GRom

Young (founded in 1993) but organized company

Producer of healthy gourmet pastas and sauces
from superior ingredients
Product line:
standard pastas
whole grain pastas
tomato-based sauces
refrigerated fresh pastas
pastas with blended ingredients

Home Meal Replacement
increase in dual-income households
time poverty
desire for variety and freshness
Semi-prepared products
Consumers still involved in preparing dinner, but it is
easier
Growth of refrigerated fresh pasta
Awareness of the importance of whole grains in
diet
Assess the current situation on the market
Analyze the position of TruEarth
Assess whether TruEarth should launch the
pizza concept and what the volume would it
be?
Segments
delivered/takeout(47%)
restaurant pizza (23%)
frozen pizza (19%)
homemade pizza (2%)
Competitors
Giants: Nestle and Kraft
Medium-sized: Papa Johns and Pizza Hut
TruEarth-like: the only such competitor is Rigazzi Brands
Threat!
Rigazzi is about to launch a similar whole grain pizza
Ideas
Quick and tasty home meal replacement
broad range of choices
Preparation
focus groups
market research
advertising and promotion ($10m)
large investment in production facilities
Promising trial results
Performance
$18m retail sales in 2nd half of 2006
$35m in 2007
slowdown in 2008
Rigazza is not far from launching its whole
wheat pizza

Refrigerated pizza brings up with an association
with frozen pizza

The offered price can be too high

Advantages of our pizza over other refrigerated
pizzas can be overestimated
During trial period the product is consumed
by 3 types of households:

1. Consumers of Cucina Fresca Pasta.

2. Non-consumers of brand who already
aware of product.

3. Non-consumers of brand who become
aware of product due to additional
advertising and promotion.

Additional marketing plan would cost $10M
and results in 800 GRP.

Additional advertisement would affect only
unaware targeted population with pure
increase in awareness on 17%.

The wholesale volume to be exceeded is
$10M+$12M = $22M

#Hh (Pasta consumers) = [Target Hh] x [CF
customers Rate] x [Trial Rate for TruEarth
customers (by thumb rule)] * [ACV] *
[Customer Awareness] = 55.8 * 0.11 * [26 *
0.8 + 53*0.3] * 0.4 * 0.5 = 0. 47 MM

#Hh (Aware Non-customers) = [Target Hh] x
[Non-customers Rate] x [Trial Rate for non-
customers (by thumb rule)] * [ACV] *
[Customer Awareness] = 55.8 * 0.89 * [15* 0.8
+ 39 * 0.3] * 0.4 * 0.12 = 0. 65 MM

#Hh (UnawareNon-customers) = [Non-
consumers Hh ] x [Rate of unaware non-
comsumers] * [Trial Rate for non-customers
(by thumb rule)] * [ACV] * [Customer
Awareness from additional advert] = (55.8 *
0.89 ) ( 1- 0.12)* [15* 0.8 + 39 * 0.3] * 0.4 *
0.17 = 0. 81 MM

Whole trial #Hh = = 0. 47 MM + 0. 65 MM + 0.
81 MM = 1.9 MM



Define those who are favorable to product as
participants of the trial period.

Hence, Only people who are favorable to
product influence the repeat rate of it.

With given prices 28% of population which is
favorable to product suggested that pizza
needs no improvement (Exhibit 10).

Hence even in the worst scenario at least 28%
of trial households would participate in repeat
period given price unchanged.

The price of the kit (pizza + toppings) remains
unchanged 12.38$

Repeat volume = [Trial Hh] * [Repeat Purchase
Occasions] *[Repeat Transaction Amounts] *
[Repeat Rate] = 1.9MM * 2.0 * 1.25 * 0.28=
1.3MM

Whole Volume during financial year = Repeat
volume + Trial Volume = 1.33+ 1.9 =
3.2MM

Retail Sale Volume = [Whole Volume] * [price
per kit] = 3.2MM * $12.38 = $39.6 MM

Gross revenue = Retail Sale Volume * [1-
Retailers Part] = $39,6 MM * 0.65 = $25.7 M

Gross profit = Gross revenue Investments
=$25.7 M- 22 M = $3.7M

Even in the worst scenario the firm would meet
its requirements with $3.7 M of gross profit.

Even in the worst scenario the expected
volume to produce exceeds 3.2 MM units.

The firm definitely should enter this new
market.