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Natureview FarmCase PresentationLucy Edmonds, Kathleen Fee, Morgan Hicks, Theresa Murphy

Agenda Background and CaseInformationProblem and SolutionIdentificationCompany and Value ChainAnalysisCompetition AnalysisRecommendation andImplementation Plan

Company Background

Product Info & Competitive Advantage 12 flavors in 8-oz cups4 flavors in 32-oz cupsConsidering a child’s size 4-oz cup sold in a 6 pack format as well as 8 2-oztubes sold Family recipeNatural ingredients20 day longer shelf-life than competitors

Objectives Maintain consistent profitabilityFind a new investor or acquisition opportunityIncrease revenues from 13,000,000 to 20,000,000 in less than two years

ProblemsCurrent need to find new fundingmust rely heavily on salesbrokersmust keep their value chainhappy after having goodrelationships for so longAnticipated main competitors are rumoredto be expanding intosupermarket chainsThe brokers were unhappy withthe chain and could leave them

Option 1enter 6 flavors of 8oz into supermarket chains to one or two select regionsStrengths expansion into greater market8oz largest dollar/unit shareother natural brands 200% revenueincreaseunique positioningrumors about top competitor movinginto supermarketsWeaknesses high costhighest level of competition of all sizes quarterly promotions & biggermarketing budget

Option 2enter 4 flavors 32oz into supermarket chains nationallyStrengths above average gross profit marginless competitionless promotion expensesWeaknesses greater slotting expensesdoubts of the success of this sizedifficulty reaching national distributionin one yearmust hire experienced sales personnel

Option 3enter 2 flavors of children’s multipacks into natural food storesStrengths already established relationshipswould not have the same impact onmarketing, sales, brand, and channelarrangementsestablished ingredients work well forend consumerhigh financial potentialnatural foods channel growing at muchhigher rateWeaknesses additional R&D costsnatural food stores do not reach a largeportion of the end consumer

Revenue and Cost analysis for each optionoption 1expected salesoption 2option 3 35,000,000.00 5,500,000.00 1,800,000.00 0.40 1.46 1.51total revenue 14,000,000.00 8,030,000.00 2,718,000.00manufacturingcosts 10,850,000.00 5,445,000.00 2,070,000.00SKUs 1,200,000.00 2,560,000.00 0.00marketing 2,400,000.00 7,680,000.00 250,000.00trade promotions 217,500.00 512,000.00 0.00additional SGA 320,000.00 160,000.00 0.00 0.00 0.00 390,000.00revenue per unitR&Dfree casestotal costsprofit for 1 year 67,950.00 14,987,500.00 16,357,000.00 2,777,950.00- 987,500.00 - 8,327,000.00- 59,950.00

Additional growth Growth insupermarketchains isexpected to be3% Natural Foodstore growth isexpected to be20%GrowthOption 1Option 2Option 3Year 2 revenue 14,420,000.00 8,270,900.00 3,261,600.00Year 2 cost 11,175,500.00 5,608,350.00 2,484,000.00 307,000.00- 5,689,450.00 527,600.00- 680,500.00- 14,016,450.00 467,650.00Year 3 revenue 14,852,600.00 8,519,027.00 3,913,920.00Year 3 costs 11,510,765.00 5,776,600.50 2,980,800.00 404,335.00- 5,609,573.50 683,120.00- 276,165.00- 19,626,023.50 1,150,770.00Year 4 revenue 15,298,178.00 8,774,597.81 4,696,704.00Year 4 costs 11,856,087.95 5,949,898.52 3,576,960.00Year 4 profits 504,590.05- 5,527,300.71 869,744.00Total profits after 4years 228,425.05- 25,153,324.21 2,020,514.00Year 2 profitsTotal profits after 2yearsYear 3 profitsTotal profits after 3years

Target Audience - End ConsumerGeneral Natural YogurtConsumerEducated, middle-aged women withmedium to high family income thatshop at natural food stores8ozGeneral user (Women)32oz“Heavy” consumerMultipackChildren (and their mothers)

SWOT STRENGTHS:Product differentiationOwns manufacturing plantRelationship brokers haveOPPORTUNITIES:Chance to get a huge investor oracquisitionHaven’t yet tapped intosupermarket chains WEAKNESSES:Can’t maintain consistentprofitabilityMinimal percentage of themarket share in the refrigeratedyogurt industry.THREATS:Dannon and Yoplait have 57% ofmarket shareDannon’s new organic productHigh level of competitors insupermarkets

