Case Report On Nestle Refrigerated Foods

Case Report On Nestle Refrigerated Foods

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Case Report On Nestle Refrigerated Foods



Introduction

The case illustrates the various studies and market researches done for the introduction of refrigerated pizza to the refrigerated food category product in the U.S. markets by Nestle Refrigerated Food Company (NRFC) in the year 1990 while in the late 1980s the company has successfully captured this category by introducing refrigerated pasta and sauces in the markets which improved the shelf life of the earlier selling products in the U.S markets

The company believes in purchasing small local brands and there facilities to enter the new markets and then invest in there up gradation to make their products compete at the national and international levels. This saves company a lot of time in just developing the product and starting from scratch in any new markets .This also helps in gaining first movers advantage and capturing the market. The refrigerated pasta was a immediate success with sales of over $30 million in the first year and $100 million in the second year

The company now intends to enter the pizza market and Stephen Cunliffe, the president of NRFC has to take decision on whether to launch the pizza in the U.S market or not

Problems

• The major problem in the case is to decide on the basis of market researches whether to launch refrigerated pizza in the U.S. market or not i.e. The Company has to decide whether it can replicate the success of its earlier product i.e. Refrigerated pasta to the pizza category also or not

• Refrigerated Food Company (NRFC) anticipates that with the entry of new competitors in the refrigerated pasta market there can be decline in its growth of the pasta market

• The company’s major competitor in the global markets  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 the competitor

Analysis

• Contadina is an established brand in the industry in the refrigerated food segment which manufactured and distributed pasta before the ranges being introduced by nestle which repositioned it so the people were familiar with its pasta product while it was not into the pizza business and had to start that from scratch so that advantage was missing which was helpful in the earlier case of pasta.

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• The decision have to be made whether the pizza and toppings would be packed and sold in the same packing or they would they be available separately to the customers or both options would be available with the customer

• On comparing the data of the Pizza kit sample the findings were in favor of take out pizza rather than Contadina kit. The take out pizza scored high ratings on almost every aspect surveyed ,easy to prepare , convenient, add taste etc. which meant that product awareness was need among the target customers

• In an study done for finding the awareness of pizza kits among the Contadina’s pasta & sauces users versus non user it was found that only 60% of its present users knew about its pizza & toppings launch and only 30% of nonusers of the brand product were aware of it which indicated there was a large opportunity in further enhancing the sale of the pizza than it was projected by increasing the awareness of the product among both the users and non users of the brand which is obviously possible

• Pasta and pizza were different in the sense that people habits were different while purchasing each of them so the results shown by pasta after its launch were not a guarantee for the similar results with pizza

• Pizza was however part of Italian ethnic food industry ,it is mostly available (before the launch by nestle) in frozen , deli made and freshly prepared in restaurants where it was available for eating, being taken out or it was home delivered However the market was dominated by restaurants where the people either ate it or carried for eating it at there home .So the point is that the entry of pizza into the refrigerated food category was new as people never tried it and it was like experimenting in the market The advantage with nestle was that its brands were already successful in the refrigerated food segment and it was thinking of extending its refrigerated food segment product line. The new eating habits were required to be developed in the people as they were not known to the refrigerated pizza earlier

• In the surveys and studies done by BASES for studying or understanding of peoples beliefs and understanding there purchase idea after the product is launched in the market for both pastas and pizza prior to there launching showed that Pasta was more likely to be purchased by the respondents than pizza with 75% of the 301 respondents were likely to purchase the pasta after it would be launched in the market while only 58% of the respondent showed positive purchase intent for the pizza of those surveyed for the pizza study which showed that the pizza was less accepted among the people than the pasta so the same expectation of success could not be done with pizza after its launch which is obviously a tough point or a risky business

• The sales volume in first and second year was from the combination of trial rate, repeat rate i.e. repeat orders from the customers, Transaction sizes of the customers and the purchase frequency of the customers each of these factors should be kept in mind while forecasting the sales during the initial years.

Recommendations

• The awareness among the Contadina brand users (people using its pasta and sauces) was 60% for both pizza kits and toppings and pizza only while it was only 30 for the non users of the Contadina brand for both kinds The overall awareness was observed to be 37% .The awareness needs to be increased among all the sections i.e. both the users and non users It is relatively easy and cheap to increase awareness among the brand users through advertising on the earlier selling products or using promotional offerings with the earlier selling brand items to make the people familiar with the new products of the same company

• BASES random sample study found that the penetration of the brand was 21% i.e. 21% of the total general population have used Contadina brand within the past year while the shortcoming in this conclusion is that the BASES study was done only in high potential markets while the parent brand penetration could range between 5% to 25% so it is recommended to do the volume projections again considering the penetration of brand to be 5%,15%,25% respectively to get a clear picture of forecasted sales under each scenario and better scenario analysis can be done.

• Brand penetration can be increased to improve the total sales it would help in improving the image of the brand as a whole and the total sales would increase of all product lines irrespective of any particular product and would also help in any further launch of new or improved product

• The company can go for testing the product response in the market by launching the product in a single city before its national launch to know the customers reactions and feedbacks and hence the improvements can be done based on the feedbacks received from the users before launching the product nationally

• Use of newer technologies, innovative strategies in sales advertising and promoting the product was needed to gain the complete first mover advantage of the new product i.e. pizza being launched in the market. New scientific technologies to increase the shelf life of the product, better taste of the product, increased nutritional contents of the product was needed to improve the acceptability of the product by the target segment.

• Brokers were involved for the sales of the pasta as they had significant experience in selling such type of product this was a innovative in distributing the product instead of relying only on the traditional company’s sales force this was also a factor in the success of pasta such type of sales and marketing innovations were desired for pizza also

• Nestle should go for the launch of refrigerated pizza in the market to gain the first movers advantage but should keep in mind the point mentioned in this report and take measures to improve its study before launching the product
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