Natureview case study
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Transcript of Natureview case study
CASE STUDY ANALYSIS
• Natureview farm• History• Goals• Statistics of natureview• Strategies • Solution
NATUREVIEW FARM• Small yogurt
manufacturer.• Located in Cabot,
Vermot.
2000
1999
Revenue of $13 million
1997
Decision to increase
revenue to $20 million by end of
2001
Equity infusion of
venture capital
1996
1989
Jim Wager hired as
CFO
Natureview farm began
JOURNEY OF NATUREVIEW FARM
GOAL• Grow revenues by over 50% before the end of 2001
REASON• VC needed to cash out of its investment
STRATEGY • Expand to supermarket channel
Twelve refrigerated yogurt flavors
Four flavors Yogurts packed in tubes for children. Newly introduced
8-oz cups 32-oz cups 4-oz cups
86% 14%
PACKAGE SEGMENT
Natural food retailers• Whole foods • Wild oats• Organic food market
DISTRIBUTION CHANNELS
3%
97%
Sales
supermarkets natural food stores
46%
29
25%
SUPERMARKET
NATURAL FOOD MARKET
SMALL HEALTH FOOD STORE
ORGANIC FOOD CONSUMER PURCHASE
MARKET SHARE IN REGIONS
NORTHEAST MIDWEST SOUTHEAST WEST0%
500%
1000%
1500%
2000%
2500%
3000%
3500%
26% 22% 25% 27%
25
30
33
17
Chart Title
DOLLAR SHARE NO. OF RETAILERS Column1
PRODUCTION COST AND RETAIL PRICE BY CHANNEL
NATURAL FOOD CHANNEL AVERAGE RETAIL PRICE
8-OUNCE CUP $0.88
32-OUNCE CUP $3.19
4-OUNCE CUP MULTIPACK $3.35
SUPERMARKET CHANNEL AVERAGE RETAIL PRICE
8-OUNCE CUP $0.74
32-OUNCE CUP $2.70
4-OUNCE CUP MULTIPACK $2.85
CUPS SIZE MANUFATURING COST
8-OUNCE CUP $0.31
32-OUNCE CUP $0.99
4-OUNCE CUP MULTIPACK $1.15
LENGTH OF CHANNEL MARKET
8-OZ represented the largest dollar and unit share.
Significant revenue potential.
First brand to enter the channel would have first-mover advantage.
Pros
Advertising would cost $1.2 million per region per year.
SG&A would increase by $320000.
Higher risks and costs.
Cons
TO EXPAND SIX SKUs OF 8-OZ PRODUCT INTO ONE OR TWO
SELECTED SUPERMARKETS
OPTION 1
32-oz generated above-average gross profit.
Fewer competitive offering in 32-oz size.
Promotional expenses lower.
Less noticed by competitors.
Pros
Slotting expenses higher.
SG&A would increase by $160000.
Nation wide distribution in 1 year is difficult.
Cons
EXPAND FOUR SKUs 32-0Z NATIONALLY IN SUPERMARKETS
OPTION 2
Strong relationship with natural foods channel.
Distribution is easy.
Sales and marketing expenses is lower.
Natural foods channel was growing seven times faster.
Pros
Revenues of $20 million cannot be achieved by 2001.
Channel conflicts may arise.
Cons
INTRODUCE TWO SKUs CHILDREN’S MULTI-PACKS INTO NATURAL FOOD
CHANNEL
OPTION 3
Advantages • Best option to achieve a revenue
of $20 million in a year• First brand to enter added
advantage• Supermarket maximize sales
volume.• 8-oz is most popular sizes
Created by Akshaya R, PSG College of
Technology, during a marketing internship
under Prof Sameer Mathur, IIM Lucknow