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Launching Krispy Natural: Cracking
the Product Management Code
Pemberton
Products
Beverage Division
Pet Care Division
Quick Service
Restaurant
Candler
Enterprises
Pemberton Products
• Ashley Marne – Executive Vice President, Sales and Marketing.
• Pemberton’s Income as a percent of sales(2011) –
Sales 100%
COGS 78.8%
Brand Advertising & Marketing 7.7%
Pretax Contribuition 13.5%
Profit After Tax 7.7%
Exclusive Brand Positioning
• Market Leader in U.S Cookie & Bakery Snacks
Segment.
• Operated Dozens of Plants and world renowned
product development labs.
• Constant Innovations in Recipes and New Products.
• Customer friendly and specific to their needs.
• DSD(Direct Store Delivery) distribution system.
DSD Distribution System
• Products directly delivered to retail outlets.
• No wholesalars warehouses and distribution
centers involved.
• Common for products with low shelf life.
• Examples – Soft Drinks, Chips, Baked Goods
DSD Representatives
• Delivered products(direct)
• In store merchandising
• Price Promotions
• Shelf Inventory
• Control of Shelf Space
• More accurate forecasting
• Reduced Stock-Outs
• Quicker turnover of products
Maximization of Sales and Profit
Beneficial for Pemberton as well as Retailer.
Priorities
• Building a collection of attractive, durable
brands.
• Leveraging leading marketing/sales.
• Building capabilities in salty snack categories
U.S Cracker Industry
• Cracker ?? – > It is an instant snack.
Retail Cracker Sales - $6.9 Billion
Caputured almost 3 quarters of
the market segment
Sales
All other Crackers
Saltines
Crackers with Filling
Graham Crackers
Breadsticks/matzoh
Top 3 Cracker Manufacturers
• Kraft Food Inc.(Nabisco Brands)
• Kellogg Co. (Sunshine, Keebler, Carrs and
Austin brands)
• Pepperidge Farm(Goldfish brands)
Manufacturer sales of “All Other Crackers”
Manufacturer 2009 - % Share 2010 - % Share
Kraft 37.8 37
Kellogg 28.9 28.1
Pepperidge Farm(Goldfish) 13.9 14.2
Private Label 4.6 4.8
Other 14.8 16
Approximately total up to 100%. Errors due to rounding off.
In General
• 74% consumers ate crackers on a regularly
basis.
• 34% consumers ate them as a part of weekly
diet.
Hence, they were the top Salty Snack
Another Challenge in Cracker Industry
Health !!
53% considered overall healthfulness an important
factor in their cracker purchase decision.
• In 2011, retail sales of “all other crackers”
were approx. $5.1 billion, a 6.2% Increase
over 2010.
Manufacturer sales of Crackers with Filling Market Share
Manufacturer 2009 - % Share 2010 - % Share
Kraft 34.7 32.7
Kellogg 31.5 29.9
Pepperidge Farm(Goldfish) 15.5 21
Private Label 8.0 8.2
Other 10.2 8.1
Krispy Inc.(2008)
• Pemberton entrance in salty snack market.
• Single serve cracker packages launched.
• Competed with “all other” crackers and
crackers-with-filling.
• A “Grab & Go” Product – Strong presence in
vending machines and convenience stores.
Expectations vs. Reality
Sales (2009)
Performance
Planned Sale Actual Sale % Sale to Plan
Krispy Retail $97.5 $50.8 52.1%
Krispy Vend $23.4 $18.0 76.9%
Total Krispy
Sales
$120.9 $68.8 56.9%
Highly Disappointing
Reasons
• Limited Product Line
• Lead to less presence in supermarkets
• Very less flavour satisfaction to consumers
• To make appropriate tastes and
preferences for consumers.
• To give more options by increasing
product line depth.
• Improvement from quality and
health point of view
• Extensive marketing and sales of
commodities.
Relaunch !!
Krispy Natural
Product Development Strategy
• Pemberton R&D Labs worked upon product
taste and quality.
• 100% Whole Wheat and Natural Ingredients
• Launched new flavours.
• Multiple serves packaging also adopted.
Marketing Plans
• Heavy Advertising, Promotions and market
tests.
• Adoption of Pull Marketing Strategy
Distribution
• Continued DSD Distribution effectively
• Optimizing the product for a longer shelf
life.
• Specially hired people – “Krispy Force for
Proper Distribution”
• Yes !! It was same as that of competitive
goods in the same segment.
But Weight of Crackers for the
same price was less
How were the
Results ?
Estimated Dollar
Shares of Market
Columbus
Pretest
Market
Columbus
Post
Southeast
Pretest Market
Southeast
Post
Kraft 40% 33% 34% 32%
Kellogg 25% 22% 23% 22%
Pepperidge Farm 11% 10% 10% 10%
Krispy 0% 18% 9% 10%
Recap
• Exclusive Features of Pemberton products.
• DSD Distribution
• Priorities
• Krispy (Entry into cracker industry)
• Relaunch – Krispy Natural
• New Marketing Strategies
• Results which were better than expected.
• This analysis was done by Manan Makhija of
IIT Kharagpur, during a marketing internship
under prof. Sameer Mathur, IIM Lucknow.

