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Case Analysis:

Nestlé Refrigerated Foods: Contadina Pasta & Pizza (A)

MGMC01

Faria Nava

Professor: Tarun Dewan

February 19, 2023

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Table of Contents

1.0 Company Overview…………..……………………………………………………………...3

1.1 Contadina Pasta & Pizza………………………………………………………….3

1.2 3C’s of Marketing Analysis………………………………………………………4

1.3 SWOT Analysis…………………………………………………………………..5

2.0 Research……………………………………………………………………………………...6

2.1 Assessing Their Research Methods……………………………………………....6

2.2 Enhancing Their Market Research……………………………………………….6

3.0 Suggestions…………………………………………………………………………………..7

3.1 Pros and Cons of Contadina Pizza………………………………………………..7

3.2 Immediate Launch………………………………………………………………..7

3.3 Patience…………………………………………………………………………...7

4.0 Conclusion…………………………………………………………………………………...9

5.0 Chapter’s Summary………………………………………………………………………...11

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1.0 Company Overview

Nestlè Refrigerated Foods (NRFC), based in Glendale, California, was a division of Nestlé S.A.

With revenues of more than $37 billion in 1993, Nestlé was one of the biggest food corporations

worldwide. The corporation had over 500 plants operating in 60 countries, employing over

195,000 people, and it was well-known globally. For its customers, Nestlé offered a wide variety

of meals and drinks, such as chocolate, instant coffee, ice cream, chilled frozen goods, water, and

pet foods. Nestlé's success can be due to its dedication to conducting the most effective research

& development for new products and enhancing quality. Their great variety of meals and

integration of various cultures and markets can be credited for their international success.

1.1 Contadina Pasta & Pizza

Convenience and perceived quality lured customers to refrigerated meals in the 1980s. Nestlè

discovered that refrigerated foods were a relatively undeveloped category in the United States,

yet in European grocery stores, refrigerated foods were a staple in many markets. Nestlè

recognized that approximately 7% of their global sales were derived from refrigerated foods yet

there was very little contribution from the potentially large United States market.

Following this discovery, in 1987, Nestlé’s Contadina Pasta story began. Prior to the launch, they

had a heavy focus on the marketing, manufacturing and distribution of the sales. Nestlè

attempted to market Contadina as a pizza that is authentic and traditional Italian food. For the

product development, they conducted a 7-stage development process, (1) Idea Generation (2)

Idea Refinement (3) Product Development (4) Quantification of Volume (5) Test Market (6)

Commercial Evaluation (7) Introductory Tracking. With sales of $150 million in 1990, Nestlè's

Contadina Fresh Pasta and Sauces were able to quickly surpass its competitors due to remarkable

market research and strategic advertising.

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The NRFC started developing their new product, their pizza product, with the intention of

expanding their already prosperous refrigerated food segment. In a sense, the brand had an idea

of how to successfully sell the product because the pizza was the most logical product expansion

line given how well it matches their image of the pasta. Stephen Cunliffe was debating whether

their market research was sufficient to launch the Contadina Pizza right away after conducting it.

The 3C's of Marketing and SWOT Analysis have been supplied to help fully comprehend the

study that NRFC conducted.

1.2 3C’s of Marketing Analysis

Customers

In the United States, a large portion of the population preferred pizza and pasta as meals. They

found that 76% of Americans had eaten pizza in the preceding six months. According to Exhibit

15, 75% of consumers choose delivery and takeout, 16% prefer frozen pizza, 5% prefer fresh,

and 4% prefer homemade. They have learned through the BASES II study (Exhibits 19–22) that

customers slightly prefer "Pizza With Toppings" to "Pizza Only." Exhibit 24 shows that

consumers believed Contadina pizza to be more expensive than other brands. However,

quantitative data from taste testing revealed that consumers preferred Contadina pizza and that

they were quite familiar with the brand, confirming Contadina’s high level of brand awareness

among consumers.

