By Jasraj Singh

To grow revenues by 50% by the end of 2001Reach from $13million to $20million in revenuesTo take a decision for achieving these goals

Current situation

Market Leader in Natural Food Channel ButIn a dilemma to extend to Supermarket Channel or stick to Natural Food Channel?

Background

Founded in 1989, Nature view Farm manufactured and marketed refrigerated cup yogurt under the Nature view Farm brand name.

4 Ps

Product(Natural Yogurt

of size 32oz, 8-6oz,4oz)

Price(Affordable

according to its channel)

Place(Natural food channel, Drug

and Convenience

stores)

Promotion(Low cost guerrilla

marketing)

Trends in Yogurt Market

Package size

Taste

Flavour Price

Ingredients

Organic or not

Focus on Sales

Sell at Cheap Rate

Price sensitive

Charge Slot Fees

Trade promotion Ads

Super Marke

t Chann

els

Focus on Profits

Sell at Expensive Rate

Other Factors

No Slot Fees

No Trade promotion Ads

Natural Food Chann

els

VS

97%

3%

Distribution Channel

Supermarkets ChannelNatural Food channel

Manufacturer

Distributor

Retailer

Customer

15%

27%

Supermarket Channel

Manufacturer

Natural food Wholesaler

Natural Food Distributor

Retailer

Customer

7%

9%

35%

Natural Food Channel

33%

24%

23%

15%

5%

Supermarket Channel

DannonYoplaitOtherPrivate labelsColumbo

24%

15%

19%7%

35%

Natural Food Channels

Nature view FarmBrown CowHorizon OrganicWhite WaveOthers

Yogurt Market Share By Brand

Option1

• Expand in Northeast and West Supermarket region.

• Bring in 6 SKUs of 8-oz

Option2

• Expand in Supermarket Nationally

• Bring in 4SKUs of 32-oz

Option3

•Stay in Natural Channel•Introduce 2 children’s multipack

Dilemma For the Management

Provides significant revenue potential.

8-oz have highest incremental demand

Give first mover advantage

Option 1

Pros

Cons

High risk and High cost

Require quarterly trade promotions

Advertising plan would cost $1.2million

SG&A expenses increase by $320,000 annually

Units sold 3,50,00,000

Revenue($0.55*35000000) 19250000

COGS($0.31*35000000) (10850000)

Gross Profit $8,400,000

Expenses

Advertisement Cost($1,200,000*2)

$2,400,000

SG&A expenses $320,000

Slotting Fees($10,000*6*20)

$1,200,000

Broker’s Fee(4%*19250000)

$770,000

Advertisement cost is abundance,Natureview would pay $4,800,000 on ads by 2001

Option 2

Pros

Generate higher profit margin than 8-oz

Strong competitive advantage: long shelf life

Lower promotion expenses

Cons

Entry of potential competitor

Inability of sales to achieve growth within 12months

Increases SG&A expenses by $160,000

Units sales 5,500,000

Revenue($1.85*5,500,000) 10,175,000

COGS($0.99*5,500,000) 5,445,000

Gross Profit $4,730,000

Expenses

Advertisement Cost($1,200,00*4)

$480,000

SG&A expenses $160,000

Broker fees(4%*10,175000) $407,000

Slotting Fees($10,000*4SKUs*64)

$2,560,000The slotting is huge as Natureview have to 64 supermarkets

Option 3

ProsFinancial potential is very attractive

Nature food channels growing 7 times faster than supermarkets

Fewer competitive offerings in this size

Cons

Potential conflicts

Uncertain factors

Unprepared to handle the demands on resources

Units sold 1,800,000

Revenue($2,13*1,800,000) $3,834,000

COGS($1.15*1,800,000) $2,070,000

Gross Profit $1,764,000

Expenses

Marketing $250,000

SG&A expenses $0

Broker’s fee $0

Slotting Fee $0

Cost Effective as there is no slotting, broker or SG&A expenses

Financial Forecast 2001

Option 3Year Revenue

1999 $13,000,000

2000 $3,834,000

2001 $4,409,000

TOTAL $21,243,100

Meets the Goal of achieving 20million by 2001