The document evaluates three options to increase revenue for an organic yogurt company from $13 million in 2000 to $20 million by 2001. Option 1 is to expand six SKU sizes into supermarket channels, which has the highest revenue potential but also increases costs the most. Option 2 is to expand four larger SKU sizes nationally, which has lower promotion costs but increased hiring needs. Option 3 is to introduce a children's multi-pack into natural food channels, which has the lowest increased costs but also the lowest revenue growth. The document recommends Option 1 due to its higher revenue generation and first mover advantage into supermarkets with a wider customer base.
6. Option 1
To expand six SKUs of the 8-oz. product line into one or
two selected supermarket channel regions.
7.
8. Pros
• 8-oz have highest incremental demand.
• Very high revenue potential.
• Other natural foods brands had successfully expanded
their distribution into the supermarket channel.
9. Cons
• Weakening of relationships with the existing distribution channels
• Little experience in dealing with supermarket chains
• Require quarterly trade promotions
• SG&A expenses increase by $320,000 annually.
12. Option 2
The second option—to expand four SKUs of the 32-oz.
size nationally
13.
14. Pros
• 32oz cups generated an above-average gross profit margin
for Natureview (43.6% vs. 36.0% for the 8-oz. line).
• Natureview Farm had a strong competitive advantage because of the
product’s longer shelf life.
• Lower Promotional expenses: promoted only twice a
year.
15. Cons
• Inability of sales team’s to achieve full national distribution in just 12
months.
• Increase in expenses for SG&A by $160,000.
• Need to hire additional Sales Personnel.
20. Pros
• Relationships with the leading natural foods channel retailers will not
be affected
• Natural food channel is growing 7 times faster than supermarkets.
• If Natureview expands to supermarket, its brand image will be
doubted by current consumers.
21. Cons
• Lowest incremental cost.
• Increased demands from wholesaler’s and retailers.
• May lose First Mover advantage(Entering in to super
market)
24. Choice1!
• Higher revenue generated.
• First Mover advantage
• People with different age groups
will visit the supermarket. So product
exposure will be more.
25.
26. • Build strong relationships with supermarket
distributors.
• Only top Supermarket Chains should be selected.
27.
28. Disclaimer
This presentation was made by Guru Vishnu Kavali,
Amrita Coimbatore, under the guidance of
Professor Sameer Mathur, IIM
LUCKNOW, During a Marketing Internship.
