The document details the strategic priorities and market analysis of Pemberton and its acquisition of Krispy Inc., focusing on the introduction of Krispy Naturals in the competitive cracker market. Pemberton's strengths included a strong brand portfolio and an effective Direct Store Delivery distribution system, while challenges included poor performance in certain test markets and aggressive competitor actions. Recommendations suggest optimizing distribution costs and implementing targeted promotions to strengthen brand positioning for a national roll-out.

1. KRISPY NATURAL
Cracking the Product Management Code

2. Key Players of the company
PATRICIA WILLIAM
President
ASHLEY MARNE
ExecutiveVice
President, Sales and
Marketing
BRANDON FREDRICK
Marketing Director
BURT SPIVEY
Chief Operating
Officer

3. SITUATION

4. 1. WHAT IS PEMBERTON?
2. STRATEGIC PRIORITIES FOR COMPANY
3. U.S. CRACKER INDUSTRY
4. KRISPY SINGLE-SERVE
5. KRISPY NATURAL
6. KRISPY NATURAL MARKETING STRATEGY

5. 1. WHAT IS PEMBERTON?
• Pemberton was the snack food division of Candler Enterprises,contributing approximately $5
billion out of total $18 billion revenue.
• Pemberton was a market leader in the U.S. cookie and bakery snacks segments
• Pemberton’s sales were from packaged food bars,cookies,and other sweet baked goods;their
market-leading brands were Softies cookies and Homestyle muffins and doughnuts
• They had world-renowned product development labs.
• They utilized a company-owned direct store delivery (DSD) distribution system
• They achieved a compounded annual growth rate (CAGR) of 14% for revenue over the past
five years.
• They had 7.7% of profit after tax in 2011.

6. Advantages of DSD distribution
Direct Store Delivery (DSD) distribution – A system in which products were delivered
directly to retail outlets.
• bypassing retailer’s warehouses and distribution centers.
• maximized sales and profit growth
• greater control of shelf space,
• more accurate forecasting,
• reduced stock-outs,and
• quicker turnover of products
• benefited both Pemberton and the retailer
1. WHAT IS PEMBERTON?

7. 2. STRATEGIC PRIORITIES FOR THE
COMPANY
• building a collection of attractive,durable brands;
• leveraging leading marketing,sales and DSD systems to increase revenue and profits;
• building or acquiring capabilities in salty snack categories.
This led to acquisition of Krispy Inc.

8. 3. THE U.S. CRACKER INDUSTRY
• Retail cracker sales reached an estimated $6.9 billion in 2011
• growth rate for the overall cracker industry from 2008 to 2010 was approximately 2.2%
CAGR.
• The top three U.S. cracker manufacturers -Kraft Food Inc., Kellogg Co, and Pepperidge Farm -
accounted for approximately 75% of the cracker market in 2010.
• A Mintel study of salty snacks reported that 74% of respondents consumed crackers on a
regular basis and 34% as part of regular weekly diet.
• trend driving the cracker industry was the desire for healthy products.

9. % share
"All other"
saltine
Crackers with filling
Graham Crackers
bread sticks and matzoh crackers
3. THE U.S. CRACKER INDUSTRY
Composition of Cracker market

10. 4.KRISPY SINGLE-SERVE
• Pemberton acquired Krispy Inc. in 2008 to enter salty snack market.
• Krispy Inc. had three production plants and competed in the crackers-with-filling and“all
other" cracker segments.
• Had great exposure in vending machines and convenience stores;marketed as “Grab and Go”.
• Had only 2 products:
Ø package containing six round toasted cracker sandwiches with cheese filling,available in 3 flavor
Ø a flat cracker sold in 1.5 ounce bags with 2 flavor options

11. Result
4.KRISPY SINGLE-SERVE

12. Reason
• Limited product line. So could not command its presence in market.
• Survey showed that the product did not deliver expected flavor satisfaction scores.
4.KRISPY SINGLE-SERVE

13. 5. KRISPY NATURAL
• Cracker market was large and segments like crackers-with-filling was expected to grow 10-
14% pa.
• Market leader- Kraft was losing its share to Pepperidge Farm and other smaller brands,giving
enough opportunity to Krispy to enter the market.
• Consumers were not satisfied with flavor and taste offered by current brands.
• Krispy relaunched as Krispy Naturals

