Heinz is one of the most profitable companies operating in the food processing industry. This essay will try to describe the industry and environment of this company. Then, we will see how the competitive advantage has been developed within this industry. By reading the Vision of the firm, we can conclude that Heinz operate in the "food processing industry". Thus, Heinz wants to become the leader in the food industry, by providing the "best value". In this industry, the firms are satisfying the needs of a great part of the population, who want to have safe and good food. The value of the products, they are delivering is function of the way they transform raw ingredients into food for consumption by human. Moreover, the products of this industry are often quickly perishable, thus they have to use process and technics that permit to prolong the lifetime of their products.
[...] - In other countries, Heinz is also well known for the soups, beans and pasta. This fame, make of Heinz the leader among most of these markets. - The infant food, an other domain where Heinz accomplishes superior capacities and great sales, represent an important market. Therefore, the strategy of Heinz has been since the beginning to provide more and more products, related with the food processing industry, to offer a large quantity of products to the customer. Until the years 2000, the firm achieves a lot of acquisitions or launch of new brand. [...]
[...] How has Heinz attempted to develop a competitive strategy to protect its business-level strategy? Heinz is a key player in the food processing industry, and operates in a large number of markets, corresponding to different business level. We have to know first that the portfolio of Heinz's activities and product is very wide, and includes sauces (Tomato Ketchup is the most famous product), condiments, snacks, soups, can (Beans) and pasta, frozen meals, infant feeding, and even pet food. We can read on the web site that starting from a unique product, Heinz achieve to create a coherent portfolio: “from one product to a dozen, made famous through the 57 Varieties slogan at the turn of the century to several thousand today”. [...]
[...] By achieving a customer focus strategy, Heinz avoids problems with the consumerism groups. By creating a specific link with its customers, Heinz also re equilibrate the excessive power of suppliers. Indeed, this relationship with customers can create brand loyalty, creating a dependence of the retailer for the firm. Thus, to satisfy its customers, the retailer must provide the Heinz's brands. - We can also see that Heinz is trying to put tools in place, to facilitate the cooperation and improve the relationship with retailers. [...]
[...] Then to continue on this idea, Heinz should spend high amount of money in advertising. This investment in a “Push strategy” will also create a positive thinking from the customer point of view, and will generate demand from consumer to retailers, for the Heinz's products. In 2007, Heinz is planning to raise “consumer marketing and advertising spending by nearly 19 percent”. Finally, in its aim to reach efficient customer responsiveness, Heinz should integrate the major suppliers into the innovation and quality process. [...]
[...] The firms must be particularly aware for this type of customers, who can create special interest group and cause negative impacts on image or brand. These lobbies, can organize campaign aiming to destabilize the brand, or boycott, concerning directly with the profitability of the company. To re-equilibrate this porter's force. Firms must spend a huge amount in communication and marketing, to become an unavoidable supplier, asked by the final customers. This can lead to create a barrier to new entrants because the communication cost to establish a well-known brand is high, and if they are not able to equilibrate the relationship with the retailer, the firm cannot achieve to create a competitive advantage. [...]
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