TruEarth Healthy Foods

Group Number: 10
Section: A

Team Members:
ACHAL GOEL-199278088
AKASH KUMAR-199278087
NANVEE RAJPUT-199278094
RISHAB SINGH-199278085
UTKARSH TIWARI-199278092
 Case Questions:

Answer 1:
a) The idea of Cucina Fresh Pasta became extremely popular because of the following
reasons:
 The first important factor was the development of HMR-Home meal replacement market
in the United States- due to increase in the number of dual income households leading
to higher disposable incomes coupled with time poverty. Moreover, the consumers were
looking for an alternative to unhealthy carryout and fast food.
 Second important factor was the growth of refrigerated fresh pasta as consumers
regarded it to be a tastier and more authentic than the dried counterpart.
 Third, increasing preferences towards the growing awareness of the importance of
whole grains in the diet.

Cucina Fresh Pasta had the first mover’s advantage as it was the sole competitor in this field.
Their products were healthy, quick and easy to cook

b) The pizza market was much larger than that of pasta (around 31.2% more). Out of
which the trial rate for whole grain pizza was around 36.7. So there was huge potential
to do well in this market and they already had some amount of infrastructure already in
place which can make their launch pretty successful and financially viable.
c) The company had already made investments in machinery like packaging equipment
and the consumers were already aware about the company because of their initial
offering in the market. Hence because of ll these features we can clearly say that the
costs involved will be mainly on the marketing and re-tooling.

Answer 2:
Forecasted demand (pizza) = 2.4 MM units

Pizza Volume Estimate - Year 1 - Non

Customer

Trial Purchase Intent Repeat Purchase Inputs

Definitely would buy 15% Trial Households (MM) 0.6
% of "Definites" who actually buy 80% Repeat Purchase Occasions 2
"Definite" Purchases 12.0% Repeat Transaction Amounts** 1.3

Probably would buy 39% Repeat Rate, by Product Scenario

% of "Probables" who actually buy 30%
"Probable" Purchases 11.7%
Excellent Product 49%
Trial Rate (Definite + Probable) 23.7%
Repeat Volume, by Product Scenario
(MM)
Marketing Plan Adjustment
Gross Rating Points
Projected Consumer Awareness 12% Excellent Product 0.7

All Commodity Volume distribution (ACV) 40%

Marketing Adjusted Trial Rate 1.1%
Trial Rate x Awareness x ACV

Target Households (MM)* 52.3

Trial Households (MM) 0.6

* Total Households = 58.5MM, Out of which 11% are TruEarth Customers

** Repeat Transaction Amount = units per purchase * average spend per purchas

Pizza Volume Estimate - Year 1 - TruEarth

Customer

Trial Purchase Intent Repeat Purchase Inputs

Definitely would buy 26% Trial Households (MM) 0.5
% of "Definites" who actually buy 80% Repeat Purchase Occasions 2
"Definite" Purchases 20.8% Repeat Transaction Amounts** 1.25

Probably would buy 53% Repeat Rate, by Product Scenario

% of "Probables" who actually buy 30%
"Probable" Purchases 15.9%
Excellent Product 49%
Trial Rate (Definite + Probable) 36.7%
Repeat Volume, by Product Scenario
(MM)
Marketing Plan Adjustment
Gross Rating Points
Projected Consumer Awareness 50% Excellent Product 0.6

All Commodity Volume distribution (ACV) 40%

Marketing Adjusted Trial Rate 7.3%

Trial Rate x Awareness x ACV

Target Households (MM)* 6.5

Trial Households (MM) 0.5

* Total Households = 58.5MM, Out of which 11% are TruEarth Customers

** Repeat Transaction Amount = units per purchase * average spend per purchase

Excellent
Pizza - Non Customer
Product
Trial Volume 0.5
Repeat Purchase Volume 0.6
Estimated Volume (MM units) 1.1
Pizza - Non Customer
Trial Volume 0.6
Repeat Purchase Volume 0.7
Estimated Volume (MM units) 1.3
Total Trial Volume 1.1
Total Repeat Purchase Volume 1.3
Total Estimated Volume (MM units) 2.4
Answer 3:
Inferences from exhibit 6
 We can clearly notice that a large section of the consumers prefers the takeout/delivered
mode of Pizza closely followed by the Dine out option where people come together at a
common place.
 Taste and Quality are the primary demand of consumer and TruEarth being already
established as a good quality provider for Pasta can capitalise over these.
Taking average of all the parameters,
Average of Takeout Pizza is 8.7
Average of Refrigerated Pizza is 6.7
TruEarth Pizza is thus the company can proceed with the idea of their launch in this category

 Moreover 17% people are willing to change their Pizza consuming behaviour when
TruEarth Pizza will be introduced, which is again a very good number launch the whole-
grain pizza.


