HARVARD BUSINESS CASE STUDY

Launching Krispy Natural : Cracking the Product Management Code

 Pemberton
Candler Enterprises – Products

A Multinational beverage and snack goods

manufacturer. with the revenue figures of
$18 Billion in 2011.
Pet Care
Candler Beverage
Enterprises Division

Restaurant
Chain
Pemberton Products-
• Snack food division : Packaged food bars, cookies, sweet baked goods
• CAGR :14 % in last 5 yrs.
• Market Leader in Sweet Snack Market of US
• Unique DSD Distribution system
Major Brands

Homestyle Muffins
Softies Cookies
& Doughnuts

Income as a Percent of Sales 2011

Sales 100 %
COGS 78.8 %
Brand Advertising & Marketing 7.7 %
Pretax Contribution 13.5 %
Profit after Tax 7.7 %
 Ashley Marney
Brandon Fredrick
(Executive V.P.
(Marketing Director)
Sales & Marketing)

Characters of
Case at
Pemberton

Burt Spivey Patricia Williams

(Chief Operating Officer) (President)
 Strategic Priorities of Pemberton Products

• Building a collection of attractive, durable brands.

1

• Leveraging leading marketing, sales and DSD

2 systems to increase revenue and profits.

• Building or acquiring capabilities in salty snack

3 categories.
 Past records in Salty Snack Market Segment

Pemberton entered Salty Snack Market with Acquisition of Krispy Inc Pemberton
in 2008 but fell short of projections after its launch in 2009…

Krispy Inc

T his Failure was attributed to

Plan 2009 Actual % to
In $Millions In $Millions Plan
• Limited Product Line
• Taste Dissatisfaction
Krispy Retail 97.5 50.8 52.1
Krispy Vend 23.4 18 76.9
Total Krispy Single-Serve 120.9 68.8 56.9
 US Cracker Industry Figures & Projections

• Retail sales $6.9 billion in 2011

• Compounded Annual Growth rate - 2.2% for 2008-10

• Mintel study :74% respondents consumed crackers on a

regular basis and 34% ate them as part of regular
weekly diet.

• Segments like crackers with filling expected to grow 10-

14% per year.
 New Product Introduction : Krispy Natural

US Cracker
Industry
Potential

CrackerLine
Extension
Future Plans
in view of
strategic
priorities
 Krispy Natural :Product Management

Product Strategy

Package sizes increased to Multiple servings

High Nutritional content: 100% whole wheat, natural

ingredients ,150 calories etc

New F lavors in both “Cracker with filling” & “F lat

cracker” segments.
T he Study shows varying Purchase intents for different flavors and
their preference over other brands.
 Marketing Strategy
Pull Strategy

• Focus on extensive Advertising &

Merchandising

• Aggressive plans for Trade promotions

Other Brands
Projected Expenses $ in millions
Year 3
Advertising 33

Merchandising 37
Promotional Plan in Columbus,Ohio
 Krispy Natural

Distribution Pricing
Strategy Strategy

Approx 155% the category average cost

DSD distribution & Krispy Force per ounce, Visual Price same but quantity
team reduced
 Sales Objectives

• Minimum sales of $500 million during year one of

national distribution

• Steady state pre tax profit contribution of at least 13%

Sales Projections
 Test Market Plan &Results
• Sept,2011- launched in two test market regions: Columbus , Ohio, and a trio of cities
in the Southeastern United States. For 16 week test period
• Sales share was double the projected value in Columbus
• Share was 5% less than projected in Southeastern US due to low shelf space
Impact on Competitors

Potential Competitor Responses

Short term
responses Long Term
responses

Spend heavily to
New product testing
counter national roll-
in process
out

Increase trade
spending and Capitalize on pull
consumer Product line
promotions improvements

Increase A & M Compete on quality

and brand
reputation
 National Roll Out

• T he Test Market reports clearly suggest

that Krispy Natural has a very
promising future crossing sales and
pretax profit contribution barriers

• Annualized National Projections are

definite to cross the expected threshold of
$500 million

• It damages the market share of other

leading brands
 Strategy against Frito Lay
• Frito Lay is rumored to be launching a similar product in second quarter which can
hamper Marne’s expectations

• Measures against Frito Lay

 Celebrity endorsements
 Ads projecting the product as a necessary element of a US Family diet
 Targeted schemes and Trade Promotions
 Incremental innovation
 Optimization of DSD &Krispy Force
 Message strategy with Family Health Benefits as the POD
 Creative strategy including Product Comparisons with routine snack options
 End of Aisle Displays and Point of Purchase marketing
 Online Campaigns based on recipe innovations with crackers
 SUMMARY

Intro to Candler
Past Records in
Enterprises Characters of
Strategic Priorities Salty Snack
(Pemberton Pemberton
Market
Products)

Krispy Natural
Test Market Plan US Cracker
Sales Objectives Product
,Results Industry
Management

Impact on Strategy against

National Roll Out
Competitors Frito Lay
 DISCLAIMER

Created by Shivam Agarwal ,KNIT Sultanpur during a Marketing Internship under

Dr Sameer Mathur, IIM Lucknow.