14. • Increased package size to incorporate multiple servings
• Improved taste
• Use of wheat and natural ingredients to make crackers healthy
• More and innovative filling options
• Wide range of flavors for flat crackers
6. KRISPY NATURAL MARKETING
STRATEGY
Product:

15. 6. KRISPY NATURAL MARKETING
STRATEGY
Product:
Consumer taste test showed a 77%–92% positive purchase intent

16. • Prior practice:heavy advertising and promotion to the end consumer
• New strategy:Prior practice + aggressive plans for pull spending and trade promotions
• Price discounts.
6. KRISPY NATURAL MARKETING
STRATEGY
Marketing:

17. Projected expenses for Krispy Naturals vs advertising spending of leading brands
6. KRISPY NATURAL MARKETING
STRATEGY
Marketing:

18. 6. KRISPY NATURAL MARKETING
STRATEGY
Marketing:
Promotional Plan-
Columbus, Ohio

19. • DSD distribution was continued,and would be optimized to account for longer shelf life.
• Proper management of shelf inventory and in-store merchandise.
• Premium price strategy was adopted.
• Same retail price as that of competitor but less quantity.
6. KRISPY NATURAL MARKETING
STRATEGY
Distribution and Pricing:

20. 6. KRISPY NATURAL MARKETING
STRATEGY
Brand projection:

21. In September of 2011,
Krispy Natural was officially
launched in two test market
regions: Columbus, Ohio,
and a trio of cities in the
Southeastern United States.

22. OBJECTIVE

23. 1. ANALYZETEST RESULT
2. RECOMMEND NATIONAL ROLL-OUT STRATEGY

24. 1. ANALYZE THE RESULT
• Krispy brand did not have any prior presence there.
• Analysis of launching completely new line of product was easy.
• Expectations:
Ø Securing 15% shelf space in each supermarket.
Ø Acquiring 9% share of the cracker category in the test market.
• Results:
Ø Acquired double the expected share – 18%.
Columbus

25. 1. ANALYZE THE RESULT
• Krispy was already established as single-serve product.
• Analysis of launching premium product was critical. Previously had 9% share of the market.
• Expectations:
Ø Securing 15% shelf space in each supermarket.
Ø Acquiring 15% share of the cracker category in the test market.
• Results:
Ø Acquired much less than the expected share – 10%.
Southeastern States

26. 1. ANALYZE THE RESULT
Test market result highlights

27. 1. ANALYZE THE RESULT
Test market result highlights

28. 1. ANALYZE THE RESULT
Test market result highlights

29. 1.RECOMMEND NATIONAL ROLL-OUT
STRATEGY
• More than expected response from Columbus.
• World renowned product development labs.
• Highly successful Pull Strategy.
• More than 80% buyers have positive purchase intent.
• Premium pricing created better brand positioning.
• DSD system can be used very effectively.
Strengths:

30. 1.RECOMMEND NATIONAL ROLL-OUT
STRATEGY
• Poor performance at Southeastern states.
• Competitors may pursue aggressive national roll-out at the same time.
• Frito-Lay might introduce a new line of crackers at the same time.
• Advertise and Marketing expenditure,along with high DSD expenditure would reduce
profit margins.
Challenges:

31. 1.RECOMMEND NATIONAL ROLL-OUT
STRATEGY
Challenges:
These would hinder the
growth of Krispy Natural.

32. 1.RECOMMEND NATIONAL ROLL-OUT
STRATEGY
• Optimization of DSD for cost reduction.
• Targeted schemes and promotions to increase brand positioning, especially in new
markets.
• In-shop sampling, sponsoring high-tea events.
• Launching new and healthy products in different states to meet local taste.
• Create enough brand position that national roll-out can achieve at least minimum target
if Frito-Lay launches new products at same time.
Recommendations:

33. CONCLUSION

34. Considering the competition, it
is impractical to target $1000
millions of sales after first year.
Original forecast of $500 million
can be achieved with extensive
marketing strategies.

35. SUMMARY

36. DISCLAIMER
This presentation was created by Aashini Soni, DAIICT,
Gandhinagar, during Marketing Management internship under
Prof. Sameer Mathur, IIMLucknow.