krispy natural- hinal shah-nirma university
TRANSCRIPT
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Launching ‘Krispy
Natural’: Cracking
the ProductManagemen
t Code
Harvard business school case
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What is Krispy Natural?
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Candler Enterpri
se
Pemberton
products
Softies cookies
Home style
muffins and
doughnuts
Krispy
Natural
Beverage division
Quick service
restaurant
Pet care division
Krispy Natural is the salty snacks brand
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About Pemberton
Market leader in US in cookies and bakery products.Generated $5 billion revenue in 2011.CAGR (compounded annual growth rate) of 14% for revenue over past 5 years.Company owned DSD (direct store delivery) system. Brandon Fredrick is the Marketing Director of Pemberton.
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In 2008, Pemberton took first step to enter the salty snack
market by acquiring Krispy Inc.
WHY?
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1. US growing Cracker Industry
Retail Cracker sale - $6.9 billion in 2011.2.2% increase in CAGR from 2008 to 2010.
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2. Research of salty snacks in US.74% respondents consumed crackers on daily basis.
Crackers were the top salty snacks ahead than potato chips.Desire for healthy products was driving cracker industry.
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Who are the Competitors?Kraft Food Inc.Kellogg Co.Pepperidge Farm
This three large brands account for ¾ of the Cracker category.
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What Pemberton team expected from Krispy?
Sales in $millions
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UnexpectedlySales in $millions
The actual sales did not match the projected sales. WHY
?Limited product line.
Lack of flavour satisfaction.
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Should Krispy relaunch again?
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Pemberton team didn’t gave up.Instead they decided to give Krispy another try.
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Why another try?
Attractive Cracker market. Overall segment was large and expected growth of 10-14% per year. Reducing markets of other competitors.
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Krispy Relaunch
Rebranding as ‘Krispy Natural’.
R&D engaged in improving taste and quality.Multi serving package sizes and more flavours to gain foothold in super markets.
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Official market test in Columbus, Ohio and Southeast US.
In Columbus Krispy Natural will achieve 9% market share of Cracker category.
In Southeast Krispy Natural will increase market share from 9% to 15%.
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This time it’s a Success
Krispy Natural is now a serious competition.
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How Krispy Natural managed to steal market share from competitors?
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Effective Marketing Strategy.
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1. Product StrategyFocused on increasing package size to multiple servings, improving taste and more flavour options.Use of 100% whole wheat and natural ingredients.
R&D tirelessly reformulate theProduct.
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1. Product Strategy
77% - 92% positive purchase intent for new Krispy Natural flavours.
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2. Pricing Strategy
Premium price strategy.
Considering product’s superiority and on the basis of ‘Visual Price’, retail price was kept same as competitors but quantity was less.
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3. Market Strategy
Adopted Pull Strategy
Aggressive plans for heavy advertising and promotions
$ in millions
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4. Distribution StrategyCompany owned superior DSD system.
Hired representatives known as ‘Krispy Force’ for proper distribution.
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Sales ObjectivesNational Distribution of Krispy Natural.Minimum sales of $500 million
Pre-tax profit contribution of at least 13%Salesobjectives
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What were the competitive actions?Short term:New product testing in process.Increase A&M.Increase trade spending and consumer promotions.
Long term:Spend heavily to counter national roll-out.Capitalize on pull.Product line improvements.Compete on quality and brand reputation.
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ConclusionStrengths:-Pemberton is already a market leader in US.-World renowned product development labs.-2:1 ratio in taste preference.-18% market share in a market with no previous presence.
Weakness:-Capacity constrains of DSD for Krispy Natural products.
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ConclusionOpportunities:-Cracker market fundamentals are attractive.-Market research shows consumer dissatisfaction with flavour and taste of current brands.
Threats:-Fritto Lays entering into Cracker market.-Modest increase of 1% sale in Southeast.
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Disclaimer
Prepared by Hinal Shah, NIRMA University, Ahmedabad during marketing internship by Prof. Sameer Mathur,IIM Lucknow