Pemberton Enterprises is launching Krispy Natural crackers to expand into the salty snack market. Market research shows consumer demand for healthier, convenient cracker options. Product testing of Krispy Natural crackers found high preference and purchase intent over leading brands. A SWOT analysis identified capacity constraints of Pemberton's distribution system for the cracker category. Forecasts show that with a national rollout, Krispy Natural could gain significant market share and exceed sales and profit objectives in its third year. The launch of Krispy Natural crackers has the potential to be successful based on consumer trends, product testing results, and sales forecasts.
3. PEMBERTON FOOTPRINT
Snack Food Division
Food Bars, Cookies & Sweet Baked foods
Softies Cookies Home style
Muffins &
Doughnuts
5 Billion in Sales
(2011)
Own & Uses Direct
Store Delivery DSD
•Acquisition of Krispy Inc. in 2008 – First step to
enter Salty Snack Market
Category
Extension
4. SPECIFIC DIRECTION FOR PRODUCT
DEVELOPMENT
BUILDING A COLLECTION OF ATTRACTIVE DURABLE BRANDS
DSD SYSTEMS TO INCREASE REVENUE & PROFITS
BUILDING OR ACQUIRING CAPABILITIES IN SALTY SNACK
CATEGORIES
- Pemberton’s President
5. US CRACKER INDUSTRY
• Estimated 6.9 billion in 2011
• CAGR of 2.2% from 2008 – 10
• Increased growth of 6.2% in General(All other) in 2010
• Annual growth forecasted between 10-14% for crackers with
filling
75
9
9
6
1
Market Share
General(All Other)
Saltines
Crackers with fillings
Graham crackers
Others
All figures are in %
Three Largest Competitors:
•Kraft Food Inc ( Nabisco
Brands)
•Kellogs Co.
•Pepperidge Farm
6. 2009 Krispy Sales Performance
2009 Krispy Single-Serve Sales Performance vs. Plan ($ millions)
Plan 2009 Actual % to Plan
Krispy Retail $97.50 $50.80 52.10%
Krispy Vend $23.40 $18.00 76.90%
Total Krispy Single-
Serve $120.90 $68.80 56.90%
7. MARKET & CONSUMERS
Mintel Study
• 74% respondents consumed crackers on
regular basis.
• 34% ate them as part of Regular Diet
• 53% considered overall Healthfulness
9. Krispy Single Serve v/s Krispy Natural
Krispy Natural Re
Launch
Krispy Single
Serve
10. KRISPY NATURAL PRODUCT STRATEGY
• Increasing Package sizes to Multiple servings
• Improving taste by introducing new flavors
• Healthfulness – An important Factor
100% whole wheat
Natural Ingredients
11. MARKETING STRATEGY
• Competitors favored to
promote productsPUSH STRATEGY
• Focus on Extensive
advertising &
merchandising
• Aggressive plans for Trade
promotions
PULL STRATEGY
12. DISTRIBUTION
• DSD system –May not work for Cracker
business. So Pemberton hired “Krispy force”
for distribution system.
• Longer Shelf life of Crackers
• Present capacity of Trucks poor
13. SALES OBJECTIVES
• National Distribution of crackers.
• Minimum Sales of $500 million.
• Steady state pre-tax profit of at least 13 %.
14. SWOT Analysis
Strengths
1. World renowned product
development labs.
2. Product mix
3. Company Owned DSD
Weaknesses
1. Capacity constrains of DSD for Krispy
natural products.
Opportunities
1. Market research shows consumer
dissatisfaction with flavor and
taste experience of current cracker
brands.
2. Cracker market fundamentals were
attractive.
Threats
1. Fritto-lays entering the cracker
market.
2. Modest increase of 1% sale in
southeast.
15. Product Testing Summary
Positive Purchase Intent % Testers that preferred taste of
(Definitely or Probably Would Buy) Krispy Natural over leading brand
Crackers with Filling
White Cheddar 92% 78%
Smoked Gouda 77% 65%
Chipotle Cheddar 78% 64%
Creamy Swiss 80% 72%
Tomato Basil 85% 75%
Vegetable Herb 77% 50%
AVERAGE 82% 67%
Flat Crackers
Smoked Cheddar 81% 61%
Sundried Tomato 80% 58%
Cracked Pepper &
Olive Oil 80% 55%
Roasted Garlic 81% 59%
AVERAGE 81% 58%
16. MARKET SHARE
All other Cracker Buisness(in Millions) 5100
Ceackers with fillings(In Millions) 660
Manufacturer sales of "All Other" Crackers % Lost
In 2009 In 2010
Kraft 37.80% 37.00% -0.80%
Kellogg 28.90% 28.10% -0.80%
-1.60%
Market loss in Millions -81.60
In 2010
Manufacturer sales of Crackers with Filling
2009%
Share 2010% Share
Kraft 34.70% 32.70% -2.00%
Lance 31.50% 29.90% -1.60%
-3.60%
Market loss in Millions -23.76
Crackers with filling segment growth of opportunity is 10-14%
Estimated Dollar Shares of Market
In 2011 in 2011
Columbus Southeast
Pretest
Market
Post
% Market
lost
Pretest
Market
Post
Kraft 40% 33% -7% 34% 32%
Kellogg 25% 22% -3% 23% 22%
Pepperi
dge
Farm 11% 10% -1% 10% 10%
Krispy 0% 18% 18% 9% 10%
18. CONCLUSIONS
INTERPRETING MARKET RESULTS
1. Grabbed 18% market share in Columbus as a new entrant
in salty snacks business.
2. Kraft,Kellogg and Pepperidge in total lost 10% of market
share, despite of higher demands cracker products since
2010 . ( 6.2% for “All other crackers and 14% for chacker
will fillings).
3 Forecasted National roll out sales figures in Columbus and
Southeast scenario for 3rd year depicts PBT more than 13
% and sales more than $500 millions.
19. POSSIBLE COMPETITIVE RESPONSES TO NEW
BRAND “FRITTO-LAY”
• Launching more new product mix as per
customer taste and keeping health as a
priority concern.
• Optimization of DSD system for Krispy natural
product for cost reductions.
20. RECOMMENDED FOR A NATIONAL
ROLLOUT
KEY INDICATORS
1. More than 60% tasters preferred taste of Krispy natural over other leading
brands.
2. Positive Purchase intent of 81%.