Natureview Farm is an 11 year old company, it mainly manufactures and markets refrigerated cup yogurt. Natureview Farm produces such yogurt which is applicable for all ages due to its creamy, unique and smooth texture. It has three product lines namely 8 oz.; 32 oz. and 4 oz. Multi pack for children. Natureview Farm has a great advantage on other competitors that its product has greater average life span than others in the market.
Natureview Farm’s revenues had grown from a 100 thousand dollars to 13 million dollars. Now the main problem is the company wants to increase its revenues by 50% but the confusion is to promote which product line in order to achieve the target.
Strategic Situation Facing Management in the Case
1.Analyze Customers and the Market
About 70% of the consumers are women so main focus should be to attract women to purchase the product. Currently market share of Natureview is 24% in natural food channel and market is segmented into two parts namely Supermarket Channel and Natural Food channel. Midwest and West are more favorable for product sales as Midwest carries more no. of retailers and west has highest dollar share.
2. Analyze the Competition
The main weakness of the other competitors is that their lifespan of products is less than 30 days while Natureview lifespan is around 50 days. They require multiple production plants to reduce shipping time to their distributers. They use artificial flavors for thickening. But their strength is that they have good public relations and large market share in Supermarket Channel. If take any action then they will try their level best to denaturalize our actions and will perform strategies to fail our product sales.
3. Analyze your Company in the Case
As stated above that we have great advantage on other competitors that our product’s shelf life is more than 50 days due to special ingredients used and unique taste provided to the customer. Our weakness is slotting price we offer to the supermarkets. This might make mind of customer that which product is real the one present at retailers’ shop or at Super Market. Moreover we also lack market share in Supermarket Channel. Our marketing strategies are also insufficient and advertisement is not helpful. Gruella marketing needs to be improved I think it is insufficient.
Strategic Alternatives Available to the Firm
We should work on strategy that strategy that states “one a customer, always a customer” to boost up sales. Because a client can be more beneficial than a customer as you have developed relations with client and surely client would recommend to others to use our product. For attracting new customers we need to introduce a new product in product line or you can say to introduce a new product in a new channel or environment.
Companies typically have the greatest potential for growth when they choose to introduce their existing products or services to new markets. Oftentimes this requires a direct marketing campaign to a new audience that is most likely to use this product or service. Targeted communication in marketing campaigns can help potential customers see products in a different light if they are not typical users of a company’s product or service.
Companies can also choose to introduce their products or services to new geographic markets. This is another area in which direct marketing campaigns can generate sales. Marketing campaigns use strategic communications to help bring awareness to products and services that nontraditional users are unaware of. We see this a lot – especially in any type of Business-to-Business (B2B) sales – where a company has a great product that would be ideal for a specific industry, but it hasn’t yet sold to that industry.
Currently we are getting 37% profit from our sales and 63% is the total cost. Three options were given by senior management which is as follows:
- Expand 6 SKUs of 8 oz.
- Expand 4 SKUs of 32 oz. and
- Introduce 2 multipacks into natural foods channel.
The first option anticipate incremental retail unit sales up to 35 million, while 2nd option exhibits sales up to 5.5 million and last option can anticipate sales up to 1.8 million. I think we should go for option 1 as 8oz. packet is giving most of the market share and has maximum number of sales. Despite of the fact that it has more competition it has lowest price. If they succeed in authorizing our product then it might be chances that only our product will be sold out.
Annual growth might be low but has a great potential in increasing sales. “Bottom on fruit” is an effective way to bomb into market for example, Cornetto has iconic base which promote a suspense that what is in the end. So cost would increase but net sales would increase. Revenues will be increased dramatically 35 million having profit of at least 12 million so sum of total revenues will achieve our required target.
I would like to conclude the analysis by saying that other options may have their advantages but I think option 1 is more helpful than others so we need to consider it.
Exhibit for option 1
Total sales estimated 35 million
Estimated gross profit 27.3 million
Total cost 17.19 million
Net profit 10.11 million