Date post: | 15-Apr-2017 |
Category: |
Marketing |
Upload: | vaishali-aravamuthan |
View: | 112 times |
Download: | 0 times |
NATUREVIEWFARM
SUBMITTED BYVAISHALI ARAVAMUTHAN
Founded in 1989 ,Nature View Farm
manufactures and markets refrigerated cup
yogurt
DIFFERENTIATORS
Natural IngredientsLonger shell life
Great taste and high quality
Success Factors
1.Brand Name2.low cost guerilla marketing
3.strong relationship with distributors
4.National distribution in natural food channel
YOGURT TRENDS
• Sales-1.8 billion $• Volume sold-2.3 billion
units• Sold via Supermarkets-97% Natural food
stores-3%• Growth of sales via Supermarkets-3% a
year Natural food stores-
20% a year
YOGURT CONSUMPTION
40%
60%
Yogurt consumptionPeople who consume People who don’t
DEMOGRAPHIC DISTRIBUTION OF YOGURT
30%
70%
People who consume yogurt
Men Women
Consumption pattern of yogurt
6 &8 oz cups
Multipacks
32 oz cups
0 10 20 30 40 50 60 70 80
Chart Title
growth(% per year) sales(%)
CHALLENGE: Identify the path to increase revenues by 50% in the next 23 months
GOAL: To secure the highest valuation to attract new investors and position itself for acquisition
It has 3 OPTIONS
EXPAND 6 SKUS OF 8 oz CUPS INTO 1 OR 2 SELECTED
SUPERMARKET REGIONS
PROS
8 ounce cups represent the largest dollar and unit share of the
market
• Other Natural brands like silk soymilk have successfully expanded into the supermarket channel.
It could gain a first mover
since supermarkets would allow only one organic yogurt brand
RISKS
The 8 oz size received the highest level
of competitive trade
promotion and marketing
spending
Possible Channel conflict between the supermarkets
and the organic food channel.
Little Experience in dealing with supermarket
channels.
Difficult to strike a balance between shelf presence and slotting
expense
PROS
To expand 4 SKUs of 32 oz size nationally
32 oz cups generated above average gross profit margin as compared to
the 8 oz cups
There were fewer competitors in the 32 oz
market and company has an advantage due to longer shelf life of the product
Promotional expenses will be lower as 32 oz size is promoted only 2
times a year.
Difficult to achieve full National level distribution in 12 months
It requires hiring sales personnel to establish relationship with the
supermarket brokers thereby increasing the expenses
• Introduce 2 SKU’s of a children's multipack into the natural food channel.
It has strong relationship with the natural food retailers for whom
yogurt was an important product.
The company has more time to prepare itself to
enter the supermarket channel
The company has the perfect positioning to launch the
children's multipack product into their core sales channel.
Gross profit-37.6%low sales and marketing costs
Attractive financial potential
Natural food channel was growing 7 times
faster than the supermarket chain and
introducing new products will boost the sales of the company.
CONS
Missed opportunity to enter the supermarket channel before competitors
OPTION 1SELLING PRICE($)
MARGIN COST PRICE($)
RETAILER-0.74 27% 0.54DISTRIBUTOR-0.54 15% 0.46MANUFACTURER-0.46
=((0.46-0.31)/0.46)=32.6%
0.31
PROJECTED INCOME STATEMENTYEAR 2000 YEAR 2001
UNIT SALES 35 million units 35million units1+0.2)=42 million units
REVENUE GROWTH 35 million units *0.74=25.9 million $
42 million units *0.74=31.08 million $
PROJECTED REVENUE 13 million $+25.9million $=38.9 million $
13 million$+31.08 million $=44.08 million $
COST 35 million units *0.31=10.85 million $
42 million $*0.31=13.02million $
GROSS PROFIT 38.9 million $-10.85 million $=28.05 million $
44.08 million $-13.02 million $=31.06 million $
EXPENSESADVERTISING 1.2 million$*2=2.4 million
$2.4 million $
S,G&A 120000+200000=32,0000$
320000*2=64,0000$
SLOTTING FEE 10,000*6*20=1.2 million $ NILBROKER FEE 0.04*35,000,000*0.46=64
4000$0.04*42,000,000*0.46=772800$
NET PROFIT GROSS PROFIT-EXPENSES=23.49 million $
27.25 million $
OPTION 2 SELLING PRICE($)
MARGIN COST PRICE($)
RETAILER-2.7 27% 1.97DISTRIBUTOR-1.97 15% 1.67MANUFACTURER-1.67
=((1.67-0.99)/1.67)=40.71%
0.99
PROJECTED INCOME STATEMENTYEAR 2000 YEAR 2001
UNIT SALES 5.5 million units 5.5 million unitsREVENUE GROWTH 5.5million
units*2.7=14.85million $14.85 million $
PROJECTED REVENUE 13 million$+14.85 million $= 27.85 million $
27.85 million $
COST 5.5 million units*0.99=5.45 million $
5.45 million $
GROSS PROFIT 22.41 million $ 22.41 million $EXPENSESADVERTISING 120000*4=480000$ 480000$S,G&A 160000$ 160000$SLOTTING FEE 10,000*4*64=2.56
million $NIL
BROKER FEE 0.04*5500000*1.67=367,400$
367,400$
NET PROFIT GROSS PROFIT-EXPENSES=18.89 million $
21.4 million $
OPTION 3SELLING PRICE($)
MARGIN COST PRICE($)
RETAILER-3.35 35% 2.18DISTRIBUTOR-2.18
9% 1.98
WHOLESALER-1.98
7% 1.84
MANUFACTURER-1.84
37.5% 1.15
PROJECTED INCOME STATEMENTYEAR 2000 YEAR 2001
UNIT SALES 1.8million units 1.8 million*1.15=2.07 million units
REVENUE GROWTH 1.8 million units*3.35=6.03million$
6.93 million$
PROJECTED REVENUE 13 million$+6.03million $= 19.03 million$
19.93 million$
COST 1.8 million units*1.15=2.07 million $
2.38 million$
GROSS PROFIT 16.96 million$ 17.55 million$EXPENSESMARKETING EXPENSES 250,000$ 250,000$COMPLIMENTARY CASES 0.025*6.03 million
=150750$173,363$
NET PROFIT GROSS PROFIT-EXPENSES=16.56 million$
17.13 million $
CONCLUSIONChoose Option 1 as it
generates the greatest revenue among all the
three options (44 million $)
SUMMARY1.INTRODUCTION2.YOGURT MARKET TRENDS3.CHALLENGES AND GOALS4.ANALYSIS OF OPTIONS5.CONCLUSION
DISCLAIMERCreated by Vaishali
Aravamuthan during an internship with Prof Sameer Mathur, IIM
Lucknow