TruEarth Case StudySection A. (3 points possible)Why was Cucina Fresca pasta successful? How would you compare the pizza opportunity to that for pasta? How would you compare the actual product development process for each? TruEarth was successful with Cucina Fresca due to an aggressive campaign approach based on sound marketing research and significant investment in manufacturing equipment. To elaborate, the founder of TruEarth recognized a market niche for providing wholesome pastas and sauces to consumers.
Trends in the market were showing that consumers were becoming more health consciencience, which included a desire for fresh pasta.
This trend was good news in that the competition had not locked into provided a fresh whole grain option that still tasted good. However, the founder of TruEarth did not rush into providing the product without first researching the market to determine consumer awareness and willingness to buy. He brought in Nielsen BASES to conduct a thorough market research study and make recommendations based on marketing models.
TruEarth was a first mover in the wholesome pasta category and included funds toward advertising. They also came up with packaging that recommends the best sauce options. TruEarth invested in new equipment necessary to offer the stuffed pasta. The pizza opportunity is similar to the pasta opportunity in that a fresh whole grain option is currently not available.
TruEarth would once again be a first mover. The market studies are also favorable, with most consumers who provided feedback favorable to the product. However, TruEarth’s main competitor was also testing a fresh whole grain pizza product and that meant that TruEarth would have to bring their product into the market very quickly. This time around, their fight for shelf space could be more intense given that their competitor is already established.
The product development process for the fresh pizza line is similar to the pasta line in that it still involves market research and product testing. However, with respect to investment, most of the needed equipment was already purchased when TruEarth introduced its fresh pasta line. Thus, the move toward generating the proper profitability ratios would be easier and, if the product sold well, sooner. Also, pizza is already a well established product in the United States.
Many Americans would try a fresh whole grain pizza at least once to see if they could introduce it back into their diets. If the product produced by TruEarth was tasty and otherwise favorable, it could do rather well in the market. Section B. (3 points possible)Using the forecast model for pasta shown in Exhibit 5, what is your forecast of demand for pizza? (Hint: there is data in Table B and Exhibit 7 that you need for your forecast.
)According to the Data Table B pizza customer awareness is at 50%, it is 30% higher than awareness for the pasta product. Exhibit 7 states that 18% of consumers questioned would definitely purchase the product and 43% of consumers questioned probably purchase the product. According to market analysis, there is an 80% modifier on the “definitely would purchase” category and a 30% modifier on the “probably would purchase” category. Thus, I would develop the following forecast: Trial Purchase IntentRepeat Purchase InputsDefinitely would buy18%Trial Households (MM)3.
2% of “Definites” who actuall buy80%Repeat Purchase Occasions2.0Definite Purchases14%Probably would buy43%% of “Probables” who actually buy30%”Probable” Purchases13%Trial Rate (Definite + Probably)27%Marketing Plan AdjustmentGross Rating PointsProjected Consumer Awareness50%All Commodity Volume Distribution (ACV)40%Marketing Adjusted Trial Rate5%Targeted Households (MM)58.8Trial Households (MM)3.2 Section C.
(3 points possible)What can the TruEarth team learn from Exhibit 6 about how consumers view pizza? TruEarth can learn many things from Exhibit 6 about how consumers view pizza. Consumers are questioned about usage, taste and quality. These questions are divided into three segments: Takeout pizza based on past experience, Refrigerated pizza based on past experience and favorable evaluation of the TruEarth concept. According to the compiled data, in general, refrigerated pizza is less favorable then takeout pizza.
On all counts of usage, taste and quality consumers scored refrigerated pizza lower than takeout. However, also on all counts, TruEarth scored higher in all categories than refrigerated pizza and not much lower than takeout. Given this preliminary data, one could assume that consumers would view TruEarth pizza more favorably than the refrigerated pizza they have purchased in the past. The second part of Exhibit 6 gives information about whether or not consumers would purchase TruEarth pizza if it was an available option.
This section is divided into three segments: % of last 10 pizzas purchased, % of next 10 pizza’s purchased, and the % change if TruEarth was available. The first category, TruEarth whole grain pizza remains the same, as it was not previously an option. The second category, takeout/delivered pizza shows that 4% of consumers would purchase TruEarth pizza if it was an option in the future. Overall, refrigerated and frozen pizza scored most favorable for TruEarth with 6% and 5% changes respectively.
Thus, according to Exhibit 6 I would gather that there is an overall favorability toward TruEarth bringing in a healthy whole grain refrigerated pizza choice. Although the percentage of change are a little low, showing less than 10%, there is a favorable response. Using this data, in conjunction with other information from the study, I could make the decision to move forward with the product line. Section D.
(3 points possible)How do the pizza concept test results (Exhibits 7 and 8) compare with the findings for pasta (Exhibits 3 and 4)?Exhibit 3 shows that the consumer base for pasta rested at 27% “definitely would buy” and 49% “probably would buy with a mean likability of 4.1 and a mean price of 3.2. Pizza test results came back at 18% “definitely would buy” and 43% “probably would buy with mean likability at 3.
7 and mean price at 3.0. This shows a 9% decrease in the “definitely would buy” category and a 6% decrease in the “probably would buy category. From this study one could derive that there is less consumer interest in a healthy refrigerated pizza then there is in healthy whole grain pasta.
