Evolution of the Music
The Natureview farm is basically company that offers organic yogurt and it also is the market leader with about 24% shares. The shelf space, the production capacity and the special recipe basically account for the brand to become a successful in the market. Natureview has also been selling packaged yogurt items and it also focused on food and taste. The company was also able to accumulate total revenue of more than $20 million in 2001.
Natureview was founded in 1989 where it was manufactured in Cabot, Belmont. The company entered the market with 8 oz. and 32 oz. with the vanilla and the plain flavor. The company also used all the natural ingredients with a more increased shelf-life of about 50 days.
In the year 1999, the company was able to accumulate revenue of $100,000 to $13 million. The company also used the guerrilla marketing services. In the year 2000, the company expanded into the 12 yogurt flavors in 8 oz. and another 4 flavors in 32 oz. The exploring multipack yogurt products for children were also induced.
The case basically depicts the situation of Natureview Farm which is an organic yogurt company with about $13 million revenues and it also the leading bran din the market. The company has been able to achieve decent success and it has been able to create a personal relationship with the dairy buyers in the natural food channel.
Set in 2000, when the company faces financial pressure to grow revenues to $20 million by the end of 2001 due to a planned exit by its venture capital investors. The immediate decision point that the protagonist, Natureview’s vice president of marketing, faces is whether to achieve this revenue growth by expanding into the supermarket channel.
Analyzing Current Situation
As the case confirms, Natureview has been a small firm manufacturing organic flavored yogurt has been able to increase the overall revenue for the company by up to 50%. However, in spite the early growth the company has been finding it difficult to maintain the profitability and the expenditures in the market.
In view of such a situation, in 1997, the company arranged a setup for the equity infusion from Venture Capital to increase the strategic investment. Venture capital organization was able to provide the required support and financial guidance and wanted to take off their review,
However, the management or the employees of the company are not ready to handover Natureview to the investor and in fact wanted another investor ort position itself for acquisition. Therefore, to increase the sales and revenue by up to 50% the company needs to grow less than $100,000 to $13 million in the income statement.
The company also established itself on the channel strategy which allowed the focus of Natureview to be on a more detailed support from the industry rivals. The company to overcome the current situation even launched two new sizes of yogurt to increase sales and it also helped the brand attain increased sales and the brand was able to earn a position of being one of the major foods to sustain the stronger value relationship with resepct to the leading retailers in the industry such as Wild Oats.
Strengths: The major strength for Natureview is the fact that the company does not offer any artificial colors and flavors; in fact all the ingredients are natural and organic. The quality of product offered by Natureview is also of the highest quality. The company has the highest shelf life products in the industry. It has also been able to penetrate in the market with strong and efficient channel management partnership.
Weaknesses: The major weakness for the company has been its over dependence on the brokers. Moreover, the company does not have an outlet which makes it limited to the customers and does not have the reach to the customers directly. Finally the market for flavored yogurt is rather new and slow.
Opportunities: The major opportunity for Natureview is to focus on opening up supermarket for its brand where all the products made by Natureview can be displayed and the customers can come over and make the purchase accordingly. Along with this, the market is expected to grow at a rapid rate of 12.5% in the multipack age products for children. Natureview can expand itself in new markets such as the Asian market where the brand will become an instant success because of its USP.
Threats: The major threats for Natureview have to be the constant competition. Along with this, the limited financial stability and financing option is also threat for the company. The competition has been rather stringent and the horizon organic market share has also deteriorated quite significantly. The cannibalization of sales is also threat for the company.
Porter Five Forces Model
Bargaining power of Buyers: High The bargaining power of buyers for the industry is rather high. The reason is simple; the switching cost of product is low which makes the industry highly competitive. The industry players also do not invest much on advertising and marketing of their brand which makes the buyer unaware of the products in the market.
Bargaining power of Suppliers: Low The large number of suppliers available in the industry makes the market less feasible for the suppliers. The organizations can switch to different suppliers which makes the industry quite competitive for the suppliers.
Threats of new Entrants: Medium New entrants in the organic yogurt industry are a moderate threat for the existing industry players. The reason is that the market requires high capital investment and with the current players in the industry already offering reasonable prices, it makes the industry quite a difficult one to penetrate.
Competitive rivalry: High The competitive rivalry in the industry is quite high. Natureview and other brands in the market are quite intensely competing with one another which make the market highlycompetitive and it has reduced the profit margins of the rivals in the market.
Threat of Substitutes: High The threat of substitutes in the industry is quite high. For instance, the yogurt can be replaced with cereals and other products such as milk and other dairy products.
Analysis of Strategic Options
The company Natureview Farm can look upon the following options in order to attain the revenue related decisions.
1. Expand the six SKUs of 8-oz and 32-oz
2. Open up a supermarket to increase sales for the company and reach out the potential customers
3. Introduce the two SKUs of children multipack into the natural food channel.
Alternative – 1 The first alternative available for Natureview is to have their importance and benefits. This alternative shall help in executing the limitations attached to them. The expansion the six SKUs of 8 and 32 oz. will help in attracting customers. It shall be a beneficial move to attract larger customer base and it will directly focus on product extension. This option is a good strategic move in terms of marketing.
Alternative â€“ 2 The second alternative is to open a store where the products offered by Natureview can be stocked and the customers can be aware of all the different products that are offered by the company. As for now, the customer awareness is not the most evidentone; therefore, it is important to have a better control over the customer needs and wants. The idea of a super market can be a costly move since the financial issues are already prevalent in the organization. It is important to introduce a super market with the company products to reach out the maximum audience.
Alternative – 3 The three options for Naturevieware to focus on children segment of the market. Since the flavor yogurt is a specific product that shall be preferred and liked by this segment of market therefore it is essential to focus on a smaller segment and spend all the resources on attracting this specific customer base. The idea or the logic will increase the market presence in the most prominent manner and it shall help in increasing sales quite efficiently.
In the end, based on the three alternatives presented, the most promising and rather feasible option shall be to select the third alternative for the company. The idea of presenting the third alternative which basically looks upon introducing the SKUs for specific market that is children and offer the multi-pack in the natural food channel. The alternative will help in attaining the results without extra expense and it shall support the idea of spending all the capital and resources of attracting a specific customer base.
The estimated profit with this alternative is that the management will be able to attain 40% profit. Moreover, this option shall also be feasible in directing the sales team to focus on a specific segment of the market. The company will be able to explore the idea of multipack and it shall help the organization achieve the maximum sales. Therefore, in the end it can be said that the organization should look to focus on children multipack. The alternative will help in attracting the parents and the customers in a more organized manner.
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