A) Executive summary

Company History: Odwalla Inc. is an American food product company that sells fruit juice, smoothies and food bars. It was founded in Santa Cruz, California in 198 and is head!uartered in "alf #oon $ay, California. %outhful, hip, and fresh, &dwalla, Inc. went from bac'yard juicer to bi( business faster than you can say )Strawberry C #onster.) *hile an E. coli scandal in 199+ s!uelched its e,plosi-e (rowth, the company)s openness in response to the crisis, won it 'udos and it remains today one of the country)s leadin( brands of fresh juice. &ther popular -arieties of its ).uice for "umans) include #an(o /an(o, 0emme 1itale, and Serious 2insen(. In 1993 &dwalla con-erted most of its deli-ery truc's to run on compressed natural (as, for which it won a Clean Air Award from the American 4un( Association. Orange Juicing Origins In 198 , 567year7old 2eor(e Steltenpohl and two fellow musicians, 2erry 8ercy and $onnie $assett, were in Santa Cruz castin( about for ways to ma'e money without much capital. /hey also wanted to contribute somethin( positi-e to their community. A business (uideboo' (a-e them the idea of sellin( fruit juices and thus &dwalla was launched in a shed in Steltenpohl)s bac'yard in September 198 . /he company)s name came from a character in an Art 9nsemble of Chica(o son(7poem called )Illistrum.) &dwalla deli-ered the )people of the sun) from the )(ray haze.) /he (roup set out to do the same with a secondhand, :556 juicer and a 19+8 1ol'swa(en -an. 4ocal restaurants were the first clients for the fresh7s!ueezed oran(e juice. $usiness was bris'. /he company was incorporated in California in September 1986. It e,panded into San 0rancisco in 1988. Steltenpohl, who earned a de(ree in en-ironmental science from Stanford ;ni-ersity, attributed &dwalla)s success to the fact that consumers were becomin( more !uality7 conscious in (eneral. In fruit drin's, this translated to the taste, nutrients, and enzymes a-ailable only in nonpasteurized, fresh juice. /his utter reliance on fresh produce left the company somewhat at the whim of nature, thou(h, and subject to une,pected losses. In 1995, Inc. ma(azine reported on the pride and passion that rallied its 8 employees around the product. /he company 'ept wor'ers informed about the juices) nutritional benefits and in-ol-ed them in taste testin( and product namin(. A pint of juice <two for dri-ers= was part of the daily salary. /he company mar'eted about 5 different types of juices at the time, which sold for about :1.6 to :5. a pint. 1

Into the I O !one in "##$ Steltenpohl aimed for more than simple enthusiasm throu(h empowerment. )If you can ta'e wa(e earners and instill an entrepreneurial dri-e, that translates into much (reater producti-ity,) he told Nation's Business. 8eople were essentially trained to mana(e themsel-es, he said. 9mployees could also desi(n their own jobs to an e,tent. Corporate head!uarters a couple of bloc's from the surf in >a-enport, California also was considered a moti-ator. &dwalla operated ?6 deli-ery truc's in 199?, when sales were about :1? million a year. It in-ested in state7of7the7art hand7held computers for its dri-ers, who ser-ed as de facto 8@ reps as they escorted the juice alon( the )cold chain) to the )&7Aone)77the company)s distincti-e in7store coolers. /he company launched its initial public offerin( <I8&= in >ecember 199?, when it had sli(htly less than 5 employees. /he @-@ Securities <)ris'7-ersus7reward)= arm of San 0rancisco in-estment ban' "ambrecht B Cuist Inc. had be(un in-estin( in the company in 1995, ac!uirin( a 1+ percent sta'e. /he (roup was impressed by &dwalla)s stron( customer loyalty and its distribution networ'. Soon after the I8&, the company e,panded into the 8acific Dorthwest -ia the ac!uisition of >harma .uice. It then bou(ht .ust S!ueezed, based in >en-er. In 199E, &dwalla mo-ed production to a reno-ated plant in >inuba, California surrounded by produce fields. It mo-ed its corporate head!uarters to "alf #oon $ay, California the ne,t year. &dwalla by then dominated Dorthern California)s fresh juice sales, holdin( half the mar'et. Its products were sold in 1,E locations. &dwalla be(an sellin( bottled water in the mid7199 s. It was supplied by Idaho)s /rinity Sprin(s, whose a!uifer held water carbon dated from the Stone A(e, 1+, years a(o. /his new line was -ery much the opposite of its hi(hly perishable, unpasteurized fruit drin's. *ater did not re!uire refri(eration and could be sold in more outlets, offerin( a distincti-e (rowth opportunity. @e-enues for fiscal year 199+ were :69.5 million. &dwalla supplied E, locations in se-en states <California, Colorado, De-ada, Dew #e,ico, &re(on, /e,as, and *ashin(ton= and $ritish Columbia. Its lar(est customer was the Safeway (rocery chain. /he natural foods mar'et was (rowin( at a rate of 56 percent a year. Steltenpohl estimated that the company would reach :1 million in sales around 1999. "e and co7C9& Stephen *illiamson told shareholdersF )&ur objecti-e, our passion, is to lead the fresh be-era(e re-olution.) It spent hea-ily to (et on /e,as shel-es in &ctober 199+. &dwalla was on the -er(e of becomin( a national brand. "##%: &isaster and 'itigation As part of its sanitation process, the company cleaned its fruit with a phosphoric acid wash and whirlin( brushes. $ut this failed in &ctober 199+. An outbrea' of food poisonin( caused by E. coli 163F"3 'illed a toddler in >en-er and sic'ened ++ other people in the *est, and the problem was traced to 2

