Bowl Appetit Presentation Team Members: Tiago EiroTommy Jacobs Matt MichaudJudd Murphy Chris PortWei Li November 19, 2001.

Bowl Appetit Presentation

Team Members: Tiago Eiro Tommy Jacobs

Matt Michaud Judd Murphy

Chris Port Wei Li

November 19, 2001

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Agenda

• Project Methodology

• Primary Research

• Market Study / Research

• Strategy Development

• Concept Development– Description of concepts

– Key strategic decisions–Target customers

–Competition

–Fit with firm capabilities, image

– Financial projections

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Project Methodology

• The group used the following framework and tools to guide the strategy and concept development processes:

Primary Research

•Surveys•Store visits

•3- C’s based on:•Analyst reports•Web site visits•Scanner/panel data

•SWOT analysis•Perception mapping•Scanner/panel data

•Brainstorming session•Financial analysis

Strategy Development

Market study / Research

Concept Development

4

Project Methodology

•Surveys•Store visits

Primary Research

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Survey Results

The following breaks down the survey respondents by age and gender. The target audience for the survey was females between 30 – 50. While

not statistically significant, the number of respondents to the survey directed our efforts in developing strategies and new product concepts.

Age Women Men<20 0 020 - 30 9 430 - 40 15 340 - 50 12 1>50 5 1Totals 41 9

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Survey Insights: Preparation

People typically allot 5-10 minutes to prepare lunch

• Want convenience of fast preparation

• Usually no assigned lunch hour- squeeze meals in whenever there is an opportunity

• Generally eat meals for one at home or at desk

Conclusion: There is a market for the easy to prepare, single serve, shelf stable lunches

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Survey Insights: Variety

Whether at home or at the office, people want variety

• Leftovers is a major substitute: different every day

• People want more than one food group

•Particularly interested in something sweet after a meal

•To get more than one food group is considered healthy

• Conclusion: Could add to perceived consumer value by offering more than one food group in container

• Bowl Appetit + Side Dish = More Complete meal

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Survey Insights: Health

Asked people to rate characteristics (scale = 1 to 5 - five most important):

• Convenience: 3.58

• Taste 4.41

• Healthy 3.79

• Price 3.33

• Brand Quality 2.41

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Survey Insights: Conclusion

Conclusions from Survey

• People willing to spend more money

• Taste is very important

• Health is second most important

People would prefer to have a low-fat product to a product fortified with vitamins and minerals

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Store Visit: Results

Food Lion • Only two SKU’s displayed (Alfredo and Tomato Parmesan) • Price = $1.29 • Placed with Hamburger Helper, Mac and Cheese, Pasta Roni, and Stovetop products • The product is tucked away in an odd corner- the two SKU’s are stocked one on top of the other

K-Mart • Currently don’t offer Bowl Appetit at the South Square location. They sell it in other

locations, depending on the store’s profile • This store does offer some competing product (Macaroni and Cheese, Dinty Moore meals) • Store has very limited space for shelf stable products • Frozen products are located on the other side of the store

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K-Mart (con’t)

Conversation with K-Mart Operations Manager: • Corporate headquarters determines which products are sold and in what volumes • Marketing department tells store how to stock to different products (shelf space size and

location) • Unestablished products have to pay a slotting fee • To get a new product into a store, companies will often times offer free samples within a

store to raise customer awareness and promote the product • Corporate headquarters strikes promotional deals with suppliers- deal with coupons,

displays and pricing

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Harris Teeter • Shelf stable, single serve section of store is about 8 feet long • There are seven shelves • Bowl Appetit has five SKU’s, all of them on the bottom row • Price = $1.89 • Four rows of Macaroni and Cheese are above Bowl Appetit (Kraft and Generic) • Hamburger Helper and Campbell's Super Bakes are in the same section, Tuna fish and Rice

dishes are nearby • Product is far from the frozen section • Bowl Appetit is surrounded by “just add meat” products (like Campbell’s and Hamburger

Helper)- probably not pure substitutes

Conversation with Harris Teeter Manager • Betty Crocker has to pay a slotting fee- the fee is smaller for the lowest shelf • The product was hot when first introduced- heavily promoted, but since it has died down • Product is in a growing sector, but really depends on coupons • Promotions last two weeks and usually increase sales ten times over • Gross margins on dry product is typically 25% (average for the store)- frozen foods typically

marked up 35%

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Store Visit: Conclusion

• The market space for shelf stable, convenient meals is filled with product that are high in fat and that have little nutritional value (e.g. Macaroni and Cheese, Noodle Dishes and Chef Boyardee canned goods).

