Natureview Farms Case Study

Topics: Revenue, Generally Accepted Accounting Principles, Supermarket Pages: 6 (1642 words) Published: February 12, 2012

Go big, or go home! This is a saying that is heard in all different fields. Its meaning is far more than the five words it contains. Go big, as in everything you do, do it to the best of your ability. Go home, means that you are throwing in the towel when things get tough, more or less, just giving up. My dad said those words to me when I was too afraid to get on stage at my first ballet recital, and he would say those same words to the management team at Natureview Farm after reading into their current predicament. History and Company Status

Since 1989, Natureview Farm’s yogurt has been known for its unique and creamy texture. The texture was created through a completely organic process. The company’s founder developed the recipe using only natural ingredients, as well as, cows that have not been affected with any type of growth hormones. This special process allowed for the shelf life of the product to be elongated form 30 days, that of the competitor, to an astonishing 50 days. Natureview Farm currently sells eight ounce cups in twelve flavors, and 32 ounce cups in four flavors. The company is currently considering a child’s multipack product that contains four ounce cups.

Natureview Farm revenues have grown considerably in the past ten years. The company strives to succeed within the natural food channel based on good relationships with their retailers. Natureview Farm is viewed as a major brand in such stores as Whole Foods and Wild Oats. Annual revenues in the previous year, 1999, concluded at $13 million. Strategic Concerns

Much of Natureview Farm’s success was accomplished thanks to an equity infusion from a venture capitalist firm. Unfortunately, the venture capitalist firm is soon cashing out, leaving Natureview Farm with a major decision to make. The company will now need to evaluate growth strategies that will lead them towards their goal. In February of 2000, Chief financial officer, Jim Wagner, decided that it will be crucial to increase revenues from $13 million to $20 million prior to the end of 2001. With this goal in mind a team got together to discuss three very well thought out options. Overview of Options

Option one, as well as option two, involve a plan to expand product lines into the supermarket channel. Option three, on the other hand, keeps the company loyal to its consumers by staying solely in the natural foods channel. The first option will be to expand six stock keeping units (SKU’s) of the eight ounce cup size into 20 northeastern and western supermarkets. The second option will be to expand four SKU’s of the 32 ounce product into 64 supermarkets nationwide. The third option will be to introduce two SKU’s of a children’s four ounce cup multipack into natural food stores that already sell Natureview Farm products. Channels

A huge part of the decision that is being faced is the choice whether or not to enter the supermarket channel. This opportunity will be used to highlight some of the pros and cons of each channel individually, as well as comparatively. The following list displays the pros with a check mark and the cons with an ex.

Supermarket Channel
* Distributes to 97% of all yogurt consumers
* Reduces the cost to the consumers
* Increases the annual market growth
* Upsurges the brand awareness
* Allows for a first to market opportunity
* Introduces slotting fees
* Mandates quarterly or semi-annually advertising agreements * Increases demand, which increases manufacturing and labor costs * Creates a need for need personnel with knowledge of the industry

Natural Foods Channel
* Demonstrates category growth of 20% annually
* Consists of consumers that are less price sensitive
* Contains previously established relationships with retailers * Holds consumers that are already loyal to the brand
* Charges a one-time free case allotment per slot, per...
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