It's a go or not go decision ... Created during my case study project at IIM Lucknow

1. Case study
Natureview
FarmGo Or
Not GO decision
By
Shivam
Gupta
IIT Roorkee

2. Why Study this
case

3. Objective of analysis of this case
To develop understanding of:

5. Natureview
Natureview farm, inc. is a small yogurt(a
type of dairy product ) manufacturer
started in 1989 .
Hits total revenue of $13 million and largest market share 24% of
yogurt in natural foods channel in 1999.

6. Management leaders
Christine Walker , Vice president of marketing
Jim Walker , Chief financial officer
Barry Landers ,
CEO
Walter Bellini, Vice president of sales
Jack Gottlieb, Vice president of operation
Kelly Riley , assistant marketing director

8. Current Situation analysis
The VC firm now needed to cash out of its
investment in Natureview.
VC firm now needed
to cash out of its
investment in
Natureview
Natureview
management had to
find another investor
or position itself for
acquisition
Company operates
only in national food
chains and have
better marketing
relationship

9. Revenues $ 13,000,000 100% Revenues
Cost of Goods $8,190,000 63%
Gross Profits $ 4810,000 37%
Expenses
Administration/freight $ 2,210,000 17%
Sales $ 1,560,000 12%
Marketing $ 390,000 3%
Research &
Development
$ 390,000 3%
Net Income $ 260,000 2%
Natureview Farm Income Statement

10. Yogurt Sales by different channels
Supermarket
Channel
natural food
channel
3%
97%

11. Manufacturer
Distributor
Retailer
Customer
Supermarket Channel Process :

12. Manufacturer
Natural Foods Wholesaler
Natural Foods Distributor
Retailer
Customer
Natural Foods Channel process :

13. 0.74
0.88
2.7
3.19
2.85
3.35
0 1 2 3 4
Supermarket channel price
Natural Foods channel price
4-oz multipack 32-oz cup 8-oz cup
Comparison of Market price(in U.S. $) of
product in both the channels

14. 74%
8%
9%
9%
Yogurt Market share by packing Segment
(Super market channel,in % U.S. Dollars)
8-oz cup
32-oz cup
4-oz multipack
other

15. 33%
24%
23%
15% 5%
Supermarket Channel
Dannon Yoplait
Others Private Label
Columbo
24%
15%
19%
7%
35%
Natural Foods Channel
Natureview
Brown Cow
Horizon Organic
White Wave
Yogurt Market Share by Brand ( In U.S. Dollars)

16. To overcome this Situations,
Natureview management team
target to increase its total
revenue by 50
% to the end of
year 2001 ..

17. But howwww
????????????
Lets take
it …..

18. Natureview operates in natural food
channel ,where growing its revenue by 50
% in short term is nearly impossible

19. Company don’t have any
experience in marketing through
supermarket channel….

20. Supermarket channel is comprised of lots
of potential competitors .

21. Risk of turning of its core natural foods
channel’s wholesalers and retailers
towards its competitors’ brand .

22. What is

23. 1
To expand six SKUs of the 8-oz
by Walter Bellini, vice president of sales

24. It has the largest Dollar &
Unit share .
Two competitors already
has got succeeded.
To have significant first
mover advantage .
Highly risky
Direct competition with
market leaders
Need high initial capital
due to large no of SKUs.

25. Financial Analysis
Beneficiary Cost($) Margin(%) Price ($)
Natureview 0.31 63.44 0.51
Distributor 0.51 15 0.56
Retailer 0.58 27 0.74

26. Description Year 2000 Year 2001
No. of increment 35,000,000 42,000,000
Revenue $ 17,850,000 $ 21,420,000
Cost of Production $ 10,850,000 $ 13,02,000
Gross Profit $ 7,000,000 $ 8,400,000
Other Expenses
Slotting fee $ 1,200,000 $ 0
SG&A $ 200,000 $ 200,000
Marketing $ 120,000 $ 120,000
Advertising $ 2,400,000 $ 2,400,000
Broker’s fee $ 714,000 $ 856,800
Net income $2,366,000 $ 5,680,000

27. 2
To expand four SKUs of the 32-oz
by Jack Gottlieb, vice president of
operations.

