An analysis of Launching Krispy Natural: Cracking the Product Management Code, during an internship by Prof Sameer Mathur IIM Lucknow.

3. 1. Pemberton: Introduction & Challenges
2. Market analysis
3. Krispy Natural market strategies
4. Result and conclusions

5. Pemberton: Introduction
 Pemberton was the snack food division of Candler Enterprises, a multinational
beverage and snack goods manufacturer.
 Had a revenue of 5 Billion USD with 7.7% Profit After Tax (PAT)
 It has experienced a compounded annual growth rate (CAGR) of 14% for
revenue over the past 5 years
 Pemberton was a market leader in the U.S. cookie and bakery snacks segments
of the sweet snack market.
 Company harnessed its owned Direct Store Delivery (DSD) distribution system
to deliver products directly from the distribution centers to the retail stores.

6. Pemberton: Introduction
 Key strategic priorities:
building a collection of attractive, durable brands
leveraging leading marketing, sales and DSD systems to increase revenue and
profits
building or acquiring capabilities in salty snack categories.

7. Pemberton: Introduction

8. Pemberton: Introduction
Pemberton’s income statement (% of revenue):

9. CHALLENGES

10. HOW TO LAUNCH AND SUSTAIN THE GROWTH
OF KRISPY NATURAL IN THE SALTY SNACK
MARKET ?

12. Market analysis
1 US Cracker industry overview
2 Product purchasing intent
3 Competitor’s analysis

14. Retail cracker sales in the United States reached an
estimated $6.9 billion in 2011.
The growth rate for the overall cracker industry from 2008
to 2010 was approximately 2.2% CAGR
A Mintel study of salty snacks in the United States
reported that 74% of respondents consumed crackers on a
regular basis and 34% ate them as part of regular weekly
diet.

16. All other” crackers
Experienced a 2.1% CAGR from the period
2008-2010.
Retail sales of 5.1 Billion USD in 2011 in
USA
Expected to grow by 6-7% per year

20. Product purchasing intent

22. Top 3 cracker manufacturers are:
Kraft Food Inc.
Kellogg Co.
Pepperfridge farm
They account for approx. 75% of the cracker market
in 2010.
Frito-Lay is rumored to be introducing a new full line
of crackers by the end of second quarters.

23. COMPETITORS ADVERTISEMENT
SPENDING

25. Product Marketing
Distribution Price
Strategy

26. Krispy Natural marketing strategy
Product:
Multiple-serving packaging
Focused on improving taste
Health conscious

27. Krispy Natural marketing strategy
Marketing:
Emphasized on heavy advertising
Promotion to the end customer and appealing
to the trade
Aggressive plans for pull spending and trade
promotions

28. Krispy Natural marketing strategy
Distribution:
Effective DSD (Direct-Store Delivery)
distribution system
Proper management of shelf inventory and
in-store merchandising
Optimizing the system to account for longer
shell life of crackers

29. Krispy Natural marketing strategy
Price:
Sought a premium strategy.
Priced at 155% above the category average
cost per ounce
Same retail price as that of competitors but
lesser quantity

31. KRISPY NATURAL BRAND PROJECTIONS

32. KRISPY NATURAL BRAND INCOME
STATEMENT

37. MARKET PLAN - COLUMBUS
5 special “Krispy Force” representatives were
hired in Columbus
These “Krispy Force” reps worked with
Pemberton regional and district sales managers
and focused solely on selling the new Krispy
Natural product line.

38. MARKET PLAN - SOUTHEAST
In Southeastern cities, the company was able to
test its ability to reposition the product to a more
premium offering
 Here regular Pemberton DSD route delivery
representatives worked with regional and district
sales managers, handling sales and service of the
new Krispy Natural line.

40. Expectations:
Columbus would achieve
a market share of 9%
Southeast’s market share
will rise from 9% to 15%
The company hoped for
15% shelf space in both
the markets
Reality:
Columbus doubled the
share target, achieving
18% market share with
30% category expansion.
Southeast had a slight
increase to just 10% with
little category expansion.

42. Columbus was able to achieve an 18% market
share by stealing share from other competitors.
However in Southeast the trade was generally
receptive to the new Krispy Natural line due to
the relatively low introductory trade case
discount of 15%.
WHY?

44.  THE LARGE CHAIN HEADQUARTER BUYERS WERE IMPRESSED WITH
THE CONSUMER RESEARCH RESULTS AND INVENTORY TURN
ESTIMATES.
 THEY ALSO LOVED ALL THE PROMOTIONAL ACTIVITY AND
CONSUMER ADVERTISING.
 THE PULL MARKETING REALLY CREATED A BUZZ AND CUSTOMERS
WERE COMING TO THE STORES ASKING FOR KRISPY NATURAL BY
NAME
Sales & channel responses

46. However one industry analyst thought that the positive
test market results were driven by significant price
discounts, couponing, and sampling, which were not
sustainable.
Also, few felt the taste preference claims of Krispy
Natural were inflated and the flavor was no better than
current brand offerings.

47. Competitive response

49. Recommendations
Extensive marketing in Southeast cities
Contemporize brand engagement
Tailor the Krispy Natural to different need
states

51. DISCLAIMER
CREATED BY SAKSHAM GUPTA, MUJ, DURING A MARKETING
INTERNSHIP WITH PROF. SAMEER MATHUR, IIM LUCKNOW .