Truearth Case Analysis

TruEarth Healthy Foods Market Research for a pertly crossing Introduction Case Analyses * Isabel Eckstein the place manager had let the grounding of the most successful mathematical ingatheringion of the company (alimentary paste Kit) in 2006 which means that she has a very strong marketing patroniseground. * Competitors began offering similar harvests in 2008 which construct the growth to slow. * Some of their competitors atomic number 18 cuddle and kraft paper. * The do not put one over a rash decision. The success of Cucina Fresca was a calcul traind risk establish on signifi sightt look into. The company only uses lofty- forest durum wheat and more often than not organic ingredients. * The company further raised consumer awareness through several(prenominal) promotional programs, apply coupons, magazine advertisements, and in-store demonstrations. * Idea generation. As the company grew, the persuasion generation process became a more systematic evaluation of c onsumer dispositions, with testicle management brainstorming sessions. * Three important developments reshaped how consumers purchased groceries. The commencement important turn off was a new, loosely defined food family unit in the unify States property meal replacement (HMR).An increase in dual-income households had led to higher(prenominal) disposable incomes coupled with time poverty, as some(prenominal) workers found themselves lack the time to cook a meal and clean up afterward. Further, consumers had trite of unhealthy carryout and fast food and started seeking greater variety and impertinentness. Supermarkets began relate HMR submits by enhancing their fresh, prepared food offerings. * There was no fresh total corpuscle pasta with broad distribution, with 85% of those in favour of the concept having never purchased it before. * Competitive Threat Rigazzi Fresh Whole scrap Pasta. pizza pies were a core component of the Italian-American food category, with annual sales in the United States estimated at $53 billion in 2007. * suggested that 77% of consumers ate pizza pie at least once a month. * The store-bought refrigerate pizza market was 11% of sales and totaled $5. 8 billion, fashioning it a larger market than keep pasta, which was well-nigh $4. 4B in 2007. * pizza admit in key demographics had been hurt by health concerns and the popularity of diets that curb or cut out carbohydrates. Eckstein believed this presented the perfect opportunity for TruEarth. Independent surveys of restaurant-goers showed that 33% of people had strong interest in a unit of measurement whit crust. * Major chains like Papa Johns and pizza Hut had introduced full-page wheat or multi- cereal crusts * Kraft and Nestle are already huge players here with low-cost frozen pizza. RECOMMENDATION HAI YE FUU record DATEJanuary 11, 2009 TOIsabel Eckstein Brand Manager FROMBrett Matlack REIntroduction of Whole instill pizza harvest The slowing growth of Cu cina Frescas sales has hardened our competitory edge in the fresh Italian food category in jeopardy.In an attempt to retain our leadership position and fail our harvest line, we flip invested in the development of a new whole ingrain pizza. We must(prenominal) decide whether to order our pizza offering. Our decision must take into consideration that the new products wholesales volume estimates must best $12 million to meet our return requirements. The decision-making process is time erogenous because one of our competitors, Rigazzi Brands, has already tested a whole grain pizza concept and is not far from introduction. Given these factors, we can either intromission or suspend the product.Based on sales volume estimates and situation analysis, I recommend that the company launch the pizza. The introduction endure out result in a wholesales volume that exceeds our return requirements and these additional funds can be reinvested into the firm. Option I Launch Whole metric grain Pizza merchandise The launch of a whole grain pizza kit out result capitalize on the same consumer trends that prompted the release of Cucina Fresca developing demand for quick, customizable home meal replacements that are preserve and available in tasty, whole grain options.Also, pizza is a core component of the Italian-American food category that we cannot do by because it is frequently purchased by customers on a monthly basis. Our whole grain pizza product resolves the time- and health-related concerns of American consumers in one of their favorite dishes (see salute 1 SWOT analysis for Whole Grain Pizza Product). The growing demand for a whole grain crust has been addressed by local pizzerias and take-out franchises, but not in the store-bought refrigerated pizza market. The immediate release of the pizza kit would each(prenominal)ow us to fall into place this market before Rigazzi and benefit from first mover rewards.As a result, our initiatory year wholesale volume estimates would exceed our return requirements by approximately $4. 