Nestlé Refrigerated Foods:

Contadina Pasta & Pizza Case Analysis

Siya Sharma
Introduc*on
Establishing a presence in the refrigerated food market in 1987, Nestlé Refrigerated Food
Company (NRFC) swiDly rose to prominence by capitalising on its experFse in quality,
innovaFon, and market research. In 1990, NRFC was at a crossroads. The refrigerated pasta
and sauce segments were bringing in significant profits, but the company had to decide
whether to enter the highly compeFFve market of refrigerated pizzas. This decision was
considered not only in response to market dynamics but also as a chance to take advantage of
Nestlé's wide-reaching global presence and operaFonal experFse. Stephen Cunliffe led NRFC
in their efforts to thoroughly analyse the feasibility and potenFal of introducing a refrigerated
pizza product. They carefully considered the delicate balance between innovaFon, customer
expectaFons, and market viability. This introducFon provides a foundaFon for a thorough
examinaFon of NRFC's strategic consideraFons, market research methods, and the wider
implicaFons of its decision-making process in the ever-changing refrigerated food market.

Product Development
The success of Nestlé's Contadina brand in the refrigerated food market was a result of
strategic innovation and market adaptation. Following the successful launch of Contadina
Pasta and Sauces, Nestlé saw a chance to expand its presence in the market by introducing a
fresh option: refrigerated pizza. This decision was made after careful consideration, based on
a thorough examination of market trends, consumer preferences, and the performance of
their current products. Realising the opportunity for expansion, Nestlé undertook a thorough
product development process to guarantee that the new pizza offering would meet the same
exceptional standards as their pasta and sauces.

The creation of Contadina's refrigerated pizza went through a meticulous seven-stage process
that showcased the company's commitment to excellence, genuine flavours, and meeting
customer expectations. Every step of the process, from generating ideas to tracking initial
results, was carefully crafted to enhance the product concept, evaluate its potential in the
market, and fine-tune the recipe to meet the high expectations of consumers seeking an
authentic and luxurious Italian dining experience in the comfort of their own homes. This
intensive development process highlighted Nestlé's dedication to utilising its worldwide
knowledge and culinary skills to meet the changing preferences and convenience
requirements of American consumers.

In addition, Nestlé's strategic choice to enter the refrigerated pizza market demonstrated
their desire to broaden their range of products and establish a strong position in the
refrigerated foods industry. Through meticulous analysis of market research and valuable
consumer input, Nestlé strived to launch a product that would not only enhance its current
offerings but also establish a fresh benchmark for excellence and ease in the industry. The
careful consideration of introducing the refrigerated pizza product highlighted the significance
of making decisions based on data and having a forward-thinking strategy to succeed in a
competitive market and fulfil the ever-changing demands of customers.

Essentially, Nestlé strategically introduced the refrigerated pizza product to further establish
its presence in the refrigerated foods market. By utilising cutting-edge product development
techniques, conducting thorough market research, and having a keen insight into consumer
preferences, Nestlé aimed to introduce a new product that would cater to consumers' need
for convenience, top-notch quality, and the genuine taste of Italy. The launch of this product
showcases the intricate and thoughtful approach required to introduce a new offering in a
fiercely competitive market. It emphasises the importance of conducting thorough market
research and strategic planning to achieve success.

3 C’s of Marke*ng Analysis

Customers
Many people in the United States have a strong affinity for pizza and consider it a popular
choice for regular meals. Recent data suggests that a significant number of Americans have
enjoyed pizza, showing a clear preference for delivery and takeaway options. This trend
highlights the importance of convenience in consumer decision-making, making it a key factor
for NRFC to consider when planning the release of their refrigerated pizza product.

The popularity of "Pizza With Toppings" compared to "Pizza Only" indicates a desire for
diverse and high-quality pizza options. This suggests that consumers are seeking more than
just a basic product; they want an elevated dining experience. However, this preference also
presents a pricing challenge for NRFC, as the addition of toppings raises production costs,
leading to a higher retail price. This can be difficult in a market where customers are price-
conscious.

