Nestle Case

Issue: In 1990, Nestle Refrigerated Food Company (NRFC) considered the release of a refrigerated pizza

product into the U.S. market. Stephen Cunliffe, President of the NRFC, had managed the release of refrigerated

pasta and sauce three years earlier, but this time faced production challenges, distribution challenges, and an

unknown sales volume for the proposed product. Would there be enough demand for the pizza and would there

sufficient sales volume to warrant moving forward with the decision?

The NRFC uses a seven-step process in product development as follows: idea generation, concept screening,

product development, volume quantification, test marketing, commercial evaluation, and introductory tracking.

This process was intentionally flexible to allow product development teams to innovate effectively. Many

times, NRFC's marketing research department (MRD) would outsource volume determination to BASES, a

marketing research firm. A BASES-I test (for volume) was used to project awareness and usage for pasta and

sauce. MRD decided to use the more thorough BASES II test (Line Extension Study) for projecting sales

volume of the pizza concept.

Prior to the launch of the pasta and sauce several surveys were conducted by BASES to test consumer likes and

dislikes of the products. As referenced above, the pasta and sauce concept tests did not include taste tests. The

majority of those surveyed "liked" the pasta and sauce concept with most having a "high intent" to purchase.

When pizza was tested it received similar subject approval. With the pizza, however, respondents who

indicated they would "likely" purchase the pizza were allowed to take a sample home for trial. The

respondent's intent to purchase was very positive after the take-home trial.

The BASES II test for pizza sale volume was conducted in high-potential markets. This concerned the MRD as

they felt the penetration calculations would vary more widely than BASES presented. Test subjects were

entirely female and in close proximity to shopping malls. Although the survey method, mall intercepts,

required the respondent in close proximity to a mall, consideration for rural areas should have been made. Male

participants should