2020 Loyalty Fund Program Customer Presentation · 2019. 12. 3. · This presentation contains highlights of the 2020 Loyalty Fund Program (“LFP”). For complete details, visit

This presentation contains highlights of the 2020 Loyalty Fund Program (“LFP”). For complete details, visit insightsc3m.com. AGDC reserves the right to modify or cancel any promotion at any time on behalf of

PM USA. In the event of a conflict between this presentation and the Agreement, the Agreement and the 2020 Loyalty Fund Program Promotion Notice will control. Any capitalized term used but not defined

herein has the meaning set forth in the Agreement, or in the 2020 Loyalty Fund Program Promotion Notice, as applicable.

2020 Loyalty Fund Program

Customer Presentation

Altria Group Distribution Company I For Trade Use Only I 10/14/19 I 1

PM USA Merchandising & Promotional Programs

Special Price Promotions

Loyalty Fund Program


Loyalty Dynamics

Better In Stock Status

Better Special Offers

Better Loyalty/Rewards

Programs

Better Price


Likelihood Adult Smokers Would Consider Changing Their Preferred Store

% Extremely/Very Likely1

29%

30%

21%

20%

% Enrolled in Program % Not Enrolled in Program

% Store Doesn't Have Program % Don't Know

Store Loyalty/Rewards Program ParticipationAdult Smokers2

Source: 1) 2018 Retail Experience Study – Questions: Please indicate how likely you would be to consider changing the

preferred stores where you usually buy, if another store had each of these better offers or features; 2) 2018 Retail

Experience Study – Question: What is your experience with a loyalty/rewards program at the usual store where you

buy? We are referring to a program that is offered by retail stores to reward frequent visits or purchases by their

customers, and that requires enrollment to participate.

PM USA LFP Redemption Rate

2018 2019 YTD

Altria Group Distribution Company I For Trade Use Only I 10/14/19 I 4Source: MPO PCR Report – Full Year 2018 Marlboro Loyalty Fund acceptance. 2019 Marlboro Loyalty Fund

acceptance as of August. Marlboro Loyalty Fund Acceptance is calculated as Total Loyalty Volume/Total Marlboro

CPW.

Importance of DataData Evolution Has Led to a Better Understanding of the Adult Smoker


Wholesale Purchase Data

Transaction Scan Data

Quality and sophistication of data have

improved over time…

Loyalty Data

…and have enabled PM USA to more

deeply understand the Adult Consumer

Loyalty ID UsageOpportunity for Consistent Loyalty ID Submission Throughout the Entire Year

8/4

/18

8/1

8/1

8

9/1

/18

9/1

5/1

8

9/2

9/1

8

10

/13

/18

10

/27

/18

11

/10

/18

11

/24

/18

12

/8/1

8

12

/22

/18

1/5

/19

1/1

9/1

9

2/2

/19

2/1

6/1

9

3/2

/19

3/1

6/1

9

3/3

0/1

9

4/1

3/1

9

4/2

7/1

9

5/1

1/1

9

5/2

5/1

9

6/8

/19

6/2

2/1

9

7/6

/19

7/2

0/1

9

8/3

/19

Loyalty Ids

20%

20%

LFP Period

LFP Period

LFP Period

LFP Period

Altria Group Distribution Company I For Trade Use Only I 10/14/19 I 6Source: POS Scan Data ID Submission: 8/4/18 – 8/3/19

2019 Loyalty Fund ProgramTrade Feedback

2019 LFP Program Elements

• Base and Leadership Options

• 2 LFP Offers

• 12 and 20 consecutive week periods

for the Leadership Option

• Includes all Marlboro SKUs

Trade Feedback

• Impactful Offers that aligned with

Retailer’s Strategies

• Additional weeks during which

LFP is available

• Increased reporting on key

Loyalty metrics


2020 Loyalty Fund ProgramWhat’s Changing?

What’s Changing in 2020

New LFP Elements

Consistent ID Incentive

• Retailers may earn $0.50 per unique Loyalty ID/Rewards Number that is reported in a Store’s or

Chain Account’s submission of PM USA Scan Data 10 of 13 weeks for each measurement

window.

