Presentation on nature view farm

3. ChristineWalker- VicePresident,MarketingJim
Wagner - Cheffinanceofficer
WalterBellini - VicePresident,Sales
JackGottlieb - Vicepresident,Operation

7. To growrevenuefrom $13
millionto $20million

13. OPTION1
•Expand6 SKUsof 8 oz.product lineintoone
or twoselected supermarketchannelregion.
•ProposedbyWalterBellini,
VP ofsales.

14. OPTION1
BENEFITS
•GreatUpsidePotential.
•Unitvolumegrowth of Organic Yogurt at
supermarketsat 20%per year from2001to
2006.
•Ithas the highest IncrementalDemand.

15. OPTION1
• Supporting8-ozcupsizewould require quarterlytrade
promotions and a meaningfulmarketingbudget.
• Advertisingplan would cost$ 1.2millionper region per year in
additional to promotional adsexpenses.
• SG&Aexpenses wouldincreaseby $320,000annually.
• Thisoptioncreates direct competitionwithnationalyogurt
brands.
RISKS

16. PRODUCTION COST AND RETAIL
PRICES BY
CHANNELNATURAL
FOOD
CHANNEL
SUPERMARK
ET FOOD
CHANNEL
MANU-
FACTURIN
G COST
8 oz. cup $0.88 0.74 $0.31
32 oz. cup $3.19 $2.70 $0.99
4 oz. cup
multipacks
$3.35 $2.85 $1.15

17. OPTION 1 :Income
Projection
2000
2001
Unit Sales 35 000 000 35 000 000 X (1+20%)=42 000
000
Revenue Growth $35 000 000 X $0.74=$25 900
000
42 000 000 X )0.74= $ 31 080
000
Projected Revenue $13 000 000+$25 900 000= $
38 900
$ 13 000 000 + $31 080 000 =
$44
000 080 000
Cost 35 000 000 X $0.31= $10 850
000
42 000 000 X 0.31 = $ 13 020
000
Gross Profit $ 28 050 000 $ 31 060 000
Expenses
Advertisement $ 1 200 000 X 2 region=$2 400
000
$2 400 000
SG&A $320 000 $ 640 000
Slotting Fee 6 X $ 10 000X 20 retails=$1 200
000
Broker’s Fee
Net Profit
$16 100 000x 0.04=$6 400 000
$ 23 486 000
$ 19 320 000x0.04=$ 772 800
$ 24 247 200

18. OPTION1
SupermarketChannelMargin Analysis
CHANNEL SELLIN
G
PRICE
MARGIN COST PRICE
Retailer $0.74 27% $0.74X73%=
$ 0.54
Distributor $0.54 15% $0.54X85%=
$ 0.46
Natureview $0.46 (0.46/0.31)/0.46
=33%
$0.31

19. OPTION11
•Expand 4 SKUsof 32-oz.size
nationally.
•Proposedby JackGottlieb,VPof
Operations.

20. OPTION11
BENEFITS
•Potentiallygives higher averagegross
profitmarginthan 8-ozsize.
•Lowerpromotionexpenses.
•Italsohas strongercompetitive
advantagelikelongershelflifeandlow
Marketingexpenses.

21. OPTION11
•Doubts on claim of new users
would readily “enter the brand” viaa multi-use
size.
•Doubt on sales' team ability to
achieve full
national distributionin 12 months.
•Need to hire sale personnel and
establish relationshipwith supermarket brokers.
•The 32oz expansionwouldincreaseSG&A.
RISKS

22. OPTION11
SupermarketChannelMargin Analysis
CHANNEL SELLIN
G
PRICE
MARGIN COST PRICE
Retailer $2.70 27% $2.70X73%
=$1.97
Distributor $1.97 15% $1.97X85%
=$1.67
Natureview $1.67 41% $0.99

23. OPTION 11 :Income
Projection
2000
2001
Unit Sales 5,500,000 5,500,000
Revenue Growth $5,500,000 X 2.70=$14
850 000
$14 850 000
Projected Revenue $14 850 000+$13 000 000=
$27 850
$27 850 000
000
Cost $5,500,000x0.99=$5,44
5,000
$5,445,000
Gross Profit $9,405,000 $ 22,405,000
Expenses
Slotting Fee 4x
10000x64=2,560,000
0
SG&A 160,000 160,000
Marketing 120,000x4=480,000 480,000
Broker’s Fee
Net Profit
367,400
$ 18 837 600
367,400
$ 21,397,000

24. OPTION111
•Introduce 2 SKUs of Children’s
multipack into the Natural Foods
Channel.
•Proposedby KelleyRiley,the
AssistantMarketingDirector.

25. OPTION111
BENEFITS
•Establishedleaderin thisChannel.
•Perfectpositioning for newmultipack
product.
•Long termfinancialpotentialvery
attaractive.

26. OPTION111
SupermarketChannelMargin Analysis
CHANNEL SELLING
PRICE
MARGIN COST PRICE
Retailer $3.35 35% $3.35X65%
=$2.18
Distributor $2.18 9% $2.18X91%
=$1.98
Nature
Foods
wholesaler
$1.98 7% $1.98X93%
=$1.84
Natureview $1.84 38% $1.15

28. DecisionMatrix
Decision parameter
Option 1 Option 11 Option 111
Revenue Objective Exceeds Exceeds Falls Short
Channel Partners Highly Alienating Alienating Enhancing
Competiti
ve
Response
Very Risky Risky Low
Cost to Induce Trial High Very High Low
Brand
Equity
Dilution
Possible Possible No
Organizati
on
Capabilities
Low Low High

29. Projection Comparison
Matrix
Option 1 Option 11 Option 111
Gross Margin 33% 41% 38%
Unit Sales 42,000,000 5,500,000 2,070,000
Revenue Projection 44,080,000 27,850,000 19,934,500
Cost 13,020000 54,445,000 23,805,000
Gross Profit 31,060,000 22,405,000 17,554,000
Expense:
SG&A 640,000 160,000 0
Marketing 2,400,000 480,000 250,000
Broker’s fees(4% revenues) 772,800 36,7400 0
Complementary cases 0 0 173363
Net Profit $27,247,200 $21,397,600 $17,130,637

30. Benefits of the
strategy
• High growth(more than 12%) from last year.
• Minimized channels conflicts : Through this
expansion ,Nature view can make it’s revenue
expansion by 2001.
• No cannibalization or alienation.
• New target customers : Supermarket will be selling
these multipacks relatively cheap.

31. POSSIBLE STRATEGY
• Ifwe really presshardto answer the
$20million question, then its fairly
simpleanswer.
Gowith Option1.
• WerecommendNatureview to expand the
multipack into supermarketchannel in
NortheastandWest

32. THANK YOU
Done by: B.Devika