Natureview Farm Case

Natureview Farm CaseNatureview Farm is a compevery that manufactures organic yogurt and is the industry leader with 24% food fall guyet sh atomic number 18. Its manufacturing process including the special recipe, longer shelf-life, no artificial ingredients, and carrefour physical body differentiated the defacement and positi integrityd it distinctively. The yogurt was produced in Vermont and sold in instinctive food stores only. The current predicament is for them to create a st set upgical plan, found primarily on dispersal-oriented selections, to exceed the $20 million tax revenue mark by the terminate of FY 2001. This was fueled by the withdrawal of the venture capitalistic firm. The distribution strategies revolve around staying in the born(p) foods stores or shape up expanding out in to the super commercialise alley. T here(predicate)fore, the problem definition is that there is a fill to expand and join on customer base to drive gross revenue which would get out in increases in revenues to understand corporate objective. addendum 1 has a pulverisation abbreviation that will help guide the rest of the discussion.Appendix 2 briefly explains the three options in question and has a fiscal think for all three options if they were pursued. excerption 1 seems to attain the lastest revenue and wampum. The firm however would be risking entryway the mass market distribution manoeuver which would be a significant shift with its current operations i.e. both the marketing and operations of the firm would need to be re-aligned to meet the large distribution channel. Setting up and effective execution may not be reliably predicted given the 12 month effectuation plan. Moreover, swimming channel conflicts would also possibly be occur overdue to the customers buying the same harvest-time at a cheaper worth at a more accessible location. This would give the supermarkets more channel motive due to them being able to drive higher sales. Ov erall, the 8oz market has a 3% expected increase rate, and this number needs to be taken into account as well since its not as high as some of the other realized trends which will be discussed below.Option 2 has the next best revenue but not a great profit margin. Again, similar to the previous option, the firm would be entering the mass market distribution channel with all the risks highlighted above including horizontal channel conflict. With this option, the growth rate of the size of the yogurt is at 2% per year however, the gross profit per sale is relatively high at 43.6%. Again, there is a slower growth rate present here but whats more important to note is the lack of support provided by retailers for this size of the product. Given that a significantly baseborner world purchases the larger tubs, the supermarkets place it in the lowest shelves in-stores and thus, may be overlooked in most scenarios.Finally, Option 3 gives a better profit than the former but not sufficie nt revenue. Nevertheless, this option highlights the trend and the researched growth rate of 12.5% with the childrens market and multi-pack sales which is an opportunity to capitalize on. This option also bears the least amount of risk due to minimal enthronisation, put forwarding and enhancing relationships with brisk intermediaries and channel partners, and not having to undergo marketing changes such as brand positioning, or significant production changes. stark(a) profits with product sales here be 37.6%.There are some critical prunes and analysis that need to be investigated before recommending which option be best for Natureview Farm. The source critical issue is that of keeping the companys existing side in mind We owe it to our customers, our suppliers, and our distribution partners to make the right strategic choices The second is that of not being able to secure other financial support options for the company which implies that high-risk initiatives need to be cho sen with extra caution.The channel flow analysis in Appendix 3 shows the differences between the supermarket channel and the natural foods channel. The relationship of the fillip compatibility with the service output of bulk-breaking is important since bulk-breaking is one of the primary value-added services that the intermediaries provide, which in turn increases the price of the yogurt for the end consumer. In addition, the product shelf-life is another factor thats relevant with compliments to service output regards. Both these factors are high in demand for the natural foods channel but not the supermarket channel which implies higher incentive compatibility with the former channel fusion. Consumers in turn would also want to be able to purchase a product that lasts longer and is broken mint for them already. In the supermarket channel