• 32 weeks of Loyalty across 3 periods

• OEI elements added to requirements

• Elimination of the Base Loyalty Option

• Number of LFP Offer periods

• Introduction of Consistent ID Incentive

• Elimination of the Operational Engagement Incentive (OEI)


2020 Loyalty Fund Program (LFP)

• Retailer may choose one of two LFP Marlboro Offers

• “Buy 2 Save $1.00” or “Buy 3 Save $1.50”

• LFP Funds available on all revenue Marlboro packings2

• 32 total weeks in 2020

• 1st LFP Offer Period: Any 12 consecutive weeks between December 29, 2019 and April 4, 2020

• 2nd LFP Offer Period: Any 16 consecutive weeks between May 17, 2020 and September 19,

2020

• 3rd LFP Offer Period: 4 consecutive weeks between November 29, 2020 and December 26,

2020

• Requires loyalty Data submission for all 52 weeks based on Retailer’s Scan Data Incentive

election3

• Retailer’s LFP Marlboro Offer must be the only cigarette loyalty offer available through any of

Retailer’s loyalty programs or platforms during the portion of the LFP Marlboro Offer period in

which Retailer is running its LFP Marlboro Offer. A cigarette loyalty offer is any discount, deal or

other value offered in connection with a cigarette purchase to a subset of Retailer’s customers

through Retailer’s loyalty programs or platforms.4

LFP Program1

1 LFP is not available in AK, HI, IN, and MA. 2All Marlboro packings excluding Product Promotions. 3Retailers will be required to

submit loyalty transaction data for the transactions it has elected to submit as a part of its Scan Data Incentive (i.e, PM USA

Scan Data Incentive Participants must submit PM USA loyalty data for 52 weeks; AOM Incentive participants must submit PM

USA and AOM loyalty data for 52 weeks. 4Retailer may participate in loyalty offers with other PM USA affiliates. Please see 2020

LFP Retail Trade Announcement for additional details. Altria Group Distribution Company I For Trade Use Only I 10/14/19 I 9

2020 Loyalty Fund Program (LFP)52 Week Scan Submission


• Retailers are required to submit loyalty transaction data for the

transactions it has elected to submit as part of its Scan Data

Incentive.

– PM USA Scan Data Incentive Participants must submit PM USA Loyalty

data for all 52 weeks.

– PM USA and AOM Scan Data Incentive Participants must submit PM USA

and AOM Loyalty data for all 52 weeks.

2020 Loyalty Fund ProgramConsistent ID Incentive

New


• The Consistent ID Incentive is intended to incent the submission of consistent Loyalty ID/Rewards Numbers on cigarette purchases by Adult Smokers throughout the year.

• Retailers may earn $0.50 per unique Loyalty ID/Rewards Number that is reported in a Store’s or Chain Account’s submission of PM USA Scan Data for 10 of 13 weeks during each measurement window.

• There will be three 13-week measurement windows throughout 2020:

– Window 1: March 29, 2020 – June 27, 2020

– Window 2: June 28, 2020 – September 26, 2020

– Window 3: September 27, 2020 – December 26, 2020

Window 1 Window 2 Window 3

Potential 2020

Earnings Per

Loyalty ID

$1.50

$1.00

Unique Loyalty ID 1

Unique Loyalty ID 2

2020 Loyalty Fund ProgramConsistent ID Incentive Requirements

New


• To meet the 10 of 13 weeks requirement, a unique Loyalty ID/Rewards Number

must appear in Retailer’s Scan Data at least once per week for 10 or more

weeks during a measurement window.– A week will be measured Sunday through Saturday.

– A Loyalty ID/Rewards Number that appears in multiple transactions during a single week will qualify

towards one Consistent ID week.

WK 1 WK 2 WK 3 WK 4 WK 5 WK 6 WK 7 WK 8 WK 9 WK 10 WK 11 WK 12 WK 13 TotalIncen

tive

(13/13) $0.50

(10/13) $0.50

(9/13) $0.00

(8/13) $0.00

• Independent Stores will be measured at the Store level.

