Marketing and Pasta
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Some of the reasons for the success of Cucina Fresca Pasta are, Thorough market survey – The company organized its R&D division and outsourced the market survey to Nielson Bases. The survey took into consideration both- the market potential as well as behavioral considerations. Easy customizable options – Consumers were provided with a wide range of sauce options. They had simple instructions/ recommendations for preparing the meal. Smaller pack sizes – This gave a feeling of freshness. It was also easier for first time/ skeptical consumers to purchase trial packs. Home meal replacements- Cucina Fresca provided a suitable alternative to home makers/ individuals who faced time constraints but at the same time had a passion for cooking. TruEarth was successful in catering to the unmet demand for healthy pasta which tasted good as well. It served as a replacement for refrigerated pasta which was considered to be less tasty and authentic. Whole grain pasta solved the problem of bad carbohydrates, thus catering to the health conscious consumers. They had prior experience and existing capabilities in the pasta market which helped them successfully launch Cucina Fresca.
How would you compare the pizza opportunity to that for pasta? Comparison of Pizza opportunity to that of Pasta is tabulated as below,
Launched as a New Brand
Brand awareness already created due to Cucina Fresca
$4.4 Bn for refrigerated pasta
$ 5.8 Bn for refrigerated pizza
Retail stores, supermarkets
Dine-in, take-out, in store refrigerated
Just one main competitor, Has first mover advantage
Attempting to be a market follower, increasing competition in the future Consumer perception
Highly health conscious consumers (85% of consumers reacted positively) Viewed as a matter of indulgence, so health could take a back seat (only 33% of consumers reacted positively to survey) Consumer awareness
Being the first mover, had to build customer awareness from scratch Could leverage on the consumer awareness of its whole grain pasta Target Households
Incremental investment Substantially less
What differences do you foresee in the actual product development process for pasta and pizza? IDEAGENERATION:
Pasta: Refrigerated pasta was growing faster than dry pasta. And there was no strong player in fresh pasta offering a compelling whole grain option. Market was also shifting from high processed foods towards greater quality and authenticity. The trend of “Home meal replacement” had started in USA. Customers have also started getting aware of the importance of whole grains in diet. Pizza: Market segment of pizza is greater than pasta. People desire for fewer carbohydrates in diet and pizza demand has been hurting in certain demographics due to health concerns. Market survey show that 33% of the restaurant goers have a strong intent in whole grain crust. There is a lack of gourmet pizza with healthy whole wheat crust and high quality ingredients.
Results indicated that 76% of the customers would purchase the product either probably or definitely.85% of the people were in favor of pasta across 300 surveys. At 35% gross margin there was a 14 to 24 mil $ opportunity. Pizza: 33% of the people had a strong interest towards whole grain crust.
PRODUCT DEVELOPMENT AND TESTING
Pasta: Truearth’s product development teams developed fresh whole grain pasta line with a full range of choices .the concept was tested with focuses groups which gave positive feedback. The team then decided to conduct a market study to estimate the total potential sales. Pizza: A pizza product would consist of the basic packing plus add ons of 3 extra cheese slices, sliced mushrooms and hormones free chicken sausages. Lot of interviews were also conducted.
VERIFICATION OF VOLUME
Pasta: Bases completed 300 concept tests across cities. Bases I study concluded with 85% of the people in favor of the idea. Bases II also created a scenario for people with experience on other food practices. Pizza: Bases I created a market research in 7 cities, interviewing customers over 18 years. After BASES II study, customers were given sample kits and they were interviewed about it after 7-10 days.
Is there a first-mover advantage in pizza similar to fresh pasta? Would you launch the pizza? In business, first mover advantage is the advantage gained by the initial significant occupant of a market segment. Sometimes, first movers are rewarded with huge profit margins and gain a monopoly-like status if they are able to capitalize on that advantage. There is a huge latent market for pizzas in the US. Pizzas are a key component of the Italian-American food category. Over two-thirds of pizza sales volume came from delivery, take-out and restaurants. However, pizza demand in key demographics had been hurt by health concerns and the popularity of diets that restricted or cut out carbohydrates. This presented a large hidden market for whole-grain pizzas.
This has been suggested by independent surveys of restaurant-goers as well. The survey says that 33% of people had a “strong interest” in a whole grain crust. The demand for whole grain pizzas is quite evident from the fact that increasing numbers of local pizzerias offered it largely in the metropolitan areas. Major chains are also introducing whole-wheat or multi-grain crusts. This clearly indicates that there is an unmet demand for pizzas that were fresher than frozen pizza, healthier than take-out. This segment can be effectively capitalized if they roll out the product first. Further, the incremental investment for pizza was substantially less than for pasta, which included some re-tooling costs and the marketing plan. The people who had tried their fresh pasta would have higher awareness of the pizza product. Purchase Behavior estimates also say that market for the pizza offering were 30% bigger than the pasta market.
Based on the studies, it would be a prudent decision to launch the pizza. The product had above average acceptance rates. Therefore, it can be said with a fair amount of confidence that this product if launched has the potential to meet the revenue requirements of the company. The product is sure to be successful in its first year and hopefully gain a substantial market share in its second year. Finally, the fact that people have begun to associate TruEarth to be a provider of healthy food that tastes good, this new offering is sure to hit the target.