9. According to Pemberton’s President, Patricia
Williams, the company’s driving force was its
culture of innovation.
Pemberton had achieved a compounded annual
growth rate (CAGR) of 14% for revenue over the
past five years.
She summarized three key strategic priorities for
the company:
(1) building a collection of attractive, durable
brands;
(2) leveraging leading marketing, sales and DSD
systems to increase revenue and profits;
(3) building or acquiring capabilities in salty snack
categories.
10. THE US CRACKER INDUSTRY
1)Retail cracker sales in the United States reached
an estimated $6.9 billion in 2011.
2) Additional segments included saltines and
crackers with filling (with each
capturing approximately a 9% market share),
followed by graham crackers at approximately 6%
share, and bread sticks and matzoh crackers each
representing less than one percent.
3) The growth
rate for the overall cracker industry from 2008 to
2010 was approximately 2.2% CAGR.
11. The top three U.S. cracker manufacturers
were 1)Kraft Food Inc. (Nabisco brands),
2)Kellogg Co (Sunshine, Keebler, Carrs and
3)Austin brands),
4)Pepperidge Farm (Goldfish brands).
These three companies accounted for
approximately 3 quarters of the cracker
market in 2010.
14. Krispy Product Line
Krispy Single-Serve:
1) It was introduced in 2008 by Pemberton with the acquisition of Kraft
Foods Inc.
2) The distribution was focussed primarily in the south-eastern states.
3) The flagship product was a package containing six round toasted
cracker sandwiches with cheese filling, available in 3 flavor options.
4) Krispy products were marketed as mobile, “Grab and Go”
snacks with a
strong presence in vending machines and convenience stores.
19. Product
• The product strategy for Krispy Natural
focused on increasing package sizes to
multiple-servings and improving taste so that
consumers would prefer Krispy Natural to
competitor brands at least two-to-one. Krispy
Natural would be made from 100% whole
wheat and other all natural ingredients, with
approximately 150 calories, 6 grams of fiber
and 3 grams of protein per serving.
20. Krispy Natural would be made
from 100% whole wheat and
other all natural ingredients,
with approximately 150 calories,
6 grams of fiber and 3 grams of
protein per serving. Cracker
with filling options would
feature White Cheddar, Smoked
Gouda, Chipotle Cheddar,
Creamy Swiss, Tomato Basil, and
Vegetable Herb.
21. The Pemberton R&D lab worked
tirelessly to reformulate the
product. The latest consumer taste
test showed a 77%–92% positive
purchase intent for new Krispy
Natural flavors. The test also
revealed almost a four-to-one
preference over the leading
competitive cracker for the White
Cheddar cracker-with-filling flavor.
22.
23. Marketing Pemberton used the approach of heavy promotions and
advertisements appealing to their customers.
Price discounts were pervasive in the industry with trade spending
often representing 10–20% of sales
24. Pemberton’s projected expenses for Krispy Natural
advertising and merchandising (Year 3 national
estimate) were as follows:
Using push and pull methods to establish Krispy
Natural Brand.
25.
26. Distribution:
Management believed effective DSD distribution
would be a critical component in the overall
Krispy Natural program strategy. An operational
test was completed in 2010 to analyze the
distribution logistics of the new product mix of
crackers and cookies/sweet baked goods.
27.
28. Pricing: Krispy Natural sought a premium pricing
strategy.
Management felt pricing of approximately 155% the
category average cost per ounce was reasonable considering
the product’s superiority. However, on a “visual price” basis,
Krispy Natural would be on par with the competition. This
meant the retail price for each package would be similar to
competitors in the category, but there would be less
quantity or weight in the Krispy Natural package
Krispy Natural sales objectives were based on expectations
of minimum sales of $500 million during year one of
national distribution and a steady-state pre-tax profit
contribution of at least 13%. The brand projections were as
follows:
29.
30. In September of 2011, Krispy
Natural was officially launched in
two test market regions:
Columbus, Ohio, and a trio of
cities in the Southeastern United
States. The company hoped to
secure
15% of shelf space in each
supermarket’s cracker section.
31. plan
Official launch in two test market regions for 16
weeks
Columbus South-East
1) No prior launch of Krispy
single serve
2) Five special “Krispy force”
were hired.
3) Pemberton
projected that Columbus
would achieve a 9% share of
the cracker
category in the test market.
4) Columbus doubled the
share target by doubling the
share to 18%.
1) There has been a prior
launch of Krispy single
serve.
2) Repositioned the product
to a more premium
product.
3) Reformulated Krispy
Natural line and hoped to
increase share in the
Southeast from its
current 9% share to 15%.
4) There was just a slight
increase of share to 10%
and very little category
extension.
Expectatio
n
Reality
32.
33.
34. Sales Channel & Response
The large chain headquarter buyers were
particularly impressed with the consumer
research results and inventory turn estimates
for Krispy Natural.
Their promotional activities and consumer
advertising were loved. Their push and pull
strategy created a buzz
The positive test market results were
driven by significant price discounts,
Couponing, not sustainable on a national
level.
Their flavour was no better than current
brandings.
BUT…
35. Ramp-up to National Roll-
out?
Fredrick recognized he also needed to consider
potential competitive responses, especially if they
were going to pursue an aggressive national
rollout
36. But now, Fredrick had just heard a rumor that
Frito-Lay might be introducing a new full line
of crackers by the end of the second quarter.
What it would mean if one of the biggest,
most successful salty-snack marketers
moved into the space at the same time?
37. Issues What was the best rollout strategy to neutralize
the competition?
How should the rollout strategy change if they
were going to have to go head-to-head with Frito-
Lay?
How will he summarise the analysis of the test
market results which are so disparate?
What will happen once the sampling, dealing and
coupons teared off?
38. Pemberton is required to create its brand positioning
amongst everyone.
1) The Research and Development of the company
must come out with various different new
flavours for their products suiting their
customers’ tastes.
2) They have to emphasize on their promotions and
advertising to counter that of Frito Lays.
3) Continue to make healthy products as that is a
major concern for most of the people.
4) Link their products with a brand Mantra which is
crisp and short and influences people.
39. 5) Adopting a suitable pricing strategy in order to be
at the top priority of customers.
6) Wider and efficient distribution in stores with a
large and attractive section of Pemberton products.
7) Increasing the volume of products.
8) Having a greater brand depth with brand category
extension at suitable prices.
40.
41. These slides were created by Akshita Gupta – DTU during a marketing
internship under the guidance of Professor Sameer Mathur- IIM Lucknow
DISCLAIMER