• Chain Accounts will be measured through the Account’s management

account number.― Adult Smokers who purchase cigarettes at separate Stores within a chain, so long as those Stores are

under the same management account number, those Loyalty ID/Rewards Number transactions will

count towards the Chain’s Consistent ID Incentive.

Loyalty Fund Program Eligibility

To be eligible for the Loyalty Fund Program, you must meet the

following requirements:

1)Participate in a Marlboro Performance Option

2)Meet the requirements of the PCMA Maintenance Qualifier

3)Have a Retailer loyalty program

4)Participate in a PM USA Cigarette Scan Data Incentive and satisfy

the requirements

– Participation in the All Other Manufacturers Cigarette Scan Data

Incentive is not required to participate in the Loyalty Fund

Program

Notes:

1) LFP is not available in AK, HI, IN, and MA.

2) Retailers with questions about types of Retailer Loyalty Programs may contact

[email protected]. Altria Group Distribution Company I For Trade Use Only I 10/14/19 I 13

mailto:[email protected]

2020 Loyalty Fund ProgramParticipation Requirements

Pricing• A Store must provide adult smokers no less than the full amount of the Loyalty Funds.

• The Store may combine multiple PM USA Promotions to lower the price of PM USA Cigarettes under its loyalty program to adult smokers.

• Retailer-funded discounts, Loyalty Funds and Marlboro Multi-Pack funds must be reported separately in PM USA Cigarette Scan Data to ensure accurate PM USA Payments.

Interior Signage• During the LFP Offer period, Retailer is required to display at least one Interior Cigarette Sign advertising

the LFP Marlboro Offer as follows:

– On fixture in the PM USA Portion of the PCMA;

– In the PM USA Signage Zone; or

– The Number One Interior Cigarette Sign location outside of the PM USA Signage Zone, but entirely within 48 inches of the PCMA and not in a fixture.

• To meet the interior sign visibility requirement, the LFP Offer must be the only cigarette offer advertised on the interior sign.

Exterior Signage• If a Store places Exterior Cigarette Signs, Retailer is required to place at least one Exterior Cigarette Sign

that advertises the Store’s LFP Offer in the Number One exterior sign location.

• To meet the exterior sign visibility requirement, the LFP Marlboro Offer must be the only cigarette offer advertised on the exterior sign.

Digital Advertising• If a Store advertises cigarette offers through any digital platform, Retailer is required to display the Stores

LFP Marlboro Offer in the number one position among cigarette offers during the portion of the LFP Offer periods in which it is running its LFP Offer.


2020 Loyalty Fund ProgramParticipation Requirements Continued

Clerk Awareness• Retailer must provide training and communication to each Store’s personnel to support understanding

of the LFP Offer and clerk-facing resources to support educating Adult Smokers on the LFP Offer.

Inventory Management• Retailer must develop inventory management plans to ensure adequate levels of Marlboro cigarettes

during the LFP Offer period.

Day One Execution Plan• Retailer must develop a plan to support day one execution and communication of its LFP Offer.


New

2020 Loyalty Fund ProgramLFP Offers

1Only revenue Marlboro packings are eligible for LFP; Product Promotions are excluded.

Retailer may choose one of the following LFP Offers for each LFP period:

Note: To participate in LFP, you must have a Retailer loyalty program, participate in a Marlboro Performance Option, meet the

requirements of the PCMA Maintenance Qualifier and be approved to participate in PM USA Cigarette Scan Data Incentive. Retailer will

be paid LFP funds according to the election they select. Retailer will be paid for the LFP Marlboro Offer in which it has elected to

participate even if a Store meets the requirements of another LFP Marlboro Offer.

Marlboro Product Promotions are not eligible for LFP funds.