Competitors

On a worldwide scale, Nestlé, Kraft, and Unilever compete against one another. The main rival

of Nestlè in this market at the time of the launch of the new Contadina pizza was Kraft General

Foods Inc. Kraft was one of the biggest processors and marketers of packaged grocery products

in the US, with operating revenue of $25 billion. DiGiorno was introduced by Kraft using a pull
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approach to draw customers in with their high-value coupons. While Contadina only had a

40-day shelf life, Kraft also produced a product with a 90-day shelf life. With the introduction of

a new pizza product, Kraft is now competing with NRFC.

Company

Following the immense success of Contadina's pasta product, NRFC is preparing to expand its

product line to include refrigerated pizza. Given the amount of Americans consuming pizza, the

market has a lot of potentials. NRFC has currently developed two concepts: (1) a pizza kit and

(2) heat-and-eat pizza. Due to their strong brand recognition and prior success with a similar

product launch (pasta), Nestlè, a currently well-known global brand, has the competitive edge

with this product expansion.

1.3 SWOT Analysis

Strengths: Weaknesses:
● Using efficient research techniques ● Kraft Di Giorno, an international rival,
(7-step process) is posing severe opposition.
● Delivering high-quality goods and ● Due to Kraft's 90-day shelf life, its
continuously seeking to improve them products could be distributed more
through efficient R&D extensively across the United States in
● Due to the introduction of their pasta, larger quantities.
Contadina has already developed a ● Di Giorno uses persuasive coupon
strong brand. strategies to draw customers, making
● Strong brand recognition among their products less expensive than
customers and strong distribution those of Contadina.
networks to key US states ● There is more competition than with
● Customers enjoy the flavour of Contadina pasta because they also
Contadina Pizza have to contend with Dominoes and
Pizza Hut in addition to Di Giorno.

Opportunities: Threats:
● According to market research, the ● The emergence of new rivals
market for frozen pizza will continue ● Di Giorno selling goods at a lower
to develop, creating a great price than Contadina
opportunity for a well-known ● Changing consumer preferences and
company like Nestlè to introduce its tastes
own pizza.
● They already have a strong Contadina
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product, so they are familiar with how

to market and sell it.
● Variety of flavours and toppings to
appeal to a wide range of customers

2.0 Research

After analyzing the case, it is evident that Nestlé has used both qualitative and quantitative

research methods to conduct whether or not to launch Contadina pizza. To assess the validity and

further provide solutions, an assessment of NFRC’s research methods has been conducted

2.1 Assessing Their Research Methods

Preliminary Concept Test

Pros: Cons:
● Equal representation of both male and ● Only conducted 200 tests and explored
female consumer preferences 4 major cities (New York, Atlanta,
Chicago and Los Angeles)

BASES II Study

Pros: Cons:
● Respondents were limited: only 18 ● Conducted 399 concept tests and
and older female, living 45 minutes explored 7 different major cities (New
within the mall interviewing site were York, Baltimore, Orlando, Pittsburgh,
interviewed Milwaukee and Los Angeles)

2.2 Enhancing Their Market Research

By organizing in-depth interviews and focus groups, NFRC did a good job of conducting both

types of qualitative research. In addition, they also effectively acquired quantitative research

through the administration of surveys and data analysis. The BASES II Study should be carried

out once more, but this time in a more efficient manner, in order to further improve NFRC's

market research. Because this excludes a sizable portion of the population who consumes pizza,
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their respondents shouldn't be restricted to women over the age of 18. Children, for instance,

would make an excellent study subject because if children like and are aware of Contadina Pizza,

they might tell their parents about it as a quick dinner option. Consequently, it's important to

know how people from various demographic groups feel about refrigerated pizza to be able to

launch Contadina Pizza which targets all demographics at once.

3.0 Suggestions

Following Stephen Cunliffe's requests of discovering whether to launch Contadina pizza

immediately the pros and cons list of the product has been provided following two alternatives

and reasoning behind the suggestions.

3.1 Pros and Cons of Contadina Pizza

Pros: Cons:
● Possibility for revenue and brand ● Contrasted with its rivals, Contadina
growth pizza is more expensive.
● In the retail pizza business, a little ● Consumer perception of the Contadina
share of 0.3% is all that is necessary to brand as a whole may be negatively
break even. impacted if the product is thought to
● If the product is successful, Nestlé can have a poor flavour, which could harm
expand its pizza offerings by adding their popular pasta product.
takeout and fresh options.

