Name Harish Dasari

Question 1

Whole grain pizza Fresh pasta and sauce

Conducted BASES II study for in-depth Conducted BASES I study to assess

concept survey and in-home product usage consumer awareness and intent to purchase.
test.
Focus group discussions were conducted

Taste test was conducted by providing Did not incorporate actual taste test.
sample kit and got feedback after 7-10 days.

Repeat purchase and estimated sales was Repeat purchase were estimated using
identified using the customer surveys and consumer reaction to fresh whole grain pasta
taste test interviews. concept and prior experience with fresh
pasta and other gourmet and healthy foods.

Created three scenarios mediocre average

and excellent product and estimated repeat
rate based on its experience with other food
products.

300 mall intercept interviews to compare Conducted 300 concept tests in various cities
TruEarth concept with takeout and other to understand the purchase intent and
refrigerated pizzas. concept likes and dislikes.

Internal - General Use

 BASES conducted interviews in seven cities
over the age of 18.

Also interviewed respondents who No in-depth interviews were conducted.

purchased the Cucina Fresca pasta and sauce Consumer reaction was gathered for the
in past year. concept appeal and product satisfaction.

Both the methods use the interviews to understand the consumer purchase intent and likes &
dislikes, but BASES II test was more robust as it incorporated in-depth surveys with taste
test. Taste test was not conducted for pasta and sauces. A taste test for a consumable item
could be very crucial as it can accurately predict the consumer reaction and can very well
decide the product acceptance in the market.

Question 2

Exhibit 7 insights.

1. A total of 60% of respondents showed interest in buying the Pizza. 18% said they
would definitely buy and 43% said they would probably buy the Pizza. Industry rule of
thumb is that 80% of respondent who say, “Definitely would buy” and 30% of
respondents who say “Probably would buy” the product would actually buy the
product. Going by that theory. We can say the total pizza concept purchase intent is
18*80%+43*30% = 26.95%. So, the trial rate is around 27%. This means 27% of the
target market would buy the product at least once.
2. A higher number(79%) of existing Truearth customers(who have bought one or more
of Truearth products) would buy the refrigerated pizza than non Truearth

Internal - General Use

 customers(39%) because of the brand loyalty, trust and expectations that Truearth built
among its customers.
3. Mean likeability and mean price/value - Existing Truearth customers like the pizza
product more this could be because of the trust and loyalty of the brand. But the price
per value of TruEarth customers are similar to that of non-customers which means the
price of Pizza was equal to or higher than the competitors.

Comparing with Exhibit 3 Purchase intent

Total Trial rate Mean Likeability Price/Value

Pizza(Exhibit 7) 60% 27% 3.7 3.0

Pasta(Exhibit 3) 76% 36.3% 4.1 3.2

1. The pasta purchase intent(76%) is more than that of Pizza(60%). This is because
TruEarth already has an existing pasta product, and the product is well tested and
successful.
2. Similarly, the trial rate of the pasta is greater than the Pizza. Which means more
consumers would buy the pasta at least once than pizza.
3. Mean likeability and mean price/value rating is also higher for pasta than the pizza.
The values are as above. So, people like TruEarth pasta more than the Pizza line.
4. Unlike fresh Pasta from whole grain and sauce which had to be compared with fresh
pasta industry, there is no available data for pasta with whole grain to compare. Pizza
had a lot of competition even from big player like Kraft and Nestle. This made market
research and purchase intent of Pizza to be compared with overall Pizza eaters.
5. Purchase intent of pizza for existing Truearth customers was higher than Cucina Fresca
but the non-customers of TruEarth were not very eager to buy the new line of Pizza
product from the company. This is because:

Internal - General Use

 a. Truearth customers were happy with existing line of products and a trust was
built with the company.
b. But when combined with non Truearth customers the overall purchase intent
reduced as there was a tough competition in pizza and non-customers were not
so much inclined towards Pizza from Truearth.

Question 3

3A:

Since the market penetration ranges from 5-15%. Worst case scenario would be with market
penetration at lowest(5%) and product quality is excellent as the cost of making an excellent
product is more compared to making a mediocre pizza. For an excellent product the product
repurchasing % is 49% which can be gathered from Exhibit 5.

The overall predicted sales revenue in the worst case is 13.6M.

Non-
Customers Source
Customers
Definitely would buy 15% 26% Exhibit 7
% of "Definites" who actually buy 80% 80% Exhibit 5
"Definite" Purchases 12% 21%

Probably would buy 39% 53% Exhibit 7

% of "Probables" who actually buy 30% 30% Exhibit 5
"Probable" Purchases 12% 16%

Trial Rate ("Definite" + "Probable") 24% 37%

Target households (MM) 58.8 58.8 Table B

Penetration, % of target households 95% 5% Table B
Awareness of pizza product 12% 50% Table B
ACV distribution 40% 40% Table B

Adjusted Trial Households 0.6 0.2

Total trial households (non-Customers +
0.9
Customers)

Internal - General Use

 % of households repurchasing 49% Exhibit 5
Repeat purchase occasions Table B
2

Total purchases (Trial + Repeat)

1.7

Retail selling price $12.38 Table B

Retail sales revenue $20.9M
Retailer gross margin 35% Case text
TruEarth sales revenue $13.6M

3B:Since the market penetration ranges from 5-15%. The best-case scenario is 15%
penetration . For an excellent product quality, the product repurchasing is at 21% which is for
the excellent product, and this can be gathered from Exhibit 5.

The overall predicted sales revenue in the best case is 19.4M.