&dwalla apple juice. 8ure apple juice accounted for a tenth of the company)s re-enuesG it also was used in blended drin's, which accounted for a majority of its business. In-esti(ators speculated that &dwalla may ha-e been sent fallen apples <or )(rounders)= that had come into contact with animal feces <the bu( li-es primarily in the di(esti-e tract of cattle=. &r it may ha-e come from carrots har-ested from the earth. /he Seattle Times reported that &dwalla)s sanitation was substandard in the wee' the tainted juice was produced. &dwalla officials stated that they belie-ed this strain of E. coli, only disco-ered in 1985, could not sur-i-e in cooled, acidic apple juice. /he microbe appeared to be e-ol-in(. Steltenpohl pointed out that it also could be spread on fresh lettuce. 9-en minuscule amounts of the (erm could spread infection. /his was the same -irulent patho(en that in 199? had 'illed three people in *ashin(ton State who had eaten insufficiently coo'ed hambur(ers at the .ac'7in7the7$o, chain. &dwalla responded by recallin( its juices containin( apples or carrots, which were processed on the same line. It offered to pay medical bills for consumers who the juice made ill. /he public relations problem was serious. As Steltenpohl later toldForbes, )Children)s health problems are ran'ed as the worst thin( that can happen to a company.) >ama(e control too' many forms. Aside from holdin( press conferences and settin( up an 8 number hotline, &dwalla used the Internet to disseminate information about the health problem and &dwalla)s response to it. 9delman 8ublic @elations had a web site de-oted to the crisis runnin( on the same day &dwalla recei-ed word of the contamination. /he site recei-ed 5 , hits in the first two days. 4in's to authorities li'e the Centers for >isease Control helped firm &dwalla)s credibility. &dwalla)s stoc' fell E percent. It would not be considered an attracti-e ta'eo-er candidate by the major fruit juice brands. Its brand name was dama(ed. /here were also numerous lawsuits, which the company faced with :53 million worth of insurance and :1 million in cash. </he .ac'7in7the7$o, E. coli lawsuits of 199? cost 0oodma'er :6+ million in le(al costs.= #ost of the suits were settled within a year. Sales fell 9 percent in the immediate wa'e of the crisis. &dwalla laid off ten percent of its +6 wor'ers by >ecember 199+ and posted a loss of :11.? million for the fiscal year endin( 0ebruary 58, 1993. In >ecember &dwalla announced plans to flash7pasteurize its apple juice. /he crisis affected not just &dwallaG (rocery store chains dropped other fresh juice producers as well. 2rowers across the country (rappled with the issue of pasteurization as the 0>A considered ma'in( it mandatory. #ost felt that the process destroyed the freshness with which they differentiated their offerin(s, in addition to addin( another set of costs. Some (rowers in the Apple "ill area of California were amon( the first to implement a 5?7point !uality assurance plan that, amon( other thin(s, forbade the use of )(rounders,) or fallen apples. /hese (uidelines were referred to as "azardous Analysis Critical Control 8oint <"ACC8= rules. 3

