Natureview

NATUREVIEW FARM

Please provide a critical evaluation of the three options outlined in the case by paying attention to channel management, conflict, and financial issues. What action plan do you propose for Nature view farm given the imminent pull out of the VC firm? To aid you in making relevant calculations, the two attached HBS notes on marketing arithmetic will be particularly useful?

Nature view farm is a manufacturer of refrigerated organic cup yogurt , which the company presently markets through Natural foods channel where its sells at a higher retail price in comparison to what it would sell at supermarkets.

To meets its targets of achieving a 50% growth in revenues by the end of 2001 , the company has three options which it can pursue to achieve its intended targets. The company has to evaluate the pros and cons of each of the options before making a strategic decision. The financial outcomes under the three options are as follows:-

| OPTION 1 | OPTION 2 | OPTION 3 |

Revenues | $ 25,900,000.00 | $ 14,850,000.00 | $ 6,030,000.00 |

Cost of goods sold | $ 10,850,000.00 | $ 5,445,000.00 | $ 2,070,000.00 |

Gross profit | $ 15,050,000.00 | $ 9,405,000.00 | $ 3,960,000.00 |

Expenses | $ 8,436,000.00 | $ 7,530,000.00 | $ 641,950.00 |

Net income | $ 6,614,000.00 | $ 1,875,000.00 | $ 3,318,050.00 |

Option 1:

Option 1 looks the best bet for nature view to consider as far as achieving their financial goals are concerned. However focusing purely on the financial numbers may not be the ideal thing and other channel issues should be evaluated by the company before going ahead with this option. By going through the supermarket channel, the company will not only have to spend more on trade promotions, it has to pay a slotting fees , compete with bigger industry players who exercise/have greater control power over the channels, and this strategy will lead to channel conflict between supermarkets and natural food stores as the company will face dual...