Natureview Farm Case

Natureview Farm Case Natureview Farm is a sm in all yoghourt maker with annual receiptss of $13 meg. It produces three different size 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 family kindred with its current, successful system in the subjective nutritions channel it is considering expanding into the supermarket channel. Conversely, it does not motivation to hurt the company brand it has created as a exchange premium yogurt brand in the natural foods market and betray those loyal, natural foods customers who make their business what it is today.In the case, Natureview is considering three options to expand its operations to reach its $20 million annual goal1. Expand six SKUs of the 8-oz. increase line into unrivalled or two selected supermarkets. The reasons shadow this option atomic number 18A) Eight-ounce cups represent the largest sawbuck and unit sh be of th e refrigerated yogurt market, providing significant revenue potential.B) opposite natural food brands had successfully expanded their statistical distribution into the supermarket channel. As a leading natural foods brand for yogurt, they can capitalize on the exploitation trend in natural and essential foods in supermarkets.C) A major Natureview competitor plans to expand into the supermarket channel. Supermarket retailers would likely only take for one organic yogurt brand. Therefore, there is a showtime-mover advantage.2. Expand quartette SKUs of the 32-oz. size nationally. The reasons pot this option areA) 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 operose competitive advantage in their products longer shelf life.C) Although slotting expenses would be higher, promotional expenses would be lower since the 32-oz. size was promoted only doubl e 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 jeopardize the relationship.B) Distribution targets were real achievable for the two SKUs.C) Gross profitability of the line would be 37. % plot of land expenses would be lower quite attractive. This option may even deport the strongest profit contribution of all strategies taken into consideration.D) Natural foods channel was outgrowth seven times faster than the supermarket channel.For each of the alternatives provided above, these are the issues that need to be encountered respectively1. It has the highest level of competitive trading promotion and marketing spending. It would imply quarterly trade promotions and a meaning marketing budget. It would alike cost Natureview $1. M per region per year. Its SGA would also incr ease by $320,000 annually. Therefore, it would be a costly approach. Also, to get through its target, Natureview needed to take advantage of its relationships with the top 11 supermarket retail arrange in the Northeast and the top 9 chains in the West and occupy majority of the retail space.2. The difficulty was that sore users would not readily get into 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 gross revenue personnel who had experience selling to more sophisticated supermarket channels and be relationships with the supermarket brokers. This would increase SGA expense costs by $160,000. To add to the complexity of the decision, a competitor was rumored to be launching a line called Bright Vista, which would at once compete with Natureview. Moreover, supermarkets were considering launching their own private-label versions of organic y ogurt. Therefore, launching the 32-oz. has its issues of being slight noticed in a myriad 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 have due to supermarkets emphasis on sales promotions and inconsistent prices. There were also fears that Natureviews marketing department was unprepared to handle the demands on resources and staffing that enter the supermarket channel would impose. Supermarket distributors were more demanding in logistics and technology than what Natureview was familiar with. However, it is thought that soon, natural foods channel would embark on similar demands.After reviewing all the alternatives and its issues and benefits, I ready that moving into supermarkets could have both positive and negative repercussions. Refraining to expand into supermarkets could contrive Natureview at a competitive disadvantage, considering there are ru mors of Natureviews competitors expanding into supermarket channels. Supermarkets are potentially a huge market for organic yogurt, considering 97% of all yogurts were purchased through this channel and 46% of organic food consumers shop at supermarkets. Two natural food companies have already entered supermarkets and in doing so have increased their revenues by over 200%.Executing a first mover strategy would be crucial if this plan were to be implemented in order to gain 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 pricing strategy against non-organic yogurts. However, the expenses associated with it (i. e. the trade promotions and SGAs) are quite expensive to take in. The goal is to obtain an increase in revenues by at least(prenominal) $7M. Costs incurred would be at least $2. M annually just 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 expensive approach, specially since there is the fear that your current customers may disown your brand and appear for others. Youll be charging less per unit and you lose the distinctive brand treasure thats associated with your brand, which is a premium yogurt manufacturer. Alternatively, my recommendation would be to insert 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 development strategy and use the same channels for distribution. Youve built a strong relationship with natural food retailers continue 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 last thing you want to do is enter a price war therefore, keep the same channe l distribution you are using but instead, introduce new products through product differentiation.