HARVARD BUSINESS SCHOOL CASE ANALYSIS

1. Natureview Farm:Growing
Revenues By 50%

2. NATUREVIEW FARM:A SMALL
YOGURT MANUFACTURER

3. NATUREVIEW FARM
Began in 1989
Key to success was unique recipe used
which included natural ingredients
increasing shelf life upto 50 days
Revenue grew from less than $100,000 in
1989 to $13 million in 1989

4. KEY PEOPLE INVOLVED….
• Christine Walker:Vice President of
Marketing
• Barry Landers:CEO
• Walter Bellini:Vice President,Sales
• Kelly Riley
• Jack Gottlieb:Vice President,Operations

5. NEW CHALLENGE
• TO GROW REVENUES BY 50% BEFORE
THE END OF 2001

7. AFTER DISCUSSIONS

8. CHRISTINE WALKER
SUMMARIZED 3 OPTIONS

9. Option:1
• Expand 6 SKU’s of 8-oz product line into
one or two selected supermarket channel
regions
• Advocated by Walter Bellini

10. Option:2
• Expand 4 SKUs of 32-oz size nationally
• Advocated by Jack Gottlieb

11. Option:3
• Introduce 2 SKUs of a children’s multi-
pack into natural foods channel.
• Advocated by Kelly Riley

12. NATUREVIEW FARM INCOME
STATEMENT,1999
REVENUES $13,000,000 100% REVENUES
COST OF SOLD
GOODS
$8,190,000 63%
GROSS PROFIT $4,810,000 37%
EXPENSES
ADMINISTRATION $2,210,00 17%
SALES $1,560,000 12%
MARKETING $390,000 3%
RESEARCH&DEVELOP
MENT
$390,000
$260,000
3%
2%
NET INCOME

13. Yogurt Market Share by Packaging
Segment,1999(supermarket channel,in
%US Dollars
DOLLAR SHARE DOLLAR SHARE
CHANGE vs. PRIOR
YEAR
8-oz cups&smaller 74% +3%
Children’s multipacks 9% +12.5%
32-oz cups 8% +2%
Other 9% NC

14. Yogurt Market Share by Packaging
Segment,1999(Supermarket channel,in
%U.S. Dollars
DOLLAR SHARE Number of Retailers in
the Region
Northeast 26% 25
Midwest 22% 30
Southeast 25% 33
West 27% 17

15. 2 DOMINANT SALES CHANNELS
IN 1999
SUPERMARKETS
• Sold 97% of total yogurt sold by
these 2 channels
NATURAL FOOD STORES
• Sold rest 3% of total yogurt
consumed by these 2 channels

16. SUPERMARKET
• One of the 2 major distribution channels in
1999
• Comprised 97% of the total sales of 2 major
channels
• Typical retailer margin was 27% and
distributor’s margin was 15%
• Companies need to pay one time slotting fee
for each SKU
• For refrigerated yogurt slotting fee averaged
$10,000 per SKU per retail chain

17. SUPERMARKET CHANNEL
• MANUFACTURER
• DISTRIBUTOR
• RETAILER
• CUSTOMERS

18. NATURAL FOODS CHANNEL
• MANUFACTURER
• WHOLESALER
• DISTRIBUTOR
• RETAILER
• CUSTOMERS

19. YOGURT PRODUCTION COSTS AND
RETAIL PRICE OF SUPERMARKETS
SUPERMARKET FOOD CHANNEL AVERAGE RETAIL PRICE
8-oz cup $0.88
32-oz cup $3.19
4-oz cup multipack $3.35

20. YOGURT PRODUCTION COSTS AND RETAIL
PRICE OF NATURAL FOODS CHANNEL
NATURAL FOODS CHANNEL AVERAGE RETAIL PRICE
8-oz cup $0.74
32-oz cup $2.70
4-oz cup multipack $2.85

