Synopsis

TruEarth is a company making healthy, gourmet products from high-quality ingredients. It is one of a few
leaders in ready-made whole grain food market, a niche market that offers greater quality and
authenticity than a mass-produced food market. In late 2004, TruEarth took advantage of a growing
demand for quick home meal requirements, refrigerated fresh pasta, and whole grain food options that
did not sacrifice taste to become the first company to develop a fresh whole grain pasta line called Cucina
Fresca. Market research findings for Cucina Fresca gave the management team high confidence in the
success of this product line with high estimated sales volume ($14 million at wholesale in the first year)
and significant interest in the new product. The Cucina Fresca line was launched in 2006 and it grew
quickly with retail sales in half of the first year was $18 million and almost doubled in the year after, $35
million.
TruEarth’s main competitor is Rigazzi which is similar in size and products offering. In order to compete
with Rigazzi and other potential new entrants, TruEarth realizes it should take advantage as the first
mover in this niche market. Therefore, following the Cucina Fresca’s success, TruEarth wanted to leverage
its brand and to make use of its large capital expenditure spent on the pasta line by extending the whole
grain products to refrigerated pizza. The concept of the new pizza line would be a pizza with a whole grain
crust and high-quality toppings that is fresher than frozen pizza, healthier than take-out, and easily
customizable. TruEarth has identified the store-bought refrigerated pizza market as highly potential
($5.8B, comparing to $4.4B of refrigerated paste market). The company conducted market research for
this new product line but they haven’t reached the final decision yet. Also, the pizza market as a whole is
highly competitive with huge players that offer low-cost frozen pizza. In addition, Rigazzi is about to
launch the same product line too. This puts a lot of pressure on management team to quickly decide if
they should launch the pizza line and what the volume should be.
Recommendation
Based on the analysis discussed in the next section, TruEarth should launch the whole grain pizza line
immediately.
Analysis
A. The success of Cucina Fresca – Key factors
I believe the success of Cucina Fresca was contributed by three key factors: First mover advantage of
offering healthy and tasty products, the convenience of product, and the reliable market research:

 Significant first-mover advantage: although TruEarth wasn’t the first company to offer whole
grain fresh pasta, it was the first one to offer whole grain fresh pasta without losing the taste, which
made it a successful first mover in the category. Cucina Fresca has successfully challenged the
biased perception of the poor taste of whole grain products and created a new perception of tasty
and healthy whole grain foods.
 Convenience of product: Cucina Fresca was not only able to meet a demand for taste and healthy
foods, as discussed above, but also able to provide the convenience for “time poverty” consumers.
By offering fresh pasta instead of dry pasta, TruEarth helped customers reduce preparing time but
still feel confident about the high quality of the product. Also, the packaging with recommendations
and cooking instructions made it easier for customers to prepare their meals.
 Reliable market search findings: conducting careful and detailed market research has played a
significant role in the success of Cucina Fresca pasta line. The findings and forecast were reliable
and trustworthy so that guesswork was minimized. This enabled TruEarth to tap into many unmet
demands of consumers that were discussed above.
B. Launching decision for whole-grain pizza – Analysis & Action plan
5Cs Analysis

Climate Company Collaborators Customers Competitors

 Opportunity Strength Opportunity Opportunity Opportunity
- Growing niche - Four-step process - Establish close - Introduce healthy - Become the first one
market of healthy and for R&D; relationship with ready-made / semi- to introduce
high quality foods; - Whole grain suppliers to lower made products due to refrigerated whole
- Growing trend of products are tastier price and maintain an increase in grain pizza.
"Home meal than most quality consistency. disposal income and Threat
replacements"; competitors' whole Threat "time poverty"; - High threat of direct
- Highly potential grain products; - Medium bargaining - Cucina Fresca's competition from
Refrigerated pizza - Brand commitment power from one customer base Rigazzi;
market ($5.8B). in healthy foods; supplier of wheat; penetration; - High threat of the
Threat - Ready packaging - Low bargaining - Lower price- same product from
- Whole grain pizza is equipment and power from other sensitivity due to major restaurant
not a new idea like distribution suppliers of high growing health chains (Papa John's
fresh pasta with infrastructure. quality ingredients; concerns and high- and Pizza Hut);
whole grain option; Weakness - Low risk of quality perception; - High threat of
- Market research has inaccurate results - Offer premium price substitute pizza
potential risk of from market research to established product (low cost
inaccuracy. firm (Nielsen). customer base. frozen pizza) from big
- High price for high Threat players (Kraft and
quality products; - Saturated substitute Nestle);
- Whole grain crust is products make it - Medium threat from
less tasty than harder to introduce new entrants.
traditional crust; high price products to
- Fresh products have new customers;
short expiration - Taste is still a
period. significant factor that
affects buying
decision.

