Copyright © 2004 Information Resources, Inc. Confidential and proprietary. Expanded Category...

Copyright © 2004 Information Resources, Inc. Confidential and proprietary.

Expanded Category Management

The Whole Store(y)

February 2005

™

2Copyright © 2005 Information Resources, Inc. Confidential and proprietary.

Objective

•Understanding & addressing consumers’ needs with regard to health and wellness is the key to achieving success.

Consumer Healthy Living Solutions

• UNDERSTANDING consumer segmentation

• FOCUSING on consumer management of conditions

• LEVERAGING consumer connections

• MEASURING consumer attitudes and satisfaction


The Healthcare Market is a Complex Interaction of Product Categories and Distribution Channels


RxPulse™ Provides Insights to Business Issues

Rx Pharma

Wellness

Retail

OTC / CPG & Healthcare

New treatment methods (switches)

Dual treatment / Non treatment

New Product Innovation

Consumer front-end/pharmacy habits

Consumer loyalty & leakage

Consumer behavior & opinions

Consumer profiles & health concerns

Patient level behavior & attitudes

Complete competitive view of patient

Evaluation of DTC Advertising


Identify the most compelling positioning with consumers

Improve shopper loyalty and prevent shopper leakage

Understand and influence

in-store shopping behavior

Integrate the front-end and pharmacy more effectively

IRI Consumer Insights Address Key Challenges Facing the Retail Industry Today

Drive Total Sales


You need a full understanding of consumer’s choices (Rx, CPG, OTC) to successfully grow your business

A Consumer Centric Approach Expanded Category Management Where Balance is Key

1

2

3

1. Retail: Pharmacy PLUS Rest of Store

2. Manufacturer: Categories & Brands mean lifestyle & total health/wellness control by consumers

3. Consumers/Patients/Customers: Looking more than ever to take control and feel valued


• Identify “high value” conditions• Identify Shoppers’ Prescription/CPG Connector

Products• Develop comprehensive total store program• Establish test metrics• Launch, measure, evaluate and refine

Expanded Category ManagementLeveraging the Connection Between Pharmacy & the Whole Store

Step by Step


Certain medical conditions are more lucrative to the front-end than others

$500Billion+

Allergies

Infections

Heartburn / Gastro Reflux

$44 Billion

$37Billion

$21Billion

Front End Store Front End Buying Power

Energize OTC by Leveraging the Lucrative Rx Customer

Source: IRI RxPulse Panel & IRI Consumer Network Panel; 26 weeks

Example


RxPulse Net

• Leverage the Pharmacy to drive total store sales

• Gain in-depth knowledge of prescription customers

• Understand competitive market share

• Make the connection between Pharmacy and the rest of the store

Expanded Category Management Applications

A web-based reporting tool with flexible access to IRI’s RxPulse & Consumer Network data


Transaction Assessment - Competitive ViewWhere are customers filling their prescriptions?

Key Business Decisions:

• Understand change in outlet purchase behavior

• Understand banner share of Total Rx Transactions

• Understand banner share of ailments

Time period 26 wksMeasure

# Transactions (>30 = Na)

CHANNELS BANNERSTotal

US-All Outlets

Total US-

Grcry

Total US-Drug

Total US-

MassTotal US-Sprcntr

Total US-Club

Total US-DM

Total US-All Other

Geography 1

Geography 2

Geography 3

Geography 4

Geography 5

Geography 6

Geography 7

Geography 8

Total PrescriptionsChronic Prescriptions

Heart ProblemsAliment 1Aliment 2Aliment 3

Muscle Pain ManagementAliment 1Aliment 2Aliment 3

Acute PrescriptionsAliment 1Aliment 2Aliment 3

Transactions Assessment


15%

47%11%

15%

1%

11%

Rx Transactions by Outlet and BannersTotal U.S. Transaction Assessment

Drug is the primary channel for prescriptions to be filled with a 47% share

Drug (-9%)

Mass (+2%) Food

(-9%)Other (-10%)

Club (+5%)

Direct Mail (+24%)

