A Case Analysis for Heinz’s Ketchup

I. Introduction

There are five known fundamental tastes in the human palate: salty, sweet, sour, bitter and umami. AN entrepreneur out of Pittsburgh named Henry J. Heinz had came up with a condiment that pushed all five of these primal buttons – the Heinz’s Ketchup. The taste of Heinz’s ketchup begins at the tip of the tongue, where our receptors for sweet andf salty first appear, moves along the sides, where sour notes seem strongest, then hit the back of the tongue, for umami and bitter, in one crescendo. This all-in-one condiment offering rarely happens. For this reason, Heinz’s charges more for their product convincing that the public would pay more for a better ketchup, and they were right.

Background

Henry John Heinz: A Man of Uncommon Vision
Henry John Heinz was very much the product of his parents, and the lessons he learned from them echo down into the character of the H.J. Heinz Company today. Henry’s parents taught him thrift rather than greed. He knew nothing of “get rich quick” business schemes and couldn’t bear the thought of ill-gotten gain. Many of his business ideals and principles, almost unheard of at the time, remain progressive to this day. For example, Henry Heinz did business based on the simple idea that every profit should be fairly earned. One of his mottos still guides Heinz’s purchasing practices today: “Deal with the seller so justly that he will want to sell to you again.” Another driving principle of Henry Heinz’s that resonates in today’s resource-conscious world was his hatred of waste of any kind.

Leading by example, he inspired each of his employees to avoid even the slightest waste of material, time or opportunity. Finally, Henry Heinz learned from his mother a genuine and enduring concern and respect for every person, rich or poor, and always tried to practice her favorite rule for living: “Always remember to place yourself in the other person’s shoes.” Individually, the principles Henry Heinz instilled in his company can seem simple and almost quaint. Taken together though, they’re an all-too-rare combination in today’s business world. Fortunately, Henry Heinz himself showed that common sense, decency and social justice is a proven recipe for enduring business success. “To do a common thing uncommonly well brings success.”

Founder Henry John Heinz
Heinz Mission Statement
As the trusted leader in nutrition and wellness, Heinz – the original Pure Food Company – is dedicated to the sustainable health of people, the planet and our Company.

Heinz Values:
* Team Building & Collaboration – We embrace great ideas from everywhere and everyone and respect all individuals. * Innovation – We spot consumer and customer needs and meet them with simple, creative solutions. * Vision – We define a compelling, sustainable future and create the path to achieve it. * Results – We deliver on commitments, take accountability and balance the short- and long-term. * Integrity – We always tell the truth, act with the highest ethical standards and ensure that our products are of the highest quality. A World of Good Food

The H.J. Heinz Company, headquartered in Pittsburgh, Pennsylvania, is the most global of all U.S.-based food companies. Famous for our iconic brands on five continents, Heinz provides delicious, nutritious and convenient foods for families in 200 countries around the world. In more than 50 of those countries, we enjoy the number-one or number-two market position. Key Heinz markets are segmented as North American Consumer Products, U.S. Foodservice, Europe, Asia Pacific and Rest of World. Our commitment to providing a variety of wholesome foods, with an unwavering emphasis on health and wellness, makes Heinz like no other company on earth. The First Name in Ketchup

Throughout the world, Heinz is synonymous with ketchup. We sell 650 million bottles of Heinz ketchup every year and approximately two single-serve packets of ketchup for every man, woman and child on the planet. For millions of families the world over, “if it isn’t Heinz, it isn’t ketchup.” The Good Food Company

Beyond ketchup, Heinz also markets an ever-expanding selection of other great tasting foods. Our core products include ketchup, sauces, meals, snacks, and infant/nutrition. Among them are our 15 Power Brands, which comprise approximately 70% of our global sales. In short, Heinz is committed to enriching your family’s eating experience, whether you’re at home, dining out, or “on the go!” Satisfying Tastes and Appetites Around the World

At any given moment, on any given continent, the 35,000 employees of Heinz are hard at work…creating new products, perfecting fresh ideas, and developing nutritious and innovative foods for today’s families. Heinz is a trusted name for consumers, a valued partner in the community, and a great investment with tremendous growth potential.

