1. www.evolution-insights.com 1 Evolution Insights Digital Marketing in Food & Grocery Essential shopper insight into the use of digital media and mobile commerce Evolution Insights Ltd Prospect House 32 Sovereign Street Leeds LS1 4BJ Tel: 0113 389 1038 http://www.evolution-insights.com

2. Disclaimer www.evolution-insights.com 2 Please note No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written consent of Evolution Insights Ltd. The content of this presentation is based on information gathered in good faith from various primary and secondary sources and is believed to be correct at the time of publication. Evolution Insights can however provide no guarantee regarding the accuracy of this content and therefore accepts no liability whatsoever for any actions taken that subsequently prove incorrect. © Evolution Insights Ltd 2010

3. This presentation is an excerpt from Evolution Insights’ latest report Digital Marketing in Food and Grocery: Essential shopper insight into the use of digital media and mobile commerce. For more information about the full report please visit www.evolution-insights.com/ or call Craig Bradley directly on +44 (0)113 336 6035 www.evolution-insights.com 3

4. Digital shopper marketing: introduction www.evolution-insights.com 4

5. Digital media lies in contrast to traditional forms of mass media such as analogue radio and television, print (newspapers and magazines), signs and banners. And while digital media is often considered synonymous with internet connected devices, it in fact extends beyond this to include other forms of media such as mobile text messaging, digital signage, kiosks and in-store TV. Indeed the digital media landscape ranges from text messages, e-mail and social media to internet websites, smartphone applications, digital signage and in-store kiosks – and more. Nevertheless, internet connected devices do form the backbone of many forms of digital media, and underpin the huge growth in electronic and mobile commerce, and social media in recent years. Digital marketing in food and grocery is quite simply the marketing of brands and retailers to consumers using digital media channels. In the same way that digital media extends beyond internet connected devices, digital marketing extends beyond use of the internet - to include digital media such as mobile text messaging, digital signage, kiosks and screens in store. Importantly - digital marketing shares all the same characteristics as traditional marketing. It is just marketing delivered using digital channels and should not be considered in isolation from traditional marketing. Digital media encompasses all forms of communication that are delivered using a binary electronic format, utilising technology such as computers, mobile devices and screens. Digital media and digital marketing: definition www.evolution-insights.com 5 Smartphones bring digital media such as e-mail, websites and apps to mobile devices E-mail remains one of the most popular digital media for push marketing Smartphone apps can offer shoppers the latest personalised coupons, offers and points rewards based on their shopping habits and location Digital media also extends to in-store scanners and screens.

6. Opportunities for shopper marketing are however not necessarily constrained to the store environment – consumers often enter into the shopper mind-set before they enter the store, and increasingly decide what to buy when at home or on-the-go. Yet traditional marketing outside the store more often than not targets consumers with traditional brand marketing designed to build awareness, rather than offer a specific call to action or directly influence their decision making process. The advent of digital media and digital marketing can now help facilitate a greater number of touch points with the consumer in shopper mode, making the concept of the path to purchase extending beyond the store environment of even greater importance. Digital marketing introduces the opportunity for FMCGs and retailers to more readily communicate with consumers as shoppers both before, during and after their visit to the supermarket. While ‘digital shopper marketing’ (DSM) is therefore in essence just traditional shopper marketing using digital media as the methods of distribution, the role of the ‘extended’ path to purchase becomes much more apparent. Essentially, it enables marketers to look beyond traditional above the line marketing via mass media, to a world where personalisation and the ability to connect more directly the consumer as a shopper outside the store is possible. Shopper marketing traditionally focuses on marketing actually in the retail environment. Initiatives seek to target the consumer in shopper mode while they are in the store, and are designed to influence their decision making process up to the point of purchase. Digital shopper marketing: definition and scope www.evolution-insights.com 6 Digital shopper marketing and the ‘extended’ path to purchase * With the rise of intelligent mobile devices and smartphones, the application of many of these initiatives increasingly extends throughout the entire path to purchase. Source: Evolution Insights

7. Digital shopper marketing presents a number of key benefits for retailers and manufacturers of consumer goods alike. Digital shopper marketing: benefits www.evolution-insights.com 7 Benefits of digital shopper marketing There are strong opportunities for digital shopper marketing in food & grocery. E-mail, SMS, websites and smartphone applications can enable targeted, personalised marketing messages reach the grocery consumer in shopper mode, both inside and outside of the supermarket. Moreover, since digital shopper marketing allows for improved targeting of shoppers, the results - and ultimately the return on investment - are often easier to measure. Source: Evolution Insights

