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Industry analysis Competitive analysis Smartest & dumbest marketing tactics Previous KIND marketing elements Marketing research Consumer “touch points map” Perceptual maps Lessons learned SWOT analysis Brand positioning

Industry Analysis

In 2011, retail current value sales of snack bars are expected to increase by 7% to US$5.7 BN, whilst retail volume sales are expected to increase by 5%  Massive growth in energy and nutrition bars, stronger growth in breakfast bars.  Energy and nutrition bars is expected to continue its recent boom with value sales increasing by 13% to reach US$2.0 BN in 2011  With an expected increase of 2% in 2011, unit prices increase faster than the annual average  By 2016, snack bars is expected to increase by 14% to reach US$6.5 billion  While the category has proven to be quite resistant to recession, there is some indication that growth will slow from 2011-15 due to market saturation and as the market reaches maturity  Companies seeking significant growth from 2011-15 will want to focus some of their efforts on recruiting new customers, in particular those who have not traditionally been nutrition and energy bar users. Brands may find that schoolbased distribution efforts—from elementary schools to college campuses—may prove to be an effective way to drive future sales and create long-lasting brand relationships

Consumers are reaching for energy and nutrition bars to supplement their regular eating habits, while some time-crunched consumers even substitute a bar or two for an entire meal Large % of one’s daily requirement of vitamins, calcium, protein and fibre are increasingly being complemented with natural grains and berries Common perception of energy and nutrition bars has changed from chalky, utilitarian food for workout junkies or crash dieters to flavorful and healthy snacks Smaller brands have cultivated hip, socially-conscious lifestyle brands which appeal to younger, more affluent consumers. Fruit bars is not positioned well for growth. Many of the products in this category are laden with sugar, corn syrup, preservatives, artificial colours and partially hydrogenated oils. Whilst many of the products contain added vitamin C, they are not commonly viewed as healthy snacks.

5 262.By Volume ('000 tonnes) 300 280 260 240 220 200 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 281.2 .

By Value (US $MM) 7.500 5.500 4.470 5.000 6.500 6.000 6.684 4.000 5.000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 .

0% 30.5% 29.0% Breakfast Bars 2011 4.7% 36.6% Other Snack Bars .3% 2016 Enerygy and Nutrition Bars Fruit Bars Granola/Muesli Bars 9.6% 19.5% 2016 4.6% 19.3% 19.3% 11.9% 30.6% 36.2016 4.6% Granola/Muesli Bars 9.5% Breakfast Bars Other Snack Bars Enerygy and Nutrition Bars Fruit Bars 34.

Industry Analysis .

5% (% retail value rsp) 4.0% 1.5% 17.2% 4.1% 9.4% 17.9% 27.6% 17.5% 17.5% Other Non Grocery Retailers Health and Beauty Retailers 60% 27.9% 26.6% 40.4% 4.1% 9.9% 0.2% 40. Supermarkets/Hypermarkets independent small grocers.0% 41.2% 10% 0%20% 10% 0% 40.0% 26.1% 16.2% Small Grocery Retailers Other Non Grocery Retailers Discounters Health and Beauty Retailers 60% 50% 40% 30% 30% 16.5% 0.% retail value rsp) 0.8% 17.8% 9.0% 27.1% 9.2% •Discounters Small grocery retailers include convenient stores.1% 41.1% 80% 70% 100% 90% 80% 4.1% 26.2% 9.3% 9.0% 1.0% 26.3% 0.8% 1.7% 17.5% 17.5% 17.2% 50% Non-Store Retailing Other Grocery Retailers 40% 70% 9.4% Non-Store Retailing 1.4% 41.8% 17.6% 40.1% 28.1% 9. and forecourt retailers • Non-store retailing includes vending machine and online retailing Small Grocery Retailers .1% 90% 28.9% 26.5% 41.2% 40.0% 9.2% 9.5% 4.4% 41.2% 9.2% 4.0% 1.8% 41.2% 26.3% 4.7% 4.9% 00% 1.6% 4.5% 17.5% 4.5% 4.0% 1.4% 4.3% 40.0% 27.8% 1.9% Supermarkets/Hypermarkets Other Grocery Retailers 20% 9.

even when they’re not hungry. . The implication for marketers and retailers is that refreshing product lines with new flavors and textures is a key to maintaining interest and engagement. a finding consistent with the notion that novelty and fun are key ingredients in snacking. Snacking while watching TV can happen nearly any time. snacking is more than just an occasional activity for most kids Kids cite a wide variety of snacking occasions.    And at an average of 2. say they snack with their mom or dad Kids are interested in trying new kinds of snacks. including after dinner and on weekends. Watching TV is the most frequently cited snacking occasion in all gender/age groups. mentioned by more than three quarters of kids. In fact nearly half of kids say they sometimes snack just for fun. but likely most often happens after school The idea that snacking can be a family activity is reflected in the finding that more than half of kids. consistent across gender and age.48 occasions per day.