II. Problem

* Maintain exclusiveness when the markets of the volatile 5R’s are to be targeted. * The markets of China, Indonesia, India, Russia, and Brazil are continuously emerging and the Western markets are going to slow down. * Heinz used to be in an exclusive position being a dollar-pound-euro company. Nevertheless, they have to go after the markets that will most probably yield greater profitability at the current context. This means capturing sales from Reminbi, Rupiah, Rupee, Ruble and Real. * Winning over governmental restrictions of foreign countries. * Heinz walked away from Ukraine and Vietnam when they have envisaged sure-loss-risks and worthless investments because of governmental issues which can never be neglectable. * Conformance to the “rule of the golden tongue”.

* Delicious is relative. What is delicious for some may be nauseating for others. For this reason, Heinz, as a global company, should continually tailor their taste to fit the preference of their market. This is most beneficial to the customers but may result to some inconsistencies and substandardizations of the taste identity of Heinz.

III. Internal / External Assumptions

Internal
* Heinz’s best competitive advantage is their complete offering of five known fundamental tastes in the human palate: salty, sweet, sour, bitter and umami in their ketchup. * Heinz’s innovated packaging – EZ Squirt bottle which drove as much as 12% in ketchup consumption giving them grounds to explore more convenient packaging ideas to offer. * Conformance to the so-called “rule of the tongue” results to inconsistent and substandard taste identity of Heinz’s ketchup.

External
* Today, China is the biggest tomato producer in the world affecting Heinz’s in terms of manufacturing and production even on exporting tomatoes. * In view of the fact that majority of ketchup customers use it as condiment not as ingredient, we could visibly conclude that Heinz’s is taking most if not full advantage from their consumers. * Tomatoes vary. In acidity and sweetness, ratio of the solids to liquid, variety of seed used, time of the year harvested, the soil it has grown, and the weather during growing season. These uncontrollable constraints defy the recipe of Heinz’s ketchup.

IV. Objectives

* To conceptualize and produce another unique yet very convenient packaging that would surpass the 12% increase in ketchup consumption rate by EZ-squirt bottle. * To intensify promotion and advertisement both in traditional and digital means.

V. SWOT
Strengths
* Heinz’s has an effective long-term emerging market strategy – Three A’s: Applicability, Availability and Affordability. * Heinz has formed an efficient Emerging Market Capability Team (EMCT). * Heinz’s buy and build enabled them to penetrate the right channels while expanding their market share. * Heinz is using good operating metrics.

* Heinz is mindful of the “Rule of the Golden Tongue” – they tailor the taste. * New packaging contributed a lot more successes.
* Heinz connects with consumers through the most efficient at the least cost social media. * Heinz’s partnership with restaurants enabled expansion and stronger equity for their business. * Heinz only has 5 courageous chairmen.

Weaknesses
* Heinz needed to pursue the volatile currencies since dollar-pound-euro countries are not as stable to buoy up profitability. * Heinz’s needed to adjust their taste or flavor because of the so-called “Rule of the golden tongue” – this affects the consistency of the original ketchup recipe. * Though Heinz’s 5 chairmen are all courageous and wise, there much productivity with greater workforce. Opportunities

* The emerging markets of China, India, Russia and Indonesia have the same motivations and desires similar to those of Americans – they were going to want the same kind of variety and convenience. * Heinz in emerging markets focused on connecting with consumers through social media to glean valuable insights and drive awareness of the new products and innovations. * Heinz has identified the common mistakes their competitors make in terms of entering emerging markets. * Heinz’s partnership with quick service restaurant chains that are expanding. * All wants convenience, high-quality at good prices.

Threats
* Growth in the developed economies was going to slow down. * Governmental issues cannot be neglected because they are significant considerations. * Heinz used to be a dollar-pound-euro company but will soon be dominated by 5 volatile but going to be the strongest R’s: Brazilian Real, Chinese Reminbi, Indian Rupee, Indonesian Rupiah, Russian Ruble.