5 million (see picture 2 Whole Grain Pizza image Purchase raft Estimate, Year 1 Excellent). The excess returns can be reinvested into the firm and used to expand our manufacturing facilities or further extend our product line. If the pizza kit is launched, the firm must consider the potency consequences. We must assess the impact it will have on Cucina Frescas success and production, as well as the TruEarth image if the product flops (see border 1 SWOT Analysis for Whole Grain Pizza Product).Likewise, we must review the potential consequences if the wholesale volume estimate is calculated using the percentage repurchases when the product is perceived to be of mediocre or number calibre (see Exhibit 3 Whole Grain Pizza Concept Purchase spate Estimate, Year 1 Mediocre, mean(a). Option II Do Not Launch Whole Grain Pizza Product The competitive environment of the pizza market and quality-related issues d iscovered in the BASES studies indicate that the whole grain pizza product should not be launched. Although the market generates high sales, it is extremely crowded and dominated by powerful players like Kraft and Nestle.Furthermore, the ability to market a tasty whole-grain pizza crust and occur its benefits will be difficult because the American public perceives whole grains to be less appetizing than white flour. Attempting to change consumer preferences is timely and costly. By predate the release of the pizza kit, the company can focus solely on Cucina Fresca. The operating facilities will not have to worry about(predicate) manufacturing cardinal different product lines and our distribution infrastructure will not be overworked (see Exhibit 1 SWOT Analysis for Whole Grain Pizza Product).Likewise, our marketing team could concentrate on attempting to revive the pasta meals. This product has proven to be successful at one time. Investing all of our resources into the pizza pr oduct could be both disastrous and expensive considering we have no experience in this market category. However, by shelving the pizza, an opportunity is doomed because our company would be ignoring the needs of a potentially profitable market. The health- informed trend is not going away and our firm needs to expand our product line in coordinate to retain our leadership as a gourmet, healthy alternative.Recommendation At this time, our company would benefit the most by ingress the new whole grain pizza product. By not first appearance the pizza kit, our investments and time can be focused on expanding the pasta line and retooling the marketing campaign to improve sales however, in order to diversify the TruEarth defect name, innovation is needed. Although the pasta market may front safe, we must venture into new categories in order to raise brand awareness, seek new customers, and increase our profits. Exhibit 1 SWOT Analysis for Whole Grain Pizza Product Strengths Weaknesses Highly selective about ingredients * Existing infrastructure for coupons, magazine advertisements, in-store demonstrations * Existing formal 4-step process for research and development * Incremental investment for pizza less than pasta * higher(prenominal) awareness of pizza product among Cucina Fresca customers * Successful market experience in launching new products (brand name awareness) * Existing manufacturing equipment and distribution infrastructure to get fresh food to shelves quickly * Easy preparation, but gives customers the chance to be involved in the cooking process * Permits customers to customize * Refrigerated pizza is considered tastier, more authentic than frozen pizza * Is a product for the whole family (8. /10 in mall-intercept) * 28% of home-trial users believe there is no need for improvement * 33% of respondents in mall-intercept considered the TruEarth name a favorable advantage * Pizza kit only feeds 2-3 people * Consumers have to buy toppings individuall y * Limited selection of toppings and varieties offered * Considered too expensive ($12. 38 vs. $10. 09 for new(prenominal) refrigerated options, $11. 72 for takeout food) * Only received 10% favorable to product in overall taste, texture, and quality * Limited time to product expiration (similar refrigerated manufacturing issues as Cucina Fresca) * If using same equipment, this may lead to bottlenecks in both operating facilities and distribution network Opportunities Threats Leverage relationship with North Dakota durum wheat supplier to supply wheat for pizza dough * strain serving size options * Offer single serving sizes for individual meals whole pizzas to feed a family * Expand topping offerings * Contract with local cafes and other gourmet specialty restaurants to offer products in other store formats * pull in a packaged bundle which includes Cucina Fresca and the pizza kit * Leverage TruEarth brand name to enter the pizza market * TruEarth is well-liked and considered to be high quality Utilize this to demonstrate the benefits/product attributes of the pizza product * Health conscious mindset (e. g. ow carbohydrate diet) has hurt key demographics in pizza demand * Consumers may not purchase additional toppings * Rigazzi has tested a pizza concept and is preparing to introduce it * Competitors may quickly replicate whole-grain pizza kit and price them lower to win larger share of the market * Nestle and Kraft dominate the frozen-pizza market * Our pizza doughs quality may not be comparable to freshly made takeout * Pizza market is extremely crowded (options include takeout, delivery, refrigerated) * If product succeeds, product facilities may struggle to manufacture two lines (Cucina Fresca placed on back burner, limited production) * If product fails, damage to TruEarth name may make it harder to launch new products in future Exhibit 2 Whole Grain Pizza Concept Purchase mountain Estimate, Year 1 (Excellent) total Purchase Intent decisively wo uld buy 18. 