• Promotions such as in-store displays and coupons drive sales. Can only do promotions a limited number of times, however, before they lose their effectiveness.

• If a product doesn’t move, store managers are likely to cancel them.• To get a new product into a grocery store chain, companies are usually forced to pay a

slotting fee. Poor shelf location in stores can be a distinct disadvantage.• Bowl Appetit is priced at a bit of a premium over some of the more traditional shelf stable

products, but it is significantly cheaper than frozen entrees.

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Project Methodology

•3- C’s based on:•Analyst reports•Web site visits•Scanner/panel data

Market study / Research

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Situation Appraisal

• A brief assessment of General Mills, the addressable market for Bowl Appetit and the competitors within the industry will provide insight in order to facilitate strategy development.

Corporation Competition

Customer

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Situation Appraisal: Customers

Understanding the customer required assessing the scanner and panel data, as well as speaking directly with a diverse group of potential target customers.

Customer

• The group conducted 50 surveys and numerous interviews to determine customer perception of the current product and to help identify strategic areas for brand extension

• Survey results demonstrate that taste and healthiness are the primary decision-making attributes for single-serve meals

• Customers expect convenience, fair pricing and quality – but most choose based on health (eg. Healthy Choice) or taste (eg. Mac & Cheese)

• Customers also stressed that taste is often correlated with the diversity of the food offered (i.e. one taste versus multiple tastes)

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Situation Appraisal: Customers

The surveys and interviews provided anecdotal evidence suggesting potential strategies for brand extension.

Customer

Customer comments focused on three areas for improvement in the “convenient-meal” arena: 1) taste, 2) healthiness, and 3) heartiness (most offerings are not filling enough)

The following are three quotes from our survey/interview process which highlight these trends:

• “If I’m going to cook something in the microwave, I’m looking for something more hearty than a side dish of potatoes.”.

• “I immediately look at the calories and fat content when I’m buying a frozen entrée or something that I would take to work for lunch”.

• “I just can’t seem to find convenient meals (frozen or shelf-stable) that taste very good. As a result, McDonalds, or some other fast-food, usually wins out.”

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Situation Appraisal: Company

Corporation

The assessment of General Mills included understanding the Bowl Appetit brand as well as other strengths within General Mills.

• General Mills has one of the most diverse and holistic brand portfolios in the market

• Based on survey results, Betty Crocker had 100% brand recognition, but many respondents didn’t realize Betty Crocker had offerings outside of baking products

• Bowl Appetit brand recognition was very low (under 15%)

• The Progresso and Old El Paso brands also had very strong recognition, suggesting cross-branding potential

• Betty Crocker, while not typically associated with this category, provided a base of quality and consistency with which to launch Bowl Appetit into national exposure.

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Corporation

Bowl Appetit’s lack of brand awareness also evident through web site research and further store visit insights

• Betty Crocker website void of any mention of Bowl Appetit (source: BettyCrocker.com)

• Search at General Mills website for “Bowl Appetit” results in no matches (source: GeneralMills.com)

• Television advertisements for Bowl Appetit targeted at incredibly narrow demographic – stay at home moms seeking easy meal at home

• Bowl Appetit appears to have poor placement in most stores visited as noted in store visit findings

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Corporation

A key takeaway from store visits was the poor visibility of the Bowl Appetit product within the store. To better understand this, we benchmarked General Mills against the competition regarding advertising and marketing expense (slotting fees are included here) as a % of Sales.

