2. Topics Covered:
Consumer marketing, Market research, New product introduction, Quantitative analysis
Actors:
GARETH DE ROSA – Founder at TruEarth
ISABEL ECKSTEIN – Brand manager
ROSIE CARLTON – Director of business development
Company Background:
Founded in 1993 by De Rosa
Offer healthy, tasty, high in quality gourmet pasta, sauces & meals
Successfully launched whole grain pasta( Cucina Fresca) in 2006
Now considering to launch whole grain pizza product line
Objective:
Decide whether to launch or not the pizza product and at what volumes
3. STRENGTH
- High quality durum wheat & highly selective about
ingredients of sauce
- Brand equity with customer & stores
- Existing (highly invested) manufacturing equipment &
distribution infrastructure
- Systematic 4-step process for R&D of products
- Existing infrastructure of magazine ads, promotional
programs, coupons & in store demonstrations
- Tastier product line with customized options
- Product for the whole family(8.6/10 in Mall intercept)
- 28% of home trial users believe there is no need for
improvement
- 33% of people favorable to concept in mall intercept
considered TruEarth name a considerable advantage
WEAKNESS
- Narrow product line with limited no. of toppings
- Higher price($12.38 vs. $10.09 for refrigerated pizza &
$11.72 for takeout)
- Separate purchase of toppings and crust
- Only 10% favorable to product in overall taste, texture&
quality
- Limited time to product expiration
- Pizza kit only feeds 2-3(No individual or family pack options)
OPPORTUNITIES
- Gain first mover advantage
- Expansion in product line
- Leverage TruEarth brand name to enter the pizza market
- Expansion in serving size option(individual & family pack)
- Come up with combos of Cucina Fresca & pizza kit
THREATS
- Demographic variation in pizza demand due to different
mindsets regarding health
- Consumers ma not purchase additional toppings
- Rigazzi is preparing to introduce a pizza product line
- Big players of frozen pizza market: Nestle & Kraft
- Failure of pizza product line can make it harder to launch new
product in future
-
SWOT
4. Trial Purchase Intent
CUSTOMER(X%) NON-CUSTOMER((100-X)%) Exhibit
Definitely would buy 26% 15% 7
% of “Definites” who actually buy 80% 80% 5
“Definite” Purchase 20.8% 12% Methodology
Probably would buy 53% 39% 7
% of “Probables” who actually buy 30% 30% 5
“Probable” Purchase 15.9% 11.7% Methodology
Trial Rate (Definite + Probable) 36.7% 23.7% Methodology
Marketing Plan Adjustment
Projected Consumer Awareness 50% 12% Table B
ACV distribution 40% 40% Table B
Marketing Adjusted Trial Rate 7.34% 1.14% Methodology
Target Households(MM) 0.588X 0.588(100-X) Table B (target HH =58.5 MM)
Trial Households(MM) 0.0432X 0.0067(100-X) Methodology
Repeat Purchase Inputs
Repeat Purchase Occasions 2.0 2.0 Table B
Repeat Transaction Amounts 1.25 1.25 Table B
Repeat Rate Y% Y% (Table B, 49% excellent product)
Repeat Volume(MM) 0.0011XY 0.00017(100-X)Y Methodology
Trial Volume(MM) 0.0432X 0.0067(100-X)
TOTAL VOLUME(MM) (0.0011XY+ 0.0432X) + (0.00017(100-X)Y+ 0.0067(100-X)) Methodology
Average spend per purchase(Retail) $12.38 Table B
Retail Sales Volume(MM) $12.38*TOTAL VOLUME
Retailers Gross Margin 35% Page 7, paragraph 2
TruEarth Sales Volume(MM) $ 0.65*12.38*TOTAL VOLUME
Reference: Methodology, Page 9, Footer section
5. 5% 11% 15%
21%(Mediocre) $10.52 million $13.22 million $15.02 million
37%(Average) $13.31 million $16.73 million $19.01 million
49%(Excellent) $15.39 million $19.36 million $22.00 million
Customer Penetration(X)RepeatRate(Y)
TruEarth Sales Volume in different situation
Recommendations:
They should launch the product
Assuming 11% penetration rate they can safely play with price in between $11.38 to $12.38 which gives TruEarth
sales volume $12.16 million
Learning Points:
Understand the assumptions & techniques for estimating markets and projecting sales
Analyze and interpret data to decide whether to bring a new product to market
Recognize the importance of perceived value to consumers for a new product as compared with existing products
Understand the limitations of making decisions based on research and available data