Read the Case 13 "Nature Bros and answer the following questions. Explain your answer . Summarize the information presented regarding the present and proposed products. Briefly describe the company's 2004 and 2005 objectives 2 After reviewing this material, make a list of additional information which should be sapplied to suppoet the sales . Comment on objectives: Are they reasonable, opcimistic, or conservative? What marketing mix would best support this growth rate 4. Evaluate the information supplied regarding a new product developmenn and physical assets in light of the pro formaincome statemeets Morris developed S. Is the capital sought appropriate for the circumstances? If more information is mcoded, state what it is and ho it could be obtained 6. What sources should Morris approach for this amount of capital Based on the current balance sheet, how much equity should he give up for the investmen CASE 13 NATURE BROS. LTD BACKGROUND recipes except the pumpkin pie-everything from the turkey and dressing to the vegetables and even the rolls As the meal progressed the verdict was unanimously in favor of his secret ingredient, although he had a hard time comvincing them that it was his invention and was only 10 percent salk. Everyone wanted a sample to try at home. Thanksgiving Day 1993 is the day that Dale Mrs remembers as the "public debut" of his seasoned salt mix. Although he was a salesman by tem- perament and career, his hobby was cooking. Having experimented with both traditional home cooking and more exotic gourmet cooking, Morris had developed an appreciation for many herbs and spices. He had also done a lot of reading about the health hazards of the typical American diet. When his mother learned that she had high blood pressure, Morris decided it was time for some action. He created a low-salt seasoning mi. sedan based on a nutritive yeast extract, dat could be used to claimmauwinulehnlauw replace salt in mont cases. This Thanksgiving dinner, bp Over the next two years, Momis perfected his prodact Experiments in new uses led to Tasting parties for friends and meighbons, and the holiday season found the Morris kitchen transformed into a miniature assembly line producing gif-wapped hottles of the mix. Moeris became something of a celeerity in his small town, but it wasn't until the Ladies Mission Socicty at his church prepared for 2s family members and fricnds, would beoffices a his final testing ground. He used his mix in all the Bne Suies Usianiny oMC 3 PART CASES approached him with the idea of allowing them to sell his are being developed: a salt-free vension of the original mix as a fund-raiser that he realized the possibilities of product and an MSG-based flavor enhancer that wil his creation. His kitchen-scale operation could support compete with Accent. Moris worked with a business the sales effort of the church women for a shoet time, but consultant in drawing up a business plan to describe hi if he wanted to take advantage of a truly marketable compamy, its future growth and its capital needs product, he would have to make other arrangements Morris agreed to "Test-market" his product through the church group and commercialize his operation. The charity sale was a The first soction discusses the objoctives and sales pro- hage success (the best the women had ever experi- jections for 2004 and 200S (Exhibits 2 and 3). The enced), and, hased on this success, Morris moved to resulhing pro forma income statements for 2004 to 2005 create his own company. Naming his product "Nature are in Exhibits 4 and 5 Bros. Old Fashioned Seasoning." he incorporated the company in 1995 as Nature Beos Ltd. Moeris used most of his savings to develop and register the trademarks for packaging and for product displays. He rescarched The company's objectives for 2004 are to stabilize its the cost of manufacturing and bottling his product in exasting kets and toachieve a 5 percent market share large quantities and concluded that he just dids't have in the calegory of seasoned salt, a 10 percent market the cash to get started. His first atempts to raise money. share in salt substitutes, and a 5 percent market share in n the form of a personal bank loan, were unsuccessful. MSG products. Althoagh the original product contain and he was forced to abandon the project. while he looked for w 2004 OBJECTIVES less than 10 percent salt, the company has developed a For several years, he concentrated on his career, salt-free product to compete with other such products becoming a regional vice president of the insurance The dollar volume for the seasoned salt category in the company he worked for. He continued to make Nature seven markets the company is in will amount to Bros. Seasoning" in small batches, mainly for his $7,931,889 in 2004. In 2003, sales of the company in mother and business associates. These users eventually the Oklahoma market were 55 percent of the total sales enabled Moris to get financial suppon for his company. for that market for the cight-month period that the com- To raise $65,000 to lease manufacturing equipment and pany was operational. Since these sales were accom- building space, he sold stock to his mother and to two plished with absolutely no advertising, the company can other regional vice presidents of the insurance company. be even more successfull in the future in all seven cur- For their contribuitions, each became the owner of 15 rent markets with a fully developed and funded