Marketing Strategies of Heinz - Term Paper Example

Task Part A - Product Portfolio Analysis of Heinz H. J. Heinz Company, popularly known as Heinz is a US based manufacturer and marketer of processed food products, having operations in 200 countries (Datamonitor Inc., 2007). The main product portfolio of the company consists of Ketchups, Ready meals, Infant Foods, Sea and Frozen Foods. Apart from these the company also hosts other products like biscuits, Juices, Soaps, Beans, Pastas, Condiments and Desserts. BCG Matrix BCG Growth-Share matrix is widely used in corporate strategic analysis. This matrix helps in analyzing likely "generators" and optimum "users" of corporate resources. The BCG growth-share matrix displays the positions of business units on graph of the market growth rate against their market share relative to competitors. Of all the products launched by Heinz between 2003 and 2006, sauces, dressings and condiments took the largest share, of 25.5%. However, ready meals also took a sizeable share of 20.9%. Other categories that been key to the company's new product developments include canned food (13.1%) and fruit and vegetable products (9.2%). Of all the products launched between 2003 and 2006, 1.5% products were classed as innovative. When looking at innovation within Heinz, the company is most innovative in meat, fish and poultry products with 6.1% of all meat products launched by the company, innovative (Datamonitor Inc., 2007). Additionally, from the information that is available about the business units of the company, it can be stated that the Tinned Pasta and Retail Brown sauce business units were the most profitable with a revenue generation of 78.2 and 74% respectively. From this information, according to the BCG Matrix, these two units can be termed as Stars. Secondly, the Retail Ketchup and Baked Beans divisions were other two divisions which generated considerable revenues. Baby food and drink products are another area in which Heinz is a leading innovator. 3.1% of all baby products launched were classed as innovative. Task A - 2 Growth & Marketing Strategies One of the most important strategies intended at the growth of the company and that was taken by the management of Heinz was to offset commodity and marketing costs and thereby increasing the operating margins. The company also increased its focus on the consumer with a strong spotlight on health and wellness. Apart from these, the company also increased investment in marketing for future growth, greater R & D and impressive productivity measures (Merrett, 2007). Heinz's international growth strategy of acquiring new companies in the Netherlands, Indonesia, the Philippines, Singapore and Costa Rica also have been of great help to the company's growth and improved performance. The company also launched growth and reorganization plans to focus on Meal Enhancers and Meals & Snacks. The historic transaction with Del Monte Foods is designed to make Heinz a more focused company able to invest more effectively in its strongest brands (Heinz). Heinz intends to build growth and value over the long term through a strategy based on certain imperatives like expansion and improved consumer price-value, remove the clutter by reducing the complexity of Heinz's business processes and continuing to focus resources on those products and activities that maximize profitability; Task 1 - C Pricing Strategies & Porter's Five forces Pricing again also played its part in the company's overall performance as changes in pricing and improved volumes, through key brands like weight watchers and Heinz baked beans, were offset by difficulties in Russia for its non-Heinz products and unbranded frozen foods. By maintaining the key initiatives of the yearof pushing both innovation and the number of its brands globally, Heinz believes that it can continue the strong performance into the 2008 fiscal year. The company was also keen in squeezing out costs to deliver the margin improvements necessary to underwrite greater marketing investment. The effective formulation of a strategy needs a clear understanding of competition. Competition in an industry is determined not only by existing competitors but also by other market forces such as customers, suppliers, potential entrants, and the existence of substitute products. Michael E. Porter of the Harvard Business School has developed a framework known as the 'Five forces Model' to help analyze the business environment. Threat of New Entrant - There are not much of entry barriers for a new player to enter the industry as Heinz was faced by a threat posed by Branston Beans which was a new entrant into the industry. Though, initially Heinz didn't react to the threat posed by the new player, it later reacted by increasing the tomato content to 33% from the earlier 27% of its beans (Datamonitor Inc., 2007). Bargaining Power of Buyers - Even this aspect had enough importance in framing the company's strategies as the company introduced new products which are customer-friendly and are tastier than its competitors' products. Bargaining Power of Suppliers - The processes at Heinz are aimed at fostering innovation and drive continuous productivity improvement as opposed to the processes of its competitors which are according to local consumers' tastes and conditions. This definitely helps the company to handle the bargaining power of suppliers in a more effective way. The rivalry among existing players - There exists enough rivalry among the existing players in this industry as there are almost 6-7 other companies which are into the same processed foods business. The threat of substitute products - As already discussed above, there are almost 6-7 companies which are into the processed food business and this clearly states that Heinz is not an exclusion to the threat of substitute products. Task 2 The marketing mix thus consists of four main elements: 1. Product 2. Price 3. Place 4. Promotion. Getting the mix of these elements right enables the organization to meet its marketing objectives and to satisfy the requirements of customers. In addition to the traditional four Ps it is now customary to add some more Ps to the mix to give the Seven Ps. The additional Ps have been added because today marketing is far more customer oriented than ever before, and because the service sector of the economy has come to dominate economic activity in this country. These 3 extra Ps are particularly relevant to this new extended service mix. 1. Physical layout - In the earlier days when manufacturing dominated the UK economy the physical layout of production units such as factories was not very important to the end consumer because they never went inside the factory. Heinz launched a new range of mini-meals by name Weight Watchers Smart Ones Anytime Selections in two different flavours. The speciality of this product range is that these are available in portion appropriate sizes with fewer than 300 calories and seven grams of fat or less per serving and the most interesting part about this is the meals take three minutes to prepare in the microwave which is suitable for today's fast life. These products are made available to customers in grocery stores across the US. 2. Provision of customer service - Customer service lies at the heart of modern service industries. Customers are likely to be loyal to organisations that serve them well - from the way, in which a telephone query is handled, to direct face-to-face interactions. At Heinz, the management is committed to satisfying consumers' cravings for taste and flavour by offering a wide variety of options that appeal to various lifestyles, eating habits and palates. 3. Processes - Associated with customer service are a number of processes involved in making marketing effective in an organization e.g. processes for handling customer complaints, processes for identifying customer needs and requirements, processes for handling order etc. The processes at Heinz are also customer-friendly. As stated earlier, the mini-meal which was introduced by the company takes less time of only 3 minutes for preparation and this saves a lot of time to customers who are time-freaks. Task 3 Report using Tesco as an example TESCO is one of the leading international retailers in the world. It was started in the mid of 1920s with the trading name TESCO. Since then the company has slowly expanded and marked its presence in different markets and sectors (TESCO). The growth strategy of the company is a long-term strategy to be as strong in non-food as in food and to follow customers into new retailing services. Their core purpose is based on creating value for its customers to earn their life time loyalty. They offer outstanding customer service; every customer is offered help at the checkout. Location and convenience is another reason to choose Tesco, they have introduced a staggering 200 in the last two years that stay open 24 hours a day and they plan another 1540 new express stores, which are Tesco mini stores linked on to esso garages and forecourts. Bibliography 1. Datamonitor Inc. (2007). H.J. Heinz Company Profile. New York: Datamonitor.com. 2. Heinz. (n.d.). About Heinz. Retrieved April 14, 2008, from Heinz.com: http://www.heinz.com/History.aspx 3. TESCO. Tesco. 5 November 2007 . Read More