8. Digital shopper marketing should not be confused with the use of digital media for consumer marketing, although the opportunities for integrated consumer and shopper marketing campaigns are notable. Digital consumer marketing is particularly prevalent with social media. Brands and retailers are increasingly utilising social media to connect with consumers, reinforce brand awareness and build emotional loyalty. Social networking sites like Facebook in particular allows brands to engage and communicate directly with consumers, keeping their brand relevant by imagery and association, and offsetting the decline in use of traditional mass media channels. With over half a billion users worldwide, it is easy to see why Coca Cola has over 11 million followers on Facebook. Yet much fewer manufacturers, retailers and brands utilise social media for shopper marketing. Two good examples however of brands that have begun to utilise the shopper marketing and sales potential of Facebook are P&G’s Max Factor, and Hallmark cards. Facebook users are able to purchase Max Factor products directly through Facebook utilising an application portal, while Hallmark offers a similar opportunity for fans to purchase both physical and electronic greetings cards for their friends offline and online. Hallmark even offer free credit up front once the shopper has added the application to their Facebook profile, opting to disclose their profile details in doing so. At Evolution we believe there is an opportunity for food & grocery brands and retailers to deliver shopper marketing campaigns directly to Facebook users, intended to influence their decision making process and purchasing. This might range from digital voucher distribution and sales promotions to complete e-commerce portals contained within the Facebook platform. Of course we also believe there remains a particularly important role for social media and consumer marketing - the opportunity it provides for engaging consumers in brands will ultimately lead to inclusion within the shopper’s brand repertoire, and therefore an increased likelihood of purchase when in the store. Digital marketing in food and grocery spans both consumer and shopper. Here we consider the differences, and in particular the role of social media. Digital shopper marketing: consumer versus shopper www.evolution-insights.com 8 P&G’s Max Factor Facebook page incorporates a shopping application that allows followers to buy their products directly from Facebook. Nestle’s Facebook site focuses largely on connecting with consumers, reinforcing reputation and building brand awareness and loyalty. Hallmark’s social calendar application enables users to purchase greetings cards without leaving the Facebook platform.

9. M-commerce is of particular importance to the digital shopper marketing landscape since it provides a platform for the increasing acceptance of mobile based shopper marketing. The advent of smartphones such as the iPhone in particular have helped generate a huge increase in m-commerce related activity, and recent statistics show that mobile internet is growing faster today than desktop internet did back in the day. A number of different digital shopper marketing initiatives in grocery can be considered in the context of mobile marketing. These range from digital vouchers and rewards points, location based targeting and the provision of enhanced product information, to the integration of marketing with digital shopping list management, and online shopping using mobile friendly websites or ‘apps’. To date, many in the industry consider mobile marketing a particularly effective means for targeting consumers and shoppers with personalised marketing campaigns, and are reporting higher responses rates and return than traditional marketing. However, many shoppers consider their mobile as highly personal to them, and marketers should not underestimate the level of intrusiveness many might associate with poorly targeted campaigns. Our research suggests that shoppers perceive a big difference between ‘bog standard marketing offers’ and initiatives that offer genuine value and engagement at a conversational level, when it comes to their mobile phone. Some of the most appealing initiatives our shopper research has identified relate more to the convenience and solutions they offer the shopping experience – for example digital shopping list management. FMCGs and retailers should carefully consider their objective when considering the use of mobile, and seek to balance marketing messages with value in order to find their way successfully onto the shopper’s phone. Unfortunately, the fragmentation and proprietary nature of different technologies and platforms complicate the challenge further . One interesting characteristic of mobile shopper marketing that many believe can assist in improving relevance is location based targeting, whether this be on a macro or micro level, and whether it be in the context of push or pull marketing. While macro based targeting might enable an FMCG or retailer to offer the latest local deals to shoppers, micro based targeting can enable location based targeting from a ‘timing’ perspective – for example by pushing the latest offers to the shopper as they actually enter the supermarket. With the rise of internet connected mobile devices and the resultant growth in mobile commerce, many brands, manufacturers and retailers are seeking to exploit the opportunities mobile marketing offers for grocery shopper marketing. Digital shopper marketing: the role of mobile www.evolution-insights.com 9 With over 250,000 ‘apps’ available in Apple’s iPhone store, and 6.5bn apps downloaded to date, the challenge for retailers and FMCGs is to be heard. Despite this, smartphone apps present a huge opportunity to integrate marketing into grocery shopping apps that offer the shopper value beyond traditional marketing - such as list management, store finders and recipe suggestions. More traditional push SMS marketing relies on shoppers choosing to opt in to receive the service, and our research suggests many consider this form of marketing intrusive unless it is highly personalised Tesco chose Nokia’s OVI app store for the launch of its recent online grocery shopping application that enables digital marketing to be targeted at consumers in ‘shopping mode’

