Nestle Refrigerated Foods:
Contadina Pasta & Pizza
After the great success of Nestle Refrigerated Food Company (NRFC) product Contadina pasta and sauces, NRFC was thinking to grab the growth opportunity through brand extension of Contadina. As in case Cunliffe stated “Contadina became the market leader in refrigerated pasta and sauces, but to continue our rapid growth, we need other new product opportunities”
NRFC had established certain guideline steps that might help them a lot in developing new successful product through out their business life. Those steps are as follow; •
Quantification of Volume
By following these steps NRFC come up with the idea of Contadina brand extension by inducing “refrigerated pizza” in a line.
The case revolves around that either NRFC should launch refrigerated pizza/ pizza kit in the market or not? If yes, than with topping or without topping?
If he should launch a pizza product;
Before taking a final decision to launch or not introduce refrigerated pizza in a market, first we have to analyze the market of USA, where NRFC wants to commercial its new product.
Here we analyze the market with three perspectives;
1. Pizza market of USA
2. Competitor Perspective
3. NRFC’s perspective
1. Pizza Market:
Pizza is part of the large and rapidly growing Italian ethnic food category. Restaurants like Pizza Hut and Domino’s capture 88% of the $18.4 billion pizza market. Although 75% of the last 10 incidences of pizza consumption were delivered/takeout, 25% of the pizzas were purchased from a grocery store [frozen (16%), fresh (5%) or homemade (4%)].
2. Competitor Analysis:
Globally, NRFC competes primarily with Kraft and Unilever; within the United States, Kraft poses the largest threat. Kraft test-marketed a refrigerated pizza product when they were testing DiGiorno pasta and sauces. Kraft was expected to enter the market within 6 months with their refrigerated Pizza.
3. NRFC’s Analysis:
NRFC’s analysis can be done in three dimensions;
First Mover advantage
i) First mover advantage:
If NRFC step into the market before Kraft, than ultimately it will gain the first mover advantage. First mover advantage here means building the brand equity before it is being created by your competitor.
If NRFC lose the chance of being first, than they will never get the market share that they deserve.
ii) Monetary Analysis:
As highlighted in the case “NRFC basic requirements for pizza is $45 million [factory dollar sales], with their projected investment costs of $12 million”. iii) Brand Image:
While taking ultimate decision of launching refrigerated pizza with the brand name of Contadina, we have to look at its impact on brand as a whole. If a brand extension is released successfully than it will aid the brand but if refrigerated pizza ends as a failed product than it may hurt the image of Contadina as whole.
After analyzing the above three factors we can clearly see that opportunity for pizza market exist. As most 75% customer of pizza are those who prefer takeaways/ deliveries rather than sitting in the restaurant. There is a need to develop a product that can satisfy the need of this segment who like to have pizza at home rather than in restaurant. Decision:
Nestle Refrigerated Food Company 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.
Which option to be selected:
“By the end of 1988, NRFC developed two pizza concepts;
A Pizza Kit
Pre assembled, heat and eat pizza”
“Further investigation by the R&D group indicated that the refrigerated pre assembled concept was infeasible from production standpoint. Not only...
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