21. Revenue in
1999:$13
Million
Target:$20
Million by the
End Of 2001

22. ANALYSIS OF 3 OPTIONS

23. PREREQUISITE DATA
OPTION ACTION ANTICIPATED
INCREAMENTAL UNIT
SALES
1 Expand 6 SKUs of the 8-oz. size into
eastern and western supermarket
regions
35,000,000
2 Expand 4 SKUs of the 32-oz. size
nationally into supermarket channel
5,500,000
3 Introduce 2 children’s multipacks into
natural foods channel
1,800,000

24. OPTION 1-1/4
• ANTICIPATED INCREAMENTAL RETAIL UNIT
SALES:35,000,000
CURRENT REVENUE:$13,000,000
GROWTH RATE OF YOGURT SALES THROUGH
SUPERMARKETS:3%
REVENUE AT THE END OF YEAR
20000:$16,500,000+REVENUE THROUGH OTHER
YOGURT TYPES AND REST OF 2 SKUs OF 8-oz
SIZE(MIN.-20%OF14% OF
13,000,000)=$16,500,000+$364,000=$16,864,000

25. OPTION1-2/4
• IN YEAR 2001..
• SALES=$16,864,000+$1,092,000+$35,00
0,000(MINIMUM)=$52,956,000>2000,000
0
• EXTRA EXPENDITURE
• SLOTTING PRICE-$60,000
• ADVERTISEMENTS
COST=$(22,500+15,000)=$37,500
• BROKER
CHARGE=$4281210(MINIMUM)

26. OPTION1-3/4
• PROs-
It provides a huge upside opportunity for
Natureview to increase sales exploiting huge
market share of supermarkets
• It also gives it edge over competitors who
will or are planning to enter supermarket
channel

27. Option1-4/4
• CONS-
• Risk of loosing market share due to
attraction of less price sensitive cnsumers
• It would require meaningful marketing
budget since this size faces most
competition

28. OPTION2:1/3
• Anticipated increamental retail unit
sales:$5,500,000
• Sales at the end of year
2000=$18,500,000
• Growth rate=2%
• Sales at the end of year
2001=$18,610,000(minimum)

29. OPTION2:2/3
• PROs
• Gross profit margin is 43.6%,more than 9-
oz line
• Strong competitive advantage,sonce less
competitor offerings are in this line
• Less promotional fees,since it needs to be
promoted twice a year only

30. OPTION2:3/3
• CONs
• Growth rate of 32-oz product line is very low
• Market share of 32-oz product line is also not
very high
• More slotting fees will be required for national
distribution
• Increased SG&A by $160,000
• Uncertainity of achieving targetsof full
distribution in 12 months
• Uncertainity of new consumers entering this
product line

31. OPTION3:1/3
• Anticipated Increamental Retail Unit
Sales:$1,800,000
• Sales at the end of year
2000=$13,000,000+$1,800,000=148000,0
00
• Sales at the end of year
2001(minimum)=$14,8000,000+(8%0f2%
of$13,000,000)=$148,020,800

32. OPTION3:2/3
• PROs
Strong relationship of Natureview with leading
Natural Food channels
Sales team was confident to achieve distribution
target
Gross profit was 37.6%
Natural food channel was growing faster than
supermarket channel,thus it will be productive in
longer run
No additional SG&A cost or R&D expenditure
would be required

33. OPTION3:3/3
• CONs
• It would not achieve target in time frame
• It can fall prey to competitors expanding
into supermarket channels
• During marketing turbulence it woul loose
shares since people can switch over to
supermarkets during turbulence due to low
price offerings

34. Disclaimer

35. conclusion
Option 1 provides the attainment of target’s
probablity most.However, profit margin is
less in that option but it can be compensated
easily with huge sales volume.
There is a risk of inability to handle
supermarket channel but,Natureview can
find a solution
Making itself vulnerable can result in more
sales,otherwise it would be stagnant and
may start declining after sometime

36. DISCLAIMER
Created during Marketing Management Internship
• CREATOR
• Ankit Raj
• Jadavpur University
• MENTOR
• Prof. Sameer Mathur
• IIM,Lucknow