Natureview Farm Case Analysis
Natureview Farm is a company that manufactures organic yogurt and is the industry leader with 24% market share. Its manufacturing process including the special recipe, longer shelf-life, no artificial ingredients, and product variety differentiated the brand and positioned it distinctively. The yogurt was produced in Vermont and sold in natural food stores only. The current predicament is for them to create a strategic plan, based primarily on distribution-oriented options, to exceed the $20 million revenue mark by the end of FY 2001. This was fueled by the withdrawal of the venture capitalist firm. The distribution strategies revolve around staying in the natural foods stores or further expanding out in to the supermarket channel. Therefore, the problem definition is that there is a need to expand and increase customer base to drive sales which would result in increases in revenues to meet corporate objective. Appendix 1 has a SWOT analysis that will help guide the rest of the discussion.
Appendix 2 briefly explains the three options in question and has a financial forecast for all three options if they were pursued. Option 1 seems to attain the highest revenue and profit. The firm however would be risking entering the mass market distribution channel which would be a significant shift with its current operations i.e. both the marketing and operations of the firm would need to be re-aligned to meet the large distribution channel. Setting up and effective execution may not be reliably predicted given the 12 month implementation plan. Moreover, horizontal channel conflicts would also possibly be occur due to the customers buying the same product at a cheaper price at a more accessible location. This would give the supermarkets more channel power due to them being able to drive higher sales. Overall, the 8oz market has a 3% expected growth rate, and this number needs to be taken into account as well since it’s not as high as some of the other realized trends which will be discussed below.
Option 2 has the next best revenue but not a great profit margin. Again, similar to the previous option, the firm would be entering the mass market distribution channel with all the risks highlighted above including horizontal channel conflict. With this option, the growth rate of the size of the yogurt is at 2% per year; however, the gross profit per sale is relatively high at 43.6%. Again, there is a slower growth rate present here but what’s more important to note is the lack of support provided by retailers for this size of the product. Given that a significantly smaller population purchases the larger tubs, the supermarkets place it in the lowest shelves in-stores and thus, may be overlooked in most scenarios.
Finally, Option 3 gives a better profit than the former but not sufficient revenue. Nevertheless, this option highlights the trend and the researched growth rate of 12.5% with the children’s market and multi-pack sales...