1)HowhasNatureviewsucceededinthenaturalfoodschannel?

Nature View has succeeded in the natural foods channel through the use
of brokers who sell its product (yogurt) to natural foods retailers. Their
brokers have the direct relationship with the retailers, meaning: the
retailers purchase the Natureview yogurt from the brokers and not directly
from Natureview itself. Using this broker distribution channel system
Natureview has succeeded in capturing 25% of the natural food market.
This system has also enabled an increase in sales for its 8 ounce and 32
ounce products.
Perhaps more importantly, the health food channel was successful
because of its success in reaching the target market. Health conscious
women were Natureviews target market and their brokers worked with
retailers that had access to that demographic. More specifically they
targeted women who earned high incomes, were education, and lived in
the Northeastern or Western USA

Natureviewwasamajorbrandinthenaturalfoodschannelin1999(24%
marketshareintheUnitedStates).
Becauseoftheemphasisonnaturalingredientsanditsstrongreputationfor
highqualityandgreattaste(noartificialthickeners),Natureviewgrewquickly
tonationaldistributionandsharedleadershipinthenaturalfoodschannel.
Itsrevenueshadgrownfrom$100,000to$13millionoverthepast10years.
Natureviewsyogurtsaverageshelflifewaslongerthanitscompetitors
productsshelflife,thereforeitwasabletohavefewerproductionplantsand
thereforesaveoncost.
Itdevelopedstrongrelationshipswithleadingnaturalfoodsretailers,including
thechainsWholeFoodsandWildOats.
Natureviewscreative,lowcostguerillamarketingtacticsthatworkedwell
inthischannel.
Premiumpricinginthenaturalfoodsstores.

2.)

3)Whatarethestrategicadvantagesandrisksofthe3optionspresented?What
channelmanagementandconflictissuesareinvolved?
Option1.ToexpandsixSKUsofthe8oz.productlineintooneortwoselected
supermarketchannelregions(NortheastandWest,20retailchains).

Strategicadvantages:
Accesstothelargercustomerbaseandbrandrecognitionwillincrease.
Eightouncecupsrepresentedthelargestdollarandunitshare(74%)ofthe
yogurtmarket,providingsignificantrevenuepotential.
ConsumersinNortheastandWestregionsaremostlikelytopurchaseorganic
yogurts.
Othercompetitorshadsuccessfullyexpandedtheirdistributioninto
supermarketchannel.
Chancetogainafirstmoveadvantageontheirorganicyogurtcompetitors.
Expertspredictedunitvolumegrowthoforganicyogurtatsupermarketsof
20%/year.
Expected1styearsalesof35millionunits($16.1millionrevenue).(*)
Risks:
Highrisk
Dependsonbrokerstouseexistingrelationshipswithsupermarketsinthe
targetregions.
Directcompetitionwithlargenationalbrands(Dannon,Yoplait,etc.).
Requiresquarterlytradepromotionsandameaningfulmarketingbudget.
Highadvertisingcost($1.2millionperregionperyear).
Increaseincostof$320,000forSG&A.
Needtohiresalespersonalwithexperienceinthesupermarketchannel.
Option2.ToexpandfourSKUsofthe32oz.sizenationally.
Strategicadvantages:
Fewercompetitionofferingsinthissize(Natureviewhasstrongcompetitive
advantagebecauseofproductslongershelflife)
Highergrossprofitmarginthan8oz.(43.6%versus36%)

Marketingandaveragetradepromotionalexpenseswerelower.
Expected1styearsalesof5.5millionunits($9.18millionrevenue).(*)
Risks:
Highrisk
Verydifficultto

sau
AdvantagesofOption1:

VeryHighpotentialforincreasedrevenue

ConsumersinNEandWregionaremostlikelytopurchaseorganicyogurt

Expected1.5%marketshareafter1year(35millionunitsales)

8ozproductlineisthemajormarket,solaunchingitmakessenseDisadvantages
ofOption1:

Highriskinvolvedasexpensesgoupsteeply

Directcompetitionfromnationalplayerslikedannon

Pricewarexpectedascompetitionsbasicrevenuecomesfrom8ozpack

LessknowledgeabouthandlingsupermarketrelationshipsAdvantagesofOption
2:

Lessercompetitionas32ozpackisnotthebreadandbuttersalesfor
nationalplayers

Loweronaveragetradepromotionexpense

Higherprofitmarginfor32ozversus8oz

Expected1styearsalesof5.5millionunitsDisadvantagesofOption2:

Newusersmaynotwanttopurchaselarge32ozquantityofproduct

Verydifficulttoachievefullnationaldistributionwithinoneyear

LargeSKUslottingfeeofaround$2.56MnAdvantagesofOption3:

Takeadvantageofcurrentrelationshipswithinnaturalfoodchannel

Lowriskfactorsasknowledgeabouttheproductexist

Lowcostoption

Takeadvantageofgrowingnaturalfoodschannel

Thechildrenspackisthemostrapidlygrowingsegment(12.5%)ofalltheother
pack
sizesDisadvantagesofOption3:

Lowexpectedrevenue

RequiresR&Dtodevelopproduct