ayush srivastava natureview farm case study
TRANSCRIPT
NATUREVIEW FARM
SUBMITTED BY-
AYUSH SRIVASTAVABtech III YearMNNIT Allahabad
AGENDA
OVERVIEW• Company• Natural/Organic Market Trends• Yogurt Market Trends• Challenge
Option 1Option 2Option 3FinancialsRccommendations
COMPANY• Founded in 1989.
• Manufacturer and marketer of refrigerated cup yogurt
• Differentiators: Natural Ingredients Longer shelf life Reputation for high quality and great taste
• Key success factors: Strong brand Effective low cost “guerrilla marketing” National distribution in natural food channel. Strong relationships with distributors.
NATURAL/ORGANIC MARKET TRENDS• Organic food market predicted to grow from $6.5 billion to $13.3 billion over 4 years.
• Generally organic products consumers tend to be more educated, be older and live in the Northeast and West.
• 67% of households consider price as a barrier to purchase of organic products.
• 44% of the customers would like a wider selection of organic products in supermarkets.
• Supermarkets are moving towards attracting new customers by offering more organic products.
YOGURT MARKET TRENDS• Concentrated- 4 competitors control over 50% share.
• Supermarkets= 97% of total sales(3% annual growth).
• Natural Food Stores= 3% total sales(20% annual growth)
• Factors in purchasing decisions: Package type/size, flavour, price, freshness, ingredients, Organic
CHALLENGE :Identify path to grow revenues by over 50% within 23 months.
GOAL :Attain against possible valuation in order to secure new investors or positionItself for acquisition.
OPTION 1
Expand 6 SKU’s of the 8-oz product line into one or two selected supermarket channel regions
PROS:• 8-oz cups represent largest dollar and unit share of market.
• Supermarkets fear losing market share to natural food competitors.
• First-Mover advantage.
• Supermarkets may only authorize 1 organic yogurt manufacturer.
CONS:• Highest level of competitive trade promotion and marketing spend.
• Possible channel conflict between supermarkets and natural food stores.
• Promotion and lower price at supermarkets may hurt the brand.
• Little experience in dealing with supermarket chains.
OPTION 2
Expand 4 SKU’s of the 32-oz product line nationality.
PROS :• Natureview already has strong relationships with leading natural foods cahnnel retailers
• More time to prepare the company for moving into supermarkets.
• Financially attractive.
• High margins- 37.6%.
• Low sales and marketing expenses.
CONS :
• Fast growth of natural food channel will lead to demands equal to those of supermarkets.
• Miss opportunity to enter supermarkets before competitors.
OPTION 3
Expand 2 SKU’s of a children’sMulti-pack into the naturalfoods channel.
PROS :
• Financially attractive
• High Margins- 37.6%
• Low sales and marketing expenses
CONS :
• Fast growth of natural food channel will lead to demands equal to those of supermarkets.
• Miss opportunity to enter supermarkets before competitors.
Financial Of Option 1:
• SALE PRICE
• RETAIL MARGIN
• PRICE TO RETAIL
• DISTRIBUTOR MARGIN
• PRICE TO DISTRIBUTOR
• MFC COST
$0.78
$0.21
$0.57
$0.09
$0.48
$0.31
GROSS PROFIT NV $0.07
GROSS PROFIT MARGIN 35.95%
Financial Of Option 2:
• SALE PRICE
• RETAIL MARGIN
• PRICE TO RETAIL
• DISTRIBUTOR MARGIN
• PRICE TO DISTRIBUTOR
• MFC COST
$2.83
$0.76
$2.07
$0.31
$1.76
$0.99
GROSS PROFIT NV $0.77
GROSS PROFIT MARGIN 43.6%
RECOMMENDATIONOPTION 1:
• Financials
• Only a regional distribution instead of national which should make it easier to implement.
• Competitors are going to move into the supermarket space and we may miss a huge opportunity by not taking the risk.
• Higher slotting fees, but more visibility of the product.
NET MARKETING CONTRIBUTION =
(Sales Revenue * % gross profit) – marketing expenses
2001 2002 2003 2004 2005 2006 Average
OPTION 1 $3599.65 $4817.58 $6279.09 $8032.91 $10137.49 $12662.99 $7588.28
OPTION 2 $3699.08 $4301.04 $5027.80 $5863.57 $6824.70 $7930.01 $5602.70
OPTION 3 $997.07 $1308.84 $1698.55 $2185.68 $2794.61 $3555.76 $2090.08