Natureview Farm

T able of Contents Introduction2 Main Issues3 confederacy Background3 Natureviews Profile Products4 solid regimenstuff place Trends Analysis for constitutional growth4 yoghourt trade Trends5 Yogurt cracket part by Packaging6 Yogurt sicet Segmentation by region7 Yogurt Market Segmentation by Competitors8 Yogurt Market Segmentation by Distribution road10 mill Analysis10 Analysis of Strategic prep bedness Options11 Recommendations14 References14 Introduction Fundamentally, this paper is ab stunned our findings of the Natureview kindles slip study.In mold to find out all-around(prenominal)ly about this bon ton, we need to investigate further for the friendships past and current activities which is it result affect future offset of the club. All of this teaching is pressing to us in decision fashioning process. More everyplace, we could excessively make a decision what is the lift out strategy for the Natureview fire. To understand thoroughly about the compan y, we need to * Analyze the companys history, development, and ontogenesis. * Analyze the external environment. * assess the lift outline. Ex filmy each resource of the Natureview raise found on qualitative and quantitative analysis. * Make good words. Main Issues Currently the company confront a freshly challenge situation to trace the best trade proposal in order to grow r so farues by over 50% before the end of 2001. The main focus of the company was whether to string out into the super foodstuff contain to hit their expected revenue. A decision which would represent a study departure from the companys established deport strategy and which would usurpation every aspect of Natureviews business.Company Background Established in 1989, Natureview kindle is a small yoghurt maker which empha surfaces the use of inherent particles and a special process that gave the yoghourt its unique smooth, creamy texture without the schmaltzy thickeners which produces in high spirits quality yoghurt. The yogurt was manufactured at the Natureview farm fruit facility in Cabot, Vermont started with 2 coats of form in two flavours- plain and vanilla. The coats of shape argon 8-ounce (Oz) and 32-ounce (Oz).Natureview resurrects revenue had growth from less(prenominal) than $100,000 to 13 cardinals as reported in income statement 1999. Because of the empha size of it of cancel ingredients and it whole reputation for high quality and wide taste help the company to grow up to national dispersion went on to attain leaders in temperament food. By the year 2000, the company producing 12 preserve yogurt flavours in 8-Oz and 4 flavours in 32-Oz. The company had similarly started exploring Multipack yogurt produces for the child package in 4-Oz cup and yogurt package in tubes.Even though in 1997, Jim Wagner as Chief fiscal Officer has testimonial to arrange for an equity infusion from a venture capital buckram to fund strategic coronations are s uccessful, the investor now needed cash out of its investment in Natureview. Now Natureview management has faced critical line of work and need to find an a nonher(prenominal)(a) investor itself because their current goal is to increase revenues to $20 cardinal before the end of 2001. * Natureviews Profile Products Yogurt is a dairy crossing, the result of milk fermented in a carefully controlled environment.Special bacteria added to the milk change its texture and give yogurt its unique wellness properties it is a good source of calcium and improves digestion. Below are the criteria of the natures convergence 1. Natureview yogurt flavour and texture was the companys founders family yogurt recipe, the recipe used cancel 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 hormone that increased milk production. 3.Because of their special process and ingredient, Naturevi ew life span on the shelf was 50 days longer examined to other competitions that 30 days. 4. Natureview has 12 refrigerated yogurt flavour in 8-Oz and four flavours in 32-Oz cups. Market Trends Analysis for primitive product 1. The organic foods market, worth $6. 5 gazillion in 1999, was predicted to grow to $13. 3 billion in 2003. 2. Generally, organic product consumer tended to have high incomes, have more(prenominal) than education, and live in the Northeast and West. 3. 67 % of U. S. ouseholds specify that expense was a barrier to their purchase of organic foods and 58% of consumer expressed that they would buy a more organic product if it were cheaper. 4. 44% of consumers want a wider filling of organic product in supermarkets. 5. Below are market skid findings * Yogurt Market Trends A comprehensive analysis must be applied in order to understand and evaluate the market trends of yogurt product. It is burning(prenominal) for the management to focus on the areas th at are needed for rise especially on customers satisfaction because it go forth yield greater improvementousness 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, or so factors in purchasing decisions that are made by customers should be analyze by the company. Several factors in purchasing decisions are such as packaging, flavour, harm, freshness and ingredients of the yogurt. Such product measurements are imperative not only to maintain the quality of the product itself, but it also will retain and attract more customers for choosing Natureview Farms yogurt rather than competitors yogurt. * Yogurt Market Segmentation by Packaging found on the market trends, the most popular sizes of yogurt cups were in 6-oz and 8-oz which contributed to 3% of the segments growth per year. In addition, these also were representing 74% of total category supermarkets gross gross sal es in U. S. dollars. Women especially bought 8-oz yogurt cups because of their health consciousness. The second largest segment 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 diminished of 2%. Normally, the buyers of 32-oz. were heavy yogurt consumers. They are either consumed the yogurt plain, added most ingredients or used it in recipes. Plain and vanilla were the most noted flavours. Buyers also put shuffle, expiration date and price as important purchase criteria for this size of yogurt. * Yogurt Market Segmentation by expanse found on the market segmentation by region, it could be determine that 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 higher(prenominal) incomes and more education. In addition, the southeastern possesses 25% and the Midwest possesses 22% of market shares. Regardless of track or distribution, the buyers habit of buying yogurt depended on their unique characteristics. Some of buyers were more come to about the quality of the yogurt while some of them were concerned about the yogurts price or vice versa. * Yogurt Market Segmentation by Competitors We had identified four close competitors of Natureview Farms yogurt. These slip by 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 see that Dannon holds 33% of yogurt market share whereas Yoplait holds 24%. The sales of t hese yogurts are conducted by two dominant distributor seams which are supermarket and infixed foods gestate.As we could see in the natural foods credit line, Natureview Farm was leading which holds 24% of yogurt market. Other than these, these yogurts revenues were also generated through warehouse clubs, conveniences stores, do drugs stores and mass merchandisers. * * * Yogurt Market Segmentation by Distribution Channel Based on yogurt market segmentation by distribution take, we could conclude that the distribution ravishs were divided into supermarkets and natural foods store. 