The document discusses Krispy Natural, a cracker brand owned by Pemberton Products that is considering a national relaunch targeting the healthy snack market. Krispy Natural performed well in product testing and gained market share in test regions. However, competitors like Kraft, Kellogg and Pepperidge Farm would respond aggressively to a national rollout. Going national could provide an opportunity to capitalize on growing demand for healthier snacks, but may face strong competitive backlash and uncertainty around distribution and Frito-Lay's potential market entry. A decision is needed on whether Krispy Natural should relaunch nationally as a healthier product.

1. LaunchingKrispyNatural:CrackingtheProductManagement
Code
Harvard Business School Case

2. Pemberton
Products
Pet Care
Division
Quick Service
Restaurant
Division
Beverage
Division
Candler
Enterprises
($18Bsalesin2011)

3. PembertonProducts
• Food Bars, cookies and sweet bakedfoods
• Best sellers: Softies Cookies & homestyle muffinsand
doughnuts
• 5 Billion in Sales (2011)
• Dozensof Plants
• Own and uses Direct Store Delivery (DSD)

4. Patricia Williams
(President)
• Threekey strategic priorities:
1) Building a collection of attractive, durable
brands;
2) leveraging leading marketing, sales and DSD
systems to increase revenue;
3) building oracquiring capabilities in salty snack
categories

5. • "Krispy Natural will provide Pemberton with its next
generation blockbuster product and provide a foothold we
need to dominate the salty snack market"
Ashley Marne
Executive VicePresident
Marketing & Sales

6. BurtSpivey
COO
• "One of our most distinct competencies is our
ability to create products that provide a superior
taste experience.
•
"Our DSD system is a major factor in the
company's growth and leading market share
position, providing us with a significant
advantage over the competition"

7. TheMarket

8. TheU.S.CrackerIndustry
• Reached 6.9 billion in2011
• Growth rate of the overall marketfrom 2008-2010 was
2.2% CAGR (Compounded AnnualGrowthRate)
• Crackers-with-fillingssector is expected to grow 10-14%
in the next few years

9. Competitors
• The three largest competitors account for ¾ of the
cracker brands
• Kraft Food Inc. (Nabisco Brands)
• Kellogs Co. (Sunshine, Keebler, Carrs and Austin Brands)
• Pepperidge farm (Goldfish Brands)

10. MarketTrends

11. • A healthtrend inAmerica.
• Mintelstudy, 53% of respondents considered healthfulness an
important factor when purchasing crackers.
• Packaged factssurvey showed that 69% of respondents indicated
that they were trying to improve their physical health and 51%
were trying to lose weight.
• 74% respondents consumed crackers on a regularbasis
• 34% ate them as apart of their regular diet.
-Mintel Study

12. Who’sFollowingTheTrend?
• Nabisco Ritz Crackerfuls launched in 2009 with whole grain
crackers and real cheese
• Kraft’s Nabisco Wheat Thins Flatbread (2009)
• Kellogg’s Keebler Townhouse Flatbread (2010)
• Pepperidge Farm Goldfish (2010) flavor focused line with
healthy emphasis (2010)

13. TheNewKrispyNatural
•Krispy Inc.
• Didn't target healthconsciousconsumers
• Regionalbrand
• Singleserve cracker packages
• Not a lot of flavoroptions

14. •Krispy Natural
• Targets healthconsciousconsumers
• Trying to go national
• Multiple-servingpackage
• More flavoroptionsw/ focused research on
taste

15. KrispyNaturalisHealthy
•100% wholewheat
•Naturalingredients approx.150 calories
•6 grams of fiber
•3 grams of protein

16. ShouldKrispyre-launchnationallyasKrispy
Natural?

17. TestData
•Product Testing
• Positivepurchase intentof 77%-92%
• Most crackers with fillingshow a 2:1 ratio in taste
preference to leading competitors

18. EstimatedDollarSharesofMarket
•Two testing regions:Columbus,Ohioand a
trio of cities inthe Southeast
•Grabbed18% of market in Columbus
Onlyincreased to 10% from 9% in the
southeast region

19. Indicators

20. Distribution
•Dsd system may not work forcrackers.
•Producthas longer shelf life
Trucks can nothandle more than the test load

21. Marketing
•KrispyNatural plans on usingpull method
instead of the industryadoptedpushmethod
•Spendingsignificantly more onA&M then
competitors

22. Competitors
•Kraft would stand to losethe biggest market
share to Krispy Natural, howmuch before
they foughtback?
•Is Fritto-Lays enteringthe market at the same
time?

23. CompetitiveActions

24. Kraft
•In lineto lose ~$179 millioninsales
•Shortterm responses:new producttesting,
increasetrade spending, and consumer
promotions
•Longterm responses: spendheavilyto counter
national roll out

25. Kellogg
•In lineto lose ~$58 millioninsales
•Shortterm response: increase A&M
•Longterm responses: capitalizeon Krispy
•Naturalspullmarketing andimprove product line

26. PepperidgeFarm
•In lineto lose ~$10 millioninsales
•Shortterm response: increase trade spending
•Longterm responses: compete on qualityand
brand reputation

27. GoNational?

28. Pros
•Positive purchaseintent
•Over 2:1 ratioin tastepreference in crackers with
filling,this segment to grow between 10%-14%
over next severalyears
•18% market share in a market withnoprevious
presence

29. Cons
•Flatcrackers taste preferences fell below 2:1 ratio
compared to competitors, this segment accounts
the largest part of the cracker market
•Modestincrease of 1% inthe Southeast
UncertaintyofFritto-Laysentering the market

30. •Created by :SachinSharma, Delhi College of Arts and
Commerce, during an internshipby Prof. Sameer
Mathur, IIM Lucknow