Answer 4:

 When we compare the exhibit 4 and 8, we can clearly observe that more percentage of
people like the products because of the reason “Freshly made and dated”.
 In the pricing front, people don’t like to pay additional price or premium in this segment
as it can be clearly seen from the rating- 3.1/5 compared to that of the pasta which is
3.5/5 on the mean pricing part of the table. Moreover, only about 9% people favoured
pizza’s price factor over 18% that of pasta’s.
 The only factor that played out in advantage of the pizza was that the people favoured
the concept of pizza also because they can purchase all items in one place where as
they preferred Pasta as it is very convenient and easy to prepare. (16% vs 21%) thus a
wide margin exists between the two
 Customers have rated pizza highly on the Too Expensive part again highlighting the
pricing issue in this regard.
 The preferences for the whole grain pizza is essentially low in comparison to the pasta
as in the table the figure stands at mere 19% when compared to the 32% in case of
pasta but the overall market size is big enough to proceed with the launch.

Answer 5:
 We have already seen in the previous case that the TruEarth was able to generate profits
and captured a significant portion of the market share only because it was first to enter in
that segment and developed a new category for the consumers all together. A similar
strategy can be deployed over here in order to do well in this new space as well. Yes,
certainly there are so negative flags like the number of pizza consumers is decreasing,
but then TruEarth can enter as a first mover and capitalize on the decreasing demand
while is mainly because people have started developing health preferences and are more
conscious about what they eat and how it effects their health. TruEarth with their healthy
alternative can capitalize on this gap and take over the market by regenerating the falling
demands.
  Moreover, Rigazzi is also developing the same product as mentioned in the case so we
need to enter anyhow before them otherwise we would lose a certain advantage which
can have adverse effects on our future goals
 They could leverage the brand equity of TruEarth developed through the sale of Pasta

Market Survey: Pizza Industry Median Cucina Fresca

Probablity
Preference
Non TruEarth
Total
Customer Customer
Definitely Would buy 18% 15% 26%
Probably Would buy 43% 39% 53%
Top Two Box 60% 54% 79%

Answer 6

 The overall price (assuming 1.25 toppings) needs to be lowered as suggested by both -
favourable to product (26%) and unfavourable to product (35%). The key reason for
unfavourable purchase intent is the expensive pricing
 The favourable price points for Refrigerated Pizza, Frozen Pizza and Delivered/Takeout
seems to be $10-$12, $8-$10 and $12-$14 (as per exhibit 10). The observation is based
on the assumption that greater than 70% of the test respondents have the mentioned
willingness to pay
 The taste/flavor of the pizza still needs to be improved as suggested by both favourable
and unfavourable groups as per their likes and dislikes
 As crust is an important aspect of Pizza and 20% respondents are unfavourable to the
product due to crust being more chewy. So, this aspect need to be improved
 49.1% respondents are willing to pay more than $10 for Refrigerated, while respondents
who are unfavourable to the product are 37.1%
 9.7% respondents are willing to pay greater than $10 which is amounts to $2.27 above
the mean price of $7,43, but 60.2% respondents are willing to pay less than $8. So, for
Frozen Pizza, the price is an important concern
 In case of Delivery/Takeout, half-of-the-consumers are willing to pay more than $12,
which is a good thing

Answer 7:
It is viable to launch the pizza as making the first move will give us a competitive advantage
against the competitors.
 Pizza is made of whole grains and is a healthy choice for consumers who are diet fads.
 Survey results are also favourable and show positive results.
 Majority of the distribution channels and production lines can be used again, hence the
cost of production will be less for pizza.
There are some hindrances –
 It is perceived to be too expensive
  We have less time on our hands as Rigazzi is also thinking of launching the same
product. Therefore, there is threat of losing the market to them.
 There is an option of cheaper alternatives of takeout and deliveries.
Based on the likes and dislikes and feedback from the consumers, there are a few
recommendations –
 Although our quality is perceived to be good, we should be concentrating on giving
better taste and new varieties.
 Small increment in the prices can be assumed in order to meet the required margin.
 Product improvements should also be made to create a wider market