10. Digital shopper marketing: a framework www.evolution-insights.com 10

11. Digital shopper marketing initiatives can be effectively considered in terms of four key dimensions; the shopper marketing initiative itself, the method of reaching shoppers, the provider or platform (the body with whom the shopper directly engages with), and the digital media utilised. At the simplest level digital shopper marketing initiatives share the same characteristics as traditional shopper marketing initiatives, and this aspect can be separated from the way in which the initiative is targeted at the shopper. Initiatives range from coupons, special offers and loyalty rewards to enhanced product information, recipe suggestions and even initiatives that seek to improve the shoppers experience (for example by making their grocery shopping easier). The method of reach becomes more important for digital shopper marketing initiatives, as the ability for example to push personalised content to a shopper based upon their geographical location becomes a reality. However the choice between push and pull, location, timing and extent of personalisation can depend upon the chosen initiative and its target audience. Another characteristic of the world of digital media and digital marketing is the variation among different ‘providers’ from the shopper’s perspective. E-commerce and m-commerce have opened up opportunities for social network platforms, third party website intermediaries (for example mysupermarket.co.uk) and even third party smartphone app developers (for example vouchercloud) to engage directly with shoppers. From the shopper perspective, the provider is the platform whom they interact with directly (even if the ultimate provider of content remains the retailer or FMCG) and this increasingly becomes fragmented with the take up of digital media. The digital media itself used to target the marketing campaign at the shopper also varies and offers differing characteristics that are useful for targeting different types of shoppers, and in different circumstances. Digital media and digital shopper marketing does focus primarily on use of the internet on a PC or mobile, but it also extends to both traditional text messaging (SMS) and digital signs, screens and interactive TV. Our 4-dimensional framework presents a simple method for considering the digital shopper marketing landscape. Digital shopper marketing: a framework www.evolution-insights.com 11 Evolution’s framework for digital shopper marketing Source: Evolution Insights

12. Shopper marketing initiatives range considerably, from coupons, special offers and loyalty rewards to enhanced product information and recipe suggestions – and more. They share the same ultimate goal however, to influence shoppers’ decision making process along their path to purchase. With the advent of digital media, while the methods of reach, providers of content and technologies differ, the actual initiatives can still be thought of in the same way. For example, while traditional coupons and offers are targeted at shoppers through mailings, newspapers, traditional signs and leaflets in store, digital coupons and offers are delivered by e-mail, SMS, websites, smartphone apps and digital screens in-store. The method of reach, provider and ability to measure return on investment are all enhanced but nevertheless the fundamental initiative remains a coupon or special offer. Two groups of initiatives that are particularly suited to digital media - in addition to digital coupons, offers and points rewards - are enhanced product information and improving the shopping experience. Product information can range from detailed nutritional content and health advice to price comparison, user reviews and product locators. Digital media enables marketers to target shoppers with highly personalised content, in turn influencing the shopper’s decision making process. Improving the shopping experience through the use of digital media is a broad concept. Potential initiatives range from digital shopping list management and ‘apps’ that allow shoppers to scan items and add them to their basket, to self service checkouts and even hand held scanners that enable shoppers to checkout items as they add them to their trolley - negating the need to queue at the supermarket checkout. Integration of different initiatives is also enhanced through the use of digital media. Marketers can for example link redemption of digital coupons with loyalty schemes, or even special offers directly with digital shopping lists or online baskets. At an initiative level, digital shopper marketing initiatives can be thought of in the same way as traditional shopper marketing initiatives. Digital shopper marketing: a framework – shopper marketing initiatives www.evolution-insights.com 12 Shopper marketing initiatives Source: Evolution Insights

