Truearth Healthy Foods

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It was determined from the study that about 54% of non-customers of TruEarth would definitely or probably buy the whole grain pizza; and 79% of its customers would definitely or probably buy the product as mentioned in Exhibit 7.

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After the respondents had used the product, they were called back in a period of 7-10 days to give a feedback. 168 respondents participated in the in-home test. Out of which 109 gave a positive feedback. Majority of the respondents made a suggestion that the company should lower the price, as stated in Exhibit 9.

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Taking into account that a consumer purchases 1.25 toppings, the price would come out to be about $12.38 for the whole grain pizza. Exhibit 10 shows that 14.3% of those who favored the new product said they would be willing to pay this price.

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3) Issues/Symptoms

One of the issues that led to TruEarth’s decision in stepping into a new market segment was the slowing down of growth in 2008, after the success of its star product Cucina Fresca. TruEarth was losing its unique selling proposition of whole grain, healthy pasta, as competitors were beginning to copy. As TruEarth decided to launch a healthier pizza option, it decided to conduct a market analysis of the target segment. The results of this market analysis presented some real issues for TruEarth. Firstly, out the total pizza market in 2007, only 11% of it consisted of store bought pizza with sales amounting to $5.8 billion (See Appendix, Figure 1). This was a particularly small segment of the market available to TruEarth, especially against its competitor giants Nestle and Kraft as well as new entrants such as Rigazzi. Hence, TruEarth, not only had a small playing ground, but also, faced strong competition in that playing ground. Furthermore, the change in consumption trends amongst the population posed an issue for TruEarth. More and more people were becoming health conscious and regarded pizza as a “bad carb”, and were cutting it out of their diets, shrinking the market further. Furthermore, as according to Rosie Carlton, Director Business Development, consumers have a lot of options when it comes to pizza consumption. These options may not only be convenient but also cheaper. TruEarth needs to provide the same freshness and superior taste that is being provided by delivery and restaurant options. Moreover, pizza is thought to be a hedonic or pleasure seeking product, and consumers may not want to have a healthier option for it.

4) Major and Minor Problems

Problem Statement

“The decision to be made by the Brand Manager, whether to launch a whole grain pizza or not?”

Initially TruEarth had informal and intuition based product development. The management was of the view that trying new products could help in identifying the increase in profits in a less risky way. The projections were often different than the actual results. The retailers demanded a “sell through” percentage in order to avoid excess inventory. As a result of there, TruEarth made its process of research and development more formal by categorizing four main steps: Idea generation (evaluating consumer trends in a more systematic manner), Concept screening (evaluating interest and purchasing behavior), Product development and testing (testing prototypes through focus groups), and Quantification of volume (estimating potential sales).

In the early 1990s, there was a change in consumer purchasing behavior. A food category named as “Home meal replacement” was the first trend. Few consumers demanded “semi-prepared” options. Secondly, there was growth in the refrigerated fresh pasta. Lastly, consumers became aware of the importance that whole grains have in diet. TruEarth had to focus on the new trends in order to compete with its competitors.

In 2006, the brand manager of TruEarth launched “Cucina Fresca”, a fresh whole grain pasta. By making sales of $23 million in 2007, it became the most successful product that was launched by TruEarth. However in 2008, TruEarth faced competition from Rigazzi because Rigazzi sold similar products and was of similar scale. When Rigazzi introduced Pasta, the sales of TruEarth declined. Rigazzi also offered discounts and high value coupons. In order to compete TruEarth had to bring innovation, therefore, it made investment in offering pizza.

Pizza being core component in Italian and American food industry, had sales of $53 billion in United States in 2007. 77% consumers ate pizza once a month. TruEarth also faced competition from Nestle and Kraft. According to the Business Development Director, Rosie Carlton, Nestle and Kraft are the key players in offering the frozen pizza at a lowest cost. In order to compete with these two, TruEarth has to make the crust of the pizza so good that the consumers feel it is freshly made. Otherwise it will be difficult to compete with other players as many options are available to the consumers. It has to focus on numbers in order to be successful in offering pizza.

Another problem faced by TruEarth was “Time constraint” as Rigazzi also tested the concept of Pizza, TruEarth did not have enough time to wait and it had to start Pizza as soon as possible in order to gain advantage.

5) Alternative Decision

By studying the nature of problem, the alternative decision making that TruEarth can carried out are quite evident in the case and are explained below:

- The first alternative available to TruEarth is to launch their pizza product before Rigazzi and gain a first mover's advantage which they have already enjoyed in the case of Cucina Fresca - whole grain pasta. By taking on this approach, TruEarth will be able to establish firm holding over the market and will have better time to penetrate by offering higher quality and better taste before competitors enter the market, hence will be able to enhance their existing brand loyalty.

- Secondly, if some of the employees of TruEarth do not agreed upon the viability of a pizza line and are not fully convinced or satisfied from the research findings of Nielsen as stated in the case, then TruEarth can launch its pizza line after the launching of Rigazzi's pizza offering. As by doing this, they will be able to get better and realistic insight into consumer preferences and market trends with regards to the