Exhibits 4 and 8 are depictions of consumer likes and dislikes for the product. Exhibit 4 pertains to the pasta product line. It shows that 35% of consumers questioned were favorable toward a fresh whole grain product while 22% were unfavorable. This compares to 25% in exhibit 8, which pertains to the pizza product, finding the whole grain concept favorable and 10% finding it unfavorable.
That is a decrease in favorability of 13% from pasta to pizza. However, only 10% of respondents found the pizza concept unfavorable, which is a difference of 12 points. Another important aspect of Exhibits 4 and 8 are the data presented for the TruEarth brand name. 40% of respondents found the pasta concept favorable while 10% did not under the brand name category.
This compares to Exhibit 8 where 33% of respondents found the pizza concept favorable and 11% found it unfavorable under the TruEarth brand name concept. This presents a difference of a 7 point decrease in favorability from pasta to pizza and a 1 point increase in the unfavorable category from pasta to pizza. Basically, when looking at the data in these four exhibits we can determine that consumers were more favorable toward healthy whole grain pasta then they are toward a healthy whole grain refrigerated pizza. This could be for several reasons, which we can gain understanding on under the likes and dislikes sections.
Most notably, Exhibit 4 indicates that consumers are most unfavorable toward pasta due to limited selection, which scored at 35% unfavorable toward the concept for that reason. Exhibit 8 indicates that only 31% of respondents indicated that they were unfavorable toward the pizza product due to limited selection. This is a decrease of 4 points. The main dislike of the pizza product was price, which indicates that 38% of respondents felt the pizza product was too expensive.
Thus, the likes and dislikes for both products score differently, yet remain within the same general ranges. Section E. (2 points possible)Is there a first-mover advantage in pizza similar to fresh pasta? Certainly, there is a first mover advantage to pizza as with the fresh pasta. While pizza is an established market in the United States, fresh whole grain pizza is not.
Given the fight for shelf space with TruEarth’s competitor, first to market will be important in keeping many of the grocer’s business. Should the competitor be first to market and their product less than desirable, then TruEarth’s pizza line will suffer the repercussions of a disinterested consumer population. Section F. (3 points possible)How do you interpret the findings in Exhibits 9 and 10 to evaluate interest in pizza?Exhibit 9 depicts the pizza likes and dislikes after the home trial.
From the data presented therein I can determine that respondents liked the sauce, the toppings, and the fresh ingredients the most. The two lowest scoring categories are price and whether or not the respondent’s family likes the pizza. Price is consistent with the rest of the data depicted in other exhibits. Respondents feel that the price of the pizza is too high and this means that TruEarth may want to focus on ways to reduce price, such as packaging changes.
The fact that family scores lowest for the reasons that respondents like the product can mean several things, and typically represents the respondents priority for scoring. It could be that only 8% of respondents cared whether or not their family liked the pizza and that this consideration did not play a big role in the decision to purchase. It could also mean that more respondents did not have family to try the pizza then respondents who did. Of course, the key reason for unfavorable purchase intent was price, scoring at 45%.
A cumulative 39% (dislike the crust, texture and quality, and family) were unfavorable due to taste factors. This is important in determining whether or not the recipe for pizza should be modified. A whopping 61% (combined of both groups) gave the suggestion to lower the price. This leads us in to Exhibit 10, which indicates the typical price that consumers would pay for the pizza product.
The main number to focus on in Exhibit 10 is the mean price. According to this category, respondents in the favorable product group would pay about $10.09 for a refrigerated pizza while respondents in the unfavorable group would pay about $8.86.
What’s interesting is that both groups would pay more for the TruEarth pizza then they would for frozen pizza. Frozen pizza shows a mean purchase price of $7.43. However, takeout/delivered pizza shows a mean price of $11.
72. So consumers are willing to pay more for takeout then they are for the TruEarth fresh pizza or frozen pizza for that matter. Another interesting factor in Exhibit 10 is that both groups are most willing to pay between $6.01 and $8.
00 for the TruEarth product. Thus, it would be good to attempt to bring the price of the product down to the $8.00 level to satisfy both groups. Section G.
(3 points possible)Would you launch the pizza? Explain your rationale.I definitely would launch the pizza, and quickly. Pizza is a favorite American food and I don’t find the argument of it being a luxury that Americans will not purchase sound. Americans love to indulge themselves with luxuries.
If anything, the fact that pizza is a luxury will have the opposite affect and increase sales. Providing a healthy whole grain option will appeal to consumers who are health conscience. Most consumers who are conscience enough to purchase healthy foods will spend a little more money to purchase them. This is evident by the positive feedback in the market research.
The market research for the pizza came back with lower scores than the pasta. However, the scores will still favorable, showing consumer interest and changes in consumer purchasing habits should the TruEarth pizza choice become available. The fact that TruEarth’s major competitor is also working on a pizza option is another queue toward favorability of launching the product that I would not take likely. First to market is a key factor in the success of launching any new product and the fight for shelf space is real, as noted by TruEarth’s founder.
Finally, although the pizza line came back with lower numbers than the pasta line, the pasta line exceeded expectations. It is probably that the pizza line will also exceed expectations in the market. I would, however, take into consideration Exhibit 8 and attempt to address consumer dislikes and capitalize on likes before the launch of the new pizza product.
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