13. Push versus pull marketing is of particular relevance with digital media. Push digital shopper marketing involves the marketer sending content to the shopper, while pull involves the shopper choosing to seek content on demand. Traditional shopper marketing in grocery is largely push oriented in the store, and e-mail and SMS are two obvious examples of push digital media. Internet websites and smartphone applications in contrast are typical examples of pull digital media (although smartphone apps are now increasingly incorporating push functionality). Both methods have their pros and cons. Push digital marketing is almost always reliant on some form of opt-in on behalf of the shopper, which in turn allows for improved personalisation (relevance) of content. However many shoppers consider push marketing intrusive and this can lead to a negative impact. Pull digital marketing is often more attractive from the shopper perspective since they choose when they wish to access the content, and can still allow for collection of data when content is requested, yet it relies on the shopper to act. Either way, digital media allows for enhanced targeting of relevant content to shoppers, in particular where the shopper chooses to opt-in in order to receive the incentives. Whether it be via registration for a loyalty scheme, online grocery mailing list, voucher website or ‘app’, or even a competition; the extent of personalisation made possible through this - combined with the capabilities of technology - can allow marketers to greatly improve the effectiveness of shopper marketing initiatives. Location and timing are also enhanced with the advent of digital media. In the world of m-commerce, location enabled mobile devices and their apps can allow for push shopper marketing based upon micro-location, for example as the shopper enters the supermarket. Even where technology remains constrained from a push perspective, location based marketing based on pull technology is still of importance. The ability for shoppers to pull the latest coupons on their mobile device when they enter the store is an equally important angle of location based marketing. Marketers should also not overlook the timing aspect of location, with e-mail for example enabling push marketing at certain times of the week. Digital media allows for enhanced methods for reaching the shopper at the right time, in the right place, and with the right content. Digital shopper marketing: a framework – methods of reach www.evolution-insights.com 13 Methods of reach Source: Evolution Insights

14. E-commerce and m-commerce have opened up opportunities for social network platforms, third party website intermediaries (for example mysupermarket.co.uk) and even third party smartphone app developers (for example vouchercloud) to engage directly with shoppers. Marketers should consider which digital platform offers the best reach for their target shoppers, and whether to act as a provider whom directly engages with the shopper or to utilise an alternative platform as the interface. Sainsbury’s and Nectar have for example recently launched two versions of the same iPhone app, one badged by Sainsbury’s and the other by Nectar. The app allows shoppers to pull personalised offers, coupons and points rewards using their iPhone wherever and whenever they are, and yet targets both shoppers who identify with Sainsbury’s and those who identify with Nectar. Third party apps and websites offering grocery coupons, offers, price comparison and user reviews are also commonplace. These offer a more effective means for shoppers to find everything they need in one place, and marketers should consider whether they offer an alternative or an addition to direct communication with shoppers. Social networking platforms have seen an unprecedented explosion in take up in recent times, none more so than Facebook. Originally intended for social activities, Facebook is increasingly becoming a platform for marketing in retail with huge potential for personalisation and targeting, and over half a billion users worldwide. While much activity to date has taken the form of more traditional consumer oriented brand marketing; platforms like Facebook and Twitter – plus location aware platforms such as Foursquare and Gowalla, present an interesting opportunity for targeting consumers as shoppers with a call to action. While a shopper may not consider visiting cokezone.com to collect points from their purchases, many Coca Cola shoppers do visit Facebook. Ease of shopping is also an important aspect of effective digital shopper marketing and one that isn’t necessarily achieved by individual FMCGs creating their own e-commerce sites. Nor is a shopper likely to choose your product or store over an alternative if the benefit is marginal but the extra factor hassle is high. Online payment service Rightcliq from Visa for example seeks to bring together enhanced product information, the latest offers, online shopping list management and payment services under one easy to use banner. From the shopper perspective, the provider is the platform whom they interact with directly (even if the ultimate provider of content remains the retailer or FMCG) , and this is becoming increasingly fragmented with the take up of digital media. Digital shopper marketing: a framework - provider www.evolution-insights.com 14 Platforms and providers of content Source: Evolution Insights

15. Digital shopper marketing to date has focused primarily on the use of the internet on a PC or mobile device, with media such as e-mail, websites and ‘apps’ supporting the most activity. However digital media also extends beyond the internet both towards simpler SMS text messaging, and towards digital signs, screens and interactive TV in-store. In fact, some of the earliest digital shopper marketing campaigns relate to the use of in-store television and mass push marketing, with little in the way of targeting or ability to measure ROI. The rise of advanced mobile devices such as smartphones however now offers a particular opportunity with internet connected ‘apps’, e-mail and mobile optimised websites including social network platforms. Mobile marketing and m-commerce is perhaps the most exciting and promising angle of digital shopper marketing, due primarily to its ability to target all different types of shopper marketing initiatives in a highly personalised format, down to a micro-location and at any time. Perhaps most importantly, it enables the marketer to target campaigns designed to influence shoppers with a call to action outside of the store. Despite this particularly important role of m-commerce and the advent of smartphone technology however, many grocery shoppers have yet to enter the upgrade curve and many more are yet to be convinced of the merits of using mobile devices for anything beyond phone calls and text messaging. ‘Old fashioned’ e-mail and SMS remain two of the most accessible digital media for communicating with the majority of shoppers, and marketers should be careful to balance efforts to innovate around the latest technology with the interests and needs of their target segments. The choice of digital media used to target the shopper varies, offering differing characteristics that are useful for targeting different types of shoppers, and in different circumstances. Digital shopper marketing: a framework - media www.evolution-insights.com 15 Smartphones bring e-mail, websites and apps to mobile devices E-mail remains one of the most popular digital media for push marketing Smartphone apps can offer shoppers the latest personalised coupons, offers and points rewards based on their shopping habits and location Digital media also extends to in-store scanners and screens.

