Expert answer:Natureview Farm Case Study
Expert answer:The questions that need to be answered are:
How has Natureview succeeded in the natural foods channel?
What are the two primary types of growth strategies under consideration by nature view?
How do the three options compare financially in terms of yearly revenue, gross margin, required investment, and profit potential?
What are the strategic advantages and risk of each option?
What action plan should the company pursue? (mention changes in the current marketing mix, sales, brand and channel partner arrangements)Attached are two files1- the case2- case requirementsSome main requirements1- 2 pages2- Single spaced 3- 12 pt. font”No need to summarize the case before responding to the questions unless you think it helps you to understand the issues and it should be no more than a quarter page. I recommend you respond to questions using bullet points each comprising on average 3 sentences. Start with a topic sentence then use subsequent sentences to substantiate your point (put more flesh). If you are asked for arguments in favor and against, I expect 3 to 5 bullet points on either side. Try to be more analytical than descriptive of the case. Analysis is about making comparisons, providing underlying explanations, identifying trends and making actionable recommendations. Be specific in your recommendation regarding a course of action and provide some ‘how’ details.”Thanks in advanced
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Teaching Note # 2.0
Case Report Instructions
Case reports are to be a maximum 2 pages single spaced 12 pt. font. All tables or documents should be
in an Appendix. All submitted documents should be in MS Word format. All reports are to be
submitted digitally to Canvas Assignments. All case reports should have a cover page and subheadings.
For the group work, please list the names of all group members. If you create multiple filesplease attach
them to a single submission. Please name your files as follows: case name_student last name_First
name. Case name is one or two words of the company name.
Reading the case
Have a look at the case questions before reading the case. Use the reading as an opportunity to create
a map of where thing are in the case and to relate them to your analysis. If you come across matters
relating to question 1, write q1 beside the information or you can label the information pricing,
branding etc. If the case is lengthy, it may be more efficient to go through the exhibits at the end rather
than flip to an exhibit each time one is mentioned.
Responding to case questions:
My preference is for a series of short paragraphs—usually not mere than three to four sentences (may
do more). Determine 3 to 5 essential supporting arguments for the position you will take/make on a
particular question and explain each point using a short paragraph. You can bullet each paragraph if
you like. This approach forces students to come up with multiple separate supporting arguments. Avoid
long drifting paragraphs. Don’t become preoccupied with filling up two pages. If the question asks for
pros and cons or the benefits of something, do a bullet list of points with complete sentences (single or
multiple).
There is no need for an introductory summary of the case. Go straight into answering the questions.
If the decision or position is not clear, present pros and cons of the situation and then on-balance
recommend or conclude.
Avoid rewriting sections from the case in your reports. Certainly you need to present supporting
arguments but this should not involve restating the case verbatim. Assume that the professor is familiar
with the case. Rewriting sections of the case takes a lot of space but brings into the question a student’s
ability to prioritize information and draw inferences.
Draw inferences and insights from the facts of the case: These are not explicitly stated in the case but
follow logically from the facts of the case. They may require a leap-of-faith, but nonetheless reveal
strategic options. Calculate ratios for comparison and state things like price and market share relative to
major competitors.
Challenge the opinions of key actors in the case. Students sometimes rely too assuredly on the opinions
of case actors when in fact these opinions need to be challenged.
Identify trends in the case that hold implications for your recommendations. Some important trends
related to: how customer (consumers and firms) behavior are changing; are the key attributes that
influence the purchase decision changing; what is the relative importance of price in customer decision;
what are the competitive trends; what are the significant advertising and promotion trends.
Making recommendations
It is my experience that students unintentionally avoid making recommendations. It takes a little
deliberateness and effort to do well at this. Typically, the last question is a “what should the company
do. It definitely gets better with experience over the course. One mistake students make is to review
the issues of the case and put a single recommendation in the last line of the paragraph. I recommend
that the first sentence of your recommendation be the recommendation. “I/We recommend the…….
Each recommendation should be a decisive statement followed by “how details.” The following are
examples.
• Review existing service standards and develop new service standards and communicate these
standards to customers. Specifically, 2 service standards need to be changed. XYZ restaurant
needs to add 1 more drive through window. Until this is done, a 7 minute customer turnaround
is more likely than a 3 minute turnaround during peak service. Place live display board indicating
customer turnaround time if it exceeds 7 minutes.
