INTRODUCTION Started by DeRosa in 1993, TruEarth was a pioneer in quality authentic pasta. It was the first to focus on healthy whole grain products. It launched the ‘Cucina Fresca’ line of wholegrain pastas with sauces that could be purchased on the side. This line was highly successful, consisting of two types of pastas with 60% and 100% wholegrain. In addition to the focus on health, a variety of pastas like tortellini, rigatoni etc. was introduced. The venture grew in scale and hence moved from an informal to formal process. DeRosa’s team worked in a structured manner starting with Idea generation, then proceeding to Concept Screening. A lot of effort was put into Product development and Testing. First the products were released on a small scale in the more populous cities; consequently the supply was extended to other cities as well. SITUATION ANALYSIS Customers in the early 1990’s were looking for quick fix meals. They were getting tired of takeout, fast foods and frozen foods. Money was aplenty but time was short. People were ready to pay for good food that was fresh and could be prepared at home without too much effort and at the same time it wasn’t effortless like ready to eat. In addition to this, a lot of new fads and diets were coming up, most of which advised against carbs. This gave rise to a new type of informed, health conscious customers. TruEarth explored the latent demand for food that was both healthy and tasty. It came up with the idea of whole grain pastas to tap the aforementioned markets. There was a latent demand for healthy food which TruEarth was looking to capitalize on. They began by concept testing new products with focus groups and used Nielsen BASES to conduct BASES 1 test to study the consumer awareness. The results of the tests were largely positive (around 76%). The tests indicated revenues ranging from $21million to $37 million. They updated their manufacturing facility to cope up with increased demand which peaked in 2006-07. Performance: The performance of the pasta line ‘Cucina Fresca ‘was very encouraging. It was rolled out in the year 2006 wherein it made revenue of $18 million. In the year 2007 the revenue was $35 million dollars. However the sales came down in the year 2008.The main competitor in this segment was Riggazi. Rigazzi targeted TruEarth’s market by offering discounts and coupons to customers. However TruEarth retained the upper hand since it was the first one to roll out the whole grain pizza.
Opportunity: BASES survey indicates that 77% of consumers ate pizzas once a month, and the pizza market on the whole was a $53 billion market, out of which 11%, i.e. $4.4 Billion, is refrigerated pizza market. Also 33% of people surveyed had shown interest in whole grain crust pizzas. People were looking at more fresher and healthier pizzas and foraying into refrigerated pizza kit is an option before TruEarth. Competition and Threat: Kraft and Nestle are two major established players in low cost frozen pizza market. So there is heavy competition already. Also many consumers don’t consider pizza to be a meal and hence promoting whole grain pizza as a single serving meal may not be a good idea. Rigazzi is also close to launching its own whole grain pizza line. Problem statement: Should TruEarth go ahead and launch the pizza product and if yes what should be the volume of it. Observations and Solution: After analysing the case our observations are as follows. a) Pasta sales have started to decline and consumers are looking out for variety. Hence it is prudent to keep up with the market. Also customer surveys indicate a favourable response towards Fresh and Healthy Pizzas. So pizza for indulgence theory doesn’t have much merit. b) In spite of the presence of players like Nestle and Kraft, TruEarth has a brand reputation in fresh frozen pizzas, especially whole grain ones, and hence we can make the best use of it. Even in case of whole grain Pastas, TruEarth was able to withstand the completion from Rigazzi. c) The investment needed for the pizza venture is low. Thought the feedback obtained by the TruEarth team is favourable, it is based on the intercept surveys. It’s better to go for a trial launch and then gauge the feedback again. Based on the consumer response the pizza line can be gradually expanded.