*Other = Dr Office & Hospital Pharmacy

Source: IRI RxPulse Panel 26 Weeks

Kroger 17.8% +0.5%

Walgreens 22.5% +3.2%

Target 19.0% +13.8%

Rx Share: Total Rx within Food & % Change vs. Year Ago

Rx Share: Total Rx within Drug & % Change vs. Year Ago

Rx Share: Total Rx within Mass & % Change vs. Year Ago

Target’s share of Rx filled within Mass is showing

strong growth

Example


17%

2%

14%

10% 42%

15%

Drug COT is not capturing its fair share of

consumers filling Heart Health Rx

Drug (+2%)

Mass (+13%)

FoodOther

Club

Direct Mail

*Other = Dr Office & Hospital Pharmacy

Source: IRI RxPulse Panel 26 Weeks

Heart Health Rx Transactions by Outlet and Banners Total U.S. Transaction Assessment

Kroger 19.2% +7.9%

Walgreens 21.2% -1.4%

Target 18.6% +12.0%

Rx Share: Heart Health Rx within Food & % Change vs. Year Ago

Rx Share: Heart Health Rx within Drug & % Change vs. Year Ago

Rx Share: Heart Health Rx within Mass & % Change vs. Year Ago

Example


Source: IRI RxPulse Panel; 26 weeks

91% Shop Acct AWith Rx Need

9% Shop Acct ANo Rx Need

32% Fill RxAt Acct A

68% Fill RxElsewhere

61% of Rx Transactions at

Acct A

39% of Rx Transactions

in Other Chains

100% of Rx Transactions

in Other Chains

Buyer Conversion

Leakage

1% of Rx filled at Acct E

2% of Rx filled at Acct C

4% of Rx filled at Acct E

8% of Rx filled at Acct C

2% of Rx filled at Acct T

3% of Rx filled at Acct W

6% of Rx filled at Acct W

5% of Rx filled at Acct T

13% of Rx filledat Direct Mail

45% Acct ATotal US Penetration

9% of Rx filled at Direct Mail

Where are Pharmacy Sales Lost?

Total U.S. Buyer Tree

Example


Front-End Consumer Spending by Category and Ailment

Pharmacy / Front-of-the-Store


• Identify category connectors

• Identify RX and OTC usage

• Identify cross-promotional partners

Time period 52 wksMeasures

Dollar Sales/1000 HH

Banner Rx Shopper

Banner Shopper, No Rx

Total HBC, Wellness, or Total EdibleCOLD CEREAL 15,582.12$ 7,104.35$

CANNED/BOTTLED FRUIT 3,764.55$ 2,274.80$

LOW CALORIE SOFT DRINKS 9,363.12$ 4,748.05$

SPICE/SEASONING - NO SALT/PEPPER 2,748.62$ 1,294.76$

CANNED TUNA 1,850.84$ 891.30$

INTERNAL ANALGESIC TABLETS 2,089.87$ 1,595.16$

COLD/ALLERGY/SINUS TABLETS 2,388.83$ 579.54$

BREAKFAST/CEREAL/SNACK BARS 924.65$ 552.82$

OTC Cross Purchasing Analysis

Linked to Cross Purchase Analysis


Source: IRI RxPulse Panel & IRI Consumer Network Panel; 26 Weeks

Consumers filling Rx outside your account, take their front-end spending outside your chain as well

Integrate the Pharmacy and Front-End More Effectively

CategoriesYour

AccountCompetitive

AccountMineral Supplements 25.06$ 29.20$ Gastrointestinal Tablets 12.34$ 17.31$ Cold Cereal 5.71$ 6.26$ Milk 5.54$ 6.36$

Your Heart Health Front-End Shoppers Who Fill Their Rx Elsewhere

Dollars Per Buyer by Category

Example


Ave Drug Shopper Retailer A Rx-Filler/Retailer AOTC's

Else Rx-Filler/Retailer A OTC's

4.63.6

6.1

# of OTC Shopping Trips $ Market Basket

# of OTC Shopping Trips and Market Basket $ Among Heart Health Rx-Shoppers

$22.98$28.86 $29.35

% $ on Deal 32.8% 32.2% 38.7%

Retailer A Rx-Fillers make more frequent OTC purchases, however their basket spend is smaller than the average drug store shopper


Example


1. Increase the frequency of front-end purchases among shoppers who are filling their heart health prescriptions elsewhere.

