Case Study on Krispy Natural

1. LAUNCHING KRISPY NATURAL
Cracking the Product
Management Code

2. CONTENTS
O Pemberton: Introduction
O Market Analysis
O Marketing Strategies
O Result and conclusions

3. • 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 Homestyle muffins and doughnuts.
• In addition to Pemberton, Candler also operated a beverage division, a
quick service restaurant division and a pet care division. Candler’s 2011
revenue was $18 billion, with Pemberton contributing approximately $5
billion in sales.
INTRODUCTION

4. • Pemberton was a market leader in the U.S. cookie and bakery snacks
segments of the sweet snack market.
• Pemberton utilized a company-owned direct store delivery (DSD)
distribution system in which products were delivered directly to
retail outlets, bypassing retailer’s warehouses and distribution
centers.
• Pemberton had achieved a compounded annual growth rate (CAGR)
of 14% for revenue over the past five years. Sustaining this growth
was central to the company’s annual and long-term objectives.
INTRODUCTION

5. Pemberton’s Key Strategic Priorities:
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.

6. Pemberton’s Income Statement (% of revenue):

7. MARKET ANALYSIS
1. US Cracker Industry
2. Product Purchasing Intent
3. Competitor’s Analysis

8. US CrackerIndustry
• Retail cracker sales in the United States reached an estimated
$6.9 billion in 2011.
• The vast majority of retail cracker sales—almost three
quarters—were categorized in a general “all other” crackers
segment.
• Additional segments included saltines and crackers with filling
(with each capturing approximately a 9% market share)
• The growth rate for the overall cracker industry from 2008 to
2010 was approximately 2.2% CAGR.
• The top three U.S. cracker manufacturers were Kraft Food Inc.
(Nabisco brands), Kellogg Co (Sunshine, Keebler, Carrs and
Austin brands), and Pepperidge Farm (Goldfish brands).

9. US CrackerIndustry
All Other Crackers:
• 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.
• Expected to grow by 6-7% per year

10. US CrackerIndustry
All Other Crackers:

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

12. US CrackerIndustry
• Crackers with Fillings :

13. PRODUCT PURCHASING INTENT

14. PRODUCT PURCHASING INTENT

15. COMPETITORS ANALYSIS
 Top 3 cracker manufacturers are:
 Kraft Food Inc.
 Kellogg Co.
 Pepperfridge farm
 They account for approx. 75% of the
cracker market in 2010.
 Frito-Lay is rumored to be introducing a
new full line of crackers by the end of
second quarters.

16. COMPETITORS ADVERTISEMENT SPENDING

17. MARKETING STRATEGY
Product:
Multiple-serving packaging
Focused on improving
taste
Health conscious

18. MARKETING STRATEGY
Marketing:
Emphasized on heavy advertising
Promotion to the end customer and
appealing to the trade
Aggressive plans for pull spending
and trade promotions

19. MARKETING STRATEGY
Distribution:
 Effective DSD (Direct-Store Delivery)
distribution system
 Proper management of shelf inventory
and in-store merchandising
 Optimizing the system to account for
longer shell life of crackers

20. MARKETING STRATEGY
Price:
Sought a premium strategy.
Priced at 155% above the category
average cost per ounce
Same retail price as that of
competitors but lesser quantity

21. PROMOTIONS

22. KRISPY NATURAL BRAND PROJECTION

23. KRISPY NATURAL BRAND INCOME STATEMENT

24. MARKET RESULT HIGHLIGHTS

25. MARKET RESULT HIGHLIGHTS

26. MARKET RESULT HIGHLIGHTS

27.  The large chain headquarter buyers were
impressed with the consumer research
results and inventory turn estimates.
 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 Sales & channel
responses

28.  However one industry analyst thought that
the positive test market results were driven
by significant price discounts, couponing,
and sampling, which were not sustainable.
 Also, few felt the taste preference claims of
Krispy Natural were inflated and the flavor
was no better than current brand offerings.

29. CompetitiveResponse

30. DISCLAIMER
THIS PRESENTATION WAS DONE BY GOUTHAM.N, SSN
COLLEGE OF ENGINEERING, CHENNAI, DURING A
MARKETING INTERNSHIP PROGRAM WITH Prof.
SAMEER MATHUR, IIM LUCKNOW