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TruEarth is faced with a dilemma on whether or not to launch the new whole grain pizza product. This case has analyzed the marketing survey data and provided full alternative solutions. The calculated projected retail market of $21 to 30 million dollars will meet the business requirements to proceed with this project. The marketing plan is to focus on two key consumer groups: existing TruEarth customers and new health conscious group that may or may not be existing pizza eaters. From this strategy, it is expected to meet on the higher end of the projected retail market.
A side benefit is the added penetration of TruEarth brand name to the overall consumer market, which may benefit the whole grain pasta product.
TruEarth is a company that supplies gourmet meal products to grocery stores with a strong emphasis in high-quality ingredients, freshness, and healthy selections.
The core competency of TruEarth is the use of whole grain ingredients to make home meal replacement products.
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TruEarth main coca cola product line composes of fresh pasta and sauce. Since product inception in the third quarter of 2006, it has been greatly benefited from the higher than expected retail sales and profit margins.
The success of this product was short lived as competitors threatened with similar product type and aggressive marketing strategies. In order for TruEarth to remain in the lead in this market, they have been investigating in a product line extension with whole grain pizza. The product development process is at or near completion; the dilemma for TruEarth is to determine whether to launch the whole grain pizza product to the market.
The success of the whole grain pizza will rest on the ability to calculate the risk to the following key points:
The overall trend in the consumer food industry in United States has shifted greatly, from frozen meal, to semi prepared single portion meal, to fresh pasta, and to avoidance of bad carbohydrates. Fresh pasta environment is where TruEarth strives and has a strong staple in. The annual sales for this category have grown to $4. 1B by 2004. History of fresh pasta and sauce The whole grain pizza is a line extension of the lead product whole grain pasta and sauce.
It is important to understand the reasons behind the success of the pasta and transfer the lessons learned to the pizza product.
TruEarth mimic the same product development process and arrived to the following analysis:
The market research performed by the team consists of two components.
An initial interview was done to compare the TruEarth concept with takeout and other refrigerated pizzas. When compared with takeout, TruEarth faired better only in the category of healthy ingredients while all other measures were scored negatively. Conversely, when compared with other refrigerated pizza, TruEarth measured better in all categories. From this initial survey, TruEarth concept can be considered as success in taking market share away from the refrigerated pizza market. At the same time, it shows that there is still some improvement needed in order for TruEarth concept to challenge takeout pizza.
This preliminary research prompted TruEarth to proceed to Bases II analysis. From exhibit 8, one can easily extract a 60% overall favorable appeal for TruEarth at mall intercept. The top 5 attributes are freshly made and dated, can purchase all items in one place, can buy toppings separately, TruEarth brand name, and looks appetizing. Among the top 5 attributes, the only long term differentiator is TruEarth brand name, while the remaining 4 are either standard market practice or attributes that can be imitated relatively easily. The top dislike attribute for favorable to concept is retail price is too expensive. Read about irds Eye and the UK frozen food industry
This can have a large impact on repeat purchaser. The top 3 attribute for unfavorable to concept are limited selection, too expensive, and freshly made and dated. This is an alarming concern as TruEarth does not have a lot of levers to pull on to convert these unfavorable consumers to like the product. From exhibit 9, the data shows market response to the 168 consumers after home trial. 65% of the respondents were favorable to the concept. The top 2 attributes are like the sauce and like the fresh ingredients. The same group commented on the need to lower price as suggested improvements.
Conversely, the 35% of the respondents that are unfavorable to the concept was concerned about the price of the product and the perception that this product is more expensive than takeout. The top improvement ideas from this group were lower price and overall taste. In summary, the market research gave TruEarth a few valuable points:
Summary of financial analysis. In the mall intercept, 60% of the respondents replied in the Top 2 boxes, this means the responds are either definitely would buy or probably would buy. The percentage number can be broken down into TruEarth customer or non-customer. By using the available awareness and purchase behavior estimates, one can calculate the trial volume as shown in appendix. This calculation included the sensitivity analysis to the penetration of TruEarth customer base for the pasta product. In summary, the total volume is 1. 685MM to 2. 408MM, which translate to retail market size of $21 million to $30 million.
This estimate exceeded the wholesale volumes of $12 million to meet the company’s return requirements.
Status Quo This alternative recommends TruEarth to hold off on the launch of the pizza product. TruEarth should focus on the key dislike attributes based on the above analysis and come up with an action plan on what and how to improve. The main driver for improvement is the pricing strategy. The secondary driver is to improve on the consumer penetration rate of TruEarth brand name.
