Professional Documents
Culture Documents
SECTION A
Name
Ashish Diana Chandan Ram Moorthy
Roll No
PGP29009 PGP29004 PGP29017 PGP29023
Saurav
Praveen Nidhi
PGP29015
PGP28187 PGP29011
2013
BACKGROUND
Natureview Farm, a Vermont-based producer of organic
yogurt with $13 million in revenues, is the leading national yogurt brand (24% market share) sold into natural foods stores.
PROBLEM STATEMENT
Natureview Farm needs to choose between
3 distribution models and product choices to increase its revenues to $20million before the end of 2001 from $13 million reported in 1999.
SWOT
SWOT ANALYSIS
STRENGTH S
WEAKNESS ES
SWOT
SWOT ANALYSIS
OPPORTUNITI ES
THREATS
Organic food market expected to grow to $13.3billion in 2003 Natural store channel sales up 20% 12.5% growth in 4 oz multipack Increase in consumer interest in organic food
Competition(both in regular yogurt and organic yogurt) Increasing natural store channel demands on logistics or technology Increasingly price sensitive consumers in the organic market
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Distributor
Customer
Customer
CHANNELS
Supermarket Channel
Charged lower retail price $0.74 per cup
One-time slotting fee for each SKU charged only in the first year it was introduced Requires trade promotions Involves 3 parties in the distribution channel Heavily dependent on brokers knowledge Distribution margin- 15% Retailer margin-27%
Charged higher retail price $0.88 per cup
Lower price sensitivity Requires a one-time allotment of one free case of product for every new SKU authorized for distribution in its first year Involves 4 parties in the distribution channel Distribution margin- 9% Wholesaler margin- 7% Retailer margin-35%
Other Channels
Cons
Highest level of competitive trade promotion and marketing spend Possible channel conflict between supermarkets and natural food stores
OPTION 2
EXPAND 4 SKUS OF THE 32 OZ PRODUCT LINE NATIONALLY
Pros
32-oz cups generate an above average gross profit margin (43.6% versus 36% for 8-oz line) Fewer competitive offerings in this size Competitive advantage due to long shelf life of product
Cons
Higher slotting fees due to national distribution National distribution will be challenging within 12 months No guarantee that customer awareness of the brand would grow
Lower promotional expenses than Option-1 Possible channel conflict between supermarkets and natural food store Promotion and lower price at supermarkets may hurt the brand
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Cons
Miss opportunity to enter supermarkets before competitors
More time to prepare the company for moving into the supermarkets
Natureview Product positioning is ideal for a childrens multipack product launch Financially attractive High margin 37.6% Low sales and marketing expenses
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OPTION 1- RATE 3%
Sl No
1 2 3 4 5 6 7 8 9 10 11 12 13 No. of Units Retailer's Selling Price Natureview's Selling Price Manufacturing Cost Per Unit Sales (1*2) Brokerage Fee (0.4*5) Slotting Cost SG & A Advertising Trade Promotion Manufacturing Cost (4*1) Total Cost (6`11) Profit (5-12)
2000 2001 2002
35,000,000 0.74 0.51 0.31 17,850,000 714,000 1,200,000 320,000 2,400,000 90,000 10,850,000 15,574,000 2,276,000
36,050,000 0.74 0.51 0.31 18,385,500 735,420 320,000 2,400,000 90,000 11,175,500 14,720,920 3,664,580
38,213,000 0.74 0.51 0.31 19,488,630 779,545 320,000 2,400,000 90,000 11,846,030 15,435,575 4,053,055
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OPTION 2 - RATE 2%
2000 2001 2002
No. of Units Retailer's Selling Price Natureview Selling Price Manufacturing Cost Per Unit Sales Brokerage Fee Slotting Cost SG&A Advertising Trade Promotion Manufacturing Cost
5,500,000 2.7 1.84 0.99 10,120,000 404,800 2,560,000 160,000 1,024,000 480,000 5,445,000
56,10,000.00 2.7 1.84 0.99 10,322,400 412,896 160,000 1,024,000 480,000 5,553,900
58,34,400.00 2.7 1.84 0.99 10,735,296 429,412 160,000 1,024,000 480,000 5,776,056
Total Cost
Profit
10,073,800
46,200
7,630,796
2,691,604
7,869,468
2,865,828
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OPTION 3
2001 2002 2003 2004
No. of Units Sold Retailer's SP Natureview's SP Manufacturing Cost Per Unit Total Sales
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RECOMMENDATION OPTION 1
Option 1 & 2 achieve the nearest dollars
expectations whereas Option 3 does not.
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THANK YOU
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