VI. TOWS Matrix
| Opportunities| Threats|
| 1. The emerging markets of China, India, Russia and Indonesia have the same motivations and desires similar to those of Americans – they were going to want the same kind of variety and convenience. | 1. Growth in the developed economies was going to slow down.| | 2. Heinz in emerging markets focused on connecting with consumers through social media to glean valuable insights and drive awareness of the new products and innovations.| 2. Governmental issues cannot be neglected because they are significant considerations.| | 3. Heinz has identified the common mistakes their competitors make in terms of entering emerging markets.| 3. Heinz used to be a dollar-pound-euro company but will soon be dominated by 5 volatile but going to be the strongest R’s: Brazilian Real, Chinese Reminbi, Indian Rupee, Indonesian Rupiah, Russian Ruble.| | 4. Heinz’s partnership with quick service restaurant chains that are expanding.| | | 5. All wants convenience, high-quality at good prices. | | Strengths| SO| ST|

1. Heinz’s has an effective long-term emerging market strategy – Three A’s: Applicability, Availability and Affordability.| 1. Take full advantage of the reach being captured by the social media. Inform the customers not only about the products but also of the partnerships they’ve closed. (S3;O2)| 1. Assure profitability and prevent probable losses from the declining growth of developed economies by buying and building more expanding brands. (S3;T1)| 2. Heinz has formed an efficient Emerging Market Capability Team (EMCT).| 2. Extend the three A’s strategy and the operating metrics to watch over the competitors’ behavior – this is hitting the customers and the competition. (S4;S1;O3)| 2. Continuous consideration of governmental issues by making use of operating metrics. This is a critical assessment that could save a lot of money. (S4;T2)| 3. Heinz’s buy and build enabled them to penetrate the right channels while expanding their market share.

3. In line with the adjustment on the rule of the golden tongue, choose not only the best channels but also the best restaurants that would best fit their adjusted taste. (S5;O4)| 3. Justify exclusive or at least selective pricing by strong ads to resist or match 5-R dominance. (S6;T3)| 4. Heinz is using good operating metrics.| 4. Continuous convenience offering of quality at good prices using three A strategy. (S1;O5)| | 5. Heinz is mindful of the “Rule of the Golden Tongue” – they tailor the taste.| 5. Maximize the 5-man team in understanding different markets. (All must be equally superb) (S9;O1)| | 6. New packaging contributed a lot more successes.| 6. Promote and advertise new packaging through social media – gives convenience to both the company and the market. (S6;S7;O2;O5)| | 7. Heinz connects with consumers through the most efficient at the least cost social media.| 7. Maintain the emerging market capability team to provide consistent and standardized management system. (S2;O1)| | 8. Heinz’s partnership with restaurants enabled expansion and stronger equity for their business.| | | 9. Heinz only has 5 courageous chairmen.

Weaknesses| WO| WT|
1. Heinz needed to pursue the volatile currencies since dollar-pound-euro countries are not as stable to buoy up profitability.| 1. Target larger market scope by acquiring maximum sales from the dominating 5 Rs. (W1;O5)| 1. Intensify brand equity and consumer loyalty in emerging markets while maintaining/sustaining sales in the developed markets. (W1;T1)| 2. Heinz’s needed to adjust their taste or flavor because of the so-called “Rule of the golden tongue” – this affects the consistency of the original ketchup recipe.| 2. Take advantage of the found common motivation from the developed and emerging market by trying to offer more western tastes that could probably be adapted in emerging markets. (W1;O1)| 2. In line with the rule of the tongue adjustment, assure profitability by satisfying and meeting the demands and requirements of the market and the government. (W2;T2;T3)| 3. Though Heinz’s 5 chairmen are all courageous and wise, there much productivity with greater workforce.| 3. Highlight competitors’ mistakes by emphasizing the company’s adjustment to the rule of the golden tongue. (W2;03)| | | 4. Establish awareness and equity of the tailored taste by offering it in the expanding restaurants. (W2;O4)| | | 5. Convert slow productivity by equipping larger workforce in partner restaurants. (W3;O4)| |

VII. Alternative Courses of Actions

ACA 1: Intensify brand equity and consumer loyalty in emerging markets while maintaining/sustaining sales in the developed markets.

ACA 2: Take full advantage of the reach being captured by the social media. Promote and advertise to establish equity of distinctive ketchup.

ACA 3: Assure profitability and prevent probable losses from the declining growth of developed economies by buying and building more expanding brands.

VIII. Recommendation

Intensify promotion and advertisement both in traditional and digital means. Information provision is still the most appropriate approach to communicate distinctive value of any brand or product.

Bill Johnson has even mentioned the importance and impact of relationship building among buyers and suppliers. Promos ad ads would play a big role to connect to its diverse target market. It also enables Heinz’s to justify and maintain market leadership in tomato ketchup worldwide.

Sources:

http://www.heinz.com/
http://www.gladwell.com/2004/2004_09_06_a_ketchup.html