Natureview Yogurt is considering three options to grow its revenue from $13 million to $20 million. Option 1 is to expand its 8-oz product line in northeast and western supermarkets, which has the highest potential for increasing sales but also carries the most risk. Option 2 is to launch a 32-oz size nationally, which has a higher profit margin but may not attract consumers. Option 3 is to introduce children's multipacks in natural food stores, which avoids risks in new channels but may not achieve the revenue goal. The analysis indicates Option 1 offers the best chance of hitting $20 million in revenue and greatest long-term benefits, despite requiring higher expenses.

1. C
A
S
E
A
N
A
L
Y
S
I

2. YOGURT
MANUFACTURER

3. PEOPLE AT AFFAIRS
CHRISTINE WALKER
Vice President Of Marketing
BARRY LANDERS
Chief Executive Officer

5. CURRENT SCENARIO
Find new investor
Since VC needs to cash out
its investment
Need to grow its revenue by
50 percent
13 million20 million
Dilemma in entering
supermarket channel
Leader in natural
foods channel

6. YOGURT PACKAGING SEGMENT
8 oz cups
74%
children multipacks
9%
32 oz cups
8%
others
9%

7. YOGURT MARKET SHARE BY REGION
Northeast
26%
Midwest
22%Southeast
25%
West
27%

8. YOGURT DISTRIBUTION CHANNEL
SUPERMARKET
97%
NATURAL FOOD STORES
3%
SUPERMARKET NATURAL FOOD STORES

9. LENGTH OF CHANNEL MARKET

10. YOGURT MARKET SHARES
Donnan
33%
Yoplait
24%
Other
23%
Private label
15%
Columbo
5%
SUPERMARKET CHANNEL
Natureview
Farm
24%
Brown Cow
15%
Horizon
Organic
19%
White Wave
7%
Others
35%
NATURAL FOOD STORES

11. YOGURT COSTS AND PRICES
TYPE SUPERMARKET CHANNEL NATURAL FOODS
CHANNEL
NATUREVIEW’S COSTS
8-Ounce cup $.074 $0.88 $0.31
32-oz cup $2.70 $3.19 $0.99
4-oz cup multipack $2.85 $3.35 $1.15

12. SALES PROJECTION

13. OPTIONS

14. OPTION 1
To expand six SKU’s of 8-oz product line in
supermarkets
Mainly in northeast and west supermarkets

15. PROS CONS
Largest unit share of Yogurt
High potential to increase revenue
Expense of slotting fee
Advertising plan of $1.2 million
per region per year
SG&A would increase by $320,000
Risk factor is high

16. OPTION2
Expand four SKU’s of 32-oz size
Expanding it nationally in all supermarkets

17. PROS CONS
Higher gross-profit margin
Longer shelf life
Promotion expenses lower since only
two promotions a year
Doubt prevails whether users will enter
the multi-use size
Should hire more sales personals
Increase of SG&A by $160,000

18. OPTION3
Introduce two SKU’s of children’s multipack
Staying back in natural foods channel

19. PROS CONS
Strong establishment in natural foods
channel
Growth rate of natural foods channel
is faster as seven percent as
supermarket channel
Distribution of two new products is
easy
Target objective of $20 million is
almost impossible to achieve
Many conflicts and undeterminable
factors

21. Decision MAKING
OPTION 1
Strength
 Best possible chance of achieving a revenue of $20 million.
 8-oz has highest demand and more market share.
 Exposure to supermarkets increase revenue since it contributes to 97% of Yogurt consumed.
 Long term revenue benefits.
 It has the highest anticipated incremental sales in the projection.
 First mover advantage.

22. WEAKNESS
 Risk of losing their natural food store distribution channel.
 Increased expense on advertising and SG&A.

23. SUPERMARKET CHANNEL ANALYSIS
Channel Selling Price Margin Cost price
Retailer $0.74 27% $0.74*73%=$0.54
Distributor $0.54 15% $0.54*85%=$0.46
Nature view $0.46 ($0.46-$0.31)/$0.46
=33%
$0.31

24. PROJECTED INCOME ANALYSIS
2001
Unit Sales 35 000 000*(1*20%)=42 000 000
Revenue Growth
Projected Revenue
42 000 000*0.74= $31 080 000
$13 000 000+$31 080 000=$44 080 000
Cost 42 000 000*0.31=$13 020 000
Gross Profit $31 060 000
Expenses
Advertisement $2,400 000
SG&A $640 000
Slotting Fee 0 (since second year after introduction)
Broker’s Fee $ 19 320 000*0.04=$772 800
Net Profit $ 27,247,200