97 % of yogurts were exchange 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 shaper usually sends their product to a large distribution centre, which in treat shipped curbly to the supermarket chains warehouse. The distributors and retailers charged a mark-up price on product tha t flowed through their warehouses or store. In order to place the product in the supermarket, manufacturer will required to pay one-off condemnation slotting lean for each SKU only in the commencement ceremony year it was introduced and and so to form in in regular trade promotions.If the SKU failed to show any profit for the supermarket in spite of appearance the year, the supermarket would discontinue the product and would require a new slotting fee wages if the manufacturer sought reauthorization of the SKU. Some key points in the distribution of supermarket channel process are as below 1. The typical distributor valuation account 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 products to the distribut ors which responsible to delivered product to the retailers. allocators would deliver products individually to the retailers, and in some cases even stock the shelves and track paperwork. Lastly customer gets the product from the retailers. Natural Food retailers will charge the manufacturer for one m allotment of one free case of product for every new SKU authorized 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. Retailers 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 distance of channel to market Channel gross profit margin Analysis By apply Margin analysis , we bottom of the inning identify the profitability of these channels and we can indicate which channel would provide the expec ted revenues of Natureview Farm. This analysis is based on the given point in the case study and each of the analysis is divided based on type of yogurt size.The results are as below. 1. will of Natural Foods Channel building block address for 8-oz cup contribution Margin regularize whole shifting Price voice Margin Unit % Mark up maker 0. 31 36% 0. 48 0. 17 56% Wholesaler 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 consider Unit selling Price Contribution Margin Unit % Mark up maker 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% Re tailer 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. Natural food channel is ab le to cost more to the customer compared supermarket channel due to lower price sensitivity among natural foods customers as well as % mark-up from the Natural foods wholesaler. SWOT Analysis The overall evaluation of a companys strengths, weaknesses, opport unit of measurementies, and threats is called SWOT analysis.Its a way of observe the external and internal marketing environment. External marketing (Opportunity and Threat) Analysis Opportunities 1. Supermarket channel will provide the companys noteworthy potential 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 depot Internal Marketing (Strength and Weakness) Analysis Strengths 1. Natureview is a major and trusted pi t 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 historic period. 5. Natureview is a leader distributor of natural food channel. 6.Strong operational efficiency because the company is using creative , low-cost rebel marketing Weaknesses 1. Natureview will heavily depend on its brokers 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 innovation.An alysis of Strategic planning Options The company has three natural selections needed to be analyzed and be identified which survival will help the company to give 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 strongly advocated by Vice president of sales Walter Bellini. The idea is to dissipate 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 the advantage as the first brand to accede 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 militant 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 yearbookly. 3. Due to Lack of arrest in supermarket channel, their broker might take advantage of their relationship with top supermarkets retails chains in Northeast and West. . This option might construct direct competition with national yogurt manufacturer. 5. Might create conflict of channel between supermarket and natural food stor es. Option 2 The second option was advocated by the vice president of 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 turn overd 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 conc erned on sales teams ability to achieve full national distribution in 12 months. . Might create conflict of channel between supermarket and natural food stores. Option 3 The third option was advocated by Walkers colleagues 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 winsome with expected high margin of 37. 6%. 5. Natureview product positioning is rarified for the new Multi-pack product launch. Cons 1. Natureview Farm will miss the opportunity 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 appendage 1 Natureview Farm total estimated for investment expenses is quite an 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 next idea is to expend 4 SKUs 32-oz into supermarket channel to their future business plannin g because 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 enthronization ROI is option 3. R ecommendationsAfter all analysis that we have done 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, incoming 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 contend 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 systematic management to keep track the trends so that they constantly 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/ footing/g/guerrilla-marketing. asp 2. http//Prezi. com/natureview farm s. 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 land (3-5 years) and in comparison to peer 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 personalised interaction and has a smaller budget, and it focuses on smaller groups of promoters that are responsible for getting the word out in a particular spatial relation rather than on wide-spread media campaigns.