I prepared this case analysis of Harvard Business School Case Study under the guidance of Professor Sameer Mathur from IIM Lucknow.

2. Contents
• Facts
• Situation
• Problems
• Decision
• Evaluation
• Preferred Choice
• Proof of Action
• Alternatives
• Concluding Notes
• Disclaimer

3. NatureView Farm Case Study
Case Number: 2073
By: Karen Martinsen Fleming

4. Facts: About NatureView Farm
NatureView Farm is a
Small Yoghurt
Manufacturer based in
Vermont, USA.

5. Facts: About Yoghurt
Yoghurt is a Dairy Product, obtained
after carefully fermenting Whole, Low-
Fat or Non-Fat Milk.
It can come in 2 flavors, plain or flavored.
Flavored Yoghurt have sugar, artificial
flavors and/or natural fruit puree added
to them.

6. Facts: USP of NatureView farm’s Products
Key to unique Flavor was a Family Recipe developed by company founder
Natural Ingredients used to develop unique, smooth and creamy texture
Average Shelf Life was 50 Days which was more than its competitors

7. Facts: Product Offerings
12 Yoghurt Flavors in 8 oz. cups - 86% Revenue
4 Yoghurt Flavors in 32 oz. cups – 14% Revenue

8. Facts: Market Data on Yoghurt
Consumers
Total US Retail Sales of Refrigerated Yoghurt:
$1.8 billion
Distribution Channels:
• Supermarkets(97%)
• Natural Food Stores(3%)
Shoppers who purchased organic products:
• Were more highly educated
• Earned higher incomes
• Lived in the NorthEast and the West

9. Facts: Market Data on Yoghurt
Consumers
8 oz. cups more popular, but faced stiff
competition
32 oz. cups less popular, but offered more
profit margin
6 oz multipacks less popular, but fastest
growing sales among the three

10. Facts: Distribution Channels
Supermarket Channel
Costs
• Slotting Fee for each SKU(Stock Keeping
Unit) - $10,000 per Retail Chain
• Trade Promotion Participation - $8000 per
3 months
• Broker’s Fee - 4% of Manufacturer’s Sales
• Distributor’s Margin - 15% of
Manufacturer’s Sales
• Retailer’s Margin - 27% of Manufacturer’s
Sales

11. Facts: Distribution Channels
Natural Foods Channel
Costs
• No Slotting fee - $0
• 1 free case to be allotted for every
new SKU in the first year(1 case
has 12, 8 oz. or 6, 32 oz. cups
=$68.4 for 12 and 4 flavors for the
$8 and $32 priced cups
respectively) - $68.4
• Wholesaler Margin - 7%
• Distributor Margin - 9%
• Retailer Margin - 35%

12. Situation
Increase the Revenue from
$13 million in 1999 to $20
million before the end of
2001.
Work starts from February,2000.

13. Problems: Competitors
Supermarket Channel Natural Foods Channel
Supermarket competitors
occupy 57% of Yogurt
market share in
supermarket channel.
Natural Foods Channel
competitors occupy 34% of
Yogurt market share in
Natural Foods channel.

14. Decision
There are 3options Available.

15. Decision: Option 1
Expand 6 SKUs of the 8 oz. product line into 1 or 2 selected Supermarket Regions.
Pros Cons
8 oz. cups represent the largest
dollar and unit share of the
refrigerated yoghurt market
Other brands like Silk and Amy’s
Kitchen had successfully
expanded into this channel and
increased revenues by over
200%
One of NatureView's natural
foods competitors was trying to
expand into supermarket
channel
Would require additional expenses like
advertising plans and quarterly trade
promotions
Meaningful Marketing Budget required

16. Decision: Option 2
Expand 6 SKUs of the 8 oz. product line into 1 or 2 selected Supermarket Regions.
Pros Cons
Offered Above Average Gross Profit Margin
Fewer Competition in this size
Promotional expenses will be lower
Additional expenses like
SGA(Sales, General
And Administrative)
Difficulty to achieve full
circulation in 12 months

17. Decision: Option 3
Introduce 2 SKUs of a children’s multi-pack into the Natural Foods Channel
Pros
Will maintain good relations
with Natural Food Retailers
“All-Natural Ingredients”
Brand Positioning profitable
for Natural Foods Channel
Attractive Financial Potential
No Additional SG&A Costs
Cons
Smaller market Size
Natural Food Retailers were
growing rapidly and could
demand more in terms of
logistic and technological
support

18. Evaluation: Option 1
Margin Analysis
Objective: Find out the profit margin of NatureView Farm
Channel Selling Price Margin Cost Price
Retailer $0.74 27% $0.54
Distributor $0.54 15% $0.46
NatureView Farm $0.46 33% $0.31