3.2 Immediate Launch

NRFC can benefit from being the first to market by launching Contadina right away, according

to their market analysis. It can be predicted that the pizza will perform reasonably well given its

already strong brand image and high consumer brand recognition.

3.3 Patience

Another recommendation is for Nestlè to do additional research before introducing the Contadina

pizza. Since Contadina pasta accounts for a significant portion of revenues, the company has a

strong brand, and any bad perception of the company or its food has the potential to
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fundamentally alter NRFC. Even though more market research and waiting could be risky and

costly for Nestlè, it is still worthwhile to conduct a launch that is calculated and will

unquestionably lead to growth for the business. It is also important to note that one of the

strongest reasons behind Contadina Pasta's success was the extensive market research behind it.

Currently, NRFC has not followed through with all of their 7-step market research process for

Contadina Pizza as they have not conducted test markets.

The current quantitative data indicates that there is not a high demand from consumers for the

product as evidenced by the trial and repurchase rate is another factor supporting the case for

NRFC to undertake additional market research as only an average of 7% of consumers are

willing to try the product and only an average of 3% would be willing to repurchase the product.

As shown in Figure A with the help of Exhibit 9.

Figure A Volume Estimate for Contadina Pizza (95.5 Million Target Households)

Pizza and Topping Users Pizza and Topping Nonusers

Sample n=181 n=318

Concept Purchase Definitely would buy: 30% Definitely would buy: 15%
Intent Probably would buy: 57% Probably would buy: 59%

Adjusted Trial 41.1% 29.7%

Environment Seasonality Seasonality

Adjustment

Marketing Plan $9 MM Advertising $9 MM Advertising

Adjustment = =
58% ACV 58% ACV
37% Awareness 37% Awareness
(41.1%)(58%)(37%) = 8.8% (29.7%)(58%)(37%) = 6.4%

Trial (95.5MM)(8.8%) = 8MM (95.5MM)(6.4%) = 6MM

Repeat Volume (8MM)(22%)(2)(1) (6MM)(22%)(2)(1)

= 3.5 MM Units = 2.6 MM Units
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Pizza Only Users Pizza Only Nonusers

Sample n=78 n=155

Concept Purchase Definitely would buy: 22% Definitely would buy: 12%
Intent Probably would buy: 48% Probably would buy: 42%

Adjusted Trial 32% 22.2%

Environment Seasonality Seasonality

Adjustment

Marketing Plan $9 MM Advertising $9 MM Advertising

Adjustment = =
58% ACV 58% ACV
37% Awareness 37% Awareness
(32%)(58%)(37%) = 6.9% (22.2%)(58%)(37%) = 4.8%

Trial (95.5MM)(6.9%) = 7MM (95.5MM)(4.8%) = 5MM

Repeat Volume (7MM)(22%)(2)(1) (5MM)(22%)(2)(1)

= 3.1 MM Units = 2.2 MM Units

In addition, with the extra research, NRFC can learn more about the children population and how

to draw in customers from that group, as well as learn more about other demographics like the

active demographic and plan to introduce a variety of pizzas rather than just one such as; family

pack, low calorie, pizza for 2 etc. Nestlè could potentially wait 6 months for Kraft to introduce

their new pizza product, observe consumer behaviour, developments, pricing, etc., and then

introduce a pizza product that is even better to the general public.

4.0 Conclusion

The market research methodologies used for Nestlé Refrigerated Foods' Contadina Pasta & Pizza

demonstrated how a blend of qualitative and quantitative research techniques can offer a

thorough picture of consumer preferences and behaviour. Nestlé is able to create new product

variants that respond to the demands and tastes of its target market by using the insights gleaned
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from its research to create focused marketing tactics. Nestlé now has the option to launch their

Contadina pizza immediately or 6 months later after conducting more thorough research.

