Beruflich Dokumente
Kultur Dokumente
SUBMITTED BY:
RICHA MAHECHA (SMBA10105)
MANISHA DAS (SMBA10099)
PANKHURI PRADHAN (SMBA10098)
HISTORY
1
Nestle S.A is the largest food and nutrition company in the world. Founded and
headquartered in Vevey, Switzerland, Nestle originated in 1905 merger of the Anglo-Swiss
Milk Company, founded by Henry Nestle in 1866. In 1987 Nestle entered into refrigerated
food market.
NRFC, located in Glendale, California, was a wholly owned subsidiary of Nestle, S.A. In
1993, Nestle, S.A., was one of the worlds largest food companies with sales of over $37
billion. The original business was based on milk and infant formula products for children.
Over time, numerous other food products were added including chocolate, instant coffee,
culinary, refrigerated and frozen food products, ice cream, mineral water and pet foods.
TIME LINE
CASE FACTS
In 1987, Nestle entered U.S. market with Contadina Pasta and sauces. The product had been
very successful, with sales with sales of $50 million in first year, growing to over $100
million in sales by 1990. Company plans its product line into pizzas. In 1990, the Nestle
refrigerated food company contemplated the introduction of a refrigerated pizza product to
the U.S market. Several market research studies and test have been conducted for the
introduction of refrigerated pizza in U.S market. The company has to decide whether the
introducing of refrigerated pizza into the market is feasible or not.
5. Test Market
a. Recommended when little capital investment is required
b. Perceived high risk in the product itself or its marketing
6. Commercial Evaluation
a. Television advertising
b. Creating brand awareness
c. Purchase interest
7. Introductory tracking
a. Performance is tracked through awareness, attitude, usage studies and
household panel data.
BRANDING
In 1987, pasta was available in two forms in the United States i.e fresh pasta and dry pasta. In
developing a national pasta product line, NRFC needed to identify a brand name for its
product that would be accepted in all regions of the United States. Carnations Contadina
brand seemed an ideal as it had an image of authentic Italian cooking. Using mall intercepts
of 200 potential purchasers in three geographically dispersed cities, Nestle refrigerated food
found that Contadina fresh Classics was a strong candidate with 70% of respondents ranking
it first or second among eight potential names. In the final outcome product range was
branded Contadina Fresh.
MARKET POTENTIAL
3
NRFC wanted to estimate first year trial volume for pasta and sauces, simulate total year1
sales volume, and understand the likely sales effects of alternate positioning.
POSITIONING STATEMENTS
1. Homemade : A complete line of fresh pastas and sauces with the taste and quality of
authentic homemade recipes
2. Pasta Dinner : Fresh pasta dinner so good they will make a meat and potatoes man
smile
3. Superior : A complete line of fresh pastas and sauces that are superior to any pasta or
sauces you have tried before
300 concept test were conducted on the basis of key concept measures demographic
population and key likes, dislikes & uniqueness
EXHIBIT 4
MEASURE
CONTADINA (N=301)
INDUSTRY MEDIAN
DEFINITELY WOULD
BUY
24%
20%
PROBABLY WOULD
BUY
51%
41%
75%
61%
EXHIBIT 8
PURCHASE
INTENT
HOMEMADE
(N=97)
PASTA
DINNER
(N=102)
SUPERIOR
(N=102)
INDUSTRY
MEDIAN
DEFINITELY
WOULD BUY
27%
19%
24%
20%
PROBABLY
WOULD BUY
43%
56%
54%
41%
70%
75%
78%
61%
REPEAT PURCHASE
POSITIONING
NRFC supplied BASES with 27 attribute statements which were drawn from qualitative
research.
Later a multivariate research technique called FACTOR ANALYSIS was used to reduce
the 27 attributes to 3 major criteria.(Refer exhibit 10)
1. Ordinary main meal (41%)
2. Quality (39%)
3. Light meal/ slight dish (20%)
Existing facilities were not top class so a considerable change was required.