0resh juice accounted for only two percent of the total juice mar'et in the ;nited States. Some producers resented attempts by &dwalla, the media, and (o-ernment to deflect criticism to the industry as a whole. )4et)s not lose trac' of the real issue,) one told the San Mateo Times, )&dwalla (ot animal poop on its apples and failed to wash it off.) Accordin( to 0>A statistics, the fresh juice industry o-erall reported only EE3 illnesses <includin( the one fatality= for more than 6 million ser-in(s between 199? and 199+. De-ertheless, the a(ency re!uired juice mar'eters to label the followin( warnin( on fresh apple juice be(innin( in September 1998 <and all other fruit and -e(etable juices by Do-ember=F )*A@DID2F /his product has not been pasteurized and, therefore, may contain harmful bacteria which can cause serious illness in children, the elderly, and persons with wea'ened immune systems.) .uice produced to the "ACC8 standard was e,empt from the labelin( re!uirement. /he fresh juice industry naturally railed a(ainst the labelin(, belie-in( it would scare away consumers. 198 F&dwalla be(ins juicin( in Santa Cruz. 199EF0irst shipments deli-ered outside of California. 199+FE. coli outbrea' traced to company)s apple juice. 1998F&dwalla returns to profitability. /hey complained that it was )more a((ressi-e) than that re!uired e-en on raw por'. Althou(h &dwalla)s openness in the face of the crisis was commended by many, the company recei-ed the hi(hest food injury penalty e-er in what was reportedly the country)s first criminal con-iction in a food poisonin( case. It was le-ied a :1.6 million fine after it pled (uilty to 1+ counts of deli-erin( adulterated food products into interstate commerce, a misdemeanor. At &dwalla)s su((estion, one7si,th of the fine was earmar'ed for the Safe /ables &ur 8riority charity and to researchers at the ;ni-ersity of #aryland and 8enn State ;ni-ersity. 0ortunately, the resolution of this case made &dwalla stoc' safe a(ain for institutional in-estors, who owned about 58 percent of the company before the crisis. /hat would fall to a low of four percent in 1998. (e)uilding in "##*+#, 8roduct offerin(s proliferated as the company pulled out all the stops to win bac' consumers. A new type of li!uid lunch debuted in #ay 1993. &dwalla)s 0uture Sha'e, desi(ned to appeal to a youn(er mar'et than that of nutrient7 fortified 9nsure, was mar'eted as a )drin'able feast) made from )real food) li'e oats, almonds, soy, banana, and man(o. Do diet drin' <one pint contained 15 (rams of fat=, it offered a lunchtime alternati-e to fried fast food. /hese were offered in Inner Chai, >utch Chocolate, and Cafe 4atte fla-ors. &dwalla introduced an ener(y bar, its first solid product, in September 1998. /his entered the company in a :9 7million7a7year mar'et. /here was also a new line of )Dutritionals) enhanced with proteins, herbs, -itamins, and fruits. @edesi(ned 4

pac'a(in( appeared in September 1999. /he new bottles featured bolder (raphics and a sturdier cap but held sli(htly less juice. &dwalla also introduced pasteurized -ersions of its citrus drin's. &dwalla announced that it was a(ain profitable by the third !uarter of 19937798, postin( a profit of :1E , -ersus the pre-ious year)s :1.8 million loss for the period. Analysts rec'oned there was still life left in its brand name. /he company continued to e,pand (eo(raphically, enterin( 8hiladelphia and *ashin(ton, >.C. mar'ets. /his e,pansion was soon followed by entry into mar'ets of Chica(o, >etroit, #inneapolis, and 8hoeni,. Analysts felt it wise for the company to (et a toehold in these new mar'ets before someone else did, e-en if it came at the e,pense of bottom line profits. &dwalla)s re-enues were up 15 percent in 1998, to :69.1 million. )&dwalla is in the business of pro-idin( easy access to (reat7tastin( nourishment,) C9& Stephen *illiamson told the Wall Street Journal. It was still in business77sales were on trac' to reach :+3 million in 1999, a rise of more than 15 percent. De-ertheless, a net loss was projected. &ne analyst estimated that the company would ha-e been a :16 million7a7year, national business were it not for the E. coli incident. rincipal Competitors: .ust S!ueezedG /ropicanaG #inute #aidG Dantuc'et DectarsG Da'ed .uice <Chi!uita $rands=G 0resh Samantha)s.

