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NATUREVIEW FARM CASE ANALYSIS

Natureview Farm Case Analysis


Ruoyu Wen
Marketing Fundamentals
Prof. Joan Crooker
Summer 2015

NATUREVIEW FARM CASE ANALYSIS

Natureview is a company that makes yogurts. However, there is a new challenge at present
which is the company want their revenues grow to 50%, and we must help the company choose
the best plan.
There are some elements that have contributed to Natureviews success. Natureview is the
leader of the nature food channel. It has strong relationships with retailers, and these retailers all
trust its products are better. Natureview also has built a impression of high quality and great taste
for their customers. Natureviews yogurts have long quality guarantee period. Customers can
stow the yogurts for a long time so they can buy many yogurts once instead of buying everyday.
And most important element is the company use a creative strategy named guerrilla
marketing. It can help the company lower their cost to make the company more efficient.
The company already has three options. On the first option advocated by the firms Vice
President of Sales, the firm would have to expand six SKUs of the 8-oz. product line into one or
two selected supermarket channel regions. First, as we know, the eight ounce cups represent the
largest dollar and unit share of the refrigerated yogurt market, thus it has major revenue
potential. Secondly, if the company expands six SKUs of the 8-oz product line, this would allow
Natureview Farm to produce enough cups to put them on the supermarkets shelves, with
minimal slotting expense. Third, Based on other natural food brands success in expanding their
product in the supermarket channel has shown significant proves Natureviews product will have
a high chance of success. However, there are still disadvantages. The management had estimated
for comprehensive advertising plan will cost $1.2 million per region per year and Natureviews

NATUREVIEW FARM CASE ANALYSIS

sales, general and administrative expenses (SG& A) would increase by $ 320,000 annually. Due
to Lack of experience in supermarket channel, their broker might take advantage of their
relationship with top supermarkets retails chains in Northeast and West. And also this option
might create direct competition with national yogurt manufacturer.
The second option was proposed by the firms Vice President of Operations. He claims that the
firm should expand four SKUs of the 32-oz. size nationally in order to address the revenue gap.
This option also has some benefits. First of all, while the 32-oz. cups comprised a smaller unit
and dollar share of the yogurt market, they generated an above-average gross profit margin for
the firm. In addition, there were fewer competitive offerings in this size, so this option would
present the firm with a competitive advantage because of the products longer shelf life. Besides,
Natureviews brand has achieved a 45% share of this size in natural food channel, it could sell
approximately 5.5 million units in the first year if the Company decided to expand into 64
supermarket retail chains across the country. Last but not the least, promotional expenses would
be lower since this size was only promoted twice a year. And this option might create conflict of
channel between supermarket and natural food stores.
The last option was proposed by the firms Assistant Marketing Director who suggests that the
firm would have to introduce two SKUs of a childrens multi-pack into the natural foods
channel. This option has less risks and costs but seems conservative. Choosing this option will
allow the company to have more time to prepare before entering the supermarket channel. The
financial potential was very attractive with expected high margin of 37.6%. This option can also
build a strong relationships with the leading natural food channel retailers. The disadvantages

NATUREVIEW FARM CASE ANALYSIS

are Natureview Farm will miss the opportunity to enter the supermarket before competitors, and
due lack of experience, the company is not convinced that they have the necessary resources or
skill-set to sell effectively to and through supermarkets. They are not sure they are ready.
My recommendation for Natureview Farm is option 1. Even though the risk of choosing
option 1 is higher, Natureview Farm should do so because based on what two other natural food
companies result, their revenues increased 200 %. In addition, entry to this supermarket channel
with 8 oz size is more viable than option 2 where to expend into this channel with 32 oz cup
size. The 8 oz size price is more acceptable than 32-oz sizes for customers. And also this
option focuses on regional distribution instead of national, which should make it easier to
implement this product information to region consumer. And the most important thing is the
revenue of option 1 is the highest. Based on my calculate, the option 1 has the revenue of
35,000,000$0.74= $25,900,00> option 2 which is $14,850,000 and option 3 which is
$6,030,000. By expanding six SKUs of the 8-oz size into eastern and western supermarket
regions, Natureview Farm would be able to achieve a net income of $7,004,000, excluding all
the costs, which is the highest net income out of the three options that we proposed.