Qualifying Purchase Offer

LFP Marlboro Offer 1Buy at least two packs of

revenue Marlboro cigarettes1

in a single transaction

Receive $1.00 off your purchase

LFP Marlboro Offer 2Buy at least three packs of

revenue Marlboro cigarettes1

in a single transaction

Receive $1.50 off your

purchase


LFP Registration Process

Registration Process Steps:

1. You must communicate your desired LFP Offer election and start dates for each LFP

Period to your AGDC Representative prior to the LFP start date.

2. Your AGDC Representative will enter your desired LFP Offer election and start dates in

insightsc3m.com.

3. Your AGDC Representative can provide you with the LFP test file requirements and IRI

contact information:• Phone: 804.230.3454

• E-mail: [email protected]

– You may submit a LFP test file to your IRI Help Desk Representative

• Please note: You are not required to submit a LFP test file. If you have not participated in LFP, we

recommend you do so to help ensure accurate data submission before running your LFP offer.

Payments are based on accurate data submissions only.

All LFP Participants must complete the registration process prior to the start of any

LFP Offer and be approved to participate in the PM USA Cigarette Scan Data Incentive


New

Note: The LFP registration document is no longer part of the LFP registration process.

2020 Loyalty Fund ProgramKeys to Success

• Accurate & Timely Data Submission– To ensure accurate and timely payments, confirm that your LFP Scan Data

Submissions include all required information listed in the LFP Reporting Requirements

– Ensure Loyalty Data submission for all 52 weeks

• Loyalty ID/Rewards Number submission throughout 2020– Ensure Adult Smokers 21+ have a unique Loyalty ID/Rewards Number

– Encourage Loyalty ID/Rewards Card utilization on all transactions throughout 2020

– Reduce the use of Manager/Register cards

• Awareness– Ensure Store personnel are communicating the LFP Marlboro Offer to Adult

Smokers

• Visibility – Utilize LFP Custom POS or PM USA-provided signage to communicate the LFP

Marlboro Offer to Adult Smokers

• Inventory– Ensure you have adequate on-hand inventory to support LFP Marlboro Offers


2020 Loyalty Fund ProgramAdditional Resources

• Consistent ID Incentive Reporting

– Account specific reporting on Consistent IDs for the first 13

weeks of 2020 will be provided by your AGDC

Representative.

– Ongoing reporting for the Consistent ID Incentive will be

made available during future measurement windows.

• Unique Loyalty ID/Rewards Card transactions per

day

– Reporting on Loyalty ID/Reward Cards used more than 4

times in a single day, at a single store.


This presentation contains highlights of the 2020 Loyalty Fund Program (“LFP”). For complete details, visit insightsc3m.com. AGDC reserves the right to modify or cancel any promotion at any time on behalf of

PM USA. In the event of a conflict between this presentation and the Agreement or the Loyalty Fund Program Promotion Notice, the Agreement and Promotion Notice will control. Any capitalized term used

but not defined herein has the meaning set forth in the Agreement, or in the Loyalty Fund Program Promotion Notice, as applicable.

2020 Loyalty Fund Program

Reporting Requirements


Participation Requirements

• You must communicate your desire to participate in LFP to your AGDC Representative. You may participate in one LFP Offer per store during each designated LFP Offer period. Retailer will be paid for the LFP Marlboro Offer in which it has elected to participate in even if a Store meets the requirements of another LFP offer.

• If you are not already participating in the PM USA Cigarette Scan Data Incentive, you must communicate your desired LFP Offer election and start dates for each LFP Period to your AGDC Representative prior to the LFP start date. Your AGDC Representative will enter your desired LFP Offer election and start dates in insightsc3m.com.

• You must provide adult smokers no less than the full amount of the Loyalty Funds. You may combine multiple PM USA Promotions to lower the price of PM USA Cigarettes under your Loyalty Program to adult smokers (e.g., Loyalty Funds and Marlboro Multi-Pack Funds). You are always free to further reduce the price of cigarettes beyond the Promotional Allowances or discount funded by PM USA.

• Generic loyalty cards (e.g., store loyalty cards, blank loyalty cards) are not permitted. If multiple ID numbers, including alternate Ids (e.g., telephone numbers), are used for one of your Loyalty Program members, the parent account number must be reported.


