Nestle Case Analysis

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Nestle Refrigerated Foods: Contadina Pasta &Pizza (A)
Case Assignment

Prepared by Group I
Ashish Kumar Dandale (1111093) Rohit Kumar Verma (1111139) Sloka Roy (1111146)

New Product Development Submitted to Prof. Ganesh Prabhu
23rd July, 2012

Introduction
This case first walks us through the journey of the launch of Refrigerated Pasta and Sauces by Nestle Refrigerated Food Company (NRFC) in the U.S. markets and then their decision to launch Refrigerated Pizza in 1990 based on various market researches carried out which have been described in detail. The company had previously been successful in capturing the market by launching refrigerated pasta and sauces in the markets. The launch of the Pasta and Sauces segment was accompanied by improving the shelf life of the earlier selling products in the U.S markets. The company purchased small local brands and their facilities to enter the new markets. They invested in their up-gradation to make the products compete at the national and international levels thereby saving a lot of time in just developing the product from scratch in any new markets. This gave them the first-mover advantage and helped them capture the market. The refrigerated pasta was an immediate success with retail sales of over $75 million in 1988 and $150 million by 1990. Having tasted success in the refrigerated pasta segment, the company is now contemplating whether to enter the refrigerated pizza market.

Problem Statements
1. NFRC had conducted the marketing research and studies based on the following: a. NRFC is trying to launch the refrigerated pizza based on the BASES study conducted only in the high potential markets (Northern and eastern parts of US) whereas their target market was estimated to 95.5 mm throughout the nation. b. NFRC assumed that since users of Contadina pastas & sauces were aware of the brand, they could estimate the brand awareness for Contadina among the users to be double that of the non-users and estimated it to 60% and 30% respectively. 2. The major problem is to decide on the basis of market researches whether to launch refrigerated pizza in the U.S. market or not and if yes then whether to launch the ‘Pizza and Toppings’ option or the ‘Pizza Only’ option. 3. NRFC anticipates that the entry of new competitors in the refrigerated pasta market can cause the decline in its growth of the pasta market and therefore have to launch new product fast. 4. Kraft is expected to launch refrigerated pizza in about six months so the company has to launch its product well before it to enjoy the first mover advantage over any other competitor.

Our Analysis
The current position of the company can be analyzed by using the exhibits given in the case. The company conducted BASES market research and based on these findings they are trying to launch the new pizza range. 1. Exhibit 13, 14 and 15: From the all the three exhibits we can infer that “Takeout” pizza is the most popular pizza. a. The Pizza Kit lags behind by a huge margin on the following counts: 2

i. Taste ii. Crust iii. Special Meal b. The Assembled Pizza lags behind by a huge margin on the following counts: i. Lack of Customization ii. Soggy Crust iii. Taste factor iv. Special Meal c. Exhibit 15 clearly indicates that if the CONTADINA pizza is introduced in the market the market share of all the other pizzas already available decrease. 2. Insights from Exhibit 19,20 and 21 a. Among the Pizza and toppings & Pizza only, Pizza and Topping are a clear favorite. b. The concept interview for the Pizza only was very brief. c. An extensive behavioral study has been conducted on Pizza and topping. d. The likeability towards Pizza and toppings was unanimous amongst both users and non-users of Contadina Pasta, the same doesn’t hold true for Pizza only. e. In the pre product launch research of Pasta there is a lot of emphasis of the USP of the product which is not being replicated while launching the pizza. f. The point of...
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