Natureview Farm Case

Natureview Farm Case Natureview Farm is a small yogurt manufacturer with annual r hithertoues of $13 million. It produces three different size of it cups 8 oz. cup, 32 oz. and 4 oz. cup multipack. However, Natureviews goal is to increase its annual revenue to $20 million in two years. With a solid relationship with its current, prospering strategy in the born(p) nutritions bloodline it is considering prospering into the supermarket pack. Conversely, it does non want to hurt the company brand it has created as a premium yogurt brand in the natural solid aliments market and betray those loyal, natural foods customers who do their business what it is today.In the case, Natureview is considering three options to expand its operations to pass its $20 million annual goal1. fatten up six SKUs of the 8-oz. product line into 1 or two selected supermarkets. The reasons behind this option beA) Eight-ounce cups correspond the largest dollar and unit sh atomic number 18 of the re frigerated yogurt market, providing significant revenue potential.B) Other natural food brands had success across-the-boardy expanded their distribution into the supermarket channel. As a leading natural foods brand for yogurt, they can trespass on the growing trend in natural and ingrained foods in supermarkets.C) A major Natureview competition sees to expand into the supermarket channel. Supermarket retailers would likely lonesome(prenominal) charter one ingrained yogurt brand. Therefore, there is a premiere-mover advantage.2. dilate four SKUs of the 32-oz. size nationally. The reasons behind this option arA) Currently generated an above-average gross profit margin for Natureview (43. 6% vs. 36. 0% for the 8-oz. line).B) Fewer competitive offerings in this size and Natureview had a strong competitive advantage in their products longer shelf life.C) Although slotting expenses would be higher, progressional expenses would be lower since the 32-oz. size was promoted only t wice a year.3. Introduce two SKUs of a childrens multi-pack into natural foods channel. The reasons behind this option areA) Company had strong relationships with leading natural food channel retailers, and expansion into supermarket channel could potentially punt the relationship.B) Distribution targets were very achievable for the two SKUs.C) rude profitability of the line would be 37. % while expenses would be lower quite attractive. This option whitethorn even yield the strongest profit contribution of all strategies interpreted into consideration.D) Natural foods channel was growing seven times faster than the supermarket channel.For each of the alternatives provided above, these are the issues that compulsion to be encountered respectively1. It has the highest level of competitive trading promotion and marketing spending. It would require quarterly trade promotions and a meaning marketing budget. It would too cost Natureview $1. M per region per year. Its SGA would also i ncrease by $320,000 annually. Therefore, it would be a costly approach. Also, to achieve its target, Natureview needed to labor advantage of its relationships with the top 11 supermarket retail custody in the Northeast and the top 9 manacles in the West and occupy majority of the retail space.2. The difficulty was that new users would not readily go far the brand and adopt a multi-size product. Furthermore, to achieve full national distribution within 12 months it would be a difficult task in of itself.Natureview would need to hire more sales personnel who had bewilder selling to more sophisticated supermarket channels and make up relationships with the supermarket brokers. This would increase SGA expense costs by $160,000. To add up to the complexity of the decision, a competitor was rumored to be open a line called Bright Vista, which would directly repugn with Natureview. Moreover, supermarkets were considering launching their own private-label versions of organic yogurt . Therefore, launching the 32-oz. has its issues of creation little noticed in a infinite of different products available.3. Introducing the multi-packs requires R&D and Operations costs. It also conflicts with the premium brand positioning it had worked hard to manifest due to supermarkets emphasis on sales promotions and unconformable prices. There were also fears that Natureviews marketing subdivision was unprepared to handle the demands on resources and staffing that entering the supermarket channel would impose. Supermarket distributors were more demanding in logistics and technology than what Natureview was familiar with. However, it is purview that soon, natural foods channel would embark on equivalent demands.After reviewing all the alternatives and its issues and benefits, I found that moving into supermarkets could energise both positive and negative repercussions. Refraining to expand into supermarkets could place Natureview at a competitive disadvantage, consid ering there are rumors of Natureviews competitors expanding into supermarket channels. Supermarkets are potentially a massive market for organic yogurt, considering 97% of all yogurts were purchased finished this channel and 46% of organic food consumers make at supermarkets. Two natural food companies have already entered supermarkets and in doing so have change magnitude their revenues by over 200%.Executing a first mover strategy would be crucial if this plan were to be implemented in order to impinge on brand equity from new consumers who are transitioning into the organic food market. Furthermore, because price inhibits 58% of consumers from buying organic products, Natureview would have to execute a competitive price strategy against non-organic yogurts. However, the expenses associated with it (i. e. the trade promotions and SGAs) are quite costly to take in. The goal is to obtain an increase in revenues by at least $7M. Costs set outred would be at least $2. M annuall y fair expanding into two regions. Therefore, if Natureview would expand to all four regions, they would incur $5. 2M in just marketing and SGAs. It is quite an dear(predicate) approach, especially since there is the fear that your current customers may disown your brand and look for others. Youll be charging less per unit and you lose the distinctive brand tax thats associated with your brand, which is a premium yogurt manufacturer. Alternatively, my testimony would be to antecede the multi-packs for children. Your current 8-oz. product is a cash cow leave it that way.The method to expand would be to enter a product nurture strategy and use the same channels for distribution. Youve build a strong relationship with natural food retailers outride it by product differentiating. Implement the multi-packs as an option for consumers in the natural food retailers and continue to keep the premium price brand positioning. The death thing you want to do is enter a price war therefore , keep the same channel distribution you are using but instead, introduce new products through product differentiation.