• Launch a new brand of cell phones to be called ZZ-UP targeted at the under-20 age group. A
launch budget of $15m is recommended. This should be spent on event sponsorship and display
vehicles at locations and events frequented by the target market. 20% of the budget should be
spent on some key magazines and web sites frequented by the target market (try to be specific).
Be creative in your suggestions.
• Launch a premium brand to appeal to customers who have progressed in economic and social
status and wish to remain loyal to XYZ Company. Follow up with “how” details suggesting key
aspects like brand name, positioning, pricing etc.
• Your recommendations should be financially realistic given the circumstances. Don’t make
recommendations that cost $50M (e.g. launch national television campaigns) if the company’s
turnover is $30M.
• Recommendations are typically assessed on the basis of (1) logical flow from analysis and facts of
the case, (2) effort and (3) creativity.
• Read over your case report. It is important to not have typos, especially obvious ones. Typos in
(especially in group work) may be an indication of insufficient effort.
• Your recommendations should be strategically important in solving the major issues in the case.
Bad recommendations:
2
•
Generic recommendations: It is important that your recommendations not appear generic.
To avoid this, your recommendations must be embedded in the facts of the case. This is the
purpose of the “how” part of the recommendations. Be specific in your recommendation
statements. Don’t say: “introduce new services or products to attract more customers.” This
applies to any company or situation.
•
Recommendations do not flow logically from the analysis. This is a frequent problem with
case reports. Often the recommendations do not address the problems identified in the
case. The analysis may have revealed that customers do not believe the brand has the
reputation to support the new product being suggested or that the product will not appeal
to the target market. The analysis may indicate that the firm should exit a market and refocus rather than expand. Recommendations should build on strengths to exploit
opportunities.
•
Don’t recommend that the marketing function be outsourced because the firm is not good at
marketing or for some other reason. Marketing teams are relatively inexpensive compared
with an outsourced agency, which will expect a percentage of sales. Even if this case can be
made, the question still remains: what will the strategy of the sub-contractor be?
3
For the exclusive use of Y. Al Jaafary, 2017.
2073
JUNE 7, 2007
KAREN MARTINSEN FLEMING
Natureview Farm
It was a crisp Vermont morning in February 2000. Christine Walker, vice president of marketing
for Natureview Farm, Inc., a small yogurt manufacturer, paused to collect her thoughts from a
recently adjourned meeting with the other members of Natureview’s senior management team. The
team faced a challenging situation—that of finding a path to grow revenues by over 50% before the
end of 2001. The central focus of the meeting was whether Natureview should expand into the
supermarket channel in order to meet its revenue goal—a move which would represent a major
departure from the company’s established channel strategy and one which would impact every
aspect of Natureview’s business.
Despite the growth that Natureview Farm had been able to achieve since it began in 1989, the
company had long struggled to maintain a consistent level of profitability. Jim Wagner, hired in 1996
as chief financial officer (CFO), had developed financial controls that brought steady profitability to
the company, in line with dairy industry standards. No one at the firm had questioned Wagner’s
recommendation in 1997 that Natureview arrange for an equity infusion from a venture capital (VC)
firm to fund strategic investments. However, the VC firm now needed to cash out of its investment in
Natureview. Natureview management had to find another investor or position itself for acquisition,
and increasing revenues was critical in order to attain the highest possible valuation1 for the
company. Wagner had advised the management that it would be critical to grow Natureview’s
revenues to $20 million before the end of 2001—a large jump from the $13 million the company
reported in 1999. (See Exhibit 1 for 1999 income statement.) While Wagner realized the bind
Natureview was in, alternative financing would be extremely difficult until the VCs cashed out.
The previous day, Natureview’s Chief Executive Officer (CEO) Barry Landers had admonished
his management team that he needed a plan:
1 Organic foods companies similar to Natureview were frequently valued on a multiple of revenues rather than profit or cash
flow because these VC firms were investing in order to generate significant revenue growth. Typical sales multiples ranged
from 1.5 times to 2.1 times revenue, so maximizing overall revenue was critical to achieving a higher valuation by potential
investors.
________________________________________________________________________________________________________________
Karen Martinsen Fleming prepared this case solely as a basis for class discussion and not as an endorsement, a source of primary data, or an
illustration of effective or ineffective management. An MBA from Harvard Business School, she has held marketing management positions at
major consumer products companies. She currently teaches marketing courses and runs a consulting business in Vermont.
