natureview farm case study analysis
Post on 09-Feb-2017
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NATUREVIEW FARM Started in 1989 Sells Yogurt using family yogurt
recipe 12 flavors in 8 oz cup and 4
flavors in 32 oz cup Average shelf life of 50 days ,
20 more than the average Growth from $100,000 to
$13,000,000 in 10 years
How to Increase the Revenue from $13 million to $ 20 million in 2001 to get the Investment from other
companies......
OPTION 1
Expand six stock keeping units (SKUs) of the 8-oz. product line into one or two selected supermarketchannel regions………..
VERY HIGH Revenue PotentialFirst Mover Advantage- Supermarket
retailers will allow only one organic yogurt brand
Highest Demand of 8 oz cups….Revenue Potential of other natural
food brands by over 200% within two years of entering supermarkets
Quarterly trade promotions and a large marketing budget
Direct competition with national brands
Conflict with distribution channelsLower price can tamper brand value
REVENUE• Total Revenue( in
2001 )$13,000,000 + 42,000,000*$0.46 = $32,320,000
• Net Income -- $2,197,200
• Profit Margin- 6.79%
32 oz generates an above average gross profit margin ( 43.6 % )….
Lesser competition in this size than the other sizes
Very less promotion cost than the 1st option
Longer Shelf life( 50 days )
Achieving national distribution will be challenging in 12 months
Most Users avoid the multi-use size or the larger 32 oz size…
Conflict with distribution channels.Little experience in dealing with
supermarket channels
REVENUE• Total Revenue(in
2001) $13,000,000 + 6,600,000*$1.74 = $24,484,000
• Net Income -- $3,086,640
• Profit Margin- 12.6%
Natural foods channel- growing seven times faster than the supermarket channel
Lower sales and marketing expenses
Channel conflict is avoided.Strong relationships with the leading
natural foods channel……
Lowest incremental costNatural foods channel may start
charging the same fees as the supermarkets
May miss the chance to enter the supermarkets
Growing demand of retailers and wholesalers
REVENUE• Total Revenue(in
2001) $13,000,000 + 2,070,000*$2.84 = $21,808,800
• Net Income -- $1,362,124
• Profit Margin- 8.1%
REASONS:-Very less marketing, promotion costsVery positive brand value to
consumers Good relationship with natural food
channelsHighly selected, highly educated and
wealthy target marketVery low risk factors in the futureVery thriving natural food sector
market in US
OPTION 3 IS THE BEST OPTION POSSIBLE
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