Natureview Farm

Table of Contents Introduction2 master(prenominal)(prenominal) Issues3 Company Background3 Natureviews Profile Products4 nutrimentstuff place Tr depots analytic thinking for organic fertiliser overlap4 Yogurt suckeret Trends5 Yogurt Market Segmentation by Packaging6 Yogurt Market Segmentation by region7 Yogurt Market Segmentation by Competitors8 Yogurt Market Segmentation by Distribution Channel10 grind away Analysis10 Analysis of Strategic planning Options11 Recommendations14 References14 Introduction Fundament each(prenominal)y, this paper is intimately our findings of the Natureview erects case study.In order to understand comprehensively about this follow, we need to investigate win for the lodges past and current activities which is it go forth affect future growth of the company. All of this schooling is imperative to us in decision making process. Moreover, we could similarly act upon a decision what is the scoop up strategy for the Natureview invoke. To understand thoroughly about the company, we need to * Analyze the companys history, development, and growth. * Analyze the outdoor(a) environment. * Evaluate the SWOT compendium. Explain each option of the Natureview Farm based on qualitative and quantitative outline. * Make recommendations. Main Issues Currently the company faced a new challenge situation to identify the best trade plan in order to grow r regularues by over 50% before the end of two hundred1. The main direction of the company was whether to expand into the super commercialize furrow to obtain their expected tax r unconstipatedue. A decision which would represent a major departure from the companys established line of business strategy and which would impact every nerve of Natureviews business.Company Background Established in 1989, Natureview Farm is a small yoghurt shaper which empha coats the enjoyment of indispensable ingredients and a special process that gave the yoghourt its unique smooth, cre amy cereal without the artificial thickeners which produces full(prenominal) caliber yogurt. The yogurt was manufactured at the Natureview farm harvest-tideion facility in Cabot, Vermont started with 2 coats of shape in two flavours- plain and vanilla. The coats of transfuse are 8-ounce (Oz) and 32-ounce (Oz).Natureview Farms revenue had growth from little than $100,000 to 13Millions as reported in income statement 1999. Because of the emphasize of inborn ingredients and it strong reputation for high quality and great taste help the company to grow up to national distribution went on to stumble drawing cardship in nature food. By the yr 2000, the company producing 12 refrigerated yogurt flavours in 8-Oz and 4 flavours in 32-Oz. The company had to a fault started exploring Multipack yogurt products for the child package in 4-Oz loving cup and yogurt package in tubes.Even though in 1997, Jim Wagner as Chief financial Officer has recommendation to go down for an equity in fusion from a venture capital firm to fund strategic investments are utilityful, the investor promptly needed cash out of its investment in Natureview. Now Natureview prudence has faced critical riddle and need to find another investor itself because their current goal is to growing revenues to $20 million before the end of 2001. * Natureviews Profile Products Yogurt is a dairy product, the result of milk fermented in a cautiously controlled environment.Special bacteria added to the milk change its texture and guide yogurt its unique health properties it is a erect source of calcium and improves digestion. under are the criteria of the natures product 1. Natureview yogurt flavour and texture was the companys founders family yogurt recipe, the recipe used indispensable ingredient and no artificial thickeners which produce great and high quality taste. 2. The company used milk from cows untreated with rGBH, an artificial growth horm champion that increased milk production. 3.Because of their special process and ingredient, Natureview life span on the shelf was 50 days longer compared to other competitions only 30 days. 4. Natureview has 12 refrigerated yogurt flavour in 8-Oz and four flavours in 32-Oz cups. Market Trends Analysis for organic product 1. The organic foods merchandise, worth $6. 5 billion in 1999, was predicted to grow to $13. 3 billion in 2003. 2. Generally, organic product consumer tended to have high incomes, have much education, and live in the northeastern and westmost. 3. 67 % of U. S. ouseholds coiffe that set was a barrier to their purchase of organic foods and 58% of consumer expressed that they would buy a much organic product if it were cheaper. 4. 44% of consumers want a wider selection of organic product in supermarkets. 