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CASE ANALYSIS:NATUREVIEW FARM

• Founded and manufactured in Cabot, Vermont• Plain vanilla flavor of 8-oz and 32-oz packaging initially• Less than $100,000 revenue earned

• Revenue of the company grew from $100,000 to $13 million

• FRUIT AT THE BOTTOM developed in productive size of 8-oz

• Introduced various flavours in different sizes• Multipack yogurt products for children

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19 99

200 0

The FOUR P’s• PRODUCT

• PRICE

• PLACE

• PROMOTION

PRODUCT• RECEPIE USED ARE NATURAL INGREDIENTS• AVERAGE SHELF LIFE OF NATUREVIEW FARM’S

YOGURT IS 50 DAYS• SPEICAL PROCESS GAVE YOGURT A SMOOTH

TEXTURE • USED MILK FROM COW UNTREATED WITH

ARTIFICIAL GROWTH HORMONE

PRICE

NATURAL FOOD CHANNELS

MANUFACTURING COST

AVERAGE RETAIL PRICE

TOTAL COST

8-oz CUP $0.31 $0.88 $1.1932-oz CUP $0.99 $3.19 $4.184-oz CUP MULTIPACK

$1.15 $3.35 $4.50

SUPERMARKET CHANNEL

MANUFACTURING COST

AVERAGE RETAIL PRICE

TOTAL COST

8-oz CUP $0.31 $0.74 $1.0532-oz CUP $0.99 $2.70 $3.694-oz CUP MULTIPACK $1.15 $2.85 $4.00

A ff o r d a b l e A c c o r d i n g To I t ’ s C h a n n e l

PLACE

SUPERMARKET CHANNELS

MARGIN

MANUFACTURER -

DISTRIBUTOR 15%

RETAILER 27%

CONSUMER -

NATURAL FOOD CHANNELS

MARGIN

MANUFACTURER -NATURAL FOOD WHOLESALER

7%

NATURAL FOOD DISTRIBUTOR

9%

RETAILER 35%CONSUMER -

PLACE

PROMOTION

• It’s natural flavor with high quality and great taste growth in the national distribution and natural food channels

• Low cost guerilla marketing

MANUFACTURER

NATURAL FOOD WHOLESALER

NATURAL FOOD DISTRIBUTOR

RETAILER

CONSUMER

NATURAL FOOD CHANNEL

Typical natural food wholesaler margin was 7%,distributor margin was 9%,and retailer margin was 35%

SUPERMARKET CHANNELMANUFACTURER

DISTRIBUTOR

RETAILER

CUSTOMER

A typical distributor margin in this channel was 15% and typical retailer margin was 27%.Hence with respect to the natural food stores, prices tended to be lower here.

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WITH MOST IMPORATANT OBJECTIVE BEING TO MEET THE DESIRED REVENUE GENERATION, FOLLOWING MARKET SURVEY RESULTS ARE TO BE CONSIDERED:

SUPERMARKET SOLD 97% OF ALL THE YOGURT CONSUMED AND NATURAL FOOD STORE SOLD THE BALANCE.

AMONG 100% OF THE U.S. POPULATION, ORAGNIC PRODUCT WAS CONSUMED BY 40 % OF THE POPULATION AMONG ORGANIC PRODUCT USERS,70% ARE YOGURT CONSUMERS SIXTY-SEVEN PERCENT OF U.S. HOUSEHOLDS INDICATED THAT PRICE

WAS A BARRIER TO THEIR PURCHASE OF ORGANIC PRODUCTS 58% EXPRESSED THAT THEY WOULD BUY MORE ORGANIC PRODUCT

IF THEY WERE LESS EXPENSIVE. FORTY-SIX PERCENT OF ORGANIC FOOD CONSUMERS BOUGHT

ORGANIC PRODUCTS AT A SUPERMARKET, 25% AT A SMALL HEALTH FOODS STORE, AND 29% AT A NATURAL FOODS SUPERMARKET

MARKET SURVEY

OPTION 1(MOST STRONGLY ADVOCATED BY WALTER BELLINI,PRESIDENT OF SALES)

TO EXPAND 6 SKU’s OF THE 8-oz PRODUCT LINE INTO ONE OR TWO SELECTED SUPERMARKET CHANNEL REGION

Supermarket retailer would likely authorize only one organic product brand. The first brand to enter the channel would have a significant advantage.

