TruEarth Healthy Foods To launch or not to launch pizza?Marketing And CRM

Young (founded in 1993) but organized companyProducer of healthy gourmet pastas and sauces from superior ingredientsProduct line: standard pastas whole grain pastas tomato-based saucesrefrigerated fresh pastaspastas with blended ingredients

Home Meal Replacement increase in dual-income householdstime povertydesire for variety and freshnessSemi-prepared productsConsumers still involved in preparing dinner, but it is easierGrowth of refrigerated fresh pastaAwareness of the importance of whole grains in diet

Assess the current situation on the marketAnalyze the position of TruEarth Assess whether TruEarth should launch the pizza concept and what the volume would it be?

Competitive environmentSegmentsdelivered/takeout(47%)restaurant pizza (23%)frozen pizza (19%)Refrigerated pizza (9%)homemade pizza (2%)CompetitorsGiants: Nestle and KraftMedium-sized: Papa Johns and Pizza HutTruEarth-like: the only such competitor is Rigazzi BrandsThreat!Rigazzi is about to launch a similar whole grain pizza

Cucina Fresca ExperienceIdeasQuick and tasty home meal replacement broad range of choicesPreparationfocus groupsmarket researchadvertising and promotion ($10m)large investment in production facilitiesPromising trial resultsPerformance $23 million sales in 2007slowdown in 2008

RisksRigazza is not far from launching its whole wheat pizza

Refrigerated pizza brings up with an association with frozen pizza

The offered price can be too high

Advantages of our pizza over other refrigerated pizzas can be overestimated

Whole Grain Pizza Purchase Volume Estimate, Year 1

Trial Purchase IntentRepeat Purchase InputsDefinitely Would Buy18%Trial HouseHolds3.21% of Definites who actually buy80%Repeat Purchase Ocassions2Definite Purchases14.40%Repeat Transaction Amounts1.25

Probably Would Buy43%Repeat Rate, by Product Scenario% of Probables who actually buy30%Mediocre Product21%Pobable Purchases12.90%Mediocre Product37%Excellent Product49%Trial Rate 27.30%

Marketing Plan AdjustmentRepeat Volume, by Product ScenarioProjected Consumer Awareness50%Mediocre Product1.69ACV40%Average Product2.975.46%Excellent Product3.93

Target House Holds58.8

Trial HouseHolds3.21

Mediocre ProductAverage ProductExcellent ProductPizzaTrial Volume3.213.213.21Repeat Purchase Volume1.692.973.93Total Estimated Volume (MM units)4.96.187.14

Total Forecasted Units of Whole Grain Pizza

Define those who are favorable to product as participants of the trial period.

Hence, Only people who are favorable to product influence the repeat rate of it.

With given prices 28% of population which is favorable to product suggested that pizza needs no improvement (Exhibit 10).

Hence even in the worst scenario at least 28% of trial households would participate in repeat period given price unchanged.

The price of the kit (pizza + toppings) remains unchanged 12.38$

Repeat volume = [Trial Hh] * [Repeat Purchase Occasions] *[Repeat Transaction Amounts] * [Repeat Rate] = 3.21MM * 2.0 * 1.25 * 0.28= 2.24MM

Whole Volume during financial year = Repeat volume + Trial Volume = 2.24+ 3.21 = 5.46MM

Retail Sale Volume = [Whole Volume] * [price per kit] = 5.46 MM * $12.38 = $67.56 MM

Gross revenue = Retail Sale Volume * [1- Retailers Part] = $67.56 MM * 0.65 = $43.9 M

Gross profit = Gross revenue Investments =$43.9 M- 22 M (Assumption) = $21.9M

Case of the Worst Scenario

ConclusionsEven in the worst scenario the firm would meet its requirements with $21.91 M of gross profit.The firm definitely should enter this new market.