it can also be seen that there are more responsibilities added for Natureview to deal with such as merchandising, payments such as the slott ing fee, and added promotions. The natural foods channel has these responsibilities eliminated and has further benefits such as tracking paperwork being guttle with the intermediaries and the information being passed upstream to Natureview. This does end up increasing the court due to the additional work done by the intermediaries. The key issue is the horizontal conflict that could potentially occur due to channel index number shifts and lack of control from the natural foods channel. Research showed that 67% of the US consumers hold that price is a barrier to them purchasing the organic yogurt this implies that these price sensitive individuals would be more inclined in purchasing the product at the supermarket.Based off the analysis, the best alternative to go onwards with would be Option 3. This is mainly because it is the best channel that would avoid any horizontal conflicts stemmed because of a power struggle between the ii separate channels. Option 3 also capitalizes o n a developing trend in the market and the natural foods industry is expected to grow at 20% annually as well. It would be of interest to maintain and enhance the existing relationships with the channel partners since adding the supermarket channel into the system would make the partnership with the natural foods channel incompatible due to lack of incentives. Furthermore, this is the least defective option that they can invest in with higher returns on investment in comparison with the other options. With existing happy customers, a allowance brand position, and strong partnerships with distributors like Wholefoods, Natureview can leverage its equity sources to increase revenue and market share by manufacturing the multipacks targeted towards the younger population. The decision intercellular substance in Appendix 4 further supports this recommendation.Appendix 1 SWOT AnalysisSWOT ANALYSIS NATUREVIEW FARMSTRENGTHSNo artificials, natural ingredientsmart leader with 24% share in Natural Foods ChannelHighest shelf-life products noticeable Channel Partner RelationshipsWEAKNESSESHighly dependent on brokersOnly in natural food channel/not supermarketStill a small share in the full yogurt marketOPPORTUNITIES12.5% growth rate with multi-packaged products for childrenSupermarket channelTHREATSNot sufficient capital and financing optionsNo deliver with supermarket channelCompetition intensifying Horizon Organic with 19% market shareCannibalization of salesAppendix 2 Three options Financial forecastOption 1 Forecasted Income Statement (Isolated) wrong = $0.74Revenue$25,900,000COGS$10,850,000Gross simoleons$15,050,000ExpensesAdvertising$2,400,000gross revenue$200,000SGA$320,000Marketing$120,000Slotting give$1,200,000 good deal advancements$3,840,000Broker Fee$1,036,000Net Income$5,934,000Option 2 Forecasted Income Statement (Isolated)Price = $2.7Revenue$14,850,000COGS$5,445,000Gross Profit$9,405,000ExpensesAdvertising$0 sales$160,000Marketing$120,000Slotting Fe e$2,560,000Trade Promotions$4,096,000Broker Fee$594,000Net Income$1,875,000Option 3 Forecasted Income Statement (Isolated)Price = $3.35Revenue$6,030,000COGS$2,070,000Gross Profit$3,960,000ExpensesAdvertising$0Sales$0Marketing$250,000Slotting Fee$0Trade Promotions$0Cost of complementary Cases$150,750Broker Fee$241,200Net Income$3,318,050All the tables presented above have employ data from the case for the numbers. The cost of each SKU is derived from Exhibit 3. The Expenses have been derived from the options expound in the case. The statements are isolated i.e. they do not take into friendship existing operations and sales of products through the nature foods channel they are only assessing the options themselves at an individual level.Appendix 3 Channel flow Analysis and Incentive CompatibilitySupermarket Channel15% Markup27%$0.74Natureview fleshly self-control ownership Promotion pay (Slotting Fee) MerchandisingOrdering allowanceSales dataRisking duologueDistributor fleshl y possessionOwnershipPromotionPaymentMerchandisingOrderingPaymentSales dataRiskingNegotiationRetailer sensible possessionOwnershipPromotionPaymentSales dataRiskingConsumerNatural Foods Channel7% Markup9%35%$0.88Naturev-iewPhysical possession Ownership Free product caseOrderingPaymentSales dataTracking paperworkRiskingNegotiationNatural Foods WholesalerPhysical possession Ownership Free product caseOrderingPaymentSales dataTracking paperworkRiskingNegotiationNatural Foods DistributorPhysical possessionOwnershipStocking shelvesBulkbreakingPaymentSales dataRiskingFree product caseOrderingPaymentRiskingNegotiationRetail-erPhysical possessionOwnershipPaymentRiskingConsumerAppendix 4 Decision Matrix