However, because of the company's successful earlier marketing initiatives, they have become a

staple in many consumers' daily groceries, giving the launch a good chance of succeeding.
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5.0 Chapter’s Summary

CHAPTER FOUR: Research Design, Exploratory Research, and Qualitative Data

➔ Plan of Action
◆ A research design is a framework or plan for a study used as a guide to collect and
analyze data
➔ Types of Research Design
◆ Exploratory Research: is the discovery of ideas and insights
◆ Descriptive Research: is typically concerned with determining the frequency with
which something occurs or the relationship between two variables
◆ Casual Research: is concerned with deciding cause-and-effect relationships and
these are studied via experiments
➔ Exploratory Research
◆ Relationship Between Exploratory Research and Qualitative Data
● The different kinds of research are frequently tied to a product’s life cycle.
Ex. in a new product launch, exploratory research is conducted.
◆ Some Basic Types of Exploratory Research
● Literature Search
● Experience Survey
● Case Analyses
➔ Standard Qualitative Marketing
◆ When people discuss qualitative methods, they typically refer to the following
techniques
● Focus Group
● Depth Interview
● Projective Technique
● Observational techniques
CHAPTER THREE: The Research Process and Problem Formulation
➔ Marketing Research - Sequence of Steps
1. Formulate the problem:
The first role marketing research plays is to help define the problem to be solved.
When it is defined carefully and precisely, research can be designed to provide
pertinent information
Marketing research methods:
● Annual national consumer studies
● National brand tracking studies
● Annual brand awareness studies consumer use tests
● Laboratory research studies
2. Determine Research Design:
The sources of information for a study and the research design go hand in hand.
They both depend on how much is known about problem
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3. Design the Data-Collection Method and Forms:

Given the dynamic nature of business and customers, the information needed is
often not found in the firm's own sales data or census reports. The research then
must collect primary data gathered specifically for the new research needs
4. Design the Sample and Collect Data:
In designing the sample the researcher must specify the following:
a. The sampling frame
b. The sample selection process
c. The size of the sample
5. Analyze and Interpret the Data
6. Prepare the Research Report

CHAPTER FIVE: Descriptive Research

➔ When to Use Descriptive Research
◆ Describe the characteristics of certain groups
◆ Estimate the proportion of people who behave in a certain way
◆ Make specific predictions
➔ Longitudinal Analysis
◆ Longitudinal or sequential data are common stock market performance is plotted
against time to study trends, agencies track consumer confidence to predict
holiday sales and inventory needs political groups
◆ Examples:
● Market shares may be compared within a category over time
● The content and photos used in print ads have been examined over
decades to show the developments of consumer attitudes and industry
trends
● The increase or decrease in sales for a newly established product is
frequently pored over by a brand manager
● Advertisements are tested before they are aired and one means of doing so
is to obtain moment-by-moment consumer reactions
◆ Longitudinal data can result from a panel
◆ There are 2 types of panels
● True panels
● Omnibus panels
● The distinction between the true panel and the omnibus panel is important.
○ True longitudinal analysis or time series analysis can be performed
only on the first type of data with repeated measurements of the
same variables and the same respondents over time
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○ Omnibus panels mostly offer the advantage of easy access the

panellists are a relatively random sample who is readily available
to participate in research but are usually different

◆ True Panels
● Rely on repeated measurements of the same variables
● Measuring the same variables over time allows the marketer to ask
questions such as:
○ What is the long-term effect of the price promotions in our
category?
○ Do consumers stockpile and only purchase again when another
sale is in effect?
○ What products in a customer's basket yield the most brand loyalty?
◆ Omnibus Panel
● A sample is maintained but the information collected from the members
varies over time
● A panel sample might be drawn randomly
● Alternatively, participants may be those who meet some criterion
➔ Brand Loyalty and Brand Switching
◆ One of the most important longitudinal questions that true panel data can address
is the question of brand loyalty and brand switching
➔ Cross-Sectional Analysis
◆ Cross-sectional studies or sample surveys rely on a sample of elements from the
population of interest that are measured at a single point in time
◆ The sample is generated scientifically so that the members are representative of
the population of interest
◆ The analysis of the sample survey results rests heavily on the cross-classification
table which is used to report the joint occurrence of the variables