Participation Requirements Continued

• Retailer-funded discounts, Loyalty Funds and Marlboro Multi-Pack Funds must

be reported separately in PM USA Cigarette Scan Data to ensure accurate PM

USA payment.

• Loyalty Fund Program Discounts must be reported in the scan data using the

PM USA Loyalty Promotion Code– PM USA Loyalty Fund Promotion Code: 028200197214

• You may report the PM USA Loyalty Fund Promotion Code in either the MFG

Deal Name THREE (Field 29) or the UPC Code (Field 15) as illustrated in the

examples contained in this Loyalty Fund Program Reporting Requirements

document

– If reporting the Loyalty Fund Promotion Code in the UPC Field (Field 15),

there must be no spaces in the code

• You are not permitted to use custom codes to report Loyalty Fund discounts in

the scan data

• In addition to satisfying the PM USA Cigarette Scan Data Retail Reporting

Requirements, you must provide one of the following in the Loyalty ID/ Rewards

Number Field: loyalty ID number, loyalty card ID number, unique consumer

number or unique consumer identifier.

• Each Loyalty ID/ Rewards Number must be assigned to an individual adult

smoker


Payment Details

• If you meet the requirements of your elected LFP Offer, PM USA will pay the

LFP Promotional Allowances on all eligible revenue Marlboro cigarettes sold in conjunction with your Retailer Loyalty Program during the specified timeframe

on the LFP Offer, as reflected in PM USA Cigarette Scan Data.

• Product Promotions are not eligible for LFP payments.

• PM USA reserves the right to withhold Loyalty Funds payments on transactions

that do not meet the LFP requirements. Upon AGDC’s request, you’ll need to

provide to AGDC sufficient information and documentation to verify your

store’s compliance with the requirements of the LFP.

• Loyalty Fund payments will be paid by EFT only.

Only revenue Marlboro packings are eligible for LFP; Product Promotions are excluded. Altria Group Distribution Company I For Trade Use Only I 10/14/19 I 23

Loyalty Fund Program Required Fields Overview

Below is a list of the fields included in the standard scan data file format

Field Field Field

Required Fields: 13. Manufacturer Name 26. MFG Deal Discount Amount ONE

1. Management Account Number (Chain),

Retail Control Number (Independents)14. SKU Code 27. MFG Deal Name TWO

2. Week Ending Date 15. UPC Code 28. MFG Deal Discount Amount TWO

3. Transaction Date 16. SKU/UPC Description 29. MFG Deal Name THREE

4. Transaction Time 17. Unit of Measure 30. MFG Deal Discount Amount THREE

5. Transaction ID Code 18. Quantity Sold 31. Final Sales Price

6. Store Number 19. Consumer Units Optional Fields:

7. Store Name 20. Multi-Pack Indicator 32. Store Telephone

8. Store Address 21. Multi-Pack Required Quantity33. Store Contact Name/Third Party

Designation

9. Store City 22. Multi-Pack Discount Amount 34. Store Contact Email

10. Store State 23. Retailer-Funded Discount Name 35. Product Grouping Code

11. Store Zip + 4 Code 24. Retailer-Funded Discount Amount 36. Product Grouping Name

12. Category 25. MFG Deal Name ONE 37. Loyalty ID/Rewards Number

Denotes data fields in which additional information is required for the LFP


2020 LFP Offer Details

Qualifying Purchase:

• Adult smokers must make a purchase under your Loyalty Program of at least

two revenue packs of Marlboro cigarettes1 in a single purchase transaction.

• The purchase may include any combination of Marlboro cigarette varieties,

excluding Product Promotions.

Offer Details and Duration:

• You must provide at least $1.00 off any single purchase transaction that

contains at least 2 revenue packs of Marlboro cigarettes to your Loyalty member.

• Only one $1.00 off redemption per transaction will be paid by PM USA.

