Harvard Business case analysis of Krispy natural

3. A. Introduction & Overview
B. Market Research
C. Marketing strategies
D. Product launch and analysis
E. Result and Inference

5. Candler enterprises: Multinational
beverage and snack good manufacturer
Pemberton products: Snack food
division of Candler enterprises
Krispy Natural: A new cracker product
after acquisition of Krispy brand by
Pemberton products

6.  It was a market leader in the U.S. cookie and bakery snacks
segments of the sweet snack market
 The majority of Pemberton’s sales were from packaged food
bars, cookies, and other sweet baked goods
 Pemberton utilized a company-owned direct store delivery
(DSD) distribution system to deliver products directly from
distribution centers to retail stores
 It has achieved a compounded annual growth rate (CAGR) of
14% for revenue over the past five years

7.  Pemberton accounted for around 30% of Candler’s
total revenue by contributing around $5 billion in sales
for the year, 2011
Pemberton’s income statement (% of revenue)
 Had a profit of 7.7% after payment of tax (PAT) in the
same year

8.  Pemberton’s President, Patricia Williams, the
company’s driving force was its culture of innovation
and believed in key strategic priorities for company
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

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
 The Mintel study reported that 53% of respondents
considered overall healthfulness an important factor in
their cracker purchase decisions

13. Best
BRANDS in
the market
Kraft
Kellogg
Pepperidge
farm
(Goldfish)
Private
label
Lance

14.  Experienced a 2.1% CAGR for the period from 2008 to
2010
 Retail sales in the United States were estimated at
~$5.1 billion in 2011, a 6.2% increase over 2010
 Expected a growth by 6-7% each year driven by
healthier, premium-priced product introductions

16.  After flat sales from 2005 through 2009, experienced
the strongest segment growth of approximately 14% in
2010
 Expected growth between 10–14% for the segment
over the next several years
 Retail sales of crackers with filling in the United States
were estimated at ~$660 million in 2011, an 11%
increase over 2010

22. Product
Marketing
Distribution
Pricing

23. Multiple-serving packaging
Focused on improving taste
Health conscious

24. Emphasized on heavy marketing
Promotion to the end customer and
appealing to the trade
Aggressive plans for pull spending
and trade promotions

25. 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

26. Sought a premium strategy
Priced at 155% above the category
average cost per ounce
Same price as that of competitors but
lesser quantity

27. Pemberton’s projected expenses for
Krispy Natural advertising and
merchandising
Krispy Natural sales objectives
were based on expectations of
minimum sales of $500 million
during year one of national
distribution and a steady-state
pre-tax profit contribution of at
least 13%.
Brand projections

31. Five special “Krispy Force” representatives
were hired for this region
These “Krispy Force” reps worked with
Pemberton regional and district sales
managers and focused solely on selling the
new Krispy Natural product line

33.  Company was able to test its ability to
reposition the product to a more premium
offering
 Regular Pemberton DSD route delivery
representatives worked with regional and
district sales managers, handling sales and
service of the new Krispy Natural line

35.  In Columbus, Pemberton projected by the end of the
16-week test period, Columbus would achieve a 9%
share of the cracker category in the test market
 In the Southeast, company hoped by the end of the
16-week test period to increase share from its
current 9% to 15%

36.  Columbus
Doubled the share target, achieving an 18% share
Category volume had increased by 30%
 Southeast
A slight increase to 10% share
With a very little category expansion

40.  The large chain headquarter buyers were impressed
with the customer research results and inventory turn
results
 The pull marketing created a buzz and customers were
coming to the stores asking for Krispy natural by name
 They also loved all the promotional activity and
consumer advertising

43.  Innovate the marketing strategies in Southeast cities to
increase the turnover
 As, this is already doing great in new cities so it is the
time to expand and establish
 Extensive work on pull strategy is required as the buzz
created shouldn’t be lost
 Beware of other potential new market launches like
Frito-Lay rumors

45. Created by Roshan Raj Mohanty, IIT Madras, During a Marketing
Internship by Prof. Sameer Mathur, IIM Lucknow
DISCLAIMER