Natureview Farm Case Summary
SUMMARY:
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 …show more content…
1999 2000
SALES VOLUME (IN UNITS) 2300000000 (3 % growth) 2369000000
SHARE OF SUPERMARKET (97% OF SALES VOLUME) 2231000000 2297930000 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 dilution of brand value due to the possible existence of two different price points of the same commodity albeit in two different channels.
OPTION …show more content…
size nationally. EXPECTED REVENUE 5500000*2.70 = $14850000
COST OF GOODS SOLD 14850000*100/143.6 = $10341225.63
GROSS PROFIT 14850000 – 10341225.63 = $4508774.3
ADDITIONAL EXPENSES
SALES $160000
MARKETING 120000*4 = $480000
SKU COSTS (40000*64) $2560000
TOTAL $3200000
NET ADDITIONAL PROFIT $1308774.3 (11% of the revenues)
Notwithstanding the net additional profit, this option is laced with many challenges.
Scale required for launching this option is huge and the company doesn’t seem to be prepared to handle the sales and marketing efforts on such a large scale. Training of a new sales force, to achieve full national level distribution in 12 months could be tough.
OPTION 3:
Introduce 2 SKU’s of children’s multipack into the natural foods channel.
Estimated Revenue on incremental sales of 1.8 Million units: 1800000 * 3.35 - $6197500
Cost of Goods Sold: .100*6197500/137.6 = $4503997.09
Gross Profit margins: $1693502.90
Additional expenses incurred:
Cost of complimentary cases:2.5/100 * 6197500 = $154937.5
Marketing expenses: $250000
Profit margin: $5792562.5 (93% of the estimated revenue)
But this figure is sans the cost which would be incurred on Research and Development and on
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 …show more content…
1999 2000
SALES VOLUME (IN UNITS) 2300000000 (3 % growth) 2369000000
SHARE OF SUPERMARKET (97% OF SALES VOLUME) 2231000000 2297930000 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 dilution of brand value due to the possible existence of two different price points of the same commodity albeit in two different channels.
OPTION …show more content…
size nationally. EXPECTED REVENUE 5500000*2.70 = $14850000
COST OF GOODS SOLD 14850000*100/143.6 = $10341225.63
GROSS PROFIT 14850000 – 10341225.63 = $4508774.3
ADDITIONAL EXPENSES
SALES $160000
MARKETING 120000*4 = $480000
SKU COSTS (40000*64) $2560000
TOTAL $3200000
NET ADDITIONAL PROFIT $1308774.3 (11% of the revenues)
Notwithstanding the net additional profit, this option is laced with many challenges.
Scale required for launching this option is huge and the company doesn’t seem to be prepared to handle the sales and marketing efforts on such a large scale. Training of a new sales force, to achieve full national level distribution in 12 months could be tough.
OPTION 3:
Introduce 2 SKU’s of children’s multipack into the natural foods channel.
Estimated Revenue on incremental sales of 1.8 Million units: 1800000 * 3.35 - $6197500
Cost of Goods Sold: .100*6197500/137.6 = $4503997.09
Gross Profit margins: $1693502.90
Additional expenses incurred:
Cost of complimentary cases:2.5/100 * 6197500 = $154937.5
Marketing expenses: $250000
Profit margin: $5792562.5 (93% of the estimated revenue)
But this figure is sans the cost which would be incurred on Research and Development and on