Heinz marketing SWOT PEST and Five forces
F.M.C.G. Company Heinz is the most global U.S. based food company, with a world-class portfolio of powerful brands holding number 1 and number 2 market positions in more than 50 worldwide markets. There are many other famous brand names in the companys portfolio besides Heinz itself, StarKist, Ore-Ida, Plasmon, and Watties. In fact, Heinz owns more than 200 brands around the world and makes over 5,700 varieties.
The Company was founded in 1869 by Henry J Heinz called Heinz and Noble Company. In the 1870s during the depression the company went into voluntary liquidation. The company was started up again in 1876 by Henrys relatives John and Frederick the company was called F & J Heinz. In 1888 Henry bought the company back, in 1905 Henry bought the first Heinz British factory. British made backed beans first came of the lines in 1928 and spaghetti followed in 1930.
We analyse Heinz using S.W.O.T., P.E.S.T. and Porters five forces.
Strengths; Brand names, Market Leader and Slogans and Advertising.
Weaknesses; Mature product, Production cost, and other market leaders
Opportunities; Market growth, Brand name and Consumer Feedback
Threats; Competitors and Brand loyalty
Political Factors; Law, employee legislation and Health and Safety regulations
Economic Factors; National Economy and Labour market
Social Factors; Attitudes and Health conscious, Lifestyle changes and Population
Technological Factors; New product development, Information technology and Infrastructure Development.
Porters five forces:
Threat of Entry, is high
Threat of Buyers, buying power is low
Power of Suppliers, is low
Threat of Substitutes, is medium
Competitive Rivalry, is medium to high
We have carried out a study on the F.M.C.G Company Heinz. Heinz is the most global U.S based food company, with a world-class portfolio of powerful brands holding number 1 and number 2 market positions in more than 50 worldwide markets. There are many other famous brand names in the companys portfolio besides Heinz itself, StarKist, Ore-Ida, Plasmon, and Watties. In fact, Heinz owns more than 200 brands around the world and makes over 5,700 varieties.
In this study we analyses the company using a S.W.O.T analysis, P.E.S.T analysis and Porters Five Forces.
We also answered the following two questions;
1. Identify 5 characteristics that consumers look for in modern fast-moving consumer food goods. Compare the characteristics you identify with those identified by someone else in your class.
2. Working in a small group. Brainstorm a series of ideas for the future development of Heinz Spaghetti. Having identified the ideas, list them in order of viability.
On the information that we gathered and analyses we gave a conclusion of our findings and made some recommendations that might be useful for Heinz to consider in theyre future businesses planning.
What is it?
You can use a SWOT analysis to identify and analyze the Strengths and Weaknesses of your organization, as well as the Opportunities and Threats revealed by the information you have gathered on the external environment.
Why use it?
To develop a plan that takes into consideration many different internal and external factors, and maximizes the potential of the strengths and opportunities while minimizing the impact of the weaknesses and threats.
,h Brand Name; Heinz has a really good reputation for being a quality food, and has done since it was established in 1869, the founder Henry J Heinz set out to bring quality and consistency to the consumers homes and the brand has carried this quality on through the years.
,h Market Leaders; Today Heinz is one of the worlds major global companies operating in some 200 countries, offering more than 5,700 products varieties, with No1 and No2 branded business in more than 50 world-wide markets.
,h Slogans & Advertising; Heinz has always been famous for it advertising and always on the forefront of new and exciting advertising and promotions Heinz used different ways of adding fun and interest. The Beanz Meanz Heinz advertising slogan is one of the most successful of all time V it appeared for 22 years.
,h Mature Products: Many of Heinz products have been around for years and may be declining in sales as a result of changing consumer tastes. I.e. the product life cycle may be in decline.
,h Production Cost: Heinz has 5,700 product varieties but are only No1 and No2 branded businesses in 50 markets worldwide. Therefore some of the products there are producing may actually be costing them money to produce and distribute.
,h Other market leaders: In the markets were Heinz is not the market leader the price of the products may need to be determined by the price of the product that is the market leaders.
,h Market Growth: As the market of Low fat foods and convenience foods grow Heinz needs to make the best of this opportunities as they already have some presence in these markets.
,h Brand Name: Heinz has made a creative partnership with Walkers Crisps to launch Heinz Tomato Ketchup Flavour Crisp. As Heinz has a good reputation for good quality traditional products they should try and look for more companies with modern products to go into partnership with in order to bring there traditional products into the modern FMCG markets.
,h Consumer Feedback: Heinz receive a lot of feedback from their customers and they use this information to there full advantage, Heinz knows that the innovation process depends on generating a stream of new ideas, Heinz analysis consumer feedback and buying habits to help with new product development.
,h Competitors: Are always a threat to any company. Heinz has many product lines and therefor there are many Companies that may cause a threat to Heinz. E.g. Bachelors and HP Sauces.
,h Brand Loyalty: As there are some many different brands in the same product lines, there is a great choice of variety and variance in prices available to the consumer. Therefore brand loyalty is not as common these days as in previous years.
What is it?