The findings of the BASES II study highlight the strong appeal of Contadina among consumers,
showcasing its brand awareness and taste preference. Although Contadina's pizza may be
priced higher than its competitors, the fact that consumers prefer its taste indicates that they
appreciate and prioritise quality. This situation poses a challenge for NRFC in finding the right
balance between product quality and price to meet consumer expectations and ensure the
product's success in the market.

Compe+tors
Within the global food and beverage industry, Nestlé encounters fierce competition from
prominent conglomerates such as Kraft and Unilever. In the refrigerated pizza market, Kraft
General Foods Inc. became a strong competitor when it introduced DiGiorno, directly
challenging Nestlé's recently launched Contadina pizza product. Kraft, a prominent player in
the packaged grocery products industry in the US, employed a pull strategy to attract
customers. They did this by offering enticing high-value coupons and launching extensive
advertising campaigns. This strategic approach not only boosted consumer awareness of
Kraft's products but also posed a threat to NRFC's market share.
Kraft's competitive advantage was enhanced by product innovations, including the
introduction of a pizza with a shelf life of 90 days, which is much longer than Contadina's 40-
day shelf life. This variation in shelf life may impact consumer preferences and buying choices,
potentially favouring Kraft. In addition, Kraft's bold marketing strategies, such as offering
coupons, led to a reduced consumer price, making their products more appealing in terms of
affordability.

The intense competition brought about by Kraft's expansion into the refrigerated pizza market
emphasises the difficulties NRFC encounters in preserving brand appeal and market
dominance. In order to stay ahead of the competition, NRFC needs to develop strategies that
not only match, but exceed Kraft's marketing innovations, product quality, and consumer
value propositions. This involves reassessing their product offerings, marketing strategies, and
possibly exploring innovations that could prolong product shelf life or improve product value
to meet or surpass consumer expectations and preferences in the midst of strong
competition.

Company
Nestlé Refrigerated Food Company is looking to build on its achievements in the refrigerated
pasta and sauce market with the Contadina brand. Their next move is to introduce
refrigerated pizzas to their product line. This strategic consideration stems from NRFC's well-
established brand image, known for its commitment to quality and innovation, which has
earned a strong consumer trust and a significant market share. The proposed introduction of
"heat-and-eat pizza" and "pizza kit" demonstrates NRFC's ability to cater to consumer
demands for convenient and customisable meal options.

The impressive performance of Contadina's pasta and sauces has showcased NRFC's aptitude
for entering and thriving in the fiercely competitive refrigerated food market. This foundation
highlights the company's ability to successfully navigate the challenges of introducing
refrigerated pizza products. With a focus on building on our established reputation and
utilising our past achievements in entering new markets, NRFC is committed to reaching a
wide range of consumers. Our goal is to combine the convenience of ready-to-eat meals with
the exceptional quality and authenticity that the Contadina brand is known for.

SWOT Analysis
Strengths:
Nestlé's market research methods for the Contadina brand are a crucial aspect of its success.
Our company uFlises a thorough 7-step research process that covers everything from
generaFng ideas to tracking introducFons. This focused approach guarantees a comprehensive
grasp of consumer needs and market trends, which is crucial for product development and
posiFoning. Nestlé's research and development efforts are focused on delivering top-notch
products that meet and exceed consumer expectaFons. They are constantly working on
making iteraFve improvements to ensure their goods are of the highest quality. The strong
brand recogniFon of Contadina, developed through extensive research, showcases Nestlé's
experFse in market research and their ability to create products that deeply connect with
consumers.

