Natureview Farm Q1,2,3

NATUREVIEW FARM PRESENTE D BY GROUP 9

Q1,How has Natureview succeeded in the natural foods channel?  Unique smooth, creamy texture & flavor owing to family recipe. Absence of artificial sweeteners & use of non rGBH treated milk gave a Natureview advantage over other Major brands. Such process & ingredients led to Natureview products having 50 days shelf life against 30 days industry standard. Captured Organic & natural segment which was under served by traditional retail channels. By servicing a specialized customer, carved out a niche for itself. Use of a broker against traditional distribution channel enabled Natureview in capturing 25% of the natural food market. The same system also helped in increase ales for its 8 ounce and 32 ounce products. Their brokers had direct relationship with the retailers. Hence Natureview didn’t deal with retailers directly but through brokers. 

2

Q2,PRIMARY GROWTH STRATEGY INTRODUCE NEW SKU’S OF CHILDRENS MULTI PACK INTO THE NATURAL FOODS CHANNEL • Growth : Average of 20% per year • Connect : Leverage relationship with existing channel retailers • Profit Contribution : Financial potential was most attractive • Positioning : Sales team was confident to achieve required distribution • Resources : no additional skill sets was required to implement the strategy

ENTER SUPERMARKETS WITH EITHER SKU’s OF EITHER 8-OZ OR 32-OZ • Growth : Average of 3% per year • Entrance : skeptical about acceptance of brand via multi-use size • Risk : High risk • Expensive Proposition: required slotting fee ,trade promotions and meaningful marketing budget • Dedicated Sales Force : sophisticated resources to enter supermarkets and establish relationships 3

Q3,Financials  

 

Revenues

 

Current

Option 1

Change in Revenue

 

Cost of Goods Sold

 

Increase in COGS

 

Gross Profits

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

Adminstrative/Freight

 

 

 

Sales

 

 

 

Marketing

 

 

 

R&D

 

 

 

Slotting fees(20 supermarket chains and 6 SKU's)

 

 

 

Trade Promotions

Total Expenses

 

Investment Required

 

Net Income

 

13,000,000

Option 2

Option 3

38,900,000

27,850,000

19,030,000

25,900,000

14,850,000

6,030,000

8,190,000

19,040,000

13,635,000

10,260,000

10,850,000

5,445,000

2,070,000

4,810,000

19,860,000

14,215,000

8,770,000

 

 

2,210,000  

2,330,000  

1,560,000  

1,760,000  

390,000  

 

 

0  

 

 

640,000  

390,000

1,200,000

490,000

(Assumption of R&D expense=100,000)

 

 

1,560,000

870,000

390,000

 

2,210,000  

1,720,000

2,790,000

390,000

 

2,210,000  

2,560,000  

0  

0

870,000

1,024,000

0

4,550,000

9,340,000

8,774,000

4,900,000

4,790,000

4,224,000

350,000

260,000

10,520,000

5,441,000

3,870,000

 

4

Option 1: Expand 6 SKU’S (8 Oz) in supermarkets Advantages: •Good Shelf Presence •No large slotting expense •8 oz- Significant revenue potential •Natureview uniquely positioned to capitalize on growing natural food market •Significant first mover advantage •High growth projections of organic yogurt at supermarkets

Risks: •High cost of trade promotion •High marketing expenditure •Huge advertising budget •Increase in sales, general and administrative expenses •Do not have necessary resources to move to supermarket channels Channel Management & Conflict Issues: •Natureviews brokers can take advantage of relationship with supermarkets in Northeast and West •Loss of trust by natural and organic stores

Option 2: Expand 4 SKU’S (32 Oz) nationally Advantages: •Above average gross profit margin • Fewer competitive offerings •Strong competitive advantage due to longer shelf life •Lesser promotional expense •Lesser marketing expense •32oz category will generally not be considered as a threat by the competitors as is the case with the 8 oz category

Risks: •High slotting expense •Inhibitions of new users to readily “enter the brand” •Increase in sales, general and administrative expenses Channel Management & Conflict Issues: •Concerns about sales team’s ability to achieve national distribution in just 12 months

Option 3: Introduce 2 SKU’S of children multi-pack into natural food channel Advantages: •Strong relationship with leading natural foods channel • Will not disrupt other relationships •All natural ingredients provide perfect positioning to launch children multi-pack •Attractive financial prospects •High growth rate of natural food channel •No increase in sales, general and administrative

Risks: •R&D and operations need to develop the new product •Natural food channel making similar demands as supermarket channel once it grows Channel Management & Conflict Issues: •Confidence of sales team to achieve distribution of the two SKU’s

Action Plan | Implementation Process Recommendation : Option 1 – Expand into supermarket space with 8oz SKU • • • •

A Trend is shown towards favorable financial position When compared with national, regional targting is easy to implement Increased visibility of products due to higher slotting fees Relinquishing first movers advantage of moving into the supermarket channel has huge opportunity cost

Implementation Adjustments • Brand: Do not loose brand positioning and equity- premium tag of product • Channel Partner: Provide beneficial schemes to natural food retailers to help them better compete with supermarkets. • Marketing mix: 4Ps - 8oz SKU, $0.78, Located in-store with competitor brands, In-store promotions • Sales: Implementing latest technology advancements to track sales trends and developments in the market

THANK YOU!!

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