An analysis of the Harvard Business Review case study on Natureview Farm. This presentation was created by G.Krupakhar, IIITDM Kancheepuram during a marketing internship under Prof. Sameer Mathur, IIM Lucknow.

1. NATUREVIEW FARM
CASE STUDY ANALYSIS

2. INDUSTRY ANALYSIS
INDUSTRY LEADERS
“Good source of calcium
& improves digestion”
$1.8
billion
Retail sales in 1999.
Other sales points
Natural foods
Distribution
channels
Supermarket
97%
YOGURT

3. MAJOR MARKETS IN AMERICA:
✤ NORTH-EAST
✤ WEST
46%
SUPER MARKETS
29%
NATURAL FOODS
STORES
25%
SMALL HEALTH
FOOD STORE
ORGANIC
FOOD
MARKETS
NATURAL FOODS CHANNEL
PROJECTION - 15% GROWTH IN 5 YEARS
Refrigerated dairy case
Package
type/size
Taste
flavour
Price
Freshness
Ingredient
Organic
Order of factors
for purchasing
Industry experts predict at supermarkets,
20% per year growth in next 5 years.

4. “NATUREVIEW FARM”
SINCE 1989
✤ EXTENDED SHELF LIFE
PRODUCED AT CABOT, VERMONT
NATURAL
INGREDIENTS
MAJOR PRODUCT VARIANTS
✤ 8 OUNCE
✤ 32 OUNCE
✤ 4 OUNCE
YOGURT
ABOUT THE COMPANY

5. INCOME STATEMENT
NATURAL FOOD RETAILERS
24%
MARKET SHARE
ABOUTTHE COMPANY
EXISTING DISTRIBUTION
IS THROUGH
NATURAL FOODS RETAILER

6. “BUSINESS PLAN”
QUEST FOR THE
PRESENT SCENARIO
JIM WAGNER, CFO BRINGS IN VENTURE CAPITALIST
INVESTMENT
1997
VC LOOKS TO CASH OUT THE INVESTMENT
1999
NEED TO INCREASE REVENUE TO ACHIEVE HIGHEST POSSIBLE VALUATION
NEW INVESTOR ACQUISITION

7. SALES & DISTRIBUTION MODELS
SUPERMARKET CHANNEL
✤ USE SOPHISTICATED TECHNOLOGY FOR INVENTORY MANAGEMENT.
✤ streamlined distribution systems => LESSER PRICES.
MANUFACTURER DISTRIBUTOR RETAILER CUSTOMER
15% 27%
✤ DEMANDS BY SUPERMARKETS
SLOTTING FEE FOR EACH SKU FOR THE FIRST YEAR
REGULAR REGIONAL TRADE PROMOTIONS

8. SALES & DISTRIBUTION MODELS
NATURAL FOODS CHANNEL
✤ LOWER PRICE SENSITIVITY RESULTS IN HIGHER PRICES.
✤ NO NEED FOR PROMOTIONS , DISCOUNTS TO ACHIEVE SALES TARGET.
✤ NO SOPHISTICATED TECHNOLOGY FOR INVENTORY MANAGEMENT.
✤ DEMANDS BY STORES
INSTEAD OF SLOTTING FEE , FREE UNITS FOR EACH SKU.
MANUFACTURER
NATURAL FOODS
DISTRIBUTOR
RETAILER CUSTOMERNATURAL FOODS
WHOLESALER
9% 35%7%

9. COMPETITORS IN NATURAL FOODS CHANNEL
ORGANIC YOGURT
LESSER SHELF LIFE
NATURAL YOGURT
NOT ORGANIC
STRONG WEST COAST
DOMINATION
RECENT IPO

10. ✤ OBJECTIVE
✤ ALTERNATIVES
✤ CONSTRAINTS
BUSINESS PLAN
GROW RENEW BY 50% AT THE END OF 2001
$13 MILLION TO $20 MILLION
ENTERING SUPERMARKET CHANNEL
OR
EXPANDING PRODUCT LINE IN THE EXISTING CHANNEL
LIMITED RESOURCES IN MANAGING DISTRIBUTION
CHRISTINE WALKER, VP MARKETING HAD TO REVIEW PLANS
SUGGESTED BY THE SENIOR MANAGEMENT TEAM

11. DECISION & EVALUATION

12. OPTION-1
✤ Justification
✤ Best selling product variant.
✤ Companies have increased revenues by over 200% within two years of
entering supermarkets.
✤ Competitors trying to expand into the supermarket channel.
Advocated by Walter Bellini, vice president of sales, Natureview Farm.
✤ Expand 6 best selling SKUs of the 8-oz. product line into
the supermarket channel.

13. Analysis of option-1
✤ Industry experts prediction:
✤ With the new plan, possible achieve a 1.5% share in the channel.
✤
Sales, general, & administrative expenses (SG&A) : $320,000⬆(for additional staffing).
✤ Take advantage of relationships with the top 11 supermarket in the Northeast and the top 9 in
the West.
20% growth of yogurt in supermarket channel
35+
Million units

14. OPTION - 2
Justification:
✤ lower Marketing expenses - 10% of projections for 8-oz. size , i.e. $120,000 per region per year.
Advocated by Jack Gottlieb, vice president of operations, Natureview Farm.
Expand four SKUs of the 32-oz product line into the supermarket channel
nation wide.
Market share
55%
45%
Natureview farm
Others
0
0.11
0.22
0.33
0.44
Gross margin
8 oz.
32 oz.
5.5 million
across 64
stores/year

15. Analysis of option-2
Doubt that new users would readily “enter the brand” via a multi-use size.
sales team’s ability to achieve full national distribution in just 12 months.
✤ Advertise the brand before the 8-oz. size comes into supermarket channel.
✤ Need to hire sales personnel who have experience working with supermarket dealers.
✤ Sales, general, & administrative expenses (SG&A) : $160,000 ⬆
✤ Dannon was rumoured to be launching a line called Bright Vista, an organic yogurt.
✤ Supermarkets can have their own versions of the 8-oz. market, a greater threat to the
company.
❓

16. Relationship with
Nature food stores
OPTION - 3
Introduction:
The marketing expenses were estimated at $250,000
Advocated by Kelly Riley, the assistant marketing director, Natureview Farm.
Introduce two SKUs of a children’s multi-pack into the natural foods channel
7x growth of nature foods stores0
0.11
0.22
0.33
0.44
Gross margin
8 oz.
32 oz.
4 oz.
1.8
billion sales
estimate
Sales team confident about adding all-natural children’s
multi-pack into the existing channel.
❌

17. Analysis of option-3
Increased reliance on R&D.
Possible to make products without incurring any SG&A expenses.
A strategy to gain shelf space at natural foods retails.
Supermarket emphasis on sales promotion & price inconsistent with STP of Natureview’s
yogurt.
Uphill task for Sales & Marketing team to adapt to the new system in terms of money
and workforce.
Suspicion that the natural foods channel would demand like supermarkets in the future.

18. summary
ABOUT THE COMPANY
PRESENT SCENARIO
SALES & DISTRIBUTION MODELS
COMPETITION IN THE NATURAL
FOODS CHANNEL
BUSINESS PLAN FORMULATION
INDUSTRY ANALYSIS

19. This presentation was created by G. Krupakhar, IIITDM
Kancheepuram, during a marketing internship program
under the guidance of Prof. Sameer mathur, IIM Lucknow.
Disclaimer