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 John’s 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

Risks  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

Basic Assumptions  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 * *0.3] * 0.4 * 0.5 = 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* * 0.3] * 0.4 * 0.12 = 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 ) ( )* [15* * 0.3] * 0.4 * 0.17 = MM  Whole trial #Hh = = MM MM 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 = 1.33ММ+ 1.9 ММ = 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 Case of the Worst Scenario

Conclusions  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.