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Product and Brand Strategies Case Study Analysis
Author: Adam Madácsi Professor: Katalin Nádasi
The value of all commodity volume 1 2012. In the next step to estimate the demand. The Problem Nestle Refrigerated Foods must decide whether or not to introduce a refrigerated ―Pizza Kit‖ product. and the refrigerated pizza market is not currently serviced by its competitors.1 units for the Pizza Only concept./1. 80% of ―definitely would buy‖ respondents and 30% of ―probably buy‖ respondents will actually purchase the product in practice. According to this rule. Nestle must address several issues prior to product launch: Unproven concept – crust packaged together with separate packets of cheese and sauce ready for home use was a new concept Product positioning—the Pizza Kit must be positioned to attract most of its customers from the takeout/delivered (75% of total market) segment Brand awareness & extension—the product is in the same ethnic food group as its pasta & sauce product.15. Nestlé may damage its current Contadina Pasta & Sauce product line if the Pizza Kit product will not perform successfully in the marketplace. Estimation of Demand (Trial and Repeat Volume) – (answer for question 1) Sales of a refrigerated pizza product line. Estimation for “Pizza with Toppings” concept The concept purchase intent for ―Pizza with Toppings‖ according to the BASES II research study is 17% for ―definitely would buy‖ and 59% for ―probably would buy‖ [Exhibit 21]. The marketing plan adjustment contains the advertising expenditures. . reasonably priced alternative to both the takeout/delivered and frozen pizza segments. The average trial unit purchased is 1. called Pizza Kit have been estimated for two product concepts. On the other hand.3*0.04. which means 31. one is the ―Pizza with Toppings‖ the other one is the ―Pizza Only‖.313. and could damage to the brand if it is a product perceived as a low quality one Nestle should bring the Pizza Kit concept to market and position it as a high quality. which achieves $9 million in order to reach the awareness goal of 37%.2 units in case of Pizza with Topping and 1. [Table D] II.17) + (0.5 million US households.Adam Madacsi (HRYRTQ) – Product and Brand Strategies Case Analysis Nestlé Refrigerated Foods: Contadina Pasta and Pizza Case Analysis I. Therefore the adjusted trial is (0. Nestlé has a sizable advertising budget to go along with the rollout. The Pizza Kit concept registered a high probability of buying similar to that of Nestlé’s successful pasta & sauce product. The target population was 95.59) = 0.3% of the consumers. II. Furthermore.g. seasonality adjustments). Brand extenuation or moreover product cannibalization could hurt in this regard. the industry rule of thumb should apply in order to adjust the trial concept test research data.8*0. The next step according to the BASES model is the environmental adjustments phase (e.
which is significantly lower than the repeat volume of the ―Topping concept‖. Exhibit 9] II. Therefore the trial volume is 95./3.22. Demand Estimation in case of Separating Users and Non-Users In my opinion the above presented calculations are not completely accurate.72% * 1. a concept purchase intent test indicated 30% top box (―definitely would buy‖) and 57% second box (―probably would buy‖) for Contadina users.442 million from users and 1.2 units for the ―Topping concept‖ and 1.113 million for pizza only).1% and 3.1% for users and 29.2 units for the ―Topping concept‖. Contadina use share at the time of the pizza introduction was estimated at 25%. thus after the Marketing plan adjustment the trial rate is 0.246 for pizza only).58 = 0.61*22% (repeat rate)*2 (repeat purchase occasion)*1 (average repeat transaction amount) = 2./2. Therefore 22.58 million non-users are on the nationwide market.799 million and 3.5 million households * 6. Therefore the repeat volume is 5. Therefore I present a calculation which differentiates the users and the non-users of Contadina products. because responses were differed among consumers who had used a previous Contadina product from those who were non-users. 2 2012. .1 for ―Pizza Only‖.2 average purchase units = 7. After the environmental and marketing plan adjustment phase the trial rate equals to 5. the estimates were 32% and 22.9% for Pizza Only concept). For the ―Topping concept‖. Repeat rates were estimated at 0.0672.04. (For the ―Pizza Only‖ concept.313*0.933 million for users and 4. Similarly to the above presented calculation.72%.7 million and the repeat volume is 7. Sales from repeat rates were estimated at 1.3*‖probably would buy‖. Thus the trial volume of this concept is 5.7% for non-users. [Table D. 0. [Table D. The concept test indicated average purchase amounts of 1.3% for users and 5. awareness was estimated at 60% for users and 30% for non-users.2%). adjusted trial rates were 14. or 6.Adam Madacsi (HRYRTQ) – Product and Brand Strategies Case Analysis (ACV) is estimated 58%.34%. ACV was estimated 58% for all cases.388 million units. so it is less than the case of ―Pizza with Toppings‖ concept. The concept test indicated average purchase amounts of 1. Estimation for “Pizza Only” concept The concept purchase intent for ―Pizza Only‖ according to the BASES II research study is 15% for ―definitely would buy‖ and 43% for ―probably would buy‖ [Exhibit 21]. 15% and 59% for non-users.92 million users and 72. sales from trial were estimated at 3. Therefore.15.2% for non-users (11. Exhibit 9] II. the adjusted trial using the industry rule of thumb is 24. with two purchase occasions.120 and 1.61 million units.37*0. yielding estimates of 41.9%. Thus.8*‖definitely would buy‖ + 0.1 for ―Pizza Only‖.529 million for non-users (2.660 million from non-users (1. The concept test indicated average purchase amounts of 1.4684 million units. Using BASES model to estimate trial. Based on the marketing plan adjustment.7*22% (repeat rate)*2 (repeat purchase occasion)*1 (average repeat transaction amount) = 3.
