Question: DIGIORNO PIZZA: INTRODUCING A FROZEN PIZZA TO COMPETE WITH CARRY-OUT

Kraft Foods successfully introduced DiGiorno Pizza into the marketplace in 1996, with first year sales of $120 million, followed by $200 million in sales in 1997. It was neither luck nor coincidence that DiGiorno Pizza was an instant success. Kraft conducted extensive research about the product and the marketplace before introducing this product to the public. Many questions had to be answered before Kraft began production. For example, why do people eat pizza? When do they eat pizza? Do consumers believe that carry out pizza is always more tasty? SMI-Alcott conducted a research study for Kraft in which they sent out 1,000 surveys to pizza lovers. The results indicated that people ate pizza during fun social occasions or at home when no one wanted to cook. People used frozen pizza mostly for convenience but selected carry out pizza for a variety of other reasons, including quality and the avoidance of cooking. The Loran Marketing Group conducted focus groups for Kraft with women aged 25 to 54. Their findings showed that consumers used frozen pizza for convenience but wanted carry out pizza taste. Kraft researchers realized that if they were to launch a successful frozen pizza that could compete with carry out pizza, they had to develop a frozen pizza that

(a) had restaurant take-out quality,

(b) possessed flavor variety,

(c) was fast and easy to prepare, and

(d) had the convenience of freezer storage.

To satisfy these seemingly divergent goals, Kraft developed DiGiorno Pizza, which rises in the oven as it cooks. This impressed focus group members, and in a series of blind taste tests conducted by Product Dynamics, DiGiorno Pizza beat out all frozen pizzas and finished second overall behind one carry out brand. DiGiorno Pizza has continued to grow in sales and market share over the years. By 2005, sales had topped the $600 million mark, and DiGiorno Pizza held nearly a quarter of the market share of frozen pizza sales. In 2004, Kraft successfully introduced DiGiorno thin, crispy-crust pizza into the market. Sales revenues continue to grow for this leading brand of frozen pizza.

Discussion: Think about the market research that was conducted by Kraft and the fact that they used several companies.

1. What are some of the populations that Kraft might have been interested in measuring for these studies? Did Kraft actually attempt to contact entire populations? What samples were taken? In light of these two questions, how was the inferential process used by Kraft in their market research? Can you think of any descriptive statistics that might have been used by Kraft in their decision-making process?

2. In the various market research efforts made by Kraft for DiGiorno, some of the possible measurements appear in the following list. Categorize these by level of data. Think of some other measurements that Kraft researchers might have made to help them in this research effort, and categorize them by level of data.

a. Number of pizzas consumed per week per household

b. Age of pizza purchaser

c. Zip code of the survey respondent

d. Dollars spent per month on pizza per person

e. Time in between purchases of pizza

f. Rating of taste of a given pizza brand on a scale from 1 to 10, where 1 is very poor tasting and 10 is excellent taste

g. Ranking of the taste of four pizza brands on a taste test

h. Number representing the geographic location of the survey respondent

i. Quality rating of a pizza brand as excellent, good, average, below average, poor

j. Number representing the pizza brand being evaluated

k. Sex of survey respondent.