Kraft Heinz Turns to Gimmicks and Nostalgia To Revive Its ‘Dusty’ Brands” by Danielle Wiener-Bronner

Section A

The merger of Kraft Foods Group and H.J. Heinz Co. to form The Kraft-Heinz Co. represented remarkable growth in the food industry. The merger was motivated by the revenue and the company’s market position, making it fifth in the world and third in the United States of America. This move aimed to create the region’s largest retail and food entity. The company’s position rose to the fifth largest company in the world and the third largest company in the United States in the food and retail industry, amounting to a revenue of $28 billion (Team, 2022). This fostered an improvement and positioned the company for a competitive stance.

This company’s merger focused on capitalizing on various strategic synergies, with the Heinz board visualizing a strengthened scale in North America across retail and food service. Through the guidance and leadership of Bernardo Hees, Heinz’s CEO, the merger sought to combine its strengths and create one of the largest companies in the world. Another motive behind the merger was the substantial cost savings both companies would experience through economies of scale. This could be achieved through streamlining the company’s production, distribution, and marketing efforts. In addition, reducing the headcount could enable the company to shut down the less effective manufacturing facilities and implement zero-based budgeting (Team, 2022). This motivated the merger as it would enable the managers to enforce strict cost control and realize various cost savings.

However, the cost-reduction strategy choked the company’s innovation, leading to its decline. Equally, 3G needed help changing the Kraft Heinz legacy brands fast enough to sustain and meet customer needs and demands for healthier, cheaper, and fresher products. This is evidenced when Jell-O, Kool-Aid, and Velveeta stacking improved on the shelves, and the tectonic plates belonging to the big–box food continued shifting under Kraft Heinz’s feet. Consequently, the 3G capital influence in the reduction of potential workforce deductions raised a lot of concerns. These challenges fueled a sense of uneasiness about the influence of 3G capital’s modes of cost reduction management on the product’s qualities. Overall, the merger’s benefits outweighed the costs; hence, the current valuation of the company’s upward trajectory of $64 per share indicates the Kraft Food Group estimate. Importance of the merger.

Stars: This group includes peanut butter and tomato ketchup. They have a sizable market share and great room for expansion. Kraft Heinz needs to invest in these items to keep their position.

Cash Cows: Although it grows slowly, natural cheese generates a consistent income. Kraft Heinz ought to concentrate on preserving its market share.

Question Marks: Although they confront competition, cream cheese and nuts have room to grow. Kraft Heinz must choose between investing and selling.

Dogs: The market share and growth of spreads are low. Kraft Heinz might consider leaving this category.

Kraft Macaroni & Cheese (Kraft Dinner) is a legendary food renowned for its convenient and cheesy taste and is a legacy brand. Store Brand Rival: Many supermarkets sell macaroni and cheese products under the “store brand” or “private label” labels. Walmart’s Great Value and Kroger Brand’s Kroger are two examples. The benefits of retail brands include the cost-effectiveness of the store brands, which appeal to consumers on a tight budget because they are typically less expensive than their branded equivalents. The quality of some store brands offers good value for the money and upholds quality standards that are on par with national names.

There are some issues with store brands, such as perceived quality by the customers who think of them as generic or inferior quality and may be skeptical of them. The restricted variety can be compared to legacy brands; store brands could provide fewer flavors or selections. Hot Dogs with the Legacy Brand and Oscar Mayer is a well-known manufacturer of cold cuts and hot dogs. Store Brand Rival will look for hot dogs sold under store brands like Target’s Market Pantry and Costco’s Kirkland Signature.

Hot dogs from the store typically cost less than those from a branded company. Comparable tastes in the flavor and texture of certain store brands are similar to legacy brands. Issues with Store Brands such as brand Loyalty store brands may need help to compete with consumers who have strong brand loyalty to legacy products. The store brands could be perceived as unoriginal or generic. Capri Sun, the legacy brand of Capri Sun, is a well-known kid-friendly fruit juice beverage. Store brand rivals in several stores, including Balanced (Target) and Nature’s Nectar (Aldi), provide comparable juice pouches. Benefits of Retail Brands include the value of the store-brand juice pouches, which are frequently less expensive and available in more significant quantities. Components are some of the few retail companies that prioritize using natural components and minimal chemicals.

