3. About Natureview Farm
• Founded in 1989 in Cabot, Vermont
• Manufacturer and marketer of refrigerated cup organic yogurt
• Uses natural ingredients and special process
4. How is Natureview Farm different?
Natureview Farm yogurt is different from its other competitors:
• Uses natural ingredients
• Longer shelf life (50 days)
• Reputation of high quality and great taste
5. Natureview is successful
Because:
• Strong brand
• Effective, low-cost “Guerrilla Marketing”
• National distribution in natural foods channels
• Strong relationships with distributors
6.
7. Issues and Challenges
Venture Capital firm needs the cash out of investment, and thus Natureview
Farm needs to increase its revenues by 50% by the end of 2001.
Its current revenue is $13 million. It needs to reach $20 million.
GOAL :
To find another investor or position itself for acquisition, and increasing
revenues.
8. Questions !
• Should Natureview expand into the supermarket channel to
increase its revenue?
• What marketing strategy should it use?
9.
10. Market Trends
46%
25%
29%
Channel that customers tend
to buy
Supermarket Small health stores Natural Foods
97
3
Yogurt Distribution Channel
Supermarket Natural Foods
11. Market Trends
26%
22%
25%
27%
Yogurt Market Share by
Region
Northeast Midwest Southeast West
74%
9%
8%
9%
Yogurt Distribution Channel
8 oz. cups and smaller Children's multipacks
32 oz. cups Others
16. Option 1
Expand 6 SKUs of the 8-oz. product line
into one or two selected supermarket
channel regions
17. Option 1
Pros
• 8-oz. cups represent largest dollar and unit share of market
• Other natural food brands have successfully expanded to
supermarkerts
• Supermarkets may authorize only one organic yogurt manufacturer
• Advantage in being the first organic yogurt to move to supermarket
18. Option 1
Cons
• Highest level of competition amongst all the product lines of yogurt
• Increase in advertising cost and SG&A expenses
• Little experience in dealing with supermarket chains
• High potential, but high risk and cost
22. Option 2
Pros
• 32-oz. cup generates an above-average gross profit margin (43.6%
vs 36% for 8-oz. product line)
• Fewer competitive offerings in this size
• Competitive advantage due to longer shelf life
• Lower promotional expenses
23. Option 2
Cons
• Higher slotting fees due to national distribution
• National distribution will be challenging within 12 months
• Promotion and lower price at supermarkets may hurt the brand
25. Option 2
Year 2000 Year 2001
Unit Sales 5,500,000 5,500,000
Revenue $9,185,000 $9,185,000
Cost $5,445,000 $5,445,000
Gross Profit $3,740,000 $3,740,000
Expense
Advertisement $480,000 $480,000
SG&A $160,000 $320,000
Slotting Fee $2,560,000
Broker’s Fee $367,400 $367,400
Net Profit $172,600 $2,572,600
26. Option 3
Introduce 2 SKUs of a children's multi-
pack into the natural foods channel
27. Option 3
Pros
• Strong relationships with leading natural foods channel retailers
• Financially lucrative
• High margins
• Low sales and marketing expenses
28. Option 3
Cons
• Have to prolong venturing into supermarkets
• May not reach the target revenue of $20 million by 2001
• Competitors have already expanded to supermarkets
30. Option 3
Year 2000 Year 2001
Unit Sales 1,800,000 2,070,000
Revenue $3,312,000 $3,808,800
Cost $2,070,000 $2,380,500
Gross Profit $1,242,000 $1,428,300
Expense
Marketing $250,000 $250,000
Comp. Case $82,800 $95,220
Net Profit $909,200 $1,083,080
31.
32. • Higher revenue generated
• Lower Slotting Fee (only 2 supermarkets)
• Transition to supermarkets
• Advantage over competitors by expanding into supermarket
33. Recommended
AdjustmentsInstead of just introducing 8-oz. cups, 32-oz, cups should also be
introduced in supermarkets.
• More shelf coverage
• Better gross profit margin
• No competition for 32-oz. cups
Combining advantages of both the product lines.
34. Created by Parth Shah, IIT Madras,
during a marketing management
internship by Prof. Sameer Mathur, IIM
Lucknow.
Disclaimer