluation Key channels, $MM, 2013 – 2018 New scenario projection Lower price stabilizes share and realigns proposition with new market equilibrium, but requires OP investment New compelling mass proposition with ‘better for you’ features partially recoups OP impact from pricing move and captures additional share Source: Strategy& analysis
  • 25. Strategy& | PwC USDP-0067252_v1.0.pptx … as well as simulate the effect of potential competitive responses Confidential property 24 Competitor launches new entrant Competitor lowers prices to protect share Competitor increases couponing and in-store support Description Likelihood Higher cannibalization than expected OP Impact Competitive intel suggested that key competitor would launch a new product into the market High High Key competitor could lower prices to recoup share losses from client’s value entrant Low Medium-Low Key competitor could spike couponing activity and in-store support to protect market position Medium Low Cannibalization of client’s premium offerings could be higher than expected Medium-Low Low ILLUSTRATIVE
  • 26. Strategy& | PwC USDP-0067252_v1.0.pptx Additionally, we trained the client team, developing a long-standing capability to inform the innovation process Confidential property 25
  • 27. Strategy& | PwC USDP-0067252_v1.0.pptx Appendix/Extra slides Confidential property 26
  • 28. Strategy& | PwC USDP-0067252_v1.0.pptx The combination of Strategy& and PwC has created a new kind of consulting business – a Category of One Confidential property 27 Introduction Scale, quality, prominence and deep relationships, skills and insights Global strategy model, leading foresight capabilities positioning Our vision The pre-eminent strategy through execution firm that delivers superior value, offers premium talent and is differentiated by its ability to help clients build their own capabilities on a global scale
  • 29. Strategy& | PwC USDP-0067252_v1.0.pptx Strategic Customer Analytics is a broad-based, industry- leading capability Confidential property 28 Dedicated team of experts Our global reach A multi-disciplinary view Access to best practices Focus on organization enablers SCA has deep expertise in applying advanced research and analytics techniques • Propensity modeling • Artificial neural networks • Advanced cluster analysis • Market basket analysis • Text mining • Conjoint/discrete choice • Purchase intent models • Agent-based models We are a network of experts located in 6 hubs across the globe Understanding of the linkages between Insights and rest of Sales & marketing disciplines A vast set of best practices in analytics documented with multiples clients Experience and proven success building sustainable capabilities by addressing all critical component of the operating model London AmsterdamNew York Sydney Los Angeles Mumbai Consumer insight Sales GTM Mkt Brand Digital Promotions Incentives Metrics TI Org
  • 30. Strategy& | PwC USDP-0067252_v1.0.pptx We provide a bridge between strategic insights and analytics Confidential property 29 Integration of strategy & analytics • Tight alignment between business objectives and analytical findings leads to practical, implementable recommendations • Increased likelihood that the organization will embrace recommendations and take action • Analytical outputs remain relevant and continuously inform marketing, pricing and product decisions • Analytics are baked in to the day-to-day decision making process Market & media mix modeling Principal components & factor analysis Agent- based models Text Mining Classification & regression trees Association rules Cluster analysis Logistic regression Anomaly detection Splines & GAMs Generalized linear models Support vector machines Web analytics Survival analysis Voice of customer analytics Artificial neural networks Social media analytics Conjoint analysis
  • 31. Strategy& | PwC USDP-0067252_v1.0.pptx Genesis calibrates baseline to retail scan data; outputs match reality and are expressed in terms of market share Confidential property 30 Respondent-level weighting algorithm to align sample demographics with target population Individual-level adjustments to attribute-level utilities, focusing on consumers at the cusp of choice, to align output with real market shares Individual-level adjustments to product utilities to account for differences in distribution, awareness, and product maturity Iterative adjustments to price-utility curves to match elasticities and market shares from independent econometric analyses 1 2 3 4 Common methods and pitfalls • Some commonly-used “calibration” approaches use crude aggregate adjustment factors to account for unequal distribution and awareness • These approaches appear to match simulation output with reality, but this is purely cosmetic • Such aggregate approaches do not improve upon the conjoint utilities, and do not modify the underlying structure of the model to replicate observable market dynamics (e.g., cross- price elasticities) • Aggregate approaches often lead to contradictory results that are inconsistent with basic economic theory and management intuition Out approach • Genesis performs a rigorous, multi-stage calibration process to align not only simulation output but also model behavior with real-world outcomes • This enables us to translate model output from “Share of Preference” to concrete predictions of market shares, volumes, and revenues • We use syndicated data and independent econometric analyses to establish baselines for market shares, competitive trends, velocities, and own- and cross-price-elasticities • At each state, we make direct, individual-level adjustments to the underlying data and structure of the model Four-Stage calibration process
