CAN 11: Nature View Farm

Submitted by: SECTION B, GROUP 7 Amarendra Gorai (PGP/14/067) Arpit Rastogi (PGP/14/077) Janani Kannan (PGP/14/087) Nidhi Pandey (PGP/14/097) Aravindh R. (PGP/14/107) Sapna Goyal (PGP/14/117)

Issues
The key issue is to decide the most appropriate distribution-channel design that would help in achieving the revenue target of $20million by the end of 2001.

Recommendations
Alternatives available: Introduce 2 SKUs of a children s multi-pack into the natural foods channel Expanding 6 SKUs of 8-oz product line into one or two supermarket channel regions Expand 4 SKUs of 32-oz size nationally Alternative suggested: Option 2 : expand 6 SKUs of the 8-oz product line into one or two selected supermarket channel regions

Analysis
Choice 1: introduce 2 SKUs of a children s multi-pack into the natural foods channel. Advantages: Strong relationships with leading natural foods channel retailers. Projected yearly revenue for the two multi-pack SKUs would be about 10% of natural foods channel category Gross profitability of about 37.6% Growing at almost 7 times the rate of supermarket channels

Disadvantages: Small market Difficult to enter the supermarket channel later

Choice 2: expand 6 SKUs of the 8-oz product line into one or two selected supermarket channel regions. Advantages: Represent largest dollar and unit share of refrigerated yogurt market Unique positioning to capture growing trend in natural and organic foods in supermarkets Possible growth of 20% in sales of yogurt in supermarkets from 2001-2006 The existing sales brokers could take advantage of their relationships with 1 supermarket retail chains in north-east and 9 in the west

Disadvantages: Extra spending on advertising of the order of $1.2mn every year SG&A would increase by $320000 and additional sales staff would require &120000 Existing skill and expertise in the field of distribution through natural foods channel. Shifting to supermarkets is thus difficult and can hurt the sentiments of existing network.

Choice 3: expand 4 SKUs of 32-oz size nationally. Advantages: Generated an above average gross profit margin of 43.6% Fewer competitive offerings in this segment. Through distribution through 64 supermarket retail chains an additional sale of 5.5 million is achievable Promotional expenses would be low Disadvantages: Smaller unit and dollar share High slotting expenses Need to establish relationships with supermarket brokers Additional headcount would increase SG&A expense by

Reasons for choosing option 2: Represent the largest dollar and unit share of the refrigerated yogurt market Supermarket retailers authorize only one yogurt brand. This would ensure minimal competition and also heavily leveraged first movers advantage. Expectations of 20% growth 2001-2006 Added investment in advertisements and promotions would ensure that nature view gets a market share of about 1.5%. this amounts to sales of over 35000000 units.