Launching Krispy Natural: Cracking the Product Management

CodeHARVARD BUSINESS SCHOOL CASE

THE PLAYERS• Ashley Marne- Executive VP, Sales and Marketing, Pemberton Products

• Brandon Fredrick- Marketing Director ,Pemberton Products

Pemberton Products (Brief Summary)

• Parent Company Candler Enterprises manufactures beverage and snacks.

• It also operates in Pet Care and Quick Service Restaurants.• PEMBERTOM PRODUCTS is its Snack Food Division.• Sells cookies, bakery snacks and other baked items.• market leader in the U.S. cookie and bakery snacks

segments of the sweet snack market.• 5 Billion $ sales revenue in 2011 i.e. 28% of total Candler

Enterprises.

Sales

PEMBERTON

Pemberton’s Strength• Market leader in the U.S. cookie and bakery

snacks segments of the sweet snack market.

• Utilized a company-owned direct store delivery (DSD) distribution system.

• R&D is given a high priority to produce world class quality products.

Key Strategic Priorities Of Pemberton Products• building a collection of attractive, durable brands; • leveraging leading marketing, sales and DSD(direct store delivery) distribution systems to increase revenue and profits; • building or acquiring capabilities in salty snack categories.

OBJECTIVES:-• To increase the sales revenue of the products of

Pemberton.• Study the marketing strategy of newly Introduced

Krispy Natural Product in the market.

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The U.S. Cracker Industry

Mintel study in United States reported that:

• 74% respondents consumed crackers on a regular basis.

• 34% ate them as part of regular weekly diet.

• 53% respondents considered overall healthfulness an important factor.

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The U.S. Cracker Industry

2009 share 2010 share

Kraft 34.7% 32.7%lance 31.5% 29.9%Kellogg 15.5% 21.0%Private Label 8.0% 8.2%Other 10.2% 8.1%

Crackers with fillings:After flat sales from 2005 through 2009, the crackers with fillings segment experienced strongest growth of approximately 14% in 2010.

Manufacturers sales of Crackers with filling market share.

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The U.S. Cracker Industry

2009 share 2010 share

Kraft 37.8% 37.0%Kellogg 28.9% 28.1%Pepperidge Farm (Goldfish)

13.9% 14.2%

Private Label 4.6% 4.8%Other 14.8% 16.0%

“All Other” Crackers:The broad all other cracker segment experienced a 2.1% CAGR for period from 2008 to 2010.

Sales of “All Other” Crackers.

Launch of Krispy Single-Serve

• first entered the salty snack market with the acquisition of Krispy Inc.

• marketed as mobile, “Grab and Go” snacks.

• Failed to execute its plans due to single line serving, taste problem etc.

Plan Actual

% to plan

Krispy Retail $97.5 $50.8 52.1%Krispy Vend $23.4 $18.0 76.9%Total Krispy

Single - Serve$120.9 $68.8 56.9%

2009 Krispy Single – Serve Performance vs. Plan ($ millions)

KRISPY RELAUNCHED Again!!

• This time all the shortcomings of the previous launched were solved.

• Research and development activities increased to improve taste, quality and shelf life.

• Rebranded as ‘Krispy Natural’.• multiple-serving package sizes and more flavours were introduced.• Marketing Strategy was completely changed to compete strongly

against competitors.

• New flavors were introduced .• Multiple Serve Packing was initiated. • 100% Whole wheat and natural ingredients

used in manufacturing.

PRODUCT STRATEGY:

• Effective, efficient and optimal adoption of pull marketing strategy.

• Hence price discounts offered initially.• Focused on more and more

advertisement and promotion.

MARKETING STRATEGY:

• Krispy Naturals adopted the premium pricing strategy.• Still in the retail market, the prices of their competitor were matched on a “visual price basis” i.e. less quantity for the same price so as to maintain their premium product image.

PRICING STRATEGY

• Hired 5 representatives known as “Krispy force for proper distribution.”• Effective and efficient direct store delivery (DSD)

distribution system.• Optimizing product using R&D for longer shelf life of

crackers.

DISTRIBUTION STRATEGY

Krispy NaturalMultiple serving packagesTargeting health conscious consumersMore flavour options and good taste experience through R&D

Krispy Single ServeRegional brandLess flavour optionSingle product line

Effect on Competitors

Suggestions:• Try to develop products in low price category as well by reducing some

cost in R&D budget.• The company should try to expand its products in developing nations

like India which has a huge market and lot of growing opportunities.• Try to use its DSD(direct store delivery) distribution systems optimally

and efficiently so that more and more market share can be gained.

THANK YOU

CREATED BY Pranav Agarwal, IIT KHARAGPUR, during a MARKETING INTERNSHIP under guidance of Prof. Sameer Mathur, IIM LUCKNOW.

DISCLAIMER