Case Study : Natureview Farm

How has Natureview succeeded in the natural foods

channel?
• The following reasons have contributed to Natureview’s success in natural
foods channel:
• Higher shelf life: Average shelf life of Natureview Farm’s yogurt was 50
days as compared to 30 days shelf life of competitors products
• Fruit on the bottom: This technique helped them expand product offerings
thereby increasing revenues
• High quality and great taste: The customers who shopped in natural foods
channel were less price sensitive, more educated and earned higher
incomes. So, they were comfortable in paying higher for higher quality and
taste
• Low cost marketing: The company practiced creative low cost guerrilla
marketing tactics that worked well for them and increased their profits
• Strong relationships with retailers: They had good relationships with the
chains such as Whole Foods and Wild Oats which helped them increase
sales
What are the two primary types of growth strategies
under consideration by Natureview?
The primary growth strategies under consideration are:
• Enter supermarket channel:
1) 46% of the organic food consumers bought organic products from
supermarkets and yogurt sales had grown at an average of 3% per year in
supermarkets
2) 58% of US households were ready to buy organic products if they were
less expensive. So, supermarkets provided a good opportunity to
increase the reach to such consumers.
• Expand in multi-pack category in natural foods channel:
1) Natural foods channel was growing at 20% per year and Natureview was
already an established player in this category. This would provide a
perfect start to the new category.
2) The company would not incur any additional SG&A cost and overall cost
to enter the category would be low.
How do the three options compare financially in terms of
yearly revenue, gross margin, required investment, and
profit potential? (Annexure 1,2,3)
Option 1: To expand six SKUs of the 8-oz. product line into one or two
selected supermarket channel regions – Walter Bellini, Vice President of sales

Strategic Advantages: Risks:

• Expansion to newer markets and
reaching a wider target audience
• High revenue potential to meet target
of $20million
• First mover advantage in organic
yoghurt segment
• Growing trends in natural and organic
foods in supermarkets (20% growth
of organic yoghurt)
• Relationship of Natureview’s brokers
with leading supermarket retail
chains in northeast and west
• Hiring sales personnel with experience
of selling to supermarket channels and
establishing relationships with
supermarket brokers
• Highest level of competitive trade
promotion and marketing spending
• High advertising costs, sales, general
and administrative expenses
• No experience of sales through
supermarket chains
• Chances of diluting the premium brand
positioning of Natureview Farm
Option 2: To expand four SKUs of 32-oz. size nationally – Jack Gottlieb, Vice
President of Operations
Risks:
Strategic Advantages:
• New-users might not enter the brand via a
• Above average gross profit margin as
multi-use size
compared to 8-oz line
• Hiring sales personnel with experience of
• Fewer competitive offerings in this
selling to supermarket channels and
segment
establishing relationships with
• Strong competitive advantage due to
supermarket brokers
longer shelf life
• Difficult for sales team to achieve full
• Lower promotion and marketing
national distribution within a year
expenses (promoted only twice a
• Higher slotting costs due to entry through
year)
large number of retailers
• Competitor introducing new product and
introduction of private labels by
supermarkets in organic yoghurt segment
Option 3: To introduce two SKUs of a children’s multi-pack into natural foods
channels – Kelly Riley, Assistant Marketing Director

Strategic Advantages: Dis-Advantages:

• Established strong relationships with • Opportunity lost if not present in
leading natural foods channel retailers supermarket chains
• Perfect brand positioning of Natureview
farms to launch its own children’s multipack
product offering into their core sales
channels
• High revenue potential and gross
profitability
• Lower sales and marketing expenses, no
additional SG&A costs
• 7x faster growth in Natural foods channel
as compared to supermarket channels
What action plan should the company pursue? What changes
in the current marketing mix, sales, brand, and channel
partner arrangements do you recommend in order to
implement the action plan?
ACTION PLAN:
• At present, Natureview Farm should go ahead with introduction of two new SKUs
of a children’s multipack in Natural foods channel.
• This would increase their market share and maintain their premium brand
positioning among the right target audience
• Also, Natural foods channel are expected to grow faster than supermarket chains
and multipacks segment was growing by more than 12.5% per year
• Moreover, there would be no channel conflicts and this strategy will further
enhance the relationships with existing natural foods channel partners
• In the short term, i.e. by 2001, the company will be able to meet its revenue
targets and attain the highest possible valuation
• Once they have attained maximum possible valuation, it should now start focussing
on entering the supermarket chains through four SKUs of 32 oz. size
• Hiring sales professional with experience in selling to supermarket chains
• Instead of national distribution, they should initially launch in supermarkets in
Northeast and west regions to understand consumer’s reaction towards the product
• Also, expansion into 32 oz. segment would be noticed less by competitors and natural
foods chains and help in slowly increasing market share in supermarket chains
Annexure 1 (option1)
Annexure 2(option2)
Annexure 3 (option3)