Nova School of Business and Economics

Marketing Management
1st Semester

Academic Year 2015/2016

“TruEarth Healthy Foods: Market Research for a

New Product Introduction”
Case - Assignment 1

Instructor: Cláudia Costa Student: Maria Ana Henriques, 2522

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Maria Ana Henriques

1. What made Cucina Fresca a market success?

Cucina Fresca is the most successful product launched by TruEarth, having

reached, by the end of 2007, $23 million in sales. It is a fresh whole grain pasta
meal kit with a full range of choices in terms of types of pasta and
accompanying sauces.
In order to better understand why Cucina Fresca was such a success, we
should make an external analysis focusing on the macro environment where the
company is involved. We can do this by analysing the PEST factors:
 Political and legal factors: Not relevant in this case as there are no
relevant regulations that can constitute a constraint in this market;
 Economical factor: Can be considered relevant since the increase
in dual-income households (in the 1990s) resulted in higher
disposable incomes and less time, which resulted in less time to
cook meals and more willingness to pay for products like Fresca’s
pastas;
 Social factor: This was probably the most important factor. There
was (and still is) a growing demand for meals that can replace
home cooked food but, at the same time, there was an
increasingly concern about unhealthy carbohydrates. TruEarth
saw in this an opportunity and took it. Cucina Fresca is, therefore,
an answer to these consumer’s needs as it conciliates both
aspects: it is a refrigerated whole grain pasta that combines a
pleasant taste with an healthy food choice.
 Technological factor: TruEarth neither had the necessary
manufacturing equipment nor the distribution infrastructure they
needed to produce, pack and distribute fresh food, so this was an
investment they needed to do. However, before taking that
decision, they conducted significant research to understand
whether that investment would have the necessary return.
This last point leads me to another key aspect that contributed to the
success of this product: the intense market research conducted by both
TruEarth teams and Nielsen BASES. They tested the concept on focus groups,
estimated, for instance, potential sales volume and so on. In Exhibit 2 it is
possible to see the methodology used.
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Maria Ana Henriques

The feedback and conclusions reached were positive and encouraging: their
required year 1 sales volume was $14 million at wholesale and managed to
overcome that value.
The fact that there was no other strong player in fresh pasta market offering
a tasty and healthy whole grain option was also a major contributor for the
established conquer.
Finally it is important to refer that another of the aspects that contributed to
this success had to do with the product itself as it was considered to be
convenient, tasty, and healthy and made with good quality ingredients. It is a
quick and easy meal but at the same time allows the cooker to add its own
touch.

2. Can these success factors be transferred to a different product

(from pasta to pizza)?

As competitors started offering similar pastas TruEarth felt the need to

innovate so that they can benefit from a competitive edge. This is why they
came up with the idea of a new product: a whole grain refrigerated pizza. I will
now compare the markets and key factors for those two different products.
The economical factor referred above definitely applies to the pizza case too
since a refrigerated pizza would also be a response to the lower time availability
and higher willingness associated with higher disposable incomes.
However, in what concerns social factors, the same cannot be said. If in the
case of a pasta there is the consumer’s perception of a healthy product, pizza,
by the contrary, is associated with a negative image in terms of healthiness. In
fact, pizza demand has been hurt by the health concerns that I referred as
positive factor in pasta’s case.
In terms of technology, pizza would have an advantage since the large
investment in machinery and distribution was already made. Incremental
investment for pizza would only be re-tooling costs and following a marketing
plan.
A core difference that one should notice is that the market for pizza is bigger
than the one for pasta, which has good and bad consequences. By the one
hand, this means that there are more potential consumers (a survey showed
that 77% of the consumers ate pizza at least once a month!), but in the other
hand this means that there is more competition which makes it more difficult to
succeed – main competitors would be Kraft and Nestle, although they don’t
compete in the exact same market than TruEarth as they sell low cost frozen
pizza. While the store bought refrigerated pizza market totalled $5.8 billion in
2007, refrigerated pasta was around $4.4 billion.
Once again, no answer would be taken without a meticulous market
research using BASES studies. This, of course, sharply reduces the risk and
provides valuable information about consumers expected answer to the
introduction of this product.
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Maria Ana Henriques

3. Which pizza attributes may determine a success, and which ones

may be problematic?

