Although NRFC believes the pizza sales estimate can be based on the Contadina pasta market penetration rate of 24%, a more conservative calculation would take into account different rate ranges penetration. Choosing three possible penetration rates of 5%. 15% and 25%, the estimated results are shown in Exhibit 1. In all three scenarios, the kit-only concept will not meet the company's expectations. Regarding the kit and topping concept, only if the penetration rate reached 15%, the launch decision could be supported.1.2 Sensitivity analysis shows that pizza sales will be largely influenced by the pasta penetration rate Farmer (Figure 2). Similarities Q2: Both launches of refrigerated pasta and pizza products aim to catch up on the growing trend towards ethnic foods. Both of these two lines try to capture this growing trend by providing convenience and freshness at the same time. In terms of competition, no refrigerated pizza and pasta category has a major brand yet. Therefore, by reacting quickly to demand, both the pasta and pizza opportunities could allow Nestlé to become a market leader in both categories with first-mover advantage. Differences: Although both lines are a new product concept, seeking to address similar customer segments who are interested in Italian food, the market potential may vary depending on the product line. First in terms of positioning in the pasta market, dried and frozen pasta has occupied large market shares thanks to its greater accessibility compared to fresh pasta sold in specialized shops and restaurants. This could explain the fact that emerged from the research according to which 77% of those interviewed in favor of the concept of fresh pasta had never purchased fresh pasta before. Therefore, a wide distribution of refrigerated pasta will satisfy customers' desire...... half of paper ...... Total retail (users+non-users) MM $65.98 $39.68 Total sales factory (2/3 of retail) MM$43.99 $26.45 NRFC hurdle (factory sales) MM$45 $45? Pizza and topping kit: 43.99 million, will you reach the company's projected factory sales of 45 million? Pizza Kits Only: 26.45 Million, Fail to Reach Company's Projected Factory Sales of 45 Million Figure 2 Sensitivity Analysis Change in Penetration Rate Change in Pizza Sales Percent Change in Pizza Sales 25% to 15% - 7.11 million -12.2% 25% to 5% - 14.26 million - 22.48% 15% to 5% - 7.15 million - 13.98% The calculation shows the high sensitivity between Contadina pasta market success and estimated pizza sales.