Launching Krispy Natural: Cracking the Product Management Code

Background to the Case

Candler Enterprises

Pemberton Pet Care Division

Multinational Beverage Division

Quick Service Restaurant

About Pemberton - Products

Snack Food Division

Food Bars, Cookies and Sweet Baked

FoodsSofties Cookies

Home Style Muffins and Doughnuts

Acquired Krispy Inc. in 2008 – to first enter salty snack

market.

Owns and Uses

Direct Store

Delivery

About Pemberton – Background

Building or acquiring

capabilities in salty snack category.

DSD system

to increase revenue

and profits

Pemberton – Aims of the President

Reasons for Pemberton to enter the salty snack market -

Growing US Cracker Industry

Retail cracker sail – 6.9 Billion USD in

2011.

2.2% increase in CAGR from 2008 to

2010.

Market for salty snacks.

High consumption of crackers on a

daily basis.

Desire for healthy products promoting

sales.

2009 Krispy Single –Serve Sales Performance vs Plan

Reasons for the above discrepancy –

• Limited product line offerings in the target segment.• Limited flavour offerings in the target market.

• Lack of flavour satisfaction among the target audience.

Relaunch of Krispy as Krispy Natural – The features

Targeting health

conscious consumers

Research and

development of better flavour options

Krispy Natural’s Marketing Strategy – Push and Pull

Push Strategy

Favouring the competition

promote products.

Creating better products

through R&D.

Pull Strategy

Focus on Extensive

Advertising and Merchandising.

Aggressive plans for trade

promotions.

Krispy Natural’s Promotional Plan in Columbus, Ohio

Krispy Natural’s Sales Objectives

To have a nationwide

presence in the cracker

industry.

Minimum sales of USD 500 Million.

Krispy Natural’s Relaunch

Dropped or remained same.Increased

Increased

• All other brands fell in market share by revenue except Krispy which made huge progress in Columbus and a bit in the South

East.

Krispy Natural’s Effective Product Strategy

• Setting effective product strategy and research and development of flavours led to high positive purchase intent.

Krispy Natural’s Effective Pricing Strategy

Hence, it was priced as a

premium product

Here, the product

was priced the same

as the competitor

s, but quantity

was same.

Krispy Natural’s Effective Distribution Strategy

Good store/display penetration

Along with the DSD System,

Pemberton used

“Krispy Force”

distribution system.

Actions taken by the competitors in response to Krispy Natural

• New product testing in process. Increase A&M. Increase trade spending and consumer promotions

What are the potential courses of action for Krispy Natural ?

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.

Kraft, Kellogg and

Pepperidge in total lost 10%

of market share,

despite of higher

demands cracker

products since 2010

What Recommendations can be made to Krispy Natural ?

• More than 60% tasters preferred taste of Krispy natural over other leading brands.

• Positive Purchase intent of 81%.• Therefore, we can recommend a national rollout.

Possible response to Frito Lay’s entry into Cracker Market

• Frito Lays is planning to enter into the cracker and salty snack market in the future.

Hence, Krispy Natural should have a good action plan for the same.

• Krispy Natural should be launching more new product mix as per customer taste and keeping health as a priority concern.

• Also, Optimize the DSD system for Krispy natural product for cost reductions.

Conclusion

•Krispy Natural should definitely consider a national rollout going by the facts of the case.

• Regular research and development must be carried out so that consumer purchase intent remains high.

• Optimize the DSD System to reduce costs and hence increase profits.

Created by Chaitanya Varma, MIT Manipal, during a marketing internship under Prof. Sameer Mathur, IIM

Lucknow.

Thank you !