Issues with stores such as brands and brand recognition store brands may need help to compete with Capri Sun’s excellent brand recognition. Taste consistency in-store brands might find matching heritage brands’ precise flavor and consistency challenging.

The first P framework is product innovation: The upside-down Ketchup Bottles: Kraft Heinz broke tradition by introducing upside-down ketchup bottles (P1). By eliminating the need for the customary tapping and shaking, this invention seeks to improve the user experience. Evaluation of Success: This move proved to be effective. It attracted notice, enhanced usefulness, and set their product apart. Sales increased as a result of the pragmatism being acknowledged by consumers.

The second P is the Price (P2): Kraft Heinz changed the price of their large-size ketchup bottles. Price Strategy: Creative Pricing for Large Bottles. To encourage bulk purchasing, they purposefully advertised these more significant variations. Success Evaluation involves the strategy that worked well. They took advantage of economies of scale by offering incentives to customers to buy more. But monitoring customer reaction is crucial to ensure it doesn’t turn off budget-conscious buyers. Marketing to School Children: A Controversial Promotional Issue in Kraft Heinz increased their marketing campaigns aimed at school-age consumers, putting special editions of their well-known product Lunchables in classrooms. Evaluation of Success is when there is controversy about this example. Children are more exposed to the brand, yet it has been criticized for affecting eating patterns and overall health. It’s critical to balance brand visibility and ethical marketing techniques.

Domestic marketing consists of various activities undertaken with the sole aim of targeting only one country, while global marketing is an activity that extends way beyond the borders of one country. Domestic marketing can be distinguished from global marketing through the range of its reach. For domestic marketing, the range is limited to a particular single nation’s borders, while for global marketing, the markets aim for a larger target. The markets are worldwide, and the audience of reach traverses national borders. It usually spans various multiple nations. The service area served by each market is different. The domestic market service is an area that concentrates on a very narrow segment of the nation of origin, while the global customer service is more of a provided platform that services the international marketing audiences. For government intervention there is less government intervention and less government regulation for domestic marketing, while international marketing faces more complex government regulatory frameworks.

These regulations are implemented to put the marketing fields on a similar level. Domestic marketing is a business operation in a single nation, while international marketing involves extending business activities to several nations. In domestic marketing, technology use is limited within particular scopes of technology adoption, while international marketing adopts and disseminates cutting-edge technology worldwide. Domestic marketing carries lower risk factors in contrast with international marketing. This is because of the difference in the markets, increasing the susceptibility of international markets carrying a more significant risk.

Domestic marketing requires less capital, while international marketing requires a significant financial outlay. The consumer type for domestic marketing has relatively variable consumer preferences, while cultural variances and a wide range of preferences greatly influence international marketing.

There are various reasons for businesses to go global. With less competition in expanding markets, businesses go global to obtain a competitive edge over current rivals. Example: Apple Inc. is a US-based company that creates, develops, and distributes software, devices, and online services globally. Expanding client base and increasing revenue potential are two benefits of exploring emerging markets for businesses.

Businesses expand from domestic to global to facilitate their global reach, facilitated by cross-border e-commerce. Examples include Amazon, Microsoft, and Nestlé. Their access to new talent and resources influences their growth internationally, opening doors to various skill sets, resources, and raw materials. As an illustration, the Japanese automaker Toyota went global to access highly trained labor and effective supply networks.

Companies also go global to reduce the risk of diversification. By engaging in a variety of markets, one can disperse risk and lessen reliance on a particular economy. As an illustration, the South Korean giant Samsung expanded its operations over several markets and industries worldwide. This reduced their risks as reliance on a single economy might cause the business to crumble in case of a financial crisis. Strategic partnerships and alliances enhance the easier expansion of a company to global standards. Working with foreign partners expands market reach and spurs innovation. As an illustration, the Dutch-British oil and gas corporation Shell establishes joint ventures with regional companies across multiple nations.

The various outcomes businesses aim to achieve. This includes businesses hoping to increase their market share globally by expanding internationally. This will influence their share income and improve their shareholdings. Enhanced brand recognition influences the need for businesses to go global. A global presence increases their credibility and brand recognition. The international markets attract business, and the profit growth accelerates their desire to go global. When businesses gain entry to new markets on global platforms, they boost revenue and earnings. This is one of the crucial factors that motivates businesses to go global.

