Innovations Update

2

Innovation’s Objectives

• Support our common goal to “Be the Best Consumer Products company in the Automotive Aftermarket “

– Identify new products, packages, or service opportunities that are driven by customer & consumer needs and will generate incremental revenue and profit for the company.

– Develop, design, test and make ready for commercialization new products or services that will address those opportunities.

– Be actively involved in the strategic direction of industry specifications in order to maintain margins of current/new products while sustaining competitive advantage.

3

New Product Development Process

IdeationScreen New Technologies

Identify Consumer Needs

Develop Platforms

Ideate

Develop Product Claims

Determine Consumer Targets

Recommend Branding

Develop Concepts

Evaluation

Screen Concepts

Test Concepts w/Target

Assess Market Potential

Assess Technical Feasibility

Estimate COGS

Preliminary Pricing

Development

Assign Team

Develop Timeline

Finalize Formulation

Validate Attributes

Finalize Packaging

Formulation Testing

Financial Projection

Sell-In[Chemicals]

Launch

Develop Launch Plan

Full-Scale Production

Sell-In [Lubricants]

Execute Marketing Strategy

Finalize Labels/Cases

Arrange Logistics

Consumer/Market Testing

Develop Marketing Strategy

Finalize Financial Projections

Commercialization

4

Keys to Success

• Team oriented individuals who possess strong strategic, distilling, problem identification/solution and project management attributes who also have a tolerance for ambiguity

• Freedom to explore all types of ideas no matter how far off base they may seem

• Unadulterated access to consumers• Access to the trade• Support from other functional groups, (Product

Management, SGS, Brands, Supply Chain, etc.)• Clearly defined, measurable scorecards• Permission to fail…within reason

5

Types of “New” ProductsIN

NO

VA

TIO

NS

BR

AN

D

Focu

sIn

fluence

Focu

sIn

fluence P

RO

DU

CT M

GM

T

Focu

s

New-to-the-Brand/Line Extensionse.g. PZL Used Oil-Sucking Bugs, QS New Vehicle Oil, Black Magic Car Care

Industry-Mandated Upgradese.g. GF 3, GF-4 (Motor Oil Only)

Product Claims-Driven Reformulatione.g. QS Hi-Rev, PZL Ultimate, QS Conventional, Slick 50 Pour and Drive

Product Repositioning/Cost-Driven Product Improvements

e.g. QS HME Reformulation, Outlaw Repackaging

6

Key Factors in New Product Profitability

Superior product– Quality, value, meeting needs

Quality marketing actions – Market assessments, customer tests, launch

Solid up-front homework– Idea screening, business case, market research

Attractive markets Sharp and early product definition Properly planned and resourced launch Synergy with other products Low-risk for customers Dedicated, cross-functional team approach Familiar, known areas

– Markets, technologies, processes High quality of technical execution Non-product advantages

– Sales force, customer service Innovativeness of product concept

Source: APQC

Insights’ Role:

• Infuse a consumer centric culture

• Identify key market opportunities

• Make smart decisions; increase success % rate

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Consumer Insights’ Roles in Innovation Success

Powering Ideas

Exploratory

Segmentation

Industry Data

Needs Assessment

Concept Screening

Evaluating & Improving

Ensuring Success

Product Optimization

Volumetric Analysis

Positioning

Pricing

Packaging

Merchandising

Decision-Making

Portfolio Optimization

Usage

8

Concept Screening

Metrics

Purchase Intent

Value

Likeability

Uniqueness

Believability

Quantity (trial)

Frequency

Need Fulfillment

Objectives• Integrate consumer insights into the

concept development process• Prioritize product ideas• Consistent metrics across categories• ‘Richness’ – Not just an up/down score

Methodology• Online interviewing from National Panel• Quasi-monadic design• All concepts branded and priced• Concept visuals and statements• Creating internal database

– Screen existing and competitive product for benchmarks

• Ability to deep-dive for target consumers

To Date• Continual refinement and learning• 162 products in data base

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Consumer Insight to drive Platform Development & Product Ideation

Brand Strategy

Product Selection Process

Consumer Feedback

Financial/Product Viability

LaunchExecute the best ideas on the table!

What are the unmet consumer needs?

How do these products align with the core brand strategies?

Did consumers like the products?

Are these products profitable?Can we make them?

10

Thinking Outside the Box

• Pursue paradigm shifting innovations

– Go where consumers are…develop new channels

– Create customer value and consumer loyalty

– Change the selling paradigm