1.
Natureview Farm

2.
Agenda
• Overview
–Market
–Nature/Organic Market trends
–Yogurt Market trends
–Challenges
• Option 1
• Option 2
• Option 3
• Financials
• Recommendation

3.
Company
• Founded in 1989
• Manufacturers and marketers of
refrigerated cup yogurt
• Differentiators
–Nature Ingredients & longer
shell life
–Reputation for high quality &
great taste

4.
Continuation
• Key success factors
–Strong brand
–Effective, low cost “guerrilla marketing”
–National distribution in natural
food channels
–Strong relationship with
distributors

5.
Natural/Organic Market Trends
• Organic foods market predicted to grow
from $6.5 billion to $13.3 over 4 years.
• Generally organic products customers
tend to be more educated, earn higher
incomes, be older and live in the
northeast and west.
• 67% of households consider
price as a barrier to
purchase of organic
products.

6.
Continuation
• 44% of consumers would like a wider
selection of organic products in
supermarkets.
• Supermarkets are moving toward
attracting new customers by
offering more organic products.

7.
Yogurt Market Trends
• Concentrated – 4 competitors
control over 50% share.
• Supermarkets = 97% of total
sales (3% annual growth).
• Natural food stores = 3% total
sales (20% annual growth)
• Factors in purchasing decisions:
-Package
type/Size, flavor, price,
freshness, ingredients, organic.

8.
Natureview
• Challenge : identify path to grow
revenues by over 50% within 23
months.
• Goal : Attain highest possible
valuation in order to secure new
investors or position itself for
acquisition.

9.
Option 1
Expand 6 SKU’s of the 8-oz product line into one or two
selected supermarket channel region.
Pros:
 8-oz cups represent largest dollar
and unit share of market
 Supermarkets fear losing market
share to natural food competitors
 Other natural food brands have
successfully expanded to
supermarkets
Cons:
 Highest level of competitive trade
promotion and marketing spend
 Possible channel conflict between
supermarkets and natural food stores
 Promotion and lower price at
supermarkets may hurt the brand

10.
Option 2
Expand 4 SKU’s of the 32-oz product line nationally.
Pros:
 32-oz cups generate an above-
average gross profit margin (43.6%
vs 36% for 8-oz line)
 Fewer competitive offerings in this
size
 Competitive advantage due to long
shelf life of product
 Lower promotional expenses than
option 1
Cons:
 Higher slotting fees due to national
distribution
 National distribution will be challenging
within 12 month
 No guarantee that customer awareness
of the brand would grow
 Promotion and lower price at
supermarkets may hurt the brand

11.
Option 3
Expand 2 SKU’s of a children’s multi-pack into naturals
food channel
Pros:
 Natureview already has strong
relationships with leading natural
foods channel retailers
 More time to prepare the company
for moving into supermarkets
 Financially-attractive
 High margins- 37.6%
Cons:
 Fast growth of natural foods channel
will lead to demands equal to those of
supermarkets
 Miss opportunity to enter supermarkets
before competitors

12.
Financials of Option 1
Sale price $0.78
Retail margin $0.21
Price to retail $0.57
Distributor margin $0.09
Price to distributor $0.48
Mfc cost $0.31
Gross profit NV $0.17

13.
Incremental unit
sales(20%
growth after year
Top line
growth(increm,
revenue)
Incremental
production costs
2000 2001
35,000,00
0
$16,939,6
50
$10,850,0
00
2002
42,000,0
00
$20,327,
580
$13,020,
000
2003
50,400,00
0
$24,393,0
96
$15,624,0
00
2004
60,480,0
00
$29,271,
715
$18,748,
800
2005
72,576,0
00
$35,126,
058
$22,498,
560
2006
87,091,
200
$42,15
1,269.8
9
$26,99
8,272.0
0
Gross profit
SG&A increase
Trade promo
Advertisement in
2 region
Slotting fee $1,200,0
00
$6,089,65
0
$320,000
$90,000
$2,400,00
0
$7,307,5
80
$640,000
$90,000
$2,400,0
00
$8,769,09
6
$960,000
$90,000
$2,400,00
0
$10,522,
915.20
$1,280,0
00.00
$90,000
$2,400,0
00
$12,627,
498.24
$1,600,0
00
$90,000
$2,400,0
00
$15,15
2,997.8
9
$1,920,
000
$90,00
0
$2,400,
000
Incremental cash
flow
NPV
$1,200,0
00
$27,184,
767.45
$3,279,65
0
$4,319,0
96
$5,352,49
8
$6,752,9
15.20
$8,537,4
98.24
$10,74
2,997.8

