launching Krispy natural case study analysis

3. Goals & Objectives
1 Pemberton: Introduction & Challenges
2 Market analysis
3 Krispy Natural market strategies
4 Result and conclusions

5. 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.

6. Pemberton: Introduction
 Key strategic priorities:
building a collection of attractive, durable brands
leveraging leading marketing, sales and DSD systems to increase revenue and
profits
building or acquiring capabilities in salty snack categories.

7. Pemberton: Introduction

8. Pemberton: Introduction
Pemberton’s income statement (% of revenue):

9. CHALLENGES

10. HOW TO LAUNCH AND SUSTAIN THE GROWTH
OF KRISPY NATURAL IN THE SALTY SNACK
MARKET ?

12. Market analysis
1 US Cracker industry overview
2 Product purchasing intent
3 Competitor’s analysis

14. US CRACKER INDUSTRY OVERVIEW
Retail 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% CAGR
A 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.

15. US CRACKER INDUSTRY OVERVIEW
75%
9%
9%
6%1%
Sales
"all other"
saltines
crackers with fillings

16. US CRACKER INDUSTRY OVERVIEW
“All other” crackers
Experienced 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

17. US CRACKER INDUSTRY OVERVIEW
“All other ” crackers

18. US CRACKER INDUSTRY OVERVIEW
Crackers with fillings
Although 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

19. US CRACKER INDUSTRY OVERVIEW
Crackers with fillings

21. Product purchasing intent

23. Competitor’s analysis
1. 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.

24. COMPETITORS ADVERTISEMENT
SPENDING

26. Product Marketing
Distribution Price
Strategy

27. Krispy Natural marketing strategy
Product:
Multiple-serving packaging
Focused on improving taste
Health conscious

28. Krispy Natural marketing strategy
Marketing:
Emphasized on heavy advertising
Promotion to the end customer and appealing
to the trade
Aggressive plans for pull spending and trade
promotions

29. Krispy Natural marketing strategy
Distribution:
Effective DSD (Direct-Store Delivery)
distribution system
Proper management of shelf inventory and
in-store merchandising
Optimizing the system to account for longer
shell life of crackers

30. Krispy Natural marketing strategy
Price:
Sought a premium strategy.
Priced at 155% above the category average
cost per ounce
Same retail price as that of competitors but
lesser quantity

32. KRISPY NATURAL BRAND PROJECTIONS

33. KRISPY NATURAL BRAND INCOME
STATEMENT

35. MARKET RESULT HIGHLIGHTS

36. MARKET RESULT HIGHLIGHTS

37. MARKET RESULT HIGHLIGHTS

38. MARKET PLAN - COLUMBUS
5 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.

39. MARKET PLAN - SOUTHEAST
In 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.

41. 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.

43. 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?

45.  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

47. 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.

48. Competitive response

50. Recommendations
Extensive marketing in Southeast cities
Contemporize brand engagement
Tailor the Krispy Natural to different need
states

52. DISCLAIMER
CREATED BY ABHISHEK PATHAK, IIT ROORKEE, DURING A MARKETING
INTERNSHIP WITH PROF. SAMEER MATHUR, IIM LUCKNOW .