Company background
1989: founded – revenue $100 K – yogurt products. Introduced 2 flavors 1996: Jim Wagner hired to steady profits
1997: CFO Jim Wagner got VC capital infused capital in 1999
Today February 2000: annual revenue is $13M in 1999. Total 12 flavors in 8 Oz and 4 flavors in 32 Oz. VC to cash out at the end of 2001. Revenue needs to grow to $20M.

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Product profile
Emphasis on natural ingredients and its strong reputation for quality and great taste No artificial thickeners and rGBH mixed mil
Comparing to the other products’ 30 days shelf life, Natureview’s yogurt will remain fresh for 50 days 8 Oz has 12 flavors and 32 Oz 4 flavors.

Customer and competition
Customer
Brand sensitive
Natural foods customer
Taste savvy
Less price sensitive
Woman (single and with kids) take 74% market share
Customer loves Natureview yogurt

Competition
Main competitor
Recent IPO
Flush with Cash
Bigger than Natureview
Already uses supermarket channel

SWOT
Strengths
Major and trusted brand in natural foods
Product quality
Strong relationships in natural food market
Channel leader
Relatively rapid revenue growth
Longer product shelf life

Weaknesses
Owns small portion of the yogurt market
Not ventured into supermarket channel
High dependence on brokers for distribution and promotion
Inefficient nature foods distribution channel

Opportunities
Supermarket channel provides significant potential of growth Natural food’s sales expected to grow by 20%
Opportunity for lowering customer cost

Threats
Lack of capital
Main competitor (Horizon) is getting stronger
No expertise in supermarket channel
Company may have to reposition
Risk Inter Product cannibalization

Problem definition
Its problem is that they have to make strategic marketing decisions to grow revenues to $20M from their current $13M before the end of the 2001 fiscal year.

Market Topology
The Yogurt Market
8 Oz cups and smaller : 74%
Children’s multipacks : 9%
32 Oz cups: 8%
Other: 9%
Channel market share
Supermarket: 97%
Natural Foods channel: 3%
Natural Foods channel
Natureview farm: 24%
Horizon Organic: 19%
Brown Cow: 15%
White Wave: 7%
Other: 35%
Supermarket channel
Danone: 33%
Yoplait: 24%
Columbo: 5%
Private label: 15%
Other: 23%
Distribution channel
Natural Foods channel:

manufacturer  wholesaler  distributors  retailer  customer Supermarket channel: manufacturer  wholesaler  retailer  customer

Alternatives
Alternative 1: Expand 6 SKUs of the 8 Oz product line into one or two selected supermarket channel regions: proposed by Walter Bellini VPSales. Alternative 2: Expand 4 SKUs of the 32 Oz size nationally: proposed by Jack Gottlieb, VP Operations. Alternative 3: Introduce 2 SKUs of a Children’s Multi-Pack into the Natural Foods Channel: proposed by Kelly Riley, the assistant marketing director.

Page 2 Natureview farm case analysis Essay

Alternative 1: Expand 6 SKUs of the 8 Ozproduct line into one or two selected supermarket channel regions: proposed by Walter Bellini VP Sales. Pros:
Great upside potential
For supermarket adding these products would attract higher-income less price-sensitive customers Unit volume growth of organic yogurt at supermarkets of 20% per year from 2001 to 2006 This option also has the highest incremental demand

Cons:
Supporting 8-Oz cup size would require quarterly trade promotions and a meaningful marketing budget Advertising plan would cost $1.2M per region per
year in addition to the promotional ads expenses SG&A expenses would increase by $320,000 annually

This option creates direct competition with national yogurt brands.

Income forecast

Alternative 2: Expand 4 SKUs of the 32 Oz size nationally: proposed by Jack Gottlieb, VP Operations. Pros:
Potentially give higher average gross profit margin than 8-Oz size It also has stronger competitive advantage like longer shelf life and lower marketing expenses

Cons:
Doubt on claim of new users would readily “enter the brand” via a multi-use size Doubt on sales team’s ability to achieve full national distribution in 12 months Need to hire sales personnel and establish relationships with supermarket brokers The 32 Oz expansion option would increase SG&A expense by $160,000

Income forecast:

Alternative 3: Introduce 2 SKUs of a Children’s Multi-Pack into the Natural Foods Channel: proposed by Kelly Riley, the assistant marketing director. Pros:
Established leader in this channel
Perfect positioning for new multi-pack product
Long term the financial potential was very attractive
Cons:
Established leader in this channel
Perfect positioning for new multi-pack product
Long term the financial potential was very attractive
Income forecast

Channel conflict and cannibalization
There will be a horizontal channel conflict with supermarkets It is possible the current channel partners may be alienated This may end up having 3-way impact:
We discussed product demand, revenue growth
Now we need to test product cannibalization
All forecasts need to be stress tested for sensitivity

Decision matrix

Since the most important to them is the $20M:
We would choose option 1: we recommend Natureview to expand the multi-pack into supermarket channel in Northeast and west. The pros
high growth (12% changes from last year)
minimized channel conflicts: through this expansion, Natureview can make its revenue goal by 2001 (no cannibalization/alienation) new target customers: supermarket will be selling these multi-packs relatively cheap higher expected annual demand

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