crust and toppings have varieties that consumers would like. The ratings given by users favoring pre-assembled pizzas imply that they are apprehensive about the freshness. Contadina as a parent brand is well known for its fresh and tasty easy-to-cook pasta. accurate and applicable in the case of trial and repeat demand volume estimation. To sum up Exhibit 13 and 14. Analysis of Exhibits 13. takeout pizza is the most popular product in this market segment. Pastas even without much brand support showed positive response during concept testing. As a conclusion. III. disclosing the additional sales of toppings. heavy users of Takeout Pizza and users of Frozen Pizza. because 75% of 3 2012.Adam Madacsi (HRYRTQ) – Product and Brand Strategies Case Analysis II.6 million. because there is more awareness and affiliation to the brand.4 million in sales from non-parent brand users. A far as I concern the 25% brand penetration scenario – supported by the strong and highly penetrated parent brand – is relevant. The higher numbers in favor of the Pizza concept is mainly due to the respondents who are users of Contadina Pastas as we could see above. If NRFC plans to go in for pre-assembled pizzas they need to take special care of the above mentioned attributes like ensuring the crust does not become soggy post production. taste. On the other hand Exhibit 15 clearly indicates that if the Contadina pizza is introduced in the market the market share of all the other pizzas already available would decrease. Pizza Only) with the substitutes available in the market through relative concept attribute ratings by users in favor of either of the two forms of Contadina Pizzas. the Pizza Kit lags behind with a huge margin compared with takeout pizza on taste. This high market penetration for parent brand users requires picking up only $8. To give an answer for this question related to penetration scenarios./4. So NRFC needs to concentrate more on the taste factor and also make it suitable for special meals. . The NRFC believed that they could reasonable expect a market penetration of 25% of the current Contadina users (24% of the 95. crush and product image of a special meal. and we can get insights about it. This can be an important factor to leverage the brand awareness. thus frozen pizza is less preferred compared to others.15. Variation in Parent Brand Usage Pizza is clear extension of the parent brand. availability of specific crust and toppings varieties and quality of the crust. that a 5% of forecast sensitivity would be more applicable or accurate than the 25% penetration forecast value. From the all the three exhibits we can learn the attitudes of consumers towards the pizza market. This base of parent brand users forecast sales of $36. I don’t think so. the previous introduction of the Kraft brand increased the size of the market instead of taking market share from NRFC. Attribute ratings given by the frozen pizza users are way below the ratings given by other 2 set of users. 14 and 15 compares and contrasts Contadina Pizza Concept (Pizza & Topping. 14 and 15 – (answer for question 2) Exhibit 13.5 M target households).04. Pasta concept test included positioning which wasn’t necessary in the case of pizza concepts. Although there is a pending market introduction from Kraft.
