Q.

Compare the three options given in the case (‘The senior management team’s three options) and
give your recommendation to Natureview. (Use the attached excel sheet to come to a logical
conclusion, but you do not have to submit the excel sheet) Max word limit: 150 words

ANALYSIS

On evaluations and calculations of all the three options, the following are our observations:

The first option is to expand into the supermarkets with 6 SKUs of 8 oz size. We get the benefit of
first mover’s advantage and these cups have the maximum demand. The target revenue of 20 million
dollars is met convincingly. Even after adding up the total costs, the net profit is the highest for
Option 1.

Although the other costs seem lower for option 2, due to there being 64 retailers, the slotting costs
are very high and that has an affect on the net profits.

For option 3, the sales revenue is the highest but the production costs, the marketing expenses and
the cost of complementary cases bring the net profit down. Thus, this option is also not viable.

Hence, looking at the calculations, option 1 is the most profitable.