Key opportunities
From the 5Cs table, it is clear that climate and customer factors offer a lot of opportunities to launch the
new pizza product. Key opportunities to grow for refrigerated pizza with whole grain options are:

 Highly potential market: market size is $5.8B, which is bigger than market size of refrigerated
pasta ($4.4B) might imply a much higher wholesale revenue for this new product. The purchase
volume estimate will be presented in Financial analysis section;
 Growing health concern: increasing awareness of “bad” carbohydrates and healthy diet will
drive more people to switch between traditional crust pizza to whole grain crust pizza;
 “Home meal replacement” trend: time constraints make refrigerated semi-prepared foods
become more relevant to customers who still want to involve in preparing and customizing their
foods.
Key issues

 Moderate first-mover advantage: although the opportunities to grow seem to be the same
with fresh pasta market, the refrigerated pizza market doesn’t offer an opportunity to gain
significant first-mover advantage as fresh whole grain pasta market did. TruEarth, of course, can
be the first company to offer refrigerated whole grain pizza, but the whole grain pizza idea has been
established in the market by major restaurant chains like Papa’s John and Pizza Hut. This would
pose a high threat of taste benchmark that might result in customers losing their interest in the
new pizza line. Therefore, I believe the first-mover advantage in this market is not as significant as
in fresh pasta market.
 Highly competitive market: although the market is highly potential for TruEarth, it is also
highly competitive with saturated substitute pizza products offering at low prices by big companies.
This implies a challenge in pricing its new products. Evidently, market research reported that both
 customers and non-customers suggested a lower price for the new whole grain pizza (26% and 35%
respectively, Source: Exhibit 9).
In addition, as discussed above, established whole-grain pizza products from famous restaurant chains
can become a real challenge of taste for the new pizza line.
The next section, SWOT analysis will discuss further on whether launching whole grain pizza line can help
TruEarth take advantage of opportunities using its strengths, and how it can mitigate the threats and
cover its weaknesses.
SWOT Analysis
Strengths (S) Weaknesses (W)
- Healthy and customizable pizza; - High price for high quality
- Brand image in healthy foods products;
SWOT
resulting from Cucina Fresca's - Whole grain crust is less tasty than
Analysis
success; traditional crust;
- Ready-to-use packaging equipment - Fresh products have short expiration
and distribution infrastructure. period.

Opportunities (O) SO implication WO implication

- Growing niche market of healthy
and high quality foods;
- Highly potential market.
- Growing health concern about "bad"
carbohydrates;
- Customer penetration;
- Become the first one to introduce
refrigerated whole grain pizza.
- Launch the whole grain pizza
product line to capture the
opportunities of growing demand for
healthy and customizable pizza, and
make use pasta customer base;
- Take advantage of brand image to
increase customer's willingness to try.
- Lower price and/or increase the
quality;
- Invest on advertising to raise
awareness of "bad" carbohydrates,
emphasize the high quality and heathy
ingredients, and focus more on
convenient feature to attract more
customers;
- Focus more on established customer
base because they have high brand
awareness and lower price-sensitivity.

