TruEarth Case Analysis

There are various objectives facing the decision maker of TruEarth foods. It is vital to have set objectives before launching a product or even a brand. There needs to be a clear vision of where the company will be in the long and short term, as well as objectives on how TruEarth will run its business and market its products. The main objectives TruEarth needs to focus on are: project objectives, company objectives, personal objectives; long-term versus short term and also the explicitly stated versus implied objectives.
The project objective for TruEarth is to successfully find the best way to enter the emerging whole grain pizza market and be the leader in this environment. As the health food industry has continued to boom, TruEarth needs to find the proper way to enter the fresh, healthy, non-frozen pizza market and appeal to those who want pizza, without the pre-existing health risks.
As a company, TruEarth focuses their objectives on sustaining their competitive advantage over competitors in the healthy gourmet foods market when entering into the very profitable pizza market. TruEarth’s initial product launch of the Cucina Fresca brand of fresh cut pasta and sauces proved to be successful due to a first mover advantage in a market without a clear leader. The company must now decide what is going to sustain their competitive advantage: attempt to gain the first mover advantage in the pizza market by launching their product as quickly as possible, or take market research into consideration and tweak their product in order to have a better received product but risk first mover advantage.
Gareth DeRosa, founder of TruEarth, had various personal objectives for starting his company as well as wanting to enter the whole grain pizza market. DeRosa saw an opportunity to market healthier gourmet pastas and sauces made from superior and fresh ingredients when the demand for healthy, gourmet products quickly inclined in the 1980’s. DeRosa, as well as many customers, wanted higher quality, authenticity, well prepared gourmet foods. After their successful pasta launch, the idea of looking into the whole grain pizza market became prominent.
TruEarth’s long term objectives are to remain competitive and continue to lead the industry in fresh pastas, sauces, and refrigerated pastas. TruEarth must continue to create new product ideas to expand their brand, respond to suggested improvements and maintain the existing loyalty from its customers. In the short term, they will also want to focus objectives on remaining a top competitor in the health pasta, sauce and gourmet food industry while keeping the brand loyalty.
It is explicitly stated by Gareth DeRosa that his personal goal was to create a market for healthier gourmet pastas and sauces made with superior and fresh ingredients. The company’s long term objectives of wanting to expand their brand create the implied objective of striving for risk diversification. A diversification strategy with a strong product will increase brand equity for a company. TruEarth’s best decision is to continue to plan on launching the pizza product with the contingency that price must be lowered and the flavor must be improved. Justifications for this decision will be examined throughout the remainder of this case study. When analyzing TruEarth’s internal and external environment, it’s clear that a couple of shifts in consumer behavior during the 90’s contributed to TruEarth’s success. With people becoming busier, many dual-income families began shopping for “home meal replacements” (HMRs) that could be microwaved and ready-to-serve in minutes. People also sought out “semi-prepared” options that allowed them to quickly prepare a meal with the feeling of having created something. There was also a shift in people’s diets, with consumers looking for food made with whole grain ingredients. With whole grain being a crucial ingredient in all TruEarth products, they have been able to attract customers. Their use of fresh ingredients is one of TruEarth’s biggest internal strengths. While TruEarth held the first-mover advantage in the fresh, whole grain pasta category, Rigazzi Brands became a serious competitor when it emerged with its own line of whole grain pasta. Some channels only wanted to provide shelf space for one company in this category, so TruEarth had the potential to be bumped out of certain key markets. The external threat of competitors and their effect on channels was a valuable lesson to TruEarth, and made them thankful for their first-mover advantage. There is a large market for pizza in America, but many people are cutting down on carbohydrates, hence cutting pizza out of their diet. TruEarth saw the opportunity for a pizza with whole wheat crust. TruEarth will face competitors in the frozen pizza market as well as delivery pizza companies. Frozen pizzas are easier to prepare, but TruEarth pizza will be fresher. Delivery pizza is widely regarded as unhealthy, so TruEarth’s target market of health-conscious consumers would likely gravitate to a healthier product. TruEarth’s biggest constraint is time; when they can launch will determine whether they will hold the first-mover advantage over their competitor, Rigazzi. Whichever company has the first-mover advantage will be tried first by consumers, receive preference in shelf space by channels, and have the ability to choose their own price instead of letting the competition choose it first. This creates a tradeoff between a first-mover advantage and taste, and TruEarth will need to decide which one is more profitable. TruEarth must also look at Porter’s Five Forces. The threat of competitive rivalry is high when it comes to the pizza market. Although TruEarth pizza is a fresh and gourmet alternative, powerful competitors include Kraft and Nestle. Rigazzi also poses a competitive threat to TruEarth because it is also coming out with a gourmet pizza as well. The threat of suppliers is medium to high for TruEarth. TruEarth is highly selective with their ingredients, which leads them to have a niche focus on healthy gourmet foods. The threat of substitutes for TruEarth is low because the switching costs are so high. If consumers want to switch from a TruEarth product to a Kraft or Nestle product, they are sacrificing the health benefits of the product, even if the monetary price is a little lower. Finally, the threat of new entrants into the market is extremely low. The capital investments of product development and R&D are significant when producing fresh pasta and pizza which makes the barriers to entry very high. Interpreting these forces concludes that they have potential to be a market leader with high entry barriers, low threat of substitutes, as well as their original first mover advantage into the fresh pasta market.
