HARVARD BUSINESS SCHOOL CASE

1. HARVARD BUSINESS CASE STUDY
Launching Krispy Natural:
Cracking the Product
Management Code

2. Pemberton: Introduction
 Pemberton was the snack food division of Candler
Enterprises, (a multinational beverage and snack goods
manufacturer).
 It was a market leader in the U.S. cookie and bakery snacks
segments of the sweet snack market.
 It harnessed its owned Direct Store Delivery (DSD)
distribution system to deliver products directly from the
distribution centers to the retail stores.
 Revenue - 5 Billion USD (7.7% PAT)
 Compounded Annual Growth Rate -14% (for revenue over
the past 5 years )

3. Pemberton’s income statement (% of
revenue):

4. CHARACTERS OF CASE AT PEMBERTON
 Ashley Marney (Executive V.P. Sales & Marketing)
 Brandon Fredrick (Marketing Director)
 Burt Spivey (Chief Operating Officer)
 Patricia Williams (President)

5. Key strategic priorities:
 building a collection of attractive, durable brands
 leveraging leading marketing, sales and DSD systems to
increase revenue and profits
 building or acquiring capabilities in salty snack
categories.

6. Past records in Salty Snack Market Segment
This Failure was attributed to
•Limited Product Line
•Taste Dissatisfaction

7. CHALLENGES

8. HOW TO LAUNCH AND SUSTAIN THE
GROWTH OF KRISPY NATURAL IN
THE SALTY SNACK MARKET ?

10. US CRACKER INDUSTRY ANALYSIS

11.  Retail cracker sales in the United States
reached an estimated $6.9 billion in 2011.
 The growth rate for the overall cracker industry
from 2008 to 2010 was approximately 2.2%
CAGR
 A Mintel study of salty snacks in the United
States reported that 74% of respondents
consumed crackers on a regular basis and
34% ate them as part of regular weekly diet.

12. 75%
9%
9%
6%1%
Sales
"all other"
saltines
crackers with fillings
graham crackers
bread sticks and
matzoh crackers

13. “All other” crackers
 Experienced a 2.1% CAGR from the period
2008-2010.
 Retail sales of 5.1 Billion USD in 2011 in USA
 Expected to grow by 6-7% per year

14. “All other ” crackers

15. Crackers with fillings
 Although experienced flat sales during 2005-
2009, but later became the strongest segment
 Retail sales of 660 Million USD in 2011 in
USA
 Had a growth rate of 14% in 2010

16. Crackers with fillings

18. Product purchasing intent

20. Competitor’s analysis
1. Top 3 cracker manufacturers are:
 Kraft Food Inc.
 Kellogg Co.
 Pepperfridge farm
2. They account for approx. 75% of the
cracker market in 2010.
3. Frito-Lay is rumored to be introducing
a new full line of crackers by the end of
second quarters.

21. COMPETITORS ADVERTISEMENT
SPENDING

23. Product Marketing
Distribution Price
Strategy

24. Krispy Natural marketing strategy
Product:
Multiple-serving packaging
Focused on improving taste
Health conscious

25. Krispy Natural marketing strategy
Marketing:
Emphasized on heavy advertising
Promotion to the end customer and
appealing to the trade
Aggressive plans for pull spending
and trade promotions

26. Krispy Natural marketing strategy
Distribution:
Effective DSD (Direct-Store Delivery)
distribution system
Proper management of shelf inventory
and in-store merchandising
Optimizing the system to account for
longer shell life of crackers

27. Krispy Natural marketing strategy
Price:
Sought a premium strategy.
Priced at 155% above the category
average cost per ounce
Same retail price as that of
competitors but lesser quantity

29. KRISPY NATURAL BRAND PROJECTIONS

30. KRISPY NATURAL BRAND INCOME STATEMENT

32. MARKET RESULT HIGHLIGHTS

33. MARKET RESULT HIGHLIGHTS

34. MARKET RESULT HIGHLIGHTS

35. MARKET PLAN - COLUMBUS
 5 special “Krispy Force”
representatives were hired in
Columbus
 These “Krispy Force” reps worked
with Pemberton regional and district
sales managers and focused solely on
selling the new Krispy Natural
product line.

36. MARKET PLAN - SOUTHEAST
 In Southeastern cities, the company
was able to test its ability to reposition
the product to a more premium
offering
 Here regular Pemberton DSD route
delivery representatives worked with
regional and district sales managers,
handling sales and service of the new
Krispy Natural line.

38. Expectations:
Columbus would
achieve a market
share of 9%
Southeast’s market
share will rise from
9% to 15%
The company
hoped for 15%
shelf space in both
the markets
Reality:
Columbus doubled
the share target,
achieving 18%
market share with
30% category
expansion.
Southeast had a
slight increase to
just 10% with little
category expansion.

40.  Columbus was able to achieve an 18% market
share by stealing share from other
competitors.
 However in Southeast the trade was generally
receptive to the new Krispy Natural line due to
the relatively low introductory trade case
discount of 15%.

42. SALES & CHANNEL RESPONSES
 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

43.  However one industry analyst thought that the
positive test market results were driven by
significant price discounts, couponing, and
sampling, which were not sustainable.
 Also, few felt the taste preference claims of Krispy
Natural were inflated and the flavor was no better
than current brand offerings.

44. Competitive response

46. Recommendations
Extensive marketing in
Southeast cities
Contemporize brand
engagement
Tailor the Krispy Natural to
different need states

48. DISCLAIMER
THIS PRESENTATION WAS CREARTED BY FARHAN
HAYAT, JMI DELHI, DURING A MARKETING
INTERNSHIP WITH PROF. SAMEER MATHUR, IIM
LUCKNOW .