16. Digital shopper marketing: the framework applied www.evolution-insights.com 16 Evolution’s framework can be applied to a full range of different digital shopper marketing initiatives.

17. Digital shopper marketing: in action www.evolution-insights.com 17

18. The rapid adoption of smartphones in the UK - driven in particular by Apple’s iPhone and the AppStore - presents a range of digital shopper marketing opportunities through the use of ‘apps’. Shoppers can download apps that find enhanced product information, locate stores, check product availability, compare prices, help create and manage shopping lists, check loyalty points and even play branded games. Digital shopper marketing: in action – smartphone apps www.evolution-insights.com 18 Some of the UK’s major grocery retailers already offer a variety of smartphone apps that present shoppers with enhanced product information, recipe suggestions, digital shopping list management and the latest offers, vouchers and reward points Apps like Redlaser and QR scanner are able to utilise smartphone cameras to scan barcodes to retrieve product information and add items to digital lists and baskets Some FMCGs have launched branded game apps for smartphones that bridge the gap between consumer and shopper marketing. Vouchercloud is a popular third party app that aggregates the latest vouchers and offers in retail, including food & grocery – and presents them to the shopper based upon their location. Loopt, a social networking app, also presents the latest vouchers and offers based upon GPS location Target’s iPhone app combines barcode scanning, digital shopping lists, SMS vouchers, the latest offers based on location and more! The Tesco Clubcard app for Blackberry and iPhone allows shoppers to replace their plastic card and check their balance in-store.

19. Websites range from brand microsites and Facebook pages, to mobile phone optimised shopping sites, price comparison independents, voucher code aggregators and even digital shopping list management sites. Digital shopper marketing: in action – websites www.evolution-insights.com 19 Mobile optimised sites like Sephora’s e-commerce portal offer a platform independent alternative to smartphone apps, making digital shopper marketing campaigns more accessible to a wider base of smartphone users. While brand microsites typically focus on reinforcing emotional brand loyalty through traditional consumer marketing, they often bridge the gap between consumer and shopper marketing with incentives, points rewards and competitions linked to repeat purchasing in-store Facebook pages range from the more ‘traditional’ brand awareness campaigns to distribution of offers and vouchers, and even fully integrated e- commerce portals Kroger’s digital coupons website enables loyalty card owners to browse and select coupons for products online, and automatically transfer them to their loyalty card to redeem next time they are in-store. Visa’s Rightcliqis an innovative new website that combines enhanced product information, the latest offers, online shopping list management and payment services under one easy to use banner. Price comparison, voucher aggregation and online shopping websites like mysupermarket.co.uk and myvouchercodes.co.uk are popular among many grocery shoppers.

20. Retailers and manufacturers in grocery can make use of both e-mail and SMS text messaging in support of a range of digital shopper marketing initiatives - ranging from voucher and offer distribution to competitions advertised on-pack. Digital shopper marketing: in action – text messaging and e-mail www.evolution-insights.com 20 Brands like Powerade have offered shoppers the opportunity to enter competitions advertised on-pack via SMS. Tesco utilises e-mail marketing as a way to communicate directly with its online grocery shoppers, presenting the latest offers, vouchers and recipe suggestions . Walmart and Kimberly Clark launched a Huggies Pull-up’s SMS campaign in the US. Parents text a number given on the pack for their child to receive a call back from their favourite Disney character. The campaign offers shoppers a strong point of differentiation at the fixture. Kellogg’s Squares’ brand used SMS to deliver an on-pack promotion that offered shoppers the chance to win a holiday - but also rewarded them with a coupon on their mobile for a free Sqaures bar, which they could redeem via a local PayPoint kiosk. Supermarket retailers such as Asda in the UK and Target in the USA allow shoppers to sign up to receive the latest grocery offers and vouchers by SMS direct to their mobile.

