Contadina Pizza

1227 Words May 1st, 2008 5 Pages
Decision Problem

The Nestle Refrigerated Food Company (NRFC) has the opportunity to extend its Contadina brand name into the refrigerated pizza market. NRFC must determine whether adding a pizza, with or without extra toppings, will meet specific financial objectives and increase sales.
Possible Decision Alternatives

Our analysis shows that NRFC can 1) maintain the status quo, 2) introduce the refrigerated pizza without toppings, or 3) introduce the refrigerated pizza with toppings.
Analysis of Industry
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
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Using the same model as in Exhibit 9, the total projected volume of “Pizza Only” is 7.85MM units (see Appendix 1) and forecasted revenues are $33.5M, which is $11.5M under the minimum baseline (see Appendix 2).
Alternative 3: Pizza & Toppings

Advantage: According to Exhibit 21, 76% of respondents are favourable to the pizza kit and toppings options. Moreover, 87% of Contadina pasta users, which represent 24% of the 95.5 million targeted households (almost 23 million), are favourable to the concept. Since Contadina has high brand awareness, advertising expenditures could be lessened. Most importantly, this option exceeds the minimum factory sales of $45 million by over $7.5 million.
Disadvantages: The pizza kit and toppings option is rated as too expensive/ more than takeout/delivery/restaurant. The mean price that typical consumers would pay for a 12” pizza service two-three people is $6.49; the average retail price for Contadina pizza and toppings is $8.00 (assuming 1.25 toppings per pizza). In addition, although the pizza kit and toppings option has a “homemade” element to it, some people will prefer to order from a restaurant. This may prove to be a major setback, especially in a market where consumers are almost conditioned to order from a restaurant whenever the craving for pizza, or the desire for a quick, easy dining occasion, presents itself.

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