1,555,259 HH’s

X $29.35 average market basket per trip

X 1.0 incremental OTC shopping trips per year

$45,646,852 annually 2. Increase the market basket of front-end purchases

among shoppers who are filling their heart health prescriptions in the chain.

569,530 HH’s X 6.1 OTC shopping trips per yearX $5.88 incremental market basket $ per trip

$20,427,902 annually

Retailer Opportunity


Example


Purchase Behavior Where are customers filling their prescriptions?


• What ailments are Rx Customers treating?

• How often are they filling their prescriptions, Days of Supply?

• Compare ailment incidenceagainst Total US trends

GeographySafeway Corporate

% Individual Penetrationl

Pt Chg vs Prev Prd

Shr of Transactions

Shr of Transactions Chg vs Prev

Prd Days of Supply% Chg vs Prev

PrdShr of Days of

Supply

Shr Chg Days of Supply vs

Prev Prd% Patients 2 +

Rx Usage Rate% Individual Penetrationl

Pt Chg vs YrAgo

Shr of Transactions

Shr of Transactions

Chg vs YrAgo Days of Supply% Chg vs

YrAgoShr of Days of

Supply

Shr Chg Days of Supply vs

YrAgo% Patients 2 +

Rx Usage Rate

Total PrescriptionsChronic Prescriptions

Allergies 9.9% 100.0% 39 100.0% 53% 2.4 9.1% -0.8% 100.0% 0.0% 37 -5.1% 100.0% 0.0% 54% 2.5

ALLEGRA 2.3% 18.4% 40 19.1% 43% 1.9 1.9% -0.4% 16.8% -1.6% 37 -6.1% 18.7% -1.6% 45% 1.9

ALLEGRA-D 0.9% 5.7% 42 6.0% 31% 1.6 0.8% -0.1% 5.4% -0.3% 38 -8.7% 5.5% -0.3% 32% 1.6

CLARINEX 0.8% 6.7% 37 6.5% 46% 2.0 0.8% 0.0% 7.2% 0.5% 36 -3.2% 7.6% 0.5% 43% 2.0

OTH MED ALLERGY 7.6% 69.1% 39 68.4% 48% 2.2 6.9% -0.6% 70.5% 1.4% 37 -4.6% 68.2% 1.4% 50% 2.3

Cholesterol (High) 7.2% 100.0% 47 100.0% 67% 2.7 7.9% 0.7% 100.0% 0.0% 47 -1.2% 100.0% 0.0% 70% 2.9

LIPITOR 3.5% 47.9% 45 45.7% 68% 2.7 3.7% 0.2% 43.8% -4.2% 45 -1.4% 41.7% -4.2% 68% 2.7

OTH MED CHOLESTEROL 3.6% 42.7% 50 45.6% 56% 2.3 4.2% 0.6% 48.0% 5.3% 49 -2.4% 50.3% 5.3% 62% 2.6

PRAVACHOL 0.7% 9.4% 45 8.7% 61% 2.5 0.8% 0.0% 8.2% -1.2% 46 1.0% 8.0% -1.2% 60% 2.5

Acute PrescriptionsAilment Category 1

Prescription 1Prescription 2Prescription 3

26 Weeks Ending 03/30/2003 26 Weeks Ending 03/28/2004

Rx Purchase Behavior

Records/Days of Supply


Rx transactions – Index to Total scripts filled by ailment within Outlet

Source: IRI RxPulse Panel; 26 Weeks

Rx Filled ForYour

Account Acct B Acct C

High Blood Pressure 147 126 160Infections 83 116 58Pain Management 156 166 89Diabetes 82 172 151

Rx Filled - Fair Share By Ailment Identify Opportunities

Greatest area of opportunity exists within the High Blood Pressure & Diabetes ailment classifications.

Both of these ailments have high indexes for Account shoppers who buy their prescriptions elsewhere.

Example


Contribution to Pharmacy Over Time vs. Competition

Where are customers filling their prescriptions?


