Analysis of external environment: Pizza consumption is strongest in the northern and eastern parts of the U.S. The target market areas will include large cities such as New York and Baltimore. Analysis of the competition: Nestle's Contadina Pizza will be competing for a share of the $18.4 billion pizza market. The pizza market can be categorized into restaurant (takeout / delivery ) pizza, frozen pizza, and refrigerated pizza. With about 60% of pizza being eaten at home. Pizza is already well-established in restaurants such as Domino's and Pizza Hut. About 88% of all pizza iss sold by restaurants (takeout / delivery ).
There are approximately 10,000 franchised pizza restaurants and 25,000 pizza outlets. In addition, 76% of all U.S. families have eaten at a pizza restaurant within the last six months. The average selling price is ~$8-10 for a 12" pizza. Contadina Pizza's refrigerated product will not be directly competing with these restaurants, however, there is potential for more market share if Contadina Pizza can win some of the restaurant customers. Frozen pizza accounts for about 16% of the last 10 consumption incidences of at-home consumption.
Key players here are Kraft's Tombstone and Jack's Frozen Pizza. The average price for a frozen pizza is ~$2-3 for a 6"-8" pizza. The refrigerated pizza market is still open, however, Nestle is expecting Kraft to market a pizza product within the next 6 months. Contadina Pizza will have to market its product soon if it wants to take advantage of being the first key player in the refrigerated pizza market. Takeout / delivery (restaurants) provides quality pizza, and frozen pizzas are offered at a low price.
Contadina Pizza would market its pizza as quality pizza at a reasonable price. PIE CHART HERE / TABLE: Last 10 incidences of pizza at-home consumption: 75% delivered / takeout pizza 16% frozen pizza from supermarkets 5% fresh pizza from grocery store 4% homemade pizza Analysis of the Company: Nestle produces a broad range of products within the following food categories: beverages, prepared dishes, milk products, confectionery, and pharmaceuticals. Nestle is known as one of the world leaders in manufacturing and distributing food products. They already have business relationships with most food retailers, and their strong brand name guarantees that their products will obtain a good shelf stand. New products bearing the Nestle name are more likely to be accepted by supermarkets and other retailers even without proven success. Nestle possesses extensive resources at its disposal.
The main advantage of this is that Nestle will be able to take advantage of economies of scale for their product, allowing them to produce the pizzas at a cheaper price. In addition, Nestle has the resources to buy an already established regional company, such as they did when they purchased Lambert Pasta and Cheeses, in case that they found an advantage to their competitor's product. Nestle has the financial resources to conduct extensive market research before launching the new product and thus are able to determine the best marketing mix that must be used. Economies of scale also affect marketing since for a large company to spend extra on marketing increase awareness of their product at a lower cost than at other companies. Nestle already has experience in the distribution of food products.
The company already possesses a proven system of distribution to its retailers. From its experience with the refrigerated pasta as well as with its milk products, Nestle already understands how to manage the production and distribution of products that have a short shelf life. Therefore, it is able to rollout the refrigerated pizza products to retailers in less than the required 10 days so that they may have a 30 day shelf life. Even the sales people at Nestle already have experience raising interest for refrigerated products and understand how they must be marketed for best success thanks to Nestle's refrigerated pasta line.
Nestle's size may also become a liability to their operations. A smaller local company would be able to place its factory near the local retail stores, therefore decreasing the burden of delivering the refrigerated pizza giving it a 30-day shelf life. Also, products of local companies are often adopted by the people of their community. A large-scale example of this would be the 'MADE IN THE USA' tags often found in products.
Companies cash in on this nationalistic feeling by making customers feel attached to a certain product and creating a feeling of camaraderie when purchasing products that they view as having a common background. Being a large international corporation, Nestle is likely to be viewed as an outsider in some communities leaving an opening in the market for local companies to cash in using the local-support approach. Analysis of the Consumer: Nestle is targeting their refrigerated pizza products at the quality conscious customers who are interested in obtaining fresh food products. The price of the Pizza Kit of $6.39 plus $1.29 per topping clearly shows that Nestle is targeting customers who are willing to pay more for a fresher product. By placing the refrigerated pizzas next to the deli and dairy products in the supermarket stands, they hope to obtain the image of better quality and of delivering a fresher product. This is also the purpose of the freshness date tag on each product.
As seen on Figure 1, a segment of the pizza market was been overlooked sellers. The segment of the market that wanted low cost was covered by frozen pizza market, while the delivery and restaurant business covered people who wanted the best quality no matter the cost. Nestle is targeting the refrigerated pizza for people who don't have the time or the money to go out and eat at restaurants but yet don't feel satisfied by the frozen pizza products currently available in the market. Through their marketing research it may be assumed that Nestle is targeting females over the age of 18 who took care of grocery shopping at their home.
Although the research was conducted in the Northeast region of the United States were research has shown there exists more interest for this type of product, Nestle is interested in rolling out this product in all the US. The main customer group that Nestle is targeting is those people who are already Contadina pasta users. The reason is that this segment has already shown interest in refrigerated products and is also already aware of the brand. A main weakness to the customer Nestle is targeting that since the refrigerated pizza is a new product the marketing group at Nestle can't be exactly sure whom it is trying to sell the product to and what they are looking for in such as product.
They are assuming that people who use previous Contadina products will be interested in this pizza product..