LFP Marlboro Offer 1

1 Only revenue Marlboro packings are eligible for LFP; Product Promotions are excluded. Altria Group Distribution Company I For Trade Use Only I 10/14/19 I 25

2020 LFP Offer Details

Qualifying Purchase:

• Adult smokers must make a purchase under your Loyalty Program of at least

three revenue packs of Marlboro cigarettes1 in a single purchase transaction.

• The purchase may include any combination of Marlboro cigarette varieties,

excluding Product Promotions.

Offer Details and Duration:

• You must provide at least $1.50 off any single purchase transaction that

contains at least 3 revenue packs of Marlboro cigarettes to your Loyalty member.

• Only one $1.50 off redemption per transaction will be paid by PM USA.

LFP Marlboro Offer 2


LFP Reporting Requirements – Option 1


Using MFG Deal THREE on the Same Transaction Line

• On the transaction line where the Loyalty Funds are applied:

– Report the PM USA Loyalty Fund Promotion Code in MFG Deal Name THREE (Field 29)

– Report the discount amount as a positive value in MFG Deal Discount Amount THREE (Filed 30)

– Final Price (Field 31) should be the final sales price of the transaction line, including the Loyalty Funds discount

3. Transaction

Date

5. Transaction

ID Code

14. SKU Code

15. UPC Code16. SKU/UPC Description

18. Quantity

Sold

29. MFG Deal Name THREE

30. MFG Deal

Discount AmountTHREE

31. Final Price

37. Loyalty ID/Rewards

Number

Option 1: Use Same Line Item

1/25/2017 3333333333 SKU1123 28200003843Marlboro Gold KS

Box 202 28200197214 1.00 7.00 123456AD

LFP Reporting Requirements – Option 2


Using a Separate Transaction Line within the Same Transaction

• Qualifying purchase and the Loyalty Funds must be part of the same

Transaction ID Code (Field 5)

• Final Price (Field 31) on the qualifying purchases should not include any sales

tax or Loyalty Funds

• On a separate transaction line, within the same Transaction ID Code (Field 5):

– Report the PM USA Loyalty Promotion Code (Field 15) and SKU/UPC

Description (Field 16)

– Report “0” in Quantity Sold (Field 18)

– Report the discount amount as a negative value in Final Price (Field 31)

3. Transaction

Date

5. Transaction

ID Code

14. SKU Code

15. UPC Code16. SKU/UPC Description

18. Quantity

Sold

29. MFG Deal Name THREE

30. MFG Deal

Discount AmountTHREE

31. Final Price

37. Loyalty ID/Rewards

Number

Option 2: Use Separate Line Item

2/2/2017 4444444444 SKU1123 28200003843Marlboro Gold KS

Box 201 4.00 123456AD

2/2/2017 4444444444 SKU1124 28200003577Marlboro Red KS

Box 201 4.00 123456AD

2/2/2017 4444444444 LFPM4 28200197214Marlboro LFP 2019 Option 1

0 -1.00 123456AD

Loyalty Fund ProgramException for New Stores1

• Retailer may elect to participate in the LFP for a new Store with any

effective date during a LFP Offer period:

― has submitted a successful PM USA Cigarette Scan Data file, and

― completed the LFP registration process

• Stores may only run the LFP Offer during the designated LFP Offer

periods regardless of start date.

• The new Store will not receive payment for Loyalty Funds unless:

― Retailer successfully submits PM USA Cigarette Scan Data beginning with

the Sunday of the week in which the new Store’s LFP Offer begins; and

― Retailer continues to submit PM USA Cigarette Scan Data through the

remainder of the LFP Offer period.

1This does not guarantee payment of the PM USA Cigarette Scan Data Incentive. To receive

PM USA Cigarette Scan Data Incentive payments you must meet the election and test file

submission deadlines for the incentive. Altria Group Distribution Company I For Trade Use Only I 10/14/19 I 29

Documents

2020 Loyalty Fund Program Customer Presentation · 2019. 12. 3. · This presentation contains highlights of the 2020 Loyalty Fund Program (“LFP”). For complete details, visit