As I said in the previous question, pizzas (in general) have a big market
which is, of course, a positive feature. But, although Americans are said to love
pizza, its demand had been decreasing due to the fact that people are trying to
change for healthier lifestyles and diets. So from this we can take two make
conclusions: pizza being a tempting meal may determine TruEarth’s success in
pizza market, but at the same time being a not that healthy option may dictate
its failure. This is where the refrigerated whole grain crust pizza can add more
value: the fact that those pizzas are a healthier alternative for those who love
pizza but are worried about unhealthy carbohydrates is its most important
attribute.
Taking a look at the first part of Exhibit 6 we can also see that varieties (the
choice is limited) may be the most problematic feature of TruEarth’s pizza
concept, along with convenience (when compared to other types of pizza
concepts). The best attributes would be the fact that it is made from healthy and
high-quality ingredients and the fact that it is easy to prepare and is considered
a product for the whole family.

The price may also become problematic: taking into consideration that
the price of the pizza with only one topping pack would be around $11.50, we
can see on Exhibit 10 (presented on question 4) that the consumers who are
favourable to the product would be willing to pay, on average, $10.75 and
unfavourable ones would pay $8.86 (both are lower than $11.50).
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On Exbihit 8 and Exhibit 9 - presented above - we can see that the

main less appealing characteristics of the product are its price which sometimes
can be more expensive than takeout and restaurant, the overall taste that
consumers consider that can be improved, the crust (that could be more chewy)
and the limited selection (as in Exhibit 6). The most appealing are the fact that
those pizzas are freshly made and dated, look appetizing and are made of
whole grain. Besides this, it is highly appreciated that they are sold all items are
sold in one place and the brand name also plays an important role.

4. How does the new product concept compare with existing

alternatives?

As I previously referred pizza market has a set of already settled

companies that would represent difficult competition to TruEarth. This might
be worsened, for instance, by the fact that those companies offer low-cost
pizza (frozen pizza producers) and TruEarth wants to sell gourmet pizza,
which, of course, would have a higher price. Although that change in price is
explained by the clear differentiation between the two products, consumers
may continue to prefer the lower priced products. We can see the
differences in average willingness to pay for different types of pizza in
Exhibit 10. But there are not only the frozen pizza producers that represent
a threat: restaurants that offer freshly made takeout pizzas might also
constitute a problem if TruEarth’s product isn’t as good as theirs (we can see
that they have the higher valuation).

As I emphasized before, the main distinctive characteristic of TruEarth’s

pizza concept is that by being a refrigerated pizza made with whole grain, with a
wheat crust and with high quality ingredients, combines being a home meal
replacement that is fresher than frozen pizza and healthier than take-out.
Furthermore, it has the distinguishing feature (mainly when comparing with
frozen pizza) of allowing the consumers to easily customize the pizza according
to their own preferences.

5. What advice would you give to TruEarth management in terms of the

new product launch? A go ahead or a no go?

To understand whether TruEarth management should go ahead and

launch the new product it is important to comprehend the strategic
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Maria Ana Henriques

positioning of the company. One way of doing that is by performing a SWOT

analysis. Focusing on internal analysis one needs to understand what are the
main strengths and weaknesses of the company in what concerns launching
the pizza.
Strengths:

 A considerable part of the needed investment in machinery and

distribution was already made when Cucina Fresca pastas started
to be produced;
 The BASES studies estimates are overall positive and
encouraging: wholesale would have to exceed $12 million to meet
the company’s return requirements which is less than for the pasta
case and for a bigger market;
 First Mover Advantage;
 The success of Cucina Fresca pasta which built a good reputation
for the company name – brand awareness;
 The product is healthy and convenient.
Weaknesses:

 High prices when compared to some of the “substitute” products;

 Perceived lack of taste: it could be tastier;
 Limited variety.
And now let’s proceed with the external analysis.
Opportunities:

 The market for pizza is a large market (larger than pasta’s one and
still Cucina Fresca was a success);
 There is a healthy trend but consumers miss eating pizza;
 There is a large and increasing market for home meals replacers;
Threats:

 Competitors like frozen pizza producers or takeout restaurants;

 Imminent entrance of Rigazzi in the pizza market;
 The fact that pizza is not trendy right now, due to health concerns.
So, the conclusion I can take from this analysis is that the strengths and
opportunities are much more significant than the threats and weaknesses, and
for this reason I would definitely advise TruEarth management to launch this
new product, provided that they do it immediately so that they can benefit from
first mover advantage and avoid falling behind Rigazzi. I would add to this
recommendation that they revisit the price of the pizza kit and continue working
on tastier options and more varieties, since those seem to be the main negative
aspects pointed out by the consumers who participated in the studies.