The analysis shows there is good demand for this product, therefore re-launch should be considered.
Launch with focus on health conscious segment This alternative recommends TruEarth to proceed with the product launch. Based on the calculations shown in the appendix, the total target volume ranges from 1. 685 MM to 2. 408 MM units. The marketing focus should be on the health conscious segment consumers. According to the situational analysis, a key attribute favorable to this concept is that this is made from healthy ingredients (exhibit 6).
It is important to send the message out that TruEarth pizza is not only an indulgence, but it can also be made a healthy choice. This is a blue ocean strategy to attract new consumers that are currently not consuming pizza with some level of frequency. This will help increase the overall penetration rate of the brand TruEarth and as a result improve sales volume and repeat purchases.
Launch with focus on converting pizza eater from delivery, take-out, and restaurants to healthy TruEarth brand This alternative recommends TruEarth to proceed with the product launch with the assumption of sales volume as shown in the appendix.
Based on the given info, over two-thirds of the pizza sales volume came from delivery, take-out, and restaurants (case). The focus is to convert this group of consumers to trade in the convenience of buying a ready to eat pizza for a healthier pizza indulgence that requires a bit of preparation work. This group of consumers represents the biggest group of pizza sales in today’s scenario.
The decision analysis involved the evaluation of the three alternatives listed above against the six measureable criteria to determine which alternative is best suited for TruEarth.
The ultimately goal for TruEarth is to identify the right alternative that will best support the maximum sales revenue growth and profit. Appendix shows a decision analysis matrix and a pair-wise table that defines the ranking of importance for each criteria. The first four criteria helps to evaluate which alternative will most likely achieve the best sales volume. The final two criteria ensure a proper balance of the alternative against the company’s core thinking and strategy. Results from decision analysis matrix
Alternative 1 had a total score of 20 points. This is the lowest among the three alternatives. The main reason is that this will not achieve any incremental sales volume, revenue, or profit for TruEarth. The only benefit is that it eliminates the need for new investment spending and possibility additional expenses. Alternative 2 and 3 had a total score of 61. 25 and 51. 25 points respectively. The main determinant is that alternative 2 reaches more customer base with the focus of all healthy conscious consumers in the market.
This is a better option to promote repeat purchases. Alternative 3 is still a viable option as it still meets target volume in the worst case. From a marketing plan, alternative 2 best suit TruEarth as it continues to focus on attracting health conscious consumers to this brand name. This alternative can indirectly help sales of the pasta product. In summary, alternative 2 is the best recommendation. Final Recommendation The marketing plan is to launch the pizza concept with the focus surrounding on this product as a healthy simple to the prepared home cooked meal.
The key point is that pizza is no longer an unhealthy snack. It is now a healthy selection for a family that has health as one of the key attributes during food selection. As an example, this can parallel the marketing plan for Diet Coke or Coke Zero. These products are essentially created to provide an alternate selection for the health conscious consumers. The intention is not to convert existing Coke customers to drink Diet Coke, because this will not yield any incremental revenue for the company.
For TruEarth, the product extension of whole grain pizza must boost overall revenue and customer awareness of the healthy selection. This product will attract Customers, such as the “runners from running room” and weight watcher, to think of this product the next time they are looking for a home meal replacement.
Secondly, the focus of health conscious group will also include the existing TruEarth customers that are currently pizza eaters. It is much easier to retain existing customers to try new products extension compared to attracting new customers to a brand name using a new product.
It is possible to enter into joint venture development projects with a corporation such as Jenny Craig or Runner Room to help increase the awareness of this brand and what this brand stands for. It is also possible to collaborate with med size pizza restaurant chains, such as Boston Pizza, to carry the whole grain pizza as a product line. The anticipated results from 1st year sales should fall between the average and optimistic projection ($26 to 30 million dollars).
A high level plan for implementation is as follows: Final product confirmation, including cost, quality, selections, etc
TruEarth should decide to proceed with the launch of the whole grain pizza concept.
The calculated projected retail market of $21 to 30 million dollars will meet the business requirements to proceed with this project. Based on the BASES survey data and marketing plan, TruEarth should expect to hit this range. Three alternatives were identified with the purpose of evaluating which one will best help TruEarth generate the maximum revenue and profit. This product should be initially launched with the target segment group of the health conscious consumers. It is expected that they are the “lowest hanging fruit” that will respond favorably to this product.
Truearth Case Analysis and Solutions. (2020, Jun 02). Retrieved from https://studymoose.com/truearth-case-analysis-and-solutions-essay
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