Evaluating a Product Line Extension Opportunity Blue Apron Evaluating a Product Line Extension Opportunity Team 3

Executive Summary Objective: Use exploratory research and survey data to recommend a potential product line extension opportunity into specialty meals for Blue Apron Focus Group 1 Survey 2 Analysis 3 6 participants Did not plan on using Blue Apron Lack of interest in specialty meals due to variety limitations 96 respondents Observed responses representative of target Only a few respondents were likely to purchase Chi-Squared, Independent Sample T-test, Regressions Dietary restrictions did not necessarily lead to likelihood of purchase or higher WTP The results from our exploratory and quantitative research do not support Blue Apron running a pilot specialty meal line extension until further research has been conducted

Focus Group findings drove survey development Takeaways Goal: insights on usage situations Tested 4 main hypotheses 6 homogenous participants from ages 25-35 based on target market Used a guide to gauge perceived benefits/drawbacks of Blue Apron Identified 5 different usage occasions for Blue Apron Found that healthiness and caloric control were important attributes for meals The dietary restrictions (specialty meals) category proved to have the most interest, had the fewest drawbacks, and allowed for a potential price premium The thread analysis confirmed potential around our initial recommendation of specialty meals, which drove our survey development and analysis

Survey data allowed for a fact-based approach Thread Analysis Survey Goals Used the thread analysis to find most opportune usage occasions Survey Development Decided on survey goals to support or refute initial hypotheses and recommendations Responses Developed 15 questions with data types structured for further data analysis Survey Analysis Received 96 responses, 83% of which were from the 21-35 age group (primary target) Ran an initial analysis on survey data based on how respondents answered each of the 15 questions Survey revealed that the average WTP for a specialty meal was very similar to current Blue Apron prices despite specialty ingredients and niche offerings

Additional survey analysis using quantitative tools further confirmed the lack of market opportunity Sample Quality Market Segmentation Expansion Opportunity Ran 2 Chi-Squared Goodness of fit tests Found that observed gender ratio and household size were not statistically different from expected Believed gender and household size could impact survey responses Ran multiple independent sample t-tests to understand if demographics drove responses Ran regressions to understand if any demographics correlated with likelihood to purchase or WTP Found no statistically significant relationships Created a variable based on response to dietary restrictions Ran tests using that variable to understand if it drove attitudes towards Blue Apron specialty meals Found that dietary restrictions didn’t necessarily increase likelihood of purchase or WTP for Blue Apron specialty meals

Final Recommendation Focus Group Survey Analysis The results from our research do not support developing specialty meals to appeal to dietary restrictions. Therefore, we recommend a no-go because (1) the market is not large enough; (2) there is not enough overall interest; and (3) there isn’t evidence to support a price premium. Additional Research: Segment respondents by urban vs. non-urban More specific ideas in a refined focus group Conjoint analysis to understand WTP Simulated Test Market Study Participants considered alternative options to Blue Apron Blue Apron should refine its current product offerings before expanding into new products Focus Group Solidified hypothesis that customers are not willing to pay premiums for Blue Apron’s specialty meal delivery service Low Calorie and Low Carbohydrate show best potential Survey The results from our research do not support developing specialty meals to appeal to specific customer segments. Therefore, we recommended a no-go. The primary reasons for this decision are that 1) the market is not large enough 2) there is not enough overall interest and 3) there isn’t a high enough willingness to pay. From our focus group, we learned that participants considered alternative options to Blue Apron. Given this and the additional insights mentioned earlier, we were led to believe that Blue Apron should refine their current product offerings before expanding into new products. The survey solidified our hypothesis that customers weren’t willing to pay for the Blue Apron meal delivery service, whether specialty meals were offered or not. We also found that the demand for specialty meals was not very high. Our additional analysis confirmed that specialty meal offerings didn’t make a person more likely to desire a Blue Apron meal nor did it make a person willing to pay more for it. Analysis Confirmed that specialty meal offerings didn’t make consumers more likely to purchase a meal or have a higher willingness to pay