Marketing Management – II

MNG615
Case – 1
TruEarth Healthy Foods
Marketing research for a new product introduction

Submitted by
Group No 1 – Section A
Suruchi Mhasde (179278036)
Vishnu Prakash B (179278038)
Sri Sharan (179278052)
Navya Kiranmai (179278063)
Medikonda Pavankumar (179278071)
Athukuri Gopichand (179278106)
1. Why was Cucina Fresca pasta successful? How would you compare the pizza opportunity to that
for pasta? How would you compare the actual product development process for each?

 Requires less effort

 Healthier than dry pasta
 There was no strong player in fresh pasta offering a compelling whole grain option. So, there
was first mover advantage
 Cucina Fresca offered better taste than other whole grain pasta makers.
 Offered good sauce options

Comparing Pizza opportunity with Pasta:

 Market Size:
The market for pizza is 30% greater than for pasta
 Competition:
There were heavy competitors like Nestle, Kraft for pizza whereas that was not case for
pasta
 Investment:
The incremental investment for pizza was less than for pasta since the capital expenditure
was already made in packaging equipment for pasta.

Comparing product development process of pizza and pasta:

 Idea generation:
Pizza:
70% of American consumers love pizza. The pizza demand was hit by health concerns. So,
this is an opportunity to provide customers with healthy pizza.
Pasta
There was no strong player in fresh pasta offering a compelling whole grain option and there
was health concern towards consuming dry pasta. So,TruEarth can seize with opportunity by
offering tasty whole grain option.
Concept screening:
Pizza:
33% people had strong interest in whole grain pizza.
Pasta:
85% of people are in favour of whole grain pasta
Product development and testing:
Pasta:
Whole grain pasta is called Cusina Fresca and it was offered as cut pasta and tortellini.
Concept was tested with focus groups.
Pizza:
Pizza consisted of basic crust, cheese and sauce. In addition, three complimentary toppings
were provided.
300 mall intercept interviews were conducted to test the product.
Quantification of volume:
Pasta:
BASES I concluded 85% of people are in favour of the concept.
BASES II created 3 scenarios and gathered feedback.
Pizza:
 Bases I interviewed people with age greater than 18 in 7 cities and 7 – 10 day period
customers were called to gather feedback.

2. Using the forecast model for pasta shown in Exhibit 5, what is your forecast of the demand for
pizza?

Pizza Purchase Volume Estimate

Trail Purchase Intent Non - customers Customers

Definitely would buy 15% 26%

% of "Definites" who actually buy 80% 80%
"Definite Purchases" 12.00% 20.80%
Probably would buy 39% 53%
% of "Probables" who actually buy 30% 30%
"Probable Purchases" 11.70% 15.90%

Trail Rate (Definite+Probable) 23.70% 36.70%

Marketing Plan Adjustment

Projected Customer Awareness 12% 50%

ACV 40% 40%

Marketed Adjusted Trail Rate 1.14% 7.34%

Target Households (MM) 31.752 46.452
Trail Households (MM) 0.361210752 3.4095768
Trail Households (MM)(Customers + Non
Customers) 3.770787552
Repeat rate 49%
Repeat transaction amount 1.25
Repeat Purchase Occassions 2
Repeat volume 4.619214751

Total Volume(MM) 8.390002303

3. What can the TruEarth team learn from Exhibit 6 about how consumers view pizza?

From data from exhibit 6 potential customer would prefer the TruEarth Pizza line to the refrigerated
pizza but obviously takeout pizza wins the game. Based on the ratings for different attributes, the
takeout pizza scores maximum in all categories except one quality attribute. When it comes to the
use of healthy ingredients the TruEarth pizza is preferred to the takeout pizza. The TruEarth pizza
dominates the refrigerated pizza in all the categories.
Form the second table in exhibit 6, even after the introduction of TruEarth pizza there is a 17% of
the sample that will go the this. While there is minimal change in choosing takeout/delivered pizza
and restaurant pizza (4% and 1%) there is quite a significant change when it comes to refrigerated
and frozen pizza (-6% and -5%).
From the comments given in the exhibit, the team can conclude that people often associate pizza as
an unhealthy food. Some don’t think that whole grain crust does not have the originality of Italian
pizza. The best way for the company would be to advertise the product as a healthy food.

4. How do the pizza concept test results (Exhibits 7 and 8) compare with the findings for pasta
(Exhibits 3 and 4)?

After analysing the concept test results, we may conclude that we may conclude that market for
pizza is not yet evolved.