5. Below are market trend findings * Yogurt Market Trends A comprehensive analysis must be applied in order to understand and evaluate the market trends of yogurt product. It is all important(p) fo r the management to focus on the areas that are needed for improvement especially on customers satisfaction because it will yield greater gainfulness for the company.For instance, the management should know better on what are the current market trends and their customers wants from their product. In addition, just about factors in purchasing decisions that are made by customers should be analyzed by the company. Several factors in purchasing decisions are such as packaging, flavour, value, freshness and ingredients of the yogurt. Such product measurements are imperative not only to maintain the quality of the product itself, but it excessively will retain and attract to a greater extent than customers for choosing Natureview Farms yogurt kind of than competitors yogurt. * Yogurt Market Segmentation by Packagingestablish on the market trends, the most popular sizes of yogurt cups were in 6-oz and 8-oz which contributed to 3% of the fractions growth per division. In addition, these also were representing 74% of jibe category supermarkets gross revenue in U. S. dollars. Women especially bought 8-oz yogurt cups because of their health consciousness. The second largest constituent is multipacks size which represented 9% total category supermarkets sales with 12. 5% growth per year. This second largest segment customarily consumed by children because of their mothers concern about their health and fastest growth.The last segment which is 32-oz. cup size represented 8% of total category supermarkets sales and was growing at a modest of 2%. Normally, the buyers of 32-oz. were heavy yogurt consumers. They are either consumed the yogurt plain, added some ingredients or used it in recipes. unambiguous and vanilla were the most famous flavours. Buyers also put brand, expiration date and expenditure as important purchase criteria for this size of yogurt. * Yogurt Market Segmentation by Region ground on the market segmentation by region, it could be identify th at the West and the Northeast possess high market shares.The West contributed to 27% whereas the Northeast contributed to 26% of national U. S. market. The main factors that contributed to these high percentages were the shoppers who live in the West and the Northeast have high incomes and more education. In addition, the Southeast possesses 25% and the Midwest possesses 22% of market shares. disregarding of impart or distribution, the buyers habit of buying yogurt numbered on their unique characteristics. Some of buyers were more pertain about the quality of the yogurt while some of them were concerned about the yogurts charge or vice versa. * Yogurt Market Segmentation by Competitors We had identified four close competitors of Natureview Farms yogurt. These top four competitors are Dannon, Yoplait, Breyers and Columbo. Dannon and Yoplait are controlling over 50% of the yogurt market share. As indicated in the supermarket Channels pie chart, we could tick that Dannon holds 3 3% of yogurt market share whereas Yoplait holds 24%. The sales of these yogurts are conducted through two dominant distributor channels which are supermarket and natural foods channel.As we could see in the natural foods channel, Natureview Farm was lead-in which holds 24% of yogurt market. Other than these, these yogurts revenues were also generated through warehouse clubs, conveniences stores, drug stores and mass merchandisers. * * * Yogurt Market Segmentation by Distribution Channel Based on yogurt market segmentation by distribution channel, we could conclude that the distribution channels were shared into supermarkets and natural foods store. 97 % of yogurts were sold in the supermarkets while 3% of yogurts were sold in the natural foods store.The sales and distribution process of Channels Supermarket Channels Process Supplier aka producer usually sends their product to a large distribution centre, which in turn shipped directly to the supermarket chains warehouse. The dist ributors and retailers campaignd a mark-up price on product that flowed through their warehouses or store. In order to place the product in the supermarket, manufacturer will required to pay wiz-off time slotting fee for each SKU only in the first year it was introduced and then to participate in regular trade promotions.If the SKU failed to show any profit for the supermarket within the year, the supermarket would halt the product and would require a new slotting fee payment if the manufacturer sought reauthorization of the SKU. Some constitute points in the distribution of supermarket channel process are as below 1. The typical distributor circumference is 15% and the typical retailer margin is 27% 2. Supermarket would charge in average of $0. 