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NATUREVIEW FARM

– SECTION A
Name
Ashish Diana Chandan Ram Moorthy

Roll No
PGP29009 PGP29004 PGP29017 PGP29023

Saurav
Praveen Nidhi

PGP29015
PGP28187 PGP29011

2013

• It has achieved this through its special yogurt manufacturing process and through cultivating personal relationships with dairy buyers in the natural foods channel. • In 2000. a Vermont-based producer of organic yogurt with $13 million in revenues. the company faces financial pressure to grow revenues to $20 million by the end of 2001 from $13 million due to a planned exit by its venture capital investors. is the leading national yogurt brand (24% market share) sold into natural foods stores. 2 .BACKGROUND • Natureview Farm.

3 .PROBLEM STATEMENT • Natureview Farm needs to choose between 3 distribution models and product choices to increase its revenues to $20million before the end of 2001 from $13 million reported in 1999.

taste and natural ingredients Strong relationship with natural store retailers Small manufacturer. Shared leadership in the natural food channel of yoghurt   Current marketing strategy based only on natural store channel 4 . low funds and revenue WEAKNESS ES   Relies on brokers that may not be adequate for supermarket channel  Strong reputation for high quality and great taste.SWOT SWOT ANALYSIS STRENGTH S  Long product shelf life   Reputation of high quality.

5% growth in 4 oz multipack Increase in consumer interest in organic food  Competition(both in regular yogurt and organic yogurt) Increasing natural store channel demands on logistics or technology Increasingly price sensitive consumers in the organic market 5      .SWOT SWOT ANALYSIS OPPORTUNITI ES  THREATS Organic food market expected to grow to $13.3billion in 2003 Natural store channel sales up 20% 12.

LENGTH OF CHANNELS TO MARKET Supermarket Channel Natural Foods Channel Manufacturer Manufacturer Natural Foods Wholesaler Natural Foods Distributor Retailer Retailer Distributor Customer Customer 6 .

7% Retailer margin-35% Other Channels     Warehouse Clubs Convenience Stores Drug Stores Mass Merchandisers 7 .74 per cup • • • • • • One-time “slotting fee” for each SKU charged only in the first year it was introduced Requires trade promotions Involves 3 parties in the distribution channel Heavily dependent on broker’s knowledge Distribution margin.CHANNELS Supermarket Channel • Charged lower retail price $0.15% Retailer margin-27% Natural Foods stores • • • • • • • Charged higher retail price $0.88 per cup Lower price sensitivity Requires a one-time allotment of one free case of product for every new SKU authorized for distribution in its first year Involves 4 parties in the distribution channel Distribution margin.9% Wholesaler margin.

OPTION 1 .EXPAND 6 SKUS OF THE 8 OZ PRODUCT LINE INTO 1 OR 2 SELECTED SUPERMARKET CHANNEL REGIONS Pros 8 oz. cups represent largest dollar and unit share of market Supermarkets fear losing market share to natural food competitors Cons Highest level of competitive trade promotion and marketing spend Possible channel conflict between supermarkets and natural food stores Other natural foods brands have successfully expanded to supermarkets First-Mover Advantage Supermarkets may only authorize one organic yoghurt manufacturer Promotion and lower price at supermarkets may hurt the brand Little experience in dealing with supermarket chains Balance between shelf presence and slotting expense 8 .

OPTION 2 EXPAND 4 SKUS OF THE 32 OZ PRODUCT LINE NATIONALLY Pros 32-oz cups generate an above average gross profit margin (43.6% versus 36% for 8-oz line) Fewer competitive offerings in this size Competitive advantage due to long shelf life of product Cons Higher slotting fees due to national distribution National distribution will be challenging within 12 months No guarantee that customer awareness of the brand would grow Lower promotional expenses than Option-1 Possible channel conflict between supermarkets and natural food store Promotion and lower price at supermarkets may hurt the brand 9 .

OPTION 3 – EXPAND 2 SKUS OF A CHILDREN'S MULTIPACKS INTO THE NATURAL FOODS CHANNEL Pros Natureview already has strong relationships with leading natural foods channel retailer Cons Miss opportunity to enter supermarkets before competitors More time to prepare the company for moving into the supermarkets Natureview Product positioning is ideal for a children’s multipack product launch Financially attractive High margin – 37.6% Low sales and marketing expenses 10 .

000 90.420 320.000 11.850.4*5) Slotting Cost SG & A Advertising Trade Promotion Manufacturing Cost (4*1) Total Cost (6`11) Profit (5-12) 2000 2001 2002 35.51 0.000 2.488.574.000 90.000 320.000.000 15.720.000 0.920 3.055 11 .31 19.664.400.545 320.030 15.31 18.000 0.000 714.500 14.500 735.000 10.000 1.000 2. of Units Retailer's Selling Price Natureview's Selling Price Manufacturing Cost Per Unit Sales (1*2) Brokerage Fee (0.630 779.580 38.000 90.575 4.200.400.74 0.385.400.000 2.000 2.000 0.213.74 0.000 11.276.846.000 36.435.OPTION 1.51 0.053.850.RATE 3% Sl No 1 2 3 4 5 6 7 8 9 10 11 12 13 No.175.74 0.31 17.51 0.050.

604 7.99 10.024.296 429.800 46.500. of Units Retailer's Selling Price Natureview Selling Price Manufacturing Cost Per Unit Sales Brokerage Fee Slotting Cost SG&A Advertising Trade Promotion Manufacturing Cost 5.99 10.000 480.7 1.84 0.84 0.000.553.322.10.120.468 2.7 1.000 2.445.412 160.000 480.073.056 Total Cost Profit 10.000 5.000 56.00 2.34.630.400 412.796 2.776.84 0.896 160.000 1.560.800 2.865.000 160.99 10.691.000 5.024.000 5.OPTION 2 .828 12 .000 1.000 480.000 1.900 58.024.400.735.000 404.200 7.869.7 1.RATE 2% 2000 2001 2002 No.00 2.

500 3.15 5.000 2.800 2.35 1.380.84 1.15 3.35 1.380.312.15 4.037.737.15 3.575 3. of Units Sold Retailer's SP Natureview's SP Manufacturing Cost Per Unit Total Sales 1.138 13 .84 1.808.000 3.120 2.84 1.35 1.000 3.OPTION 3 2001 2002 2003 2004 No.800.070.35 1.84 1.

• We suggest option 1 as it provides Natureview into the new channel. secure a first mover’s advantage and also position itself in the 8 oz category. 14 .RECOMMENDATION – OPTION 1 • Option 1 & 2 achieve the nearest dollars expectations whereas Option 3 does not.

THANK YOU 15 .