Launching Krispy Natural: Cracking the product management code.

1. Launching Krispy Natural:
Cracking the product management
code.

3. What is Pemberton Products?
Pemberton products is the snack food division
of Candler Enterprises, a multinational
beverage and snack goods manufacturer.

4. Candler
Enterprises.
Revenue
recorded as
of 2011 $18
billion
Pemberton
Products(snack
goods
manufacturer);
accounts for
$5 billion
revenue as of
2011
Multi-
national
beverage
Quick
service
restaurant
division
Pet care
division

5. Key people involved in the company
PATRICIA WILLIAMS; President
ASHLEY MARNE; Executive Vice-
President
BURT SPIVEY; Chief Operating Officer
Pemberton's Dream Team
BRANDON FREDERICK; Marketing Director

6. What is the present situation
in the company?

7. Pemberton Products is a U.S. market leader in
the cookie and bakery snacks segment of the
sweet snack market.
Looking to expand into the salty snack
market, the company acquires Krispy Inc., a
maker of salty snack crackers located in the
Southeastern U.S.
To compete with premium cracker brands,
Pemberton plans to reformulate and re-
launch the Krispy brand as "Krispy Natural“,
which offers natural ingredients, improved
taste, and revised packaging

8. Are there any issues
currently associated
with the situation?
• Market tests in Columbus, Ohio
show market share results that
are double the company’s
projections while results in 3
cities in the Southeastern U.S. fall
well below expectations.
How is the situation
going to be dealt?
• The marketing director must
interpret the market test results,
consider possible competitive
responses to the new brand, and
present his recommendation for a
national rollout to the VP of sales
and marketing.
Concerns of the case
study
• Review and interpret test market
results for a new packaged
product.
• Provide guidelines in the analysis
of quantitative test market data
while illustrating the roles of
managerial judgment and
organizational context in
interpreting the same.

9. Their DSD system
is a major factor
in the company's
growth and
leading market
share position
Increased building or
acquiring capabilities in
salty snack categories.
74% respondents consumed
crackers on a regular basis.
Health trends show 53% of
respondents considered
healthfulness an important
factor when purchasing
crackers.
Pemberton
wishes to build a
collection of
attractive,
durable brands.
69% of
respondents
indicate they were
trying to improve
their physical
health and 51%
were trying to lose
weight.
"Krispy Natural” acts as the
next generation blockbuster
product, thus gaining a
foothold in salty market.
Why study this case
study?
Leveraging leading
marketing, sales and
DSD systems to increase
revenue thereby
providing them with a
significant advantage
over the competition

10. Objectives of the case study
Understanding
Krispy Product
line and issues
associated
Krispy Relaunch
Krispy
Marketing
Strategy 4Ps
Pre Testing and
Results
Final Responses
Ramp-up to
National Rollout

11. Understanding Krispy Product line and issues
associated
Krispy Inc., manufacturer of single
server cracker packages. Focused primarily on Southeastern
US; provided six toaster
sandwiches, 3 flavor options
Marketing as “ Grab and Go”
snacks; strong presence in
vending machines and
convenience store
Underperformance due to
limited product line
Unsatisfactory flavor; hence
product fell short of
management projections

12. Planned V/S Actual

13. Krispy Relaunch; Cracker with filling markets were attractive and
expected to grow 10-14% per year.
Krispy Inc.
Regional brand
Doesn’t target
health conscious
consumers
Single serve
cracker packages
2-3 flavor
options
Krispy Natural
Increase its
geographical
spread
Targets health
conscious
consumers
Multiple serve-
offerings
Extensive R&D;
better quality
and taste and
more flavors

14. Krispy Marketing Strategy
4 Ps of
Marketing
Product
Promotion
Place
Price

15. Product strategy involved increased package sizes,
improved taste.
Krispy Natural would be made very healthy. 100%
whole wheat, Natural ingredients, Approx 150
calories, 6 grams of fiber, 3 grams of protein per
serving.
Product Testing showed a positive purchase intent of
77%-92% for new Krispy Natural flavors.
Most crackers with filling show a 4:1 ratio in taste
preference over other leading competitors
Product

16. Krispy would gain a foothold in supermarkets and
compete with other established brands.

17. Emphasized on heavy advertising.
Promotion to the end customer and appealing to the trade.
Aggressive plans for pull spending and trade promotions.
Promotion