Hormel Campbell's ConAgra Nestle 2 General MillsSales 3,675,132 6,267,000 27,194,200 41,241,000 7,077,700 Selling 379,326 1,622,000 2,355,100 14,517,000 3,067,200 1Marketing 292,808 319,000

Selling / Marketing % of Sales 18.29% 30.97% 8.66% 35.20% 43.34%

So, while General Mills is the market leader in this expense category, Bowl Appetit has not been the beneficiary in terms of good visibility within the stores. However, the Bowl Appetit brand has some benefit from an extensive ad campaign –and we will make specific recommendations regarding how to improve the message to the potential consumer.

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Corporation

A final aspect of the company analysis focused on brand/product awareness amongst other brands and products in the General Mills brand portfolio

• Strong brand awareness amongst several brands within the portfolio, with the three highlighted above scoring at or near the top regarding awareness

• Quality associated with all brands, yet each clearly appears to have separate connotations in respondent’s opinion:

• Betty Crocker = Baking products

• Nature Valley = Healthy / natural snacks

• Progresso = Soup

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Situation Appraisal: Competition

Competition

The final aspect in understanding the marketspace is an assessment of the competition. Based on survey and research results, the competitive space was, to a certain extent, anything that fights for “share of stomach” in the convenient/minimal preparation snack/meal category. That said, there are definitive sub-segments based on usage and demographics, as defined later.

Leftovers

Frozen Meals

Sandwiches

“Easy soups”

MicrowaveablePasta - Kids

Snack Bars

Bowl Appetit

Eating Out

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Situation Appraisal: Competition

Competition

Each of the competitors and their positioning of their products must be assessed to understand the marketspace

Ragu Express•Targeted solely at kids•Pasta now equals convenience

Kraft Easy Mac•Targeted at kids with message to mom that snacks are easy now•Pasta now equals convenience

Chef Boyardee•Targeted at “older” kids with message to mom that this is what kids want•Pasta now equals convenience

Campbell’s Soup To Go•Targeted at working adults•Lunch can be convenient yet tasty

Its Pasta Anytime•Targeted at adults•“Authentic” tasting pasts can be quick and easy now

Uncle Ben’s Rice/Noodle Bowl•Targeted at younger adults•“Passion” lesson connotates passion for food and life satisfied by Uncle Ben’s

Stouffer’s Mac and Cheese•Targeted at families•Heartiness/portion size can satisfy entire family

Lean cuisine•Targeted at adults•Lunch doesn’t have to equal leftovers/fast food/bland alternatives

Healthy Choice•Targeted at adults (all ages)•Healthy = feeling good•Multiple tastes in one serving

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3-C’s: Takeaways

Corporation Competition

Customer

Customer

Corporation

Competition

• The customer values taste and healthiness • There is little brand recognition for the current Bowl Appetit offering(s)

• General Mills has a strong brand portfolio which offer cross-branding opportunities

• There appears to be a gap between GM’s promotional spending and Bowl Appetit’s share of the promotional pie

• The competitive products for Bowl Appetit are marketed directly at adults• Messages focus on heartiness, health and variety of offerings

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Project Methodology

• SWOT analysis• Perception Mapping• Scanner/panel data

analysis

Strategy Development

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Situation Appraisal: SWOT Analysis

Strengths Weaknesses Brand reputation for quality and consistency

Extensive advertising reach and marketing power

Product offering is extremely convenient and fairly priced

Taste rates high on taste test surveys in comparison to competition (internal surveys done by our group)

Limited brand awareness (for Bowl Appetit)

Lack of clear, identifiable target consumer

Product offering is too one-dimensional and does not satisfy hunger

Product offering cannot compete along health dimension

Poor visibility in stores

Opportunities Threats Bowl Appetit has not heavily targeted women at home, which represents large potential

There exists an opportunity to fill market gaps based on product usage dimensions (ie. satisfying, tastes great, good for me)

Retaliation - the more established players in the market will not take Bowl Appetit’s presence lightly

Negative public sentiment towards shelf-stable meals

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After a SWOT analysis, the competitive space must be defined before a strategy can be developed

Kim and Mauborgne suggest looking across boundaries to define the competition

• Accomplishing this requires understanding the attributes Bowl Appetit appeals to and then defining options within these attributes:

Taste

Healthy

Perception Mapping

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Perception Mapping

Perception Mapping

Taste

Healthy

Bowl Appetit

Healthy Choice

Lean Cuisine

Private Labels

Uncle Ben’s

This map illustrates consumer perceptions of the Bowl Appetit offering in comparison to some its larger competition (including frozen goods) as well as an opportunity area for brand extension.

