Low Carb Dilemma

Fitter Snacker has built its business on selling healthy, nutritious snacks. The recent low-carb craze has started to impact Fitter Snacker’s sales. While sales have not yet declined, they have been flat over the past year. The Fitter Snacker R&D team has been working on the development of the NRG-C bar, a healthy low carb snack bar. Brandon Williams, Fitter Snacker’s CEO, convened a meeting of the company’s leadership to make a decision on whether to proceed with test marketing the NRG-C bar.

CEO Williams convened the meeting by setting out the fundamental question. “Fitter Snacker has always defined itself as the healthy snack bar company. That is a reputation we’ve worked hard to build, and I don’t want to see it tarnished. But the low carb craze has been eating into our market. Leeza, how successful has our recent advertising campaign been in stopping the erosion of our market share?”

Leeza Schaul, Director of Sales and Marketing for Fitter Snacker, thought for a moment before responding. “Well, we certainly haven’t seen a return to the levels of growth that we were seeing before the low-carb craze hit, but we then again, we may be having some success in preserving our current customers. We did some focus group studies on current customers. We showed a group of customers advertising copy that presented research that challenged the long-term success of low carb diets and pointed out the important role that carbohydrates play in overall health. Those customers that felt strongly about our products felt the advertising copy would make them much more likely to continue buying our products. We think it may be the case that when someone really likes our product, they are looking for something to support their desire to continue buying NRG-A or NRG-B bars. However, the advertising seemed to have little impact among those customers who rarely bought Fitter Snacker products. Basically, our current approach to advertising will keep our loyal customers, but won’t really help us grow market share.”

Williams then asked Kathy Cook, Director of New Product Development, how the research efforts were progressing to develop an NRG-C bar. Kathy passed out a summary report on the NRG-C product, then presented a PowerPoint slide show on the status of the NRG-C bar. “Using the focus group research that Leeza conducted, we concluded that we could probably develop a suitable low carb bar for the general market. We didn’t feel that we could develop a bar that would meet the needs of the extreme low-carb customer and still resemble a Fitter Snacker product. The extreme low-carb customer is looking for a bar with only three to four grams of carbohydrate, which means that we couldn’t use anywhere near the amount of oats and wheat germ we traditionally use in an NRG bar. But we felt that if we replaced half of the oats with soy protein, increased the wheat germ content and replaced the honey with SplendaTM and additional canola oil, we could significantly reduce the carbohydrate content while still producing a product that would be recognizable as a Fitter Snacker NRG product.”

“How much lower in carbohydrates is the NRG-C bar you developed?” Williams asked.

“It has half of the carbohydrates and 30% more protein.” Cook replied.

“Have you done consumer testing of the product?” Williams asked.

“We did a number of consumer taste panels, and we think that the NRG-C bar Kathy’s group developed could find a significant market niche. It won’t appeal to the die-hard low carb customer, but we think it would be attractive to a significant share of the market that wants to reduce carbohydrates, but doesn’t want to pursue an extreme low–carb diet. It’s hard to tell, but I think that the new customers might try NRG-A or NRG-B bars after some time, especially when the low-carb craze runs its course.”

Williams looked at Ryan Korte, Production Manager, and asked “Are we ready to start production?”

Ryan thought for a moment, then replied. “We’ve made a number of test cases of snack bars, and I think we’ve solved all the manufacturing problems. None of our current vendors can supply us with Splenda TM, but we’ve found a new vendor, Adrian Additives, that can provide us with enough Splenda TM to produce 500 cases per month at $20 per pound. After that, we’ll need to find another supplier. Splenda TM supplies are still pretty tight. Grand Rapids Grains can provide all the soy protein we need at $0.50 per pound. So the final answer is, we’re good to go.”

Williams assumed a thoughtful pose for a moment, then announced his decision. “Okay, we’ll start producing and marketing the NRG-C bar. Let’s get things rolling. Because we don’t know how well it will sell, we make it to order. Whenever a customer order comes in, we’ll make enough 500 lb. batches to satisfy the order. Andrea, do you know what information you’ll need for the SAP system to support the purchase of the new raw materials and the manufacturing and sales of NRG-C bars?”

Andrea Brown, IT Manager, responded “I’ve been working on this for a while, and will have final data requirements to all managers tomorrow morning.”

“Good.” Williams replied, “Let’s make this happen.”

Part 1

Identify all the information required to implement the NRG-C bar in Fitter Snacker’s SAP system.

Low Carb Dilemma Files

Low Carb Dilemma

Enter New Material Master Records

Create New Vendor

Create Purchasing Info Records

Purchase Splenda and Soy Protein

Create Production Data

Setup Sales Views and Prices

Create Sales Order

Process Production Orders