74 for 8-oz cup of yogurt, $2. 70 for 32-o cup of yogurt, and $2. 85 for 4-oz cup of multipack. Natural Food Channels processFirstly, manufacturer shipped the product to the natural wholesalers and then wholesalers will ship the product s to the distributors which responsible to delivered product to the retailers. electrical distributors would deliver products individually to the retailers, and in some cases even stock the shelves and track paperwork. Lastly customer crosss the product from the retailers. Natural Food retailers will charge the manufacturer for one time allotment of one free case of product for every new SKU permit for distribution in its first year. Some key points in the distribution of natural food channel process are as below 1.The typical natural food wholesaler margin is 7%, the natural food distributor margin is 9% and the typical retailer margin is 35% 2. retail merchants would charge in average of $0. 88 for 8-oz cup of yogurt, $3. 19 for 32-o cup of yogurt, and $3. 35 for 4-oz cup of multipack. Exhibit 1 Length of channel to market Channel allowance Analysis By using bound analysis , we can identify the profitability of these channels and we can indicate which channel would provide the expected revenues of Natureview Farm. This analysis is based on the given point in the case study and each of the analysis is change integrity based on type of yogurt size.The results are as below. 1. Result of Natural Foods Channel unit of measurement Cost for 8-oz cup portion Margin respect whole selling Price Contribution Margin Unit % Mark up Manufacturer 0. 31 36% 0. 48 0. 17 56% contact 0. 48 7% 0. 52 0. 04 8% Distributor 0. 52 9% 0. 57 0. 05 10% Retailer 0. 57 35% 0. 88 0. 31 54% Customer 0. 88 Unit Cost for 32-oz cup Contribution Margin Rate Unit Selling Price Contribution Margin Unit % Mark up Manufacturer 0. 99 44% 1. 75 0. 76 77% Wholesaler 1. 75 7% 1. 89 0. 13 8% Distributor 1. 9 9% 2. 07 0. 19 10% Retailer 2. 07 35% 3. 19 1. 12 54% Customer 3. 19 Unit Cost for 4-oz multipack Contribution Margin Rate Unit Selling Price Contribution Margin Unit % Mark up Manufacturer 1. 15 69% 1. 84 0. 69 60% Wholesaler 1. 84 7% 1. 98 0. 14 8% Distributor 1. 98 9 % 2. 18 0. 20 10% Retailer 2. 18 35% 3. 35 1. 17 54% Customer 3. 35 2. Result of Supermarket Channel Unit Cost for 8-oz cup Contribution Margin Rate Unit Selling Price Contribution Margin Unit % Mark up Manufacturer 0. 31 32% 0. 6 0. 15 48% Distributor 0. 46 15% 0. 54 0. 08 18% Retailer 0. 54 27% 0. 74 0. 20 37% Customer 0. 74 Unit Cost for 32-oz cup Contribution Margin Rate Unit Selling Price Contribution Margin Unit % Mark up Manufacturer 0. 99 41% 1. 68 0. 69 69% Distributor 1. 68 15% 1. 97 0. 30 18% Retailer 1. 97 27% 2. 7 0. 73 37% Customer 2. 7 Unit Cost for 4-oz multipack Contribution Margin Rate Unit Selling Price Contribution Margin Unit % Mark up Manufacturer 1. 15 35% 1. 77 0. 62 54% Distributor 1. 77 15% 2. 8 0. 31 18% Retailer 2. 08 27% 2. 85 0. 77 37% Customer 2. 85 As you can see, % mark-up in Natural foods channel is higher compared to supermarket channel in all sizes of yogurt in the manufacturer phase which means higher profitability. Natura l food channel is able to cost more to the customer compared supermarket channel repayable to dispirit price sensitivity among natural foods customers as well as % mark-up from the Natural foods wholesaler. SWOT Analysis The boilers suit evaluation of a companys strengths, weaknesses, opportunities, and threats is called SWOT analysis.Its a way of monitoring the external and internal trade environment. External Marketing (Opportunity and Threat) Analysis Opportunities 1. Supermarket channel will provide the companys noteworthy emf of growth for get higher revenues. 2. Yogurt sales through natural food stores had grown 20% per year. 3. Through the supermarket channel, the price of the product can be lower. Threats 1. The main competitors in the supermarket channel are getting stronger with the top four competitors which are Dannon, Yoplait, Breyers and Colombo. . Company may have to reposition Internal Marketing (Strength and Weakness) Analysis Strengths 1. Natureview is a majo r and trusted brand for the natural food channel and has developed strong relationships with leading natural food retailers 2. Natureview has a strong reputation for high quality and great taste. 3. Natureviews yogurt has longer average shelf life compare other products. 