Launching Krispy Natural Cracking the Product Management Code
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Launching Krispy NaturalCracking the Product Management Code
Pemberton
Cookies and bakery
products
CAGR of 14% for
revenue for the past 5
years
Owns DSD System
5 billion revenue in
2011
From sweet snack market, Pemberton tried to enter the salty snack market by acquiring Krispy Inc. in 2008
But why?
US loves Crackers1. US growing Cracker Industry retail
Cracker sale - $6.9 billion in 2011. 2.2% increase in CAGR from 2008 to 2010. 74% respondents consumed crackers on
daily basis. Crackers were the top salty snacks ahead
than potato chips. Desire for healthy products was driving
cracker industry
Krispy disappointed everyone in 2009
But why?Limited product lineFlavour
dissatisfaction
We believe in Krispy, Let’s
fight back!
Competitors• Kraft Food Inc. • Kellogg Co. • Pepperidge Farm
How will Krispy be
better this time?
Krispy Single Serve v/s Krispy Natural
Krispy Single Serve Regional brand Limited flavour
options Limited product
line.
Krispy NaturalMultiple Serving
packages.Targeting health
conscious consumers.
More flavour options and better taste experience through research.
PRODUCT STRATEGYIncreasing Package sizes to Multiple
servings Improving taste by introducing new
flavours Healthfulness – An important Factor 100% whole wheat Natural Ingredients
Marketing Strategy• Competitors favoured
to promote productsPush
Strategy• Focus on Extensive advertising &
merchandising• Aggressive plans for Trade
promotions
Pull strategy
2011 Promotional Plan- Columbus,Ohio
Pricing Strategy• Considering product’s superiority and on
the basis of ‘Visual Price’, retail price was kept same as competitors but quantity was less.
Distribution Strategy• Company owned superior DSD
system. • Hired representatives being called as
‘Krispy Force’ for proper distribution.
Sales ObjectivesNational Distribution of crackers. Minimum Sales of $500 million. Steady state pre-tax profit of at least
13 %
And They did it..
Potential Competitive Responses
• Short term • New product testing in process. • Increase A&M. • Increase trade spending and consumer promotions.
• Long term• Spend heavily to counter national roll-out. • Capitalize on pull. • Product line improvements. • Compete on quality and brand reputation.
How should the company respond to “Frito-Lay”?
• 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.
Strengths Pemberton is already a market leader in US. – 2:1 ratio in taste preference. World renowned product development labs.
Weakness Capacity constrains of DSD for Krispy
Natural products.
Opportunities Market research shows consumer dissatisfaction with
flavour and taste of current brands. Cracker market fundamentals are attractive.
ThreatsModest increase of 1% sale in Southeast. Frito Lays entering into Cracker market.
Conclusion
Grabbed 18% market share in Columbus as a new entrant in salty snacks business.
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 cracker will fillings).
Forecasted National roll out sales figures in Columbus and Southeast scenario for 3rd year depicts PBT more than 13 % and sales more than $500 millions.
CREATED BY GURNOOR KAUR, THAPAR UNIVERSITY, PATIALA, DURING A MARKETING INTERNSHIP UNDER PROF. SAMEER MATHUR, IIM, LUCKNOW.
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