Professional Documents
Culture Documents
Hasan Rehman
Sadiq Ali
Khadija Jordan
Founded in 1989, Natureview Farm Inc. was a small yogurt manufacturer that had
recently been facing some economic challenges. Despite its growth over the last 10 years, it had
been struggling with implementing an effective marketing strategy that could guarantee the firm
a decent amount of profitability. Fleming (2007) revealed that in 1997, Natureview Farm had
sought an “equity infusion from a venture capital (VC) firm to fund strategic investment,” and
now that the firm had grown considerably by 2000, the VC firm wanted to “cash out” the money
it had invested in Natureview Farm (p. 1). To pay out this money, Natureview Farm’s CEO
Barry Landers wanted to come up with and implement a strong marketing plan that would grow
the firm’s revenues by 50%, a jump from $13 million in 1999 to $20 million, by the end of 2001
SWOT Analysis
The SWOT analysis, defined by Kotler & Keller (2009) as “the overall evaluation of a
Strengths
According to Fleming (2007), Natureview Farm’s biggest strength was its products’ shelf
life, averaging about 50 days, which was considerably higher than that of any of its competitors’,
which average around 30 days (p. 2). This strength helped the firm grow rapidly over time,
increasing its revenues from less than $100,000 to $13 million in 10 years (Fleming, 2007, p. 2).
The firm had the highest market share in the natural foods channel, owning about 24% of the
Natureview Farm’s Dilemma 2
channel, and certainly had the potential to grow further to compete the firms with higher market
Weaknesses
As per Fleming (2007), the biggest weakness of the firm was its inability to maintain a
consistent level of profitability (p. 1). This weakness limited the company’s revenues and cash
flow, due to which it struggled when its VC firm wanted to cash out its investment from
Natureview Farm (Fleming, 2007, p. 1). Natureview Farm had negligible market share in the
supermarket channel, which constituted about 97% of the national yogurt sales, thus making it an
Opportunities
The current need for an aggressive marketing strategy to increase Natureview Farm’s
revenues by 50% laid out many opportunities for the firm. It was a chance for the firm to create a
stronghold in the natural foods channel and/or to aggressively enter into the supermarket channel
and make its appearance known on the national level. Because of consumer interest in organic
foods, the natural foods channel had a 20% growth in its yogurt sales per year over the last five
years (Fleming, 2007, p. 3). This meant that being a leading market shareholder the firm could
Threats
The market conditions and channel differences posed a substantial threat for Natureview
Farms. It was already low on cash flow since its VC firm wanted to cash out on it, and to pay
them off it only had the choice to implement an aggressive marketing strategy to increase its
Natureview Farm’s Dilemma 3
revenues. The market conditions resembled a double edged sword, since if Natureview Farm
would prefer to stay in the natural foods channel, it wouldn’t be able to increase its sales
substantially, and if it would prefer to enter the supermarket channel, it would risk the loss of its
relationship with natural foods channel that it had created as a leading market shareholder.
Industry Analysis
Natureview was a leader in the natural foods channel with 24% market share and
reporting $13 million in revenues in 1999 (Fleming, 2007, p. 2). On the whole, the natural foods
channel accounted for only 3% of national yogurt sales but the channel sales had been growing at
a rate of 20% per year in the previous five years as opposed to 3% growth of the supermarket
channel (Fleming, 2007, p. 3). The future of the organic food market (and thus of the natural
foods channel) looked bright, as it was expected to grow from $6.5 billion in 1999 to $13.3
As per Fleming (2007), “46% of customers bought organic foods at a supermarket, 25%
at a small health food store and 29% at a natural foods supermarket,” and 71% of the heavy and
29% of the light organic food consumers bought organic dairy, especially yogurt (p. 3). In the
yogurt categories, the 6-oz and 8-oz yogurt categories growing at 3% per year represented 74%
of total yogurt sales, multipacks growing at 12.5% per year represented 9% and 32-oz packs
growing at 2% per year represented 8% of total yogurt sales (Fleming, 2007, pp. 3-4). Nature
produced twelve refrigerated yogurt flavors in 8-oz cup (accounting for 86% of company
revenues) and four in 32-oz cup (14% of company revenues), thus pretty much in line with the
Alternatives’ Analysis
Potential for each option is directly commensurate with the amount of forethought,
planning and calculated risk the executive team at Natureview Farm is willing to take. This
answer then comes down to how urgent of a situation is the company actually in, or perceives
they are in, based on the fact their capital is running extremely low and acquisition is a real
possibility unless the company can significantly increase its cash flow and top line. Appendix B
contains the cost structure for the 3 types of products in the two market channels, and calculates
The first option is the riskiest but has the largest potential payoff by far and includes
sizable investment by the company to make it happen. This option is to expand the six top
selling SKUs of their 8 oz. cup into one or two carefully selected supermarket channels in the
region. The advantages of option 1 are that as per Exhibit 2, 8 oz. yogurt cups represent the
largest dollar and unit share of the refrigerated market, providing the highest revenue potential
(Fleming, 2009, p. 10). Another advantage is that the precedent of a natural food manufacturer
moving into the supermarket arena has been set, and these companies have enjoyed revenue
boosts of over 200% within two years with the calculated risk of moving in this direction
(Fleming, 2009, p. 6). Lastly, there would be a decided first mover advantage if other organic
yogurt companies were considering this move, because most supermarkets would most likely
only carry one organic brand and Natureview could be it (Fleming, 2009, p. 7).
The disadvantages of this option are that it is a decidedly more costly plan to implement.
It would require an extensive marketing and advertising plan and a beefed up sales and broker
Natureview Farm’s Dilemma 5
team to handle the new and larger supermarket accounts. Supermarkets also require some
guaranteed trade promotions to take place which could further erode profitability if sales didn’t
pan out according to projections as well as slotting fees to even get the project considered.