Kids aged 11 and under are projected to increase 4.    Only 12% report buying snacks from school vending machines.2% rate projected for kids aged 12-17 While the difference is not dramatic. a finding that reflects the lower incidence of vending machines in elementary schools.7%. Six kids in 10 say they really like snacks that come with free surprises in the package. Between 2010 and 2015 the population of younger kids will grow faster than that of their older counterparts. more than twice the 2. faster population growth among kids aged 11 and under ensures that they will remain a primary target for snack food marketers .

March 2010 Question: “Of the snacks that you eat. snack cakes or pies Candy bars Nutritional snacks (like cereal or granola bars) Pizza rolls or bites Cereal by itself (plain and with no milk) Cold cereal with milk or soy milk Donuts Total Boys 6-8 Boys 9-11 Girls 6-8 Girls 9-11 480 120 120 120 120 32% 25% 23% 22% 20% 20% 19% 19% 12% 11% 11% 11% 11% 10% 9% 7% 6% 5% 37% 23% 19% 18% 20% 20% 20% 18% 14% 13% 14% 9% 7% 8% 13% 12% 7% 6% 36% 27% 13% 23% 23% 18% 14% 17% 9% 10% 13% 13% 20% 9% 14% 3% 9% 5% 20% 33% 33% 23% 18% 23% 18% 23% 12% 10% 7% 10% 3% 13% 4% 9% 3% 5% 35% 18% 28% 23% 20% 18% 25% 19% 13% 13% 9% 10% 13% 10% 6% 3% 3% 6% . by gender and age.Favorite healthy snack. what are your three favorites?”  Base: kids 6-11 who eat snacks/treats between meals Favorite (1st. 2nd or 3rd favorite)*: Chips or pretzels Cookies Fresh fruit Fruit snacks (like “roll-ups” or strips) Ice cream Yogurt or yogurt drinks Popcorn String cheese or sliced cheese Frozen treats (like popsicles) Crackers Pudding cup Cupcakes. among kids 6-11.

among kids 6-11. by gender and age. second favorite. or third favorite snack. Favorite healthy snack. March 2010 Question: “Of the snacks that you eat. Source: Mintel . what are your three favorites*?” Total Boys 6-8 Boys 9-11 Girls 6-8 Girls 9-11 480 120 120 120 120 Base: kids 6-11 who eat snacks/treats between meals Healthy snacks: Fresh fruit Fruit snacks (like “roll-ups” or strips) Yogurt or yogurt drinks String cheese or sliced cheese Nutritional snacks (like cereal or granola bars) Raw vegetables Nuts Snack mixes (like nuts and raisins together) Dried fruit (like raisins or apricots) 63% 52% 48% 46% 42% 28% 25% 25% 19% 58% 48% 45% 43% 41% 23% 28% 21% 16% 58% 55% 46% 42% 38% 24% 25% 26% 15% 64% 53% 49% 52% 39% 32% 21% 24% 21% 69% 54% 53% 48% 49% 33% 28% 29% 23% * Results show the percentage of respondents that indicate that a given snack is their favorite.

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Key Players Marketing Strategies Spending & Advertising Pricing Merchandising .

$345 2009 .$474 Roasted Nut Crunch Granola Bars (2) 2010 .• Variety: Granola Nut Clusters (3) Crunchy Granola Bars (9 flavors) Granola Thins (2) Chewy Trail Mix Granola Bars (3) • Sales ($mm): Chewy Granola Bars w/ Yogurt Coating (2) 2008 . oatmeal to go • Sales ($mm): 2008 .$489 Sweet & Salty Nut Granola Bars (5) 2009 .$542 • General Mills • 11 varieties including: granola bars.$374 2010 .$402 • PepsiCo .

$132 2009 .$146 2010 .$39 2010 .$25 2009 .$153 • Kellogg .$54 • General Mills • 4 flavors • Sales ($mm): 2008 .$46 2009 .$35 • Coca-Cola Co • Variety: GOLEAN. Chewy/Crunchy Granola.• 19 flavors • Sales ($mm): 2008 .$37 2010 . Layered Granola • 25 flavors • Sales ($mm): 2008 . Cereal Bars.

$189 2010 .$274 * Clif Kid Z Bar attributable for ~11% of total sales .• 5 flavors • Nature’s Path revenue was $150mm in 2007 and was growing annually at 20% • Nature’s Path Foods • 13 flavors • Launched new kidapproved bars in August 2011 in two flavors: Oatmeal raisin and Peanut butter chocolate chip • General Mills • 7 flavors • Total sales ($mm) for Clif Bar Inc: 2008 .$168 2009 .

$204 2010 .• • • • • • 10 flavors Sales ($mm): 2008 .$213 Kellogg • 3 flavors • General Mills Variety: • Fruit & Nut – 11 flavors • Plus – 8 flavors • Mini – 4 flavors • Healthy Grains – 6 flavors .$186 2009 .

    Competitors rely heavily on ATL advertising Big CPG companies do not have the same type of user community that KIND does Brand positioning is as a healthy snack simply because it falls in the granola bar category – exploits consumer lack of education about healthy foods Discounting is used to encourage consumers to taste their product .

