natureview project_group5_section a.pptx
TRANSCRIPT
8/14/2019 Natureview Project_Group5_Section A.pptx
http://slidepdf.com/reader/full/natureview-projectgroup5section-apptx 1/15
NATUREVIEW FARM
– SECTION A
2013
Name Roll No Ashish PGP29009 Diana PGP29004 Chandan PGP29017 Ram Moorthy
PGP29023
Saurav PGP29015 Praveen PGP28187 Nidhi PGP29011
8/14/2019 Natureview Project_Group5_Section A.pptx
http://slidepdf.com/reader/full/natureview-projectgroup5section-apptx 2/15
BACKGROUND
• Natureview Farm, a Vermont-based producer of organic
yogurt with $13 million in revenues, is the leading national
yogurt brand (24% market share) sold into natural foodsstores.
• It has achieved this through its special yogurt manufacturing
process and through cultivating personal relationships with
dairy buyers in the natural foods channel.
• In 2000, the company faces financial pressure to grow
revenues to $20 million by the end of 2001 from $13 million
due to a planned exit by its venture capital investors.2
8/14/2019 Natureview Project_Group5_Section A.pptx
http://slidepdf.com/reader/full/natureview-projectgroup5section-apptx 3/15
PROBLEM STATEMENT
• Natureview Farm needs to choose between
3 distribution models and product choices toincrease its revenues to $20million before
the end of 2001 from $13 million reported in
1999.
3
8/14/2019 Natureview Project_Group5_Section A.pptx
http://slidepdf.com/reader/full/natureview-projectgroup5section-apptx 4/15
SWOT ANALYSIS
4
SWOT
Long product shelf life
Reputation of high quality,taste and natural ingredients
Strong relationship withnatural store retailers
Strong reputation for high
quality and great taste. Shared leadership in the
natural food channel ofyoghurt
WEAKNESS
ES
STRENGTH
S Small manufacturer, low
funds and revenue
Relies on brokers that maynot be adequate forsupermarket channel
Current marketing strategybased only on natural storechannel
8/14/2019 Natureview Project_Group5_Section A.pptx
http://slidepdf.com/reader/full/natureview-projectgroup5section-apptx 5/15
SWOT ANALYSIS
5
SWOT
Organic food market
expected to growto $13.3billion in 2003
Natural store channel salesup 20%
12.5% growth in 4
oz multipack
Increase in consumerinterest in organic food
THREATSOPPORTUNITI
ES
Competition(both in
regular yogurt and organicyogurt)
Increasing natural storechannel demands on logisticsor technology
Increasingly price sensitiveconsumers in the organicmarket
8/14/2019 Natureview Project_Group5_Section A.pptx
http://slidepdf.com/reader/full/natureview-projectgroup5section-apptx 6/15
LENGTH OF CHANNELS TO
MARKET
6
Distributor Natural FoodsWholesaler
Manufacturer Manufacturer
Natural FoodsDistributor
Retailer Retailer
Customer Customer
Supermarket Channel Natural Foods Channel
8/14/2019 Natureview Project_Group5_Section A.pptx
http://slidepdf.com/reader/full/natureview-projectgroup5section-apptx 7/15
CHANNELSSupermarket Channel
• Charged lower retail price $0.74 per cup
• One-time “slotting fee” for each SKU charged only in the first year
it was introduced
• Requires trade promotions
• Involves 3 parties in the distribution channel
• Heavily dependent on broker’s knowledge
• Distribution margin- 15%
• Retailer margin-27%
Natural Foods stores
• Charged higher retail price $0.88 per cup
• Lower price sensitivity
• Requires a one-time allotment of one free case of product forevery new SKU authorized for distribution in its first year
• Involves 4 parties in the distribution channel
• Distribution margin- 9%
• Wholesaler margin- 7%
• Retailer margin-35%
7
Other Channels Warehouse Clubs
Convenience Stores
Drug Stores
Mass Merchandisers
8/14/2019 Natureview Project_Group5_Section A.pptx
http://slidepdf.com/reader/full/natureview-projectgroup5section-apptx 8/15
OPTION 1 - EXPAND 6 SKUS OF THE8 OZ PRODUCT LINE INTO 1 OR 2
SELECTED SUPERMARKET CHANNELREGIONS
Pros Cons
8 oz. cups represent largest dollar and unitshare of market
Highest level of competitive tradepromotion and marketing spend
Supermarkets fear losing market share tonatural food competitors
