4067 TruEarth Healthy Foods: Market Research for a New Product Introduction Student Spreadsheet

Copyright 2009 Harvard Business School Publishing

Exhibit 3
Exhibit 3 - Fresh Pasta Purchase Intent Cucina Fresca (N=300) 27% 49% 76% 4.1 3.2 Industry Median* 20% 42% 62% 3.6 3.5

Measure

Definitely would buy Probably would buy "Top Two" Box Mean Likeability** Mean Price/Value rating**

Exhibit 4
Exhibit 4 - Fresh Pasta Concept Likes & Dislikes 300 Total (N=300) 228 Favorable to Concept (N=228) 72 Unfavorable to Concept (N=72)

Attributes LIKES Food Qualities Whole grain Freshly made and dated Looks appetizing Preparation Product selection Easy to prepare Single meal portion size Other TruEarth brand name Good price

32% 38% 22%

35% 42% 25%

22% 26% 13%

17% 21% 16%

20% 24% 18%

9% 12% 10%

33% 18%

40% 22%

10% 7%

DISLIKES Limited selection 20% 15% 35% Too expensive 8% 3% 25% Limited time to product expiration 16% 10% 33% Respondents are asked to select the attributes that they "like" or "dislike" about the product concept.

Exhibit 5
Exhibit 5 - Fresh Pasta Purchase Volume Estimate, Year 1 Trial Purchase Intent Definitely would buy % of "Definites" who actually buy "Definite" Purchases Probably would buy % of "Probables" who actually buy "Probable" Purchases Trial Rate (Definite + Probable) Marketing Plan Adjustment Gross Rating Points Projected Consumer Awareness All Commodity Volume distribution (ACV) Marketing Adjusted Trial Rate Trial Rate x Awareness x ACV Target Households (MM)* Trial Households (MM) Repeat Purchase Inputs Trial Households (MM) Repeat Purchase Occasions Repeat Transaction Amounts Repeat Rate, by Product Scenario Mediocre Product Average Product Excellent Product Repeat Volume, by Product Scenario (MM) Mediocre Product Average Product Excellent Product

27% 80% 21.6% 49% 30% 14.7% 36.3%

1.4 2.1 1.6

21% 37% 49%

800 17% 50% 3.0%

1.0 1.7 2.3

45.2 1.4

* Target households based on addressable market in metropolitan areas with annual household income over $50K

Exhibit 6
Exhibit 6 - Pizza Attributes & Substitution, Mall Intercept Measures (based on 10-point scale where 10 = "Agree Strongly") Usage attributes Is a product for the whole family Is convenient Is easy to prepare Taste attributes Would taste fresh Comes in varieties I like Quality attributes Is made from high-quality ingredients Is made from healthy ingredients Substitution of TruEarth Pizza for other choices (N=181)* Takeout Pizza, based on past experience (N=300) 8.9 9.3 N/A Refrigerated Pizza, base on past experience (N=137) 7.1 7.3 7.4 Favorable Evaluation of TruEarth Pizza Concept (N=181) 8.6 7.3 7.7

9.4 9.1

7.2 6.3

7.9 6.7

7.1 6.5

6.2 5.9

8.1 9.1

% change with % of Last 10 Pizza Eating % of Next 10 Pizza Eating introduction of TruEarth Occasions Occasions Pizza TruEarth Whole Grain Pizza N/A 17% 17% Takeout/delivered pizza 47% 43% -4% Restaurant pizza 23% 22% -1% Refrigerated pizza 9% 3% -6% Frozen pizza 19% 14% -5% Homemade pizza 2% 1% -1% Total 100% 100% 0% * To be read: Among those favorable to the TruEarth Whole Grain Pizza concept, on average, 47% of the last 10 instances of pizza consumption were takeout. If TruEarth were available, the average respondent indicated that takeout pizza would account for 43% of their next 10 pizza-eating occasions. Example comments: 23-year old female: "I rarely eat pizza because it's not very healthy, but I miss it. I would definitely consider it more often if it were healthier." 35-year old male: "Whole grain crust does not even sound like real pizza. It would probably have to taste better than the stuff I can get from delivery." 42-year old female: "The whole family loves pizza, but it's important to me to provide something that's not terribly unhealthy. A good whole grain crust just might do the trick."