Weaknesses:
Although Nestlé's market research methods have their strengths, there are also areas where
they may not be as effecFve. CompeFFon from KraD DiGiorno exposes possible gaps in
Nestlé's understanding of the market. The 90-day shelf life of KraD's product indicates their
strong understanding of distribuFon and storage requirements in the market, which may have
been overlooked in Nestlé's research. Moreover, it seems that KraD has a keen grasp of the
market's price sensiFviFes, as evidenced by their clever use of high-value coupons and
aggressive markeFng tacFcs. This level of understanding may have been overlooked by
Nestlé's research.
Opportuni+es:
The market research methods employed by Nestlé have revealed noteworthy opportuniFes.
Understanding the latest developments in the frozen pizza industry offers valuable guidance
for expanding our product offerings. With the experFse in research, Nestlé can gain valuable
insights into evolving consumer behaviours, paving the way for groundbreaking product
enhancements and untapped market opportuniFes. Furthermore, uFlising the market
research to predict and respond to changes in consumer preferences may lead to gaining a
compeFFve edge in emerging markets.

Threats:
On the other hand, the threats faced by Nestlé's Contadina brand can be attributed, to some
extent, to gaps or limitations in market research. The rise of fresh rivals and DiGiorno's more
affordable pricing strategy might suggest a shift in market dynamics that Nestlé's research
may not have fully accounted for. Keeping up with ever-changing consumer preferences and
the dynamic competitive landscape demands continuous and proactive market research to
promptly recognise and address these shifts.

Overall, Nestlé's market research methods have laid a solid groundwork for the Contadina
brand. However, it is crucial for them to constantly adapt and improve in order to tackle the
weaknesses and threats that have been identified. Maximising the opportunities uncovered
through their research will be crucial for maintaining and improving Nestlé's competitive
advantage in the refrigerated foods industry.

Product Launch Decision

The evaluation of launching a new pizza product by the NRFC under the Contadina brand
should consider its potential for revenue and brand growth, along with the associated risks.
Understanding the dynamics of the retail pizza business is crucial, and NRFC has set a realistic
goal of achieving a 0.3% market share to reach breakeven. The ease of reaching breakeven
suggests a safe and low-risk entry into the market, giving NRFC some protection as it explores
this new category.

If the product launch is successful, Nestlé will experience significant benefits that go beyond
just financial gains. It provides opportunities for brand expansion, enabling Nestlé to explore
and introduce a wider variety of pizza-related products, including takeaway and fresh options.
This has the potential to position the Contadina brand as a versatile contender in the pizza
industry, appealing to a broader spectrum of consumer preferences and occasions.

Nevertheless, the pricing strategy for Contadina pizza could pose a significant challenge. The
product is priced higher than its competitors, potentially discouraging budget-conscious
consumers and reducing its competitive edge in a market that prioritises affordability.
Furthermore, there is a potential for harm to the brand's reputation if the new pizza product
does not live up to consumer expectations in terms of flavour. This situation could have a
ripple effect, potentially damaging the reputation of NRFC's well-known pasta products. The
Contadina brand's reputation is on the line, and NRFC needs to ensure that the new pizza
product meets the brand's high standards to maintain and strengthen its position in the
market.

Overall, it is important to carefully consider the decision to launch the Contadina pizza
product. Strategic considerations about pricing, brand management, and market positioning
are involved. Although there are opportunities for growth and expansion, it is crucial to
carefully handle the risks to protect the brand's reputation and secure lasting success.

Assessing Research Methods

Nestlé's research methodology in assessing the potential of introducing Contadina pizza has
been thorough and meticulous, employing a combination of qualitative and quantitative
research methods. The qualitative research was conducted through in-depth interviews and
focus groups, which yielded valuable insights into consumer behaviour and preferences. The
execution of quantitative research was skillfully carried out through surveys and data analysis.
The BASES II Study provided significant empirical data.

However, upon evaluating Nestlé's research methods, it becomes apparent that there are
areas that could be enhanced. A notable limitation of the BASES II study is that it only includes
women who are over 18 years old. It's important to consider other significant consumer
segments, like children, who have the power to influence purchasing decisions within
households. Expanding the participant pool to include a wider range of individuals would
result in a more holistic grasp of the general public's perception of refrigerated pizza.