A bo, of $anana Dut bars and two Chocolate Chip 8rotein bars

A bottle of &dwalla 0uture Sha'e

-) .ituation Analysis Cate(ory analysis

9ner(y bars is the one of the se(ments of the broad snac' bar cate(ory. Snac' bars include such item as (ranola bars while health bars include for e,ample, cereal or diet bars. 9ner(y bars are defined as -itamin7enriched, nutritious bars intended either to boost performance or replenish nutrients followin( e,ercise or as a complete snac' or meal replacement. /he ener(y bar cate(ory is hi(hly fra(mented with o-er 1 competitors and 3 brands. /he mar'etin( objecti-es F 1. 5. ?. E. 6. +. /o define the current situation facin( the productG /o define problems and opportunities facin( the businessG /o define the strate(ies and pro(ram necessary to achie-e the objecti-esG /o pinpoint responsibility for achie-in( product objecti-esG /o encoura(e careful and disciplined thin'in(G /o establish a customer H competitor orientation.

i. Aggregate mar/et 0actors a) Category si1e &-erall snac' bar sales were o-er :1.E billion in 5 5G of this, ener(y bars were nearly :? million with 58 percent (rowth rate o-er 5 1. /he industry e,perts e,pect the ener(y bar cate(ory to continue to (row in the 567? percent ran(e annually. 9ner(y bar cate(ory contains four primary brands, plus their sub7 brands and o-er a hundred smaller players. )) Category growth In between 1993 and 5 1, the a-era(e annual (rowth rate is 63 percent. ;.S ener(y bar cate(ory sales forecasted at :36 million in 5 ? for a continued e,pected (rowth of 55 percent. /he industry reports su((est current annual (rowth for the ener(y bar mar'et at 567? percent. /he cate(ory was e,pandin( because the new competitors are enterin( the mar'et, the e,istin( brands are e,pandin( with new products and fla-ors, mar'et penetration and usa(e occasion is increasin(. 6

c)

roduct li0e cycle

$oth the cate(ory and &dwalla $ars specifically are both securely in early sta(es of the (rowth phase. d) .ales cyclicity *hile ener(y bars are premium7priced for their con-enience and nutrient le-el, the base dollar point of :1 to :? per bar is low such that they are not directly impacted by 2>8 -ariations. e) .easonality ItIs a year7round sales. Cate(ory o-erall may e,perience a sli(ht sales increase in the sprin( and summer months durin( Jrace seasonK and as users are en(a(ed in more outdoor acti-ities and desire !uic', portable ener(y. 0) ro0its

As most major competitors are within the product portfolios of lar(er consumer (oods companies, it is difficult to benchmar' profitability within the ener(y bar cate(ory specifically. De-ertheless, the recent ac!uisition of the leadin( competitors reflects an e,pectation for stron( profit potential. Increased cate(ory competiti-eness may lead to lower pricin( and profits.

ii. Category 0actors a) 2hreats o0 new entrants3exits A stron( potential for new competitors (i-en that the cate(ory is profitable, fairly easy to enter, and increasin(ly rele-ant to consumers. 0urther, with the Jbi( threeK brands stron(ly in place <8ower$ar, Cliff <includin( 4una= and $alance=, it is most li'ely that small competitors will enter throu(h the natural foods channel, creatin( more direct competition with &dwalla bars. /he barriers to entry erected by the e,istin( competition are 'ey to the li'elihood that new competitors will enter the mar'et. Some of the potential barriers to entry followF

1) Economies o0 scale Competitors within the broader cate(ory of snac' bars would li'ely e,perience economies of scale with a relati-ely easy entry into the ener(y bar mar'et. 4) roduct di00erentiation

*ithin the mainstream ener(y bars, differentiation is lar(ely throu(h brand, taste and fla-or -ariety. *ith the e,ception of tar(eted nutrition products li'e protein or carbohydrate7specific products, nutritional le-els are lar(ely at parity. $) Capital re5uirements Capital re!uirements are relati-ely low, increasin( the threat of new entrants. 6) .witching costs Switchin( costs are -ery low, openin( the door to potential competitors. 7) &istri)ution As there are not specialty re!uirements for distribution <refri(eration, etc.= it would be -ery easy for any of the Jcentre of the storeK consumer food companies to enter the cate(ory and add on to their e,istin( distribution structure. /his is particularly true for companies that ha-e an established relationship with the cate(ory buyer.