• Assess Pharmacy programs over time

• Understand outlet/banner interactions over time

• Track impact of special programs on Retail over time


Heart Health Rx Transactions Share Trend – Total U.S. All OutletHeart Health Rx Transactions Share Trend – Total U.S. All Outlet

Longitudinally Understand Competition’s Impact on Your Business

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

Q4'04 Q1'03 Q2'03 Q3'03 Q4'03 Q1'04 Q2'04 Q3'04

Drug Retailer A Food Retailer B Mass Retailer C

Transaction Trend

Source: IRI RxPulse Panel; 104 weeks

Did Drug Retailer A Implement a Heart Health Program?

Example


Switch Evaluation System

Switch MonitorRx to OTC Forecasting and Modeling Tool


Effective Switch Modeling Requires Understanding of Impact and Interaction of Multiple Variables

Market Dynamics: Order of Entry Product Differentiation Brand Equity

User Variables: Insurance coverage Individual Usage and

Usage Rate Cross-Usage Demographics

Medical Factors: Indication Dosage Prescribing Habits Emerging Rx Therapies

But the impact of individual user variables has historically been either unavailable or available only through custom research…Until Now!!!

™


February 2005

™

Planning for the Unplanned and Unprecedented:

Switches, Withdrawals and Recalls

A Board’s Eye View


Vioxx Omnibus Survey

Understanding Consumers’ Attitudes and Behaviors following the Vioxx Recall


Project Scope and Background

An Omnibus survey was fielded to understand consumers’ attitudes and behaviors following the September 30th marketplace withdrawal of the Rx Arthritis drug Vioxx

The survey was fielded November 10th to December 1st 2004 to individuals who treat for Pain.

• Questions inquiring about “current” usage refer to this time frame.

The survey was mailed to panelists who, in the past six months, have used Vioxx, Celebrex and/or Bextra


What type of Pain do you Treat for? If you treat Arthritis with an Rx, what do you use?

Source: IRI Vioxx Omnibus Survey 2004

While many respondents say they treat for multiple types of pain, 79% of those surveyed identified Arthritis as one of the ailments they seek relief for.

• Of those who treat for Arthritis, over half of them turn to Celebrex to alleviate their pain.

Respondents Treating for Pain

100%

79%

48%

71%

Total Respondents Arthritis Joint Pain Muscle/Neck or BackPain

516 407 250 368n =

Example


% HH Buying –Time Series(Total Pain)

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

11/1/2003

12/1/2003

1/1/2004

2/1/2004

3/1/2004

4/1/2004

5/1/2004

6/1/2004

7/1/2004

8/1/2004

9/1/2004

10/1/2004

11/1/2004

12/1/2004

1/1/2005

2/1/2005

3/1/2005

COX-2s BEXTRA CELEBREX MOBIC Rx NSAID ADVIL ALEVE

Vioxx Withdrawn from Market


With the new surrounding Cox-2s, how will the rest of the market be affected?

Example


% Households Buying Shift Vs. Year Ago

Households* Bextra Celebrex Rx NSAID Total OTC

Bextra -61% NA^ +54% -13%

Celebrex NA^ -52% +47% +8%

Vioxx +18% +107% +37% -2%

* Households using listed Rx brand (rows) during pre-withdrawal periodNA^ = sample not sufficient for release during one of the comparison time periodsArrows noted only for changes => +/-20%

Source: IRI RxPulse Panel & IRI Consumer Network Panel; 4 weeks ending 1/23/05 vs. 1/25/04

Many patients have switched to Rx NSAIDs post Vioxx-withdrawal. Celebrex consumers are also turning to OTC to relieve their pain

Example


Do You Know….

After the Vioxx withdrawal, what % of Rx users of Cox-s talked to their Doctors?

A. 45%B. 38%C.17%

What % of Arthritis Rx Treaters believe that Rx medicines are safe since the Vioxx withdrawal?

A. 23%B. 85%C.60%

Source: IRI Vioxx Omnibus Survey 2004

Example


For Information ContactDiane [email protected] [email protected] ResourcesHealthcare Solutions Group

Copyright © 2004 Information Resources, Inc. Confidential and proprietary. Expanded Category...

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