8 ounce cup represented the largest dollar and unit share of refrigerated yogurt market.

Other natural food brand had successfully expanded their distribution into the supermarket channel out of which two of them have increased revenue by over 200% within two years of entering supermarket.

OPTION 2

TO EXPAND 4 SKU’S OF THE 32-oz SIZE NATIONALLY

32-OZ CUPS CURRENTLY GENERATED AN ABOVE AVERAGE GROSS PROFIT MARGIN FOR NATUREVIEW(43.6% VS 36% FOR 8-oz PRODUCT LINE)

NATUREVIEW FARM HAD A STRONG COMPETITIVE ADVANTAGE BECAUSE OF THE PRODUCTS LONGER SHELF LIFE 32-OZ. SIZE WAS PROMOTED ONLY TWICE A YEAR,HENCE LESSER

PROMOTIONAL EXPENSES

(ADVOCATED BY JACK GOTTLIEB, VICE PRESIDENT OF OPERATIONS)

OPTION 3

TO INTRODUCE TWO SKUS OF A CHILDREN’S MULTI-PACK INTO THE NATURAL FOODS CHANNEL EXPANSION INTO THE SUPERMARKET CHANNEL COULD POTENTIALLY AFFECT STRONG

RELATIONSHIPS WITH THE LEADING NATURAL FOODS CHANNEL RETAILERS RELATIONSHIPS.

NATUREVIEW FARM’S ALL-NATURAL INGREDIENTS WOULD PROVIDE THE PERFECT POSITIONING FROM WHICH TO LAUNCH ITS OWN CHILDREN’S MULTI-PACK PRODUCT OFFERING INTO THEIR CORE SALES CHANNEL

THE FINANCIAL POTENTIAL WAS VERY ATTRACTIVE. THE PROJECTED TOTAL YEARLY REVENUE FOR THE TWO MULTIPACK SKUS WOULD BE APPROXIMATELY 10% OF THE NATURAL FOODS CHANNEL CATEGORY DOLLAR SALES, AND THE ESTIMATED POTENTIAL INCREMENTAL UNIT VOLUME AT 1.8 MILLION.

THE NATURAL FOODS CHANNEL WAS GROWING ALMOST SEVEN TIMES FASTER THAN THE SUPERMARKET CHANNEL, AND NATUREVIEW WAS DEVELOPING SEVERAL NEW PRODUCTS THAT COULD FURTHER BOOST SALES PERFORMANCE IN THIS HIGHLY SUCCESSFUL CHANNEL.

( advocated by Walker’s colleague Kelly Riley, the assistant marketing director)

CONSIDERING THE UNIT SALES AND HENCE FINDING THE REVENUE PROJECTION, WE CAN SEE THAT REVENUE FOR THE OPTIONS ARE(YEAR 2001)

OPTION UNIT SALESOPTION 1 42,000,000OPTION 2 5,500,000OPTION 3 2,070,000

REVENUE44,080,00027,850,00019,934,500

NET PROFIT27,247,20021,397,60017,130,637

OPTION 1 IS THE BEST OPTION! EASIER IMPLEMENTION AS IT’S A REGIONAL DISTRIBUTION WITH MORE COMPETITORS MOVING INTO THE SUPERMARKET,THIS RISK IS

NECESSARY ELSE A HUGE OPPORTUNITY MIGHT BE MISSED ITS LONG TERM ADVANTAGES ARE HIGH IF PROPERLY IMPLEMENTED AND

SUCCESSFUL. EXPOSURE TO MORE RANGE OF CUSTOMERS IT EXCEEDS THE REVENUE OBJECTIVE

CREATED BY PUJYA PANDEY,JSS NOIDADuring a marketing internship underProf. SAMEER MATHUR,IIM LUCKNOW.