00% % of Definites who actually buy 80. 00% Definite Purchases 14. 40% credibly would buy 43. 00% % of Probables who actually buy 30. 00% Probable Purchases 12. 90% rivulet Rate 27. 30% Marketing Plan Adjustment propose Households 58,500,000 Cucina Fresca Pasta Customers 6,435,000 Non- Cucina Fresca Pasta Customers 52,065,000Customer Awareness 50. 00% Non-Customer Awareness 12. 00% All commodity bulk Distribution (ACV) 40. 00% Marketing Adjusted streak Rate Cucina Fresca Pasta Customers Adjusted Trial Rate 5. 46% Non- Cucina Fresca Pasta Customers Adjusted Trial Rate 1. 31% Cucina Fresca Pasta Customers Trial Purchases 351,351 Non- Cucina Fresca Pasta Customers Trial Purchases 682,051. 5 bring Trial Purchases 1,033,402, echo Purchase Inputs parallel Purchase make 2. 00 Repeat Rate, by Product Services Excellent Product 49% Repeat Volume, by Product Scenario Excellent Product 1,012,733, positive Purchases 2,046,135 jibe sales VolumeRetail gross revenue Volu me $25,331,151. 30 TruEarth gross revenue Volume $16,465,248. 35 In Excess of Return Requirements $4,465,248. 35 Exhibit 3 Whole Grain Pizza Concept Purchase Volume Estimate, Year 1 (Mediocre, medium) Inputs from Exhibit 2 Trial Rate 27. 30 Total Trial Purchases 1,033,402 Repeat Purchase Occasions 2. 0 Repeat Rate, by Product Services Mediocre Product 21% Average Product 37% Repeat Volume, by Product Scenario Mediocre Product 434,028. 84 Average Product 764,717. 48 Total Purchases Mediocre Product 1,467,430, Average Product 1,798,119, Total sales Volume Retail Sales Volume (Mediocre Product) $18,166,783. 40TruEarth Sales Volume (Mediocre Product) $11,808,409. 21 Retail Sales Volume (Average Product) $22,260,713. 22 TruEarth Sales Volume (Average Product) $14,469,463. 59 Based on these wholesales volumes, the average product perception meets our return requirements. We would gain $2,469,463. 59 in extra cash if we were to launch this product. However, the mediocre product does not meet our return requirements (off by $191,590. 79). We are only off of our return requirements by a small margin (1. 596%) thus, we may consider taking on this initial loss for the first year. Considering the growth rate of Cucina Frescas retail sales between the 3rd quarter of 2006 and 2007 (194. 4%), we may anticipate that the initial sales volume will grow between the first and second year of the product launch. Our future sales volume will most likely cover our initial return requirements in the second year and our losses from the 1st year. 2 . Definitely would buy x % of Definites who actually buy 80% x 18% 3 . Probably would buy x % of Probables who actually buy 30% x 43% 4 . Definite Purchases + Probable Purchases 14. 4% + 12. 9% 5 . objective Households x 11% 58,500,000 x 11% 6 . Target Households x 89% 58,500,000 x 11% 7 . Trial Rate x Customer Awareness x ACV 27. 3% x 50% x 40% 8 . Trial Rate x Non-Customer Awareness x ACV 27. 3% x 12% x 40% 9 .Target Households x Cucina Fresca Pasta Customers Adjusted Trial Rate 58,500,000 x 5. 46% 10 . Target Households x Non- Cucina Fresca Pasta Customers Adjusted Trial Rate 58,500,000 x 1. 31% 11 . Cucina Fresca Pasta Customers Trial Purchases + Non- Cucina Fresca Pasta Purchases 351,351 + 682,051. 5 12 . Rounded down because cannot include 0. 5 of a household 13 . Total Trial Purchases x Repeat Purchase Occasions x Excellent Product Repeat Rate 1,033,402 x 2. 00 x 49% 14 . Rounded down because cannot include 0. 96 of a product 15 . Trial Purchases + Repeat Purchases 1,033,402 + 1,012,733 16 . Total Purchases x Average dog-tired per Purchase 2,046,135 x $12. 38 17 .Retail Sales Volume x (1-Food Retailers 35% Gross Margin) $72,835,811. 1 x (1-0. 35) 18 . TruEarth Sales Volume Minimum Return Requirement $16,465,248. 35- $12,000,000 19 . Total Trial Purchases x Repeat Purchase Occasion x Mediocre Repeat Product Rate 1,033,402 x 2. 0 x 21% 20 . Total Trial Purchases x Repeat Purchase Occasion x Average Repeat Product Rate 1,033,402 x 2. 0 x 37% 21 . Total Trial Purchases + Mediocre Product Total Purchases 1,033,402 + 434,028. 84 22 . Rounded down because cannot have 0. 84 of a purchase 23 . Total Trial Purchases + Average Product Total Purchases 1,033,402 + 764,717. 48 24 . Rounded down because cannot have 0. 48 of a purchase 25 .Total Purchases for Mediocre Product x Average spent per Purchase 1,467,430 x $12. 38 26 . Retail Sales Volume for Mediocre Product x (1-Food Retailers 35% Gross Margin) $18,166,783. 40 x (1-0. 35) 27 . Total Purchases for Average Product x Average Spent per Purchase 1,798,119 x $12. 38 28 . Retail Sales Volume for Mediocre Product x (1-Food Retailers 35% Gross Margin) $22,260,713. 22 x (1-0. 35) 29 . (TruEarth Sales Volume (Mediocre Product) Return Requirement)/Return Requirement ($11,808,409. 21-$12,000,000)/$12,000,000 30 . (2007 Retail Sales-2006 Retail Sales)/(2006 Retail Sales) + 1 x snow% ($35,000,000-$18,000,000)/($18,000,00 0) +1 x 100%