Nature view Farm Case Study,Harvard Business School-

1. NATURE VIEW FARM
CASE STUDY

2. BACKGROUND

3. ➢Founded in 1989
➢Manufacturer and Marketer of Refrigerated Cup
Yogurt
➢ REVENUE GENERATED: LESS THAN $100,000.
➢ENTERED MARKET WITH 8-oz AND 32-oz CUP SIZE
OF YOUGURT IN TWO FLAVORS: VANILLA AND
PLAIN

4. ➢1999:
➢ REVENUE GENERATED: $13 MILLION.
➢2000
➢ INTRODUCED 12 REFRIGERATED YOGURT
FLAVOURS IN 8-oz SIZE CUP.
➢ INTRODUCED FOUR FLAVORS IN 32-oz SIZE
YOUGURT CUP.
➢ STARTED EXPLORING MULTIPACK PRODUCTS.

5. ❖ Increase its revenue by over 50% before the
end of 2001 -
❖ Increase its 1999 revenue from $13 million to
$20 million before the end of 2001. -
❖ Has to increase at least $7 million.

6. Venture capital has to cash out of its investment in
Natureview, therefore the company is looking for new
investor and a possibility for acquisition
Natureview must achieve its goal in order to attain
the highest possible valuation of the company.

7. Natureview should expand their
business into the supermarket
channel or not ?

8. Current situation
➢2 main channels for Natureview to sell
its products Supermarket and Natural
food stores
➢ In the proportion of 97% to
supermarket and 3% to natural food
stores. Problem Defense

9. Even though supermarket is more attractive, there are some
reasons behind this and that should be considered” - Depend
heavily on broker's knowledge - Broker's fees, slotting fees,
promotional allowance bring high risk and high cost to
Natureview.

10. Option 1 - Expand 6 SKUs of the 8-oz
product line into one or two selected
supermarket channel regions

11. Benefits
1. Great Upside Potential
2. For supermarket adding these products would attract
higher-income less price-sensitive customers
3. Unit volume growth of organic yogurt at supermarkets of
20% per year from 2001 to 2006
4. This option also has the highest incremental demand

12. RISKS
1. Supporting 8-oz cup size would require quarterly trade
promotions and a meaningful marketing budget
2. Advertising plan would cost $1.2 million per region per
year in addition to the promotional ads expenses
3. SG&A expenses would increase by $320,000 annually
4. This option creates direct competition with national yogurt
brands

13. Option 2 –
Expand 4 SKUs of the 32-oz. size
nationally

14. Benefits
1. Potentially give higher average gross profit
margin than 8-oz size
2. It also has stronger competitive advantage
like longer shelf life and lower marketing
expenses

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

16. Option 3 – Introduce 2 SKUs of a Children’s
Multi-Pack into the Natural Foods Channel

17. Benefits
1. Established leader in this channel
2. Perfect positioning for new multi-pack
product
3. Long term the financial potential was
very attractive

18. Risks
1. Established leader in this channel
2. Perfect positioning for new multi-pack product
3. Long term the financial potential was very
attractive

19. Conclusion : Option 1 Recommended
8 –oz yogurt is the highest demand and have the largest dollar share
Reach beyond the target objective of 20 million revenue by end of
2001
A bit risky but in a long term will generate revenues of 200% Creates
a strong long term financial situation
Will have the first mover advantages of natural product to enter
supermarket