20. Pizza and Pasta concept test data (Analysis of Exhibit 6. freshness. 21) – (answer for question 3) Among the ―Pizza with Toppings‖ and ―Pizza Only‖ concepts. IV. both respondents in favor and not in favor of refrigerated pizza quoted the units were too expensive (21% and 44 % respectively). easiness and quickness in preparation. almost no consumption of fresh pizza from supermarket.04. 33% noted that it is an unfavorable reason against purchase intent. 50% and 22% reduction in consumption of frozen and takeout pizzas respectively.Adam Madacsi (HRYRTQ) – Product and Brand Strategies Case Analysis the last 10 pizza-eating occasions were takeout or delivered pizza for those respondents who are favorable to Contadina pizza and who would buy it instead of another product. that the product is 4 2012. Major contrast can be observed in the concept test data for Pastas & Pizzas is case of pricing. The percentage of respondents who indicated a high probability of buying is almost the same in concept testing for Contadina Pastas and Contadina ―Pizza with Toppings‖ (75% and 76% respectively). and 3 out of 10 times. Contadina pastas already had a favorable response from the users. therefore more extensive behavioral study have been conducted on ―Pizza with Toppings‖ concept. 19. To sum up. Contadina pizza becomes the 2nd most preferred product for the user after takeout’s.15. ―Pizza with Toppings‖ is more popular among the consumers. The point of understanding the market perception with regards to the packing of the product at hand has not been taken care of in the case of pizza. Respondents have rated availability of variety. general taste and flavor as the major attributes in refrigerated pasta and pizza as well. 24 and 18 – (answer for question 4) According to Exhibit 23 and 24 the determined price for the pizzas are too high for the respondents. than in case of the ―Pizza Only‖ concept. they would prefer eating Contadina pizzas. The likeability towards ―Pizza with Toppings‖ was more significant amongst both users and non-users of Contadina Pasta. Analysis of Exhibit 23. Those favorable were asked just why they were favorable. Comparing the concept test data for Contadina Pastas and Pizzas the ratings are the same for ―Likability‖ and ―Concept uniqueness‖. Despite being an entirely new product in the market. and those unfavorable just why they disliked the concept. V. Moreover the whole positioning process of the pizza product is determined previously by the position of other ethnic foodstuff of Contadina. However the concept interview for the ―Pizza Only‖ option was brief. . Respondents in favor of Pastas did not have issues with pricing of units (only 3% of favorable and 23% of unfavorable thought they were expensive). in case of Pizza. In the pre-product launch research of Pasta there is more emphasis on the USP of the product which is not being replicated while launching the pizza. However. Exhibit 15 presented the likely trend post-trial of Contadina Pizza: There is no change in the consumption of homemade pizzas. the percentage is lower (58%) in case of Contadina ―Pizza Only‖ concept. Therefore there are just limited diagnostics.
04. it has a good quality and freshness. which can use a sufficient supply chain management and network nationwide in the US. consumer’s attitudes. which may indicated that the product is not competitively priced.15. Both respondents in favor and not in favor of refrigerated pizza argued that the units were too expensive (21% and 44 % respectively). it is higher than the price of the takeout pizza. With these high quality and premium positioned products there is the opportunity also to reach high-rollers and build up a significant brand and product loyalty in the market of refrigerated products. Launching the Pizza product line – (answer for question 7) In my opinion I would launch the pizza product. VIII. the capability of distinguishes the product and the lower marketing and positioning costs. The success of Pasta – (answer for question 6) The success of Pasta product line can be attributed to the following reasons. two plants. on the one hand because of the market niche and the first mover advantage on the refrigerated product market. and quick and convenient to make. because it presents strong and accurate data and information about the market. Contadina achieved first mover advantages in the market of refrigerated products. which is completed with a large variety of the ingredients products. which should be explored and capitalized on. which could distinguish the product and the brand and can use as a USP for premium or superior positioning strategy. the strong and effective research methodology is also a huge benefit and opportunity for the company and for both pasta and pizza concept. Furthermore. majority of the population was in favor of the concept. Further. and has serious advertisement budget. The mean price of the research in related to typical price consumers would pay for different pizza products shows as well. Furthermore. opinions and perceptions about a certain product. which characteristics are perceived by the consumers as well. . that the current price of the pizza line is not favorable for the consumers. before the competitors (Kraft) enter the market. Highly important point of view is the 5 2012. making a high intent and perceived value of the product.Similarities and Differences in the Opportunities of Pasta and Pizza – (answer for question 5) Similar opportunities in case of the pasta and pizza concept are a significant market niche. which it is refrigerated and not frozen to target a market niche in the US. VI. VII. Another factor of the success is the main characteristic of the pasta. a package technological innovation. a longer shelf life and an efficient supply chain is a benefit of the product as well. On the other hand I would launch because of the strong parent and umbrella brand support. which I like very much.Adam Madacsi (HRYRTQ) – Product and Brand Strategies Case Analysis too expensive. With the refrigerated pasta and the pizza kit. Moreover due to the acquisition of Lambert Inc. They could capitalize on the First Mover Advantage and on the strong research methodology adopted prior to launch. the umbrella brand name of Nestlé is also a strong supported force for both products. Further.
the results are not favorable for the “Pizza Only” concept. BASES accuracy is within +/. but I definitely would not launch ―Pizza Only‖ concept according to this research. based on estimated retail and factory prices. The estimates were factory sales of $57.264 million for ―Pizza Only‖ concept.04. 6 2012.763 million for the ―Pizza with Topping‖ concept and $35. in which aspect this pizza product performed well according to the market research data. .Adam Madacsi (HRYRTQ) – Product and Brand Strategies Case Analysis awareness and perceptions of the customers. Given the estimated breakeven point of $45 million in factory sales.20%. Total sales were estimated from trial plus repeat for users plus non-users (plus sales of toppings for the kit option). On the other hand. mainly in favor of the Contadina users and loyal customers. the ―Topping concept” was estimated to be profitable even with the worst error. According to this data I would definitely launch the Pizza Kit product applying the “Topping concept‖. which would have to be on the very high side of the error interval to be profitable.15.
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