krispy natural
TRANSCRIPT
LAUNCHING KRISPY NATURAL
CRACKING PRODUCT MANAGEMENT CODE
WHO ARE THE PLAYERS??
PATRICIA WILLIAM Pemberton’s President
ASHLEY MARNE Executive Vice President Of
Sales And Marketing, PEMBERTON
BRANDON FREDRICK Marketing Director Pemberton
BURT SPIVEY Pemberton Chief Operating
Officer
WHAT IS THE PRESENT SITUATION ??
What is Krispy Natural????
In 2008 Pemberton took first step to enter Salty Snack Market with the Acquisition of Krispy Inc.
CANDLER ENTERPRISE (18 MILLION)
Pemberton Products
Beverage division
Quick service restaurant
Pet care division
PEMBERTON SALES WERE FROM ????
SOFTIES COOKIES
HOMESTYLE MUFFINS
DOUGHNUTS
PACKAGED FOOD BARSOTHER SWEET BAKED GOODS
Market leader in US in cookies and bakery products.Generated $5 billion revenue in 2011.CAGR (compounded annual growth rate) of 14% for revenue over past 5 years.Company owned DSD (direct store delivery) distribution system.
ABOUT PEMBERTON
WHY STUDY THIS CASE???
OBJECTIVES OF THIS CASE ???
Understanding the U.S Cracker Industry and Assessment of rivals.
Marketing plan of Krispy Natural. Analysis of Test Market results. Should Krispy Natural be rolled out
Nationally? What should be the National roll out
strategy?
SPECIFIC DIRECTION FOR PRODUCT DEVELOPMENTS OF PEMBERTON
BUILDING A COLLECTION OF ATTRACTIVE
DURABLE BRANDS
Leveraging leading marketing,sales and DSD SYSTEMS TO INCREASE REVENUE & PROFITS
BUILDING OR ACQUIRING CAPABILITIES IN SALTY SNACK CATEGORIES
-Patricia Williams
Why did Pemberton
acquire Krispy Inc.
Consumption of crackers was frequent and regular.
Consumers liked convenient and portable packages.
Emerging desire of healthy products.
A Mintel study of salty snacks
in the U.S reported that
74% of respondants consumed
crackers on a regular basis and 34% ate
them as part of regular weekly
diet.
50% of respondants
liked crackers that were
conveniently packaged in
easily portable quantities.
53% respondents considered overall healthfulness an important factor in cracker purchase decision.
US CRACKER INDUSTRY Retail cracker sales estimated 6.9
billion in 2011 CAGR(Compounded annual growth
rate) of 2.2% from 2008 – 10 Increased growth of 6.2% in
General(All other) in 2010 Annual growth forecasted between
10-14% for crackers with filling
75
99
6 1
Market Share
General(All Other)SaltinesCrackers with fillingsGraham crackersOthers
All figures are in %
Premium priced products were being introduced
Growth was driven by new flavour focussed product lines.
Cracker with fillings were gaining popularity
The segment was having flat sales from 2005
to 2009. It experienced the strongest growth of 14% approx in
2010. Annual growth forecast
was between 10-14% for the next
several years.
Kraft's Nabisco Wheat Thins
Flatbread( launched in 2009) and Kellogg's
Keebler Townhouse
Flatbread(launched in 2010)
were healthier and upscale
options.
Market share for
Pepperidge Farm
Goldfish grew from 13.9% to 14.2% by
focussing on new
flavours.
Competitors?Kraft Food Inc.( Nabisco Brands)Kellogg Co.(Sunshine ,Keebler,Carrs and
Austin brands)Pepperidge Farm(Goldfish brands)
These three large brands account for ¾ of the Cracker category.
MAJOR PRODUCT OF KRISPY SINGLE SERVE
Six round toasted cracker sandwiches with cheese filling in 3 flavour optionsFlat cracker sold in 1.5ounce bags with 2 flavour options
What Pemberton team expected from Krispy?
Sales in $millionsPLAN
Krispy Retail $97.5Krispy Vend. $23.4Total Krispy $120.9
UNEXPECTEDLYPLAN 2009 Actual
Krispy Retail $97.5 $50.8Krispy Vend. $23.4 $18.0Total Krispy $120.9 $68.8
The actual sales did not match the projected sales!! WHY?
KRISPY SINGLE-SERVE DRAWBACKSMarketed as ONLY “Grab and go” snacksStrong presence in vending machines and convenience storesRegional brand(mostly in southeastern US)Limited product lineFlavour satisfaction very lessOnly single serve offerings
Should Krispy relaunc
h again?