21. Digital shopper marketing: in action – digital signage, screens and kiosks Digital shopper marketing extends beyond internet connected devices to include digital signage, screens and kiosks in-store. Shopper marketing initiatives that utilise these technologies in grocery to date range from price and stock check, and offers – to coupon dispensing, recipe suggestions and product locators. www.evolution-insights.com 21 Tesco Screens, the in-store TV network deployed by Tesco, was used to target shoppers with the latest deal and offers - but was criticised for the positioning of its screens outside of the shopper’s typical field of vision, and was later decommissioned. Target in the USA and some Tesco Extra stores in the UK offer a fixed price and stock check scanner attached to the fixture, which enables shoppers to check the price of a product in-store. Canada’s metro supermarket chain offers recipe suggestions and a product locator through its digital kiosks in-store. 7-Eleven TV in the USA is one of the more extensive and successful in-store TV networks that is used to target the latest offers to shoppers while they walk around the store. Asda’s venture with Amstrad, known as AmScreen, is being trialled in select stores offering product and pricing information. Convenience store operator SPAR has also rolled out an in-store TV network through its stores.

22. Detailed shopper insights were gained from a survey of 1,546 UK adults who say they regularly shop for food and grocery. The samples were fully representative of the UK population. The survey contained 15 questions relating to technology ownership and usage; awareness, usage & appeal of digital shopper marketing initiatives, perspectives on barriers, incentives and methods of reach– in addition to standard demographic profiling questions. The questions were designed to give maximum insight into shoppers perspective on their awareness, usage and appeal of digital shopper marketing initiatives in food and grocery. The survey was undertaken by PCP Market Research Consultants on behalf of Evolution Insights. PCP is a company partner of the MRS and is therefore bound by the MRS code of conduct. The survey was carried out online during the week commencing 9th August 2010. Methodology: quantitative survey www.evolution-insights.com 22 Topics of questions in quantitative survey Source: Evolution Insights

23. Glossary www.evolution-insights.com 23 POP – Point of purchase POS – Point of sale POS Material– Marketing communications at the point of sale. Push delivery – delivery where content is sent to the recipient without their interaction at the time of delivery Pull delivery – delivery where content is requested by the recipient reactively. QR code – Quick response code (new form of 2D barcode that carries more information) Revenue – Total reported turnover (excluding VAT). ROI – Return on investment Shopper marketing – Any marketing activity aimed at the shopper throughout their path to purchase. Shopper mission – the reason/purpose of the shopping trip from the shopper’s perspective. Smartphone – An internet enabled mobile phone device that runs applications (‘apps’). SMS – Short message service (mobile text messaging) Socio-demographic - Characteristics of the population (including sex, race, age and income). Social network – electronic social interaction platform for example Facebook, Twitter URL – Uniform resource locator (web standard for internet website addressing) 3G – Third generation mobile phone network capable of improved data connectivity 2G – Second generation (GSM) mobile phone network technology ABC1C2DE – Socio demographic profile using job type (if applicable). Above the line (ATL) – Advertising using the main 5 media types of television, press, radio, cinema, and posters to promote brands. App – A smartphone application Below the line (BTL) – Advertising using non-media communication. Typically sales promotions as short-term incentives, largely aimed at consumers in-store. Big Four – The largest four grocer retailers in the UK by market share. Category driver – key influences driving the growth of any given category Channel – Retail distribution type for example supermarket, c-store, CTN Circumstances – The circumstances of the shopper when they undertake their shop Demographic – Characteristics of the population (including sex, race, age and income). Digital media – digital marketing medium for example social media, mobile, digital signage. Digital shopper marketing – Shopper marketing that utilises digital media DSM – Digital shopper marketing EAN – European Article Number (barcode standard) E-commerce - buying and selling of products or services over electronic systems such as the Internet and other computer networks ePOS– electronic point of sale system, e.g. checkout technology EDLP – Everyday low prices. FMCG– Fast moving consumer goods, often used to refer to a manufacturer. Food and grocery - Foodstuffs and various household supplies Gondola end - The promotional position at the end of a main aisle. GPS – global positioning system (technology incorporated into mobile devices for geographic location identification and tracking) Impulse – A sudden wish or urge that prompts an unplannedact or feeling. Location based delivery – delivery of marketing to mobile devices based upon GPS location M-commerce - buying and selling of products or services over mobile electronic systems such as the smartphones Microsite – Internet website dedicated to a particular brand, using a different (branded) URL Modality – The way a shopper behaves in-store On-the-go – Buying any food and/or drink for immediate consumption, i.e. outside the home Personalisation – Targeting of marketing campaigns to individuals based upon detailed information about their demographic and shopping habits

