This document summarizes information about Natureview Farm, a yogurt manufacturing company. It discusses the company's history and options to increase revenue to $20 million by the end of 2001. The company is considering three options: 1) expanding product lines into supermarket chains, 2) nationally distributing larger container sizes, or 3) introducing multi-packs to natural food stores. Option 1 is projected to generate the most revenue at $16.1 million while meeting expenses. Though Option 3 has lower costs, it does not meet the revenue goal. The document recommends implementing Option 1 to successfully increase revenue by expanding into select supermarket regions.

1. NATUREVIEW FARM

2. Natureview Farm
is a small yogurt
manufacturing
company

3. 1989
• Founded and Marketed in Cabot, Vermont
• First entered market with 8-oz and 32-oz plain and vanilla flavour
• Use Natural Ingredients with longer average shelf life of 50 days
1999
• Company revenue growth from $ 100,000 to $ 13 million
• Introducing fruit puree on the bottom of yogurt
2000
• Increase in product lines by 12 Yogurt flavors and multipack yogurts
Natureview Farm’s Early Years

4. Factors
Organic/In
Organic
Price
Taste
Shelf life
Packaging
Flavour
Factors influencing purchase of yougurt

5. Natureview farm products offer:
Quality and taste
Organic Natural Ingredients
Multiple Flavours
Larger Shelf Life

6. SITUATION

7. SITUATION
To find a path to increase revenue by over 50%
before the end of 2001.
i.e, from $13 millon to $20 million

8. Issues?

9. Objective:
To increase revenue of the
company
Points to be considered :
Additional costs
Will it be successful
Effect on relations with existing natural food channels

10. Decision
Whether to enter
supermarket channel or to
continue with traditional
natural foods channel?

11. NATURAL FOOD CHANNEL
MANUFACTURER
NATURAL FOODS WHLOE SALER
NATURAL FOODS DISTRIBUTOR
RETAILER
CONSUMER
The typical natural foods wholesaler margin was
7%, the distributor margin was 9%, and the retailer
margin was 35%.

12. SUPER MARKET CHANNEL
MANUFACTURER
DISTRIBUTOR
RETAILER
CUSTOMER
The typical distributor margin in this channel was
15%, and the typical retailer margin was 27% and
thus prices tended to be lower here than the natural
foods stores.

13. Comparision of prices between Supermarkets and natural foods
0
0.5
1
1.5
2
2.5
3
3.5
8-ounce(oz) cup 32-oz cup 4-oz cup multipack
super market natural foods

14. Options to choose

15. Option 1
To expand six SKUs of the 8-oz
product line into one or two selected
supermarket channel regions

16. PROS
● 8-oz represented
highest incremental
demand and unit share
● High potential to
Increase Revenue
● First Mover as Organic
Yogurt Brand to enter
Supermarket chain
● High risks and High
costs (Marketing)
● Advertisement plans
cost $1.2 million per
region per year
● SG&A cost increase by
$320,000 annualy
CONS

17. Option 2
To expand four SKUs of the 32-oz cups
into supermarkets nationally

18. PROS
● 32-oz generate higher
profit margin than 8-oz
size
● Lower promotional
expenses
● Fewer Competitors
● Difficult to achieve
National distribution
● Increased SG&A
expenses
● Core consumers limited
● Hard marketing Strategy
CONS

19. Option 3
To introduce two SKUs of a children’s
multi-pack into the natural foods channel

20. PROS
● Perfect Position due to
all Natural ingredients
● Confidence of Sales
team in distribution of 2
SKU’s
● Lower SG&A expenses
● Attractive Financial
Potential
● Can not achieve the
Target Objective
● Ignores Opportunities in
growing Supermarkets
● Potential conflicts and
uncertain factors
CONS

21. Targeted revenue =$20 million
Present revenue =$13 million
Targeted revenuegrowth =$7 million

22. HYPOTHESIS
I Believe that OPTION 1 will
generate more revenue so as to
satisfy the revenuegrowth and
to increase profits in near future
and at the same time is more
stable among the Possible
options to satisfy the remaining
decision critreria.

23. Total increase in sales units =35,000,000
Margin of retailer =27%
Margin of distributor =15%
S.P of retailer =$.74/cup
C.P of retailer = S.P of disributor =$0.54/cup
C.P of distributor = S.P of manufacturer =$0.46/cup
C.P of manufacturer =$0.31/cup
Therefore, net increase in revenue of manufacturer =
0.46*35million = $ 16.1 million
Hence, the revenue generation objective is fulfilled.
Revenue generated(OPTION 1)

24. Marketing expenses =$1,200,000/region
=$1,200,000*4 =$4,800,000=$4.8 million
Increased SG&A expenses =$320,000
Slotting expenses =$12000
SG&A forsales staff =$200,000*2
=$400,000
Marketing staff expenses =$120,000
Brokers fee =$16,100,000*0.04
=$644,000
EXPENSES (OPTION 1)

26. Total increase in sales units =5,500,000
Margin of retailer =27%
Margin of distributor =15%
S.P of retailer =$2.7/cup
C.P of retailer = S.P of disributor =$1.97/cup
C.P of distributor = S.P of manufacturer =$1.67/cup
C.P of manufacturer =$.99/cup
Therefore, net increase in revenue of manufacturer =
1.67*5.5million = $ 9.185 million
Hence, the revenue generation objective is fulfilled.
Revenue generated(OPTION 2)

27. Marekting expenses =$1,200,000/region
=$1,200,000*4 =$4,800,000=$4.8 million
Increased SG&A expenses =$160,000
Slotting expenses =$10,000*4*64
=$2.56 million
Brokers fee =$9,185,000*0.04
=$367,400
EXPENSES (OPTION 2)

28. Total increase in sales units =1,800,000
Margin of retailer =35%
Margin of distributor =9%
Margin of Wholesaler =7%
S.P of retailer =$3.35/cup
C.P of retailer = S.P of disributor =$2.18/cup
C.P of distributor = S.P of wholesaler =$1.98/cup
C.P of wholesaler = S.P of manufacturer =$1.84/cup
C.P of manufacturer =$1.15/cup
Therefore, net increase in revenue of manufacturer =
1.84*1.8million = $3.312 million
Hence, the revenue generation objective is not fulfilled.
Revenue generated(OPTION 3)

29. Marketing expenses =$250,000
Increased SG&A expenses =$0
Slotting expenses =$0
Complemntary cases =$3,312,000*0.025
=$82,800
EXPENSES (OPTION 3)

31. Though OPTION 3 won’t have any issues such as destroying the relationship
with natural foods store and also costs incurred were little lower. but, it isn’t
satisfying our primary objective i.e, revenue growth

32. Though OPTION 3 won’t have any issues such as destroying the relationship
with natural foods store and also costs incurred were little lower. but, it isn’t
satisfying our primary objective i.e, revenue growth
Comparing OPTION 1 and OPTION 2,
OPTION 2 will incur slotting expenses which would be higher because of
national distribution on the other hand OPTION 1 will have less slotting
expenses as it will be released in only 2 supermarkets channel regions
Potential channel conflict should not be the deciding factor. company can find
ways to manage it i.e, we can manage the conflict between two channels of
distribution easily
OPTION 1 would generate more revenue than OPTION 2 , OPTION 2 have no
chance of revenue growth in near future where as OPTION 1 would like to
increase the revenue growth by 20% yearly

34. Company should go with OPTION 1 and
implement it successfully

35. RECAP

36. Disclaimer
This presentation was made by
pogiri venkata sai sasidhar, nit
silchar,under the guidance of
Prof. Sameer Mathur