RSM 332 Marketing Research

Fall 2011
Thursday 1:00 pm - 3:00 pm WO 20
Professor: Mengze Shi

Project: TruEarth Healthy foods case

Chernenko Kirill
998581510

TruEarth it is the" strong player" company, offering healthy and gourmet whole
grain products consisting of only highest-quality ingredients. After the huge success
in making fresh and tasty pasta in 2006, TruEarth is planning to extend the product
line introducing fresher than frozen and healthier than delivered pizza.
Unfortunately, consumers have too many choices by powerful giants like Kraft and
Nestle. The question is launching this Italian-American product into market or not.
In the first place, we have to focus on 3 things
- how favorable is the market (dynamics and volume)
- how favorable is the product in market (demand and return)
- how to launch it (competition and recommendations)
People need healthy and tasty pizza, which will be easy to prepare and made of
only high-quality ingredients (no dried spices and sweeteners). Therefore, the
demand for healthy pizza will be growing in US together with popularity of diets and
products targeting authenticity and quality.
To predict the demand for a new TruEarth's product we have to make simple
calculations.
Table A. Whole wheat pizza Purchase Volume Estimate, Year 1
Trial Purchase
intent (Pizza
Survey)
Definitely would
buy
% of "definites"
who actually
buy
"Definite"
purchases
Probably would
buy
% of
"Probabels"
who actually
buy
"Probabels"
purchase
Trial Rate

Marketing Plan
Adjustment
18%
80%

14.4%
43%
30%

Customers of
Cucina Fresca
Customer
awareness

11%

Non-customers
of Cucina Fresca
Non-customer
awareness
Projected
Customer
Awareness

89%

12.9%

ACV

12.9+14
.4=27.3
%

MarketingAdjusted Trial
Rate

50%

12%
11x0,5+89x0,1
2=
16.2%
40% (from
table B)
27.3%x16.2%x
40%=
1.8%
(rounded)

Target
households
Trial
households(MM
)
Repeat purchase
occasions
Repeat
purchases

58.8MM (from table B)

58.8x1.8 %=1.1(MM)

2.0 (from Table B)

2x0.49(excellent product) = 1

Total purchases (1+1.1)x12.38(retail)=26MM

So, there is $26 million of revenue. As Eckstein estimated that 12million is needed
to meet company's return requirements. Therefore profit will be $26MM -12MM =
$14MM. Conclusion: launch the product as soon as possible before
competitors!
Unfortunately, this is only the prediction, assuming that customers will find the
product excellent. What if the penetration will not be exactly 11%? TruErth's
evaluation is the range between 5% and 15%. Let's show the link between 3 types
of pizza's volume (Mediocre 21%, Average 37%, Excellent 49%) and 3 types of
penetration (5%, 10% and 15%)
1st case. Cucina Fresca Pasta Customers 5%, Mediocre 21%
Projected
Customer
Awareness
MarketingAdjusted Trial
Rate
Trial
households(M
M)
Repeat
purchases

5x0,5+95x0,12
=
13.9%
27.3%x13.9%x
40%=
1.5%
(rounded)
58.8x1.5
%=0.88(MM)

2x0.21(mediocr
e product) =
0.42
Total
(0.88+0.42)x12
purchases
.38(retail)=
16.1 MM
This is the worst case scenario when the product is below average in quality and
number of customers who is aware of TruEarth is only 5%. But still there is 4MM
profit.
2nd case. Cucina Fresca Pasta Customers 5%, Average 37%

Projected
Customer
Awareness
MarketingAdjusted Trial
Rate
Trial
households(M
M)
Repeat
purchases

5x0,5+95x0,12
=
13.9%
27.3%x13.9%x
40%=
1.5%
(rounded)
58.8x1.5
%=0.88(MM)

2x0.37(average
product) =
0.74
Total
(0.88+0.74)x12
purchases
.38(retail)=
20 MM
3rd case. Cucina Fresca Pasta Customers 5%, Excellent 49%
Projected
Customer
Awareness
MarketingAdjusted Trial
Rate
Trial
households(M
M)
Repeat
purchases
Total
purchases

5x0,5+95x0,12
=
13.9%
27.3%x13.9%x
40%=
1.5%
(rounded)
58.8x1.5
%=0.88(MM)
2x0.49(excellen
t product) =
0.98
(0.88+0.98)x12
.38(retail)=
23 MM

4th case. Cucina Fresca Pasta Customers 10%, Mediocre 21%

Projected
Customer
Awareness
MarketingAdjusted Trial
Rate

10x0,5+90x0,1
2=
15.8%
27.3%x15.8%x
40%=
1.7%
(rounded)

Trial
households(M
M)
Repeat
purchases
Total
purchases

58.8x1.7
%=1(MM)
2x0.21(mediocr
e product) =
0.42
(1+0.42)x12.38
(retail)=
17.5 MM

5th case Cucina Fresca Pasta Customers 10%, Average 37%

Projected
Customer
Awareness
MarketingAdjusted Trial
Rate
Trial
households(M
M)
Repeat
purchases
Total
purchases

