Case Study Natureview Farm

Natureview Farm

After looking at the problem, situation, and available options, I recommend that Natureview Farms chooses the third option as it offered fewer risks. The decision to stay in the natural food channel allows Natureview to continue their good relationship with natural food stores as well as customers. Natureview’s success up to date depended on these retailers and if they start offering products cheaper at supermarkets the retailers could drop the brand completely as they would likely have to match the supermarket price otherwise. Also since there were rumors of one of Natureview’s competitors expanding into the supermarket channel, they could take this opportunity to further strengthen relationship with suppliers and take

Furthermore, Dannon which has 33% market share in supermarket channel is considering launching their own large yoghurt product which will be in direct competition with Natureview. Another factor against option 2 is the fact that national distribution is difficult to achieve in one year. Therefore, it is not a reasonable move for Natureview. As with options 1 and 2 there are also risks with option 3, however they can be easily managed. The third option falls below the $7M increment needed by Natureview to achieve the revenue target of $20M. Hence Natureview could risk finding someone willing to invest and position itself for acquisition. However, in the financials we see that Natureview actually stands to profit the most from this option as it involves fewer costs. Natureview may think that showing VC’s the high revenues of other options would benefit them however, VC’s are likely to think these options are not sustainable for ensuing years, especially as the supermarket channel is only growing slightly and market share is stolen by the big competitors who have enormous resources. Furthermore by using forceful guerilla marketing techniques like the ones they used before they can further increase their revenue. Hence, by expressing this profit difference

There is also the risk of natural food retailers making the same demands as supermarket retailers. In Natureview’s case by the time this occurs it will have had more time needed to expand and adjust by hiring more appropriate staff or establishing relationships. This will even put Natureview in a better position to enter supermarkets in the future. In relation, Nature view will also lose the first mover advantage over the competitors also thinking of expanding into the supermarket channel. However as this advantage is not really a sustainable one and even if supermarkets only stock one brand, when Natureview decides to enter the channel it would have its great market share in the natural channel and brand image to support it. Therefore, this risk is not something Natureview should take seriously into consideration. Even though supermarkets sold 97% of all yoghurt consumed and natural food stores sold 3%, sales in supermarket had grown 3% per year but in