Possible channel conflict betweensupermarkets and natural food stores
Other natural foods brands havesuccessfully expanded to supermarkets
Promotion and lower price at supermarketsmay hurt the brand
First-Mover Advantage Little experience in dealing with
supermarket chainsSupermarkets may only authorize oneorganic yoghurt manufacturer
Balance between shelf presence andslotting expense
8
8/14/2019 Natureview Project_Group5_Section A.pptx
http://slidepdf.com/reader/full/natureview-projectgroup5section-apptx 9/15
OPTION 2EXPAND 4 SKUS OF THE 32 OZPRODUCT LINE NATIONALLY
Pros Cons
32-oz cups generate an above averagegross profit margin (43.6% versus 36% for8-oz line)
Higher slotting fees due to nationaldistribution
Fewer competitive offerings in this size National distribution will be challengingwithin 12 months
Competitive advantage due to long shelflife of product
No guarantee that customer awareness ofthe brand would grow
Lower promotional expenses than Option-1 Possible channel conflict betweensupermarkets and natural food store
Promotion and lower price at supermarketsmay hurt the brand
9
8/14/2019 Natureview Project_Group5_Section A.pptx
http://slidepdf.com/reader/full/natureview-projectgroup5section-apptx 10/15
OPTION 3 – EXPAND 2 SKUS OF ACHILDREN'S MULTIPACKS INTO THENATURAL FOODS CHANNEL
Pros Cons
Natureview already has strong
relationships with leading natural foodschannel retailer
Miss opportunity to enter supermarkets
before competitors
More time to prepare the company formoving into the supermarkets
Natureview Product positioning is ideal fora children’s multipack product launch
Financially attractive
High margin – 37.6%
Low sales and marketing expenses
10
8/14/2019 Natureview Project_Group5_Section A.pptx
http://slidepdf.com/reader/full/natureview-projectgroup5section-apptx 11/15
OPTION 1- RATE 3%
11
Sl No 2000 2001 2002 1 No. of Units 35,000,000 36,050,000 38,213,000 2 Retailer's Selling Price 0.74 0.74 0.74 3 Natureview's Selling Price 0.51 0.51 0.51 4 Manufacturing Cost Per
Unit 0.31 0.31 0.31 5 Sales (1*2) 17,850,000 18,385,500 19,488,630 6 Brokerage Fee (0.4*5) 714,000 735,420 779,545 7 Slotting Cost 1,200,000 - -
8 SG & A 320,000 320,000 320,000 9 Advertising 2,400,000 2,400,000 2,400,000 10 Trade Promotion 90,000 90,000 90,000 11 Manufacturing Cost (4*1) 10,850,000 11,175,500 11,846,030 12 Total Cost (6`11) 15,574,000 14,720,920 15,435,575 13 Profit (5-12) 2,276,000 3,664,580 4,053,055
8/14/2019 Natureview Project_Group5_Section A.pptx
http://slidepdf.com/reader/full/natureview-projectgroup5section-apptx 12/15
OPTION 2 - RATE 2%
12
2000 2001 2002 No. of Units 5,500,000 56,10,000.00 58,34,400.00Retailer's Selling Price 2.7 2.7 2.7 Natureview Selling Price 1.84 1.84 1.84 Manufacturing Cost Per Unit 0.99 0.99 0.99 Sales 10,120,000 10,322,400 10,735,296
Brokerage Fee 404,800 412,896 429,412
Slotting Cost 2,560,000 - -
SG&A 160,000 160,000 160,000
Advertising 1,024,000 1,024,000 1,024,000
Trade Promotion 480,000 480,000 480,000
Manufacturing Cost 5,445,000 5,553,900 5,776,056
Total Cost 10,073,800 7,630,796 7,869,468
Profit 46,200 2,691,604 2,865,828
8/14/2019 Natureview Project_Group5_Section A.pptx
http://slidepdf.com/reader/full/natureview-projectgroup5section-apptx 13/15
OPTION 3
13
2001 2002 2003 2004 No. of Units Sold 1,800,000 2,070,000 2,380,500 2,737,575
Retailer's SP 3.35 3.35 3.35 3.35 Natureview's SP 1.84 1.84 1.84 1.84 Manufacturing Cost PerUnit 1.15 1.15 1.15 1.15 Total Sales 3,312,000 3,808,800 4,380,120 5,037,138
8/14/2019 Natureview Project_Group5_Section A.pptx
http://slidepdf.com/reader/full/natureview-projectgroup5section-apptx 14/15
RECOMMENDATION – OPTION 1
• Option 1 & 2 achieve the nearest dollars
expectations whereas Option 3 does not.
• We suggest option 1 as it provides Natureview into
the new channel, secure a first mover’s advantage
and also position itself in the 8 oz category.
14
8/14/2019 Natureview Project_Group5_Section A.pptx
http://slidepdf.com/reader/full/natureview-projectgroup5section-apptx 15/15
15
THANK YOU