NESTLE REFRIGERATED PRODUCTS-CASE ANALYSIS

Ans 1: Estimated Demand for Two Pizza Options

Target Household 95.5 Million  

       
Concept Purchase Intent      
       
  Pizza & Topping Pizza Only  
       
definitely 17 15  
probably 59 43  
top two box 76 58  
       
       
Adjusted Trial 0.313 0.249  
  31.30% 24.90%  
       
Marketing Plan
Adjustment      
Awarenees 37    
ACV 58    
       
  0.0671698 0.0534354  
  6.70% 5.30%  
No of Untis in Trial 1.2 1.1  
       
Trial Housel Hold
Demand in Million
7.7 5.6  
Repeat Rate 22% 22%  
Repast Unit 1 1  
Repeat Occasion 2 2  
       
Repeat Volume In
Millions
3.4 2.4 Million
Ans 2 : By the exhibit 13/14/15 following things are evident

 Majority of the pizza eaters were take away.

 75 % of the pizza sales were takeaway/delivered , 16 % for Frozen, 5 % from grocery
story and 4 % homemade.
 Contadina Pizza Kit was a good option for take way pizza eaters.
 They find it good for kids, family meal and in-house eating.
 The taste, toppings and the flavors were well accepted by the users
 Contadina is a preferred brand for take away pizza eaters
 Consumer is happy with taste , quality and freshness of Contadina kit
 Consumer were preferring it over other similar brand / product. They had brand
recognition in pizza segment as well like the pasta.

Ans 3 . With respect to the data given in Exhibit 6 for pasta and exhibit 19.20.21 for pizza , we
noticed that

 Concept Uniqueness was a key attribute in pasta which made it more popular among
consumer. There were no fresh pasta / refrigerated pasta brands. All dry pasta was sold.
This was a key differentiator which propelled the Contadina brand name in fresh
refrigerated food segment
 During launch of Pasta , due emphasis was given on value proposition and positioning
the USP of the product to consumer along with precise care in packaging and quantity
which was not the case during launc of Pizza
 Both users and non-users of Contadina pasta preferred Contadina Pizza with toppings
rather than Pizza only concept .
 Major emphasis was given on freshness, taste, ease of preparation and quality for both
Products.
 Both products were liked and likely to be used on a recurring basis
 Major Contrast in pricing data was seen during the analysis. Pasta was correctly
priced only 3 % of favorable & 23 % non-favorable thought pasta was expensive .
For Pizza , large group of consumer felt it was expensive – 21 % favorable & 44 % non
favorable .

S. PASTA PIZZA
No
1 Natural Custom Toppings
2 Fresh Made Fresh
3 Easy to Prepare Easy to Prepare
4 Quick / Fast Quick / Fast
 5 Very Unique and New Concept General Taste / Flavor
6 Expensive for some users
7 Is Made by a manufacturer you trust – Brand
Recognition
8 Already Contadina Pasta users were more
likely buy pizza

Ans 4 : From Exhibit 23 & 24 following things are evident arising from after use :
People liked following things:

 Quick / Easy to Prepare but not as good as fresh pizza

 Crust is crisp not soggy
 Seasoning and spiciness were perfect
 Although overall the product was accepted and appreciated, prizing was a major
concern . 33 % felt price is key reason for loss of purchase intent for this product
 Contadina $ 8 price was perceived as expensive, high price by the Consumers . It was
more expensive than the takeaway pizza. Rationalization of price was a major outcome
from the exhibit for success of this product
 Large group of consumer felt it was expensive – 21 % favorable & 44 % non favorable .
 Contadina Pizza were well positioned to replace the frozen pizza in the market but due
to the higher price it will be difficult Contadina to capture that market segment. The
acceptable price range to consumer was $4-$5 .

Key learning is that Contadina should re look at their pricing in order to capture larger
market share for their Pizza product.

