Natureview Farm grew from $100,000 to $13 million in revenue from 1989 to 2000 by producing yogurt with natural ingredients and longer shelf life. To increase revenue to $20 million by 2001, they considered: 1) Expanding 8oz cups into supermarkets, 2) Expanding 32oz cups nationally in supermarkets, or 3) Introducing children's multipacks in natural food stores. Hypothesizing that Option 2 could generate sufficient revenue while maintaining relationships in the natural food channel, Natureview chose to expand 32oz cups in supermarkets to achieve their revenue goal.

1. Natureview Farm :
Case Analysis

3. In 1989 :
• Founded and manufactured in Cabot, Vermont
• Entered market with 8-oz and 32-oz with plain and vanilla flavor
• Used natural ingredient with longer average shelf-life of 50 days.
In 1999 :
• Company revenue growth from $ 100,000 to $13 million
• Fruit on the bottom yogurt
• Low-cost “guerilla marketing” tactics
In 2000:
• Expanded to 12 yogurt flavors in 8-oz. & 4 flavors in 32-oz.
• Exploring multipack yogurt products

5. Yogurt is consumed by 40% of the population
 Among these people 7 % are women
 Organic foods market was expected to grow by 20-40%
and the yogurt market by 2-4% in the next 5 years
 Different criteria for the regular shoppers and the people
prefering organic foods in the selection of yogurt.
 46% of organic food buyers bought food at a supermarket
 29% at natural foods store.
 25 % at a small health store.

7. Shoppers at natural food stores tend to be more educated,
richer and older than the regular supermarket shoppers.
 They tend to settle in the Northeast and the West.
 Natural stores channel was expected to grow 7 times faster
than the supermarket channel.
 58% of US households told that they will buy more organic
products if prices were less.
 44% demanded a larger variety of organic products.

9. TO EMPLOY MEASURES TO INCREASE THE
REVENUE FROM $13 MILLION (YEAR 2000) TO
$20 MILLION BY THE END OF THE YEAR 2001.
-------------------Decision is to be made!!

10. Natural Food Channel

11. Super Market Channel

13. Decision
Making

14. Decision Criteria
• REVENUE GENERATION
• EFFECT ON THE EXISTING RELATIONSHIPS
• ADDITIONAL COSTS

15. 3 Options!

17. To expand 6 SKUs(Stock-keeping units) of 8
oz cups into 1 or 2 selected supermarkets.

19. •Great upside potential
• 8 oz cups were the largest source of
revenue generation
• Horizon Organic and other competitors
were also planning to enter the
supermarkets and they would allow entry
of only 1 such brand
•A modest growth rate(3%).

21. • Fierce competition in the 8 oz cup segment (74% of
market share).
• Alienating relations with the existing distribution
channel
• Fear of losing trust and in turn shelf place in the
natural food stores.
• Increased costs owing to increased advertising,
trade promotions increment in SG&A costs.
• Higher slotting costs
• Inefficient sales team.

23. To expand 4 SKUs of 32 oz cups nationally
in supermarkets.

25. • Potentially gives higher profit margins
than the 8 oz cups
• Natureview had competitive advantage
because of the longer shelf life
• Lower marketing, advertising and SG&A
cost increments.
• Trade Promotions only twice a year.

27. • Doubt that they will enter a multi – brand use.
• Inefficiency of the sales team.
•Need to hire additional sales personnel.
• Increased costs for advertising , marketing and half-
yearly trade promotions(though less than option 1).
• The SG&A costs will increase by $160,000.

29. Introduce 2 SKUs of children’s multi-pack in
the natural foods channel.

31. • Established leader in the market(45%).
• Perfect positioning for the launch of children
multipacks.
• Attractive long term potential.
• Existing channel relationships would
strengthen.
• Effective sales team.
• No additional SG&A costs.
• The natural foods channel was expected to
grow 7 times faster than the supermarket
channel.

33. • Lower revenue generation than either of the 3
options.
• Fears of natural food retailers putting forth the
same demands as a supermarket retailer.
• Fear of falling behind the competitors and losing an
important opportunity for expansion and increasing
revenue.

34. HYPOTHESES

35. I hypotheses that OPTION 2 shall generate
enough revenue so as to satisfy the
objective and at the same time should be
more suitable among the 3 options to
satisfy the remaining decision criterias.

37. TARGET OF REVENUE GENERATION =$ 20 MILLION
CURRENT REVENUE GENERATION =$ 13 MILLION
DIFFERENCE TO BE ACHIEVED(in 1 year) =$ 7 MILLION
SELLING PRICE (at the supermarket) =$2.70/cup
DISTRIBUTOR+RETAILER MARGIN =15%+27%=42%
SELLING PRICE FOR NATUREVIEW =$ 1.566/CUP
ANTICIPATED INCREMENT IN SALES UNIT = 5,500,000
INCREASES REVENUE GENERATION = 5,500,000*1.566=$8,613,000
Hence, the revenue generation objective is fulfilled..

39. • Natureview could not risk itself losing the trust of the natural
food stores as they were expected to grow 7 times faster than
the supermarket stores. “Farm had developed strong
relationships with leading natural foods retailers, including the
chains Whole Foods ($1.57 billion revenues in 1999) and Wild
Oats ($721 million revenues). The organic foods market, worth
$6.5 billion in 1999, was predicted to grow to $13.3 billion in
2003.”

40. Natureview should therefore go with
option 2 !!

41. Summary :

42. • Title slide
• Background
•Introduction
• Situation Analysis
• Questions • Decision options
• Decision criteria
• Decision options
• Option 1
• Option 2
• Option 3
• Hypothesis
• Analysis
• Proof

43. Disclaimer
Created by R. Veena Desai, BIT Mesra, during a
marketing internship under Prof. Sameer Mathur,
IIM Lucknow.