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PROBLEM STATEMENT:

Feasibility of the launch of Whole Grain Pizza i.e. whether it should launch the product or
not. In case it goes for launching, what should be the marketing volume.
BACKGROUND:
TruEarth Healthy Foods, a maker of gourmet pastas, sauces, and meals, wants to build on its
successful introduction of fresh whole grain pasta, by introducing a similar product concept
for pizza. In an increasingly competitive market, TruEarth is focused on beating its
competition and wants to act quickly and decisively. The company conducts extensive market
research, first using focus groups to test the concept and then following up with take-home
trials.
SWOT ANALYSIS:
STRENGTHS:
Large Pizza Market: Pizzas were a core component of the Italian-American food category,
annual sales in the USA estimated at $53 bn in 2007. (Para 2, pg 6)
First Mover Advantage: Immediate release of the pizza kit would give TruEarth
Healthy Foods the first mover advantage, leading to better market penetration
Brand awareness of TruEarth and Cucino Fresca: The launch of a whole grain
pizza kit will capitalize on the same consumer trends that prompted the release of
Cucina Fresca
Health Trend: TruEarth pizza marked the highest for healthy ingredients(9.1 on a
scale of 10: Exhibit 6), which might have resulted from the 'healthy brand image of
TruEarth, as well as the brand's core value to use 'top-of-the quality' and 'healthy-
conscious' ingredients
WEAKNESSES:
Popularity of competing categories: Presence of existing players like Nestle and
Kraft in low price pizza market- an easy alternative to the consumers (Para 5, pg 6)
Expensive as per study: Price perception is on the higher side. In the key reasons for
unfavorable purchase intent, high price contributes 45% . (Exhibit 9, pg 12)
Perceived lack of taste: Whole Grain Pizzas taste is perceived to be lower. (Exhibit
9, pg 12)
Challenges of Marketing: The ability to market a tasty whole-grain pizza crust and
communicate its benefits will be difficult because the American public perceives
whole grains to be less appetizing than white flour. Attempting to change consumer
preferences is time consuming and costly.

OPPORTUNITIES:

Chances of reducing use of substitutes: As shown in Exhibit-6(Page-10), TruEarth
Pizza would lessen use of substitutes.
No large player at the moment: The demand for whole grain has still been untapped
from perspective of store-bought refrigerated pizza market and has been addressed
only by local pizzerias
Suitable Product: This type of product depicts the perfect mix for addressing the
time and health related issues of the American consumers
Larger Market than pasta: The market for pizza is 30% more than the existing
product line of pastas. So this fact can be leveraged (Table B, page 7)
Incremental investment for pizza less than that for pasta (para 2, page 7)

THREATS:

Rigazzi- New pizza concept test was already done and was likely not far from an
introduction (Last para, page 7)
Risk of authenticity of BASES test: BASES test might be proved wrong leading to
business risk


MONETARY AND VOLUME ANALYSIS:
During trial period , the product is consumed by 3 types of households:
1) Consumers of Cucina Fresca Pasta
2) Non-consumers of brand who are already aware of the product.
3) Non-consumers of brand who become aware of the product due to additional advertising
and promotion.
Calculations for trial volume: ( using Exhibit 5, page 9 and Table B, page 7)
1) Number of household (Pasta Consumers)
= [Target household] * [CF Customer Rate] * [Trial rate for TruEarth customer(by thumb
rule)] * [ACV] * [Customer awareness]
= 55.8 * 0.11 * [26*0.8 + 53*0.3] * 0.4 * 0.5
=0.47 MM
2) Number of household (Aware Non Customers)
= [Target household] * [Non Customer Rate] * [Trial rate for Non-customer(by thumb rule)]
* [ACV] * [Customer awareness]
= 55.8 * 0.89 * [15*0.8 + 39*0.3] * 0.4 * 0.12
= 0.65 MM
3) Number of household (Unaware Non Customers)
= [Non consumer household] * [ Rate of unaware non consumer] * [Trial rate for non-
customers(by thumb rule)] * [ACV] * [Customer awareness from additional advertisement]
= (55.8 * 0.89)(1-0.12) * [15*0.8 + 39*0.3] * 0.4 * 0.17
= 0.81 MM
Therefore, volume for whole trial = (0.47 + 0.65 + 0.81) MM = 1.9 MM

Calculations for repeat volume: ( using Exhibit 5, page 9; Exhibit 9, page 12 and Table B,
page 7)
Only people who are favorable to the product will affect repeat rate of it. With given prices,
28% of the population which is favorable to the product suggested that it needs no
improvement (Exhibit 9).
Hence in worst case, 28% of the trial households, would participate in the repeat process.
Repeat Volume
= [Trial household] * [Repeat purchase occasions] * [Repeat transactions amount] * [Repeat
Rate]
= 1.9 MM * 2.0 * 1.25 * 0.28
= 1.3 MM
Therefore total wholesale volume during financial year
= ( Trial Volume + Repeat Volume)
= (1.9 + 1.3) MM
= 3.2 MM
The price of 1 kit = $ 12.38
Thus, Retail Sales Volume
= [Whole volume] * [Price per kit]
= 3.2 MM * $ 12.38
= $ 39.6 MM
Calculation of Investment (using para 2, page 4 and para 2, page 7)
Investment = Company Return requirement + Cost of Marketing plan
= $ 12 M + $ 10M
= $ 22 M
Calculation of Gross Revenue
Gross Revenue = Retail Sale Volume * [1- Retailers part]
= $ 39.6 MM * 0.65
= $ 25.7 M
Calculation of Gross Profit
Gross Profit = (Gross Revenue Investments)
= ($ 25.7 M - $ 22 M)
= $ 3.7 M

CONCLUSION:
We can see that, even in the worst case scenario, the firm would meet its requirements with $
3.7 M of Gross profit and the expected volume to produce exceeds 3.2 MM units.
Thus, the firm should definitely enter into the new market and produce whole grain
pizza. To sustain the business and increase the profits even further, it should improve its
accessibility, user-friendliness (easy-to-prepare), freshness while maintaining price
competitiveness against its more-direct competitors, namely take-out or delivered,
refrigerated and frozen pizzas in order to win consumers heart and mind as well as to sustain
its competitive advantage.