Under Prof. Sameer mathur

1. Launching Krispy Natural:
Cracking the Product
Management Code
Harvard Business School – CASE STUDY

2. INDEX
1) Pemberton introduction and their products
2) About US cracker industry and players in it
3) Krispy inc. brand
4) Relaunch of Krispy natural and strategies used.
5) Results and findings

3. Candler Enterprises products:
Beverage Division
Pemberton Products
Pet Care Division
Quick Service Restaurant

4. Pemberton: PRODUCTS
• Pemberton was the snack food division of Candler Enterprises, a multinational
beverage and snack goods manufacturer. The majority of Pemberton’s sales
were from packaged food bars, cookies, and other sweet baked goods; their
market-leading brands were Softies cookies and Home-style muffins and
doughnuts.
• Ashley Marne – Executive Vice President, Sales and Marketing.
• Brandon Fredrick- Marketing director for Pemberton
Pemberton’s Income as a percent of sales (2011) –
Sales 100%
COGS 78.8%
Brand Advertising & Marketing 7.7%
Pretax Contribuition 13.5%
Profit After Tax 7.7%

5. Brand Positioning and operating
strategies of Pemberton
• Market Leader in U.S Cookie & Bakery Snacks
Segment.
• Operated Dozens of Plants and world renowned
product development labs.
• Constant Innovations in Recipes and new ranges.
• Customer friendly and specific to their needs.
• DSD (Direct Store Delivery) distribution system was
installed for customer satisfaction.

6. What is DSD Distribution
System?
• Products directly delivered to retail outlets.
• No wholesalers warehouses and distribution
centres were involved which helped in
maintaining transparency of sales.
• Common for products with low shelf life
like – Soft Drinks, Chips, Baked Goods
It was estimated the DSD system cost Pemberton
approximately 20 cents of every sales dollar.

7. TASKS PERFORMED BY DSD
REPRESENTATIVES:
• Delivered products directly to the
retail outlets.
• Conducted in-store merchandising
• Did price promotions
• Had a check on shelf inventory

8. • Control over the shelf space
• More accurate forecasting
• Reduced Stock-Outs
• Quicker turnover of products
CONCLUDING :
DSD helped in Maximization of Sales and Profit
for Pemberton and was beneficial for
Pemberton as well as Retailer.
ADVANTAGES OF INSTALLING DSD DELIVERY SYSTEM

9. VISION AND AIMS OF THE
COMPANY:
(1) building a collection of attractive, durable
brands
(2) leveraging leading marketing, sales and DSD
systems to increase revenue and profits
(3) building or acquiring capabilities in salty
snack categories.

10. U.S CRACKER INDUSTRY:
- Retail cracker sales in the United States reached an estimated $6.9
billion in 2011
- 74% consumers ate crackers on a regularly basis.
- 34% consumers ate them as a part of weekly diet.
All other Crackers
Saltines
Crackers with Filling
Graham Crackers
Breadsticks/matzoh

11. BIG PLAYERS OF THE CRACKER
SECTOR:
• Kraft Food Inc.(Nabisco Brands)
• Kellogg Co. (Sunshine, Keebler, Carrs and
Austin brands)
• Pepperidge Farm(Goldfish brands)

12. STATING SOME FACTS:
The broad “all other” crackers segment experienced a 2.1% CAGR for
the period from 2008 to 2010. Retail sales of “all other” crackers in the
United States were estimated at ~$5.1 billion in 2011, a 6.2% increase
over 2010.

13. After flat sales from 2005 through 2009, the crackers-with-filling
segment experienced the strongest segment growth of approximately
14% in 2010. Annual growth was forecasted between 10–14% for the
segment over the next several years. Retail sales of crackers with
filling in the United States were estimated at ~$660 million in 2011, an
11% increase over 2010.

14. The original Krispy
Inc.(2008)
• Had been into single serve cracker product
ranges.
• Competed with “all other” crackers and crackers-
with-filling.
• Had a limited range of crackers.
Was known a “Grab & Go” Product – Strong
presence in vending machines and convenience
stores.

15. PRODUCT RANGE OF THE
COMPANY:
-The flagship product was a package
containing six round toasted cracker
sandwiches with cheese filling,
available in 3 flavour options.
-Krispy also offered a flat cracker sold
in 1.5 ounce bags with 2 flavour
options

16. INITIAL INVOLVEMENT OF
PEMBERTON:
• In 2008 Pemberton took the first steps to enter the
salty snack market with the acquisition of Krispy
Inc.
• Pemberton hoped to increase volume through
wider distribution in supermarkets and better
placement using Pemberton displays.

