presentation on the HBR case Natureview Farm

1. NATUREVIEW FAR

3. WHO ARE THE PLAYERS
CHRISTINE WALKER VICE PRESIDENT OF MARKETING
BARRY LANDERS CHIEF EXECUTIVE OFFICER(CEO)
WALTER BELLINI VICE PRESIDENT OF SALE
JACK GOTTLIEB VICE PRESIDENT OF OPERATIONS
KELLY RILEY ASSITANT MARKETING DIRECTOR

6.  Yogurt is consumed by 40% of population
 Among these people 7% are women
 Organic Foods market was expected to grow by 20-40%
and the yogurt market was expected to grow by 2-4% in
the next five years
 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.
 Yogurt sales through supermarkets had grown an
average of 3% per year, while sales through natural
food stores had grown 20% per year. Because
consumers were increasingly interested in natural and
organic foods, well-managed natural foods retailers
were thriving.

7. MARKET SHARE
8-oz. cups
Children's
multipacks
32-oz. cups
Others
YOGURT MARKETSHARE BY
PACKING SEGMENT

8. Nothwest
26%
Midwest
22%
Southwest
25%
Westh
27%
MARKET SHARE
YOGURT MARKET SHARE BY REGION

10. TO EMPLOY MEASURES TO INCREASE
THE REVENUE FROM $ 13 MILLION
(YEAR 2000) TO $20 MILLION BY THE
END OF THE YEAR 2001

11. VC needed to cash out of
its investment
Needed to find a path to grow revenues
by over 50% before the end of 2001
Should Natureview farm expand into
Supermarket channel?
ISSUES

12. THE FOUR P’S

13. LENGTH OF CHANNELS TO MARKET

14. LENGTH OF CHANNELS TO MARKET

15. YOGURT MARKET SHARE BY BRAND

16. YOGURT MARKET SHARE BY BRAND

17. YOGURT PRODUCTION COSTS AND
RETAIL PRICES BY CHANNEL
Natural Food
Channel
Supermarket
Food Channel
Manufacturing
Cost
8-oz. cups $0.88 $0.74 $0.31
32-oz. cups $3.19 $2.70 $0.99
4-oz. cup multipack $3.35 $2.85 $1.15

18. OPTION 1
• To expand six SKU’s (Stock Keeping Units) of 8-oz.
cups into one or two selected supermarkets.
• Expanding in Northeast and West Supermarket
regions.
BENEFITS
• 8-0z. Cups have highest incremental demand
• Great upside potential to increase the revenue
• First mover as organic yogurt brand to enter
supermarket channel
• The other competitors were also planning to enter
the supermarkets and they would allow entry of
only one such brand.

19. RISKS
• High risk and high cost for marketing
• Fierce competition in the 8-oz. cup segment (74%
of market share)
• Inefficient sales team
• SG&A expenses increase by$320,000 annually
• Need to pay one time slotting fee
• Require quarterly trade promotions.
• Advertising plan would cost $1.2 million per
region per year

20. OPTION 2
• Expand four SKU’s of the 32-oz. size nationally into
supermarket regions.
BENEFITS
• Generates higher profit margin than 8-oz. size
• Strong competitive advantage: longer shelf life
• Lower marketing, advertising and SG&A increments
• Trade promotions only twice a year

21. RISKS
• Doubt on claim of new users would readily “enter
the brand” via a multi-use size
• Doubt on sales team ability to achieve full
national distribution in 12 months
• Need to hire additional sales personnel and
establish relationships with the supermarket
brokers
• The 32-oz. size expansion would increase the
SG&A expenses by $160,000

22. OPTION 3
BENEFITS
• To introduce two SKU’s of a children multipack into
the Natural Foods Channel.
• The financial potential was very attractive
• The sales team was confident that they could
achieve distribution foe the two SKU’s
• Perfect positioning for the launch of children
multipacks
• No additional SG&A costs
• It would yield the strongest profit contribution
of all the strategies under consideration.
• The Natural food channel was expected to
grow 7 times faster than the supermarket
channel.

23. RISKS
• There were many potential conflicts and other
uncertain factors that the manager could not
determine.
• Lower revenue generation than the other 2
options
• Fear of falling behind the competitors and
losing an important opportunity for the
expansion and increasing revenue
• Cannot achieve the target objective of
Natureview Farm

24. WHICH OPTION TO CHOOSE??

25. Sales Projections for Natureview’s Strategic Options

26. DECISION
Go for option 1
• Reach beyond the target objective of 20 million
revenue by the end of 2001 with the anticipated
incremental retail unit sales of 35,000,000
• 8-oz. yogurt is the highest demand
• In supermarket, can expose to more range of
customers
• Will have the first mover advantages of natural
product to enter supermarket
• A bit risky but in a long term will generate revenues
of 200% ( as looking at two other competitors).

27. DISCLAIMER
Created by
Nandyala Venkat Reddy,
NIT Jamshedpur as a part
of Marketing management
internship under
Prof. Sameer Mathur
IIM Lucknow