Natureview farm Case Study-This is the Harvard Business School case study in which most suitable business strategy to be chosen after the critical analysis of the facts mentioned in the document
2. BACKGROUND
1989
• Founded and manufactured in Cabot, Vermont.
• Used natural ingredient which enhanced its average shelf life to 50 days.
• Entered market with 8 oz. and 32 oz. plain and vanilla flavored yogurt.
1999
• Revenue grew from $100,000 to $13 million in just 10 years.
• Introduced fruit yogurt by placing fruit at the bottom of a plain one.
2000
• Expanded to 12 flavored yogurts and multipack for children.
3. HOW IS IT DIFFERENT ?
Uses milk from
cows untreated
with rBGH.
Aided by
“Guerilla
Marketing”.
Positioned itself
as a organic
Yogurt brand.
No chemical
finishing.
Strong relations
with brands like
Whole Foods and
Wild Oats.
What makes it different?
4. THE 4P’s
1-Natural yogurt
2-8 oz. size with
12 flavors
3-32 oz. size
with 4 flavors
1- Natural food
channel
2- Wholesale club
3-National Retailer
channel
4-Convenience store
5-Drug Store
Affordable according
to its channel
1-Guerilla
Marketing
2- Retail level
3-Distributor level
4-Wholeseler
level
6. DIFFERENT PACKAGING
sales of different packs
8-OZ CUPS, 74%
32-OZ CUPS, 8%
CHILDREN
MULTIPACKS, 9%
OTHERS, 9%
SALES
7. DIFFERENT REGIONS
market share on the basis of region
27, 27%
26%
25%
22%
Dollar share
WEST NORTH-EAST SOUTH-EAST MID-WEST
8. PRICING IN DIFFERENT CHANNELS
NATURAL FOOD
CHANNEL
SUPERMARKET
CHANNEL
MANUFACTURING
COSTS
8-oz CUP $0.88 $0.74 $0.31
32-oz CUP $3.19 $2.70 $0.99
4-oz MULTIPACK $3.35 $2.85 $1.15
9. DIFFERENT MARKET CHANNELS
NATURAL FOODS
3% OF TOTAL SALES
20% ANNUAL GROWTH
MANUFACTURER
COMPANY
WHOLESELLER
COMPANY
DISTRIBUTER
RETAILER
CUSTOMER
SUPERMARKET
97% OF TOTAL SALES
3% ANNUAL GROWTH
COMPANY
DISTRIBURER
RETAILER
CUSTOMER
10. ISSUES AND GOALS
VC needed to cash out its
investment
Another investor needed to be
found or Natureview Farm needs
to prepare itself for acquisition.
Should it expand into supermarket
channel?
11. OPTION 1
To expand 6 SKUs of 8-oz product line into one or two selected
supermarket channel regions
PROS
• Growing trends in natural
foods in supermarket
• Natureview would be the
first natural yogurt brand
• Supermarkets may allow
only one natural yogurt
brand
• 8 Oz yogurt size has the
highest share in the market
CONS
• Company has no experience in
supermarket channel
• Very high competition
• Higher costs
• Higher advertising costs($1.2
million per region per year)
• Conflict between supermarket
and natural food store loyality
12. Option 2
Expand 4-SKUs of 32-oz size nationally into supermarket regions
PROS
• Lower promotional
expenses and lower
competition in the
field of 32 0z yogurt
cups
• Generate higher
gross profit margin
than 8 oz size(43.6%
vs 36% for 8 oz line)
CONS
• High level of initial expenses
• Would take time to become
nationally popular
• Doubt on claim of new users
would readily “enter the brand”
via a multi- use size
• Company Needs to hire sales
personnel and establish
relationships with supermarket
brokers
13. OPTION 3
Introduce 2-SKUs of a children multipack into the natural foods channel
PROS
• No time constraint as in
option 2.
• The financial potential
was very attractive
(Gross profitability :
37.6%)
• The natural foods
channel was growing
almost seven times
faster than the
supermarket.
CONS
• The company will not be
able to expand to
supermarkets which has high
market share.
• Fast growth of natural food
channel will lead to
demands equal to those of
supermarkets
• It will miss opportunity to
enter supermarket channel
before competitors.
21. REASON
Benefits are high
Higher Revenue
Growth rate is higher comparatively
8-oz. is most feasible for customers more
new customers may join
Best opportunity to expand into
supermarket simultaneously by achieving
the desired goals
22. Disclaimer
These slides have been
created by Souren Kumar
Pradhan, CET Bhubaneswar,
during a marketing internship
by Prof. Sameer
Mathur, IIM Lucknow
