True Earth Case

Topics: First-mover advantage, First-move advantage in chess, Business terms Pages: 2 (625 words) Published: November 8, 2012
“Mulling over the extensive data from the TruEarth and BASES studies, Eckstein wondered whether to launch the pizza product and what the volume would be”. The following forecast analysis shows whether or not the TruEarth pizza should be launched

Demand Forecast
80% of those who claim they “definitely would buy” and 30% of those who stated they “probably would by” would actually complete a purchase, resulting in a 24% and a 37% trial rate for non-consumers and TruEarth costumers respectively.

Looking at the table above,there is an estimated total awareness for this product of 16.18%. Based on an anticipated ACV of 40%, this results in an adjusted trial rate of 1,8%. Thus TruEarth will get a total of 1.07 million trial households who will try the product upon release. As stated, the product is of excellent category and the repeat rate is 49%. With a given repeat purchase occasion of 2 and an estimated repeat transaction amount of 1 we derived a total repeat volume of 1.05 million. This will give us a total volume of 2.12 million people who will purchase the product against the average retail purchase price of $12.38, generating $26.23 million. Correcting the 35% retailers margin on the total generated amount, this will provide a wholesale value of $17.07 million.

First mover advantage
The first-mover advantage in the case of fresh pastas was based around the fact that, at the time, the fresh pasta industry was still in the “growing” stage of its lifecycle. It was therefore relatively easy for TruEarth to move in as the first producer of a healthy, wholegrain fresh pasta option that still tasted good. However, in 2007 refrigerated pizzas were already an established market, holding 11% of all pizza sales (delivery, restaurant, etc). As a result TruEarth will have to rely solely on the “healthy” ready-to-make pizza concept for its first-mover advantage. The question is whether this will be enough. The growing health concerns of the American...
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