24. Evolution offer a range of products & services for clients in the field of shopper research:- Off-the-shelf research Evolution’s off the shelf research publications deliver affordable insight into shopper motivation and behaviours in UK food, drink and grocery Insight Plus Insight Plus offers your business the opportunity to engage in any of our regular shopper research projects in advance of publication, tailoring the scope to suit your needs Bespoke Consulting As publishers of research, we are able to draw upon a wealth of existing proprietary data for consulting projects – helping to better inform and shape any further research requirements. Evolution is a leading research consultancy specialising in shopper motivation and behaviour. We deliver off-the-shelf, tailored and bespoke research for manufacturers, retailers and agencies. Further information is available at our website http://www.evolution-insights.com Visit and sign up for Reflections, our free quarterly newsletter offering analysis and commentary on topical issues About Evolution Insights 24 Our research and analysis helps clients develop targeted shopper marketing initiatives designed to influence shoppers at the point of purchase. We use a range of research methodologies to discover genuine insights. Our research incorporates a broad spectrum of robust qualitative and quantitative research techniques. As a leading publisher of shopper research, we are ideally placed to offer your business actionable shopper insight. www.evolution-insights.com

25. Contents www.evolution-insights.com 25

26. Contents (2) www.evolution-insights.com 26

27. Figures & Graphs Page Type Title 21 Figure Digital shopper marketing and the extended path to purchase 22 Figure Evolutions ‘Benefits of digital shopper marketing’ 26 Figure Evolutions ‘Framework for digital shopper marketing’ 27 Figure Shopper marketing initiatives 28 Figure Methods of digital shopper marketing reach 31 Figure Evolutions framework for digital shopper marketing – applied to practical examples 39 Graph Proportion of time spent social networking, by device 39 Table Top UK mobile Internet sites, December 2009 42 Graph UK household Internet penetration 2006-2010 42 Graph Home internet access, by demographic, 2009 and 2010 42 Graph Proportion of UK adults using the Internet every day, 2006 - 2010 43 Graph Mobile phone penetration, Q1 2010, by age group 43 Graph Number of smartphone users and penetration of smartphones in the UK, 2008 Q1 to 2010 Q2 44 Graph Mobile phone ownership in the UK 44 Graph Penetration of UK adults who say they ‘regularly shop for grocery’ and ‘own any sort of mobile phone’, by demographic 45 Graph Penetration of UK adults who say they ‘regularly shop for grocery’ and ‘own a smartphone’, by demographic 45 Graph Active connections, 3G mobile and home Internet, 2004 - 2009 46 Graph Penetration of UK adults who say they ‘regularly shop for grocery’ and ‘own a smartphone’, by retailer 47 Graph UK adults - Usage of technology 47 Graph UK adults using a mobile phone to access the Internet growth index 48 Graph Penetration of UK adults who say they ‘regularly shop grocery’ and ‘own any sort of mobile and use internet on it’, by demographics 48 Graph Penetration of UK adults who say they ‘regularly shop grocery’ and ‘own a smartphone - and use internet on it’, by demographics 49 Graph Penetration of UK adults who say they ‘regularly shop grocery’ and ‘own any sort of mobile and use ‘apps’ on it’, by demographics 49 Graph Penetration of UK adults who say they ‘regularly shop grocery’ and ‘own a smartphone - and use ‘apps’ on it’, by demographics 50 Graph Proportion of UK adults who rate specific technologies as ‘important’ 50 Graph Importance of specific technologies 51 Graph Penetration of UK adults who shop grocery regularly and say that being able to purchase items on their mobile is important, by demographic 51 Graph Penetration of UK adults who shop grocery regularly and say that being able to find product information on their mobile is important, by demographic 52 Graph Penetration of UK adults who shop grocery regularly and say that being able to find offers on their mobile is important, by demographic 52 Graph Penetration of UK adults who shop grocery regularly and say that internet on their mobile while in the supermarket is important, by demographic 54 Figure UK population age profile, 2010 estimate and 2015 projection www.evolution-insights.com 27