17. WHEN EXPECTATIONS FAIL
STATING THE FIGURES:
Sales (2009)
Performance
Planned Sale Actual Sale % Sale to Plan
Krispy Retail $97.5 $50.8 52.1%
Krispy Vend $23.4 $18.0 76.9%
Total Krispy
Sales
$120.9 $68.8 56.9%

18. REASONS OF FAILURES AS STATED BY
THE COMPANY HEADS:
• limited product line, which made it difficult to command any
sort of presence in supermarkets.
• Taste survey showed the product did not deliver the flavour
satisfaction scores we expected.
• Didn’t satisfy the customers looking for healthy snacks.
BUT STILL BELIEVING IN THE COMPANY THE HEADS STATED
“ I still believe in Krispy, and with a tweaking of the product and
marketing strategy, it can provide an attractive growth
opportunity”.

19. THE TURNING
POINT FOR THE
COMPANY
LAUNCH OF:
KRISPY NATURAL

20. PRODUCT DEVELOPMENT
STRATEGY
• Pemberton R&D Labs worked upon product taste and
quality.
• Krispy Natural would be made from 100% whole wheat
and other all natural ingredients, with approximately
150 calories, 6 grams of fibre and 3 grams of protein
per serving.
• Launched new flavours and attractive packaging.
• Multiple serves packaging also adopted.
• Krispy Natural focused on increasing package sizes to
multiple-servings and improving taste so that
consumers would prefer Krispy Natural to competitor
brands at least two-to-one.

21. NEW MARKET RANGE:
Cracker with filling options would feature:
White Cheddar
Smoked Gouda
Chipotle Cheddar
Creamy Swiss
Tomato Basil
Vegetable Herb.
Flat cracker flavours would include:
Cracked Pepper & Olive Oil,
Sundried Tomato,
Smoked Cheddar
Roasted Garlic.

22. MARKETING STRATEGY:
• Heavy Advertising, Promotions and market
tests.
• Adoption of Pull Marketing Strategy
• trade promotions

23. PRODUCT DISTRIBUTION
STRATEGY:
• Continued DSD Distribution effectively
• Optimizing the product for a longer shelf
life.
• Specially hired people – “Krispy Force”
for proper distribution and product
promotions.

24. PRICE RANGE OF THE
COMPANY:
• Krispy Natural sought a premium pricing strategy.
Management felt pricing of approximately 155%
the category average cost per ounce was
reasonable considering the product’s superiority.
• for each package would be similar to competitors
in the category, but there would be less quantity
or weight in the Krispy Natural package

25. TEST PERIOD OVER,
RESULT TIME
Estimated Dollar
Shares of Market
Columbus
Pre-test
Market
Columbus
Post
Southeast
Pre-test Market
Southeast
Post
Kraft 40% 33% 34% 32%
Kellogg 25% 22% 23% 22%
Pepperidge Farm 11% 10% 10% 10%
Krispy 0% 18% 9% 10%

26. 2 SCHOOL OF THOUGHTS WERE THERE
REGARDING THE SUCCESS OF THE
CAMPAIGN:
1) The large chain headquarter buyers were particularly impressed with the consumer
research results and inventory turn estimates for Krispy Natural. We created a comprehensive
sales presentation with category expansion estimates and a competitor analysis of projected
turns per year that really blew them away. They also loved all the promotional activity and
consumer advertising. The pull marketing really created a buzz and customers were coming to
the stores asking for Krispy Natural by name.
2) The positive test market results were driven by significant price discounts,
couponing, and sampling, which were not sustainable on a national level. Also,
there were those in the industry who felt the taste preference claims of Krispy
Natural were inflated and the flavour was no better than current brand offerings

27. AFTER THE MIXED RESPONSES FROM THE ANALYSTS
IT STILL REMAINED A DOUBT IF THE COMPANY IS
READY TO BE LAUNCHED AT A NATIONAL SCALE OR
NOT.

28. This case study analysis was done by
ANIRUDH GARG ,BITS PILANI
during a marketing internship under
PROF. SAMEER MATHUR , IIM LUCKNOW