A PEST analysis is an analysis of the external macro-environment that affects all firms. P.E.S.T. is an acronym for the Political, Economic, Social, and Technological factors of the external macro-environment.
Why use it?
Such external factors usually are beyond the firm’s control and sometimes present themselves as threats. However, changes in the external environment also create new opportunities. As a company had no control over these factors, it should understands and be able to anticipate and take advantage off changes within their environment.
,h Heinz will at all times comply with the law. It will be normal practice to comply with Government guidelines and relevant codes of practice in labeling and advertising.
,h All employers are required to conform to the now mandatory workweek and to comply with the wage legislation- minimum wages and overtime.
,h Heinz had to make all the necessary changes to comply with the Industrial Health ; Safety Regulations.
,h The state of National Economy V The sales of many of Heinz products may fluctuate depending on the rise and fall of our economy: High disposable income more money to spend on luxury items i.e. meat products. Low disposable income less money to spend purchase of necessary items only i.e. pasta, beans, and potatoes.
,h The labour market V When there is a tight labour market it is a sellers market for employees and causes a wage increase, thus Heinz would find it hard to recruit employees and would incur high wage expenses. When there is a loose labour market it buyers market for employers and cause a wage decrease, thus Heinz would find it relatively easy to employ staff at a low wage rate.
,h Attitudes ; Health Consciousness V People have become more health and weight conscious, Heinz have moved to meet these changes in consumer attitudes i.e. Low V Fat Range, organic versions of some of there icon brands, Heinz’s Company Nutrition Team will be able to discuss complex dietary needs or answer specific questions on product ingredients.
,h Lifestyle Changes V Many of todays consumers do not want to spend time cooking due to hectic lifestyles, so Heinz have created products that can be effortlessly cooked, in convenient packaging that can be eaten from the microwave, and products that can be eaten on the move.
,h Population/ Age Distribution V Heinz have many products in traditional markets which are well known to the older generation in our population, Heinz have joined forces with companies that have products in the more modern markets to attract the younger generation of our population i.e. Walkers to create a new and unique flavoured crisp Heinz Tomato Ketchup Flavour.
,h New Product Development V Heinz knows that the innovation process depends on gathering a stream of new ideas from various sources e.g. customer feedback, market research and employees. By encouraging these new ideas, Heinz can also focus on those, which meet consumer needs and are practical for the market place.
,h Information Technology V Heinzs likes to keep up with fast moving technology. Heinz relaunched their salad cream in 2001. A new web site has been created to compliment the brand repositioning as well as television advertisements thus providing a mix of communication routes to meet new technology demands.
,h Infrastructure Technological Developments V During the past number of years there have vast changes in infrastructure and Heinz needed to change their transport procedures to meet these developments. Heinz makes 1.5 million cans of baked beans every day and the same number of soups. Heinz uses enough tomatoes to fill an Olympic size swimming pool. This will give you some idea of the amount of goods that need to be transported to and from Heinz factories.
Porters Five Forces
What is it?
Force Field Analysis is a technique based on the premise that change is a result of a struggle between forces of resistance (forces that impede change) and driving forces (forces that favor change). By using Force Field Analysis, you can learn which course of action will be the best one to implement because it will have the most driving forces and the least resistant forces.
Five forces look at five key areas namely the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry.
Why use it?
To determine the best course of action to take.
Threat of Entry
Entry Barriers are low and Exit Barriers are low so firms can easily enter and leave the industry.
Entry Barriers are low as raw materials are easily accessible, and there are no government policies prohibiting entry into the market. Exit Barriers are low so poor performing companies can easily exit.
Threat of Buyers
The power of buyers is the impact that customers have on a producing industry. Buying power is low as Heinz products are very evenly distributed between large players in the market and small distributors. Heinz products are easily purchased by the buyer.
Power of Suppliers
A producing industry requires raw materials – labour, components, and other supplies. This requirement leads to buyer-supplier relationships between the industry and the firms that provide it the raw materials used to create products. The power of suppliers to Heinz is low because they do not depend on any particular supplier i.e. raw materials are easily obtained. Many of Heinz suppliers may depend more on Heinz than Heinz depends on them i.e. Heinz use enough tomatoes a day to fill an Olympic sized swimming pool.
Threat of Substitutes
In Porter’s model, substitute products refer to products in other industries. A close substitute product constrains the ability of firms in an industry to raise prices. The threat of substitute to Heinz is medium made up of a contribution of high and low factor. Products with a high threat of substitute to Heinz are other products that are quick and convenient these products compete with Heinz on price i.e. Own Brands, Homestead and Tesco. E.g. Substituting Bean for Spaghetti. Low threat to Heinz is that Heinz all ready has a large product mix with products already in the markets that would be considered as a substitute. When the consumer is more quality conscious than price conscious Heinz products will nearly always out sell the cheaper product i.e. Heinz long established good quality brand name.
This force describes the intensity of competitors between existing players (Companies) in an Industry.
Competitive Rivalry to Heinz is medium to high. There is a threat of substitute products not only from the Heinz label itself i.e. substituting Heinz beans for Heinz spaghetti but also from other competing brands e.g. Bachelors and Tesco, however supplier and buyers in the market do not attempt to control i.e. number of competitors is high in the market but however product differentiation is low between competitors.