  • 32. Strategy& | PwC USDP-0067252_v1.0.pptx Key Genesis activities and deliverables Confidential property 31 Key activities & deliverables Hypothesis definition Consumer research Topline findings Simulator development Scenario analysis Key activities • Key imperatives from stakeholders • Category definition (competitive set) • Market position baseline (trends, segments, share) • Competitive pricing analysis • Hypothesis generation • Questionnaire development, review, and iteration • Conjoint design (aligned to hypotheses) • Survey programming and testing • Survey fielding (management) • High-level consumer segmentation • Analysis of consumer behavior and preferences • Need-offer gap assessment • Initial testing and refinement of hypotheses • Product feature/ attribute utility estimation (conjoint) • Category baseline incorporating market structure • Market share/ elasticity calibration • Simulator development • Scenario/hypothe sis testing (simulator) • Evaluation of near-term profitability impact (COGS and share changes) • High-level assessment of capability fit and implications Key deliverables • Category analysis and initial product portfolio change hypotheses • Consumer survey and conjoint optimized to test key hypotheses • Initial consumer survey findings including behavior and preferences by segment • Customized Genesis simulator • Scenario analysis of hypotheses • Portfolio change recommendations • Action plan
  • 33. Strategy& | PwC USDP-0067252_v1.0.pptx Genesis delivers immediate client impact and supports the longer term growth agenda Confidential property 32 About Genesis Near term Medium term Long term Defend brand’s market/ competitive position • Evaluation and prioritization of price-pack-channel and feature attributes • Understand sources of volume and profitability – across client’s portfolio and competitors • Identify the appropriate product-price architecture for Brand to establish a winning positioning and strengthen the overall portfolio Develop a sustainable growth capability for Client • Establish a differentiated capability at Client that can help respond to changes in market dynamics (around competition, price, consumer behavior, etc.), even after the project ends Inform brand’s innovation agenda • Refine the innovation agenda with precise understanding of consumer feature values • Refresh channel strategies to identify winning positions by channel type and specific major accounts • Define the accompanying cost agenda to deliver feature/price combinations to deliver consumer value, profitably
  • 34. Strategy& | PwC USDP-0067252_v1.0.pptx …forcing companies to piece together “answers” from existing capabilities Confidential property 33 Setting the Context Discrete choice model Disconnected from in-market results and subject to “irrelevant alternatives” New product forecasting Limited in testing multiple scenarios due to timing and cost Market structure Can’t look beyond “today” and simulate new products or claims Pricing & Promotion Too much emphasis on short-term effects; little strategic insight Henry Rak Hendry Market Structure Intro Cast Launch X X X X
  • 35. Strategy& | PwC USDP-0067252_v1.0.pptx Option 1 – Standalone Genesis project (9 weeks) Confidential property 34 Genesis-Led Price-Product architecture work plan Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9Work Steps Final Alignment Scenario Analysis Simulator Development Topline Analysis Research Fielding Research Design Category Baseline Final readout Discuss prelim. results Review category baseline/ Sign-off on survey design Review topline findings/ Align on scenario list Survey vendor Staffing/Fees Team Fees • 30% Partner • 60% Principal • 100% Senior Associate • 100% Lead Associate • 100% Consultant • $700k plus research and expenses Source: Strategy& analysis
  • 36. Strategy& | PwC USDP-0067252_v1.0.pptx Option 2 – “Genesis Lite” (8 weeks, leaner senior team) Confidential property 35 Genesis-Led Price-Product architecture work plan Staffing/Fees Team Fees • 20% Partner • 100% Senior Associate • 100% Lead Associate • 100% Senior Consultant • $460k plus research and expense Survey vendor Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Topline Analysis Simulator Development Simulator Cleanup/ Training Scenario Analysis Work Steps Research Fielding Research Design Category Baseline Final readout Discuss prelim. results Align on scenario listSign-off on survey design Option 2 only offered to clients who have done Option 1 at least once Source: Strategy& analysis
  • 37. Strategy& | PwC USDP-0067252_v1.0.pptx © 2015 PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is general information purposes only, and should not be used as a substitute for consultation with professional advisors.