adver- Read the Case 13 "Nature Bros and answer the following questions. Explain your answer . Summarize the information presented regarding the present and proposed products. Briefly describe the company's 2004 and 2005 objectives 2 After reviewing this material, make a list of additional information which should be sapplied to suppoet the sales . Comment on objectives: Are they reasonable, opcimistic, or conservative? What marketing mix would best support this growth rate 4. Evaluate the information supplied regarding a new product developmenn and physical assets in light of the pro formaincome statemeets Morris developed S. Is the capital sought appropriate for the circumstances? If more information is mcoded, state what it is and ho it could be obtained 6. What sources should Morris approach for this amount of capital Based on the current balance sheet, how much equity should he give up for the investmen CASE 13 NATURE BROS. LTD BACKGROUND recipes except the pumpkin pie-everything from the turkey and dressing to the vegetables and even the rolls As the meal progressed the verdict was unanimously in favor of his secret ingredient, although he had a hard time comvincing them that it was his invention and was only 10 percent salk. Everyone wanted a sample to try at home. Thanksgiving Day 1993 is the day that Dale Mrs remembers as the "public debut" of his seasoned salt mix. Although he was a salesman by tem- perament and career, his hobby was cooking. Having experimented with both traditional home cooking and more exotic gourmet cooking, Morris had developed an appreciation for many herbs and spices. He had also done a lot of reading about the health hazards of the typical American diet. When his mother learned that she had high blood pressure, Morris decided it was time for some action. He created a low-salt seasoning mi. sedan based on a nutritive yeast extract, dat could be used to claimmauwinulehnlauw replace salt in mont cases. This Thanksgiving dinner, bp Over the next two years, Momis perfected his prodact Experiments in new uses led to Tasting parties for friends and meighbons, and the holiday season found the Morris kitchen transformed into a miniature assembly line producing gif-wapped hottles of the mix. Moeris became something of a celeerity in his small town, but it wasn't until the Ladies Mission Socicty at his church prepared for 2s family members and fricnds, would beoffices a his final testing ground. He used his mix in all the Bne Suies Usianiny oMC 3 PART CASES approached him with the idea of allowing them to sell his are being developed: a salt-free vension of the original mix as a fund-raiser that he realized the possibilities of product and an MSG-based flavor enhancer that wil his creation. His kitchen-scale operation could support compete with Accent. Moris worked with a business the sales effort of the church women for a shoet time, but consultant in drawing up a business plan to describe hi if he wanted to take advantage of a truly marketable compamy, its future growth and its capital needs product, he would have to make other arrangements Morris agreed to "Test-market" his product through the church group and commercialize his operation. The charity sale was a The first soction discusses the objoctives and sales pro- hage success (the best the women had ever experi- jections for 2004 and 200S (Exhibits 2 and 3). The enced), and, hased on this success, Morris moved to resulhing pro forma income statements for 2004 to 2005 create his own company. Naming his product "Nature are in Exhibits 4 and 5 Bros. Old Fashioned Seasoning." he incorporated the company in 1995 as Nature Beos Ltd. Moeris used most of his savings to develop and register the trademarks for packaging and for product displays. He rescarched The company's objectives for 2004 are to stabilize its the cost of manufacturing and bottling his product in exasting kets and toachieve a 5 percent market share large quantities and concluded that he just dids't have in the calegory of seasoned salt, a 10 percent market the cash to get started. His first atempts to raise money. share in salt substitutes, and a 5 percent market share in n the form of a personal bank loan, were unsuccessful. MSG products. Althoagh the original product contain and he was forced to abandon the project. while he looked for w 2004 OBJECTIVES less than 10 percent salt, the company has developed a For several years, he concentrated on his career, salt-free product to compete with other such products becoming a regional vice president of the insurance The dollar volume for the seasoned salt category in the company he worked for. He continued to make Nature seven markets the company is in will amount to Bros. Seasoning" in small batches, mainly for his $7,931,889 in 2004. In 2003, sales of the company in mother and business associates. These users eventually the Oklahoma market were 55 percent of the total sales enabled Moris to get financial suppon for his company. for that market for the cight-month period that the com- To raise $65,000 to lease manufacturing equipment and pany was operational. Since these sales were accom- building space, he sold stock to his mother and to two plished with absolutely no advertising, the company can other regional vice presidents of the insurance company. be even more successfull in the future in all seven cur- For their contribuitions, each became the owner of 15 rent markets with a fully developed and funded adver