Health and taste are the primary differentiating attributes, as defined by our consumer panel.

Stouffer’s

Opportunity Area

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Bowl Appetit Shelf-Stable Single-Serve Market Share – Under current offering, share is declining even with new potato product (source: Nielsen scanner data)

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Sep-00 Oct-00 Nov-00 Dec-00 Jan-01 Feb-01 Mar-01 Apr-01 May-01 Jun-01 Jul-01 Aug-01

4 Week Period

% o

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Bowl Appetit (Total) Potato Pasta Rice

Data Analysis : Competition

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• Target market – Great market share with working women, but need to improve appeal to stay at home moms (source: Nielsen panel data)

0.0

20.0

40.0

60.0

80.0

100.0

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Bowl Appetit Kraft Easy Mac Maruchan Instant Lunch Hormel Chef Boyardee

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Female Head - Employed Female Head - Stay at Home

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• Nearly a quarter of purchase price of Bowl Appetit represents coupon discount: indicates people only buy product when it is promoted heavily (source: Nielsen panel data)


0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Bowl Appetit Kraft Easy Mac MaruchanInstant Lunch

Fantastic Hormel Chef Boyardee

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New Product Concepts: Healthy line

Perfect Timing: customer’s unit demand for “healthy” options in the post-Christmas months shows enormous potential to immediately capture large volume growth with a “healthy” offering. (Source: Healthy Choice Sales, Nielsen scanner data)

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Data Analysis: Competition

Key takeaways from market size and market share slides:

Market share is deteriorating at a fairly constant pace

• Illustrates lack of enthusiasm for product offering – advertising and brand name induced trial, but product did not induce loyalty

Some competitors, such as Kraft Easy Mac and Ragu, have been stealing share at an alarming rate over the past few months

• Since no products compete on health dimension, consumers have flocked to the “tastiest” options. Marginal health benefits, if not marketed properly, have not led to improved sales.

• Highlighted by fact that Kraft / Ragu products need little promotion for sales

Timing is perfect for healthy option given pending New Year’s “resolution” season (January – February) that appears to drive immense volume upswing for healthy options

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Bowl Appetit: Recommended Strategy

Currently, Bowl Appetit is focusing its advertising efforts on the stay-at-home mom. This should help improve market share in the short term. However, most consumers feel that Bowl Appetit is better suited for the working-woman segment. Therefore, Bowl Appetit has somewhat of an identity crisis.

As you can see from the previous slide, there are various other segments, based on both demographics and primary decision-making product attributes, which can be easily targeted with some product modifications. By expanding the current product offerings to suit a larger portion of “convenient lunch-eaters”, there lies great opportunity to achieve much higher market share with a better tailored product offering.

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Bowl Appetit: Recommended Strategy - Filling the market void

Consumer dissatisfaction is focused in three areas:

1. Taste

2. Healthiness

3. Heartiness

Consumers are satisfied (enough) with:

1. Convenience

2. Price

Our strategy is to improve our product offering to maximize our delivery of these three dimensions, while ensuring that convenience and fair pricing do not suffer.

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Dominated by Chef Boyardee/Hormel’s Kid Kitchen- Convenience and taste

primary selling points

45% of segment 16% of FH

Market


Market


Market


Market

More Likely to eat out for lunch or bring leftovers

The following table illustrates the market sizes for each of the identified segments, in the attempt to gauge opportunity for product extension.

Children/Teens

Women/home

(35% of FH Market)

Women/work

(65% of FH Market)

Men

Taste Health

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Not suited- Small market size

Current target Lower calories/fat

Better advertising Lower calories/fat

Larger portions Larger portions, lower calories/fat

The following table illustrates both primary product attribute and demographic segmentation. As you can see, Bowl Appetit is focusing its marketing energies primarily in one segment. NOTE: all segments seek greater variety.

