Natureview Farm Case Study Essay
Natureview Farm Case Study Report
Background
Natureview Farm, a Vermont-based organic yogurt manufacturer with annual revenues of 13 mln. USD and 24% of market share, is a major brand in the natural foods channel. Company’s leadership in this channel was achieved through its emphasis on natural ingredients, strong reputation for quality and great taste, creative marketing techniques and established relationships with leading natural foods retailers. Company now faces financial pressure to grow revenues by over 50% before the end of 2001 by expanding into the supermarket channel.
Market
* The organic foods market, worth 6.5 billion USD in 1999 was predicted to grow to 13.3 billion in 2003. * 1.8 billion USD total U.S. retail sales …show more content…
Product line into one or two selected supermarket channel regions. * II - Expand 4 SKUs of the 32-oz. * II - Introduce 2 SKUs of a children multipack into the natural foods channel. Analysis
Even though proposed option No. 1 sounds to be attractive in terms of revenue potential (6 SKUs chosen were the best-selling SKUs of the 8-oz. line; other natural foods brands had successfully expanded their distribution into the supermarket and increased revenues by over 200% within two years; the first brand to enter would have a first-mover advantage) it actually threatens with high risks and costs (highly competitive environment would demand aggressive promotion and intensive marketing support – advertising plan would cost 1.2 million USD per region per year, SG&A would increase by 320 000 USD …show more content…
2 seems to be more appealing for the company’s revenue growth strategy (32-oz already generated an above average gross profit margin for Natureview (43.6% vs36.0% for the 8-ozline); fewer competition and product’s longer shelf life gained to the Natureview’s brand 45% share of this size segment in the natural foods channel; promotional and expansion marketing expenses will be significantly lower – only 10% compared to 8-oz. size in each region, representing 120 000 USD per region per year) it is highly dubious that new users would readily “enter the brand” via a multi-use size. Moreover, sales personnel with experience for sophisticated supermarket channel must be hired in order to establish relationships with brokers. Added to that, it is also physically hardly possible for the sales team to achieve full national distribution in 12
Background
Natureview Farm, a Vermont-based organic yogurt manufacturer with annual revenues of 13 mln. USD and 24% of market share, is a major brand in the natural foods channel. Company’s leadership in this channel was achieved through its emphasis on natural ingredients, strong reputation for quality and great taste, creative marketing techniques and established relationships with leading natural foods retailers. Company now faces financial pressure to grow revenues by over 50% before the end of 2001 by expanding into the supermarket channel.
Market
* The organic foods market, worth 6.5 billion USD in 1999 was predicted to grow to 13.3 billion in 2003. * 1.8 billion USD total U.S. retail sales …show more content…
Product line into one or two selected supermarket channel regions. * II - Expand 4 SKUs of the 32-oz. * II - Introduce 2 SKUs of a children multipack into the natural foods channel. Analysis
Even though proposed option No. 1 sounds to be attractive in terms of revenue potential (6 SKUs chosen were the best-selling SKUs of the 8-oz. line; other natural foods brands had successfully expanded their distribution into the supermarket and increased revenues by over 200% within two years; the first brand to enter would have a first-mover advantage) it actually threatens with high risks and costs (highly competitive environment would demand aggressive promotion and intensive marketing support – advertising plan would cost 1.2 million USD per region per year, SG&A would increase by 320 000 USD …show more content…
2 seems to be more appealing for the company’s revenue growth strategy (32-oz already generated an above average gross profit margin for Natureview (43.6% vs36.0% for the 8-ozline); fewer competition and product’s longer shelf life gained to the Natureview’s brand 45% share of this size segment in the natural foods channel; promotional and expansion marketing expenses will be significantly lower – only 10% compared to 8-oz. size in each region, representing 120 000 USD per region per year) it is highly dubious that new users would readily “enter the brand” via a multi-use size. Moreover, sales personnel with experience for sophisticated supermarket channel must be hired in order to establish relationships with brokers. Added to that, it is also physically hardly possible for the sales team to achieve full national distribution in 12