TruEarth Healthy Foods: Market Research for a New Product Introduction Case Analysis

TruEarth Healthy Foods: Market Research for a New Product Introduction Case Analysis Student’s Name Institution Course # and Name Professor’s Name Submission Date The Success of Cucina Fresca Pasta and Comparison to Pizza Opportunity Success for Cucina Fresca Pasta exploited two routes of excellence: the alignment with consumer trends and the structured execution of the launch. TruEarth leveraged this with a fresh whole-grain pasta offering to fill a gap in the refrigerated pasta section. The ingredients used by the company included real tomatoes and virgin olive oil and contained no artificial additives (Rangan & Yong, 2009). These ingredients appeal to the gourmand and health-oriented customer. The product was not time-consuming in terms of preparation and gave a homely touch. This marketing aspect, along with $8 million spent on advertising and $2 million in promotion, contributed much towards the visibility of the new product and its sales (Rangan & Yong, 2009). When considering the pizza opportunity against pasta, a few factors stood out. Pizza, a staple in Italian-American cuisine, boasts an even greater market size of 5.8 billion dollars in revenue versus 4.4 billion dollars in refrigerated pasta sales (Rangan & Yong, 2009). Consumer surveys also addressed interest in healthier pizza options; 33% of restaurant-goers reported interest in whole-grain crusts (Rangan & Yong, 2009). This means that the demand for a healthier pizza is not much different from the demand for pasta. However, pizza is different because of consumer perception: it's a pleasure, not too healthy a meal, and that may make a difference in its adoption by exactly those health-conscious consumers who had accepted the pasta. Besides, the pizza market remains more competitive, dominated by big players like Kraft and Nestle, who offer frozen pizzas at relatively lower prices, making things even tougher for TruEarth to differentiate. The product development process for pizza is more intricate and detailed than that of pasta. However, the development of both product offerings entails market research and product testing. The product development process for both products also requires vastly similar equipment. Forecasting Demand for Pizza Data from the Table Trial rates Parents who were non-customers, 15% "definitely would buy" and 39% "probably would buy." Customers: 26% "definitely would buy"; 53% "probably would buy." Conversion rates-likeliness to buy, actual purchases: 80% of those who said "definitely will buy" will actually purchase. Assume 30 percent of the people who responded "probably will buy" actually do buy. Other relevant data Target households: 58.8 million Penetration: 11% of the households which the product targets. Awareness: 12 percent among non-customers and 50 percent among customers ACV distribution: 40% (this reflects how well the product is distributed in stores) Repurchase rate: 49% (percentage of trial households that will repurchase) Repurchase occasion: 2 (how many times the households have repurchased, after trying). Calculating the Trial Households To determine how many households will try the pizza product, we apply the trial rates to the target households, adjusting for awareness and distribution. Non-customers: The overall trial rate for non-customers is therefore: 15% "definitely would buy" × 80% conversion = 12% 39% "probably would buy" × 30% conversion = 12% Total trial rate for non-customers = 12% + 12% = 24% To find out how many non-customer households will try the product, multiply the trial rate by total target households: Target households = 58.8 millions Trial rate for non-customers = 24% Non-buyer trial households = 58.8 million × 24% = 14.1 million h...