Product Favorable to concept Unfavorable to concept Favorable percent

Pasta 228 72 76%

Pizza 181 119 60.33%

For this, pasta tests were conducted across several cities where as for Pizza they selected few malls.
In the observed results 27% of 300 are marked for definitely would buy and 49% of 300 are marked
for probably would buy. As mentioned in the case 80% of 27% and 30% of 49% may buy the product
for pasta. This becomes 36.3% of total sample. Whereas for pizza this hovers around 27.3%.

As we are targeting price sensitive market, price sensitivity component becomes very crucial.
Comparison analysis between Pasta and Pizza for likability delineates this point. Out of the persons
who are favourable to pasta concept 8% are disliked it for its expensiveness. While in the case of
pizza it is 27%.

After analysing all these attributes, we may conclude that, the concept for a whole grain refrigerated
pizza kit may not be well received as that of whole grain pasta kit.
5. Is there a first-mover advantage in pizza similar to fresh pasta?

According to the data given in the case the Pizza market is 5.85bn$(in 2007) in contrast to 4.4bn$ of
that of pasta. This shows that the Pizza market in US is much bigger than that of Pasta. Also, it is
stated that a lot of local pizzerias and major chains like Papa John’s and Pizza Hut had introduced
whole wheat or multi grain crusts. Also, the frozen pizza product line saw the dominance of huge
players like Kraft and Nestle. So, from this information we can conclude that TrueEarth will not be a
first mover in Healthy and or refrigerated pizza product line.
However, the independent survey of restaurant goers shows that 33% of people had “strong
interest” in a whole grain crust. Also, pizza demand in key demographics had been hurt by health
concerns. So, this presents an excellent opportunity for TrueEarth to launch their refrigerated Pizza
Kit which is one of its kind in the market. The frozen Pizza kit offered by TrueEarth includes 1)
Crust, 2) separate packets of cheese and 3) sauce along with line of separate complementary
toppings such as extra cheese, sliced mushrooms and hormone-free chicken sausage crumbles. So,
in this way it is a first mover in this line. However, it won’t be able to enjoy advantage equivalent to
that in case of pasta.

6. How do you interpret the findings in Exhibits 9 and 10 to evaluate interest in pizza?

Exhibit 9 and Exhibit 10 represents the likes and dislikes of the respondents and the price at which
respondents will pay for pizza respectively. From exhibit 9, we can see that out of the 168 people
participated in the in-home test, 109 people are favourable to the pizza and 59 people are
unfavourable to the pizza. So, almost favourable people count is twice of the unfavourable people
count. Most of the people who are favourable to the product given key reasons as “like the sauce”
and “fresh ingredients”. It indicates that most of the people are giving importance to sauce and fresh
ingredients. Most of the people who are unfavourable to the product given key reasons as “too
expensive”. Out of the 59 people who are unfavourable to the product, 45% are feeling product too
expensive. And in the suggested improvements, most of the people from both the groups given as
“Make it lower price”. From these suggestions, we can see that people are feeling $12.38 as high
price for TruEarth Whole Grain Pizza.

From exhibit 10, we can see that people are willing to pay a mean price of $10.09 for refrigerated
pizza, $7.43 for frozen one and $11.72 for delivered/takeout pizza. It shows that TruEarth’s
refrigerated pizza price is higher than the price people willing to pay. From both the groups, most of
the people are willing to pay $6 - $8 and $8 - $10 range. It would be better, if the company priced
the product in this range at same time it has check this with the cost incurred and finalize the price
of the product.

7. Would you launch the pizza?

Yes, we would like to launch Pizza, because

 In the U.S, Pizzas have greater demand under Italian – American food category worth
$53billion share in 2007
 It has great market share of about 77% of consumers having pizza at least once a month
and 33% of people had ‘strong interest’ in whole grain crust
 Market survey of new Pizza offering considering health factors, mostly received positive
response and price is also reasonable i.e., a Pizza which can feed 2 to 3 people can be
priced at $8.00 and individual topping packs at $3.50 each
 As packaging equipment already made, the incremental investment is substantially less
than Pasta which included some retooling cost and the market plan and margin
structure is similar to pasta, with food retailers expecting 35% gross margin
 As TruEarth has 13% penetration of Cucina Fresca pasta, it is expecting penetration can
be in the range 5% to 15% in highly potential markets and to meet company’s return
requirements, whole sale volumes needed to exceed $12 million which can be met
probably. So, it is favourable to launch Pizza