Richlands Harvest

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Michelle Freese

• Vice President, Marketing

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Alliance

• Exclusive PROSeed TM
• A high-protein seed

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• PROSeed TM Value Added

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Health Flavor
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Dr. Chips
Enriched with

• Lycopene, an antioxidant
• Soy protein, for a healthy heart

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The Marketplace

• U.S. Corn Chip Market
• 1.4 Billion
• U.S. Snack Market
• 6.4 Billion

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The Consumer

• 76 of target market will buy a chip with
  cancer-fighting properties and heart benefits.
• Cuppy, Bailey Assoc. (2000)

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A Profitable Venture

• Dr. Chips will contribute to Richland Harvest
  Inc. profits
• 6 by 2004

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Roger Hurley
Market Analysis

• Market Research Analyst

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Market Size(6.4 billion)
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Focus Groups

• Positive results in
• Columbus
• Pittsburgh
• Syracuse
• Baltimore

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Market Trends

• Strong consumption index
• Corn chip consumption trend
• Increasing awareness of disease/diet
  relationships

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Market Trends

• Families spend 4.48 per week
• Per capita consumption 5 lbs./year

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Consumer Profile

• Primary Target Customer
• Women 30 to 44
• 9 million women
• 52,000 household income
• Make 75 of kids food choices
• Health conscious
• Seeking healthy food alternatives

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Consumer Profile

• Secondary Target Customer
• Men 30 to 44
• 9 million men
• Active lifestyles
• Want healthy diets
• Will pay for nutritional benefits

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Why Dr. Chips?

• Consumers want good tasting, nutritious food that
  prevents disease.

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Kim Sheerin
Competitive Analysis

• Market Operations Coordinator

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The Healthy Alternative
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Key Strengths

• Reduces the risk of breast and prostate cancers
• Reduction in heart disease risk
• Minimal cannibalism

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Key Strengths

• Market niche exists
• Positive taste testing results

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Research Conducted
Focus Groups Said

• 65 would consume at least twice a week
• 77 liked the name Dr. Chips
• 9 out of 10 like the packaging and label
• 3/4 would pay 20 more for enhanced corn chips

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Produce Section

• Health Conscious Shopper
• High Profits

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Challenges For Dr. Chips

• Limited consumer awareness
• Consumer perceptions
• Intense, concentrated competition

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Competitive Environment
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Consumer Preferences

• 93 of consumers prefer the
• Taste
• Texture
• Consistency
• Appearance

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Paul Esterline
Business Proposition

• Director, Product Strategy

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Key Planning Assumptions

• Consumers are sensitive to nutrition and health
• Dr. Chips can be sold at a premium price

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Business Objectives

• First purchase by target customers
• 2002 5
• 2004 12
• Achieve a return on investment of 28 by December
  of 2004

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Distribution Strategy

• Established Specialty Distributors
• Such as Gambino Sons Produce Co.
• Existing relationships with retailers

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Differentiating Dr. Chips

• Higher margins for managers
• Removal from traditional corn chips market
• Produce section location encourages slotting

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Communication Goals
Product Awareness

• 15 in target market in 2002
• 30 in target market in 2004

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Measuring Awareness

• Telephone Surveys
• Aided
• Non-Aided

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Company Strategy

• Focused marketing
• Promotions based upon conclusive research
• Dependable, established distribution channels

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Amy MoleDirector, Product Planning
Action Plan
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I cant believe how great Dr. Chips taste. And
my best friend told me they fight cancer and
heart disease. The kids can eat Dr. Chips
anytime Rachel Hubbard-Ingram
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Product Position

• Good tasting
• Low fat
• High protein
• Lycopene and soy enriched
• Irregularly-shaped, baked chip
• Self-standing resealable bags

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Pricing

• 6 oz. bag for 2.29
• 12 oz. bag for 3.49

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Market Zone
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2002

• Ohio
• Pennsylvania
• New Jersey

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2003

• Massachusetts
• Connecticut
• New York
• Rhode Island

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2004

• Maryland
• Delaware
• Virginia
• West Virginia
• Washington, D.C.

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Annual Corn Chip Consumption(million Lbs./week)
Source American Snack Food Assoc., 2000
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Promotions
Focus on Dr. Chips attributes

• Good Taste
• Low Fat
• Nutritious
• Healthy
• Convenience

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Before Launch

• Tradeshows
• Press Kits
• Print Advertisements

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Magazine Ads

• Redbook
• Working Woman
• Mens Health
• Shape

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Launch

• Color newspaper ads with coupons
• Magazine ads
• Radio
• Free supermarket samples

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In-Store Sampling
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Promotions Budget(thousand )
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2002 Promo Budget(thousand )
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Kris Young
Finance

• Financial Analyst

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Dr. Chips Sales
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Wholesale Prices

• 1.72 for 6 oz. bag
• 2.62 for 12 oz bag

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Gross Sales(million )
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Net Sales Forecast(million )
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Percent of Total Company Net Sales
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Cost of Goods Sold

• Costs for producing Dr. Chips
• 51 for 6 oz.
• 84 for 12 oz.

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Gross Margin(million )
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Operating Expenses

• Promotion
• Transportation
• Research Development
• Depreciation
• Interest
• Unanticipated Expenses

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Net Income(million )
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Break-Even Analysis
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Net Income(million )
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Year Three

• 24 Return on Sales
• 28 Return on Investment
• 6 Additional Company Net Profit

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Net Present Value

• With RHIs standard interest rate of 12, Dr.
  Chips has a Net Present Value of

10.6 Million
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Dale Bohman
Monitoring and Measuring

• Director, Sales Evaluation

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Sales Evaluation

• Real time inventory monitoring
• Store sales reported weekly
• Evaluate each individual market

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Distribution Evaluation

• Monitor individual store inventory
• Evaluated semi-weekly
• Just-in-Time inventory management

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Contingency Plan

• If greater-than-anticipated sales
• 20 more production capacity is available

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Contingency PlanIf lower-than-expected sales

• Delay Market Expansion
• Intensify Promotions
• Cross Marketing

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Becky BrillChair, Product Steering
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