NESTLE REFRIDGERATED FOODS:

CONTADINA PASTA & PIZZA (A) GROUP 2

Marketing Program Design Case Analysis

GROUP 2
1302-066 Keshika Lakhani
1302-070 Jubin Goel
1302-073 Keval Shah
1302-086 Mrigakshi Punga
1302-087 Nandita Jaswal
1302-093 Nirav Shah
1302-206 Gagandeep Singh

NESTLE REFRIDGERATED FOODS: CONTADINA PASTA & PIZZA (A) - GROUP 2

Contents
Executive Summary ................................................................................................................. 2
Q1) Using the BASES model described in Exhibit 9, forecast the estimated demand (trial
and repeat) for the two Pizza options under consideration: Pizza and Topping and Pizza
Only. ......................................................................................................................................... 3
Q2) What can one learn from Exhibits 13, 14, and 15? .......................................................... 3
Q3) How does the pizza concept test data (Exhibits 19, 20, and 21) compare to the pasta
concept test data (Exhibit 6)? .................................................................................................. 4
Q4) What is your reading of Exhibits 23 and 24? (include Exhibit 18 if you wish) ............... 4
Q5) In general, how would you compare the pizza opportunity to the pasta opportunity?
What are the similarities? Differences? ................................................................................. 5
Q6) Why was the pasta product so successful? ....................................................................... 5
Q7) How do you like Nestls new product development process? For pasta? For pizza? .... 6
Q8) Would you launch the pizza? ............................................................................................ 6

NESTLE REFRIDGERATED FOODS: CONTADINA PASTA & PIZZA (A) - GROUP 2

Executive Summary
Nestle Refrigerated Food Company, in 1990, had to decide about the launch of Contadina Pizza
(a refrigerated pizza), and so that it could continue the building of the refrigerated food category
started by it a few years ago. It had entered this category through the launch of Contadina Pasta
and Sauces, and had achieved results that exceeded its expectations. Nestle Refrigerated Food
Company would cut out serious and major competition, Kraft general food, who was to make a
similar launch in about 6 months; by being the first mover in this competition.
Marketer studies that consists of the forecast of estimated demand show that the launch is
recommended and pizza with topping are preferred as compared to only pizza. Market studies also
show that the basic business requirement of $45 million, factory dollar sales, can be met by a
minimum of 7% market penetration.
As per studies and since the Italian ethnic food market is fast developing, the opportunity looks
great, but Nestle Refrigerated Food Company should be very careful as bad results could seriously
hurt the Contadina Brand Name. The price of the offering should be adjusted to be at lower levels
and heavy support from advertising should be carried.

NESTLE REFRIDGERATED FOODS: CONTADINA PASTA & PIZZA (A) - GROUP 2

Q1) Using the BASES model described in Exhibit 9, forecast the estimated demand (trial and
repeat) for the two Pizza options under consideration: Pizza and Topping and Pizza Only.
Using the BASES Model, we forecast trial and repeat purchases. The BASES Model assumes that
the sample size used and the analysis of in-house product usage represents the entire target market.
It also assumes that the estimated market plan is similar to the actual launch plan. If there is any
inconsistency in these assumptions, it can result in incorrect forecasting of the success of the
product.
The estimated advertising awareness and purchase intent figures are subjected to certain
limitations and these involve risks with respect to the following:

The product does not live up to the promised benefits

Respondents like a concept but overstate preferences or do not buy the product due to the
social desirability factor
High trial cannot predict product success
Limited diagnostic information cannot provide insight into complex structure or interests
and attitudes

Q2) What can one learn from Exhibits 13, 14, and 15?
We can analyse from exhibit 13,14 & 15 , that kit has huge potential of attracting customer
segment consuming frozen pizza and fresh pizza from supermarket , but Nestl should ensure use

NESTLE REFRIDGERATED FOODS: CONTADINA PASTA & PIZZA (A) - GROUP 2

of high quality ingredients and avoidance of artificial ingredients or preservatives, as this is one
of the most important reason that will catalyse the switch. Therefore, branding and advertising
campaign should be built around awareness of masses about two main factors:

High quality ingredients

Zero preservatives and additives

Significant switch in heavy pizza consumers wouldnt be seen initially since:

1. They get a huge variety through take away and deliveries T
2. The brand loyalty to already existing chains like Pizza Hut, Dominos.
In the long run, Nestl can gain momentum in this segment if they are able to diversify the kind
of pizza they will serve in the kit both in terms of crust and toppings.
Q3) How does the pizza concept test data (Exhibits 19, 20, and 21) compare to the pasta
concept test data (Exhibit 6)?
Exhibit 6 talks about the Pasta concept. Pasta in this case was an already existent product, which
acquired by Nestl sought to reposition itself in the market and highlight its USP. The pasta market
already had many competitors of its kind and in this case, Nestl had a building ready with them
which had to be knocked down, its foundation used to create a completely new brand. The
concept test data clearly even in terms of its parameters like creating uniqueness in the product,
negligence of the pricing and more focus on improvement or change rather than formation,
establishes this fact.
Looking at Exhibits 19, 20 and 21 - the predominant focus on the pricing of the product, the
features / characteristics of the pizza kit itself in terms of taste and delight propositions to the
customer, comparison with alternatives (emphasis on ALTERNATIVES and not competitors,
because none existed) clearly proves that Nestl was focusing on starting from scratch, creating a
market by offering something that till then did not exist.
Q4) What is your reading of Exhibits 23 and 24? (include Exhibit 18 if you wish)
Exhibit 23
This exhibit talks about market research analysis conducted by Nestl, with regard to its pizza and
toppings, with the sample size of 186 people out of which 130 had a favourable intent to purchase
the product and 56 were against. In percentage the exhibit tells us about the number of people who
had particular likes (Favourable) about particular features/ characteristics of the product.
Talking about the Suggested Improvements section- these were the recommendations of the
people in general (both favourable and non-favourable about areas of the product which the
company might work on, comprising of every characteristic of importance to a customer price
,taste, ingredients et al. The Unfavourable section talks about, again in percentage, of people
criticizing a certain characteristic of the product, as being bad or demanding
improvements/change.
This analysis, in numbers, gives an insight into the features of the product that Nestl had got right
and where the market demanded more. A favourable value of 130 out of 186 was encouraging but
still much remained and this analysis gave precise areas into which Nestl could look for further
customer satisfaction.

Exhibit 24

NESTLE REFRIDGERATED FOODS: CONTADINA PASTA & PIZZA (A) - GROUP 2

This exhibit talks about the price that Nestl wanted to put forward in the market with the
consent of the customers. Again a sample of 186 people who were chosen for the in home use
test was taken and they were asked what price they would pay for the product. If we take the
sum of any one column of this exhibit, we achieve the total of 100, which tells that each customer
could recommend one price and this data collected along with the recommendations from the
exhibit 23 and primarily the cost involved in producing the product and the target profits were the
deciding factors for the price of the product.
Exhibit 18
Once again the sum of each column gives a value of 100, each individual value in terms of
percentage. Respondents were asked whether they tried a particular product from an array of eight
choices (frozen pizza, home delivered pizza etc.) and then whether they retry the product. The two
different columns tell us how customers shifted from one product to another, some products
gaining a percentage at the expense of other product.
Q5) In general, how would you compare the pizza opportunity to the pasta opportunity?
What are the similarities? Differences?
Extensive market research by Nestl inferred that the market for refrigerated pizza and toppings
was very limited as compared to pasta. The success of renovation of an already established pasta
brand in the market could not be taken as an example or a demonstration or anticipatory results
for the pizza product in the market. As is preached by the most preliminary principles of marketing,
the USP of both the pizza and the pasta products were the primary and decisive factors in their
popularity and sales. Both with respect to the pasta and the pizza range, Nestl had the chance to
create a market, establish new brands, position themselves as they wanted and a major first mover
advantage. However, with the pizza range, they had virtually no foundation or base to work on
and they were competing with alternatives for the products, not competitors. Market survey
indicated that only 15% and 4% of people consumed frozen and homemade pizzas in contradiction
to the 17% and 90% users of frozen and home-made pasta. Pastas did not have any issues with the
pricing while 21% and 44% of respondents who were in favour of and not in favour of refrigerated
pizzas respectively felt that pizzas were quite expensive. Nestl plan to give to the customers, not
only a pizza of good quality, taste and a reasonable price but also the freedom to customize their
pizza, something not offered by the restaurants and delis.
Q6) Why was the pasta product so successful?
With first year sales of $ 50 million going up to $ 100 million in 3 years, NRFCs Contadina Pasta
was a great success. The factors that contributed to the same are as follows:
1. Realizing the potential of the Italian Food Segment in the US market, Nestl decided to launch
Contadina Fresh in the refrigerated foods category. Analysis brought forward the view that
competitors would be following the same cycle and all the products would reach the market at the
same place, due to which Nestl would not be able to gain a significant first mover advantage. It
therefore acquired an established regional player in the market- Lamberts Pasta and Cheese, to
help surpass its competitors and be the first to bring refrigerated pasta to the national market.
2. Having acquired a regional player that had developed a process to extend the shelf life of the
product, Nestl was able to establish a highly efficient distribution system. Alongside this, the
decision to establish a new manufacturing facility helped Nestl to achieve considerable
efficiencies in costs.