Top Advertising Spenders Nature Valley (1) Soyjoy (2) Nutri-Grain (3) Quaker Chewy (4) Dollars Spent on Advertising $10.875.590 $2.720 $5.540 $4.000 Outdoor .550 Main Medium Television Magazines Television Television & Magazines KIND Snacks (9) $191.342.696.309.

92 $2.* Price per single-serving bar calculated as average price across multiple retailers $1.69 $0.70 $0.39 $0.89 $1.00 $0.57 $0.52 $0.46 $0.29 $1.28 $1.83 .

Cascadian Farm. Lara.Natural Grocery Channel Crowded snack bar aisle. and Nature’s Path enjoy dominant shelf positioning. Clif. KIND. . Brands Kashi.

positioned alongside energy drinks and supplements .Drug Channel Product assortment is a mix of Energy & Performance bars and Diet bars.

Drug Channel End cap displays feature brands Nature’s Valley and Kashi .

Traditional Grocery Channel Quaker Chewy features teen celebrity Nick Jonas on packaging . Quaker Chewy. . and Fiber One enjoy dominant shelf positioning. Brands Nature Valley.

Other Channel: School Cafeteria Other Channel: Airport .

SMARTEST Quaker Chewy: “Nourish their Play” DUMBEST Special K: “Strut Your Sassy” .

 Marketing strategy driven by sampling and POS display  Touching consumer when most effective – when hungry or   Very limited use of advertising Cause marketing brand mission making purchase decision  Coupons and mailers to promote sampling  Only a few billboards and street furniture  KIND Movement as a way of engaging customers with  Website & Social media  Interacting with customers online .

 Sampling  Goal to try and find people in a time of need (when they are hungry). and sample them  Best conversion rate of sample to regular consumer of any bar brand  Best marketing dollar spent is to provide someone with a KIND bar in a time of need .

 Sampling – KIND Food Truck .

 Sampling – At the point of need .

 Point of Sale Marketing  In-store displays & placement near register .

 Point of Sale Marketing  In-store sampling .

 Targeting influential groups and individuals  Culinary Community ▪ Nutrition. VIP rooms. and fashion ▪ Product seating in green rooms. music. etc . yoga and pilates ▪ Support pro athletes – avoid competitive athletics  Culture Groups ▪ Art. nutrition experts. whole ingredients  Health & Wellness Community ▪ Gym-goers. bold taste.

street furniture . posters. Media & Advertising  Very limited use of advertising ▪ To-date only street displays – billboards.

 Cause Marketing – The KIND Movement .

word of mouth . Cause Marketing – The KIND Movement  Using cause to promote trial.

even though CLIF is a much bigger company . Cause Marketing – The KIND Movement  Social mission being pushed by charismatic founder creates many PR opportunities  KIND gets much more press coverage than CLIF.

 Website & Social Media  KINDAHOLICS & KIND Advantage ▪ Direct sales to customers & subscription service .

 Website & Social Media  Facebook & Twitter ▪ Use social media to interact with customers as well as merchants and partner brands ▪ Reinforce brand image & messaging .

In-store Retail Regional Partners (e. Airport) Kind Social Media Outdoor Adv Grassroot Sampling Truck PR & Media (TV. Zip Car) Company Website Other Retail (Café. Print) .g.

After School During School • • • • YMCA Daycare Summer Camps Convenience Stores • • • • School Cafeteria Vending Machines Sports Stadiums School Fundraisers .

Whole Fruit/Nuts Low Price High Price Processed .

Gluten free Kid’s Snack Adult Snack Gluten .

Diverse Flavor Range Unhealthy Healthy Uniform Flavor Range .

such as at schools or children’s sporting events To reach the kids segment.Lesson Learned Implication KIND ‘s strength is in sampling: it has a 70% conversion rate To reach children. KIND needs to invest more in marketing. KIND should offer sampling when children have a time of need. KIND should target influencers in the sphere of children’s health and nutrition To compete with more established players. either by increasing sampling or trying ATL advertising KIND has been able to attract positive media attention better than competitors Competitors heavily use ATL advertising and discounting to create brand awareness .

Non GMO * Wide flavor product range * Strong social mission INTERNAL ORIGIN WEAKNESS * Low brand awareness * High price point * Limited distribution * Limited advertising support * Lack of kid snack positioning OPPORTUNITY EXTERNAL ORIGIN * Sales via school-based distribution channels * Kid size package size * Multi-pack vs.STRENGTH * All natural fruit & nut positioning * Heavy PR & media exposure * High conversion rate * Gluten & wheat free. single serving all THREAT * Fragmented competitive landscape dominated by large CPGs with deep distribution * Heavy industry print advertising & celebrity endorsements * Deep retail promotions .

and caretakers of school-aged children. which is good because growing children need healthy food to build healthy bodies . Kind snacks is a convenient snack bar that is both nutritious and delicious with wholesome ingredients you can see and pronounce. teachers.To parents.

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