Children/Teens

Women/home

Women/work

Men

Taste Health

MORE VARIETY

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Project Methodology

•Brainstorming session•Financial analysis

Concept Development

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Screening Down New Product Concepts

A brainstorming session was conducted to identify new product concepts within the two strategic areas defined as our target areas for line extensions:

“Milk Bowl

Appetit”

“Bowl Appetit On The Road”

“Color Bowl

Appetit” Organic Bowl Appetit

“Family-size Bowl Appetit”

“Bowl AppetitSurprise

”

“Bowl Appetit As Side Dish”

Bowl Appetit at Warehouse Stores

“Fortified Bowl

Appetit”

“Healthy Bowl

Appetit”

“Split- Bowl

Appetit”

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New Product Concepts

Healthy line Reduced fat and calories

Contains the nutrition you need to get you through the day

Market it as a healthy sub-brand

Opens doors to those that typically consider Betty Crocker unhealthy

Split Bowl A complete meal available in 5 minutes

Soup, entrée and desert of your choice

Opportunity to cross-brand (eg. Progresso Soup and Betty Crocker brownie)

Opportunity to combine products (i.e. healthy split bowl)

Based on the analysis/research conducted, the Healthy Line and Split Bowl extensions were chosen.

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New Product Portfolio

The following is our recommended product portfolio. We have only increased total SKU’s from 10 to 12, by eliminating the potato line. We were cognizant of the issues more SKU’s would cause (eg. confusion among consumers, lack of shelf-space in the stores), and felt that the potato line, even though it has not had proper time to grow, was the best option for elimination.

“Regular”

2 Pasta offerings

•Current best-sellers, which should allow the majority of market share to be retained

2 Rice offerings

•Same concept

Healthy Line

2 Pasta offerings

•One current best-seller, modified to be lower in calories and fat

•One new dish with a more dietary connotation, in order to increase total brand variety

2 Rice offerings

•Same concept

Split Bowl

2 Pasta offerings

•One regular entrée – combined with popular, tasty soup (eg. Chicken noodle) and a BC brownie

•One healthy entrée – combined with healthy soup (eg. Vegetable) and a Nature Valley granola bar

Same concept for 2 rice offerings

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New Product Concepts: Product Introduction

Four-pronged approach to product introduction:

1. Awareness – Media blitz and prime shelf-space are critical, at least in the introduction phase, to gain awareness for the two new products. General Mill’s promotional monies need to target the Bowl Appetit brand (slotting fees/end-caps/etc.) to accelerate movement along the product development lifecycle.

2. Acceptance – The idea has to make sense to consumers; they need to think to themselves, “This is something I am really interested in trying.

3. Trial – Additional incentives, such as coupons and end-of-aisle displays, along with fair-pricing, should induce trial among our current customers and our new potential target customer base.

4. Loyalty – Providing a quality product, that focuses on the primary differentiating attribute that consumers are seeking (whether it be healthy or variety/heartiness), combined with all other important product attributes mentioned earlier, the Bowl Appetit product line should provide for loyal customers.

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New Product Concepts: Product Introduction

Cash Flows

Time

With market based assets

Without market based assets

With the new line extensions and leveraging the Betty Crocker brand through better use of promotional dollars, we should be able to capture greater cash flows and move to a “higher” market based asset line:

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“Betty knows Health”

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What is it?

Healthy line Reduced fat and calories

Contains the nutrition you need to get you through the day

Market it as a healthy sub-brand

Opens doors to those that typically consider Betty Crocker unhealthy

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Why Healthy?

• Consumers stated in our surveys that there was a growing desire to eat convenient, healthy lunches to displace fast-food and other less-healthy alternatives.

• Consumers are not satisfied with the current healthy choices, most of which are frozen offerings.

• The market size for “healthy” convenient meals (as defined in the market sizing slide) is large and ripe for the picking.

• This should be a relatively easy product transformation; one that can be fully supported by Betty Crocker’s marketing power.

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Perfect Timing: customer’s unit demand for “healthy” options in the post-Christmas months shows enormous potential to immediately capture large volume growth with a “healthy” offering.

