Desarrollo Socio-Economico
TRUEARTH PIZZA PURCHASE VOLUME ESTIMATE, YEAR 1
Trial Purchase Intent
Definitely 18%
% of “Definites” who actually buy 80%
“Definite” purchases 14.4%
Probably would buy 43%
% of “Probables” who actually buy 30%
“Probable purchases 14.3%
Trial Rate (Definite + Probable) 28.7%
Marketing Plan Adjustment
Gross Rating Volume 800
Projected consumer awareness 16.1%
All Commodity Volume distribution 40%
Marketing Adjusted Trial Rate (=28.7% x 16.1% x 40%)
Trial Rate x Awareness x ACV 1.9 %
Target Households (MM) 58.8 MM
Trial Household 1.1 MM
Repeat Purchase Inputs
Trial Households (MM) 1.1 MM
Repeat Purchase Occasions 2.0
Repeat Transaction Amounts 1.25
Repeat Rate, by Product Scenario
Excellent Product 49%
Repeat Volume
Excellent Product 1.3 (= 1.1 x 2.0 x 1.25 x 49%)
Total Forecasted Units of Pizza (MM) -> assuming Excellent Product
Trial Volume: 1.1 MM
Repeat Volume: 1.3 MM
Total Estimated Volume (MM) 2.4 MM
Forecast Purchase Wholesale Revenue of TruEarth Pizza
Total Estimated Volume (MM) 2.4 MM
Average Spend per Purchase (retail) $12.38
Retailer Margin 35%
Wholesale Revenue US 19.3 million (2.4 x $12.38 x 65%)
Company’s return requirements US $12 million
Company’s marketing spending US $10 million
Verdict
According to the calculation, TruEarth’s Pizza product’s estimated wholesale revenue will cover return requirements but not marketing spending.
As such, given that:
1. The total potential for store bought refrigerated pizza is US$ 5.8 billion, so there is still a lot of room for TruEarth to grow its sales in subsequent years.
2. Considering the existence of Rigazzi as a main competitor who will launch its pizza product, Cucina Fresca pizza need to launch before them to get first product benefit
3. If marketing spending is considered as brand investment over several years then probably it is ok if during first year TruEarth does not cover 100% marketing spending as TruEarth will recover the
Trial Purchase Intent
Definitely 18%
% of “Definites” who actually buy 80%
“Definite” purchases 14.4%
Probably would buy 43%
% of “Probables” who actually buy 30%
“Probable purchases 14.3%
Trial Rate (Definite + Probable) 28.7%
Marketing Plan Adjustment
Gross Rating Volume 800
Projected consumer awareness 16.1%
All Commodity Volume distribution 40%
Marketing Adjusted Trial Rate (=28.7% x 16.1% x 40%)
Trial Rate x Awareness x ACV 1.9 %
Target Households (MM) 58.8 MM
Trial Household 1.1 MM
Repeat Purchase Inputs
Trial Households (MM) 1.1 MM
Repeat Purchase Occasions 2.0
Repeat Transaction Amounts 1.25
Repeat Rate, by Product Scenario
Excellent Product 49%
Repeat Volume
Excellent Product 1.3 (= 1.1 x 2.0 x 1.25 x 49%)
Total Forecasted Units of Pizza (MM) -> assuming Excellent Product
Trial Volume: 1.1 MM
Repeat Volume: 1.3 MM
Total Estimated Volume (MM) 2.4 MM
Forecast Purchase Wholesale Revenue of TruEarth Pizza
Total Estimated Volume (MM) 2.4 MM
Average Spend per Purchase (retail) $12.38
Retailer Margin 35%
Wholesale Revenue US 19.3 million (2.4 x $12.38 x 65%)
Company’s return requirements US $12 million
Company’s marketing spending US $10 million
Verdict
According to the calculation, TruEarth’s Pizza product’s estimated wholesale revenue will cover return requirements but not marketing spending.
As such, given that:
1. The total potential for store bought refrigerated pizza is US$ 5.8 billion, so there is still a lot of room for TruEarth to grow its sales in subsequent years.
2. Considering the existence of Rigazzi as a main competitor who will launch its pizza product, Cucina Fresca pizza need to launch before them to get first product benefit
3. If marketing spending is considered as brand investment over several years then probably it is ok if during first year TruEarth does not cover 100% marketing spending as TruEarth will recover the