HBR Case Study ‘Launching Krispy Natural: Cracking the

product Management code’

What is Krispy Natural?

‘Krispy natural’ is the name of cracker (food) brand of the food company called ‘Pemberton’

Pemberton Overview● Snack Food Division of Candler

Enterprises.● Revenue of 5 billion USD in 2011● Market leader in the U.S. cookie and

bakery snacks segments of the sweet snack market.

● Acquired Krispy Inc. in 2008 - First step to enter Salty Snack Market.

Three key strategic priorities for the company

● Building a Collection of Attractive and Durable Brands● Direct Store Delivery (DSD) systems to increase

revenue.● Building or Acquiring Capabilities in Salty Snack

Categories.

US CRACKER INDUSTRY● Estimated 6.9 Billion USD

in 2011.● Cumulative Annual Growth

Rate of 2.2% from 2008-10

● Increased Growth rate of 6.2% in 2010.

Who is Frederick?

Frederick is the marketing Director of Pemberton.

What is the situation that Frederick is facing?

● Has to draw conclusions from the test market results for a new cracker product, Krispy Natural and present feasible recommendations and strategies to make the product succeed in the national market.

LET US FOCUS THIS ANALYSIS ON 4 FRONTS

● LAUNCH OF KRISPY NATURAL● TEST MARKET RESULTS● PROBLEMS IN NATIONAL ROLLOUT● POSSIBLE RECOMMENDATIONS TO

SUCCEED AT THE NATIONAL LEVEL

LAUNCH OF KRISPY NATURAL

1ST

FAILURE OF KRISPY AFTER ACQUISITION

● Krispy’s single serve product failed miserably after acquisition by pemberton in 2008. ( Exhibit 1)

WHAT NEXT?

Krispy relaunched as ‘Krispy Natural’

Marketing strategies for Krispy Natural● Product: Improved taste and increased packet sizes● Marketing: Used ‘Pull Marketing Strategy’ and spent

heavily on advertising● Distribution: Used DSD mode of distribution.● Pricing: 155% of other brands because of superior taste

and quality.

TEST MARKET RESULTS AND ANALYSIS

2ND

TEST MARKET PLAN ● Krispy Natural officially launched in: Columbus, and a trio of cities

in the Southeastern United States.● 16 week Test market period● In Columbus region, Krispy was a new product and hnece five

special “Krispy Force” representatives were hired and they were separate from the traditional DSD route.

TEST MARKET RESULTS

● In Columbus, the test market results were very positive as Krispy natural grabbed a market share of 18%.

● In Southeast, the results were not as much as expected.

Possible reasons for the results● Krispy Natural was a newly introduced brand in Columbus. So

superior taste and quality combined with coupons, etc would have attracted consumers to try it out.

● Whereas, Krispy is an already established brand in southeast. So many of the consumers would have thought that Krispy Natural was just an addition to the existing brand.

PROBLEMS IN NATIONAL ROLLOUT

3RD

SUSTAINABILITY AT NATIONAL LEVEL

● Coupons, Discounts,etc. which were used at the test markets may not help in the sustainability of the company in the national level.

● Very difficult to provide big discounts at the national level

REVAMPED STRATEGIES FROM BIG COMPANIES

● The already established companies like Kraft, Kellogg and Pepperidge farm may formulate new strategies to withhold their market shares.

COMPETITION FROM FRITO-LAY

● Fritolay, a well known brand is set to release its full range of cracker products into US markets.

● Krispy Natural may not be able to cope up with this competition.

POSSIBLE RECOMMENDATIONS TO SUCCEED IN THE NATIONAL LEVEL

4TH

ADVERTISING

● Pemberton should rely more on ‘Pull Strategy’ for marketing which means it has to spend a lot of money on advertising since the rival companies already spend huge sums to maintain their brand image.

● More emphasis should be laid on social media marketing.● Table below shows the amount spent by the cracker companies ( in million USDs) in

the year 2008 and 2009:

MORE EMPHASIS SHOULD BE GIVEN ON TASTE

● Testing results proved that improved taste attracted consumers towards Krispy Natural.

● So if even better tastes are engineered in the R&D of Pemberton, it can pay huge dividends in the long run.

MORE EMPHASIS ON INCREASING NUTRIENT VALUE

● Market Research revealed that US citizens are moving towards a healthier diet.● So Krispy Natural will be a huge success if it builds and maintain its brand as a

cracker of high nutritious value.

USE OF A CATCHY TAGLINE

● Pemberton should discover a catchy tagline which would demonstrate Krispy Natural’s superiority over other brands.

● Its tagline should particularly be based on nutritive value of the Krispy Natural crackers.

POSSIBLE COMPETITIVE RESPONSE TO FRITTO-LAY

● Launching more product mix and changing it frequently according to the tastes of customers.

● Optimisation of DSD to reduce the cost of the cracker products.

STRENGTHS

● World renowned product R&D labs.● Product Mix● Company owned DSD

WEAKNESS

Capacity constraints of DSD for

Krispy Natural Products:

So Pemberton has to expand

its capacity in order to meet such constraints.

OPPORTUNITIES

Market research shows

customer dissatisfaction when it

comes to taste of cracker

products in US. So

Krispy Natural capitalise on this.

THREATS

● Competition from Fritto-lays.● Modest increase of sales in

southeast in the test market conditions

WHY RECOMMEND NATIONAL ROLLOUT?

● Test results revealed that more than 60% of testers preffered Krispy Natural’s taste over other brands.

● More than 80% showed a positive purchase intent.