Harvard Business Review

2. WHO ARE THE PLAYERS??

3. PATRICIA WILLIAM Pemberton’s President
ASHLEY MARNE Executive Vice President Of
Sales And Marketing,
PEMBERTON
BRANDON FREDRICK Marketing Director
Pemberton
BURT SPIVEY Pemberton Chief Operating
Officer

4. WHAT IS THE
PRESENT
SITUATION ??

5. Test results have been obtained to decide the strategy to roll
out the product(if possible).
Launched the product in two test market regions of
Columbus, Ohio and Southeastern U.S.
Products quality and taste are improved. Product rebranded
as Krispy Natural. Product line extended for more options.
Pemberton took the step to enter Salty Snack Market. It
acquired Krispy Inc. and plans for its National Rollout

6. What is Krispy
Natural????

7. In 2008 Pemberton
took first step to enter
Salty Snack Market
with the Acquisition of
Krispy Inc.

8. CANDLER ENTERPRISE (18 MILLION)
Pemberton
Products
Beverage
division
Quick service
restaurant
Pet care
division

9. PEMBERTON SALES
WERE FROM ????

10. SOFTIES COOKIES
HOMESTYLE MUFFINS
DOUGHNUTS
PACKAGED FOOD BARS
OTHER SWEET BAKED GOODS

11. Market leader in US in cookies and bakery products.
Generated $5 billion revenue in 2011.
CAGR (compounded annual growth rate) of 14% for
revenue over past 5 years.
Company owned DSD (direct store delivery)
distribution system.
ABOUT PEMBERTON

13.  Understanding the U.S Cracker Industry and
Assessment of rivals.
 Marketing plan of Krispy Natural.
 Analysis of Test Market results.
 Should Krispy Natural be rolled out
Nationally?
 What should be the National roll out
strategy?

14. SPECIFIC DIRECTION FOR PRODUCT
DEVELOPMENTS OF PEMBERTON
 BUILDING A COLLECTION OF ATTRACTIVE DURABLE
BRANDS
 Leveraging leading marketing,sales and DSD SYSTEMS TO
INCREASE REVENUE & PROFITS
 BUILDING OR ACQUIRING CAPABILITIES IN SALTY
SNACK CATEGORIES
-Patricia Williams

15. Why did
Pemberton acquire
Krispy Inc.

16. Consumptio
n of crackers
was frequent
and regular.
Consumers
liked
convenient and
portable
packages.
Emerging
desire of
healthy
products.
A Mintel study of
salty snacks in the
U.S reported that
74% of
respondants
consumed
crackers on a
regular basis and
34% ate them as
part of regular
weekly diet.
50% of
respondants
liked crackers
that were
conveniently
packaged in
easily portable
quantities.
53%
respondents
considered
overall
healthfulness
an important
factor in
cracker
purchase
decision.

17. US CRACKER INDUSTRY
 Retail cracker sales estimated 6.9 billion in
2011
 CAGR(Compounded annual growth rate)
of 2.2% from 2008 – 10
 Increased growth of 6.2% in General(All
other) in 2010
 Annual growth forecasted between 10-
14% for crackers with filling

18. 75
9 9 6
1
Market Share
General(All Other)
Saltines
Crackers with fillings
Graham crackers
Others
All figures are in %

19. Premium
priced
products were
being
introduced
Growth was
driven by new
flavour
focussed
product lines.
Cracker with
fillings were
gaining
popularity
The segment was
having flat sales
from 2005 to 2009.
It experienced the
strongest growth of
14% approx in
2010. Annual
growth forecast
was between 10-
14% for the next
several years.
Kraft's Nabisco
Wheat Thins
Flatbread(
launched in 2009)
and Kellogg's
Keebler
Townhouse
Flatbread(launche
d in 2010) were
healthier and
upscale options.
Market share
for
Pepperidge
Farm Goldfish
grew from
13.9% to
14.2% by
focussing on
new flavours.

20. Competitors?
Kraft Food Inc.( Nabisco Brands)
Kellogg Co.(Sunshine ,Keebler,Carrs and
Austin brands)
Pepperidge Farm(Goldfish brands)
These three large brands account for ¾ of the
Cracker category.

21. MAJOR PRODUCT OF KRISPY SINGLE
SERVE
Six round toasted cracker sandwiches with
cheese filling in 3 flavour options
Flat cracker sold in 1.5ounce bags with 2
flavour options

22. What Pemberton team expected
from Krispy?
Sales in $millions
PLAN
Krispy Retail $97.5
Krispy Vend. $23.4
Total Krispy $120.9
UNEXPECTEDLY
PLAN 2009 Actual
Krispy Retail $97.5 $50.8
Krispy Vend. $23.4 $18.0
Total Krispy $120.9 $68.8
The actual sales did not match the projected sales!! WHY?

