Analysis of Natureview Farm case study, Harvard Business Review. During a marketing management internship under prof. Sameer Mathur IIM - Lucknow, created by Navin Kumar Manoharan of SKASC

1. Natureview Farm Case Study

2. History
• Founded in 1989.
• The company manufactured organic
yogurt.
• The company uses natural ingredients
and its own family recipe.

3. • Organic yogurt.
• Family yogurt recipe.
• Different size of cups.
• Longer shelf life (about 50 days).
• Different flavours.

4. What made the company successful ?
• The emphasis on natural ingredients.
• Strong reputation for high quality and
great taste.
• The company brand grew quickly to
national distribution.
• Low-cost “guerilla marketing” tactics.

5. Current situation of the company,
• In 10 years, Natureview Farm’s revenues
had grown from less than $100,000 to $13
million.
• The company initially started with 2 size of
cups and grew to 2 two flavors to 3
different size of cups, multipacks and 12
different flavors.

6. Challenges
faced

7. • To find a new path to increase the
revenues by 50% before the end of 2001.
• Should the company enter into the
supermarket channel to increase the
revenue.

8. But, Why ?

9. • Since 1989, the company had long
struggled to maintain a consistent level
of profitability.
• Natureview arrange for an equity
infusion from a venture capital (VC) firm
to fund strategic investments.

10. • The Venture Capital firm now needed to
cash out of its investment in Natureview.
• The company was in alternative
financing would be extremely difficult
until the Venture Capitals cashed out.

11. Natureview Farm Income statement, 1999

12. The Refrigerated Yogurt
Category and the Yogurt Consumer

13. The Companies main competitors,
• Dannon
• Yoplait
• Breyers, and
• Columbo
These had the dominant share and the top
two competitors controlling
over 50% of the market.

14. Yogurt distribution channel
• Supermarket – 97%
• Warehouse clubs,
• Convenience stores,
• Drug stores, and
• Mass merchandisers.
– 3%

15. Natureview did not consider entry into these
channels because,
• The company’s product was not a strong fit
for the narrow product offering afforded to
consumers through these channels.
• Volume requirements were prohibitive in
certain channels.

16. Organic Food Purchased Place
Supermarket
46%
Small Health Foods
Store
25%
Natural Food Stores
29%
Supermarket
Small Health Foods Store
Natural Food Stores

17. Factors involved in buying a yogurt,
• Package type/size,
• Taste,
• Flavor,
• Price,
• Freshness,
• Ingredients, and
• Organic.

18. Yogurt Market Share by Packaging Segment
and by Region

19. Consumer
Distribution

20. 32-oz.
For heavy consumers.
Popular flavour were plain and
vanilla.
Purchase criteria were brand,
expiration date, and price.
Multipacks
Targeted kids and mothers. Six-packs of 4-oz and eight 2-oz. tubes.
8-oz. Pack
Targeted at women. Holds 74% of shares.

21. Supermarket channel
Vs. Natural Foods
Stores

22. •High retail price for the same products in
supermarket.
•Distributors deliver products individual
stores and sometimes stock the shelves and
paperwork.
•Intermediaries ‘Break cases’,
1. Natural foods wholesalers margin – 7%
2. Distributors margin – 9%.
3. Retailers margin – 35%.

23. Yogurt production costs and retail prices
by channel

24. Supermarket Channel
Manufacturer Distributor
RetailerCustomer

25. Natural foods channel
Manufacturer
Natural foods
wholesalers
Natural foods
distributor
Retailer
Customer

26. Yogurt Market Share by
Brand

27. The Senior Management Team’s Three Options

28. Option 1
By Walter Bellini,
VP of Sales.

29. Expand 6 SKUs of the 8-oz. product
line into one or two supermarket
channel regions.
Pros,
• 8-oz. cups has largest dollar
and unit share of market.
• Supermarkets may
authorize only one yogurt
brand.
Cons,
• High competition among all
the product lines of yogurt.
• High potential, but high risk
and cost.

30. Option 2
Jack Gottlieb,
VP of
operations.

31. To expand four SKUs of the 32-oz. size
nationally.
Pros,
• 32-oz. cups generated an above-
average gross profit margin for
Natureview (43.6% vs. 36.0% for
the 8-oz. line).
• Lower Promotional expenses is
needed.
Cons,
• Higher slotting fees due to
national distribution.
• National distribution will be
difficult within 12 months and
the revenue also can’t be
improved.

32. Option 3
Kelly Riley,
the assistant
marketing
director

33. To introduce two SKUs of a children’s multi-
pack into the natural foods channel.
Pros,
• Supermarkets may authorize
only the natural and organic
yogurt.
• Natureview Farm’s all-natural
ingredients would provide the
perfect positioning from which
to launch its own children’s
multi-pack product offering into
their core sales channel.
Cons,
• The company already had
strong relationships with the
leading natural foods channel
retailers, and expansion into
the supermarket channel
could potentially affect these
relationships.

34. By Comparing with all other options the best
strategy is the option 1,
• High Revenue
• Lower slotting fee
• Transition to super market from Natural
foods store
Best Option for the company to follow

35. Sales Projections for Natureview’s
Strategic Options

36. Summary  History.
 Challenges Faced.
 Consumer distribution.
 Best Strategic Channel.

38. Created by Navin Kumar Manoharan,
SKASC, during a Marketing
Management Internship under the
guidance of Prof. Sameer Mathur
Indian Institute of Management (IIM) –
Lucknow.