6. Supermarket Channel
Manufacturer
Distributor(Margin-
15%)
Retailer( Margin –
27%)
Customer
Natureview would be
required to pay a one-time
“slotting fee” for each
SKU(Stock Keeping Unit)
only in the first year
For refrigerated yogurt, the
slotting fee averaged
$10,000 per SKU per retail
chain.
7. Natural Foods Channel
Natural foods chains
typically charged higher
retail prices for the same
products than supermarkets
did, due to lower price
sensitivity among natural
foods customers as well as
differences in the
distribution system.
Manufacturer
Natural Foods
Wholesaler ( Margin–
7%)
Natural Foods
Distributor (Margin –
9 %)
Retailer ( Margin –
35%)
Customer
9. TO EXPAND SIX SKUS OF THE 8-OZ.
PRODUCT LINE INTO TWO SELECTED
SUPERMARKET CHANNEL REGIONS
(NORTHEAST & WEST)
Option 1
10. Pros
Eight-ounce cups represented the largest dollar and
unit share of the refrigerated yogurt market
Other natural foods brands had successfully
expanded their distribution into the supermarket
channel.
One of Natureview’s major natural foods competitors
would soon try to expand into the supermarket
channel. The first brand to enter the channel could
therefore have a significant first-mover advantage.
11. Cons
The 8-oz. size received the highest level of
competitive trade promotion and marketing
spending.
Natureview Farm’s sales broker had indicated that
supporting this cup size would require quarterly
trade promotions and a meaningful marketing
budget.
12. Cost Analysisfor a year
Expected Revenue -
35,000,000*$0.31 = $10.85 million
Expenses –
1. Advertising - $1.2 million * 2 = $2.4 million
2. SG & A Expenses - $0.2 million
3. Marketing staff - $0.12 million
4. Stock Keeping Unit Cost - $1.2 million
Gross increase in profit –
$10.85 million - $ 2.92 million = $ 6.93 million
13. TO EXPAND FOUR SKUS OF
THE 32-OZ. SIZE
NATIONALLY
Option 2
14. Pros
Although 32-oz. cups comprised a smaller unit and
dollar share of the yogurt market, they currently
generated an above-average gross profit margin for
Natureview
There were fewer competitive offerings in this size
Natureview Farm had a strong competitive
advantage because of the product’s longer shelf life.
Promotional expenses would be lower
15. Cons
Slotting expenses would be higher because national
distribution would require slotting fees across a
larger number of retailers
the management team doubted that new users would
readily “enter the brand” via a multi-use size.
16. Cost Analysisfor a year
Expected Revenue -
5,500,000*$0.99 = $5.445 million
Expenses –
1. Advertising - $0.12 million * 4 = $0.48 million
2. SG & A Expenses - $0.64 million
3. Stock Keeping Unit Cost - $2.56 million
Gross increase in profit –
$5.445 million - $ 3.68million = $ 1.765 million
17. T O I N T R O D U C E T W O S K U S O F A C H I L D R E N ’ S
M U L T I - P A C K I N T O T H E N A T U R A L F O O D S
C H A N N E L
Option 3
18. Pros
The company already had strong relationships with
the leading natural foods channel retailers, and
expansion into the supermarket channel could
potentially affect these relationships.
Natureview Farm’s all-natural ingredients would
provide the perfect positioning from which to launch
its own children’s multi-pack product offering into
their core sales channel.
19. Cons
Natureview’s marketing department was unprepared
to handle the demands on resources and staffing that
entering the supermarket channel would impose.
20. Cost Analysisfor a year
Expected Revenue -
1,800,000*$1.15 = $2.07 million
Expenses –
1. Marketing Expenses - $0.25 million
2. Cost of Complimentary cases - $0.15075 million
Gross increase in profit –
$2.07 million - $0.40075 million = $ 1.67million
21. DECISION
Go for option 1
Reach beyond the target objective of 20 million
revenue by end of 2001
8 –oz yogurt is the highest demand
In supermarket, can expose to more range of
customers
Will have the first mover advantages of natural
product to enter supermarket