Presentation on Harvard case Study titled-"Nature View Farm"

2. Founded 1989
Headquarters Cabot,Vermont,USA
C.E.O Barry Landers
Sales $13,000,000
Profit $4,810,000
Market Share 24% in Fresh Food Market
COMPANY PROFILE

3. 1989
• Founded and manufactured in Cabot, Vermont •
• Entered market with 8-oz and 32-oz with plain and vanilla flavor
• • Used natural ingredient with longer average shelf-life of 50 days
1999
• Company revenue growth from $ 100,000 to $13 million
• Fruit on the bottom yogurt
• Low-cost “guerilla marketing” tactics
2000
• Expanded to 12 yogurt flavors in 8-oz. & 4 flavors in 32-oz.
• Exploring multipack yogurt products (for children)

4. Problems faced in 1999-2001
V.C Cashing out
Desperate need to increase
revenue to $20million from 13$
dollar presently
Contemplating on which
channel to adopt

5. Unique Selling Proposition
1. Use of only natural ingredients and absence of
artificial thickeners
2. High average shelf life( 50 days vs competitors 30
days)
3. Strong Reputation for taste and high quality
4. Excellent marketing stratergy

6. Sales Target
$20 million (2001)
$ 13 million (1999)

7. Market trends
97
3
Distribution Channel
Supermark
et Channel
Natural
Food
Stores
46
29
25
Channel through which
the consumer purchases
SuperMark
et
Small
health
stores
Natural
Food
Stores

8. Market trends
26
2225
27
Yogurt Market share
by region
North-
East
Mid-
West
South -
East
West
74
9
9
8
Yogurt Distribution
channel
8 oz.cup
and
smaller
Children
s
Multipac
k

9. Market trends
33
34
23
5
15
Market
Share(SuperMarket
Channel )
Dannone
Yoplait
Others
Private
Player
24
15
19
7
35
Market Share (Natural Food
Channel )
Naturview
Farm
Brown Cow
Horizontal
White
Wave
Others

10. Distribution Channel Comparison

12. Expand 6 SKUs of the 8-oz. product line into
one or two selected supermarket channel
regions

13. Pros and cons
 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
 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

14. Various Prices at Different intervals
Point of Reference Selling Price Margin Cost Price
Retailer $0.74 27% 0.73x74=0.54
Distributer $0.51 15% 0.85x51=0.46
Nature-View $0.46 (0.46-
0.31)/0.46=33%
0.31

15. Profit calculation
2000 2001
Unit Sales 35000000 42000000
Revenue Selling price *sales 16100000 19320000
Manuf Cost price*sales 10850000 13020000
OTP Standard metric 600000 600000
Broker 0.04*revenue 644000 772800
SG
Raises by 32000
every year 32000 64000
Total Cost- - 10882000 13084000
Profit 5218000 6236000

16. Expand 4 SKU’s of the 32-oz product line
nationally.

17. Pros and cons
Pros
 32-oz cups generate an
above- average gross profit
margin (43.6% vs 36% for
8-oz line)
 Fewer competitive
offerings in this size
 Competitive advantage
due to long shelf life of
product
 Lower promotional
expenses than option
Cons
 Higher slotting fees due to
national distribution
 National distribution will
be challenging within 12
month
 No guarantee that
customer awareness of the
brand would grow
 Promotion and lower
price at supermarkets may
hurt the brand

18. Various Prices at Different intervals
Point of
Reference
Selling price Margin Cost Price
Retailer 2.7 27% 1.971
Distributer 1.971 15% 1.61
Nature view 1.61 62.6% 0.99

19. Profit calculation
2000 2001
Unit Sales 55,00,000 55,00,000
Revenue 9295000 9295000
Manuf 5445000 5445000
Marketing 4,80,000 4,80,000
OTP 12,80,000 12,80,000
SG 1,60,000 3,20,000
Total Cost 94,55,000 96,15,000
Profit 1,60,000 3,20,000

20. Option 3 Expand 2 SKU’s of a children’s multi-pack
into naturals food channel

21. Pros and cons
Pros
 Natureview already has
strong relationships with
leading natural foods
channel retailers
 More time to prepare the
company for moving into
supermarkets
 Financially-attractive
 High margins- 37.6%
Cons
 Fast growth of natural
foods channel will lead to
demands equal to those of
supermarkets
 Miss opportunity to enter
supermarkets before
competitors

22. Various Prices at Different intervals
Entity Margin Cost Price Selling Price
Nature View 38 1.15 1.84
NatureView Wholeseller 7 1.8414 1.98
Distrivutor 9 1.9838 2.18
Retailer 35 2.1775 3.35

23. Profit calculation
2000 2001
Unit Sales 1800000 2070000
Revenue 3312000 3808800
Cost 2070000 2380500
Marketing 250000 250000
Comp Cost 82800 95220
Total cost 2402800 2725720
909200 1083080

24. Best Option ??
 Undoubtedly Option 1
 Reasons
1. Highest Turnover
2. Highest Profit
3. Assent of a lot of members associated with it
4.Good Profit margin
5.Since competitors are gravitating towards supermarkets ,Natureview
should not miss this oppurtunity

25. Recommendations
 The firm can incorporate the use modern technology
to analyse and increase sales
 Work closely with the shop authorities to reduce costs
 Promote the product through proper advertisement
campaigns and increase sails
 Launch new exotic flavours in the market in order to
create a brand image

26. Disclaimer
 This ppt was prepared by Hrishikesh Wagle( S.P.C.E
Mumbai ) at an internship under Prof Sameer Mathur
IIM,Lucknow