3. Using brokers as sales agents instead of the traditional sales force was another factor attributing
to the success of NRFC. A larger share of sales time was achieved due to these brokers who had

NESTLE REFRIDGERATED FOODS: CONTADINA PASTA & PIZZA (A) - GROUP 2

significant experience in the sales of perishable/refrigerated products. It also helped in further cost
reductions.
4. Establishing a brand name that communicated an image of traditional authentic Italian food
which could be distinguished from the convenience products category was another advantage.
This, combined with the packaging technology of Lambert helped Nestl in positioning itself in a
particular market segment via the PASS technique.
5. A well marketed component approach allowed Nestl to achieve high quality over the
products shelf life as flavour did not migrate between the components. It also helped in reducing
the sticker shock among customers.
Q7) How do you like Nestls new product development process? For pasta? For pizza?
The 7 steps of Nestls new product development process starting from the concept creation to the
final launch of the product are very comprehensive and look over almost every matter / issue
concerning the development and launch of a new product. I would definitely say this is a very
good process, not only in its capacity to cover each and every aspect of a new product but also in
its versatility of application to products in virtually any industry with small tweaks here and there,
and also because of its practicality and the sheer common sense of involving the right people from
the right departments at different stages of the process, whilst giving them the freedom to take a
different path, if deemed appropriate, for any specific product.
For Pasta, because of the already established Lamberts Pasta and Cheeses, Nestl skipped out on
the first 2 phases of Idea Generation and Refinement. The product development stage focused on
R&D and changes required to increase the shelf life to 40 days and devise various innovative ways
of testing the product. Further moving on, they carried out tests in the market, extensive market
research, surveys, and in-home use tests to further work out how to improve their pasta line
effectively repositioning the pasta brand itself christened as Contadina Foods.
For pizza, Nestl had to start from the scratch. There didnt exist any such product in the market.
The Idea generation phase resulted in the refrigerated pizza as a product extension to the preexisting Contadina product-line. The Idea refinement phase went ahead with two ideas about the
refrigerated pizzas that can be introduced in the market. The product development phase resulted
in elimination of one of the ideas due to feasibility issues. Though Market Research was conducted
for both the ideas, Nestl had no option right now to move ahead with only one of the idea.
Q8) Would you launch the pizza?
Yes, launching of the pizza will be favourable for Nestl as they were already successful in the
refrigerated Pasta market by acquiring the Contadina refrigerated foods, reducing the time to do
Market research and thereby gaining the first mover advantage. This created a positive image of
the refrigerated products of Nestl in the market. Moreover, this was a new offering in the market.
Also as per Exhibit 13, out of 200 people 128 were heavy takeout users, 115 were favourable to
the concept of Top two box and 129 had purchased frozen pizza in the past 12 months; moreover
making frozen product is difficult as it has to be first thawed from its frozen state before it could
be cooked, as against the refrigerated product which had to be just microwaved in most of the
cases.

Also before working on creating market awareness, they carried out extensive research which told
them that among the current user & non-users, 60% of the current users knew about Contadinas
pizza launch whereas 30% of the non-users knew about it. Even if they didnt invest in promotions,
the $13 million they spent for pasta, they still were getting enough of the market.