14.
Financials of Option 2
Sale price $2.83
Retail margin $0.76
Price to retail $2.07
Distributor margin $0.31
Price to distributor $1.76
Mfc cost $0.99
Gross profit NV $0.77

15.
Incremental unit
sales(15%
growth per year)
Top line
growth(increm,
revenue)
Incremental
production costs
2000 2001
5,500,000
$9,658,08
2
$5,445,00
0
2002
6,325,000
$11,106,7
94.88
$6,261,75
0
2003
7,273,750
$12,772,8
14.11
$7,201,01
2
2004
8,364,81
3
$14,688,
736
$8,281,1
64
2005
9,619,53
4
$16,892,
046
$9,523,3
39
2006
11,062,
465
$42,151
,269.89
$26,998
,272.00
Gross profit
SG&A increase
promo cost
Advertisement in
2 region
Slotting fee $2,560,0
00,00
$4,213,65
0
$64,000,0
00
$480,000,
000
$160,000
$4,845,04
4
$640,000
$480,000
$320,000
$5,769,09
6
$64,000
$480,000
$480,000
$6,422,9
15.20
$64,000.
00
$480,000
$640,000
$7,627,4
98.24
$64,000
$480,000
$800,000
$8,152,
997.89
$1,920,
000
$90,000
$2,400,
000
Incremental cash
flow
NPV
$2,560,0
00
$20,044,
533.32
$3,509,08
2.50
$3,981,04
4.88
$4,547,80
1.61
$5,223,5
71.85
$6,024,7
07.62
$6,970,
013.72

16.
Financials of Option 3
Sale price $3.35
Retail margin $1.17
Price to retail $2.18
Distributor margin $0.20
Price to distributor $1.98
Mfc cost $1.15
Gross profit NV $0.69

17.
Recommendations
Option 1
• Financials
• Only a regional distribution instead of national
which should make it easier to implement
• Competitors are going to move into
the supermarket space and we
may miss a huge opportunity
by not taking the risk
• Higher slotting fees,
but more visibility
of the product

18.
Recommended Adjustments
What action plan should the company pursue?
• Marketing mix: 8-oz, $0.78, located in-store
with other major yogurt manufactures, in-
store promotions
• Sales: utilize more sophisticated technology
to monitor sales trends
• Brand: will remain premium through
joint promotions with other
premium products such as
granola or organic fresh fruit

19.
Continuation
• Channel partner Arrangements:
 Lower MSRP for natural food retailers to better
compete with supermarkets
 Work with retailer, distributer, and wholesaler to
reduce costs and maintain margins
 Ex: case-breaking, shelf stocking, paperwork

20.
Net Marketing contribution= (Sales revenue * % gross profit) –
Marketing expenses
Net Marketing contribution
(in thousands)
2001 2002 2003 2004 2005 2006 Averag
e
Opt. 1 $3,599.
65
$4,817.
58
$6,279.
09
$8,032.
91
$10,137
.49
$12,662
.90
$7,585.
28
Opt. 2 $3,669.
08
$4,301.
04
$5,027.
80
$5,863.
57
$6,824.
70
$7,930.
01
$5,602.
70
Opt. 3 $997.07 $1,308.
84
$1,698.
55
$2,185.
68
$2,794.
61
$3,55.7
6
$2,090.
08

21.
DISCLAIMER
Thank You for your time!!
-Created by Rajat Nagar, IIT Kanpur,
during a marketing Internship by
Prof. Sameer Mathur,
IIM Lucknow.