)) -argaining power o0 )uyers 4ots of competitors with relati-ely similar options distin(uished by brand and taste 'eeps retailer power stron(. c) -argaining power o0 suppliers As the suppliers of raw inputs for ener(y bars are lar(ely a(ricultural, the commodity nature of a(riculture 'eeps prices and supplier power low. *hile still relati-ely low, supplier power will be hi(her for nutrient supplement suppliers. 8

d)

ressure 0rom su)stitutes

0resh fruit, cereal bars, smoothies, candy bar, etc. are all suitable portable substitutes for the mainstream ener(y bar consumer. /rue athletes are most li'ely to substitute with hi(her nutrient le-el ener(y bars. e) Category capacity It is appears to be hi(h (i-en current scenario of more than 1 manufactures and many more products. $ut, still it is too early to determine true capacity. 0) Current category rivalry 1ery hi(h. A differentiation is lar(ely by taste and fla-or -ariety and by tar(etin( uni!ue mar'et se(ments.

iii. Environmental 0actors a) 2echnological /echnolo(y could play a si(nificant role with respect to manufacturin( efficiencies and taste profiles. )) Economic *hile premium priced, ener(y bars ha-e so far seemed to fare the recession well. "owe-er, if economic conditions persist, consumers may opt for less e,pensi-e alternati-es li'e fresh fruit or non7ener(y snac' bas. c) olitical3regulatory

/he ener(y bar cate(ory is re(ulated by the 0>A as are other food products. /here are not to our 'nowled(e, howe-er, additional re(ulations directed toward the ener(y bar cate(ory. d) .ocial As li-es (et busier and mealtimes shrin', ener(y bars will continue to be an acceptable meal replacement. 9

 Competitor analysis
i. roduct 0eatures matrix /he major competin( brands to the &dwalla bar are 8ower$ar, $alance $ar, and Clif brand their -ariants. An additional competitor, Lashi 2o4ean, comes from the natural foodMener(y bar cate(ory. ii. -rand O)8ectives All four brands appear to be pursuin( mar'et share (rowth strate(ies. /he cate(ory is at a relati-ely early sta(e in the product life cycle, so it is too early to be (oin( e,clusi-ely for profits. /he smallest brand, Lashi, also see's to increase its presence in the channels. iii. -rand .trategies a) 8ower$arF /his brand in-ented the ener(y bar cate(ory. *hile it has maintained a loyal followin( of athletes, it lost (round to competitors as the mar'et e,panded to include more mainstream consumers. As a result, the brand has launched a number of e,tension, includin( 8ower$ar 8ria tar(etin( woman and a brea'fast bar, "ar-est. b) $alance $arF /his brand does not appear to ha-e a stron( focus. 4i'e 8ower$ar, it has focused on brand e,tension funded by its parent, Lraft, and is attemptin( to fill as many se(ments as possible. c) Clif $arF /his is the only independent company amon( the top brands. It is loo'in( to hold on to its top mar'et position in the face of competition with much (reater resources. /o lure athletes, the brand launched an e,tension, Ice $ar, and a salty #ojo $ar straddlin( the health and snac' cate(ories. d) Lashi F Its mar'etin( focus has been to e,pand its distribution. It has used its parent, Lello((Is, to accomplish this.