Non-
Customers Source
Customers
Definitely would buy 15% 26% Exhibit 7
% of "Definites" who actually buy 80% 80% Exhibit 5
"Definite" Purchases 12% 21%

Probably would buy 39% 53% Exhibit 7

% of "Probables" who actually buy 30% 30% Exhibit 5
"Probable" Purchases 12% 16%

Trial Rate ("Definite" + "Probable") 24% 37%

Target households (MM) 58.8 58.8 Table B

Penetration, % of target households 85% 15% Table B
Awareness of pizza product 12% 50% Table B
ACV distribution 40% 40% Table B

Adjusted Trial Households 0.6 0.6

Total trial households (non-Customers +
1.2
Customers)

% of households repurchasing 49% Exhibit 5

Repeat purchase occasions Table B
2

Internal - General Use

 Total purchases (Trial + Repeat)
2.4

Retail selling price $12.38 Table B

Retail sales revenue $29.8M
Retailer gross margin 35% Case text
TruEarth sales revenue $19.4M

Question 4

The two pizza categories that TruEarth whole grain pizza compete against is Takeout Pizza
and Refrigerated Pizza. This can be inferred from Exhibit 6.

Advantages of TruEarth Pizza

1. TruEarth pizzas are made with high-quality ingredients compared to other refrigerator
pizzas.
2. TruEarth pizzas are made with healthy ingredients compared to both Takeout pizzas
and other refrigerated pizzas.
3. Also, the pizza was made for the whole family.
4. Easiest to prepare compared to other refrigerated pizza.

Disadvantages of TruEarth Pizza

1. TruEarth Pizza does not taste as fresh as takeout pizza but is better than other
refrigerated pizzas.
2. Also, TruEarth offered less varieties of pizzas compared to takeout.
3. TruEarth pizzas were less convenient to purchase as people have to go to supermarket
to buy the product and also involve some amount of preparation. Whereas takeout
pizzas would be delivered to home.

Internal - General Use

 Question 5

According to Exhibit 9, 59 people were unfavorable to the product. Out of which 68%(45% -
Too expensive and 23% - More expensive than the restaurant or takeout) of the people thought
it was expensive. But only 9% of the people who were in favor of the Pizza felt that price was
not expensive. Looking at the suggested improvements, 26% of favorable people and 35% of
unfavorable respondents suggested to lower the prices. This clearly indicates that the TruEarth
Pizza was overpriced.

Internal - General Use

 According to Exhibit 10, TruEarth whole grain pizza average retail price is being projected at
$12.38. Which according to Exhibit 9 is expensive. If $12.38 is set the retail price, 12.6% of
the total respondents who preferred refrigerated pizza were favorable in buying and the rest are
not. Also, the mean price of all the different customer segment is less than the retail
price($12.38) of pizza.

So it can be concluded that whole grain pizza was over priced and expensive. The actual price
should be in the range of $9-10(Mean price of unfavorable to product to Mean price of
favorable to product). Considering the cost of production and the margins to be met, TruEarth
should take a call.

Internal - General Use

 Question 6

SWOT analysis can be done to take strategic decision on whether TruEarth should launch the
Pizza. SWOT is a technique used to determine Strengths, Weaknesses, Opportunities and
Threats. This gives a better and clear picture for the management to make a decision.

Strengths:

• Company uses only high-quality ingredients with health conscience in mind as it is

using whole grain crust.
• There is no pizza product in market which uses whole grains. Company has first
mover advantage.
• The required investment for the production is low, as much of the investment in
machinery and distribution was already made for Cucina Fresca pastas. Which is an
existing successful product.
• Company needs to make an excess of $12 million dollars to meet the return
requirements. And according to BASES studies numbers are positive.
• TruEarth has built a good reputation and loyalty amongst the customers with Cucina
Fresca pasta. So, brand awareness is an added advantage.
• Refrigerated pizza is considered better than frozen one.
• The product is healthy and convenient.

Weaknesses:

• Toppings were sold separately and so it could be inconvenience and could become
more expensive.
• The pizza is expensive compared to competitor.
• Limited variety compared to competitors.

Opportunities:

• Market of pizza industry is large, larger than pasta.

Internal - General Use

 • Use the good will and reliability of the brand name which can easily be used for pizza
business.
• Pizza is considered unhealthy. Consumers are looking for healthy options. This could
provide an opportunity for TruEarth to introduce healthy option of pizza.
• Market is increasing for home meals replacement as more consumers do not have time
to cook home food but are looking for healthy food options.

Threats:

• Competition is more from frozen pizza producers like Nestle and Kraft
• A lot of takeout restaurants producing fresh pizza.
• Rigazzi an immediate competitor is also trying out pizza product and could introduce
very soon.

Quantitative

To meet the company’s return requirement wholesale volumes of pizza needed to exceed $12
million.

Based on the market penetration and product quality, it is estimated that TruEarth with worst
case scenario would have market penetration at lowest(5%) and with product quality excellent
as the cost of making an excellent product is more compared to making a mediocre pizza. For
an excellent product the product repurchasing % is 49% which can be gathered from Exhibit 5.

The overall predicted sales revenue in the worst case is 13.6M which is higher than estimated
returns of $12 million.

Conclusion

1. Annual pizza sales in United states in 2007 was $53 billion. Refrigerated Pizza market
in $5.8 billion which is bigger than pasta business. So pizza business is lucrative.
2. Low investment as existing pasta equipment can be re-tooled.

Internal - General Use

 3. Pizza with whole grain option is a new concept and can very well be accepted,
provided the taste is also at par with regular takeout pizza.
4. People are more health conscious but also love the have pizza atleast once a month.

With all the above factors put to gather, launching the pizza is advisable provided the pricing
is tweaked a little bit, introduce more variety options, and launch the product as soon as
possible, beating Rigazzi.

Internal - General Use