Nestle Refrigerated Foods: Contadina Pasta & Pizza

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Nestle Refrigerated Foods (“Nestle”) must determine whether or not to introduce a refrigerated “Pizza Kit” product. Nestle must address several issues prior to product rollout: •Unproven concept – crust packaged together with separate packets of cheese and sauce ready for home use was a new concept. •Product positioning—the Pizza Kit must be positioned to attract most of its customers from the takeout/delivered (75% of total market) segment. •Brand awareness & extension—the product is in the same ethnic food group as its pasta & sauce product, and could damage this product if it is a bad product. Nestle should bring the Pizza Kit concept to market and position it as a high quality, reasonably priced alternative to both the takeout/delivered and frozen pizza segments. The Pizza Kit concept registered a high probability of buying similar to that of Nestle’s successful pasta & sauce product, and the refrigerated pizza market is not currently serviced by its competitors. Further, Nestle has a sizable advertising budget to go along with the rollout. Year 1 Pizza Kit & Toppings sales are estimated at 22.0 million units for a total of $54.9 million. Sensitivities performed on Contadina’s brand awareness indicated sales of $50.9 million and $46.5 million for 15% and 5% awareness, respectively. Year 3 product volume and sales are estimated at 72.6 million and $193.4 million. However, Nestle could damage its current Contadina Pasta & Sauce product line if the Pizza Kit product is not received well in the marketplace. Brand extenuation could hurt in this regard. Further, Kraft, a competitor to Nestle, had an unsuccessful launch in the refrigerated pizza segment that was not adequately researched by Nestle. The reasons behind this failure would be invaluable to Nestle. In addition, the market data used to project volume and sales may not be accurate due to sample size, locations taken, and other factors that could skew the data. Nestle should bring the Pizza...
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