Krispy natural Case Study by Shivam Agarwal

1. HARVARD BUSINESS CASE STUDY
Launching Krispy Natural : Cracking the Product Management Code

2. Candler
Enterprises
Pemberton
Products
Beverage
Division
Restaurant
Chain
Pet Care
Candler Enterprises –
A Multinational beverage and snack goods
manufacturer. with the revenue figures of
$18 Billion in 2011.

3. Pemberton Products-
• Snack food division : Packaged food bars, cookies, sweet baked goods
• CAGR :14 % in last 5 yrs.
• Market Leader in Sweet Snack Market of US
• Unique DSD Distribution system
Income as a Percent of Sales 2011
Sales 100 %
COGS 78.8 %
Brand Advertising & Marketing 7.7 %
Pretax Contribution 13.5 %
Profit after Tax 7.7 %
Softies Cookies
Major Brands
Homestyle Muffins
& Doughnuts

4. Ashley Marney
(Executive V.P.
Sales & Marketing)
Brandon Fredrick
(Marketing Director)
Burt Spivey
(Chief Operating Officer)
Patricia Williams
(President)
Characters of
Case at
Pemberton

5. 1
• Building a collection of attractive, durable brands.
2
• Leveraging leading marketing, sales and DSD
systems to increase revenue and profits.
3
• Building or acquiring capabilities in salty snack
categories.
Strategic Priorities of Pemberton Products

6. Pemberton entered Salty Snack Market with Acquisition of Krispy Inc
in 2008 but fell short of projections after its launch in 2009…
Pemberton
Krispy Inc
Plan
In $Millions
2009 Actual
In $Millions
% to
Plan
Krispy Retail 97.5 50.8 52.1
Krispy Vend 23.4 18 76.9
Total Krispy Single-Serve 120.9 68.8 56.9
This Failure was attributed to
• Limited Product Line
• Taste Dissatisfaction
Past records in Salty Snack Market Segment

7. • Retail sales $6.9 billion in 2011
• Compounded Annual Growth rate - 2.2% for 2008-10
• Mintel study :74% respondents consumed crackers on a
regular basis and 34% ate them as part of regular
weekly diet.
• Segments like crackers with filling expected to grow 10-
14% per year.
US Cracker Industry Figures & Projections

8. New Product Introduction : Krispy Natural
US Cracker
Industry
Potential
Future Plans
in view of
strategic
priorities
CrackerLine
Extension

9. Krispy Natural :Product Management
Product Strategy
Package sizes increased to Multiple servings
High Nutritional content: 100% whole wheat, natural
ingredients ,150 calories etc
New Flavors in both “Cracker with filling” & “F lat
cracker” segments.

10. The Study shows varying Purchase intents for different flavors and
their preference over other brands.

11. Marketing Strategy
Pull Strategy
• Focus on extensive Advertising &
Merchandising
• Aggressive plans for Trade promotions
Projected Expenses
Year 3
$ in millions
Advertising 33
Merchandising 37
Other Brands

12. Promotional Plan in Columbus,Ohio

13. Distribution
Strategy
Pricing
Strategy
Approx 155% the category average cost
per ounce, Visual Price same but quantity
reduced
DSD distribution & Krispy Force
team
Krispy Natural

14. Sales Objectives
• Minimum sales of $500 million during year one of
national distribution
• Steady state pre tax profit contribution of at least 13%
Sales Projections

15. Test Market Plan &Results
• Sept,2011- launched in two test market regions: Columbus , Ohio, and a trio of cities
in the Southeastern United States. For 16 week test period
• Sales share was double the projected value in Columbus
• Share was 5% less than projected in Southeastern US due to low shelf space

16. Impact on Competitors
Short term
responses
New product testing
in process
Increase trade
spending and
consumer
promotions
Increase A & M
Long Term
responses
Spend heavily to
counter national roll-
out
Capitalize on pull
Product line
improvements
Compete on quality
and brand
reputation
Potential Competitor Responses

17. National Roll Out
• The Test Market reports clearly suggest
that Krispy Natural has a very
promising future crossing sales and
pretax profit contribution barriers
• Annualized National Projections are
definite to cross the expected threshold of
$500 million
• It damages the market share of other
leading brands

18. • Frito Lay is rumored to be launching a similar product in second quarter which can
hamper Marne’s expectations
• Measures against Frito Lay
 Celebrity endorsements
 Ads projecting the product as a necessary element of a US Family diet
 Targeted schemes and Trade Promotions
 Incremental innovation
 Optimization of DSD &Krispy Force
 Message strategy with Family Health Benefits as the POD
 Creative strategy including Product Comparisons with routine snack options
 End of Aisle Displays and Point of Purchase marketing
 Online Campaigns based on recipe innovations with crackers
Strategy against Frito Lay

19. Intro to Candler
Enterprises
(Pemberton
Products)
Characters of
Pemberton
Strategic Priorities
Past Records in
Salty Snack
Market
US Cracker
Industry
Krispy Natural
Product
Management
Sales Objectives
Test Market Plan
,Results
Impact on
Competitors
National Roll Out
Strategy against
Frito Lay
SUMMARY

20. Created by Shivam Agarwal ,KNIT Sultanpur during a Marketing Internship under
Dr Sameer Mathur, IIM Lucknow.
DISCLAIMER