Natureview Farm Harvard Business Review Case Analysis
-
Upload
abhishek-naulakha -
Category
Education
-
view
178 -
download
9
Transcript of Natureview Farm Harvard Business Review Case Analysis
NAT U R E V I E W FA R M C A S E S T U DY AN ALY S I S O N
W H AT I S T H E
C A S E ?
N AT U R E V I EW FA R MFO U NDE D 1 9 89
MANUFACTURER OF REFRIGERATED CUP YOGURT
NEEDS TO INCREASE REVENUES BY 50% IN 2 YEARS
NAT U R E V I EW FA R M YOG U RT
SMOOTH, CREAMY TEXTURE WITHOUT ARTIFICIAL THICKENERS AS OPPOSED TO COMPETITORS
NATUREVIEW FARM’S YOGURT’S AVERAGE SHELF LIFE WAS 50 DAYS COMPARED TO COMPETITORS’ 30 DAYS
1 9 8 9 -2 0 0 0
T H E Y E A R S O F GR O W T H
REVENUES FROM LESS THAN $100,000 TO $13 MILLION
OFFERS TWO SIZES OF YOGURT- 8 & 32 OUNCES
VANILLA AND PLAIN FLAVOURS TO 12 OTHERS
P R E S E N T S C E N A R I
O
GREW TO NATIONAL DISTRIBUTION
SHARED LEADERSHIP IN THE NATURAL FOODS CHANNEL
REVENUES CAME 86% FROM 8oz. PACKAGES AND 14% FROM 32oz. PACKAGES
R E F R I G E RAT E D YO G URT C AT E G O RY
TOTAL SALES $1.8 BILLIONYOGURT MARKET BY SHARE AND
REGION MARKET SHARE
R E F R I G E RAT E D YO G URT C AT E G O RY
97%
3%
yogurt sales
Supermarkets Natural Food Stores
46%
29%
25%
ORGANIC YOGURT MARKET
Supermaret Natural Food Stores Small Health Stores
S A L E S & D I S T R I BU T I ON CH A NNE L S
SU PE R M A R K E T C H A N N E L
MANU FACT UR ER
D IS TR I BU T OR
RETA I LER
CU ST OME R
15%
27%
DISTRIBUTION MARGINS
SLOTTING FEE- $10000 PER SKU PER RETAIL
CHAIN
ADVERTISEMENT COSTS-
NORT H E A S T, M ID W E S T , SO U T H EA S T
$75 00
WEST $80 00
N AT U RA L F O O D S C H A N N E LMANU FACT UR ER
WH OL ES ALER
D IS TR I BU T OR
RETA I LER
7%
9% DISTRIBUTION MARGINS
CU ST OME R
35%
NO SLOTTING FEE
MINIMAL ADVERTISEMENT
COSTS
SALES WITH SUPERMARKET CHANNELS MAY ALIENATE THE NATURAL FOODS CHANNEL
3 OP T I ONS T O R E ACH
T H E TA R G E T
OPT I ON 1
EXPAND SIX SKUs OF THE 8oz. PRODUCT LINE INTO ONE OR TWO SELECTED SUPERMARKET
CHANNEL REGIONS
WH Y ?
• 8oz. REPRESENTS LARGEST DOLLAR SHARE OF REFRIGERATED YOGURT
• COMPETITORS WERE SUCCESSFUL IN SUPERMARKETS
• FIRST MOVER ADVANTAGE
STRENGTH
• Organic high quality natural yogurt
• First mover in the supermarkets with organic yogurt
WEAKNESS
• High marketing costs
• High slotting fee
OPPORTUNITY
• Huge potential in the supermarket chain
• High demand for 8oz. yogurt
THREAT
• Various competitors
• New entrants in the organic yogurt
S WOT A NA LY S I S
CURRENT ASSETS 2000 2001
Units US$ 3,50,00,000.00 US$ 3,60,50,000.00
Price Per Unit US$ 0.74 US$ 0.74
Revenues From Natural US$ 1,30,00,000.00 US$ 1,30,00,000.00
REVENUE US$ 3,89,00,000.00 US$ 3,96,77,000.00
F I NA NC I AL V I AB I L I TY
THIS PROPOSAL IS FINANCIALLY VIABLE
OPT I ON 2
EXPAND FOUR SKUs OF THE 32oz. PRODUCT LINE NATIONALLY IN SUPERMARKETS
WH Y ?
• PROFIT MARGINS OF 32oz.(43.6%) ARE HIGHER THAN THAT OF 8oz.(36%).
• COMPETITIVE ADVANTAGE IN THE SEGMENT
• LOWER MARKETING EXPENSES
STRENGTH
• High Gross Profit Margins on 32oz. yogurt
• Lower marketing costs as compared to 8oz. yogurt
WEAKNESS
• High slotting fee
• Higher marketing costs than natural foods channel
OPPORTUNITY
• Low prevailing size offering in the sector
• Increasing health conscious consumers
THREAT
• May damage existing relationship with natural foods chain retailers
• New entrants in the organic yogurt
S WOT A NA LY S I S
CURRENT ASSETS 2000 2001
Units US$ 55,00,000.00 US$ 56,65,000.00
Price Per Unit US$ 2.70 US$ 2.70
Revenues From Natural US$ 1,30,00,000.00 US$ 1,30,00,000.00
REVENUE US$ 2,78,50,000.00 US$ 2,82,95,500.00
F I NA NC I AL V I AB I L I TY
THIS PROPOSAL IS FINANCIALLY VIABLE
OPT I ON 3
INTRODUCE TWO SKUs OF THE CHILDREN’S MULTI-PACK PRODUCT LINE INTO NATURAL FOODS
CHANNEL
WH Y ?
• HIGH FINANCIAL POTENTIAL
• LACK OF EXPERTISE FOR SUPERMARKETS
• BEST PRODUCT POSITIONING
STRENGTH
• Low marketing costs
• Efficacy in handling natural foods chain
WEAKNESS
• Natural Foods Channel accounts for just 3% of yogurt sales
OPPORTUNITY
• Fast growing(12.5%) sector for yogurt
• Increasing health conscious consumers
• Already has a high market share, and can increase it even further
THREAT
• Various competitors
• New entrants in the organic yogurt
S WOT A NA LY S I S
CURRENT ASSETS 2000 2001
Units US$ 18,00,000.00 US$ 20,70,000.00
Price Per Unit US$ 3.35 US$ 3.35
Revenues From Natural US$ 1,30,00,000.00 US$ 1,30,00,000.00
REVENUE US$ 1,90,30,000.00 US$ 1,99,34,500.00
F I NA NC I AL V I AB I L I TY
THIS PROPOSAL IS FINANCIALLY UNVIABLE
• ACCORDING TO THE ANALYSIS, OPTION 1 SHOULD BE FOLLOWED FOR IT LEADS TO THE HIGHEST REVENUES, AND CONSEQUENTLY, PROFITS
CO N CLU S I O N