Natureview Farm

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University of California, Los Angeles *

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MISC

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Marketing

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Feb 20, 2024

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docx

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2

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Natureview Farm, Inc. had $13M of revenues in 1999 and needs to grow this number to $20M by the end of 2001. Of the three strategic options put forward for accomplishing this goal, Natireview should go with Option 2: Expand four SKUs of 32oz product line nationally. Company Analysis: Natureview Farm, Inc. produces natural ingredient-based yogurt that had a strong reputation for high quality and great taste. Natureview yogurt comes in 8oz (86% of revenues) and 32oz cup sizes (14% of revenues). As a major brand in the natural foods channel, Natureview had developed strong relationships with leading natural food retailers. Natureview does not currently offer its products in the supermarket channel. Competition Analysis: Natureview is the leading yogurt brand in natural food retailers with a 24% market share. Horizon Organic and Brown Cow are the two leading competitors in the natural food space with similar, organic type ingredients and sizable market share. Additionally, Horizon Organic was also looking to expand into the supermarket space and serves as a potential competitor in this channel as there are concerns over first to enter dominating the channel. Dannon, Yoplait, and Breyers dominated the supermarket space, but used artificial thickeners and other ingredients that differentiated their products from Natureview. Customer Analysis: The U.S. yogurt market reached $1.8B of sales in 1999. Yogurt Consumers make up 40% of the U.S. population and are roughly 70% female 30% male. Apart from natural foods shoppers, the typical yogurt consumer places a greater emphasis on package size and taste than on ingredients or whether the yogurt was organic. Between supermarkets and natural food stores, supermarkets accounted for 97% of sales volume. 46% of organic food customers bought products at supermarkets and 29% at natural foods stores. Segmentation: Yogurt consumers can be broken down into 3 segments based on the types of yogurt packaging they purchase. Consumers have very different needs from their yogurt purchase and these segments allow Natureview to target a specific need. Snackers – Primarily women buying yogurt as a quick snack. 6 to 8oz sized yogurt. Want to pay little at storefront but less concerned with $/oz. Frequent purchases. Concerned with flavor. Less concerned with expiration date. 74% of supermarket yogurt sales growing at 3% YoY. Bulk Buyers – Parents buying for families/children. Smaller 4 to 8oz bulk yogurt packs. Willing to pay more up front for $/oz savings. Less concerned with flavor. Fastest growing segment, 9% of sales growing 12.5% YoY. Heavy consumers – 32oz Tubs of yogurt. Infrequent purchases. Less concerned with flavor. More concerned with expiration date. Smallest segment, 8% of sales growing 2% YoY.
Targeting: Natureview serves to best target the 32oz market, or the heavy consumer segment for the following reasons: 1. As Natureview only collects 14% of yogurt revenue off the 32oz product there is a reduced risk of revenue cannibalization opposed to 8oz products. 2. Heavy consumers are most concerned with shelf life and Natureview offers the longest shelf life in the industry. 3. Minimal competition in the space gives Natureview the opportunity to capture market share in both channels. Additionally, encroaching the 8oz space might cause competitors to retaliate, whereas 32oz may not illicit a response. Positioning: For heavy consumers of yogurt, Natureview is the yogurt brand that offers the best ingredients and longest shelf life. Other yogurt brands use unhealthy thickeners which cause the yogurt to go bad fast. Natureview uses natural ingredients to offer a superior yogurt at a competitive price that will stay good for over 60% longer than the competition. Price: As shown in Exhibit 3, average retail prices for supermarket channel and nature foods channels respectively are $2.70 and $3.19. Product: Plain or vanilla flavored organic yogurt sold in 32oz containers. Place: Supermarket: Will need to establish new distribution channels to enter this market. Send product to distribution center which then ship product to supermarkets. Fees involved with entering this market. Will rely heavily on experienced sales brokers to establish this network. Natural Foods: Utilize existing distribution channels. Promotion: Regular trade promotions as required by supermarkets, usually twice a year. Utilize experienced sales personnel to engage with supermarkets. Will depend heavily on these brokers knowledge.
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