19. Evaluation: Option 1
Income Analysis
2000 2001
Unit Sales 35,000,000 35,000,000 x 120% = 42,000,000
Revenue Growth 35,000,000 x $0.74 = $25,900,000 42,000,000 x $0.74 = $31,080,000
Projected Revenue $13,000,000+$25,900,000= $38,900,000 $13,000,000+$31,080,000= $44,080,000
Cost 35,000,000 x $0.31 = $10,850,000 $42,000,000 x 0.31 = $13,020,000
Gross Profit $28,050,000 $ 31,060,000
Expenses
Advertisement $1,200,000 x 2 regions = $2,400,000 $1,200,000 x 2 regions = $2,400,000
SG&A $320,000 $320,000 x 2 = $640,000
Slotting Fee(1 Time) 6 x 20 x $10,000 = $1,200,000
Broker’s Fee $16,100,000 x 0.04 = $644,000 $19,320,000 x 0.04 = $772,800
Net Profit $23,486,000 $27,247,200
Objective: Find out the Net Profit and Projected Revenue for 2000 and 2001.

20. Evaluation: Option 2
Margin Analysis
Objective: Find out the profit margin of NatureView Farm
Channel Selling Price Margin Cost Price
Retailer $2.70 27% $1.97
Distributor $1.97 15% $1.67
NatureView Farm $1.67 41% $0.99

21. Evaluation: Option 2
Income Analysis
2000 2001
Unit Sales 5,500,000 5,500,000
Revenue Growth 5,500,000 x $2.70 = $14,850,000 $14,850,000
Projected Revenue $13,000,000+$14,850,000= $27,850,000 $27,850,000
Cost 5,500,000 x $0.99 = $5,445,000 $5,445,000
Gross Profit $19,405,000 $ 22,405,000
Expenses
Advertisement $1,200,000 x 2 regions = $2,400,000 $1,200,000 x 2 regions = $2,400,000
SG&A $320,000 $320,000 x 2 = $640,000
Slotting Fee(1 Time) 4 x 64 x $10,000 = $2,560,000
Broker’s Fee(4% Revenue) $367,400 $367,400
Net Profit $18,837,600 $21,397,600
Objective: Find out the Net Profit and Projected Revenue for 2000 and 2001.

22. Evaluation: Option 3
Margin Analysis
Objective: Find out the profit margin of NatureView Farm
Channel Selling Price Margin Cost Price
Retailer $3.35 35% $2.18
Distributor $2.18 9% $1.98
Nature Foods
Wholesalers
$1.98 7% $1.84
NatureView Farm $1.84 38% $1.15

23. Evaluation: Option 3
Income Analysis
2000 2001
Unit Sales 1,800,000 1,800,000 x 1.15 = 2,070,000
Revenue Growth 1,800,000 x $3.35 = $6,030,000 2,070,000 x $3.35 =$6,934,500
Projected Revenue $6,030,000 + $13,000,000 =$19,030,000 $6,934,500 + $13,000,000=$19,934,500
Cost 1,800,000 x $1.15 = $2,070,000 2,070,000 x $1.15 =$2,380,500
Gross Profit $16,960,000 $17,554,000
Expenses
Marketing $250,000 $250,000
Complementary Cases 6,030,000 x 2.5% = $150,750 6,934,500 x 2.5% = $173,363
Net Profit $16,559,250 $17,130,637
Objective: Find out the Net Profit and Projected Revenue for 2000 and 2001.

24. Preferred Choice
Option 1

25. Proof Of Action: A comparison
Option 1 Option 2 Option 3
Margin 33% 41% 38%
Sales 42,000,000 5,500,000 2,070,000
Revenue Projection $44,080,000 $27,850,000 $19,934,500
Cost $13,020,000 $5,445,000 $2,380,500
Miscellaneous Costs $3,812,000 $1,007,400 $423,363
Net Cost $16,832,000 $6,452,400 $2,803,863
Net Profit $ 27,247,200 $21,397,600 $17,130,637

26. Alternatives
The firm can make reasonable profits in the Supermarket channel only till the time when the decent
growth rates can offset the rapidly growing Children’s MultiPack segment.
The 32 oz. pack segment is a niche market which can prove profitable in the longer term.
The relations with natural foods Retailers like Whole Foods and Wild Oats need to be maintained.

27. Concluding Notes
The 8 oz. market was chosen since it represents the largest market size
(74% of total supermarket category sales)
Gives NatureView Farm the “First-Mover” Advantage over its natural Foods Channel Competitors
USP of Longer Shelf Life of 50 Days and “All-Natural” can be leveraged to the Firm’s Benefit
Lower Prices at Supermarkets can help reach the quality products of NatureView Farm
to a Larger Audience

28. Disclaimer
This project was created by Rohan Roy, IET Lucknow during a Marketing Internship
by Prof. Sameer Mathur, IIM Lucknow.