NATUREVIEW FARM

HARVARD BUSINESS SCHOOL

BACKGROUND

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......

HARVARD BUSINESS SCHOOL

HARVARD BUSINESS SCHOOL

HARVARD BUSINESS SCHOOL

HARVARD BUSINESS SCHOOL

HARVARD BUSINESS SCHOOL

HARVARD BUSINESS SCHOOL

OPTIONS

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%

OPTION 2

Expand four SKUs of the 32-oz size nationally through supermarket channel

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%

OPTION 3

Introduce two SKUs of a children’s multi-pack into the natural foods channel

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

BackgroundProblemAnalysisOption 1Option 2Option 3Best Option

DISCLAIMERCREATED BY ANKAN MUKHERJEE, IIT-R DURING THE MARKETING MANAGEMENT INTERNSHIP BY

PROF. SAMEER MATHUR