Stephen Cunliffe decided to build a single factory in Danville, Virginia.
Moreover, to roll out perishable product nationally from a single location requires a
highly efficient distribution system.
Product shelf life was 40 days
The customer and retailer demand delivery of the product with 30 days of remaining shelf
life
Goal was to produce ship and deliver product throughout the U.S within 10 days.
SALES
Traditionally, sales by Carnation were handled by 700 person direct sales force.
Cunliffe was concerned with share of voice that Contadina would receive from sales
forces as they had limited experience in new refrigerated category.
Other option was to utilize outside brokers who had significant experience in perishable/
refrigerated foods.
Brokers organization was developed to gain a larger share of sales time because dollar
values were high on the Contadinas products.
12 Contadina sales managers managed 50 brokers who had 1200 sales people calling on
food retailers.
CONTADINA LAUNCH
NRFCs main strategy was to capitalize on Lamberts major assets (high quality product
recipes and packing technology) and distribute the first nationally branded refrigerated
pasta and sauces products.
It would be stocked in grocery store and each product is tagged with an expiry date.
NRFC supported its launch with
$7 million advertising campaign (85% television advertising &15% print media)
$5 million consumer promotion
$4 million trade promotions.
NRFC decided to sell its products using a Component approach with pasta and sauces
packaged separately and sold.
Became market leader, with $75 million in retail sales in 1988 and $150 million by 1990.
The pasta line accounted for nearly 80% of the sales volume.
DI GIORNO
To win a competitive battle against Kraft, Contadina sets a goal of maintaining a 2:1 share
ratio nationally
Di Giorno entered the market with high value coupons ranging from $0.50 to $1.80
Contadina responded with low value coupons ranging from $0.20 to $0.90
Di Giorno entry resulted in considerable growth in pasta category
Both the companies sales volume increased simultaneously
The first mover advantage in the new product helped NRFC to sustain the threat
MARKETING MIX
Pasta Varieties..
1. Strand pasta(linguine, fettucine,
and angels hair)
2. Filled Pastas (ravioli, tortellini,
totelloni, agnolotti)
Sauce Variety..
1. Plum tomato
2. Bolognese
3. Alfredo
4. White clam
5. Pesto
$1.99
$2.99
$1.99
$2.49
$2.49
$2.79
$2.79
PROMOTION
$7 million for advertising campaign (85% for television advertising and 15% in print
media.)
$5 million for consumer promotion.
$4 million for trade promotions.
PLACE
U.S
77.4M households which represent 89% of U.S households
SWOT ANALYSIS
Strength
o Good quality
o Greater market share
o Pioneer in the U.S market
o Easy to prepare
o Efficient distribution through brokers
o Component approach
Weakness
o Shorter Shelf life
Opportunity
o Brand awareness
o Market leaders
Threats
8
o Increasing competition
o It is a market leading to a cash cows
LOW INVOLVEMENT
MARKET GROWTH
BCG MATRIX
ANSOFF MATRIX
NEW
PRODUCT
LAUNCH OF PIZZA
o NRFC decided to extend its product line into refrigerated pizza.
o In 1988, NRFC develop two new concept
1. PIZZA KIT:
Crust packed together with separate packets of cheese and sauces. Size available 12.
Price $6.40. Additional topping $1.30.
2. PRE-ASSEMBLED
Available in 4 varieties. Size available was 12. Price $7.60
MRD conducted preliminary concept test to assess market interest in its new offerings.
Findings from the study indicated (Exhibit 13 & 14)
Positive purchase intent for the pizza kit 58%
Positive purchase intent for pre-assembled pizza 52%
R&D found that the flavours of the sauces and toppings migrated into one another
resulting in a poor quality product.
Hence, refrigerated pre-assembled concept was infeasible from a production stand point.
Moreover, the kit product was consistent with NRFC component approach.
Hence it was feasible to launch pizza kit.
