Executing in developing markets

1. Executing in developing markets Sharon Skurnac

2. Executing in developing markets Managing geographic and population expansion Vibrant and evolving trade Evolutionary process for growth Using technology and innovation

3. Developing market consumers LIVING IN HUTS AND HIGHRISES…… COMMUTING ON DIRT PATHS AND MAIN MOTORWAYS……

4. TRADITIONAL TRADE RETAIL ENVIRONMENT As diverse and complex as the consumer

5. INDIA DOMINATES TT GLOBAL PRESENCE Africa not to be ignored

6. Table Tops, Dukas and Home Stores not commonly found in other regions Africa has TOP traditional Trade penetration % of store types

7. Strategy in Africa Getting products to consumers is vital, but challenging Almost 594 million consumers being served through 2.6 million retail points ‘I buy brands that are easily available’ was the second ranked purchase driver Strong distribution is more key to success in innovations in Africa than Asia, East Europe and LATAM

8. The African Retail Environment Commonality across the continent Retail Universe by Region

9. The African Retail Environment Commonality across the continent There are local store types but structural commonality and comparable patterns of channel importance are spreading across the Sub Sahara Continent

10. Retail Universe Uganda is constantly changing and evolving 30% growth in store numbers in 2 years 164,000 outlets of which two thirds are in Rural areas Equal growth in Urban and Rural Movement to small but permanent outlets Conversely, in Ghana trends are towards larger outlets Small emerging channels are present only in Kampala

11. Macro Level Opportunity by Country Example – Temporary Stores RETAILER WHOLESALER DISTRIBUTOR MANUFACTURER

12. Channel and Micro Understanding is Crucial Focus on Mobile Hawkers in Nigeria Areas Covered Inventory 85 percent of vendors always carry the same products 80% have turnover under $200/wk More than 50% sold telecom products. 1 in three sold Carbonated Soft Drinks Only 15% carried small pack items (Cigarettes, Analgesics, Gum) 7% Anywhere in town 23% Move about block 9% Move along road 61% Same spot

13. Manufacturers’ Challenges in Route to Market Are distributor networks optimized? Where are the high impact wholesalers and how do you reach them? What are the distribution layers and how can they be optimized? Are any missing? Grey/ black market?

14. The Nairobi ‘Model Market’ Shows Importance of Understanding Opportunity at the Micro Level • Uncommon Catchment Area • 2 Key Wholesalers Reach all Retailers • Distributors are Competing Neighbours • Unique Patterns by Product Category Irregular micro patterns and spider webs of complexity

15. Distribution Attributes Dictate Strategies • SAVOURY • ANALGESICS • TOOTHPASTE DISTRIBUTION Very streamlined distribution with a few key players Widespread distribution with some depth though no truly dominant players Extremely flat and fragmented distribution STRATEGY Focus on relationship with “Golden Touch Point” suppliers Must build relationships across many distributors Focus on retailers to strengthen the presence of your products

16. Push Bikes: The Final Point of Distribution • OBSERVATIONS • Varied routines based on daily orders • Morning to evening 6 to 7 days a week • Fewer than 10 different products, mainly beverages • 10 to 20 stops a day • 60% of retailers believe push/motorbikes are cheaper • CONCLUSIONS • Demonstrates influence and reach of key distributors • Numerous and small volumes but can grow distribution • They maintain a direct link to stores impacting pricing, promotion and new products

17. Manufacturer evolution in TT Right products, right stores, right price DRIVE FOCUS INFLUENCE DEMAND ENSURE SUPPLY Insights Understand what motivates the TT shopper to buy. Activate stimuli to change purchasing behavior. VALUE Efficiency Segment stores and prioritize resources to drive greater executional impact. Availability Close gaps on all consumer purchase points. EXECUTIONAL MEASUREMENT ROI Performance Measurement

18. Innovation: the Heart of Developing Markets Improved quality, coverage and insights LEVERAGE TECHNOLOGY CREATE NEW METHODOLOGIES CENTRALIZATION & SIMPLIFICATION

19. InnovationPlays Efficiency, Coverage, Actionability Exported to 50 countries in 2012 Quality and controls Specific and useable results Data at the point of action Large “field force” Geographically disperse Fast, efficient, and cost effective method Ground Truth Understanding Growth Improved quality and accuracy MOBILE DATA COLLECTION MOBILE DELIVERY SOCIAL MEDIA & CROWD-SOURCING SATELLITE & MAPPING Global Expertise, Cross Functional Teams, Rapid Development

20. FASTER, MORE ACCURATE, TRADITIONAL TRADE INSIGHTS Live in 45 countries WHOLESALER 25 million + traditional trade stores in developing markets Helping clients increase business in developing markets by 2-3x over the next 5 years with optimized distribution, pricing, assortment Wholesale & Retail Trading Area Indexes RETAILER Via satellite imagery & modeling Mobile Enumeration of Stores INDEX 148 INDEX 67 MOBILE QRE DIGITAL MAPS

21. NEW COVERAGE VIA SATELLITE CARTOGRAPHY SATELLITE IMAGE SPECTRAL ANALYSIS OPTIMAL FORAGING THEORY

22. PROOF OF CONCEPT TEST Identify visual features of 15 known markets in Nairobi Find additional markets based on visual features RESULTS Team found 8 new possible markets Seven are confirmed markets One had 3 markets in close proximity Finding Open Markets from the Sky Can we find, size and track Africa open markets using satellite images?

23. METHODOLOGY Find open markets in “White Space” geographies Track growth over time More frequent and efficient sales volume estimations Refine current Universe Estimates and sampling methods Finding Open Markets from the Sky ACTIONABILITY • Identify new markets more quickly • Provide Route to Market insight • Provide distributor and delivery information and local knowledge

24. Estimating White Spaces Opportunity Using new approaches POPULATION STATS SATELLITE IMAGERY UNIVERSE KPIs WHITE SPACE AUDIT DATA BENCHMARKS OPEN MARKET ESTIAMTIONS