Truearth Case Study Pdf

 

Group 3 | Section C

Porter’s Five Forces Analysis

 of the Whole Grain Fresh Refrigerated Pizza Market

Threat of Competitors: HIGH

TruEarth faced a formidable competitor in Rigazzi Brands, which was not only of a similar scale, but also sold all the same products as TruEarth. It competed with TruEarth for the limited shelf space &

had previously targeted TruEarth’s high priority cities with its own line of whole grain

 fresh pasta. It had also offered high trade discounts to retailers and high-value coupons to consumers in the process. It had also tested its own pizza concept and was likely not far from an introduction.

Threat of New Entrants: HIGH

Like in the case of whole grain pastas (pp 5-6), it would not be long before other companies figured out how to make whole grain fresh refrigerated pizza that also tasted good, just like Rigazzi. The entry barrier was low. Therefore, in the whole grain fresh refrigerated pizza market, TruEarth could face a high level of threat from new potential entrants.

Threat of Substitutes: HIGH

Whole grain fresh refrigerated pizza faced a whole array of substitute products. For those customers who were inclined to consume whole grain pizza out of health concerns, restaurants such as Papa

John’s and Pizza Hut, as well as local pizzerias had offerings.

In general, pizzas were available as takeout/delivery, restaurant pizzas refrigerated pizzas, frozen pizzas (from Kraft and Nestle) and homemade pizzas.

Threat of Buyers’ Growing Bargaining Power: MODERATE

As more players enter the whole grain fresh pizza market, the bargaining power of the buyers’ would

increase. However, TruEarth had the reputation of supplying high quality and tasty products and hence, the threat would be moderate.

Threat of Suppliers’ Growing Bargaining Power: ?

TruEarth used only high quality ingredients, and hence was susceptible to some extent to supplier’s

bargaining power. However, the case does not provide much data regarding this aspect.

From Porters’ model, the market does seem to face a high level of threats, and does not seem very

attractive.

Quantitative Market Analysis

Assumptions

Some of the assumptions considered in the quantitative analysis are given below: 1.

The awareness level of Cucina Fresca customers with regard to the pizza offering would be higher (50%) as compared to a 12% awareness level for non-customers 2.

The penetration level of Cucina Fresca among the target market for the pizza product varied from 5% to 15% and was reported to be 11% by the BASES survey 3.

The pattern of 80% of “definitely would buy” and 30% of “probably would buy” respondents

actually making a purchase would hold in case of the pizza market as well.

 

TruEarth Healthy Food

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 Case Analysis

Question:

Why was Cucina Fresca Pasta successful? How would you compare Pizza opportunity to that of Pasta?

The success of Cucina Fresca brand was largely because of the brave pioneering efforts of TruEarth in launching the product before competition. There was an ever increasing demand for quick home meal replacement, refrigerated pasta, and whole grain food options that did not sacrifice taste. The company therefore took the first mover advantage. Further, Cucina Fresca was a quick and easy to cook meal along with variety choices available to consumers. Needless to say it was healthy too as it was made of whole grain pasta. Cucina Fresca came along with cooking instructions and also the best sauce option. Thus, it was a combination of both perfect quality and quantity and far tastier than its competitors. Thus, all these factors led to the success of the Cucina Fresca. The estimated annual sales in the US market were $53 billion in 2007 with 33 % of restaurants-goers exhibiting a strong interest in whole grain crust. However, identifying the correct market for the sale of whole grain pizza, approximating its size as well as its business potential was critical in success ratio. The table below gives the comparison between the two opportunities:

PASTA PIZZA

$4.4 Billion Market.

It is considered as a Meal

Purchase Intent was as high as 33%

It was launched as a new product

Has First Mover Advantage.

 No topping product

 No customization in taste

More investment

11% sales, i.e. $5.8 Billion Market (about 30 percent bigger)

It is considered as an Indulgence

Higher “Strong Intent” (76%)

Brand awareness established due to Cucina Fresca

Perceived price value gap was high

Has Heavy duty competitors

Customization of taste

Incremental investment - substantially less

Question: What difference do you foresee in the actual product development process for pasta and pizza?

The following table shows the difference in the actual product development process for pasta and  pizza:

STAGES PASTA PIZZA

Idea Generation Seeing the growing demand for healthy, gourmet products in the market, the company wanted to tap the HMR market. The increasing competition in pasta segment and large size of the pizza led to the generation of the idea. Concept Screening Only formal survey like small intercept was done. Concept test, Mall intercept and interview of grocery shoppers Product Development and The product came out with 5 variety of product and it was convenient for IN this case, the company did home trial through sample kits and taste kits

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