Heinz

Heinz Ketchup : Pricing the product line.

SUBMITTEDTO Dr.D.D Swain

SUBMITTED BY Mr.Dipanjan Bhattacharya.


Declaration :I Dipanjan Bhattacharya hereby declare that the project is done entirely by me and the facts and figures that have taken from outside has been declared as reference.

Date:10-11-2012.


Introduction Heinz is a US based Food company with numerous branches worldwide. Some of the countries that enjoy their products include the US, UK, India, Australia and many more. The company was founded in Pennsylvania by a twenty five year old known as H.J. Heinz in the year 1869. (Heineman,1990)Thereafter, the company began growing and eventually became recognized as one of the most reputable food based companies in the world. Given the above fact, one cannot underestimate the role that this company's marketing strategy has played in putting them in the map. The paper shall examine these with specific reference to the initiatives launched by the company and recommendations will be given about the issues that can be changed within the company.Heinz ushered into aggressive marketing in developing and acquiring brands that cater to tastes around the world. Issues: 1. Market was saturated in 2007 in the ketchup category so the overall growth was slow in this segment. 2. Increase in raw material costs like oil and natural gas prices had significant cost implications for the ketchup category starting in 2004.COGS has increased by nearly 20% from 2004 to 2006 which further decreased its operating profit margin.It experienced 3 years of stagnant sales. 3. Competition from other brands like Hunt’s brand and other in house products .It faced stiff competition from retailers which devoted space to Inhouse products because they provided greater margins to them.So Heinz started cutting its wholesale prices which eroded profitability But helped it to gain market share.

Solutions: 1. Heinz relied on its strongholds product,price and promotion strategyto maintain its stronghold. 2. It acquired many of the brands which cater to tastes thus decreasing many potential new entrants. 3. The company streamlined their products into major categories like


* Sauces * Ketchups * Baby food * Convenience meals. Which helped them to flash their different products. 4.Its developed its advertising strategy to boost its product line up sales. 5.It developed innovations in packaging which attracted the customers like the upside down bottle ketchup. SWOT analysis: One of the major strengths in Heinz's strategy is the fact that this company is quite mature. It has operated in the food manufacturing sector for over a century. Consequently, the brand has an advantage in terms of experience. Brand maturity also encourages loyalty among consumers. It usually discourages other players from attempting to eliminate that respective company because of its years in service. Another strength lies in its diverse product offerings. Through such an approach, products that fail to do well can be eliminated in order for the company to concentrate on those ones that are performing adequately. Heinz marketing strategies have displayed some weaknesses in terms of choosing to air controversial advertisements. (The Times, 2008) Additionally, the company has been handling decreased sales though cost cutting rather than product innovation. In line with the latter argument is the fact that there are certain opportunities that present themselves to this particular company. For example, the company could opt to diversify its product offerings. Instead of dwelling on categories that are already performing poorly, the company could offer a totally different range of commodities. This would allow the company to enter into a new market segment that would neutralise some of the saturation in their current product ranges. Positioning:Heinz brand has positioned itself as a market leader in its category. The company heavily relies on their name to lure clients. Targeting:It targeted the fast food industry for promotion of its ketchup brand and also mothers for their baby food category. Segmentation: Since Heinz operates in different parts of the world, their segmentation is largely geographical. Some of the products found in one location cannot be found in others. Demographic segmentation is highly influential because of the fact that there are products for mothers and there are


others for the rest of the family; this is segmentation by age. Segmentation by income also exists owing to the fact that in certain regions, one is likely to find a certain commodity and not another. Recomendation:While promoting its large size bottles Heinz should give subsidies to retailers because they were costly and occupied a good amount of space and so are not replaceable faster.So they would be much better if they changed their marketing approach in some aspects.Also retailers were inclined to promote local brands ,so Heinz should devise strategy to promote their own products so that customers don’t go away in finding a particular product of their brand. Conclusion: Heinz is one of the most well known food brands in the world. They have made a name for themselves due to their intense numbers of years, however, this company needs to be less rigid in marketing in order to stay ahead of their competition.

Heinz

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