In order to reach pizza lovers and alleviate health concerns associated with the food category, TruEarth must effectively differentiate their pizza offering from that of other options: delivery, take-out, restaurant, and other store-bought pizza. Three important developments reshaped how consumers purchased groceries: home meal replacement, refrigerated fresh ingredients, increasing awareness of the importance of whole grain. Given this, TruEarth developed a more formal process for research and development; idea generation, concept screening, product development and testing, and quantification of volume. They have created more competition and a leading advantage by upgrading their manufacturing facility in order to meet consumer demands. Their primary competitors include: Rigazzi, who began making whole grain fresh pasta in 2007 by using traditional pasta making techniques and vintage Italian equipment, and Kraft and Nestle, very reputable brands that sacrificed quality to be viewed as a low cost frozen pizza that consumers can afford, if they are willing to forgive the less healthy factor.
Before launching their pizza line to take advantage of the first mover advantage, TruEarth conducted in-home trials and a mall-intercept to gain customer perceptions and become aware of changes that needed to be made before launch. Results indicated that price was too high and the crust needed improvement; however, they liked the whole grain concept and indicated that our product was of higher quality than other offerings. This led TruEarth to find solutions for larger varieties and ways to more easily prepare while still being a better tasting pizza. Given the results of these studies, TruEarth determined that their target market should focus on customers in high-priority cities in the major metropolitan areas with households’ annual income over $50K.
TruEarth’s management team fosters a freewheeling, entrepreneurial spirit and believes in crafting new product ideas in order to identify the next hits. In addition to emphasizing healthy and high-quality products, other differentiating factors include: convenience, ease of preparations, simple instructions and complimentary recommendations. TruEarth’s concept includes a basic kit (crust, separate packets of cheese and sauce, and a line of complimentary toppings). This kit would feed 2-3 people and be priced around $8.00 for the kit itself and an additional $3.50 for topping packs. TruEarth will focus on the idea that their pizza is fresher than frozen pizza, healthier than takeout, and allows consumers to easily customize their own taste. In addition to targeting consumers in major metropolitan areas, TruEarth will focus on businessmen/women with time sensitive schedules, health conscious or carbohydrate avoiding shoppers and consumers of the Cucina Fresca product line. TruEarth focuses on providing the best possible pizza offering at the most affordable price to pizza loving Americans that have cut pizza out of their diet, are looking for affordable options, focus on convenience and easy preparation, as well as consumers looking for a delicious meal with high-quality ingredients.
To be the first brand of healthy, refrigerated gourmet pizzas in the market, TruEarth will be able to set the standard for consumers and competitors. In order to tackle this successfully, as with their pasta offering, they must ensure that their product launch includes the four P’s: price, product, promotion, place. As previously mentioned, results from in-home trials and mall-intercepts revealed that consumers thought the price of TruEarth’s gourmet pizza was too high. Consumers indicated that they would prefer the price to be approximately $10, given a range of options. A smart strategic move would be to price their pizza around $11, in between customer preference and original pricing of $12.38; however, if they do not achieve first mover advantage, they will have to base price on competitors. Product is a key factor as the demand for whole grain crust has sparked a lot of interest to consumers. TruEarth needs to perform more kitchen taste tests to ensure the product is not only healthy, but has the right amount of flavor and natural ingredients to compete in the market. Consumers will also gravitate to the fact that TruEarth’s approach is to have a refrigerated pizza product that you can prepare yourself. The psychology involved with this approach is that consumers will feel that they can ultimately determine how the pizza tastes; giving consumers the opportunity to feel in control of a product will aid TruEarth toward future success. To ensure effective execution of this product, TruEarth needs to perform more research and development as well as produce better tasting crust. TruEarth already has huge brand awareness from the launch of its healthy whole grain pasta. Through promotions, TruEarth needs to set their product apart from other offerings by focusing on their healthiness and quality. As long as TruEarth’s product tastes just as good as other offerings, the guilt of buying a pizza will not seem as prevalent to health conscious consumers. Consumers will also automatically connect TruEarth’s gourmet pasta taste with their gourmet pizza. Traditional advertising is the best promotional strategy for TruEarth. It would also be beneficial to come up with a catchy slogan or tagline that emphasizes the freshness and taste of their pizza, keeping in mind that inadequate promotional initiative can waste time and money.
The whole grain pizza will serve as a product extension to their pasta and will be placed in the refrigerated section. Supermarkets already have a strong relationship with TruEarth, so shelf space should not be an issue upon launching. More important than obtaining the first mover advantage is correcting the whole wheat crust; therefore, if not perfected, TruEarth should not launch their new product.