4. The company has rapid growth revenue from $100,000 to $13 Million within 10 years. 5. Natureview is a leader distributor of natural food channel. 6.Strong usable efficiency because the company is using creative , low-cost guerrilla market Weaknesses 1. Natureview will heavily depend on its divisors knowledge of promotional and merchandising requirement. 2. Inadequate operational capacity because ineffective to generate the volume requirements needed to meet consumer demand of other distribution channels. 3. Relatively small company compared with other potential competitors in supermarket channel. 4. Natureview only invested 3% of total expenses in research & developments which cause discourage product innova tion.Analysis of Strategic planning Options The company has three options needed to be analyzed and be identified which option will help the company to achieve their goal. Each of the options has their own importance and benefits however they also have some limitation attached on them. Option 1 The first option was powerfully advocated by Vice president of sales Walter Bellini. The stem is to expand six SKUs of the 8-Oz. product line into one or two selected supermarket channel regions. Pros 1. 8-Oz cups have the highest demand in the refrigerated yogurt market and will be able to provide the expected revenues. . Based on other natural food brands success in expanding their product in the supermarket channel has shown significant proves Natureviews product will have a high chance of success. 3. Natureview is the leading naturals foods brand of refrigerated yogurt and have uniquely positioned to capitalize on the growing trend in natural and organic foods. 4. Natureview will have t he advantage as the first brand to enter the channel due to supermarket channel will likely to give permission only to one natural yogurt manufacturer. Natureview will be the first mover in this channel 5.Some industry experts predicted unit volume growth of organic product at supermarket will be at 20% per year from 2001 to 2006. Cons 1. The 8-Oz cups size received the highest level of competitive in trade promotions and marketing budget. 2. The management had estimated for comprehensive advertising plan will cost $1. 2 million per region per year and Natureviews sales, general and administrative expenses (SG& A) would increase by $ 320,000 annually. 3. Due to Lack of experience in supermarket channel, their broker power take advantage of their relationship with top supermarkets retails chains in Northeast and West. . This option might create direct competition with national yogurt manufacturer. 5. Might create conflict of channel amidst supermarket and natural food stores. Option 2 The second option was advocated by the vice president of trading operations Jack Gottlieb. The idea is to expand 4 SKUs of the 32-Oz. Based on the giving points we can identify the pros and cons as below Pros 1. The gross profit margin for the 32-oz cups is higher at 43. 6 % compared to 8-oz cups at 36%. 2. This size of 32-oz cups was potentially become stronger competitive advantage like longer shelf life and lower marketing expenses. 3.This brand had achieved a 45% share of this size segment in the natural foods channel. 4. The management also assume that the company could sell 5. 5 million incremental units in the first years by expand more in supermarket retails across the united state. Cons 1. This option will have higher slotting fees due to national distribution. 2. There are no guaranteed customer acceptances towards the multi-use size of yogurt. 3. With the additions to sales headcount for the 32-oz,that will increase the SG& A cost to $160,000. 00 4. They also concerne d on sales teams ability to achieve full national distribution in 12 months. . Might create conflict of channel among supermarket and natural food stores. Option 3 The third option was advocated by Walkers swains Kelly Riley, the assistant marketing director, she supported the idea to introduce two SKUs of a childrens multi-pack into the natural food channel. Based on her arguments, we can identify the pros and cons as below Pros 1. Natureview Farm is the established leader in the natural food channel and has a strong relationship with the leading food natural food channel retailers. 2. Sales and marketing expenses were the lowest compared to other options. 3.Choosing this option will allow the company to have more time to prepare before entering the supermarket channel. 4. The financial potential was very prepossessing with expected high margin of 37. 6%. 5. Natureview product positioning is ideal for the new Multi-pack product launch. Cons 1. Natureview Farm will miss the oppor tunity to enter the supermarket before competitors. Supermarket retailer would likely authorize only one organic yogurt brand. 