Natureview Farm Solution

Our group decided it was most eco-friendy and benefical for Natureview to enter the conventional
supermarket segment with their 32 oz. tubs as opposed to the 8 oz. cups or a line that catered to
kids' preferences.

One the other hand, while entering the supermarket segment with the 32oz. tubs will result in the
desired revenue increase, it will also result in a first-year loss in income of about $800K. Considering
that the company's current annual profits are about $260K, it will face a cash flow problem as it deals
with the loss and with venture capitalists who are looking to exit the business. A more feasible option
would be to go with options 1 and 3. Option 1 will result in more than the desired revenue increase
and a loss of $211K in earnings, while option 3 will mitigate some of the risks generated by option 1
through the profits it will generate and its low initial cost. Furthermore, the calculations do not take
into account the cost synergies that may result from employing both options at the same time.

Above all, examining options 1, 2, and 3 reveals that these options are recipes for disaster. Each of
these options places Natureview in an entirely new arena, the supermarket, in which they have no
experience in and are the underdog. Natureview became a success in such health food grocery stores
as Whole Foods and Wild Oats (when Wild Oats was independent of Whole Foods). In fact, before
planning to hit the supermarket arena, Natureview held approximately 24% of the yogurt market in
natural and health food grocery stores. By entering the supermarket industry, not only would they be
leaving their niche market, but they will also have to invest heavily, take a big risk and battle fierce
competitors with deep pockets. Just by entering the supermarket industry, Natureview will have pay
a steep SKU fee for each of their products to each supermarket store. And if Natureview’s SKU
doesn’t meet the supermarket’s target annual revenue, then their SKU will expire and they would
have to purchase another one if they choose to continue to sell with that supermarket. Many
supermarkets also require SKU purchasers to invest in costly periodic promotions for their products.
So, with the money invested in the SKUs and promotions, if Natureview does not hit revenue targets,
they will lose heavily in their investment, thus, making this a risky venture. Also, Natureview’s
supermarket competitors, Yoplait and Dannon for example, not only run promotions frequently but
they also spend around 60 million dollars annually in advertising, which makes it very difficult for
Natureview to compete.

Natureview’s purpose for creating the three options was to increase revenue. They believed that
penetrating the supermarket division would yield their desired revenues. However, with the risks and
investment cost associated with options 1, 2, and 3, coming up with a 4th option seems as the wisest
path to take. Option 4, as we discussed in class, could be selling in a new arena such as at schools or
at sporting events. Option 4 could also include investing heavily to increase Natureview’s current
24% market share in health food stores to 50%.

Natureview could create a sub-brand to market to supermarkets. This would help to maintain
Natureview's brand idenity to their natural food stores and allow the company the freedom to
expand a new brand to a new market.

Natureview could also develop direct relationship with one, two, or several natural food stores to
sell their yogurts. By cutting out the distributor and the agent, Natureview would have the ability to
sell their products at a slightly higher price; this would be a reduced price from what the stores are
used to paying.
Our group took a more "out-of-the-box" approach to addressing these challenges. From our
perspectives the following activities would best enhance profitability at Natureview Farms:

Align with a major food service firm that provides meals for public schools systems (small 4oz
packages). We feel that there is major potential here for profitability & product visibility, which could
have great implications for customer lifetime value

Align with distributors to penetrate the supermarket sector, 4oz, 8oz & 32oz would be offered.

Better optimize Health Food store sales by introducing a child size 4oz lineup with "enviro-pack"
packaging to appease the environmentally conscius shoppers, as well as maintaining the line of 8oz.

Team #3-The Marketing Marvels:

We felt that choosing (option 1) which was to move ahead with taking their product to standard
grocery stores was the decision that would afford Natureview the best probability of generating the
necessary revenues. With 97% of the market coming from the chain stores they were simply limiting
the ability to grow sales of their products. We believed they should modify the plan to the following;

Implementation of this plan should only occur in the north east and west coast regions of the country
as to minimize risk
Sell only the 8 oz sized yogurts in a minimal number of flavors (aprox 4)

Provide their current distributors (health food stores) new flavors of yogurt with a portion of
proceeds going to either help the impoverished people from the region(s) where the fruit is
indigenous or offer some kind of carbon credit.
The case stated that Natureview was not in a position in 1999 to handle the projected capacity that
would be required of them to break into the supermarket segment. Therefore, team #4 felt
Natureview had to take a hybrid approach to reaching their $20 million goal in a two year timeframe.
The current customer was able to find this brand of yogurt at specialty locations and natural food
outlets. We felt the best plan was to build upon their brand recognition in year one and expand
within the natural food sector with 2 SKUs of the 4 oz childrens multipack product while gearing up
for the launch of the supermarket opportunity. In year one Natureview would increase revenues by
$3,317,073. In year two, with the supermarket expansion, Natureview can obtain their revenue goal
by introducing 6 SKUs in 20 chains in 2 regions with their 8 oz product.