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Key Strategic Decisions:

• Target market – women, both at home and in the office. The health-conscious segment for women is substantially larger than that for men, especially when factoring in those willing and able to carry and prepare a shelf-stable meal.

• Competitors – virtually new territory for the shelf-stable, single-serve market. Most of the competition, and market share, will come from the frozen food section (eg. Lean Cuisine and Healthy Choice)

• Fit with firm equities, capabilities, resources – this is a nice way to show the consumer that Betty Crocker is more than just Brownies. Stigma of baked goods, often unhealthy, may be difficult to shake, but a sustained marketing campaign will be effective.

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Healthy line: Marketing Message

The following will guide the introduction of the Healthy Line extension:

• Customers – message directed at women, both at home and in the office. Message focuses on healthy alternative for lunch/snack, emphasizing active women who value their health yet seek a tasteful alternative to the salad/snack bar alternative

• Competitors – message emphasizes the ready-to-eat aspect and quality perception of Betty Crocker over its frozen rivals (Lean Cuisine and Healthy Choice). Highlights the “tired” option that frozen meals present, emphasizing the relatively unchanged landscape within the frozen meals category over the last 10 years or so

• Company – Emphasized the general Mills / Betty Crocker focus on quality. Potential tag line: “Betty knows Health”

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Healthy line: Marketing Strategy

The following is an outline for the marketing campaign of the Healthy line extension:

• Promotions – the extension should be promoted immediately to create brand awareness for the post-holiday “boom” that healthy meals encounter (see previous slide)

• Television: Advertisements should begin highlighting the post-holiday bloated feeling many people feel

• Healthy option is a way to get rid of those extra pounds

• Bland/tasteless/freezer burnt frozen alternatives aren’t the only way to get back into shape after the holidays

• Print: Promotion should begin Sunday before Christmas and for next 5 weeks promoting Healthy option with coupons

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The challenge to the Healthy Line extension will be maintaining some of the “spike” highlighted in the previous graph.

• Promotions – a Springtime promotion should highlight the pending arrival of “bathing suit” weather and the need to prepare.

• Television: Advertisements should begin highlighting the fact that healthy meal options aren’t just for the post holiday “resolution” period anymore

• Healthy option is a great way to get ready for the beach

• Healthy options don’t have to be boring anymore (possible launch of new sku (flavor) could promote this message)

• Print: Promotion should run for 5 weeks beginning in mid-March promoting Healthy option with coupons

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The challenge to the Healthy Line extension will be maintaining some of the “spike” highlighted in the previous graph.

• Promotions – a Fall promotion should highlight the pending arrival of the holiday season and the need to “prepare” for those pounds you’ll be adding:

• Television: Advertisements can focus on the pounds that will be “packed” on over the holidays, so don’t forget to “pack” your Bowl Appetit Healthy meal today so you can enjoy tomorrow

• Healthy option is a great way to get ready for the holiday and those extra pounds

• Healthy options don’t have to be too terribly different from those holiday meals you can’t wait to eat

• Print: Promotion should run for 5 weeks beginning in early-September promoting Healthy option with coupons

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Financial Projections: Healthy Line Methodology

Key Assumptions:

• Market: The market for the Healthy Line brand extension is the current market space occupied by the Healthy Choice and Stouffer’s Lean Cuisine lines

• Market space defined based on survey results directed at “healthy” options respondents seek when purchasing ready-to-eat microwaveable meals

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Financial Projections: Healthy Line Methodology

Key Assumptions (con’t):

• Bowl Appetit market: Bowl Appetit can capture 10% of the healthy market in the first year.