Another factor influencing businesses to go global is the economies of scale. Various businesses usually cut costs when they are expanding internationally. This allows them to save on various costs, hence the urge to pursue international markets. Exposure to various markets also promotes both learning and innovation as it exposes the companies to various cultural and economic set-ups. This exposure promotes learning and various innovations to mitigate the challenges of expanding to new markets.

The centralized method has the following benefits: Consistency that can be evaluated through cross-review of markets. A centralized approach guarantees consistency in branding, marketing, and strategy. Maintaining consistency helps improve trust and brand recognition. Consistency is crucial in export promotion campaigns in the sports shoe industry. Through consistency, it’s easier to strengthen the brand’s image on the world level. While in a decentralized system, it’s easier to customize the advertisements to the target markets least, taking the customer preferences into account. The centralized approach utilizes campaigns that could usually find it challenging to adapt to various regional quirks and meet the demands of a unique market. In contrast, a decentralized approach will easily permeate adjustments concerning immediate feedback.

A centralized approach for an export promotion campaign of the sports shoes industry is easier to control through better activity monitoring and coordination, which are made possible by the centralized approach. At the same time, the decentralized system enhances faster and easier decision-making processes as the local teams can react urgently and quickly to various opportunities for market changes. A centralized approach quickly enhances saving various costs. This can be attained by combining various resources and striking bulk agreements, reducing the workforce costs and enhancing unification. In the decentralized system, local teams have better market insights, which enhances easier targeting because they have first-hand information on the market dynamics. A centralized approach has more effortless efficiency as better resource allocations are made possible by centralized decision-making, which also plays a crucial role in simplifying procedures and minimizing duplication efforts.

The centralized and decentralized approach to the export promotion campaigns of the sports shoe industry faces various challenges. There is a reduced reaction to the market demands for the centralized approach. This is a result of the bureaucracy and the hierarchical structures that exist within the organizations. Decision-making can take quite a while as they try to ascertain the requirements of every neurocritical order taken. The centralized approach also has the danger of misalignment. This is because the campaign is unable to resonate with the central team and needs to be made aware of the local market’s demands and how to meet the specific demands. For the decentralized approach, there is inconsistency, and the differing teams illustrate this. The interpretations of the brand could easily not result in the messaging that needs to be consistent. The resource fragmentation in the decentralized approach system is also a challenge. The ineffective resource allocation and the duplication of the effort are possible. The decentralized approach is also faced with the danger of misalignment, evidenced by the incoherent tactics that could arise from a lack of coordination.

There are essential standards for choosing and designating a mega agency. This includes enough expertise that the firm needs to have a track record of successfully promoting exports, particularly in the sports shoe sector. Secondly, the mega-agency should have a global reach. This will guarantee efficient execution and take into account agencies that are present in important export markets. The mega-agency needs to have reliable and valid knowledge of the local markets. The agency must know the subtle differences in consumer behavior, cultural quirks, and legal environments in the target nations. This will enable it to plan and effectively conquer the local markets. The mega-agency also needs creativity and innovation in the local markets. This will encourage the mega agencies to seek out agencies capable of creating memorable and effective advertising campaigns.

The mega-agency needs collaboration Skills. It’s critical to have the capacity to collaborate effectively with internal teams, external partners, and stakeholders. This will enhance the efficiency of communication, resource allocation, and utilization and the smooth running of different mega agency operations. The budget management team also needs to be available. This will Evaluate the agency’s capacity to maximize funds and produce outcomes while adhering to strict financial guidelines. The measurable metrics play a crucial role in selecting and appointing a mega agency. Measurable metrics enhance the verification that the agency can monitor and assess campaign performance with pertinent KPIs. Finally, selecting and appointing a mega-agency to plan and control a campaign enhances adaptability. This enhances the agency’s needs selection and increases the flexibility enough to adjust to shifting market conditions.

References

Team, T. (2022, October 12). Analysis of the Kraft-Heinz merger. Forbes. https://www.forbes.com/sites/greatspeculations/2015/03/30/analysis-of-the-kraft-heinz-merger/?sh=20ceea2cc9a8