Threats (T) ST implication WT implication

- Whole grain pizza is not a new
idea;
- High threat from direct competitor;
- High threat from major restaurant
chains (Papa John's and Pizza Hut);
- High threat of substitute pizza
product (low cost frozen pizza) from
big players (Kraft and Nestle);
- Medium threat from new entrants.
- Launch the new pizza to leverage
brand image, making it harder for
direct competitor and new entrants to
compete;
- Continue to invest on R&D to
improve and develop products;
- Focus on customizable benefit of
refrigerated pizza to avoid benchmark.
- Lower price and/or increase the
quality;
- Invest on advertising to raise
awareness of "bad" carbohydrates,
emphasize the high quality and heathy
ingredients, and focus more on
convenient benefit of refrigerated
products to attract more customers and
avoid benchmark;

From SWOT analysis, it is likely that launching the whole grain pizza can work for TruEarth if it can
incorporate with marketing mix plan to avoid threats and minimize weaknesses. Financial analysis will
explain the feasibility of this launching decision.
Financial analysis
 Total forecasted sales revenue of new whole grain pizza ($ million)
Based on data from case study exhibits and TruEarth’s assumption of penetration, the total forecasted
sales revenue of new whole grain pizza for each scenario (worst to best) is presented in table above [See
Appendix for calculations].
Based on data from Exhibit 9 and TruEarth’s high confidence in its R&D and market research, I believe
the two most possible and reliable scenarios are:

 Average Product x 11% Penetration (24% and 20% non-customers want taste and crust
improvement); and
 Excellent Product x 11% Penetration (28% customers don’t need improvement and 12% non-
customers dislike the quality).
In addition, even if we assume the probability of each scenario is equal, we still have the weighted average
sales revenue of $14.42 million, which exceeds the minimum sales revenue requirement of $12 million.
Therefore, I recommend TruEarth launch the new whole grain pizza product line quickly.
Action plan
Target market and Positioning statement
Target market’s traits:

 Families with 1 – 2 kids, the parents are both working: working parents will have less time to
prepare for meals and even indulgence. Also, having kids usually makes the parents more concern
about food choices;
 These families love pizza and consider pizza as an indulgence. Some of the families have tried the
Cucina Fresca pasta for dinner and liked it;
 The mothers love to cook and preparing foods for their families. They are usually the decision
makers in food choices: the reason behind this trait is because example comments in Exhibit 6
show that men are like to prefer taste over healthy feature. Therefore, it would be more reasonable
if TruEarth can tap into these mothers’ health concern for their families.
Positioning statement: for busy families that love pizza, TruEarth’s refrigerated pizza is an indulgence
that is made from whole grain and high quality ingredients. It’s fresher than frozen pizza, healthier than
take-out, and easily customizable to your family own taste.
Marketing mix
Product & Price

 Product name: TruEarth should consider using the name Cucina Fresca to leverage and make
use of this successful brand name. This would also make it easier to increase customer penetration
and brand awareness for the pasta line.
 Packaging: just as the company has done with Cucina Fresca’s packaging, the pizza’s packaging
should provide recommendations on toppings and instructions for cooking which include some
famous, but easy, pizza recipes.
Based on Exhibit 8 & 9, it is clear that high price is a disadvantage to the new pizza’s success since 45%
non-customers indicate the price of $12.38 is too expensive and 26% customers suggested lower price.
Although a one-topping pizza is sold at $13.5 ($8 crust + $3.5 topping), which is considered attractive to
both customers and non-customers (Source: Exhibit 10), the assumption of 1.25 toppings shifts the price
to the next price range, resulting in a significant drop in non-customers’ share. The following change can
possibly help avoiding price threat:
  Toppings: based on Exhibit 9, toppings is considered as one of the key reasons that affect buying
decision. However, Exhibit 10 implies that a refrigerated pizza with two toppings selling at $15 ($8
crust + $3.5 x 2 toppings) cannot attract many non-customers (only 1.1%). Therefore, TruEarth can
consider making a valued packet of two-toppings mixed selling at $3.99. This will lower the price of
a two-toppings pizza to $11.99, which is more attractive to non-customers (17.9%, Source: Exhibit
10).
To decide which combination of toppings for the mixed packet, TruEarth might need to conduct survey
and research on sample market. Also, adjustment should be made for every six-month or one-year period
based on sales of one-topping packets.
By lowering the price from $12.38 to $11.99 (roughly 3%), projected sales revenue will increase from
$17.05 million to $17.28 million (assuming there will be an increase of about 6% of non-customers and
3% of non-customers) (See Appendix). Although the increase in sales revenue isn’t significant, the plan is
still worth the effort because TruEarth won’t have to sacrifice its gross margin.
Promotion
Budget for marketing plans can be the same as pasta line’s, with $8 million for advertising and $2 million
for coupons:

 Advertising: because whole grain pizza is no longer a new idea, TruEarth should consider create
TV commercials focusing on the combination of healthy, convenient, and customizable product.
Also, marketing campaign to increase awareness of “bad” carbohydrates can help lower the threat
from unhealthy substitute pizza products;
 Promotional coupons: for higher customer penetration, TruEarth can consider give out higher
value coupon or trail coupon for its pasta customers. For example, customer receives a free pizza
kit with one topping packet for every three purchases of Cucina Fresca pasta. This will help boost
sales of the pasta line too.
Place
TruEarth can make use of its established distribution channels and consider expanding to other states /
areas since pizza market is much bigger than pasta market.
Measurement

 The main metric to measure the success of the product and action plan is sales revenue;
 For marketing plan, metrics might include changes in customer penetration range, brand
awareness, and ACV.
APPENDIX
New whole grain pizza volume estimate, Year 1 -
Penetration 5%
Non-
Customers Source Source
Customers
Trial Purchase Intent Repeat Purchase Inputs
Exhibit
Definitely would buy 15% 26% Trial Households (MM) 0.85
7
% of "Definites" who Exhibit Table
80% 80% Repeat Purchase Occasions 2
actually buy 5 B
"Definite" Purchases 12.00% 20.80%
Exhibit Repeat Rate, by Product
Probably would buy 39% 53%
7 Scenario
% of "Probables" who Exhibit
30% 30% Mediocre Product 21%
actually buy 5
"Probable" Purchases 11.70% 15.90% Average Product 37%
Excellent Product 49%
Trial Rate (Definite +
23.70% 36.70%
Probable)
Repeat Purchase, by Product
Scenario (MM)
Marketing Plan
Mediocre Product 0.36
Adjustment (same budget)
Penetration, % of target Table
95% 5% Average Product 0.63
households B
Projected Consumer Table
12% 50% Excellent Product 0.83
Awareness B
All Commodity Volume Table
40% 40%
distribution (ACV) B
Total Purchase, by Product
Scenario (MM)
Marketing Adjusted Trial
1.08% 0.37% Mediocre Product 1.21
Rate
Trial Rate x Awareness x
Average Product 1.48
ACV
Target Households (MM) 58.8 58.8 Excellent Product 1.69
Trail Households (MM) 0.64 0.22
Total Trial Households $ Table
0.85 Retail selling price
(MM) 12.38 B
Retail sales volume, by
Product Scenario (MM)
$
Mediocre Product
14.96
$
Average Product
18.34
$
Excellent Product
20.87

Case
Retailer gross margin 35%
text
TruEarth sales volume, by
Product Scenario (MM)
$
Mediocre Product
9.73
$
Average Product
11.92
$
Excellent Product
13.56

New whole grain pizza volume estimate, Year 1 -

Penetration 11%
Non-
Customers Source Source
Customers
Trial Purchase Intent Repeat Purchase Inputs
Exhibit
Definitely would buy 15% 26% Total Trial Households (MM) 1.07
7
% of "Definites" who Exhibit Table
80% 80% Repeat Purchase Occasions 2
actually buy 5 B
"Definite" Purchases 12.00% 20.80%
Exhibit Repeat Rate, by Product
Probably would buy 39% 53%
7 Scenario
% of "Probables" who Exhibit
30% 30% Mediocre Product 21%
actually buy 5
"Probable" Purchases 11.70% 15.90% Average Product 37%
Excellent Product 49%
Trial Rate (Definite +
23.70% 36.70%
Probable)
Repeat Purchase, by Product
Scenario (MM)
Marketing Plan
Mediocre Product 0.45
Adjustment (same budget)
Penetration, % of target Table
89% 11% Average Product 0.79
households B
Projected Consumer Table
12% 50% Excellent Product 1.05
Awareness B
All Commodity Volume Table
40% 40%
distribution (ACV) B
Total Purchase, by Product
Scenario (MM)
Marketing Adjusted Trial
1.01% 0.81% Mediocre Product 1.52
Rate
Trial Rate x Awareness x
Average Product 1.86
ACV
Target Households (MM) 58.8 58.8 Excellent Product 2.12
Trail Households (MM) 0.60 0.47
Total Trial Households $ Table
1.07 Retail selling price
(MM) 12.38 B
Retail sales volume, by
Product Scenario (MM)
$
Mediocre Product
18.81
$
Average Product
23.05
$
Excellent Product
26.23

