hbr case study
TRANSCRIPT
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HBR Case Study ‘Launching Krispy Natural: Cracking the
product Management code’
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What is Krispy Natural?
‘Krispy natural’ is the name of cracker (food) brand of the food company called ‘Pemberton’
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Pemberton Overview● Snack Food Division of Candler
Enterprises.● Revenue of 5 billion USD in 2011● Market leader in the U.S. cookie and
bakery snacks segments of the sweet snack market.
● Acquired Krispy Inc. in 2008 - First step to enter Salty Snack Market.
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Three key strategic priorities for the company
● Building a Collection of Attractive and Durable Brands● Direct Store Delivery (DSD) systems to increase
revenue.● Building or Acquiring Capabilities in Salty Snack
Categories.
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US CRACKER INDUSTRY● Estimated 6.9 Billion USD
in 2011.● Cumulative Annual Growth
Rate of 2.2% from 2008-10
● Increased Growth rate of 6.2% in 2010.
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Who is Frederick?
Frederick is the marketing Director of Pemberton.
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What is the situation that Frederick is facing?
● Has to draw conclusions from the test market results for a new cracker product, Krispy Natural and present feasible recommendations and strategies to make the product succeed in the national market.
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LET US FOCUS THIS ANALYSIS ON 4 FRONTS
● LAUNCH OF KRISPY NATURAL● TEST MARKET RESULTS● PROBLEMS IN NATIONAL ROLLOUT● POSSIBLE RECOMMENDATIONS TO
SUCCEED AT THE NATIONAL LEVEL
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LAUNCH OF KRISPY NATURAL
1ST
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FAILURE OF KRISPY AFTER ACQUISITION
● Krispy’s single serve product failed miserably after acquisition by pemberton in 2008. ( Exhibit 1)
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WHAT NEXT?
Krispy relaunched as ‘Krispy Natural’
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Marketing strategies for Krispy Natural● Product: Improved taste and increased packet sizes● Marketing: Used ‘Pull Marketing Strategy’ and spent
heavily on advertising● Distribution: Used DSD mode of distribution.● Pricing: 155% of other brands because of superior taste
and quality.
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TEST MARKET RESULTS AND ANALYSIS
2ND
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TEST MARKET PLAN ● Krispy Natural officially launched in: Columbus, and a trio of cities
in the Southeastern United States.● 16 week Test market period● In Columbus region, Krispy was a new product and hnece five
special “Krispy Force” representatives were hired and they were separate from the traditional DSD route.
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TEST MARKET RESULTS
● In Columbus, the test market results were very positive as Krispy natural grabbed a market share of 18%.
● In Southeast, the results were not as much as expected.
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Possible reasons for the results● Krispy Natural was a newly introduced brand in Columbus. So
superior taste and quality combined with coupons, etc would have attracted consumers to try it out.
● Whereas, Krispy is an already established brand in southeast. So many of the consumers would have thought that Krispy Natural was just an addition to the existing brand.
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PROBLEMS IN NATIONAL ROLLOUT
3RD
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SUSTAINABILITY AT NATIONAL LEVEL
● Coupons, Discounts,etc. which were used at the test markets may not help in the sustainability of the company in the national level.
● Very difficult to provide big discounts at the national level
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REVAMPED STRATEGIES FROM BIG COMPANIES
● The already established companies like Kraft, Kellogg and Pepperidge farm may formulate new strategies to withhold their market shares.
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COMPETITION FROM FRITO-LAY
● Fritolay, a well known brand is set to release its full range of cracker products into US markets.
● Krispy Natural may not be able to cope up with this competition.
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POSSIBLE RECOMMENDATIONS TO SUCCEED IN THE NATIONAL LEVEL
4TH
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ADVERTISING
● Pemberton should rely more on ‘Pull Strategy’ for marketing which means it has to spend a lot of money on advertising since the rival companies already spend huge sums to maintain their brand image.
● More emphasis should be laid on social media marketing.● Table below shows the amount spent by the cracker companies ( in million USDs) in
the year 2008 and 2009:
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MORE EMPHASIS SHOULD BE GIVEN ON TASTE
● Testing results proved that improved taste attracted consumers towards Krispy Natural.
● So if even better tastes are engineered in the R&D of Pemberton, it can pay huge dividends in the long run.
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MORE EMPHASIS ON INCREASING NUTRIENT VALUE
● Market Research revealed that US citizens are moving towards a healthier diet.● So Krispy Natural will be a huge success if it builds and maintain its brand as a
cracker of high nutritious value.
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USE OF A CATCHY TAGLINE
● Pemberton should discover a catchy tagline which would demonstrate Krispy Natural’s superiority over other brands.
● Its tagline should particularly be based on nutritive value of the Krispy Natural crackers.
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POSSIBLE COMPETITIVE RESPONSE TO FRITTO-LAY
● Launching more product mix and changing it frequently according to the tastes of customers.
● Optimisation of DSD to reduce the cost of the cracker products.
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STRENGTHS
● World renowned product R&D labs.● Product Mix● Company owned DSD
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WEAKNESS
Capacity constraints of DSD for
Krispy Natural Products:
So Pemberton has to expand
its capacity in order to meet such constraints.
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OPPORTUNITIES
Market research shows
customer dissatisfaction when it
comes to taste of cracker
products in US. So
Krispy Natural capitalise on this.
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THREATS
● Competition from Fritto-lays.● Modest increase of sales in
southeast in the test market conditions
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WHY RECOMMEND NATIONAL ROLLOUT?
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● Test results revealed that more than 60% of testers preffered Krispy Natural’s taste over other brands.
● More than 80% showed a positive purchase intent.
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