launching krispy natural case study analysis
TRANSCRIPT
HARVARD BUSINESS SCHOOL
Launching Krispy Natural: Cracking the Product Management Code
Goals & Objectives
1 Pemberton: Introduction & Challenges
2 Market analysis
3 Krispy Natural market strategies
4 Result and conclusions
Pemberton: Introduction Pemberton was the snack food division of Candler Enterprises, a multinational
beverage and snack goods manufacturer. Had a revenue of 5 Billion USD with 7.7% Profit After Tax (PAT) It has experienced a compounded annual growth rate (CAGR) of 14% for
revenue over the past 5 years Pemberton was a market leader in the U.S. cookie and bakery snacks segments
of the sweet snack market. Company harnessed its owned Direct Store Delivery (DSD) distribution system
to deliver products directly from the distribution centers to the retail stores.
Pemberton: Introduction Key strategic priorities:
building a collection of attractive, durable brandsleveraging leading marketing, sales and DSD systems to increase revenue and
profitsbuilding or acquiring capabilities in salty snack categories.
Pemberton: Introduction
Pemberton: Introduction
Pemberton’s income statement (% of revenue):
CHALLENGES
HOW TO LAUNCH AND SUSTAIN THE GROWTH OF KRISPY NATURAL IN THE
SALTY SNACK MARKET ?
Market analysis
1 US Cracker industry overview
2 Product purchasing intent
3 Competitor’s analysis
US CRACKER INDUSTRY OVERVIEW
US CRACKER INDUSTRY OVERVIEWRetail cracker sales in the United States reached an estimated
$6.9 billion in 2011.The growth rate for the overall cracker industry from 2008 to
2010 was approximately 2.2% CAGRA Mintel study of salty snacks in the United States reported that
74% of respondents consumed crackers on a regular basis and 34% ate them as part of regular weekly diet.
US CRACKER INDUSTRY OVERVIEW
75%
9%
9%6%1%
Sales
"all other"
saltines
crackers with fillings
graham crackers
bread sticks and matzoh crackers
US CRACKER INDUSTRY OVERVIEW“All other” crackersExperienced a 2.1% CAGR from the period 2008-2010.Retail sales of 5.1 Billion USD in 2011 in USA Expected to grow by 6-7% per year
US CRACKER INDUSTRY OVERVIEW“All other ” crackers
US CRACKER INDUSTRY OVERVIEWCrackers with fillingsAlthough experienced flat sales during 2005-2009, but later
became the strongest segment Retail sales of 660 Million USD in 2011 in USA Had a growth rate of 14% in 2010
US CRACKER INDUSTRY OVERVIEWCrackers with fillings
PRODUCT PURCHASING INTENT
Product purchasing intent
Competitor’s analysis1. Top 3 cracker manufacturers
are: • Kraft Food Inc.• Kellogg Co.• Pepperfridge farm
2. They account for approx. 75% of the cracker market in 2010.
3. Frito-Lay is rumored to be introducing a new full line of crackers by the end of second quarters.
COMPETITORS ADVERTISEMENT SPENDING
MARKETING STRATEGY
Product Marketing
Distribution PriceStrategy
Krispy Natural marketing strategy
Product: Multiple-serving packagingFocused on improving tasteHealth conscious
Krispy Natural marketing strategy
Marketing: Emphasized on heavy advertising Promotion to the end customer and appealing
to the tradeAggressive plans for pull spending and trade
promotions
Krispy Natural marketing strategy
Distribution: Effective DSD (Direct-Store Delivery)
distribution systemProper management of shelf inventory and
in-store merchandisingOptimizing the system to account for longer
shell life of crackers
Krispy Natural marketing strategy
Price: Sought a premium strategy.Priced at 155% above the category average
cost per ounceSame retail price as that of competitors but
lesser quantity
PROMOTIONS
KRISPY NATURAL BRAND PROJECTIONS
KRISPY NATURAL BRAND INCOME STATEMENT
MARKET RESULT HIGHLIGHTS
MARKET RESULT HIGHLIGHTS
MARKET RESULT HIGHLIGHTS
MARKET PLAN - COLUMBUS5 special “Krispy Force” representatives were hired in Columbus
These “Krispy Force” reps worked with Pemberton regional and district sales managers and focused solely on selling the new Krispy Natural product line.
MARKET PLAN - SOUTHEASTIn Southeastern cities, the company was able to test its ability to reposition the product to a more premium offering
Here regular Pemberton DSD route delivery representatives worked with regional and district sales managers, handling sales and service of the new Krispy Natural line.
Expectations: Columbus would achieve
a market share of 9%Southeast’s market share
will rise from 9% to 15% The company hoped for
15% shelf space in both the markets
Reality:Columbus doubled the
share target, achieving 18% market share with 30% category expansion.
Southeast had a slight increase to just 10% with little category expansion.
Columbus was able to achieve an 18% market share by stealing share from other competitors.
However in Southeast the trade was generally receptive to the new Krispy Natural line due to the relatively low introductory trade case discount of 15%.
WHY?
The large chain headquarter buyers were impressed with the consumer research results and inventory turn estimates.
They also loved all the promotional activity and consumer advertising.
The pull marketing really created a buzz and customers were coming to the stores asking for Krispy Natural by name
Sales & channel responses
However one industry analyst thought that the positive test market results were driven by significant price discounts, couponing, and sampling, which were not sustainable.
Also, few felt the taste preference claims of Krispy Natural were inflated and the flavor was no better than current brand offerings.
Competitive response
Recommendations
Extensive marketing in Southeast cities Contemporize brand engagementTailor the Krispy Natural to different need
states
DISCLAIMERCREATED BY ABHISHEK PATHAK, IIT ROORKEE, DURING A MARKETING INTERNSHIP WITH PROF. SAMEER MATHUR, IIM LUCKNOW .