Ans 5: Pasta & Pizza Opportunities

S. PASTA
No
1 Pioneer in refrigerated fresh Pasta
concept . They had First Mover
Advantage It was totally a new concept
for the consumers
2 Increased growth of ethnic Italian food
in US made Nestle to enter in to this
market
PIZZA
Pizzas were available in different forms. It
was not a new concept. Frozen Pizzas, Take
way , home delivery pizza were there in
market
USA had great pizza market but different
pizzas were already present .
 3 It was a problem solving product for
customer – Fresh Pasta with life of 38
days and at a cheaper price than fresh
pasta
4 Increased Demand in Pasta -becoming Quick / Fast
like a staple. High Purchase Intent was
their
5 Along with Pasta , Pasta sauce General Taste / Flavor
piggybacked on the pasta sales for
additional revenue for Contadina .
6 Product were correctly priced with right Expensive for some users
packaging
7 High quality , great taste , right price Is Made by a manufacturer you trust – Brand
and easy availability led to its success in Recognition
US market
8 Contadina Brand was established with Already Contadina Pasta users were more
Pasta likely buy pizza

In their First Year Nestle was eyeing 12-14 Million Units for Pasta whereas 8 Million for Pizza with
Topping / 6 Million for Pizza Only .

Similarity between Pasta and Pizza Business

 Both Products were under umbrella of Nestle Brand.

 Strong Research & Development of Nestle along with product innovation made both
products ideal for a niche and premium segment.
 Both Products emerged nestle as a market leader in US market in refrigerated products
against their major competition Kraft . For both products Nestle had an early mover
advantage to gain the market share and build brand royalty among the customers.
 Nestles large presence, efficient and extensive distribution network along with sales
team pushed both the products in the market aggressively
Ans 6 : Pasta was successful for following reason :

 Nestles Strong R&D produced an innovative product that solved a problem for
consumers – Getting Fresh pasta easily at affordable pricing .
 Uniqueness and Freshness of the concept made it favorable and readily acceptable to
the consumer
 Nestle had an early mover advantage as no other company was offering refrigerated
pasta product with a shelf life of 38 -40 days .
 Nestle was able to establish value of this product among the user and create niche for
itself in the well acceptable food item in US – Pasta
 Increasing popularity of ethnic Italian food in US also helped in the success
  Timely acquisition of Lambert plant , innovative packing technology and efficient and
extensive distribution network propelled the success of Pasta in US market

Ans 7 : Nestle Product Development

As mentioned the case Nestle had a strong research and development team for its new
product development known as Market Research Development MRD .
MRD has adopted a seven step approach for development of new products.
7 Steps are as follows:
1. “Idea Generation
2. Concept Screening
3. Identification of Volume
4. Product Development
5. Test Market
6. Commercial Evaluation
7. Introductory tracking “
(Mentioned in the Case )
Nestle Used BASES - Pre Bases/ Bases I for development of Pizza and volume quantification
whereas BASES II extension was used for development of Pizza product line
Results of BASES studies coupled with other factors like weakness on key use , Price / Value
measures helped Nestle to take future decisions on the product development / launch /
advertisement / positioning etc.

Ans 8 : Launch of Pizza

Yes I would launch the Pizza .
USA had a large pizza . 16 % of Frozen Pizza market was fragmented without any clear market
leader. There is a big gap in the market
Total estimated Market : 18.4 Billion USD
 US PIZZA MARKET

Delivered / Takeout Pizza Frozen

Grocery Homemade

We are estimating a yearly sale of

7.7 Million Pizza with Topping:
Average cost 8 USD
Expected Revenue: 61.4 Million USD > 45 Million USD (Cunliffe Expectation)
If they choose to go with Pizza with topping Kit, they will have financial viable and profitable
business with Pizza

Reasons for Launch:

 Huge Market available in US
 Strong and Established Umbrella Brand – Nestle
 Product line extension of the established and successful brand
 Contadina Pasta already a valuable brand perceived by customer for high quality , fresh
and value for money
 No Established Player for this product, Early Mover advantage
 Established Distribution and retail network.
 Experience Sales Teem, Brokers for refrigerated products
 They can easily capture 0.3 % of Pizza Market.
 Financial risk can be mitigated by Pasta & sauce business
 Price /Value is concern as per surveys , the price can be readjusted by cost control
measures and other tools
 Kraft already planning to introduce the product. To gain the market share and early
mover advantage, it should be launched