Harvard Business Review of Natureview farm was carefully studied and a tentative conclusion was derived

1. Harvard Business Review: Case
Study
Natureview Farm

2. Key Players
• Christina Walker-VP of Marketing
• Barry Landers-CEO
Opinions presented by
1. Walter Bellini-VP of Sales
2. Jack Gottlieb-VP of Operations
3. Kelly Riley-Assistant Marketing Director

3. What issues does Natureview face?
VC firm needed to cash out
of it’s investment in
Natureview

4. Two ways to deal
Find Another Investor
Or
Position for Acquisition
13M$ 20M$
Revenues (1999) (2001)

5. Burning Questions
1.Would Natureview survive
if it entered the
supermarket channel?

6. 2.Would introducing Natureview
in supermarkets have a negative
impact on their core target
segment?

7. 3.Can Natureview take on
the competition?

8. Background
• Biggest Company in Organic Yoghurt
Sector
• Higher Shelf Life - 50 days

9. The market share of different sizes
86%
14%
8 oz Cups-86%
32 oz Cups-14%

10. Targeted Market Segment
1. More Educated
2. Having Higher Income
3. Older than the typical
supermarket shopper

11. Yoghurt Statistics
• 70%+ of consumers buying are
women
• For organic food products, customers
said the barrier was Price and also
wanted a wider selection

12. Preference Order of Factors for buying
• Package type/size
• Taste
• Flavor
• Price
• Freshness
• Ingredients
• Organic or not

13. Yogurt Market Share by Packaging
Segment, 1999
(Supermarket channel, in % U.S. dollars)
Type
• 8-oz. cups and smaller
• Children’s multipacks
• 32-oz. cups
• Other
Dollar Share
• 74%
• 9%
• 8%
• 9%
Dollar Share change
vs prior year
• +3%
• +12.5%
• 2%
• NC

14. Dollar Share No. of Retailers
in the Region
• Midwest 22% 30
• Southeast 25% 33
• West 27% 17
• Northeast 26% 25
Yogurt Market Share by Region, 1999
(Supermarket channel, in % USD)

15. Yogurt Production Costs and Retail
Prices by Channel
Natural Foods Channel Average Retail
Price
• 8-ounce (oz.) cup $ 0.88
• 32-oz. cup $ 3.19
• 4- oz. cup multipack $ 3.35

16. Supermarket Channel Average Retail Price
• 8-ounce (oz.) cup $ 0.74
• 32-oz. cup $ 2.70
• 4- oz. cup multipack $ 2.85

17. Length of Channels to Market
Supermarket channel Natural foods channel
Manufacturer Manufacturer
Natural Foods
Wholesaler
Distributor
Natural Foods
Distributor
Retailer
Customer
Retailer

18. Yogurt Market Share by Brand, 1999
(Supermarket and Natural Foods
channels, in % U.S. dollars)
Supermarket Channel Natural Foods Channel
• Dannon 33% 1. Natureview Farm 24%
• Yoplait 24% 2. Brown Cow 15%
• Others 23% 3. Horizon Organic 19%
• Private Label 15% 4. White Wave 7%
• Columbo 5% 5. Others 35%
100% 100%

19. The Three Options

20. 1.Introduce 6 SKUs of 8 oz cups in
selected supermarkets
• Pros
1. More revenue Potential
2. There were examples of success by other
organic food products in
supermarket(increase sales by 200%)
3. If Natureview is first in the supermarket
channel among competitors it has advantage

21. • Cons
1. Higher risks and costs
2. Natureview would be dependent on it’s
brokers for getting them the best deals with
the supermarket
3. Huge competition in the 8 oz product line

22. 2.Expand 4 SKUs of 32 oz line
nationally
• Pros
1. Generated a better profit margin than 8 oz
cups(43.6% vs 36%)
2. Natureview’s longer shelf life gave
competitive advantage
3. Promotional expenses are lower

23. • Cons
1. New users may not readily buy a multi-size
2. Sales team was not sure about attaining full
national distribution in a year
3. Sales personnel would have to be increased
meaning an expenditure of $160,000

24. 3.Introduce two SKUs in children’s
multipack via Natural Foods
Channel
• Pros
1. Expansion in the natural foods channel would
not affect the relationship with it’s traditional
retailers
2. Not sure if Natureview could survive in
Supermarkets
3. Could easily achieve sles for two SKUs
4. Attractive Financial potential

25. • Cons
1. Natureview could manage the channels
properly
2. There was no guarantee that the natural Foods
retailers won’t make same demands as
supermarkets

26. Sales Projections for Natureview’s
Strategic Options
Options Incremental sales
Units
1 35 million
2 5.5 million
3 1.8 million

27. The Matrix

28. Expenses
Advertising 1.2million 120,000$
SG&A 320,000$ 160,000$
Production 10.85million 5,445,000$
2,070,00$
charges
Total 12.37M 5.75M 2.32M
Revenue 25.9M 14.85M 6.03M
Option 1 Option2 Option 3
}250,000$

29. Taking all factors into consideration
• Option 1 offers higher revenue but also has
higher risks involved
• Option 2 gives good returns and also has lower
risk
• Option 3 does not give sufficient returns
• The best option therefore is Option 2

30. Disclaimer
This presentation was made by
me,Sukkhada Joshii,during a
marketing internship under Prof.
Sameer Mathur
Thank You!