10

iv. 'ar/eting mix #ar'etin( mi, 8rice Lashi 2o Clif $ar 8ower $ar $alance &dwalla 4ean :1.+9M:5 . :1.?6M:1E.56 :1.?6M:1E.56 :1.?6M:1+.E9 :1.?6M:1E.56

>istribution Datural food, 2rocery, 2rocery, Club, mass, Datural food, (rocery and dru(, mass, dru(, mass, natural food, and some mass. natural food. natural food. dru(. dru(, (rocery and mass. 8roduct /aste so Dutrition, 9ner(y for E 7? 7? Dourishin( decadent, ener(y, optimum nutritional food bar, but they are natural performance philosophy, in(redients a healthy in(redients. nutrition and you can alternati-e, taste. pronounce. hi(h protein and fiber. 8romotion "ealth Athletes, Athletes "ealth Datural food enthusiastsM (eneral conscious, and health dieter. consumer. (eneral enthusiast. consumer. v. 2otal sales )e0ore merger: a= 8ower$ar F 1999 7 :1?6 million b= $alance $arF 1999 7 :1 c= Clif $ar F DMA d= Lashi F 1999 7 :56 million e= &dwalla 7 :158.? million <less than 6N is from food bar= vi. &i00erential competitor advantage analysis a= 8ower$ar F /his company has been -ery successful at differentiatin( itself by tar(etin( hardcore athletes and positionin( itself solidly in the ener(y bar cate(ory. /his tradition is from its founder, $rian #a,well, who was a former &lympic marathon runner. .9 million

11

b= $alance $ar F /heir main competiti-e ad-anta(e is a solid distribution system as it is mar'eted in natural foods, mass merchandise, club, (rocery, and a number of other channels of distribution. c= Clif $ar F /his is the most customer7oriented brand as its mana(ers do the best job interactin( with customers and listenin( and respondin( to their needs. It is percei-ed by consumers to be the most inno-ati-e and creati-e of the major brands. d= Lashi F Lashi is a natural cereal and con-enience foods company. /he comnpanyIs products are made with a blend of sesame and se-en whole (rains. /he brand is stron(ly associated with (rain and fiber. vii. Expected 0uture strategies a) 8ower$ar F /his brand is li'ely to continue to be more a((ressi-e in tar(etin( mainstream mar'ets and thus continue to launch more brand e,tensions. /he brandIs mana(ers will also in-est hea-ily in ad-ertisin( and promotions. b= $alance $ar F *ith the assistance of LraftIs resources, the brand will continue to introduce more e,tensions. c) Clif $ar F 4i'e the others, the emphasis for this brand will be on e,tensions. Its (oal is to remain ahead of both $alance $ar and 8ower$ar. d= LashiF /his brand will focus on new fla-ors and e,pand distribution to (ain shelf space in (rocery, dru( and mass channels.

Customer analysis i. 9ho are the customers:

Accordin( to S8ID <A.C. Dielsen Consumer @eports=, +?.3 N of -olume is from households with (reater than :E , ?5.EN of -olume is from households with (reater than :+ , 35.8N of -olume is from households with no 'ids. income. income.

12

+6.8N of -olume is from households where the "ead has some colle(e education. ?9.EN of -olume is from households with the "ead under ?6 years old. 9aten by about 1 in 6 people. Customer segments: J"ard7core athletesK F the ori(in consumer tar(et, who use ener(y bars, (els and other portable food products to maintain a hi(h le-el of strenuous acti-ity. J#usclemenK F indi-iduals tryin( to ma,imize their muscle mass throu(h use of ener(y bars, protein powders, and other dietary supplements. J>ietersK F indi-iduals usin( ener(y bars as a meal replacement or snac' alternati-e in an effort to lose or maintain wei(ht. J"ealth puristsK F indi-iduals who insists on the nutritional benefits of or(anic and all7natural foods. J"ealth conscious and on7the7(oK F indi-iduals with busy lifestyles who see' a healthier alternati-e to traditionally a-ailable fast foods. JSports enthusiastsK F acti-e indi-iduals see'in( sustained ener(y for less strenuous acti-ity than hard7core athletes. JSpecialty se(mentsK F such as women and minorities, who desires specific nutritional formulations (eared to their uni!ue health re!uirements. JDutrition see'in( familiesK F households that acti-ely see' to promote healthier eatin( habits amon( all members of the family, both adults and children. ii. 9hat they -uy: Con-enience /aste /e,ture 13

