Data Sensitivity Analysis
TruEarth Healthy Foods: Market Research for a New Product Introduction
TruEarth was founded in 1993 in St. Louis Missouri, by Gareth DeRosa, a young entrepreneur. The company was one of the first companies to focus on whole grain products. It provides high quality gourmet pastas, sauces and meals. In the third quarter of 2006, the company had launched a fresh whole grain pasta meal kit sold through supermarkets. It was the most successful product launch in the company history.
The company is now considering the product line extension by introducing a refrigerated pizza kit. Pizza market in the US was estimated at $53 billion in 2007, compared to $4.4 billion pasta market. Since the company had already made large capital expenditure in packaging equipment, the incremental investment for pizza was substantially less than pasta. To meet the company’s return requirements, wholesale volumes of $12 million were needed. The team also believed that the customer base that had already tried the fresh pasta would have higher awareness of the pizza product.
The Cucina Fresca project, introducing fresh pasta had been successful, however there are certain differences between the pasta and pizza project:
In the fresh whole grain pasta market, the company had the first mover advantage.
Pasta required TruEarth to upgrade its manufacturing facility, thereby requiring more initial investment.
Another competitor had also tested a pizza concept and was not likely far from an introduction. Therefore, TruEarth needs to move fast.
Pizza is being sold at a higher price.
Pizza is viewed as an indulgence, and not as a meal.
Pizza’s Purchase Volume Estimates (Exhibit 7):
Market Size: 58.8 MM = 58,800,000
Definitely would buy: 18%
% of Definites who actually buy = 80%
Probably would buy: 43%
% of Definites who actually buy = 30%
Therefore, Trial Rate (Definite + Probable) = (0.8*18 + 0.3*43) = 27.3%
Market Plan Adjustment:
Cucina Fresh Pasta customers = 11% of 58.8MM =
TruEarth was founded in 1993 in St. Louis Missouri, by Gareth DeRosa, a young entrepreneur. The company was one of the first companies to focus on whole grain products. It provides high quality gourmet pastas, sauces and meals. In the third quarter of 2006, the company had launched a fresh whole grain pasta meal kit sold through supermarkets. It was the most successful product launch in the company history.
The company is now considering the product line extension by introducing a refrigerated pizza kit. Pizza market in the US was estimated at $53 billion in 2007, compared to $4.4 billion pasta market. Since the company had already made large capital expenditure in packaging equipment, the incremental investment for pizza was substantially less than pasta. To meet the company’s return requirements, wholesale volumes of $12 million were needed. The team also believed that the customer base that had already tried the fresh pasta would have higher awareness of the pizza product.
The Cucina Fresca project, introducing fresh pasta had been successful, however there are certain differences between the pasta and pizza project:
In the fresh whole grain pasta market, the company had the first mover advantage.
Pasta required TruEarth to upgrade its manufacturing facility, thereby requiring more initial investment.
Another competitor had also tested a pizza concept and was not likely far from an introduction. Therefore, TruEarth needs to move fast.
Pizza is being sold at a higher price.
Pizza is viewed as an indulgence, and not as a meal.
Pizza’s Purchase Volume Estimates (Exhibit 7):
Market Size: 58.8 MM = 58,800,000
Definitely would buy: 18%
% of Definites who actually buy = 80%
Probably would buy: 43%
% of Definites who actually buy = 30%
Therefore, Trial Rate (Definite + Probable) = (0.8*18 + 0.3*43) = 27.3%
Market Plan Adjustment:
Cucina Fresh Pasta customers = 11% of 58.8MM =