Lastly, by entering into the supermarket channel Natureview does run the risk of alienating its
traditional and first relationship with the natural foods channel. This is because supermarkets
would typically sell natural food products at significantly lower prices because they do not have
to contend or deal with natural foods distributors. However, this option provides the best
The second option is to expand Natureview’s four SKUs of 32 oz. multiuse cups
nationally. The advantages of this option are that there is far less competition in the 32 oz. size so
Natureview would almost immediately stand alone in the supermarket segment. Also, the
companies’ product that would directly compete with Natureview has a much shorter shelf life,
meaning they could ship less frequently. Also, marketing and promotional expenses would be
far less with this option because the 32 oz. product was only promoted twice in their last year.
Disadvantages of this option and that the company leaders are considering is whether or
not a new/prospective consumer would jump into the product by trying a multi-use size instead
of a single serving option. Also option 2 would present much higher slotting fees because this
option has Natureview’s yogurt expanding into 64 supermarkets across the country that would
each require a fee. Also due to the massive new relationships that would need to be built and
maintained via this new channel, new and experienced sales and advertising talent would need to
be acquired to ensure this happens. Lastly, this option also includes the risk of souring
Natureview Farm’s Dilemma 6
relationships in the natural food world by introducing their product to supermarkets. Option 2
The third and last option is also the one with the lowest amount of risk, which therefore
gives the lowest potential return for implantation. This option is to create and introduce two new
SKUs of a multipack children’s yogurt to the natural foods channel as opposed to going through
Advantages of this option are that for one, very little infrastructure would have change in
order to implement this plan. The relationships are already established in the natural foods
world, which meant no new personnel would have to be hired, the premium ingredients of the
product would mean it would fit right along with current product offerings, and lastly the natural
foods channel was still growing and yogurt sales are a big part of that. Lastly no channel conflict
The only real disadvantage, because of its low risk, is the fact that the product would
actually have to be developed from scratch, which would take time, but fortunately for the
Recommendations
In order to prevent acquisition and basically stay in business, there is a current need for
an aggressive marketing strategy to increase Natureview Farm’s revenues by 50%. Since the
increase is so drastic and the timeframe is so short, this calls for an aggressive and perhaps more
risky plan of action. Therefore, the best option for Natureview to implement is Option 1. This
Natureview Farm’s Dilemma 7
option will yield the company the highest revenue, because 8 oz. yogurt cups represent the
largest dollar and unit share of the refrigerated market. Further, the history of natural food
manufacturers moving into the supermarket arena shows companies that have increased their
revenue by a significant percentage in a short period of time (within two years). Also,
Natureview would have the opportunity to further compete with other products as the only
organic product offered and thus further increase their revenue and marketing scope. The
disadvantages of this option, initial cost for implementation and extensive marketing, are a given
in a dire situation such as Natureview’s. However, the benefits of this option outweigh the
negatives as they would significantly cover the initial costs of implementation and marketing
expenses.
There will need to be a change made to partner arrangements for the future in order to
implement this option and keep Natureview’s profitability up. One of the reasons that the
company found itself in this mess to begin with was due to the fact that Jim Wagner suggested
and implemented an equity infusion from a venture capital firm and once that firm needed to
cash out they were left high and dry (Fleming, 2007, p. 1). One recommendation would be to
seek out funds and infusions from a number of investors, instead of just one, so that if one has to
cash out, there are additional partnership agreements to fall back on. This will prevent Naturview
from being faced with the option of having to find an additional investor in the midst of losing
revenue or position itself for acquisition. Natureview should also implement a task force whose
sole obligation is to develop innovative ways to increase revenue on an ongoing basis. That way,
new ideas, strategies and products are always in the pipeline and Natureview won’t have to wait
Conclusion
Natureview Farm’s Dilemma 8
As a conclusion, it’s pretty apparent that expanding six flavors of the 8-oz product line is
the best option for Natureview Farm, as it generates the highest revenue and the market demand
forecast is favorable for the company’s endeavors in the supermarket channel. Moreover,
Natureview is expected to receive the first mover’s advantage if it decides to pursue this option
before any other organic food companies do it. Also, the product choice for this channel is
perfect as well, as the demand for the 8-oz product line is growing at the fastest rate as compared
to other product lines, and Natureview Farm will certainly reap the benefit of making the right
Appendices
Natureview Farm’s Dilemma 9
Strengths Weaknesses
High quality product/Long shelf life Owns Small portion of the yogurt
Opportunities Threats
Natural food’s sales expected to grow Low cash since VC firm needs to cash
by 20% out
Chance to expand business into Super Limited sales if prefer natural foods
Exhibit
Retail Price $0.88 $3.19 $3.35 3
Retail Margin 35.0% 35.0% 35.0% Text - Nat Foods
Retail Purchase Price (RPP) $0.57 $2.07 $2.18
Natural Foods Distributor Margin 9.0% 9.0% 9.0% Text - Nat Foods
Natural Foods Distributor
Purchase Price $0.52 $1.89 $1.98
Wholesaler Margin 7.0% 7.0% 7.0% Text - Nat Foods
Wholesaler Purchase Price
(WPP) $0.48 $1.75 $1.84
Manufacturer Sales Price (MSP) 0.484 1.755 1.843
Exhibit
Cost Per Unit 0.31 0.99 1.15 3
Contribution per Unit Sold 0.174 0.765 0.693
Manufacturer Gross Margin 35.96% 43.58% 37.60%
References
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Keller, K. & Kotler, P. (2009). A Framework for Marketing Management. New Jersey: Pearson
Prentice Hall.
Fleming, K. M. (2007). "Natureview Farm," Case Studies, Harvard Business School, June 7,