• Bowl Appetit market size determined assessing the cyclicality of “healthy” options. January/February offer immense opportunity to capture large and immediate market share given healthy product sales in this time period (see graph)

• Bowl Appetit Healthy line extension and marketing campaign will also allow overall “healthy” market to grow by 10% based on extended offerings and marketing campaign directed at health-conscious consumers following Holiday “binges”

• Healthy option will cannibalize current Bowl Appetit offerings by 25%. Based on fact that most respondents to survey seeking “healthy” option for ready-to-eat microwaveable meals rarely buy Bowl Appetit or other “non-healthy” options

• Healthy line priced at current prices

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The following shows how the market size for the Healthy Line was determined and first-year revenues (projections shown on next page) were calculated:

Financial Projections: Healthy Line

Healthy Line revenue:Lean Cuisine revenue 132,968,857 Healthy Choice revenue 646,456,480 Total healthy revenue 779,425,338

Market share Bowl Appetit could take from healthy frozen 5%Market size Bowl Appetit could take from healthy frozen 38,971,267

Increase in achieved shelf-stable market with healthy line addition ($356MM) 10%Cannibalization of current product ($46MM) 25%

Net increase in shelf-stable market3 23,936,467

First year revenue for Healthy Line 62,907,734

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The following shows 3 year revenue projections for the Healthy Line and regular Bowl Appetit offerings.

Financial Projections: Healthy Line

Bowl AppetitFinancial Projections

20011 20022 2003 2004Current product revenue

Pasta 27,326,797 24,047,582 26,452,340 29,097,574 Rice 18,469,240 16,252,931 17,878,224 19,666,047 Potato 828,071 - - -

46,624,108 40,300,513 44,330,564 48,763,620

New product revenueHealthy line - 62,907,734 69,198,507 76,118,358

Total revenue 46,624,108 103,208,247 113,529,072 124,881,979

Assumptions:1 Used 12 months of scanner data, ending 8/1/01 as a proxy for 2001 revenue.2 Current product revenue assumes 10% growth each year, however 2002 experienced a

20% decline prior to 10% growth, caused by reduction of SKU's

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New Product Concepts: Split Bowl

Introducing a “merger” that just solved all of your lunch-time concerns.

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What is it?

Split Bowl A complete meal available in 5 minutes

Soup, entrée and desert of your choice

Opportunity to cross-brand (eg. Progresso Soup and Betty Crocker brownie)

Opportunity to combine products (i.e. healthy split bowl)

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Why Split Bowl?

• Consumers desire a more complete, well-rounded offering in order to satisfy their expectations of lunch, as well as their hunger.

• General Mills has various brands that offer wonderful cross-branding opportunities – this will also facilitate brand recognition for Bowl Appetit.

• This product allows Bowl Appetit to compete for “share of stomach” with many more offerings, bringing men and more women into the potential target market.

• This should also be a relatively easy product transformation; one that can be fully supported by Betty Crocker’s marketing power.

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What is the “market space” for the Split Bowl offering?• Survey respondents expressed opinion the Bowl Appetit and other

offerings offered too little variety

• Subsequently, respondents were asked to categorize scanner data sku’s (I.e. Uncle Ben’s bowls) into two categories:• Single flavor offerings

• Multiple flavor offerings

• Majority of respondents viewed Stouffer’s sku’s designated as “2-food” items as only multi-flavored offerings

• The following chart shows the relative market sizes for “single-flavor” and “multi-flavor” offerings• “Healthy” options (Lean Cuisine and Healthy Choice) were not

considered as part of the market based on survey responses

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Single Food Share - Stouffer's

53%

Multiple Foods Share - Stouffer's

22%

Single Food Share - Others23%

Single Food Share - Soups2%


The addressable market/ competitive space is much larger when analysis of the competition includes those offerings that provide 2+ “tastes”/package. The larger size, and increased variety in the offering, will enable Bowl Appetit to attract a much larger audience.

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Key strategic decisions

• Market - Expands target to include those women that typically eat out or prepare a full lunch, or eat leftovers, i.e. those that would not purchase the current version of Bowl Appetit because the offering is not sufficiently diverse or filling. May also extend market to some men, however our research indicates the male population is much less willing to bring and prepare this type of lunch – preferring to eat out or have a brown bag lunch.

• Competitors - Extends competition to include frozen foods, and to a certain extent, leftovers and dining out.

• Fit with firm equities, capabilities, resources – Great fit given the cross-branding opportunities and the marketspace void.

