MKTG 5801 – Dr. Neeraj Bharadwaj Binh Tran, Jai Gulati...
Transcript of MKTG 5801 – Dr. Neeraj Bharadwaj Binh Tran, Jai Gulati...
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MKTG 5801 – Dr. Neeraj Bharadwaj Binh Tran, Jai Gulati, Geoff Fadden & Amir Kesten
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Agenda
� Natureview background � The yogurt industry and Organics � C’s & P’s � The options & Dilemma � Option analysis � what Would you dO?? � Recommendation
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Background � Manufacturer and marketer of refrigerated cup
yogurt � Success factors –
� Strong brand � Low cost � National distribution within natural foods channel � Strong relationships with distributors
� Differentiators – � Natural ingredients � Long shelf life � Reputation for high quality and good taste
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Background (cont.)
1989 1996 1997 2000 2001
Founded with two yogurt flavors with ~ $100K Revenue
Jim Wagner joined company as CFO
Wagner arranged for infusion of VC
Capital to fund investments
VC firm wants out
Growth of $20M needed by end of
year 1999 Revenue Reached 13
MM
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yOgurt iNdustry & ORGANICS
* This Data is from US population of the year 1999 based on US Census
97%
3%
Yogurt Sales Supermarkets Natural Food Stores
33
77
175
0 50 100 150 200
Men
Women
Non Consuming
Yogurt Consumption in Million*
Yogurt Consumption in Million
34%
22%
19%
0% 10% 20% 30% 40%
Supermarkets
Natural Food Stores
Small Health Foods Stores
Heavy Organic Food Buyer (organic Dairy)
Heavy Organic Food Buyer
74%
9%
8% 9%
Yogurt Sales by Size 6 & 8 Oz Multi Pack 32 Oz Others
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Do you remember your C’s ? C
usto
mer
s • Natural Food Customers
• Women (single and with kids)
• High Income and more educated
• Live in Northeast & West Coast
Com
pany
• 12 Flavors in 8 Oz cups and 4 in 32 Oz
• Longer shelf life
• Not treated with rGBH
• Strong relationships with leading natural food retailers
Com
petit
ors • Horizon –
Organic (Cash heavy and national brand) Shorter shelf life compared to Natureview
• Brown Cow – Natural not Organic (Presence in West Coast)
Col
labo
rato
rs
• Brokers • Distributors • Wholesalers • Retailers C
onte
xt
• 58% of yogurt consumer would buy Organic if price was less expensive
• Long term growth requires $30mm Capital spend
• Organic food socially on the rise
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What about the p’SSS not
Product • Size • Flavors • Natural • Organic
Price • Supermarket
Channel • Natural Foods
Channel
Place • Natural Food
Channel • National
Retailer Channel
• Wholesale/Clubs i.e. Costco, Sam’s
• Convenience Store
• Drug Stores
Promotion • Retail level • Wholesale level • Distributor level
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Are we having fun YET!!
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Options & Dilemma
Option 1 Expand in 2 supermarket
Regions (Northeast &
west)
Introduce 6 SKU’s of 8oz
products
Option 2
Expand Nationally
Introduce 4 SKU’s of 32oz
products
Option 3
Stay in Natural Food Chains
Introduce 2 SKU’s of children’s Multipack
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Go–To StrategY
Natureview Farm
Sales Brokers
Retailers
Consumer
Natureview Farm
Natural Foods Wholesalers
Natural Foods Distributors
Retailers
Consumer
8 oz cup
4 oz multipak
32-oz cup
• $.74
• $2.70
• $2.85
8 oz cup
4 oz multipak
32-oz cup
• $.88
• $3.19
• $3.35
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AnalysiS
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analYsis explained
0%
50%
100%
150%
200%
250%
300%
$10,000,000
$5,000,000
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
Incremental Sales
Gross Profit
Total Costs
Profit Contribution
Total Sales Projection
Required Investment
% Increase
Gross Margin
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What would you do?
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Recommendation
� Go with Option 3 � Less risky � Gets us to our target � Does not cannibalize our existing customers
and partners � Gives us a boost to get into the retail space at
a later date � Revisit the retail options after we meet our
20M target and Investment is secured