"ealth benefits 8erformanceM ener(y "un(er satisfaction 8rice <e,pect to pay :1. 8ac'a(in( M buy in bul' A-ailability iii. 9hat use 0or: #eal replacements Snac's Athletic ener(y booster iv. 9here they )uy: "ouse food stores &utdoor retailers 2rocery stores >ru( stores Con-enience stores #ass merchandizers Club stores v. Odwalla customers /ried &dwalla juice first 8refer F li(hter, fruiter fla-ors and chewier, whole7(rain te,ture /aste matters more than performance. 14 to :1.6 per bar=

 8lannin( assumption
i. Energy )ar potential *e assume <optimistically= that consumers eat an a-era(e of one bar per day < a real JsaturationK le-el= . *e then e,amine how many people are potential customers. "ere we start with the entire population and then subtract those we consider not to be consumers due to a(e, aller(ies, or income le-el. <Dote in doin( this we o-er7adjust since some consumers fall in multiple cate(ories, i.e., are o-er 3E and poor=. /he resultin( potential number of customers is 516,E? . /herefore 8otential O <516 million= <?+6 barsMyear= O 38.6 billion bars per year Dotice here how critical the usa(e assumption <bars consumed per wee'= is to this estimateG if we assume a more realistic 1 bar per wee' a-era(e, the potential estimate drops to a more reasonable, but still hard to attain, 11.5 billion bars per year, a far cry from current le-els. ii. ;orecasting Energy -ar .ales via (egression 0orecastin( ;.S. sales of ener(y bars is difficult for se-eral reasons. 0irst, there are relati-ely few years of data to (o on <here we use fi-e years, 199375 1, to forecast 5 5=. Second, many of the macroeconomic -ariables one mi(ht use <e.(., household income, C8I= are hi(hly correlated, forcin( a choice of one <here number of household=. /hird, causal -ariables such as price and new product entries are difficult to forecast. 0or the sa'e of the e,ample, we use ad-ertisin( spendin( of 8ower$ar, the cate(ory creator, partly because it was a-ailable. <Dote we need to forecast this for 5 5, which introduces more uncertainty in the forecast. /he resultin( re(ression model produced an @5 of .998, inflated because of the scarcity of data points. /he model was >ollar sales O 73,1? , , P 31.59 <number of households= P 9,663,E+3 <8ower $ar Ad-ertisin(= *ith a standard error of 9,?1E,3 1. "ouseholds are fairly easy to forecastG here we use 1 6,E68,15E <admittedly ridiculous precision.= 8ower $ar ad-ertisin( is harder to forecast, so we use three scenariosF an optimistic 5+ million, a best (uess of 5E million, and a pessimistic 18 million, a decrease from 5 1. <Dotice how sensiti-e the forecast is to this assumption.=/he resultin( forecasts, with P 5 standard errors, e!ual to 15

18,+ , used, as a conser-ati-e estimate of the uncertainty, are the followin( QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ 8ower $ar QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ Ad-ertisin( le-el 0orecast @an(e 18 million 5E million 5+ million 668,1 +16,+ +?E,+ , , , 6?9,6 693, +1+, , , , to 63+,3 to +?E,5 to +6?,5 , , ,

Dote that, e-en with @5 abo-e .99, there is si(nificant uncertainty stemmin( mostly from uncertainty about the causal mar'et factors <here 8ower$ar ad-ertisin(= which dri-e sales. Dotice also how much less this is than the potential estimate, su((estin( the result is feasibly attainable.

c) 'ar/eting .trategies
&dwalla bars that produces ener(y bars cate(ory and other all natural and or(anic food tar(eted at people with acti-e lifestyles. /heir introduce the brand e,tension in the ener(y bar cate(ory in 1998. #ar'etin( strate(y fo &dwalla $ar is F /hey can introduce new brand will be based on their popularity when they success to produce the product with natural in(redient. So, that can help them to promote their new product and will be done throu(h a -ariety of method. /hey can use promotion for a tar(eted se(ment such as samplin( in the mar'et for taster. >o in7store acti-ities bein( fa-ored and can use the primary form of communication with sponsorship because the demo(raphics of their readership are fairly similar with their brandIs name. Create ad-ertisin( for your ener(y bars in a ma(azine or trade publication for your tar(et mar'et.

