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MKTG 5801 Dr.

Neeraj Bharadwaj
Binh Tran, Jai Gulati, Geoff Fadden & Amir Kesten

Agenda
Natureview

background
The yogurt industry and Organics
Cs & Ps
The options & Dilemma
Option analysis
what Would you dO??
Recommendation

Background

Manufacturer and marketer of refrigerated cup


yogurt
Success factors
Strong brand
Low cost
National distribution within natural foods channel
Strong relationships with distributors

Differentiators
Natural ingredients
Long shelf life
Reputation for high quality and good taste

Background
(cont.)

Founded with two


yogurt flavors with
~ $100K Revenue

1989

Wagner arranged
for infusion of VC
Capital to fund
investments

1996

Jim Wagner joined


company as CFO

1997

1999 Revenue
Reached 13
MM

2000

VC firm wants out

Growth of $20M
needed by end of
year

2001

yOgurt iNdustry & ORGANICS


Yogurt Sales
Supermarkets

Yogurt Sales by Size

Natural Food Stores

6 & 8 Oz

3%

8%

Multi Pack

32 Oz

Others

9%

9%
74%
97%

Yogurt Consumption in Million*


Non Consuming

Heavy Organic Food Buyer


(organic Dairy)

175
Small Health Foods
Stores

Women

77

Men

Yogurt Consumption in
Million

33

50

19%

Natural Food Stores

22%

Supermarkets
100

150

200
* This Data is from US population of the year 1999
based on US Census

Heavy Organic Food


Buyer
34%

0%

10% 20% 30% 40%

Brokers
Distributors
Wholesalers
Retailers

Context

Horizon
Organic
(Cash heavy
and national
brand)
Shorter shelf
life
compared to
Natureview
Brown Cow
Natural not
Organic
(Presence in
West Coast)

Collaborators

12 Flavors in
8 Oz cups
and 4 in 32
Oz
Longer shelf
life
Not treated
with rGBH
Strong
relationships
with leading
natural food
retailers

Competitors

Natural Food
Customers
Women
(single and
with kids)
High Income
and more
educated
Live in
Northeast &
West Coast

Company

Customers

Do you remember your Cs ?


58% of
yogurt
consumer
would buy
Organic if
price was
less
expensive
Long term
growth
requires
$30mm
Capital
spend
Organic food
socially on
the rise

What about the pSSS not

Product

Price

Place

Promotion

Size
Flavors
Natural
Organic

Supermarket
Channel
Natural Foods
Channel

Natural Food
Channel
National
Retailer
Channel
Wholesale/
Clubs i.e.
Costco, Sams
Convenience
Store
Drug Stores

Retail level
Wholesale level
Distributor level

Are we having fun YET!!

Options &

Dilemma

Option 1 Option 2 Option 3


Expand in 2
supermarket
Regions
(Northeast &
west)

Expand
Nationally

Stay in Natural
Food Chains

Introduce 6
SKUs of 8oz
products

Introduce 4
SKUs of 32oz
products

Introduce 2
SKUs of
childrens
Multipack

GoTo StrategY
8 oz cup

$.74

8 oz cup

$.88

4 oz
multipak

$2.70

4 oz
multipak

$3.19

32-oz cup

$2.85

32-oz cup

$3.35

Natureview Farm

Natureview Farm

Sales Brokers

Natural Foods Wholesalers


Natural Foods Distributors

Retailers
Retailers

Consumer

Consumer

AnalysiS

analYsis explained
$45,000,000

300%

$40,000,000
$35,000,000

250%

$30,000,000
200%

Incremental
Sales

$25,000,000

Gross Profit

$20,000,000

Total Costs
150%

$15,000,000

Profit
Contribution

$10,000,000

Total Sales
Projection

100%
$5,000,000

Required
Investment
% Increase

$0

50%
Gross Margin

$5,000,000
$10,000,000

0%

What would you do?

Recommendation
Go

with Option 3

Less risky
Gets us to our target
Does not cannibalize our existing customers

and partners
Gives us a boost to get into the retail space at
a later date
Revisit the retail options after we meet our
20M target and Investment is secured