The preliminary concept test, carried out in shopping malls with 200 participants, successfully
gathered the viewpoints of primary grocery shoppers and individuals who play a role in pizza
purchasing choices. The high level of interest, with 58% expressing enthusiasm for the pizza
kit and 52% for the pre-assembled pizza, suggests that consumers have a positive attitude
towards these new product ideas. Nevertheless, the scope of this research was confined to
just four major cities, potentially overlooking the wide-ranging consumer base throughout the
United States.

In addition, the absence of test markets in the research stages for the pizza product is a
notable departure from Nestlé's usual 7-step research process. Test markets play a vital role
in evaluating how consumers react to and perceive the added value of refrigerated pizzas
compared to other easily accessible options. Without taking this step, one may fail to fully
grasp the consumer's perception of value and the potential for refrigerated pizza to position
itself as a delicious and fresh choice in the eyes of customers.

Nestlé conducted descriptive research to evaluate the overall market for their potential pizza
launch. I conducted an analysis of quantitative data that focused on consumer preferences,
including factors like preparation time, convenience, and purchase locations. Although more
than half of the participants in the preliminary test had a positive response to the product
ideas, it is important to note that the conclusions of the BASES study were based solely on
feedback from female participants. Therefore, it is possible that these findings may not fully
represent the entire market segment.

Ultimately, Nestlé's research methods have their strengths, but there is room for
improvement in order to be more inclusive of a broader range of people. In addition, bringing
back test markets could offer valuable insights into how consumers behave and how well the
Contadina pizza is received, leading to a more accurate prediction of its market potential. By
addressing these gaps, we can greatly improve the effectiveness of Nestlé's market research
and make more informed decisions when launching new products.

Recommenda*ons
• Diversify Par*cipant Selec*on in Research Studies:
It is crucial to broaden the range of parFcipants to ensure a more diverse demographic. For
example, by including a wider range of ages, such as children and teenagers, we can gain
valuable insights into the consumpFon habits of families. This is especially important for food
products like pizza. Similarly, incorporaFng a diverse range of socioeconomic backgrounds can
reveal varying price sensiFviFes and value percepFons across different income brackets. This
diverse range of parFcipants would enable Nestlé to develop a product that resonates with a
wide range of people and to effecFvely customise markeFng strategies for various segments.

• Conduct Regional Market Analysis:

The United States offers a wide range of opportuniFes with diverse tastes and preferences
across different regions. Through thorough regional market analysis, Nestlé has the
opportunity to idenFfy unique consumer preferences or untapped market opportuniFes that
the Contadina pizza can effecFvely cater to. For instance, different areas may have a
preference for organic ingredients, while some may have specific dietary habits that influence
their choice of toppings. Grasping these subtleFes would allow Nestlé to tailor their pizza
offerings and potenFally launch markeFng campaigns that are specific to each region. This
would enhance the product's desirability and improve its likelihood of success in various parts
of the country.

• Implement Longitudinal Studies:

Consumer preferences are constantly changing, and longitudinal studies can help monitor
their evoluFon over Fme. This ongoing research would offer valuable insights to Nestlé
regarding long-term trends, including the growing emphasis on health awareness and the
surging popularity of plant-based products. With this knowledge in hand, Nestlé could adjust
their product development to cater to these evolving demands, possibly offering healthier
choices for pizza or exploring plant-based toppings. Longitudinal data would also be extremely
useful in assessing the long-term effects of the pizza launch on the Contadina brand and
making any necessary adjustments to the strategy.

• Leverage A/B Tes*ng in Test Markets:

Experimenting with different variables among similar audiences in a controlled framework,
A/B testing helps determine which variation performs better. When it comes to the Contadina
pizza, Nestlé has the opportunity to explore different elements like pricing, toppings, and
packaging designs in various test markets. This approach would provide tangible data on
consumer preferences and assist Nestlé in making well-informed decisions regarding the final
product offering. Additionally, by incorporating real consumer feedback, the chances of a
major launch failure would be greatly reduced, as the product would already be optimised for
the market.
By prioritising these research methods, Nestlé can develop a more comprehensive and precise
understanding of the market, minimise the risks involved in launching products, and increase
the chances of success for the Contadina refrigerated pizza.