2. Natureviews marketing department was unprepared to handle the demands on resources and staffing that will be needed once the company entered the supermarket channel.Option financial Overview Based on the case study, we have analyzed all three options that Natureview Farm tried to include in their future business plan. For the first option, Natureview Farm idea is to expand 6 SKUs into supermarket channel with 8 oz cups to get more profit. Refer to concomitant 1 Natureview Farm total estimated for investment expenses is quite higher than another option. However, even though Natureview spend more for the investment we can see that total expected profit is positively increased by annually.To get expected for this option need For option two, Natureview Farm abutting idea is to expend 4 SKUs 32-oz into supermarket channel to their future business planning b ecause their product is longer shelf life. Based on appendix 2, the investment plan is lower than option 1. The investment has divided to four regions for selling. Even through the management estimated that they can sell this brand with higher sold, the cost of the good sold also is quite higher and this is expenses will affect the profitability of goods sold. The last option is Natureview Farm plan to expand 2 SKUS 4-oz multipack into natural food channel.Refer to appendix 3, we can see that the cost of goods sold is quite higher even through this idea not involved slotting fee, the estimated annual profit is not shown in positive way. Based on the calculation, the cost of goods sold and estimated annual profit is shown the selling product is lower profitability. Based on the financial analysis, we can identify some trends The highest Profitability is option 1. Based on the graph, the higher of total investment expenses are option 1. The higher Investment ROI is option 3. Recommend ationsAfter all analysis that we have do in this case study, our recommendation for Natureview Farm for their future planning are option 1. This is because based on our analysis we can see option 1 is the best choice to get more profitability in 5 years onward as planning. This option is to expand 6 SKUs of the 8-oz size into eastern and western supermarket regions. Even though the risk of going to supermarket channel is higher, Natureview Farm should expand into this channel because as we can see, two natural food companies expanded into this channel and increased their revenues by 200 %.To achieve their mission, they need to take the risks for get their estimated projected net profit. In addition, entry to this supermarket channel with 8 oz size is more viable than option 2 where to expend into this channel with 32 oz cup size. The 8 oz size price initially attempt to negotiate retail price more than 32-oz size where the price of product will also affect the consumer choice. This option focuses on regional distribution instead of national, which should make it easier to implement this product information to region consumer.The level of education and higher income of consumer is also a origin for consumer to buy this natural food product. Natureview Farm can also market their product to this type of consumer with our product advantages such as the product has a longer shelf life, uses natural ingredients and uses only organic ingredients. The next recommendation strategy is, Natureview farms need to utilize more advanced in monitoring the technology and authoritative management to keep track the trends so that they always be the consumer choice in natural food products.To become a successful natural food company in this channel, they need to be more systematic and always have good relationship with media, consumer and retailer. References 1. http//www. investopedia. com/terms/g/guerrilla-marketing. asp 2. http//Prezi. com/natureview farms. 3. http// www. slideshare. net/nature -view-case 1 . Based on investopedia. com, Margin analysis uses the percentage calculation to provide a comprehensive measure of a companys profitability on a historical basis (3-5 years) and in comparison to friction match companies and industry benchmarks. 2 . Based on investopedia. com, Mark-up is the difference between an investments lowest current offering price among dealers and the higher price a dealer charges a customer. 3 . Guerrilla Marketing is different than traditional marketing in that it often relies on personal interaction and has a small budget, and it focuses on smaller groups of promoters that are responsible for getting the word out in a particular location rather than on wide-spread media campaigns.