Pemberton Products tested the relaunch of its Krispy Natural cracker line in two markets. In Columbus, Ohio, Krispy Natural achieved an 18% market share through heavy promotional activity. However, in the Southeastern US, it only gained a 10% share due to lower discounts and display activity. While sales responses were positive in Columbus, an industry analyst argued the results relied too heavily on unsustainable discounts. Pemberton's executive VP, Fredrick, wanted a national rollout but recognized risks from potential competitive responses and varying consumer tastes. The document recommends an expanded marketing and rollout strategy while addressing these risks.

1. Launching Krispy Natural Cracking The Product Management Code
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Background to the Case
Candler Enterprises
Beverage Division
Pemberton
Pet Care Division
Quick Service Restaurant Division

3. PEM
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Pemberton
Snack Food Division

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Team Players
Patricia Williams Burt Spivey
Brandon FredrickAshley Marne
President
Pemberton Products
Marketing Director
Pemberton Products
Executive Vice-President Sales
and Marketing
Pemberton Products
Chief Operating Officer
Pemberton Products

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Majority of Pemberton Products
Cookies Sweet Baked Goods Food Bars
Market Leading Brands- Softies Cookies, Home Style Muffins and Doughnuts.

6.  Market Leader in US cookie and Bakery Snacks Segment.
 World Renowned Product Development Labs.
 Direct Store Delivery (DSD)
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Pemberton’s sales contributed $5 Billion in $18 Billion of Candler Enterprises for
the year 2011.

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Pemberton’s income as a percent of sales for 2011 was:

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Direct Store Delivery
Goods delivered directly to the retail outlets, bypassing retailer’s warehouses and
other distribution channels.
Most often used for low shelf life products.
Greater control of shelf space, more accurate forecasting, reduced stock-outs and
quicker turnover of products.
According to Pemberton’s President Patricia Williams, the company’s driving
force was it culture of innovation.

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I. Building a collection of attractive, durable brands.
II. Leveraging leading marketing, sales and DSD systems to increase revenue and profits.
III. Building or acquiring capabilities in salty snack categories.
Compounded annual growth rate (CAGR) of 14%
for revenue over the past 5 years.
Strategic Priorities for the Company:

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The U.S. Cracker Industry
Estimated $6.9 billion in 2011

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Market Overview
I. Compound Annual Growth Rate from 2008-2010 is 2.2%.
II. Volume Sales rose in 2010.
III. Kraft Food Inc., Kellogg Co, Carrs and Pepperidge Farm accounted for three
quarters for the cracker market in 2010.
IV. Consumption of Cracker was frequent and regular.
V. 74% consumed crackers on a regular basis, 34% ate them as a part of regular
weekly diet.
VI. 53% considered overall health fullness and an important factor.

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“All Other” Cracker Industry
Estimated at almost $ 5.1 billion in 2011, a 6.2% increase over 2010.
2.1% CAGR for the period from 2008-2010.
Growth Driven by healthier, premium-priced product introductions.

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Crackers with filling.
Highest segment growth in 201014%
Estimated Retail sales for the year 2011 in United States, 11% increase over 2010
$660 million
 Kraft Foods Inc. led the segment with 33% market share in 2010.

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Crackers with filling.
Premium alternative with whole grain cracker and real cheese.

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Krispy Product Line
Krispy Single Serve
2008 Pemberton entered salty snack market with acquisition of Krispy Inc.
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Production plants
And competed in the crackers with-filling and “all other” cracker segments.
Marketed as “Grab and Go” with strong presence in vending machines and
convenience stores.

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Krispy Relaunch
Fell short of management projections in 2009

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Reasons
Rebranding
R&D Labs
Belief
Product Line
I. Limited Product line.
II. Consumer dissatisfaction with flavour and taste experience.
I. Change in product and marketing strategy.
I. Engaged to improve product test and quality.
I. To Krispy Natural.
I. To extend beyond single serve offering.
II. Multiple package sizes and more flavour options.
Krispy Relaunch

18. PEM
Krispy Natural
Marketing Strategy
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Product Strategy
I. Increased Package Sizes to multiple servings.
II. Improving taste.
III. 77%-92% positive purchase intent for new Krispy Natural Flavours.
IV. White Cheddar cracker-with-filling flavour is leading with four to one
preference

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Marketing Approach
I. Heavy advertising and promotion to the end consumer.
II. Price Discounts.
III. Pull efforts in contrast to push, to quickly establish the Krispy Naturals
Brand.

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2011 Promotional Plan-Columbus, Ohio

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DSD Distribution
Pricing Strategy
I. Critical component in overall strategy.
II. Operational test completed in 2010 to analyse distribution logistics.
III. Trucks have the capacity to carry test market quantities.
I. It has sought a premium pricing strategy considering product superiority.
II. Sales expectation of $500 million during one year and a pre-tax profit
contribution of 13%.

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The brand projections were as follows:

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Test Market Plan
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Columbus, Ohio
Trio Cities, S.E of United States
I. Brand did not have any prior presence.
II. Five special “Krispy Force” focused solely on selling the new Krispy product
line.
III. Columbus would achieve a 9% share of cracker market projected by
Pemberton
I. Repositioning the product to a premium offering.
II. Critical to test the receptiveness of the trade and consumers towards higher
priced & reformulated products.
III. At the end, of 16 week test period increasing market share from its current
9% to 15%

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27.  Columbus achieved 18% market
share.
 Category volume raised by 18%
 Slight increase to 10% market share.
 Little Category Expansion.
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Columbus, Ohio Trio Cities, S.E of United States
Reasons for poor results in South Eastern, United States.
 Low introductory trade case discount of 15%
 Low Shelf Space and Display Activity.

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Sales and Channel Responses
I. All of them loved the promotional activity and consumer advertising.
II. Pull marketing strategy created a buzz, customers were coming to the
stores and asking for Krispy Natural by name.
III. The large chain headquarters buyers were particularly impressed with the
consumer research results and inventory turn estimates.

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However, there’s a less encouraging view.
Fredrick spoke to an Industry analyst and he said:
I. The positive test market results were driven by significant price discounts,
couponing and sampling, which were not sustainable in a national level.
II. Taste preference claims of Krispy Natural are inflated and flavour was no
better than current brand offerings.

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Ramp-up to National Rollout?
I. Fredrick was disappointed with test market results, and knew projected
figures could be achieved with aggressive national roll out and more shelf
space.
Fredrick had outlined preliminary analysis on the competition is in the next
slide…

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Partial Competitive Analysis

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National Roll-out Risks
National Roll-out Indications
I. Uncertain about Frito-Lay entrance in the market, introducing a full line of
crackers.
II. Varying Consumer taste choices, and competitors can pose a threat to
Krispy Natural.
I. More than 80% customers have positive purchase intent.
II. More than 60% of testers preferred test of Krispy Natural over other
leading brands.

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National Roll-out Recommendations:
I. Extensive Online/Offline Marketing in South Eastern part of United States.
II. Aggressive national roll-out considering potential competitive responses.
III. Expansion of Market to more states across the country.
IV. The brand can be very successful in any newer market if it uses, the
strategies it has used at Columbus, Ohio.

34. Thank You!
Asif Momin
+91-8093246430
asifmomin@gmail.com
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