Case
Retailer gross margin 35%
text
TruEarth sales volume, by
Product Scenario (MM)
$
Mediocre Product
12.23
$
Average Product
14.98
$
Excellent Product
17.05

New whole grain pizza volume estimate, Year 1 -

Penetration 15%
Non-
Customers Source Source
Customers
Trial Purchase Intent Repeat Purchase Inputs
Exhibit
Definitely would buy 15% 26% Trial Households (MM) 1.22
7
% of "Definites" who Exhibit Table
80% 80% Repeat Purchase Occasions 2
actually buy 5 B
"Definite" Purchases 12.00% 20.80%
Exhibit Repeat Rate, by Product
Probably would buy 39% 53%
7 Scenario
% of "Probables" who Exhibit
30% 30% Mediocre Product 21%
actually buy 5
"Probable" Purchases 11.70% 15.90% Average Product 37%
Excellent Product 49%
Trial Rate (Definite +
23.70% 36.70%
Probable)
Repeat Purchase, by Product
Scenario (MM)
Marketing Plan
Mediocre Product 0.51
Adjustment (same budget)
Penetration, % of target
85% 15% Table B Average Product 0.90
households
Projected Consumer
12% 50% Table B Excellent Product 1.19
Awareness
All Commodity Volume
40% 40% Table B
distribution (ACV)
Total Purchase, by Product
Scenario (MM)
Marketing Adjusted Trial
0.97% 1.10% Mediocre Product 1.73
Rate
Trial Rate x Awareness x
Average Product 2.12
ACV
Target Households (MM) 58.8 58.8 Excellent Product 2.41
Trail Households (MM) 0.57 0.65
Total Trial Households $ Table
1.22 Retail selling price
(MM) 12.38 B
Retail sales volume, by
Product Scenario (MM)
$
Mediocre Product
21.38
$
Average Product
26.19
$
Excellent Product
29.81

Case
Retailer gross margin 35%
text
TruEarth sales volume, by
Product Scenario (MM)
$
Mediocre Product
13.89
$
Average Product
17.03
$
Excellent Product
19.37

Non-Customers Customers Source

Definitely would buy 15% 26% Exhibit 7
% of "Definites" who actually buy 80% 80% Exhibit 5
Definite Purchases 12% 20.8%

Probably would buy 39% 53% Exhibit 7

% of "Probables" who actually buy 30% 30% Exhibit 5
Probable Purchases 11.7% 15.9%
Trial Rate ("Definite" + "Probable") 24% 37%

Target households (MM) 58.8 58.8 Table B

Penetration, % of target households 89% 11% Table B
Awareness of pizza product 12% 50% Table B
ACV distribution 40% 40% Table B

Adjusted Trial Households 0.60 0.47

Total trial households (Non-Customers +
Customers) 1.07

% of households repurchasing (Excellent) 49% Table B

Repeat purchase occasions 2 Table B

Total purchases (Trial + Repeat) 2.12

Retail selling price $12.38 Table B

Retail sales volume $26.23 M
Retailer gross margin 35% Case text
TruEarth sales volume $17.05 M

Mediocre Average Excellent Weighted

Product Product Product average
$ $ $ $
5% Penetration
9.73 11.92 13.56 11.74
$ $ $ $
11% Penetration
12.23 14.98 17.05 14.75
$ $ $ $
15% Penetration
13.89 17.03 19.37 16.76
$
Minimum Business Requirement: $12 million wholesale
14.42