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Launching krispy natural: Cracking the Product Management Code

  • 1. Launching Krispy Natural: Cracking the Product Management Code
  • 2. Pemberton Products Beverage Division Pet Care Division Quick Service Restaurant Candler Enterprises
  • 3. Pemberton Products • Ashley Marne – Executive Vice President, Sales and Marketing. • Pemberton’s Income as a percent of sales(2011) – Sales 100% COGS 78.8% Brand Advertising & Marketing 7.7% Pretax Contribuition 13.5% Profit After Tax 7.7%
  • 4. Exclusive Brand Positioning • Market Leader in U.S Cookie & Bakery Snacks Segment. • Operated Dozens of Plants and world renowned product development labs. • Constant Innovations in Recipes and New Products. • Customer friendly and specific to their needs. • DSD(Direct Store Delivery) distribution system.
  • 5. DSD Distribution System • Products directly delivered to retail outlets. • No wholesalars warehouses and distribution centers involved. • Common for products with low shelf life. • Examples – Soft Drinks, Chips, Baked Goods
  • 6. DSD Representatives • Delivered products(direct) • In store merchandising • Price Promotions • Shelf Inventory
  • 7.
  • 8. • Control of Shelf Space • More accurate forecasting • Reduced Stock-Outs • Quicker turnover of products Maximization of Sales and Profit Beneficial for Pemberton as well as Retailer.
  • 9.
  • 10. Priorities • Building a collection of attractive, durable brands. • Leveraging leading marketing/sales. • Building capabilities in salty snack categories
  • 11. U.S Cracker Industry • Cracker ?? – > It is an instant snack. Retail Cracker Sales - $6.9 Billion Caputured almost 3 quarters of the market segment
  • 12. Sales All other Crackers Saltines Crackers with Filling Graham Crackers Breadsticks/matzoh
  • 13. Top 3 Cracker Manufacturers • Kraft Food Inc.(Nabisco Brands) • Kellogg Co. (Sunshine, Keebler, Carrs and Austin brands) • Pepperidge Farm(Goldfish brands)
  • 14. Manufacturer sales of “All Other Crackers” Manufacturer 2009 - % Share 2010 - % Share Kraft 37.8 37 Kellogg 28.9 28.1 Pepperidge Farm(Goldfish) 13.9 14.2 Private Label 4.6 4.8 Other 14.8 16 Approximately total up to 100%. Errors due to rounding off.
  • 15. In General • 74% consumers ate crackers on a regularly basis. • 34% consumers ate them as a part of weekly diet. Hence, they were the top Salty Snack
  • 16. Another Challenge in Cracker Industry Health !! 53% considered overall healthfulness an important factor in their cracker purchase decision.
  • 17. • In 2011, retail sales of “all other crackers” were approx. $5.1 billion, a 6.2% Increase over 2010. Manufacturer sales of Crackers with Filling Market Share Manufacturer 2009 - % Share 2010 - % Share Kraft 34.7 32.7 Kellogg 31.5 29.9 Pepperidge Farm(Goldfish) 15.5 21 Private Label 8.0 8.2 Other 10.2 8.1
  • 18. Krispy Inc.(2008) • Pemberton entrance in salty snack market. • Single serve cracker packages launched. • Competed with “all other” crackers and crackers-with-filling. • A “Grab & Go” Product – Strong presence in vending machines and convenience stores.
  • 19.
  • 20. Expectations vs. Reality Sales (2009) Performance Planned Sale Actual Sale % Sale to Plan Krispy Retail $97.5 $50.8 52.1% Krispy Vend $23.4 $18.0 76.9% Total Krispy Sales $120.9 $68.8 56.9% Highly Disappointing
  • 21. Reasons • Limited Product Line • Lead to less presence in supermarkets • Very less flavour satisfaction to consumers
  • 22.
  • 23. • To make appropriate tastes and preferences for consumers. • To give more options by increasing product line depth. • Improvement from quality and health point of view • Extensive marketing and sales of commodities.
  • 25. Product Development Strategy • Pemberton R&D Labs worked upon product taste and quality. • 100% Whole Wheat and Natural Ingredients • Launched new flavours. • Multiple serves packaging also adopted.
  • 26. Marketing Plans • Heavy Advertising, Promotions and market tests. • Adoption of Pull Marketing Strategy
  • 27. Distribution • Continued DSD Distribution effectively • Optimizing the product for a longer shelf life. • Specially hired people – “Krispy Force for Proper Distribution”
  • 28. • Yes !! It was same as that of competitive goods in the same segment. But Weight of Crackers for the same price was less
  • 30. Estimated Dollar Shares of Market Columbus Pretest Market Columbus Post Southeast Pretest Market Southeast Post Kraft 40% 33% 34% 32% Kellogg 25% 22% 23% 22% Pepperidge Farm 11% 10% 10% 10% Krispy 0% 18% 9% 10%
  • 31. Recap • Exclusive Features of Pemberton products. • DSD Distribution • Priorities • Krispy (Entry into cracker industry) • Relaunch – Krispy Natural • New Marketing Strategies • Results which were better than expected.
  • 32. • This analysis was done by Manan Makhija of IIT Kharagpur, during a marketing internship under prof. Sameer Mathur, IIM Lucknow.