Natureview Farm is a small yogurt manufacturer founded in 1989 in Vermont. It has grown revenues from less than $100,000 to $13 million in 10 years by emphasizing natural ingredients, quality, and taste. The company is considering options to grow further to $20 million by 2001. The three options presented are: 1) Expand 8oz yogurt SKUs into supermarket regions, 2) Expand 32oz SKU sizes nationally, or 3) Introduce multi-pack children's yogurt into natural food channels. Expanding 8oz SKUs into supermarkets could generate significant revenue but would require high marketing costs. Expanding 32oz SKUs would have lower costs but reducing the 8oz presence could hurt brand entry.

1. Natureview Farm
HARVARD BUSINESSSCHOOL
Case Study

2. What is Natureview
Farm?

3. A small yogurt
manufacturer
(Since 1989)

4. • Founded in 1989 in Cabot Vermont.
• Manufactured and marketed refrigerated cupyogurt.Company
• It’s yogurt’s average self life: 50 days.
• Competitors’ yogurt’s average self life: 30 days .
• Emphasis on natural ingredients, high quality and great taste.
Product
• In 10 years, revenues had grown from less than$100,000 to
$13 million.
Financial
situation
Some basic info about:

5. Who are the key players?

6. ChiefExecutive Officer: Barry Landers
ChiefFinance Officer: Jim Wagner
Vise president: ChristineWalker
Vise President of Sales: Walter Bellini
Vice president of Operations: Jack Gottlieb
Assistant MarketingDirector: KellyRiley

7. Early year situation
Entered the market
with 8oz. and 32oz.
Cup sizes of yogurt
with plain and vanilla
flavor
By 2000 produced 12
flavors in 8oz. (86%
revenues) and 4 flavors
32oz. (14% revenues).
Started multipack yogurt
products (children’s 4 oz.
cup)
Brand grew quickly
to national
distribution in
naturalfood
channel.Aided by
low cost “guerilla
marketing ”

8. GOAL?

9. To grownatureview’s revenues to
$20 million from $13 million before
the endof 2001

10. Team’s Three Options
1 2 3
Which onetochoose?

11. To expand sixSKUs of the 8-oz.
product line into one or two selected
supermarket channel regions- was
advocatedby WalterBellini,vice
presidentof sales

12. PROS
• Eight-ounce cups providing significant revenue potential.
• Supermarketretailers would likely authorize only oneorganic yogurt brand. The first
brand to enter the channel could therefore have a significant first-mover advantage.
• Two such brands—Silk Soymilk and Amy’s OrganicFoods—had increasedrevenues by
over 200% within two years of entering supermarkets

13. CONS
• The 8-oz.sizereceived thehighest level ofcompetitivetradepromotionand marketingspending.
• comprehensiveadvertising planwouldcostNatureview $1.2million perregion per year.
• Natureview’ssales, general, andadministrativeexpenses (SG&A) wouldincreaseby$320,000
• $200,000wouldbeincrementalSG&A foradditionsto salesstaffrequired tomanage the supermarket
brokersin thetworegions
• $120,000wouldgo towardsadditionalmarketing staffannually.

14. To expandfourSKUs of the 32-oz. size
nationally—was advocated by Jack
Gottlieb,vice president of operations

15. PROS
• 32-oz.cupsgeneratedanabove-averagegrossprofitmargin forNatureview(43.6% vs. 36.0%forthe8-
oz.line).
• Therewerefewercompetitiveofferingsin thissize,andNatureviewFarmhada strongcompetitive
advantagebecauseofthe product’slonger shelf life.
• Natureview’sbrandhadachieved a 45%shareofthis size segment in the naturalfoodschannel.The
managementteamfeltthatit wasrealistictoassumethatthecompanycould sell approximately5.5
million incremental unitsin thefirstyear.
• Slottingfees,promotionalexpenses,marketingexpenses wouldbesignificantlylower.

16. CONS
• newusers would readily “enter the brand” via a multi-use size.
• expansion option would increase SG&Aby $160,000.
• Inefficient sales team.

17. To introduce two SKUs of a children’s multi-pack
into thenaturalfoods channel—
was advocated by Walker’s colleague KellyRiley,
the assistant marketingdirector

18. PROS
• Gross profitability of the line would be37.6%.
• Thenatural foods channel was growing almost seven times faster than the supermarket
channel
• Sales and marketing expenses in this channel were lower

19. CONS
• Retailers demandmore as they grew.
• Retailers may impose the same demands as of super markets.
• Might loose an opportunity to step in supermarket expansion.

20. RECAP
• Introduction
• About Natureview Farm
• Key players
• Challenge
• Goal
• Options
• Option 1
• Option 2
• Option 3

21. DISCLAIMER
Created by RohitSinghduring marketinginternshipunder prof
Sameer Mathur