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TruEarth Healthy Foods:

Market Research For A New


Product

By :

Lokesh Sharma
IIT Kanpur

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

Actors:
GARETH DE ROSA Founder at TruEarth
ISABEL ECKSTEIN Brand manager
ROSIE 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


WEAKNESS
about ingredients of sauce
- Narrow product line with limited no. of toppings
- Brand equity with customer & stores
- Higher price($12.38 vs. $10.09 for
- Existing (highly invested) manufacturing
refrigerated pizza & $11.72 for takeout)
equipment & distribution infrastructure
- Separate purchase of toppings and crust
- Systematic 4-step process for R&D of products
- Only 10% favorable to product in overall taste,
- Existing infrastructure of magazine ads,
texture& quality
promotional programs, coupons & in store
demonstrations
- Limited time to product expiration
- Tastier product line with customized options
- Pizza kit only feeds 2-3(No individual or family
- Product for the whole family(8.6/10 in Mall
pack options)
intercept)
- 28% of home trial users believe there is no need
for improvement
THREATS
- 33% of peopleOPPORTUNITIES
favorable to concept in mall
SWOT
intercept
considered
TruEarth name a considerable - Demographic variation in pizza demand due to
- Gain first
mover advantage
different mindsets regarding health
advantage
- Expansion in product line
- Consumers ma not purchase additional toppings
- Leverage TruEarth brand name to enter the
- Rigazzi is preparing to introduce a pizza product
pizza market
line
- Expansion in serving size option(individual &
- Big players of frozen pizza market: Nestle & Kraft
family pack)
- Failure of pizza product line can make it harder to
- Come up with combos of Cucina Fresca & pizza
launch new product in future
kit
-

Trial Purchase Intent


CUSTOMER(X%)
NON-CUSTOMER((100-X)%)
Definitely would buy
26%
% of Definites who actually buy
Definite Purchase
20.8%
Probably would buy
53%
% of Probables who actually buy
Probable Purchase
15.9%

15%
80%
12%
39%
30%
11.7%

Trial Rate (Definite + Probable)

36.7%

23.7%

Projected Consumer Awareness


ACV distribution 40%
40%

50%

12%

Marketing Adjusted Trial Rate

7.34%

Target Households(MM)
Trial Households(MM)

0.588(100-X)
0.0067(100-X)

Exhibit
7

80%

5
Methodology
7
5
Methodology

30%

Methodology

Marketing Plan Adjustment


Table B
Table B

0.588X
0.0432X

1.14%

Methodology
Table B (target HH =58.5 MM)
Methodology

Repeat Purchase Inputs


Repeat Purchase Occasions 2.0
Repeat Transaction Amounts 1.25
Repeat Rate
Y%
Y%

Repeat Volume(MM)
Trial Volume(MM)

2.0
1.25

Table B
Table B
(Table B, 49% excellent product)

0.0011XY
0.00017(100-X)Y
0.0432X 0.0067(100-X)

TOTAL VOLUME(MM)

Methodology

(0.0011XY+ 0.0432X) + (0.00017(100-X)Y+ 0.0067(100-X))

Methodology

Average spend per purchase(Retail)


$12.38
Retail Sales Volume(MM) $12.38*TOTAL VOLUME
Retailers Gross Margin
35%

TruEarth Sales Volume(MM)

Table B
Page 7, paragraph 2

$ 0.65*12.38*TOTAL VOLUME

Reference: Methodology, Page 9, Footer section

Repeat Rate(Y)

Customer Penetration(X)
5%
21%
(Mediocre)

$10.52
million

11%

$13.22
million

15%

$15.02
million

$13.31
$16.73
$19.01
million
million
million
TruEarth Sales Volume in different situation
49%
$15.39
$19.36
$22.00
(Excellent)
million
million
million
37%
(Average)

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 sales
Analyze and interpret data to decide whether to bring a new product to market
Recognize the importance of perceived value to consumers for a new product as compared
with existing products
Understand the limitations of making decisions based on research and available data

Thanks