28. Figures & Graphs (2) Page Type Title 55 Figure Mobile phone penetration, smartphone penetration and overall appeal of DSM, 2008 – 2010 and forecast to 2015 57 Graph Awareness of digital shopper marketing initiatives 57 Graph Usage of digital shopper marketing initiatives 58 Graph Appeal of digital shopper marketing initiatives 59 Figure Evolution’s digital shopper marketing ‘potential matrix’ 60 Figure Evolution’s digital shopper marketing ‘potential matrix’-outlook for growth 61 Graph General appeal of digital shopper marketing among shoppers in food and grocery 62 Graph Penetration of those who said they would never consider digital shopper marketing, by demographics 62 Graph Penetration of those who said they would never consider digital shopper marketing, by retailer 63 Graph ‘Hard’ barriers to adoption of digital shopper marketing 65 Graph Shoppers perspective on overcoming receiving digital shopper marketing communications 65 Graph Proportion of shoppers who believe no initiative would overcome their barriers 66 Graph Preferences of shoppers regarding methods of digital shopper marketing delivery 68 Graph Shoppers perspective on the appeal of receiving digital shopper marketing directly from a brand manufacturer 71 Figure Different forms of ‘digital’ coupons, and offers 75 Figure Benefits of digital ‘vouchers’ or ‘coupons’ 76 Graph Out of store influences when selecting brands 76 Figure Different forms of mobile digital coupons 78 Graph Shopper perspective on receiving coupons & offers on mobile or desktop device 79 Graph Shopper perspective on opting in to receive coupons & offers on mobile or PC 81 Graph Penetration of those who say they would be interested in receiving targeted coupons and offers to their mobile or desktop device, by demographic 81 Graph Penetration of those who say they would be interested in receiving targeted coupons and offers to their mobile or desktop device, by retailer 82 Graph Shopper perspective on opting in and push versus pull in relation to receiving digital coupons and offers 84 Graph Relative appeal of different digital coupon initiatives 87 Graph Perspective on receiving coupons & offers on mobile or desktop device 88 Graph Penetration of those who say they would be interested in receiving targeted coupons and offers to their mobile or desktop device, by demographic 88 Graph Relative appeal of different digital coupon initiatives 89 Graph Relative appeal of different digital coupon initiatives (2) 91 Graph Relative trust of different potential providers of coupons & offers to mobile or desktop device 99 Figure Different forms of ‘digital loyalty schemes’ 102 Figure Benefits of digital loyalty schemes 103 Graph Appeal of digital coupon related shopper marketing initiatives, by mobile phone ownership www.evolution-insights.com 28

29. Figures & Graphs (3) Page Type Title 103 Graph Average awareness & usage of loyalty points related shopper marketing initiatives 106 Graph Appeal of redeeming loyalty points using a mobile (virtual loyalty card) 107 Graph Appeal of checking for loyalty points in store using a mobile 107 Graph Awareness & usage of initiative 108GraphAppeal of earning additional loyalty points from products using your mobile 109GraphAppeal of digital loyalty point’s initiatives 111 Figure Different forms of ‘digital list and basket management schemes’ 112 Figure Benefits of digital loyalty schemes 113 Figure Barriers to use of digital shopping lists and online shopping baskets 117 Graph Digital shopping list initiatives 118 Graph Building shopping lists using mobile devices - initiatives 119 Graph Creating online shopping baskets using mobile devices - initiatives 124 Figure Different forms of enhanced product information initiatives 127 Figure Benefits of digital media for use with product information initiatives 129 Graph Proportion of shoppers who find digital price check and comparison ‘appealing’ 129 Graph Proportion of shoppers who find digital price check and comparison ‘appealing’, by demographic 130 Graph Proportion of shoppers who find digital price check and comparison ‘appealing’ (2) 130 Graph Proportion of shoppers who find digital price check and comparison ‘appealing’ (2), by mobile ownership 132 Graph Proportion of shoppers who find recipe and meal suggestions ‘appealing’ 132 Graph Proportion of shoppers who find recipe and meal suggestions ‘appealing’, by demographic 134 Graph Proportion of shoppers who find product information ‘appealing’ 134 Graph Proportion of shoppers who find product information ‘appealing’, by demographic 135 Graph Proportion of shoppers who find nutritional value information ‘appealing’ 135 Graph Proportion of shoppers who find nutritional value information ‘appealing’, by demographic 136 Graph Proportion of shoppers who find user review information ‘appealing’ 138 Figure initiatives to improve the shopper experience 139 Graph Appeal of using a mobile to find what you need quicker when you are actually in the supermarket 139 Graph Appeal of using a mobile to find what you need quicker when you are actually in the supermarket’, by age 140 GraphAppeal of using a mobile in the supermarket to checkout item as you put them in your trolley, to save time at the checkout www.evolution-insights.com 29