Learn Italian: La slitta di Marco è rossa, ma quella di Luca è blu.

In English, we can just add "'s" and drop the noun to say "Luca's". In Italian, you cannot leave the phrase di Luca hanging by itself. You must use a demonstrative pronoun to stand in for the missing noun. So, quella di Luca literally translates to "that of Luca".

How do I know to use quella instead of quello or quelle?

The demonstrative pronoun must match the gender and number of the noun it is replacing. Since it replaces la slitta (the sled), which is feminine and singular, you must use the feminine singular pronoun quella.

Why does the adjective rossa end in an "a", but blu doesn't?

The adjective rossa (red) changes its ending to match the feminine singular noun slitta. However, the color blu (blue) is an invariable adjective in Italian. It never changes its ending, no matter the gender or number of the noun it describes.

Could I say la sua è blu instead of quella di Luca è blu?

Yes! If you said la sua è blu, it would mean "his is blue" using a possessive pronoun. But because this sentence specifically names Luca to contrast him with Marco, we need the structure quella di Luca (that of Luca) to express "Luca's".