History of Heinz
Heinz began in the USA, with an American boy, barely one third of a hectare of land, and a horse and cart. Heinz as a company was established in 1869.
Henry J Heinz was an industrious young lad at the age of 15 he took the first step into convenience foods. By bottling horseradish in clear glass jars Henry Heinz was clearly different to other manufacturers who bottled their goods in coloured glass jars to hide the cheap fillers used to add to the ingredients. Here was a product you could trust, because you could see exactly what you were getting, Henry believed in offering quality products to consumers.
In 1869 he set up a brick-making and food business with a friend, L C Noble. But then trouble struck even, Heinz and Noble Company could not ride out the depression of the 1870s and the company went into voluntary liquidation.
Henry J Heinz however persuaded his brother John and cousin Frederick to put up the money he needed to start again. In 1876 Henry became the manager of F ; J Heinz Company, in 1888, Henry bought out his relatives and the company H J Heinz the company was born.
In 1886 Henry made his first trip to Europe, the world famous grocery store in Piccadilly, London stocked seven varieties of his products. In 1905, he bought the first British factory; a pickle manufacturer called Batty and Company for the Heinz business. British-made backed beans first came off the line in 1928 and spaghetti followed in 1930.
Even back in the 1800s, Heinz was famous for its advertising. The late 1950s saw the arrival of commercial television and the early Heinz commercials quickly established the superior quality of Heinzs products.
Always on the forefront of new and exciting advertising and promotions Heinz used different ways of adding fun and interest. In 1961, a groundbreaking promotion was organised, giving away 27 mini minors to 57 lucky Heinz soup fans. Britain had never seen a prize competition quite like it.
Now a days Heinz is the most global U.S based food company, with a world-class portfolio of powerful brands holding number 1 and number 2 market positions in more than 50 world-wide markets. There are many other famous brand names in the companys portfolio besides Heinz itself, StarKist, Ore-Ida, Plasmon, and Watties. In fact, Heinz owns more than 200 brands around the world and makes over 5,700 varieties.
Case Study Questions
Identify 5 characteristics that consumers look for in modern fast-moving consumer food goods. Compare the characteristics you identify with those identified by someone else in your class.
,h Price is important to student A, while brand and reputation is more important to student B than price
,h Quality is important for both students, Student A; a cheap product with good value and for student B; a quality product for the price paid.
,h Taste is important for student A, while for student B a quick and convenient product is important.
,h Student A the most quantity for the cheapest price and for Student B packaging is important, that the product looks modern and attractive.
,h What the product contains is important for both students but in different ways, Student A wants the product to be good for them and not to contain artificial ingredients but for Student B the source of the product and where the raw materials came from is important.
Student A. May be the type of person who looks for value for money and is not to interested in modern day marketing, but more interest in a good quality natural product at the cheapest possible price available.
Student B. May be the type of person who has a very busy life style, likes popular modern products and is willing to pay the going price for such a product. Also the source of origin is a very modern day concept in food products, with the awareness of BSE in Beef and chicken been feed artificial foods.
Working in a small group. Brainstorm a series of ideas for the future development of Heinz Spaghetti. Having identified the ideas, list them in order of viability.
,h Microwaveable pot; Take the spaghetti out of the can and put it in a microwaveable pot so people can have it as a quick and convenient snack.
,h Full Meal; Make the spaghetti a full meal that is quick, convenient and easy to cook but still a nutritious filling evening meal. E.g. Spaghetti with Chicken pieces and Basil.
,h Recipes; Design recipes for meals that contain Spaghetti that the consumer can cook, possibly 4 recipes and put one recipe on the label on the back of each can, so that the consumer can cook their own meals that contain spaghetti.
,h Lunch Meals; Make a spaghetti product that can be eaten cold, E.g. Spaghetti with peppers and in the packaging include a small plastic fork
In conclusion to the study we carried out on Heinz we found that:
,h Heinz relies heavily on their good brand name and reputation, good quality products and a long established company.
,h The market that Heinz competes in is very competitive and has many rivalry bands all aiming to be top of the market.
,h Heinz is a large company with over 200 brands, it also has a large product mix with 5,700 varieties of products.
,h Heinz main competitors are own brand products that sell their products at a very low price. E.g. Tesco and Homestead.
,h Heinz pay a lot of attention to the change in consumer habits and change their traditional products to suit the every changing consumer needs and wants. E.g. Microwave able packaging for theyre traditional baked beans.
Heinz knows how to use their advantage and disadvantages to their best possible potential and to capitalise on all opportunities. This is what makes Heinz the most global U.S based food company, with a world-class portfolio of powerful brands holding number 1 and number 2 market positions in more than 50 worldwide markets.
Heinz has 5,700 varieties of products but is only No1 and No2 in 50 markets. Heinz should take a good look at their product mix and the products that are not selling well. They should research why these products are not selling well and come up with some ideas to improve the sales of the products, if the ideas are not viable they should consider discontinuing some of the products. As they may be actually costing Heinz more money to produce than the profit they make from the sales of the product.