Harvard Business Review - Case

1. Launching Krispy Natural
Cracking the product management code

2. Overview of the company
Krispy Inc.
acquired by
Pemberton
Pemberton is the
snack food division of
Candler Enterprises
Candler Enterprises is
multinational company
$18 B Revenue - 2011
Snack Food Division
(Pemberton
products)
Beverages Division
Quick Service
Restaurant Division
Pet Care Division

3. More About Pemberton
•Market leader in cookie and bakery snacks segment.
• Direct Store Delivery (DSD) strategy employed.
• Known for it’s ability to create a superior taste
experience, constant innovation and new
products/flavors.
• It has market leading brands like Softies Cookies &
Homestyle muffins and doughnuts.
• Pemberton contributes $5 Billion to
Candler Enterprise’s revenue.

4. They have strategic priorities
• Pemberton has achieved a compounded annual growth rate of 14%
(CAGR) in terms of revenue
• Sustained growth is central to the company’s annual and long term
objectives
• Develop a sustainable competitive advantage
• Building a collection of attractive & durable brands
•Leveraging leading marketing, sales and DSD systems to increase
revenue
• Acquiring capabilities in the salty snack category

5. What are we
tackling
here ?

6. Situation Analysis
• Krispy Inc is a regional salty cracker brand acquired by Pemberton
Foods.
• It was earlier sold as a low cost single serving product with a Grab
and go concept.
• When the company was transitioned to Pemberton, it fell short of
management projections by close to 40%.
• Main reasons for failure were cited as limited product line and
lower flavor satisfaction.
• A strategy revamp was needed and hence Krispy was relaunched
as Krispy Naturals.

7. The future plan ?
Brandon Fredrick was
kept in charge of
coming up with a
marketing plan for
Krispy Naturals.
A Market test was
initiated in the states
of Columbus, Ohio and
3 Southeastern states
where Krispy was
initially established.
Based on the test
results, Fredrick it to
come up with
necessary changes in
the marketing
plan.

8. Who is responsible ?
•Ashley Marne
Executive Vice President – Sales & Marketing
•Brandon Fredrick
Marketing Director
•Patricia Williams
Company President

9. What is the market like ?
Retail cracker sales in the
US reached an estimated
$ 6.9 Billion in 2011
Growth rate for the
overall cracker industry
from 2008 to 2010 was
2.2% CAGR
Major Components of Cracker Market –
• “All Other” general (75%)
• Saltlines and crackers with filling (10%)
• Graham Crackers (6%)
Kraft Foods
Inc
Kellogg Co
Perpperidge
Farm
Market Share division

10. The People want more
A Mintel Study of salty snacks in the
US stated 74% respondents
consumed crackers on a regular basis
For most of the metrics, crackers
were the top salty snack, ahead
of potato chips
Standalone flavor of the
crackers and the convenience of their
packaging is a key selling point
Focus on health is now
important for most US consumers

11. “ I still believe in Krispy and with a
tweaking of the product and
marketing strategy, it can provide
an attractive growth opportunity”

12. Type of Cracker
Positive Purchase Intent
(Definitely or Probably would buy)
% Testers that preferred taste of
Krispy Natural over leading Brands
Crackers with Filling
White Cheddar 92% 78%
Smoked Gouda 77% 65%
Chipotle Cheddar 78% 64%
Creamy Swiss 80% 72%
Tomato Basil 85% 75%
Vegetable Herb 77% 50%
Flat Crackers
Smoked Cheddar 81% 61%
Sundried Tomato 80% 58%
Cracked Pepper & Olive Oil
80% 55%
Roasted Garlic 81% 59%
Relaunching a regional brand
Purchasing intent based on Market Test
Krispy failed to match
management expectations Rebranding and national
launch of the product was
warranted

13. Region wise splits
Company
Columbus Southeast
Pre-test
Market Post
Pre-test
Market Post
Kraft 40% 33% 34% 32%
Kellogg 25% 22% 23% 22%
Pepperidge
Farm 11% 10% 10% 10%
Krispy 0% 18% 9% 10%
Krispy performed very well in the new market it entered – Columbus.
However, it could not reach the 15 % mark expected in the South
East states where it already had a presence

14. Important Questions
Will consumers accept Krispy
Naturals with a higher price point
as compared to it’s predecessor ? Would the same acceptance rates
prevail once the samples, discounts
and coupons go away ?
How will current competitors
respond to the national launch of
Krispy Naturals
What is the best strategy to
roll out and neutralize the
competition nationally ?
Considering Frito Lays plan to enter the market,
how should the current strategy change ?

15. Krispy OLD vs Krispy Naturals
• Regional Brand
• Limited Flavor
options
• Limited Production
line
• Multiple serving
packages
• Targeting health
conscious customers
• More flavor options
and better taste
experience through
research

16. How do we market this ?
•Product
•Multiple Serving packaging
•Focused on improving taste
•Health Conscious
•Several different options in standalone and
filling type

17. Marketing
•Emphasized on heavy advertising as done for
other product lines
•Pull marketing strategy, Create a loyal fan
base and then attract recurring purchases
through
•Promotion strategies like discounts, freebies
and coupons in smaller regions

18. Distribution
The same DSD – Direct
Store Delivery concept
of Pemberton would
be leveraged for Krispy
Naturals The supply chain
needs to be
optimized to account
for longer shelf life
of crackers
Hired representatives
known as Krispy force for
proper distribution

19. Pricing
Premium pricing
strategy adopted 155% of category
average as the
baseline price
Price per package would
match competitors but
the quantity would be
lower

20. Do the numbers add up ?
• Grabbed 18 % market share in Columbus as a new entrant in salty
snack business
• Kraft, Kellogg and Pepperridge in total lost 10% of market share,
despite higher demand of cracker products since 2010. This shows
their brand complacency
• Forecasted National roll out sales figures in Columbus and Southeast
scenario for 3rd year depicts profit before tax of more than 13% and
sales more than $500 million.

21. Competition Ahead already !
Plans to enter the salt cracker
market by introducing a whole new
line of crackers by the end of the
second quarter

22. Disclaimer
This presentation is prepared by Chirag Mehta ( H.R College – Mumbai University) as
part of a summer internship under Prof. Sameer Mathur (IIM Lucknow).
Chirag Mehta
Prof. Sameer Mathur