19. Effective DSD system was thought to be a
critical component in overall Krispy Natural
program strategy.
Effective analysis of the distribution logistics of
the new product mix of crackers was carried
out.
Optimizing Longer Shelf life of Crackers.
Place

20. Management felt approximately 155% the category
average cost per ounce was reasonable considering
the product’s superiority.
“Visual price” basis : Similar price with competitors,
but less quantity or weight in the package
Pricing

21. Pre Testing
In Columbus:
No prior presence of Krispy
brand; launched a new of line of
cracker products.
Hired five special “Krispy Forces”
who worked with sales
managers and focused on selling
new Krispy Natural product line.
Southeast area:
Was already served as a single-
served product; repositioned the
product to a more premium
offering.
DSD route delivery system
worked well.

22. Planned
With no prior presence,
Columbus was expected to
achieve a 9% share of the
cracker category.
Southeast share was expected
to rise from 9% (in 2010) to
15% (in 2011).
Actual
outcome
Columbus achieves double the
expected, thus gaining an 18%
share.
This was derived by stealing
the share from the competitors
thus increasing the category
volume by 30%
There was just a slight increase
to 10% share, thus yielding
unimpressive results.
Actual shelf space and display
activity was below what the
team expected due to low
introductory trade case
discount.

23. a Percent of total stores where product line found in distribution.
b Percent of stores that placed product on gondolas, which are merchandise display shelves.
c Percent of stores that placed product on end aisle displays, which are point-of-purchase displays located at the end of a row.

24. Sales and Channel
Responses
Sales managers
were pleased with
the product and felt
the trade was
interested in the
new offering.
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.

25. Drawbacks
According to industry analyst, the
positive market results were driven by
significant price discounts, couponing,
and sampling, which were not
sustainable on a national level.
Taste preference claims of Krispy
Natural were inflated and the flavour
was no better than current brand
offerings.

27. Ramp-up to National Rollout??
Opportunities: There is a
possibility of exceeding the
company’s original forecasts of
$500 million if worked out the
marketing strategy effectively.
Since Pemberton products is
already an established market in
salty snacker industry, there is
already customer loyalty
generated for the company and
hence people will opt for trying
out new things.
This segment is expected to grow
between 10%-14% over next
several years
Threats: Frito-Lay might be
introducing a new full line of
crackers thus might result in a
head-to-head competition with
Krispy Natural.
Modest increase of 1% in the
Southeast market(where it was
already having a presence
previously).
Faces competition from other
leading brands like Kraft,
Kellogg and Pepperidge Farm.

28. How can this problem be
approached?
1) Apply concept of STP:
By carrying out segmentation on the basis of geography, they can cater to
the needs of different people differently. The marketing method applied
in the US might no be successful enough if applied in the Southeastern
states. Thus they need to pay heed to the local needs accordingly
By carrying out segmentation even on the basis of age, they can modify
the composition of the product in order to cater to the RDA of different
people: children, adults, aged members thus causing an expansion in
target segment.

29. 2) Customer Relationship Management:
With an effective marketing strategy carried
out by proper STP method, more people’s
needs are taken care of thus aiding in
establishment of connection at an emotional
level.
This is the key to increasing customer loyalty.

30. 3) Advertising Strategies:
They need to involve in extensive innovative advertising strategies to make people abreast of the same.
They should also carry out heavy promotions by entering into collaborations/pacts with theatres and theme parks so
people come across the product more often.
They should also involve in trade discounts.While retailer buys the product from the manufacturer at a reduced
price than the original, he can charge the full retail price from its customers in order to earn profit on the difference
between the amount by which the manufacturer sold the product to him and the price at which he finally sold.
This increases retailer retention.

31. 4) Extensive Research and Innovation:
In order to neutralize the competition that
its expected to face, it roll out strategy can
be to improvise the product extensively thus
carrying out continuous innovation.
It should carry out the line extension
method thus serving with new flavors,
forms, colors, ingredients and package sizes.

32. 5) Increase in the number of test markets:
A better idea of all
possibilities and loopholes(if
any) that a business may
encounter is met only when
pretesting is carried out more
extensively.
Had Pemberton group also
included a couple of other
locations, it would have
gained better insights into
its future methodology that
it needs to bring out.

33. Disclaimer
The following slides are created by Isbah Ajaz during a
marketing internship by Prof. Sameer Mathur, IIM
Lucknow.
Thank You