This case, though based on real events, is fictionalized, and any resemblance to actual persons or entities is coincidental. There are occasional
references to actual companies in the narration.
Copyright © 2007 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685,
write Harvard Business Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. This publication may not be digitized,
photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.
This document is authorized for use only by Yousif Al Jaafary in Applied Marketing Management_2-1-1-1-1-1-1-1 taught by Devon Johnson, Montclair State University from October 2017 to
December 2017.
For the exclusive use of Y. Al Jaafary, 2017.
2073 | Natureview Farm
We have to come up with a plan that takes us to $20 million in revenues by the end of 2001.
This immediate pressure to grow the top line is going to help us get to the size that we have
long aspired to be. As you think through our options, though, you can’t lose sight of what has
made this company great. I’m proud of the strong brand we’ve built and what it represents in
our marketplace, and I’m even more proud of the unconventional route we’ve taken to get
here. We owe it to our customers, our suppliers, and our distribution partners to make the
right strategic choices regarding the revenue growth objective before us.
Those words weighed heavily on the Natureview management team. The first meeting to address
the CEO’s challenge had not gone well. After much analysis and discussion, the team members were
sharply divided.
Natureview Farm’s Early Years and the Current Situation
Founded in 1989, Natureview Farm manufactured and marketed refrigerated cup yogurt under
the Natureview Farm brand name. The yogurt was manufactured at the Natureview Farm
production facility in Cabot, Vermont. The key to the Natureview yogurt flavor and texture was the
family yogurt recipe developed by the company’s founder. The recipe used natural ingredients and a
special process that gave the yogurt its unique smooth, creamy texture without the artificial
thickeners used by the major U.S. yogurt brands—Dannon, Yoplait, and Breyers. The company used
milk from cows untreated with rGBH, an artificial growth hormone that increased milk production.
Because of the special process and ingredients, Natureview Farm’s yogurt’s average shelf life (the
length of time the yogurt stayed fresh) was 50 days. Most of the large competitors’ products had a 30day shelf life, requiring them to build multiple production plants to reduce shipping time to their
distributors.
In 10 years, Natureview Farm’s revenues had grown from less than $100,000 to $13 million. The
company first entered the market with 8-ounce (oz.) and 32-oz. cup sizes of yogurt in two flavors—
plain and vanilla. Based on its early success, the company added flavors to both sizes. The 8-oz.
flavors were developed by putting fruit puree into the bottom of the cup and adding plain yogurt on
top. Producing this “fruit on the bottom” yogurt product required new equipment, but it allowed the
brand to expand its product offerings to help increase revenues. Because of the emphasis on natural
ingredients and its strong reputation for high quality and great taste, the Natureview brand grew
quickly to national distribution and shared leadership in the natural foods channel. This was aided
by creative, low-cost “guerilla marketing” tactics that worked well in this channel.
By 2000, Natureview Farm produced twelve refrigerated yogurt flavors in 8-oz. cups (86%
revenues) and four flavors in 32-oz. cups (14% revenues). The company had also started exploring
multipack yogurt products (children’s 4-oz. cups and yogurt packaged in tubes). Natureview
shipped its yogurt to retailers in cases, with a typical case containing 12 cups for the 8-oz. and 6 cups
for the 32-oz. product lines, respectively. (If the company were to expand into multipack products,
their cases would contain four packages.) As a major brand in the natural foods channel, Natureview
Farm had developed strong relationships with leading natural foods retailers, including the chains
Whole Foods ($1.57 billion revenues in 1999) and Wild Oats ($721 million revenues). The organic
foods market, worth $6.5 billion in 1999, was predicted to grow to $13.3 billion in 2003.2
2 “A Step Closer To Defining ‘Organic,’” Natural Foods Merchandiser 12: 43 (December 1999).
2
BRIEFCASES | HARVARD BUSINESS SCHOOL
This document is authorized for use only by Yousif Al Jaafary in Applied Marketing Management_2-1-1-1-1-1-1-1 taught by Devon Johnson, Montclair State University from October 2017 to
December 2017.
For the exclusive use of Y. Al Jaafary, 2017.
Natureview Farm | 2073
The Refrigerated Yogurt Category and the Yogurt Consumer
Yogurt is a dairy product, the result of milk fermented in a carefully controlled environment.