28. It has the largest Gross
Profit margin .
Less competition due to
larger shelf life.
Less promotion cost .
New customer would
readily enter new brand
via multi use size.
Lowest in the shelf ,low
interaction with
customers
Slotting fee would be
higher .

29. Financial Analysis
Beneficiary Cost($) Margin(%) Price ($)
Natureview 0.99 86 01.85
Distributor 1.85 15 2.13
Retailer 2.13 27 2.70

30. Description Year 2000 Year 2001
No. of increment 5,500,000 5,500,000
Revenue $ 10,175,000 $ 10,175,000
Cost of Production $ 5,445,000 $ 5,445,000
Gross Profit $ 4,730,000 $ 4,730,000
Other Expenses
Slotting fee $ 2,560,000 $ 0
SG&A $ 160,000 $ 160,000
Marketing $ 480,000 $ 480,000
Advertising
(promotion)
$ 75,000 $ 75,000
Broker’s fee $ 407,000 $ 407,800
Net income $1,048,000 $ 3,608,000

31. 3
To expand two SKUs of the 4-oz
multipacks by Kelly Riley, assistant
marketing manager .

32. Supermarket channel
could potentially effect its
core channel .
Its core brand positioning
would be helpful to launch
new product effectively.
Growth rate of natural
food channel is 7 times
more than supermarket
channel .
Management team
believed that they could
manage channel conflict.
Natural food channel has
less potential for
expansion.
Growth rate would not a
key factor for short term
.

33. Financial Analysis
Beneficiary Cost($) Margin(%) Price ($)
Natureview 1.15 85 2.13
Distributor 2.28 9 2.48
Retailer 2.48 35 3.35
Wholesaler 2.13 7 2.28

34. Description Year 2000 Year 2001
No. of increment 1,800,000 2,070,000
Revenue $ 3,834,000 $ 4,409,100
Cost of Production $ 2,070,000 $ 2,380,500
Gross Profit $ 1,764,000 $ 2,028,600
Other Expenses
Slotting fee $ 0 $ 0
SG&A $ 0 $ 0
Marketing $ 250,000 $ 250,000
Complementary
cases
$ 95,850 $ 0
Broker’s fee $ 153,360 $ 176,364
Net income $1,264,790 $ 1,602,236

36. Comparison of all three Solutions
Solution
No.
Revenue Before
expansion(1999)
Revenue After
Expansion(2001)
Result
(% increase by)
1 13,000,000 34,420,000 164%
2 13,000,000 23,175,000 78%
3 13,000,000 16,834,000 29%

38. 2choices are
there……..

39. Lets have a look
at other
marketing
issues

41. Supermarket Customer choose yogurt according to
• Package type /size
• Taste
• Flavor
• Price
• Freshness
• Ingredients
• Organic or not

42. Natural foods channel customers take decision
according to :
• Ingredients
• Organic or not
• Product’s health promoting qualities

43. Natureview
Core
Health
promoting
qualities
No
artificial
Thickners
longer
shelf life
Pure organic
product

44. 8-oz have more
chances to get succeed in
supermarket channel.
But it has also high
potential to harm
company’s core distribution
channel

45. To avoid it , company
should launch this
product with new
brand
positioning .

46. HOW
WWW
WWW
W

47. Company would launch 8-oz
size cup with a new
unique flavor, with self
co-branding
strategy .
.

48. Why New
Flavor

49. Because of
A new unique flavor would attractmore and
more customers towards itself .
Because in Supermarket customers don’t care for health
qualities much they care for taste and flavor more

50. New flavor would
differentiate
the product from other
potentials competitors and
give a good brand positioning
.

51. Why self c0-
branding

59. Disclaimer
This presentation is made by SHIVAM GUPTA ,IIT
ROORKEE during my internship at IIM Lucknow under
guidance of Prof. SAMEER MATHUR.