Value ChainSupermarketsNatural Food StoresManufacturerManufacturerDistributorNatural FoodsWholesalerNatural FoodsDistributorRetailerRetailerCustomerCustomer

Revenue taken by each level of Value Chainoption 1option 2option 3supermarket (8oz) supermarket (32oz) natural (6pk)manufacturer (NVF) 0.40 1.46 1.51broker (4%) 0.03 0.11 0.13NF wholesaler (7%) 0.23distributor (15%,15%, 9%) 0.11 0.41 0.30retailer (27%, 27%35%) 0.20 0.73 1.17price to consumer 0.74 2.70 3.35

Market ShareSupermarketNatural Food Stores

Industry AnalysisPorter's 5 Forces for YogurtThreat of New EntrantsLow due to multiple barriers to entry.Threat of Substitute Products orServicesHigh because if you wanted to switch from eating yogurtto any other snack food there are no switching costs.Bargaining Power of BuyersHigh because there are many other substitute goodsretailers could put on their shelves instead ofNatureview.Bargaining Power of SuppliersMedium because some suppliers are critical and havefew alternatives where as other suppliers are moreeasily replaceable.High due to the fact that two competitors make up half ofRivalry Among Existing Competitors the total market share for yogurt in supermarkets.

Additional Information NeededInformation that Natureview Farm should know to make a more educatedand rational decision How many markets and chains they expect to enterBetter knowledge of end consumer demographics, behaviors, lifestyles how many consumers in each region purchase natural yogurt, and from whattype of store

RecommendationSell Children’s yogurt to Natural Food retailers Will not sell as much as 8 oz in Supermarket would, but they will save onthe high stocking and marketing fees32 oz comprised a smaller unit and dollar share of the yogurt marketNatural foods industry is growing fasterHighest profit margin optionAlready high market share in natural food industryKeeps consistent and positive relationships with established value chainCreate unique product which stands out against competitors so retailerschoose Natureview

Implementation Construct marketing campaign to attract end users with the estimated 250,000 budgetConduct market research to further understand and segment marketProduct design appeal for differentiation: on-the-go tubes instead of cupsCreate a mascot for brand imageAds in parenting magazinesChild celebrity endorsementsPartner with child entertainment companies i.e. Marvel

Appendix

Porter’s 5 Forces: Threat of New EntrantsLow. There are high capital requirements such as manufacturingfacilities, transportation acquisition, etc. Economies of scale arealso high due to the high fixed costs. Product differentiation ismedium bc while there a lot of yogurt brand and even someorganic brands, there are none with the all natural ingredientsthat Natureview provides.

Porter’s 5 Forces: Threat of SubstitutesHigh. If you wanted to switch from eating yogurt to applesauce you could. Thereare all kinds of substitutes, especially in a grocery store setting.

Porter’s 5 Forces: Bargaining Power of BuyersHigh. There are many other substitute goods a supermarket or natural foodsretailer could buy to put on their shelves, but they have high power becauseNatureview farms wants to be on their shelves so much that they are willing to payslotting fees and one-time allotment of free products

Porter’s 5 Forces: Bargaining Power of SuppliersMedium. Some suppliers, such as those who provide the special milk and bacteriahave high bargaining power becuase their product is so vital to the process andnot widely produced. Other suppliers, such as those providing sugar, flavoring,and fruit, have low supplier power because there are many more companies thatmake these products.

Porter’s 5 Forces: Competitive RivalryHigh. Dannon and Yoplait hold 57% of market share for yogurt in supermarketstores. In natural food stores, Natureview has the highest individual market sharebut is followed closely by Horizon Organic and Browncow. Dannon is alsoexpected to release a brand of organic yogurts to directly compete withNatureview.

Natureview Farm Case Presentation Lucy Edmonds, Kathleen Fee, Morgan Hicks, Theresa Murphy . Agenda Background and Case Information Problem and Solution Identification Company and Value Chain Analysis Competition Analysis Recommendation and Implementation Plan. Company Background. Product Info & Competitive Advantage 12 flavors in 8-oz cups 4 flavors in 32-oz cups Considering a