16

/he messa(e &dwalla Inc will see' to communicate and this messa(e will be communicate throu(h a -ariety of method. /he first method will be ad-ertisement. /he bul' of the ad-ertisements will be in the *illamette *ee'ly, a wee'ly entertainment (uide. /he other form of ad-ertisin( will be usin( J(rassrootsK method where customers will be (i-en coupons for their friends to try &dwalla bar for the first time.

d) 'ar/eting O)8ectives
&ur primary mar'etin( objecti-e are to F >e-elop brand awareness throu(h a steady, month to month increase of new customers. >e-elop an increase in sales or decrease in mar'etin( e,penses. >e-elop awareness of the structured con-ersation system measured by customers comin( to the retailers shop for buy their product

&dwalla bar primary financial objecti-es are to F (row 1 percent faster than the ener(y bars cate(ory. i. 'ar/eting mixF &dwalla bars mar'etin( mi, is comprised of these followin( approaches to pricin(, distribution, ad-ertisin( and promotion, and place. 8ricin( H the pricin( scheme is based on standard price for ener(y bars cate(ory. >istribution H all products will be distributed from &dwalla Inc. Ad-ertisin( and promotion H the most successful ad-ertisin( will be with *illamette *ee'ly or retailers shop its self. 8lace H retailer shop 17

ii. Customer targets *e focus to the &dwalla 9ner(y $ar customer tar(ets is from e,istin( juice customers, health conscious and on7the7 (o customers, sport enthusiasts people, health purist and nutrition see'in( families. iii. Competitor targets "a-e more than one competitor in ener(y bar cate(ory such as F Clif $ars and Clif 4una Lashi 2o 49AD 8ower $ar $alance $ar Calorie #ate

iv. Core .trategy 0or core strate(y, we will increase distribution to 8 percent AC1 in mainstream (rocery stores. /hen we focus on natural health and le-era(e brand name, #inute #aid resources. v. roduct positioning /he &dwalla Inc will position itself as a reasonably price and natural in(redient <nutrition and health=.

e) ;inancial history and Contingency plan

Odwalla ;oods

*hen &dwalla)s apple juice was thou(ht to be the cause of an outbrea' of 9. coli infection, the company lost a third of its mar'et -alue. In &ctober 199+, an 18

outbrea' of 9. coli bacteria in *ashin(ton state, California, Colorado and $ritish Columbia was traced to unpasteurized apple juice manufactured by natural juice ma'er &dwalla Inc. 0orty7nine cases were reported, includin( the death of a small child. *ithin 5E hours, &dwalla conferred with the 0>A and *ashin(ton state health officialsG established a schedule of daily press briefin(sG sent out press releases which announced the recallG e,pressed remorse, concern and apolo(y, and too' responsibility for anyone harmed by their productsG detailed symptoms of 9. coli poisonin(G and e,plained what consumers should do with any affected products. &dwalla then de-eloped 7 throu(h the help of consultants 7 effecti-e thermal processes that would not harm the products) fla-ors when production resumed. All of these steps were communicated throu(h close relations with the media and throu(h full7pa(e newspaper ads. /hus, &dwalla had a -ery successful contin(ency plan durin( their crisis mana(emen. /hey mana(e to control their company financial profits as the 'ey elements towards the continuity of company (rowth.

19

Appendices:

Type

Wholly owned subsidiary

Industry

Consumer roduc!s

Founded

"an!a Cru#$ Cali%ornia$ &ni!ed "!a!es '1980)

Founder(s)

(re) "!el!en ohl (erry *ercy +onnie +asse!!

Headquarters

,al% -oon +ay$ Cali%ornia$&ni!ed "!a!es

Area served

&ni!ed "!a!es

Key people

"!e.en -. -cCormic/$ C00 and (eneral -ana)er 1ames 2. "!eichen$ "3* 4inance and C40 Chris +rand!$ 5irec!or +rand

Products

5rin/s$ %ood bars

Revenue

&"6187.9 million '2007)

Employees

900718

Parent

-inu!e -aid$ a di.ision o% !he9he Coca:Cola Com any

Website

0dwalla.com

20

21

22

(e0erences :
23

1. www.scri)d.com 2. httpFMMen.wi'ipedia.or( $. www.google.com 6. roduct 'anagement )y <ehmann 39iner ='c>raw?Hill)

24