TruEarth Healthy Foods: Market Research For A New Product

By :

Lokesh SharmaIIT Kanpur

Topics Covered: Consumer marketing, Market research, New product introduction, Quantitative analysis

Actors: GARETH DE ROSA – Founder at TruEarthISABEL ECKSTEIN – Brand managerROSIE CARLTON – Director of business development

Company Background: Founded in 1993 by De Rosa Offer healthy, tasty, high in quality gourmet pasta, sauces & meals Successfully launched whole grain pasta( Cucina Fresca) in 2006 Now considering to launch whole grain pizza product line

Objective:Decide whether to launch or not the pizza product and at what volumes

STRENGTH- High quality durum wheat & highly selective about ingredients of sauce- Brand equity with customer & stores- Existing (highly invested) manufacturing equipment & distribution infrastructure- Systematic 4-step process for R&D of products- Existing infrastructure of magazine ads, promotional programs, coupons & in store demonstrations- Tastier product line with customized options- Product for the whole family(8.6/10 in Mall intercept)- 28% of home trial users believe there is no need for improvement- 33% of people favorable to concept in mall intercept considered TruEarth name a considerable advantage

WEAKNESS- Narrow product line with limited no. of toppings- Higher price($12.38 vs. $10.09 for refrigerated pizza & $11.72 for takeout)- Separate purchase of toppings and crust- Only 10% favorable to product in overall taste, texture& quality- Limited time to product expiration- Pizza kit only feeds 2-3(No individual or family pack options)

OPPORTUNITIES- Gain first mover advantage- Expansion in product line- Leverage TruEarth brand name to enter the pizza market- Expansion in serving size option(individual & family pack)- Come up with combos of Cucina Fresca & pizza kit

THREATS- Demographic variation in pizza demand due to different mindsets regarding health- Consumers ma not purchase additional toppings - Rigazzi is preparing to introduce a pizza product line- Big players of frozen pizza market: Nestle & Kraft - Failure of pizza product line can make it harder to launch new product in future

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SWOT

Trial Purchase IntentCUSTOMER(X%) NON-CUSTOMER((100-X)%) Exhibit

Definitely would buy 26% 15% 7% of “Definites” who actually buy 80% 80% 5“Definite” Purchase 20.8% 12% MethodologyProbably would buy 53% 39% 7 % of “Probables” who actually buy 30% 30% 5“Probable” Purchase 15.9% 11.7% Methodology

Trial Rate (Definite + Probable) 36.7% 23.7% Methodology

Marketing Plan Adjustment

Projected Consumer Awareness 50% 12% Table BACV distribution 40% 40% Table B

Marketing Adjusted Trial Rate 7.34% 1.14% Methodology

Target Households(MM) 0.588X 0.588(100-X) Table B (target HH =58.5 MM)Trial Households(MM) 0.0432X 0.0067(100-X) Methodology

Repeat Purchase InputsRepeat Purchase Occasions 2.0 2.0 Table BRepeat Transaction Amounts 1.25 1.25 Table BRepeat Rate Y% Y% (Table B, 49% excellent product)

Repeat Volume(MM) 0.0011XY 0.00017(100-X)Y Methodology

Trial Volume(MM) 0.0432X 0.0067(100-X)

TOTAL VOLUME(MM) (0.0011XY+ 0.0432X) + (0.00017(100-X)Y+ 0.0067(100-X)) Methodology

Average spend per purchase(Retail) $12.38 Table B Retail Sales Volume(MM)$12.38*TOTAL VOLUMERetailers Gross Margin 35% Page 7, paragraph 2

TruEarth Sales Volume(MM) $ 0.65*12.38*TOTAL VOLUME

Reference: Methodology, Page 9, Footer section

5% 11% 15%

21%(Mediocre) $10.52 million $13.22 million $15.02 million37%(Average) $13.31 million $16.73 million $19.01 million49%(Excellent) $15.39 million $19.36 million $22.00 million

Customer Penetration(X)Re

peat

Rat

e(Y)

TruEarth Sales Volume in different situation

Recommendations:They should launch the product

Assuming 11% penetration rate they can safely play with price in between $11.38 to $12.38 which gives TruEarth sales volume $12.16 million

Learning Points:Understand the assumptions & techniques for estimating markets and projecting salesAnalyze and interpret data to decide whether to bring a new product to marketRecognize the importance of perceived value to consumers for a new product as compared with existing productsUnderstand the limitations of making decisions based on research and available data

Thanks…