Why Pemberton Agreed For RelaunchAttractive Cracker market.Overall segment was large and expected growth of 10-14% per year. Reducing markets of other competitors(Eg Kraft losing its share to Pepperidge Farm)
Krispy RelaunchRebranding as ‘Krispy Natural’.
Targeting health conscious consumers.
R&D labs engaged in improving taste and quality.
Multi serving package sizes and more flavours to gain foothold in super markets.
Market Test Plan In Columbus, Ohio And Southeast US.
In Columbus Krispy Natural will achieve 9% market share of Cracker category.In Southeast Krispy Natural will increase market share from its current market share of 9% to 15%.
THIS TIME IT’S A SUCCESS
Krispy Natural is now a serious competition.
Columbus(2011) Southeast(2011)
Pretest Post %lost or gained
Pretest Post %lost or gained
Kraft 40% 33% -7% 34% 32% +1%Kellogg 25% 22% -3% 23% 22% +1%Pepperidge Farm
11% 10%
-1%
10% 10%
0%Krispy 0% 18% 18% 9% 10% +1%
How Krispy Natural managed to steal market share from competitors?
PRODUCT STRATEGY(1/2)
POSITIVE PURCHASE INTENT OF 77-92%
PRODUCT STRATEGY(2/2)Focused on increasing package size to multiple servings, improving taste and more flavour options.Health consciousness: Use of 100% whole wheat and other natural ingredients.
R&D working tirelessly reformulate theProduct.
Improving taste by introducing new flavors
National Distribution of Krispy Natural.Pre-tax profit contribution of at least 13%Minimum sales of $500 million
SALES OBJECTIVES
Products delivered directly to retail outlets,bypassing retailer’s warehouses and distribution centersCritical merchandising functions were undertakenINDIRECTLY PERFORMED SALES FUNCTIONS
MAXIMISED SALES
AND PROFIT
GREATER CONTROL OF SHELF
SPACE
REDUCED STOCKOUT
S
MORE ACCURATE FORECASTI
NG
DIRECT STORE DELIVERY (DSD) DISTRIBUTION SYSTEMS
MARKETING STRATEGY
REJECTED
ADOPTED
Advertising and mass media promotion
Sales promotions and discounts
Customer relationship
management
Columbus had no prior presence of Krispy. Here special Krispy forces were formed seperate from DSD route.
They doubled the share target achieving an 18% market share.
TEST MARKET RESULTS(1/2)
Here, Krispy was already established as single serve product at a lower cost.
So it was challenging to reposition at a premium range.
Actual shelf space and display was below expectations.
Only 10% increase in market share. It can be attributed to low introductory trade discount of 15%.
TEST MARKET RESULTS(2/2)
INTERPRETING MARKET RESULTS
1. Grabbed 18% market share in Columbus as a new entrant in salty snacks business.
2. Kraft,Kellogg and Pepperidge in total lost 10% of market share, despite of higher demands cracker products since 2010 . ( 6.2% for “All other crackers and 14% for chacker will fillings).
RECOMMENDED FOR A NATIONAL ROLLOUT
More Than 60% Tasters Preferred Taste Of Krispy Natural Over Other Leading Brands.
Positive Purchase Intent Of 81%.
Its Premiuim Pricing Was Greatly Successful In Columbus,ohio.
If an average is taken for poor performance national extended and good performance national extended sales of $ 775 million can be expected. However even in the worst case sales projection is $ 550 million,well above the expectation of $ 500 million. Thus, the product should be rolled out nationally.
RECOMMENDED FOR A NATIONAL ROLLOUT
Pull Strategy was proving to be effective and hence to be used to combat competitors response.
Since price discounts, coupons and sampling could not be sustained at a national level. It should be aggressive in places where it was previously positioned at a lower cost.
Continuous R&D to come up with newer and better flavours and strong brand building to go head to head with Frito-Lay.
NATIONAL ROLLOUT STRATEGY?
Launching more new product mix as per customer taste and keeping health as a priority concern.
Optimization of DSD system for Krispy natural product for cost reductions.
POSSIBLE COMPETITIVE RESPONSES TO NEW BRAND “FRITTO-LAY
Disclaimer
Prepared by PRABAL AGRAWAL, NIT JAIPURduring marketing internship by Prof. Sameer Mathur,IIM Lucknow