Truearth Case Analysis Essay
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Competitors began offering similar products in 2008 which cause the growth to slow. * Some of their competitors are Nestle and Kraft. * The do not make a rash decision. The success of Cucina Fresca was a calculated risk based on significant research. The company only uses high-quality durum wheat and mostly organic ingredients. * The company further raised consumer awareness through several promotional programs, using coupons, magazine advertisements, and in-store demonstrations. * Idea generation. As the company grew, the idea generation process became a more systematic evaluation of consumer trends, with formal management brainstorming sessions.
* Three important developments reshaped how consumers purchased groceries. The first important trend was a new, loosely defined food category in the United States— “home meal replacement” (HMR).
An increase in dual-income households had led to higher disposable incomes coupled with “time poverty,” as both workers found themselves lacking the time to cook a meal and clean up afterward. Further, consumers had tired of unhealthy carryout and fast food and started seeking greater variety and freshness. Supermarkets began meeting HMR needs by enhancing their fresh, prepared food offerings. * There was no fresh whole grain pasta with broad distribution, with 85% of those in favour of the concept having never purchased it before.
In an attempt to retain our leadership position and extend our product line, we have invested in the development of a new whole grain pizza. We must decide whether to launch our pizza offering. Our decision must take into consideration that the new product’s wholesales volume estimates must exceed $12 million to meet our return requirements. The decision-making process is time sensitive because one of our competitors, Rigazzi Brands, has already tested a whole grain pizza concept and is not far from introduction. Given these factors, we can either debut or suspend the product.
Based on sales volume estimates and situation analysis, I recommend that the company launch the pizza. The introduction will result in a wholesales volume that exceeds our return requirements and these additional funds can be reinvested into the firm. Option I: Launch Whole Grain Pizza Product The launch of a whole grain pizza kit will capitalize on the same consumer trends that prompted the release of Cucina Fresca: growing demand for quick, customizable home meal replacements that are refrigerated and available in tasty, whole grain options.
Also, pizza is a core component of the Italian-American food category that we cannot ignore because it is frequently purchased by customers on a monthly basis. Our whole grain pizza product resolves the time- and health-related concerns of American consumers in one of their favorite dishes (see Exhibit 1: SWOT Analysis for Whole Grain Pizza Product). The growing demand for a whole grain crust has been addressed by local pizzerias and take-out franchises, but not in the store-bought refrigerated pizza market. The immediate release of the pizza kit would allow us to penetrate this market before Rigazzi and benefit from first mover advantages.
As a result, our 1st year wholesale volume estimates would exceed our return requirements by approximately $4. 5 million (see Exhibit 2: Whole Grain Pizza Concept Purchase Volume Estimate, Year 1 [Excellent]). The excess returns can be reinvested into the firm and used to expand our manufacturing facilities or further extend our product line. If the pizza kit is launched, the firm must consider the potential consequences. We must assess the impact it will have on Cucina Fresca’s success and production, as well as the TruEarth image if the product flops (see Exhibit 1: SWOT Analysis for Whole Grain Pizza Product).
Likewise, we must review the potential consequences if the wholesale volume estimate is calculated using the percentage repurchases when the product is perceived to be of mediocre or average quality (see Exhibit 3: Whole Grain Pizza Concept Purchase Volume Estimate, Year 1 [Mediocre, Average]. Option II: Do Not Launch Whole Grain Pizza Product The competitive environment of the pizza market and quality-related issues discovered in the BASES studies indicate that the whole grain pizza product should not be launched. Although the market generates high sales, it is extremely crowded and dominated by powerful players like Kraft and Nestle.
Furthermore, the ability to market a tasty whole-grain pizza crust and communicate its benefits will be difficult because the American public perceives whole grains to be less appetizing than white flour. Attempting to change consumer preferences is timely and costly. By foregoing the release of the pizza kit, the company can focus solely on Cucina Fresca. The operating facilities will not have to worry about manufacturing two different product lines and our distribution infrastructure will not be overworked (see Exhibit 1: SWOT Analysis for Whole Grain Pizza Product).
Likewise, our marketing team could concentrate on attempting to revive the pasta meals. This product has proven to be successful at one time. Investing all of our resources into the pizza product could be both disastrous and expensive considering we have no experience in this market category. However, by shelving the pizza, an opportunity is lost because our company would be ignoring the needs of a potentially profitable market. The health-conscious trend is not going away and our firm needs to expand our product line in order to retain our leadership as a gourmet, healthy alternative.
Recommendation At this time, our company would benefit the most by launching the new whole grain pizza product. By not launching the pizza kit, our investments and time can be focused on expanding the pasta line and retooling the marketing campaign to improve sales; however, in order to diversify the TruEarth brand name, innovation is needed. Although the pasta market may seem safe, we must venture into new categories in order to raise brand awareness, seek new customers, and increase our profits. Exhibit 1: SWOT Analysis for Whole Grain Pizza Product Strengths| Weaknesses| Highly selective about ingredients * Existing infrastructure for coupons, magazine advertisements, in-store demonstrations * Existing formal 4-step process for research and development * Incremental investment for pizza less than pasta.