Krispy Natural is a cracker brand that Pemberton wants to launch nationally. Market research shows the cracker industry is growing, especially in filling segments. Krispy tested well in two regions - gaining share in Columbus but only slight growth in its home Southeast region. While sales and consumer interest were good, analysts note incentives like discounts may not be sustainable nationally. The recommendation is to target filling segments, enforce the distribution system with premium strategies and flavors, and ensure quality and reach to preempt competition entering the market.

1. Launching Krispy Natural-Cracking the Product Management Code
Case Study
Harvard Business School

2. Roadmap
Objective of the study
Present situation
The way ahead
Recommendation

3. Objective of the case

4. Problem of the case
Krispy Natural
Objective of the case
To layout a plan for introducing “Krispy Natural” nationally on the basis
of prevailing market condition and test market result.

5. Present Situation

6. Present Situation
US cracker industry
Industry overview
 Retail cracker sales of $6.9 billion in 2011
 Steady annual growth rate of 2.2% CAGR
Mintel Study on salty snacks in US
Frequent and regular consumption of crackers -Either on regular basis or weekly diet
Consumer mentality
 Desire for healthy product-An important driving factor for cracker industry
 Convenient Packaging & Portability
 Standalone Flavors – Number 1 Purchasing Criterion

7. Present Situation
All other crackersAll other crackers
75%
Cracker with fillings
9%
Saltines
9%
Graham crackers
6%
Rest
1%
Major segments on the basis of Product type

8. Present Situation
All other crackers
 2.1% CAGR from 2008-2010
 6.1% growth expected afterwards
 Retail cracker sales of $5.1billion in 2011
 Growth driving factor- Healthier & Premium priced product

9. Crackers with Filling
 Flat sales during 2005-2009,but later experienced strongest segment growth
of approx. 14% in 2010
 Retail cracker sales of $0.66 billion in 2011
Present Situation

10. Major Players in US cracker industry
Present Situation
Manufacturer
Kraft Food Inc. -
Kellogg Co -
Pepperidge Farm -
Brands
Nabisco Brands
Sunshine, Keebler, Carrs and Austin brands
Goldfish brands

11. 0
5
10
15
20
25
30
35
40
Kraft Lance Kellogg Private lebel Other
2009 2010
Present Situation
Manufacturer Sales Data
Manufacturer sales of All other crackers Manufacturer sales of Cracker with Filling
Kellogg share
Kraft remained at top with its healthier & upscale optionsKraft remained at top with its premium offerings
0
5
10
15
20
25
30
35
40
Kraft Kellogg Pepperidge
Farm(Goldfish)
Private lebel Other
2009 2010

12. Present Situation
Candler
Enterprise
Pet care
division
Multinational
Beverages
Quick service
restaurant
Pemberton

13. Present Situation
Pemberton

14. Present Situation
 Packaged Food bars, cookies, sweet baked goods
 Flagship products – Softier cookies, Homestyle muffins , Doughnuts
Brand values
Superior taste experience
Constant improvisation in recipes
Coming up with new flavors & products
 Snack food division and a major revenue source For Candler Enterprise
About

15. Present Situation
Strategic priorities
Building strong Brand values
Applying leading marketing, sales and distribution system to increase revenue and sales
A good brand image in the market
Annual and long term objective :
To sustain CAGR of around 14% for revenue, which it achieved over the past 5 years

16. Present Situation
DSD
Direct store delivery distribution system
Pemberton’s Biggest Point of Difference (POD)
Benefits
Control of shelf space
Accurate forecasting
Reduced stock-outs
Operations
Manage shelf inventory
Execute price promotion
Handle in-store merchandising

17. Present Situation
Possible reasons for failure
 Limited product line
 Dissatisfactory Taste survey performance
Krispy single serve
‘Krispy’ a regional brand in Southeastern US
Marketing strategy
 Grab & Go
 Product outlet – Vending machines + convenient stores

