HBR case study on Launching krispy natural

1. Launching Krispy Natural:
Cracking the Product Management Code

2. Brief About Case
In January of 2012 and Fredrick, a marketing director for Pemberton, was reviewing test
market results for a new cracker product, Krispy Natural. Pemberton had just
concluded market tests in Columbus, Ohio as well as three cities in the Southeast.
Fredrick was delighted that the Columbus market share results were double what the
company had projected. However, the Southeast results fell well below management’s
expectations.
 National Roll-out Risks
 Competition Results.
 Krisp positioning

3. Team
• President
• Building or
acquiring
capabilities in
salty snack
Categories.
• Building a
collection of
attractive, durable
brands.
Patricia Williams Burt Spivey Ashley Marne Brandon Fredrick
•COO (Chief
Operating Officer)
•“One of our most
Distinct
Competencies is our
ability to create
products that
provide a superior
taste experience”.
•Executive Vice-
President (Marketing &
Sales)
•“Krispy Natural will
provide Pemberton with
its next generation
blockbuster product and
provide a foothold we
need to dominate the
salty snack market”
•Marketing Director

4. CANDER ENTERPRISES

5. Pemberton Products
• Food Bars, Cookies & Sweet Baked Goods Snack Food Division of Candler
Enterprises
• Beverage Division .
• Softies Cookies, Muffins & Doughnuts
• Pet Care Division

6. Key Strategies:
Building a collection of
attractive and durable brand
Leveraging leading marketing,
sales, and DSD system to increase
revenue and profits.
Building or acquiring
capabilities in salty snack
categories.

7. Building a collection of attractive and
durable brand
• Enhance manufactured Product taste and quality.
• Improve products made of natural ingredients and
wheat.
• Increase Package size, Availability in flavours.

8. Sales Performance

9. Marketing, Sales and DSD System
• Company-owned direct store delivery (DSD) distribution system in which products
were delivered directly to retail outlets, bypassing retailer’s warehouses and
distribution centers.
• More accurate forecasting
• Reduced stock-outs
• Quicker turnover of products
• Marketing : Pull Strategy and Advertising.

10. Income statement (% of revenue)

11. Promotional Plan

12.  U.S. Cracker Industry
Cracker with fillings
Krispy
Krispy Relaunch

13. The U.S. Cracker Industry (Worth $6.9 billion in
2011 )
• Compound Annual Growth Rate (CAGR) of 2.2% from 2008 to 2010.
• Crackers were top salty snack ahead of Potato Chips
• 75% Market Share was captured by top 3 companies.
• 50%+ people preferred cracker packages with portable quantities
• 53% considered healthiness as an important factor
• 74% people consumed snacks on a regular basis while it was a part of
weekly diet of 34% people

14. Other Cracker Segments ($5.1 billion in 2011
6.2% over 2010 )
• Compound Annual Growth Rate (CAGR) 2.1% from 2008 to
2010
• Growth driven by healthier, premium priced options
• Kraft Food Inc focused on healthier up-scale options
• Pepperidge Farm focused on flavor and healthiness
• Kellogg Co focused on healthier up-scale options

15. Competitive Analysis

16. Crackers with Fillings ($660 million in 2011
11% over 2010 )
• Kellogg captured 33% share in 2010.
• 2:1 ratio in taste preference for crackers
with filling.
• Best obtained alternatives: With whole-grain
cracker & real cheese

17. Crackers with Fillings Analysis

18. Krispy
• In year 2008, Pemberton bought Krispy which now comprises 3
production plants.
• Primary region: South Eastern U.S.
• Marketed as: Mobile_ Grab & Go
• Product primary presence: In Vending Machines & Convenience
Stores.

19. Product Regional Share

20. Krispy Natural
Marketing Strategy

21. Product
• Intent for new flavors purchase of 77% to 92%.
• High priority for White Cheddar flavor of Cracker
with Filling than other Brands.
• Creating Larger Package Sizes, Improvising Taste and
Multiple Servings

22. Pricing (Premium Pricing Strategy )
• Minimum sales expecting of $500 million in 1 year of
National Distribution.
• Visual Price: Price similar to competitors with
lesser quantity.
•
• Steady state pre-tax profit of 13%.

23. Place (Distribution)
• Special system for Longer Shelf Life of Crackers
versus Baked Goods & Cookies.
• Trucks capable of accommodating Test Market
Quantities

24. Promotion (Marketing)
• Pull Spending & Trade Promotions.
• Heavy Advertising and Promotion to end-customer &
trade.
• Discount Prices.

25. National Roll-out Risks
Competition Results
Krisp positioning
Challenges

26. National Roll-out Risks
• Introduction of product like Frito Lay in the National
Market increases risk factor.
• Tremendous competitive from Kellogg, Kraft, Pepperidge
etc. marketing with healthy standards.(Flat Crackers taste
preference decreased about 50% ratio compared to
competitors).
• Positive Purchase Intent of 81%.

27. Competition
• Continuous innovation in types and introduce different
kinds of products to market.
• Produce crackers with less sweet or salt mainly
focusing on health.

28. Krisp Postioning
• Highlight the use of natural ingredients.
• Continuously improve quality and taste and developing
strong R&D.

29. Disclaimer
Created by Kuchibhotla Sai Srivastava, BIT Mesra, During
marketing Internship by Prof. Sameer Mathur (IIM Lucknow).
Prof. Sameer Mathur
(IIM Lucknow)