23. KRISPY SINGLE-SERVE DRAWBACKS
Marketed as ONLY “Grab and go” snacks
Strong presence in vending machines and convenience
stores
Regional brand(mostly in southeastern US)
Limited product line
Flavour satisfaction very less
Only single serve offerings

24. Should
Krispy
relaunch
again?

25. Why Pemberton Agreed
For
Relaunch
Attractive Cracker market.
Overall segment was large and expected growth of
10-14% per year.
 Reducing markets of other competitors(Eg Kraft
losing its share to Pepperidge Farm)

26. Krispy Relaunch
Rebranding as ‘Krispy Natural’.
Targeting health conscious consumers.
R&D labs engaged in improving taste and quality.
Multi serving package sizes and more flavours to
gain foothold in super markets.

27. Market Test Plan In Columbus, Ohio
And Southeast US.
In Columbus Krispy Natural will achieve 9% market
share of Cracker category.
In Southeast Krispy Natural will increase market
share from its current market share of 9% to 15%.

28. THIS TIME IT’S A SUCCESS
Krispy Natural is now a serious competition
Columbus(2011) Southeast(2011)
Pretest Post %lost or
gained
Pretest Post %lost or
gained
Kraft 40% 33% -7% 34% 32% +1%
Kellogg 25% 22% -3% 23% 22% +1%
Pepperid
ge Farm
11% 10%
-1%
10% 10%
0%
Krispy 0% 18% 18% 9% 10% +1%

29. How Krispy Natural
managed to steal
market share from
competitors?

30. PRODUCT STRATEGY(1/2)
POSITIVE PURCHASE INTENT OF 77-92%

31. PRODUCT STRATEGY(2/2)
Focused on increasing package size to multiple servings,
improving taste and more flavour options.
Health consciousness: Use of 100% whole wheat and
other natural ingredients.
R&D working tirelessly reformulate the
Product.
Improving taste by introducing new flavors

32. National Distribution of Krispy Natural.
Pre-tax profit contribution of at least 13%
Minimum sales of $500 million
SALES OBJECTIVES

33. Products delivered directly to retail outlets,bypassing retailer’s warehouses and
distribution centers
Critical merchandising functions were undertaken
INDIRECTLY PERFORMED SALES FUNCTIONS
MAXIMISED
SALES AND
PROFIT
GREATER
CONTROL OF
SHELF SPACE
REDUCED
STOCKOUTS
MORE
ACCURATE
FORECASTING
DIRECT STORE DELIVERY (DSD) DISTRIBUTION SYSTEMS

34. MARKETING STRATEGY
REJECTED
ADOPTED

35. LONG TERM promise unlike push strategies
Help in successful building of KRISPY NATURAL
"Getting the customer to come to you“
PULL MARKETING

36. Advertising and
mass media
promotion
Sales
promotions and
discounts
Customer
relationship
management

37.  Columbus had no prior presence of
Krispy. Here special Krispy forces
were formed seperate from DSD
route.
 They doubled the share target
achieving an 18% market share.
TEST MARKET RESULTS(1/2)

38.  Here, Krispy was already established
as single serve product at a lower cost.
 So it was challenging to reposition at a
premium range.
 Actual shelf space and display was
below expectations.
 Only 10% increase in market share. It
can be attributed to low introductory
trade discount of 15%.

39. INTERPRETING MARKET RESULTS
1. Grabbed 18% market share in Columbus as a
new entrant in salty snacks business.
2. Kraft,Kellogg and Pepperidge in total lost 10%
of market share, despite of higher demands
cracker products since 2010 . ( 6.2% for “All
other crackers and 14% for chacker will
fillings).

40. RECOMMENDED FOR A NATIONAL ROLLOUT
More Than 60% Tasters Preferred Taste
Of Krispy Natural Over Other Leading
Brands.
Positive Purchase Intent Of 81%.
Its Premiuim Pricing Was Greatly
Successful In Columbus,ohio.

41. If an average is taken for poor performance national
extended and good performance national extended sales of
$ 775 million can be expected. However even in the worst
case sales projection is $ 550 million,well above the
expectation of $ 500 million. Thus, the product should be
RECOMMENDED FOR A NATIONAL ROLLOUT

42.  Pull Strategy was proving to be effective
and hence to be used to combat
competitors response.
 Since price discounts, coupons and
sampling could not be sustained at a
national level. It should be aggressive in
places where it was previously positioned
at a lower cost.
 Continuous R&D to come up with newer
and better flavours and strong brand
building to go head to head with Frito-Lay.

43.  Launching more new product mix as per
customer taste and keeping health as a
priority concern.
 Optimization of DSD system for Krispy
natural product for cost reductions.
POSSIBLE COMPETITIVE RESPONSES TO
NEW BRAND “FRITTO-LAY

44. Disclaimer
Prepared by PRABAL
AGRAWAL, NIT JAIPUR
during marketing internship
by Prof. Sameer Mathur,
IIM Lucknow