Prof. Joan Crooker
Natureview is a company that makes yogurts. However, there is a new challenge at present which is the company want their revenues grow to 50%, and we must help the company choose the best plan.
There are some elements that have contributed to Natureview’s success. Natureview is the leader of the nature food channel. It has strong relationships with retailers, and these retailers all trust its products are better. Natureview also has built a impression of high quality and great taste for their customers. Natureview’s yogurts have long quality guarantee period. Customers can stow the yogurts for a long time so they can buy many yogurts once instead of buying everyday. And most important element is the company use a creative strategy named “guerrilla marketing.” It can help the company lower their cost to make the company more efficient.
The company already has three options. On the first option advocated by the firm’s Vice President of Sales, the firm would have to expand six SKUs of the 8-oz. product line into one or two selected supermarket channel regions. First, as we know, the eight ounce cups represent the largest dollar and unit share of the refrigerated yogurt market, thus it has major revenue potential. Secondly, if the company expands six SKUs of the 8-oz product line, this would allow Natureview Farm to produce enough cups to put them on the supermarket’s shelves, with minimal slotting expense. Third, Based on other natural food brands success in expanding their product in the supermarket channel has shown significant proves Natureview’s product will have a high chance of success. However, there are still disadvantages. The management had estimated for comprehensive advertising plan will cost $1.2 million per region per year and Natureview’s sales, general and administrative expenses (SG& A) would increase by $ 320,000 annually. Due to Lack of experience in supermarket channel, their broker might take advantage of their relationship with top supermarkets retails chains in Northeast and West. And also this option might create direct competition with national yogurt manufacturer.
The second option was proposed by the firm’s Vice President of Operations. He claims that the firm should expand four SKUs of the 32-oz. size nationally in order to address the revenue gap. This option also has some benefits. First of all, while the 32-oz. cups comprised a smaller unit and dollar share of the yogurt market, they generated an above-average gross profit margin for the firm. In addition, there were fewer competitive offerings in this size, so this option would present the firm with a competitive advantage because of the product’s longer shelf life. Besides, Natureview’s brand has achieved a 45% share of this size in natural food channel, it could sell approximately 5.5 million units in the first year if the Company decided to expand into 64 supermarket retail chains across the country. Last but not the least, promotional expenses would be lower since this size was only promoted twice a year. And this option might create conflict of channel between supermarket and natural food stores.
The last option was proposed by the firm’s Assistant Marketing Director who suggests that the firm would have to…