10x0,5+90x0,1
2=
15.8%
27.3%x15.8%x
40%=
1.7%
(rounded)
58.8x1.7
%=1(MM)
2x0.37(average
product) =
0.74
(1+0.74)x12.38
(retail)=
21.5 MM

6th case Cucina Fresca Pasta Customers 10%, Excellent 49%

Projected
Customer
Awareness
MarketingAdjusted Trial
Rate
Trial
households(M
M)

10x0,5+90x0,1
2=
15.8%
27.3%x15.8%x
40%=
1.7%
(rounded)
58.8x1.7
%=1(MM)

Repeat
purchases
Total
purchases

2x0.49(excellen
t product) =
0.98
(1+0.98)x12.38
(retail)=
24.5 MM

7th case. Cucina Fresca Pasta Customers 15%, Mediocre 21%

Projected
Customer
Awareness
MarketingAdjusted Trial
Rate
Trial
households(M
M)
Repeat
purchases
Total
purchases

15x0,5+85x0,1
2=
17.7%
27.3%x17.7%x
40%=
1.93%
(rounded)
58.8x1.93
%=1.13(MM)
2x0.21(mediocr
e product) =
0.42
(1.13+0.42)x12
.38(retail)=
19.2 MM

8th case Cucina Fresca Pasta Customers 15%, Average 37%

Projected
Customer
Awareness
MarketingAdjusted Trial
Rate
Trial
households(M
M)
Repeat
purchases
Total
purchases

15x0,5+85x0,1
2=
17.7%
27.3%x17.7%x
40%=
1.93%
(rounded)
58.8x1.93
%=1.13(MM)
2x0.37(average
product) =
0.74
(1.13+0.74)x12
.38(retail)=
23.15 MM

9th case Cucina Fresca Pasta Customers 15%, Excellent 49%

Projected
Customer
Awareness
MarketingAdjusted Trial
Rate
Trial
households(M
M)
Repeat
purchases

15x0,5+85x0,1
2=
17.7%
27.3%x17.7%x
40%=
1.93%
(rounded)
58.8x1.93
%=1.13(MM)

2x0.21(excellen
t product) =
0.98
Total
(1.13+0.98)x12
purchases
.38(retail)=
26.12 MM
This case is the best but it requires best product and best prices. Nevertheless, in
any case total revenue exceeds total cost, which means that the world must see
healthy and tasty TruEarth pizza.
To determine the consumer's point of view on whole grain pizza Truearth team
conducted 300 mall intercept interviews comparing takeout, refrigerated and
Truearth Pizza. No doubt that these product categories are slightly different from
each other; in spite of this, interviewees generally consider pizza as easy-toprepare and conveniently accessed product for the whole family. Past experience of
consumers shows us that takeout pizza is most convenient and accessible, which
gives it the competitive advantage.
Moreover, takeout pizza earned the highest consumers' evaluation in freshness and
variety choices. In terms of quality attributes, consumers rated the highest both
takeout and TruEarth pizza because of high-quality ingredients. In addition, TruEarth
pizza scored 9.1 out of 10 (even higher than takeout) for the healthy ingredients.
This fact can be influenced buy the brand image of TruEarth, the company focused
on food made of superior ingredients offering greater quality and authenticity.
Exhibit 6 is showing that 17% of interviewed principal grocery shoppers would
switch to TruEarth, if it were launched. Unfortunately, those customers who prefer

to make pizza at home or order from restaurant are less likely to change their
purchase behavior if TruEarth pizza is available on shelves.
All things considered, to satisfy the needs of customers and increase the chances of
success TruEarth has to concentrate on freshness, convenience and easy-to-prepare
concept. Furthermore, to take and keep the competitive advantage over delivered,
refrigerated and frozen pizzas TruEarth team should maintain mind-catching
price*(see Table B) as "consumers have so many options we need to compete
against" (Rose Carlton, the director of business development).
However, before taking for credit the suggestions above TruEarth have to launch
product first (before Rigazzi!). If TruEarth is first in market (3-6 months before
Rigazzi), it will earn the competitive advantage, collecting the essential experience
and getting into scale production with lowering prices in the future.
Positioning product is also very important part. TruEarth has to say "No" to remorse
and "Yes" to providing pleasure and satisfaction. Introducing "guilt-free gourmet
pizza with healthy, whole wheat crust and high-quality ingredients" TruEarth will be
unbeatable (Eckstein, brand manager)

*Table B. Recommendations in terms of quality and prices by competitors

Quality/Prices by
competitors' pizza
Lower
Same
Quality

Higher

Lower
Do not change
price
Do not change
quality

Price
Same
Reduce the price
Reduce the price

Do not change
price,
Increase the
variety of
ingredients,
Make more
precise
positioning

Higher
Increase the
quality,
Make analysis of
the prospects
within the
market
Make a product
of higher quality
in the
competitors'
segment