Special bacteria added to the milk change its texture and give yogurt its unique health properties—it
is a good source of calcium and improves digestion. Plain yogurt is typically made from whole, lowfat, or nonfat milk without additional flavoring ingredients. Flavored yogurt has sugar and either
artificial flavorings or natural fruit (or both) added.
In 1999, total U.S. retail sales of refrigerated yogurt reached $1.8 billion and sales volume was just
over 2.3 billion units. The market was fairly concentrated with the top four competitors—Dannon,
Yoplait, Breyers, and Columbo—having the dominant share and the top two competitors controlling
over 50% of the market. In 1999, when sales through the dominant two distribution channels—
supermarkets and natural foods stores—were combined, supermarkets sold 97% of all yogurt
consumed, and natural food stores sold the balance. Yogurt revenues were also generated through
other channels, including warehouse clubs, convenience stores, drug stores, and mass merchandisers.
However, Natureview did not consider entry into these channels because, relative to the supermarket
channel, these channels offered limited revenue generation potential; the company’s product was not
a strong fit for the narrow product offering afforded to consumers through these channels; and
volume requirements were prohibitive in certain channels. Warehouse clubs, for example, required
multiple unit packages, 24 cups of 8-oz. cups per carton, but Natureview did not view its brand as
developed enough to generate the consumer demand necessary to meet this volume requirement. In
the previous five years, yogurt sales through supermarkets had grown an average of 3% per year,
while sales through natural food stores had grown 20% per year. Because consumers were
increasingly interested in natural and organic foods, well-managed natural foods retailers were
thriving. Yogurt was an important product in the overall dairy portfolio of natural foods retailers,
since stores earned a higher margin on yogurt than on any other dairy product.
Shoppers at natural foods stores tended to be more educated, earn higher incomes, and be older
than the typical supermarket shopper. Forty-six percent of organic food consumers bought organic
products at a supermarket, 25% at a small health foods store, and 29% at a natural foods
supermarket. Generally, shoppers who purchased organic products, regardless of channel, tended to
have higher incomes, have more education, and live in the Northeast and West. Organic dairy
products were bought by 74% of heavy organic food buyers and 29% of light organic food buyers.
Sixty-seven percent of U.S. households indicated that price was a barrier to their purchase of organic
products, and 58% expressed that they would buy more organic product if it were less expensive.
Forty-four percent of consumers identified the need for a wider selection of organic product in
supermarkets.3
Yogurt was consumed by approximately 40% of the U.S. population, with women comprising the
majority (over 70%) of yogurt purchases. Factors considered when deciding which yogurt to
purchase included package type/size, taste, flavor, price, freshness, ingredients, and whether the
product was organic, typically in that order of preference. For natural foods shoppers, the product’s
ingredients and whether or not the product was organic were more important purchase criteria.
Among natural foods shoppers, a product’s health-promoting qualities were usually more important
than price in the purchase decision.
Regarding consumer product preferences, 6- and 8-oz. yogurt cups were the most popular
product sizes, representing 74% of total category supermarket sales in U.S. dollars. This segment was
3 “A Step Closer To Defining ‘Organic,’” Natural Foods Merchandiser 12: 43 (December 1999); “Organic Products Are On One
Third of Shopping Lists Enhanced Title,” Research Alert 18(7):5 (April 07, 2000); eBrain Market Research,
http://www.ebrain.org/ (2002 survey).
HARVARD BUSINESS SCHOOL | BRIEFCASES
3
This document is authorized for use only by Yousif Al Jaafary in Applied Marketing Management_2-1-1-1-1-1-1-1 taught by Devon Johnson, Montclair State University from October 2017 to
December 2017.
For the exclusive use of Y. Al Jaafary, 2017.
2073 | Natureview Farm
growing 3% per year, but also faced stiff competition. Women primarily bought 8-oz. yogurt cups as
a healthy snack or lunch substitute and valued a variety of flavors since most consumers did not
“add” anything to this size. By comparison, the next largest segment—multipacks—represented 9%
of category sales and was growing by more than 12.5% per year. Children (and their mothers,
seeking healthier snack alternatives) were the target of the fastest growing multipacks. These
included six-packs of 4-oz. cup servings and the “fun and less messy” tube yogurt, which was
squeezed from a flexible plastic tube and could be eaten without a spoon; eight 2-oz. tubes were
inclu …
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