18. The way ahead

19. The way ahead
Krispy Natural
Reasons for Relaunch
 Large market for crackers
 Attractive expected growth rate
of 10-14% per year in segments
like cracker with fillings
 Promising results from internal
market research
Product Marketing
Distribution Pricing
Marketing Strategy
for Krispy Natural

20. The way ahead
Krispy Natural Marketing Strategy
Product
Multiple Serving Packaging
Focus on improving taste
Health conscious products

21. The way ahead
Krispy Natural Marketing Strategy
Marketing
 Heavy advertising
 Promotion to the end customer and appealing to the trade
 Aggressive plans for pull spending and trade promotion

22. The way ahead
Krispy Natural Marketing Strategy
Distribution
 Effective DSD system
 Proper management of shelf inventory and in-store merchandising
 Optimizing the system to ensure shelf life of crackers

23. The way ahead
Krispy Natural Marketing Strategy
Pricing
 Premium pricing strategy
 “Visual price” at par with competitors
but less quantity in packages

24. The way ahead
Promotional Plan
Promotion techniques

25. The way ahead
Krispy Natural Brand Projections
Krispy Natural Brand Income Statement
Increasing growth percentage and dollar sales
from Year 1 to Year 3
To achieve a pretax profit of 13% till Year 3 13% of
manufacturer
sales of $700 billion

26. Columbus Ohio vs Trio cities in Southeastern US
Market Survey
The way ahead

27. The way ahead
Columbus Ohio
No prior presence
Mission
To assess the ability to sell a completely new line of cracker products
Methodology
”Krispy Force” representatives hired to sell Krispy Natural Product Line

28. The way ahead
Southeastern US
Already established
Mission
To test its ability to reposition the product to a more premium offering
Methodology
Introduced higher priced reformulated Krispy Natural Product Line

29. Results
The way ahead

30. Expectation vs Reality – Market share
The way ahead
In Columbus
Double the expectation with 18% share in hand.
Stole share from competitors
In Southeastern US
A slight increase to achieve 10% share from 9%
against the expected 15%.

31. The way ahead
Projected sales in test regions
Market share in test regions
Test market result highlights
 Krispy cut the share of competitors in Columbus
 No significant effect in Southeast
 Promising sales in Columbus after Year 1
 Almost Double that in Southeast

32. The way ahead
Product testing analysis
Store & display penetration
Test market result highlights
 Majority of the stores in both regions covered
 Shelf presence is more observed in Southeast
 More volume purchase in Columbus
An average of Positive purchase intent of around
81% observed in Crackers with filling and flat
crackers category.

33. The way ahead
Interpretation
Sales & Consumer channel
 Consumer research results and inventory turn estimates were impressive
 Pull Marketing created a buzz and attracted customers
But at the same time ……..

34. The way ahead
In view of one industry analyst
Positive test market results were driven by incentives like significant price
discounts, couponing and sampling which were not sustainable on national basis.

35. SWOT ANALYSIS
The way ahead
Strength
Efficient DSD system.
World renowned R&D
facility.
Product mix.
Weakness
DSD capacity
constraint.
Opportunity
Huge market for
crackers.
Scope of new taste and
flavors.
Threats
Frito- lay entering the
market.
Brand dilution in
Southeastern US.

36. Partial Competitive analysis
The way ahead

37. Recommendation

38. Recommendation
For National roll out
 Product testing survey indicates huge enthusiasm for Krispy natural products in new regions.
So new areas can be approached.
 They should target cracker with filling segment. It is expected to grow from 10-14% in next few
years.
Challenges
 Pull strategy may not be successful in long run .
 It should be used for instant success only in the beginning.
 Enforce DSD system in the new areas with premium strategy and different flavors to gain instant
customer attraction.

39. Recommendation
To neutralize competition from Frito –lay and other major players
 Ensure Brand positioning and customer reach before Frito-lay establishes itself.
 Ensuring quality of products as well as its reach to customers through proper shelf inventory
management.
 Targeting public outing spots like cinema halls , parks, malls etc.

41. This presentation is created by AKASH , a student of IIT ISM Dhanbad under the
guidance of Professor Sameer Mathur, IIM Lucknow.
DISCLAIMER