10
It conducted Bases II Line Extension Study to analyze strength and weakness of both
the concept
11
REPEAT PURCHASE
12
REPEAT PURCHASE
13
= 1.21 MM
MARKETING MIX
PRODUCT
Pizza and Toppings
Pizza kit with the option of
Available toppings sold separately.
For Toppings
Pizza only
(crust, cheese and sauce)
PROMOTION
Approximate - $18M
$ 9M in advertisement
$ 5M in consumer promotion
$ 4M in trade promotion.
PLACE
U.S
95.5M target households
PRICE
$ 6.39
$ 1.39
$6.39
SWOT ANALYSIS
Strength
Good quality
Large variety
Convenient to prepare
Established brand
Weakness
Present competitors
14
EXHIBIT 14
Contadina Pizza offering is favored more than the current frozen pizza in the market.
Both the concepts (Pizza Kit & Assembled Pizza) measure slightly behind the Takeout
Pizza.
Large differences were found in some of the attributes of Takeout Pizza & Pizza Kit.
Attributes are: Soggy Crust
Product Variety
Freshness
Appropriate for special meals
Taste
There is slight difference between the two Contadina's offerings as more people are in
favor of the Pizza kit as compared to Assembled Pizza.
EXHIBIT 15
15
% of Last Pizza
Eating Occasions
(n=60)
Contadina Pizza
% of Next 10 Pizza
Eating Occasions
(n=60)
28%
Takeout Pizza
75%
58%
16%
9%
5%
1%
Homemade Pizza
4%
4%
Future Pizza Kit sales would come from customers who prefer Takeout Pizza, Frozen &
Fresh Pizza from supermarket.
The largest segment of customers comes from Takeout Pizza followed by Frozen Pizza
from supermarket.
EXHIBIT 19 & 20
Bases II study was conducted to determine likes & dislikes of Pizza & Toppings and
Pizza only.
Out of 399 respondents for Pizza & Topping, 304 respondents were in favor of this
concept.
Out of 198 respondents for Pizza only, 116 were in favor of this concept.
Among these 116 respondents, 76 understood that Pizza comes with just sauce & cheese.
EXHIBIT 21
16
Pasta Concept Test was performed with BASES I approach whereas Pizza Concept Test
was performed with BASES II approach.
Pasta Concept Test was bases on volume estimates within 25% accuracy range whereas
the Pizza Concept Test involved a concept test in combination with a product taste test
and was reliable within 20%.
Purchase intent for Pasta 75%
Purchase intent for Pizza & Topping 76%
Purchase intent for Pizza Only 58%
Pizza only option did not have same luck as compared to Pizza & Topping.
This shows that Nestle should launch Pizza & Toppings Concept.
EXHIBIT 23
It shows how the product will be perceived by the respondents after its consumption.
69% of respondents are in favor of repeat purchase of the product
In the Favorable Category,
34% believe that pizza should be quick & easy to prepare
33% believe that no improvements are needed
23% believe that the price should be lowered
In the Unfavorable Category,
33% believe that it is too expensive & the price should be lowered
22% believe that the overall taste should be improved
EXHIBIT 24
It shows the price which the consumers are willing to pay for 12 pizza.
In the favorable category, respondents are willing to pay between $4 - $10
In the unfavorable category, respondents are willing to pay between $3 - $7
Consumers are willing to pay more for refrigerated pizza rather than frozen pizza because
of it convenience to prepare & freshness
DIFFERENCES
Market Potential Varies
Major threat for Pasta Dry Pasta (90%) whereas for Pizza Fresh Pizza (88%)
Improving the existing product of LPC in case of Pasta whereas complete in-house
development for Pizza.
Timing of launch: Pasta First Mover Advantage
Pizza critical to launch as Krafts had already tested its Pizza product
PASTA
All the steps were followed except Product Development & Test Market.
Acquisition of Lamberts Pasta & Cheese
Test Market could not be conducted because huge capital investment was
required.
PIZZA
All the steps were followed except Introductory Tracking
Decision to launch Pizza is Pending.
RECOMMENDATION
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