Conclusion
The examination of Nestlé's strategic approach to the potential launch of Contadina
refrigerated pizzas has provided a comprehensive perspective on the factors and approaches
involved in making such a decision. Nestlé has a proven history of success with the Contadina
brand, as they have made a notable impact in the market for refrigerated pasta and sauce.
This achievement sets a strong basis for exploring opportunities in the refrigerated pizza
market.

However, the current research methodologies used have potential for enhancement. The
suggestions offered aim to enhance Nestlé's grasp of the market and ensure a more strategic
approach to introducing products. Through various research methods and analysis
techniques, Nestlé can improve the accuracy of its market insights and make more accurate
predictions about the success of its new product. These advanced research strategies will
enable Nestlé to better adapt to consumer needs, anticipate market shifts, and proactively
respond to competitive challenges.

In order for the Contadina refrigerated pizza product to be successful, Nestlé must effectively
incorporate these improved research methods into its decision-making process. By taking this
approach, Nestlé can minimise the potential challenges that come with introducing new
products and maximise the chances for expansion, broadening their brand portfolio, and
establishing themselves as a market leader. Applying rigorous, data-driven market research
will be crucial in helping Nestlé navigate the competitive refrigerated foods market. This will
enable the company to surpass consumer expectations and achieve its business goals.
Sec*on of Chapter 2 Summary
Exploring causal research, a key focus of this chapter, is crucial for understanding cause-and-
effect relationships in market research. Unlike other types of research that focus on
uncovering insights or describing market phenomena, causal research aims to understand the
direct impact that one variable has on another. Through controlled experiments, researchers
manipulate one element to observe changes in another, aiming to establish a definitive
relationship between the two.

Experiments are essential for causal research and can be carried out in different settings.
Working in a laboratory provides a great level of control, ensuring that external factors don't
interfere with the accuracy of the results. Nevertheless, laboratory experiments may
occasionally lack authenticity, which can restrict their applicability to real-life situations. Field
experiments, conducted in real-world settings such as malls or schools, can provide more
authentic insights but can also be more difficult to control, potentially leading to bias and
impacting the reliability of the results.

Ensuring the integrity of the experiment is of utmost importance in causal research, and this
involves controlling extraneous variables. It is crucial for researchers to carefully consider
their experimental design in order to identify and mitigate any potential factors that could
influence the results. Randomization, control groups, and blinding are a few techniques that
researchers often employ to enhance the validity of their experiments.

The importance of causal research to Nestlé's case study cannot be overstated. For NRFC, it is
essential to grasp the causal relationship between product features (such as pizza toppings or
pricing strategies) and consumer purchasing behaviour. For instance, by conducting controlled
experiments, Nestlé could isolate the impact of introducing a new topping to the pizza on
sales figures. This would allow Nestlé to make informed decisions about product attributes
that are likely to boost market share and customer satisfaction. Likewise, having a grasp on
the effects of pricing adjustments on sales can assist Nestlé in establishing a price for the
Contadina refrigerated pizza that is both competitive and profitable.

Utilising causal research in the Nestlé case study could help refine the product launch
strategy. Through a thorough analysis of the key factors that drive consumer preference and
purchase intent, Nestlé can fine-tune the product's attributes, marketing messages, and
overall go-to-market strategy. This approach reflects Nestlé's dedication to innovation and
excellence, guaranteeing that every new product meets the company's rigorous criteria and
connects with consumers on a deep level.

Chapter 2 highlights the significance of causal research in comprehending the direct

connections between variables. Applying causal research methods can shed light on the
pathways to product success and help companies like Nestlé make informed, strategic
decisions that align with consumer desires and market demands.