Exhibit 7
Exhibit 7 - Pizza Concept Purchase Intent, Mall Intercept 300 Measure Total (N=300) 18% 43% 60% 3.7 3.0 225 Non-Customers (N=225) 15% 39% 54% 3.5 3.0 75 TruEarth Customers (N=75) 26% 53% 79% 4.2 3.1

Definitely would buy Probably would buy "Top Two" Box Mean Likeability** Mean Price/Value rating**

Exhibit 8
Exhibit 8 - Pizza Concept Likes & Dislikes, Mall Intercept 300 Attributes LIKES Food Qualities Whole grain Freshly made and dated Looks appetizing Preparation Product selection Can purchase all items in one place Can buy toppings separately Can add amount & type of toppings desired Easy to prepare Other TruEarth brand name Good price DISLIKES Limited selection Too expensive Limited time to product expiration Total (N=300) 181 Favorable to Concept (N=181) 119 Unfavorable to Concept (N=119)

19% 31% 24%

25% 35% 31%

10% 26% 13%

16% 27% 23% 18% 16%

20% 35% 31% 24% 20%

9% 15% 11% 9% 9%

24% 9%

33% 13%

11% 3%

23% 27% 12%

18% 20% 3%

31% 38% 25%

Respondents are asked to select the attributes that they "like" or "dislike" about the product concept.

Exhibit 9
Exhibit 9 - Pizza Product Likes & Dislikes, After Home Trial 109 Favorable Attributes to Product (N=109) KEY REASONS FOR FAVORABLE PURCHASE INTENT Overall taste, texture, and quality 10% Like the crust 13% Like the cheese 18% Like the sauce 22% Like the toppings 19% Like the fresh ingredients 21% Easy to prepare 19% Good price 9% Family likes it 8% KEY REASONS FOR UNFAVORABLE PURCHASE INTENT Too expensive More expensive than restaurant or takeout Overall taste, texture, and quality Dislike the crust Family dislikes it SUGGESTED IMPROVEMENTS (BOTH GROUPS) Improve overall taste/flavor Improve the sauce Make crust less chewy Lower price No improvement needed 59 Unfavorable to Product (N=59)

45% 23% 12% 16% 11%

8% 3% 7% 26% 28%

24% 9% 20% 35% 6%

From the original sample of 300 respondents, 168 participated in the in-home test. Of these, 109 indicated they were "favorable" to purchasing the product

Exhibit 10
Exhibit 10 - Typical Price Consumers Would Pay for 12 Pizza Serving, After Home Trial 168 109 59 Refrigerated Pizza Favorable Unfavorable Total to Product to Product (N=168) (N=109) (N=59) $4.00 or less 9.7% 9.5% 10.1% $4.01 to 6.00 10.9% 8.6% 15.2% $6.01 to 8.00 17.4% 15.5% 21.0% $8.01 to 10.00 12.8% 10.8% 16.6% $10.01 to 12.00 14.5% 12.7% 17.9% $12.01 to 14.00 12.6% 14.3% 9.5% $14 to 16.00 8.5% 12.5% 1.1% $16 to 18.00 7.9% 9.3% 5.2% Over $18 5.6% 6.8% 3.4% Mean Price $10.09 $10.75 $8.86

Other Pizza Delivered/ Frozen Takeout (N=168) (N=168) 16.0% 1.2% 18.3% 4.3% 25.9% 10.8% 17.6% 16.0% 12.5% 18.5% 4.5% 20.2% 3.5% 18.0% 1.0% 9.3% 0.7% 1.7% $7.43 $11.72

min $0.00 $4.01 $6.01 $8.01 $10.01 $12.01 $14.00 $16.00

max $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 $16.00 $18.00 $2.00 $5.01 $7.01 $9.01 $11.01 $13.01 $15.00 $17.00 $20.00

Assuming 1.25 toppings with each pizza, the average retail price for TruEarth Whole Grain Pizza is about $12.38

Table A
Table A Mediocre Product Pasta Trial Volume Repeat Purchase Volume Total Estimated Volume (MM units) Sauce Trial Volume Repeat Purchase Volume Total Estimated Volume (MM units) Minimum Business Requirement 1.4 1.0 2.3 Average Product 1.4 1.7 3.1 Excellent Product 1.4 2.3 3.6

0.9 0.8 1.7

0.9 1.8 2.7

0.9 2.6 3.5

$21M retail market ($14M wholesale)

Additional analysis for case facts Price Pasta Sauce Market ($M) Pasta Sauce Retail Wholesale @ 35% GM for Retailers

$ $

5.75 4.50

$ $ $ $

13.4 7.7 21.1 13.7

$ $ $ $

17.7 12.2 29.9 19.4

$ $ $ $

20.8 15.8 36.7 23.8

Table B
Table B Target Households & Awareness Target Households (30% bigger than pasta) Cucina Fresca Pasta Customers Customer Awareness Non-Customer Awareness ACV distribution Purchase Assumptions Units per purchase (pizza kit + 1.25 toppings) Average spend per purchase (retail) Repeat purchase occasions % repurchasers (Excellent product)

58.8MM 11% 50% 12% 40%

1.25 $12.38 2.0 49%