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Natureview Form

The document outlines three marketing options for yogurt products, detailing their projected sales, profit contributions, and marketing expenses. Option 1 focuses on 8 oz yogurt SKUs in supermarkets with a high revenue potential but significant risks, while Option 2 targets 32 oz yogurt SKUs with lower expected revenue and higher slotting fees. Option 3 offers a multipack SKU in the natural foods channel, presenting lower risks and costs but also lower revenue expectations.

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2 views7 pages

Natureview Form

The document outlines three marketing options for yogurt products, detailing their projected sales, profit contributions, and marketing expenses. Option 1 focuses on 8 oz yogurt SKUs in supermarkets with a high revenue potential but significant risks, while Option 2 targets 32 oz yogurt SKUs with lower expected revenue and higher slotting fees. Option 3 offers a multipack SKU in the natural foods channel, presenting lower risks and costs but also lower revenue expectations.

Uploaded by

hryompatel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Option Product Focus Channel Regions Annual Marketing Budget

Supermarket $1.2 million per region ($2.4M


Option 1 8 oz Yogurt SKUs 2
Chains total)

32 oz Yogurt Supermarket
Option 2 4 Not specified (assumed high)
SKUs Chains

Not specified
Multipack Yogurt Natural Foods
Option 3 (likely niche Not specified (assumed lower)
SKU Channel
focus)

https://www.ukessays.com/essays/management/natureview-farm-strategy-case-analysis.php
Projected Annual Sales Profit Contribution

$16.07 million - $211,888 (Loss)

$9.21 million - $823,152 (Loss)

$3.32 million $781,463 (Profit)


Option 1 Option 2 Option 3
Incremental Revenue $25,900,000 $14,850,000 $6,030,000
COGS $10,850,000 $5,445,000 $2,070,000
Gross Profit $15,050,000 $9,405,000 $3,960,000
Expenses
• SG&A Expenses $320,000 $160,000 - Selling, General and Administrati
• Marketing Expenses $4,470,000 $4,064,000 $400,750
• Broker Fee $1,036,000 $594,000 $241,200
Net Incremental Income $9,224,000 $4,587,000 $3,318,050

Marketing Expenses Option 1 Option 2 Option 3


$250,000 + 0.025 ×
$1.2M × 2 = $120,000 × 4 =
Advertising $6,030,000 =
$2,400,000 $480,000
$400,750
$10,000 × 6 × 20 = $10,000 × 4 × 64 =
Slotting Fee –
$1,200,000 $2,560,000
$7,500×4×11 +
Trade Promotions $8,000 × 2 × 64 =
$15,000×4×9 = –
(Annual) $1,024,000
$870,000
Total Marketing
$4,470,000 $4,064,000 $400,750
Expenses
Selling, General and Administrative, expense
Option Advantages Disadvantages / Risks

- Very high potential for increased


Option 1 - High risk due to steep expenses
revenue

- Consumers in NE and NW
(8 oz yogurt SKUs in 2 - Faces direct competition from
regions are most likely to
regions) national players like Dannon
purchase organic yogurt

- Price war expected as


- Expected 1.5% market share
competitors’ base revenue comes
after 1 year (~$35M in unit sales)
from 8 oz packs

- 8 oz product is in the major - Less knowledge about handling


market, so launching makes sense supermarket relationships

- Less competition, as 32 oz packs


- New users may resist buying
Option 2 are not a focus for national
large 32 oz quantity
players

(32 oz yogurt SKUs in - Lower average trade promotion - National distribution within 1
4 regions) expenses year is very difficult

- Higher profit margin for 32 oz


- Large SKU slotting fee (~$2.56M)
versus 8 oz

- Expected first-year sales of $5.5


million

- Leverages current relationships


Option 3 - Low expected revenue
in the natural food channel

(Multipack SKU in - Low risk due to better product - Requires R&D to develop the
natural food channel) understanding product

- Low cost option

- Takes advantage of growing


natural food demand

- Targets the children’s segment


(fastest-growing, 12.5% share)
Channel Management & Conflict
Issues

- Potential conflict with


entrenched players in
supermarket chains

- Requires negotiation for shelf


space and promotions

- Complexities in scaling national


distribution

- Conflict risk with retailers for


large shelf space requirements

- Fewer conflict issues due to


alignment with existing channels

- Smooth entry with minimal


disruption
Criteria Option 1 (8 oz) Option 2 (32 oz) Option 3 (Multipack)

6 SKUs of 8 oz to 20 4 SKUs of 32 oz to 64 2 SKUs of multipack to


SKUs & Channel
supermarket chains supermarket chains natural foods channel

Natural foods national


Regions 2 4
channel

$1,200,000 per region $120,000 per region per


Ad Plan $250,000
per annum annum

3,000,000 units per 5,500,000 units per 1,800,000 units per


Incremental Sales (Units)
region annum annum

$10,000 per chain per $10,000 per chain per


Slotting Fees N/A
SKU SKU

Gross Profit $12,600,000 $7,700,625 $1,247,071

Less Ad Cost ($2,400,000) ($480,000) ($250,000)

Less Incremental SGA


(Selling, General, and ($1,200,000) – 20% of ($1,080,000) – Half of ($124,707) – 10% of
Administrative (SGA) sales + $120K marketing Option 1 Manufacturer Sales
Expenses)

($1,200,000) – 20 chains, ($2,560,000) – 64 chains,


Less Slotting Fees -
6 SKUs per chain 4 SKUs per chain

($870,000) – 11
Less Trade Promotion ($1,024,000) – 64 chains,
supermarkets in NE, 9 in -
Expenses 2 times/year
West, 4 times/year

($612,488.4) – 5% of ($384,771.25) – 5% of ($62,353.57) – 5% of


Less Broker’s Commissions
sales sales sales

Profit Contribution $6,317,512 $2,171,854.75 $810,010.43

Sales Growth (Year 1) $16,070,950 $9,214,425 $3,317,073

1.5% of supermarket
Market Share yogurt / 2.0% of 10.3% of 32 oz yogurt 11.2% of natural yogurt
supermarket

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