Natureview Farm,a Vermont-based producer of organic yogurt with a $13 million revenue ,is the leading yogurt brand sold in natural food stores and has a 24% market share. it has achieved this through its special yogurt manufacturing process and a good rapport with the dairy buyers in the natural foods channel. As of the year 2000, the company faces a financial pressure to increase its sales to $20 million by the end of 2001 due to a planned exit by its venture capital investors .Natureview’s Vice-President of Marketing, Mrs.Christine Walker, faces the immediate decision of whether or not to try and achieve this revenue growth by venturing into the supermarket. PROBLEM STATEMENT:
To assess whether NatureView should venture into the supermarket, to achieve the revenue target of $20 million. DISCUSSION OF ALTERNATIVES:
Expansion of 6 SKU’S of the 8-oz. product line into one or two selected supermarket channel regions. Scenario where two regions (North East and West) have been selected: ANTICIPATED REVENUE FOR THE YEAR 2001
COST OF GOODS SOLD (63% OF REVENUE)819000016317000
R & D390000390000
AD IN TWO REGIONS2400000
SKU COSTS (60000*20)1200000
NET PROFIT260000 (2%)793000 (3.06%)
Here, 35000000 has been considered to be the absolute, rather than incremental sales because of the following reason.
SALES VOLUME (IN UNITS)2300000000(3 % growth) 2369000000
SHARE OF SUPERMARKET (97% OF SALES VOLUME)22310000002297930000
ANITCIPATED SHARE OF NATURE VIEW (1.5% SHARE)34468950
(approximates to 35000000 units)
Although the projected revenue figures look positive, there is no definite information on the kind of impact this would have on the natural foods channels. Moreover, this might lead to the...