CASE STUDY ANALYSIS

• Natureview farm• History• Goals• Statistics of natureview• Strategies • Solution

NATUREVIEW FARM• Small yogurt

manufacturer.• Located in Cabot,

Vermot.

2000

1999

Revenue of $13 million

1997

Decision to increase

revenue to $20 million by end of

2001

Equity infusion of

venture capital

1996

1989

Jim Wager hired as

CFO

Natureview farm began

JOURNEY OF NATUREVIEW FARM

GOAL• Grow revenues by over 50% before the end of 2001

REASON• VC needed to cash out of its investment

STRATEGY • Expand to supermarket channel

Twelve refrigerated yogurt flavors

Four flavors Yogurts packed in tubes for children. Newly introduced

8-oz cups 32-oz cups 4-oz cups

86% 14%

PACKAGE SEGMENT

Natural food retailers• Whole foods • Wild oats• Organic food market

DISTRIBUTION CHANNELS

3%

97%

Sales

supermarkets natural food stores

46%

29

25%

SUPERMARKET

NATURAL FOOD MARKET

SMALL HEALTH FOOD STORE

ORGANIC FOOD CONSUMER PURCHASE

MARKET SHARE IN REGIONS

NORTHEAST MIDWEST SOUTHEAST WEST0%

500%

1000%

1500%

2000%

2500%

3000%

3500%

26% 22% 25% 27%

25

30

33

17

Chart Title

DOLLAR SHARE NO. OF RETAILERS Column1

PRODUCTION COST AND RETAIL PRICE BY CHANNEL

NATURAL FOOD CHANNEL AVERAGE RETAIL PRICE

8-OUNCE CUP $0.88

32-OUNCE CUP $3.19

4-OUNCE CUP MULTIPACK $3.35

SUPERMARKET CHANNEL AVERAGE RETAIL PRICE

8-OUNCE CUP $0.74

32-OUNCE CUP $2.70

4-OUNCE CUP MULTIPACK $2.85

CUPS SIZE MANUFATURING COST

8-OUNCE CUP $0.31

32-OUNCE CUP $0.99

4-OUNCE CUP MULTIPACK $1.15

LENGTH OF CHANNEL MARKET

8-OZ represented the largest dollar and unit share.

Significant revenue potential.

First brand to enter the channel would have first-mover advantage.

Pros

Advertising would cost $1.2 million per region per year.

SG&A would increase by $320000.

Higher risks and costs.

Cons

TO EXPAND SIX SKUs OF 8-OZ PRODUCT INTO ONE OR TWO

SELECTED SUPERMARKETS

OPTION 1

32-oz generated above-average gross profit.

Fewer competitive offering in 32-oz size.

Promotional expenses lower.

Less noticed by competitors.

Pros

Slotting expenses higher.

SG&A would increase by $160000.

Nation wide distribution in 1 year is difficult.

Cons

EXPAND FOUR SKUs 32-0Z NATIONALLY IN SUPERMARKETS

OPTION 2

Strong relationship with natural foods channel.

Distribution is easy.

Sales and marketing expenses is lower.

Natural foods channel was growing seven times faster.

Pros

Revenues of $20 million cannot be achieved by 2001.

Channel conflicts may arise.

Cons

INTRODUCE TWO SKUs CHILDREN’S MULTI-PACKS INTO NATURAL FOOD

CHANNEL

OPTION 3

Advantages • Best option to achieve a revenue

of $20 million in a year• First brand to enter added

advantage• Supermarket maximize sales

volume.• 8-oz is most popular sizes

Created by Akshaya R, PSG College of

Technology, during a marketing internship

under Prof Sameer Mathur, IIM Lucknow