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Split Bowl: Marketing Message

The following will guide the introduction of the Split Bowl Line extension:

• Customers – message directed at women and men, both at home and in the office. Message focuses on new alternative for multi-food/variety lunch/snack, emphasizing those that are looking beyond a tasteless single food alternative to their meal but don’t have time for long waits

• Competitors – message emphasizes the ready-to-eat aspect and quality perception of Betty Crocker over its frozen rivals (Stouffer’s). Highlights the “tired” option that frozen meals present, emphasizing the relatively unchanged landscape within the frozen meals category over the last 10 years or so

• Company – Emphasizes the combination of General Mill’s brands in one offering (i.e. Betty Crocker + Progresso / Nature Valley / baked goods)

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Split Bowl: Marketing Message

The following is an outline for the marketing campaign of the Healthy line extension:

• Customers – message directed at women and men, both at home and in the office. Message focuses on variety of tastes / foods offered in such a convenient manner. Message switches from one taste to the other and goes back and forth as consumer is torn between the two great tastes/brands

• Competitors – message emphasizes the ready-to-eat aspect and quality perception of Betty Crocker + Progresso/Old El Paso over its frozen rivals (primarily Stouffer’s). Highlights the “tired” option that frozen meals present, emphasizing the relatively unchanged landscape within the frozen meals category over the last 10 years or so

• Company – Emphasized the General Mills / Betty Crocker focus on quality. Potential tag line: “A perfect merger of equals”

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Financial Projections: Split Bowl Methodology

Key Assumptions:

• Market: The market for the Split bowl brand extension is the current market space occupied by the Stouffer’s “2-food” lines as provided in the Nielsen scanner data

• Market space defined based on scanner data and survey respondents definition of single / multiple flavor sku’s as discussed previously

• Bowl Appetit market: Bowl Appetit can capture 5% of the multi-flavor market in the first year.

• Bowl Appetit market size determined assessing the cyclicality of “healthy” options. January/February offer immense opportunity to capture large and immediate market share given healthy product sales in this time period (see graph)

• Bowl Appetit Split Bowl extension and marketing campaign will also allow overall market market to grow by 10% based on extended offerings and marketing campaign directed at consumers seeking quick meals that offer a variety of flavors

• Split Bowl option will cannibalize current Bowl Appetit offerings by 10%. Less than Healthy line extension because respondents see multi-flavor as more heartier option seldom in “share of stomach” competition with current bowl Appetit

• Split Bowl extension priced at a premium of $2.99 because of extended offerings

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The following shows how the market size for the Split Bowl line extension was determined and first-year revenues (projections shown on next page) were calculated:

Financial Projections: Split Bowl

Split Bowl revenue:

Stouffer's "2-food"/multiple flavor market size4 428,795,617

Market share Bowl Appetit could take 2-food/multiple flavor "market" 5.0%Market size Bowl Appetit could take from 2-food/multiple flavor market 21,439,781

Increase in achieved shelf-stable market with split bowl line addition ($356MM) 10%Cannibalization of current product ($46MM) 10%

Net increase in 2-food/multiple flavor "market" 30,930,083

First year revenue for Split Bowl 52,369,864

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The following shows 3 year revenue projections for the Split Bowl and regular Bowl Appetit offerings.

Financial Projections: Split Bowl




46,624,108 40,300,513 44,330,564 48,763,620

New product revenueSplit bowl - 52,369,864 57,606,851 63,367,536

- 115,277,598 126,805,358 139,485,894

Total revenue 46,624,108 92,670,377 101,937,415 112,131,156



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Financial Projections: Totals




46,624,108 40,300,513 44,330,564 48,763,620

New product revenueHealthy line - 62,907,734 69,198,507 76,118,358 Split bowl - 52,369,864 57,606,851 63,367,536

- 115,277,598 126,805,358 139,485,894

Total revenue 46,624,108 155,578,111 171,135,922 188,249,514



The following shows 3 year revenue projections for the entire line of Bowl Appetit products now available.

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Questions & Answers

Bowl Appetit Presentation Team Members: Tiago EiroTommy Jacobs Matt MichaudJudd Murphy Chris PortWei Li November 19, 2001.

Documents

store slide

survey people

survey insights

survey respondents

complete meal slide

important people

preparation people

food group