Presentation on the HBR Case Study: Krispy Natural, Cracking the PM Code completed by Karthik Prasad, BITS Goa as part pf the marketing internship under Prof. Sameer Mathur, IIM Lucknow

1. LAUNCHING KRISPY NATURAL
Cracking the Product Management Code

2. Pemberton Products
• Pemberton is the snack food division of Candler Enterprises. Other
divisions operated by Candler include:
• Beverage division
• Quick Service Restaurant Division
• Pet Care Division
• Pemberton’s product mix includes:
• Packaged food bars
• Cookies
• Other sweet baked goods

3. Pemberton Product Summary
• Pemberton contributed $5 billion to Candler Enterprises’ $11 billion
sales revenue, a total of 27.28%
• Among its market leading brands are Softies cookies and Homestyle
muffins and doughnuts
• Pemberton is a market leader in the U.S. cookie and bakery snacks
segments of the sweet snack market.
• The company’s USP includes its culture of innovation, research and
product development labs and a superior DSD system.

4. Strategic Priorities
• According to President Patricia Williams the three key strategic
priorities for the company are:
• 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

5. U.S. Cracker Industry
• Retail cracker sales in the United States reached an estimated $6.9
billion in 2011.
• CAGR for overall cracker industry from 2008-10 is 2.2%
• Crackers are the top salty snack, slightly ahead of potato chips.
• The top three U.S. cracker manufacturers were Kraft Food Inc.
(Nabisco brands), Kellogg Co (Sunshine, Keebler, Carrs and Austin
brands), and Pepperidge Farm (Goldfish brands).

6. Market Distribution “All Other” Category
37.80%
28.90%
13.90%
4.60%
14.80%
2009 % Share
Kraft Kellogg Pepperidge Farm (Goldfish) Private Label Other
37.00%
28.10%
14.20%
4.80%
16.00%
2010 % Share
Kraft Kellogg Pepperidge Farm (Goldfish) Private Label Other

7. Market Distribution “Crackers with Filling” Category
34.70%
31.50%
15.50%
8.00%
10.20%
2009 % Share
Kraft Lance Kellogg Private Label Other
32.70%
29.90%
21.00%
8.20%
8.10%
2010 % Share
Kraft Lance Kellogg Private Label Other

8. Consumer Survey
• 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
• The study reported that 53% of respondents considered overall
healthfulness an important factor in their cracker purchase decisions

9. Krispy Product Line
• Krispy was a regional brand with distribution focused primarily in the
Southeastern United States.
• The flagship product was a package containing six round toasted
cracker sandwiches with cheese filling, available in 3 flavor options.
• Krispy also offered a flat cracker sold in 1.5 ounce bags with 2 flavor
options.
• Krispy products were marketed as mobile, “Grab and Go” snacks with
a strong presence in vending machines and convenience stores.

10. Plan vs Actual Sales Figures ($ millions)
Product Plan 2009 Actual % to Plan
Krispy Retail $97.5 $50.8 52.1%
Krispy Vend $23.4 $18.0 76.9%
Total Krispy
Single Serve
$120.9 $68.8 56.9%

11. Reasons for Under-performance
• Limited product line, which made it difficult to command any sort of
presence in supermarkets
• The product did not deliver the flavor satisfaction scores expected

12. Krispy Relaunch
• Pemberton R&D labs were engaged to improve the product taste and
quality. This would lead to a rebranding of the product to Krispy
Natural
• The product line would be extended beyond single-serve offerings.
the product line would be extended beyond single-serve offerings.
The team felt multiple-serving package sizes and more flavor options
were critical to gain a foothold in supermarkets and to compete with
established brands.

13. Krispy Natural Marketing Plan - Product
• Increasing package sizes to multiple-servings
• Krispy Natural would be made from 100% whole wheat and other all
natural ingredients.
• Improved product mix with more flavors and better taste

14. Krispy Natural Marketing Plan - Marketing
• Aggressive plans for pull spending and trade promotions.
• Price discounts with up to 10–20% of sales
Year 3 Estimate ($ in millions)
Advertising $33
Merchandising $37
$70

15. Krispy Natural Marketing Plan - Distribution
• Effective DSD distribution, a critical component in the overall Krispy
Natural program strategy
• Optimizing the system to account for the longer shelf life of crackers
versus baked goods and cookies

16. Krispy Natural Marketing Plan - Pricing
• Krispy Natural sought a premium pricing strategy.
• Approximately 155% the category average cost per ounce

17. Objectives
• How to position Krispy Natural in the cracker industry?

18. Position Krispy in the Premium Segment
• Pros
• Better profit margins
• Brand Equity Improvement
• Cons
• Low Economy of Scale
• Polarization the target market

19. Feature Based Positioning
• Pros:
• In-line with the pro-fitness and healthy food-trend
• Plays on the strengths of the company’s innovation & R&D
• Cons:
• Associates the brand with the existing products
• Polarization of brand and products

20. SWOT Analysis
• Strengths:
• Strong culture of innovation – research & product development labs
• Strong brand following and market presence
• Existing delivery networks and expertise
• Weaknesses:
• Inefficient delivery system
• Lack of accurate consumer data

21. Recommendation
• Continue in the premium price segment as this will allow the
company to fund its R&D with the high profit margins
• The company already has a loyal consumer following and a strong
DSD. If Pemberton optimizes its delivery network and uses its DSD
channel efficiently it can hope to gain market share.
• The company should also employ POS marketing campaigns and
invest in push advertising along with pull advertising.

22. DISCLAIMER
• These slides are prepared by Karthik Prasad, BITS Goa during a
marketing internship under Prof. Sameer Mathur, IIM Lucknow.