Introduction
Heinz Corporation is a United States company that produces and supplies jarred baby foods. Other companies that operate in the same market as Heinz are Gerber Products, Beech-Nut, and other small companies do not pose a significant threat to Heinz’s operations. In the case study, Gerber Products Company is the region’s giant, with approximately 65 percent of the United States market share (Gerber et al., 2021).
Although Heinz Corporation produces the most significant baby foods in the United States, it only reaches about 17.4 percent of the total consumers in the market (Gerber et al., 2021). Beech-Nut is another baby food manufacturer in the United States but comes third in market possession with about 15.4 percent (Gerber et al., 2021). The implication is that Gerber enjoys customer loyalty despite the competitive pressure from the two existing companies.
Heinz and Beech-Nut proposed a merger that the Federal Trade Commission (FTC) needed to comprehend better to counteract Gerber’s dominance and monopoly in the United States market (Gerber et al., 2021). Following the merger’s evaluation and consequences, the FTC blocked the union and left Heinz Corporation with alternative business strategies to compete fairly with Gerber.
Heinz and Beech-Nut could have formed a perfect merger considering their market possession. However, the FTC evaluation of the union deemed the action a violation of the anti-trust law (Sokol, 2020). The merger was blocked, and Heinz Corporation was forced to re-evaluate itself, highlighting its weaknesses and strengths regarding baby food production and supply. The corporation needed to address the challenges that hindered its market penetration.
The main reason FTC blocked the merger was that Heinz and Beech-Nut are competitors in the second shelf space in all supermarkets in the United States (Gerber et al., 2021). Therefore, this paper analyses Heinz’s plan to topple Gerber in the United States market using limited resources and money.
Course of Action
The concern is that Heinz Corporation needs to catch up to Gerber even though it is the number one producer of baby foods in the world market. Crawford (2022) explains the puzzle by pointing out that Gerber, as a brand loyalty, has ventured into massive marketing, reaching many consumers in the United States.
In addition, Gerber’s intensive marketing makes its product known in every market and supermarket, which translates to a 65 percent market share (Crawford, 2022). Even though Heinz Corporation produces much more jarred baby foods than Gerber and Beech-Nut, it is behind Gerber because it has yet to establish itself and its products as the giant does in many markets (Crawford, 2022). Heinz Corporation needs a clear economic plan to aid its expansion to international markets.
Moreover, through economic analysis, the company must know where demand is located and leverage technology in product packaging. Other economic factors that the company should focus on to deal with Gerber dominance and monopoly include customers’ preferences, shift in demand, technological changes, and demand location (Balawi & Ayoub, 2022). Heinz could realize these factors without entering a merger with Beech-Nut Corporation and could help the company build its reputation in the United States markets.
Recommendations
Customer Preferences
Considering customers’ preferences in one way, Heinz Corporation needs to address to match Gerber’s performance in the United States market. A branding plan is crucial in winning industries’ customers (Ahani et al., 2019). Research has found that companies with excellent and convenient branding plans have customers (Ahani et al., 2019).
Considering the statistics from the given case study, it is clear that Gerber is doing better in packaging baby foods than Heinz Corporation (Gerber et al., 2021). This, therefore, gives customers convenience and, in return, trusts the company’s products. As such, Heinz Corporation needs to address the gaps in its branding strategies.
The company needs to leverage technology and modern packaging methods to improve customers’ access to its products, including safety mechanisms. For instance, during morning hours, parents rush to work on time. Thus, they need efficiently packed foods with a safety mechanism in case the container falls on the ground.
To surpass Gerber, the Corporation would need to research with the help of technology to develop convenience packaging that would satisfy the current needs. Another commendable solution to the currently experienced packaging problems is the manufacture of pouches and reusable packages. Moreover, the company needs to redesign the boxes so that they can be resealed in case a child fails to completely eats the packed foods.
Shift in Demand
Customer demands are always ever-changing, and companies need to improve their products to meet the current needs of parents. Over time, baby food customers, primarily parents and daycares, are becoming curious about what the kids consume. According to Rakhra et al. (2022), most parents in the world prefer their kids to have natural, unpreserved, and nutritious foods that meet their children’s needs for proper growth. Moreover, parents, today want their young ones to have good-tasting foods.
Heinz is trying to compete with Gerber instead of recognizing its weaknesses and leveraging its strengths to overcome Gerber. Thus, Heinz needs to dominate the United States markets by venturing into alternative products. This can also be done by producing a new line of products capable of meeting customers’ demands through innovation and exploiting technology.
For instance, with the introduction of the 2016 one-child policy in China, the demand in Asia is on a constant uptick (Zhang et al., 2021). As such, Heinz Corporation needs to produce a new line of products in Asia since research shows that the demand is shifting to the Asian market. Heinz Corporation is more internationally known than Gerber; thus, expanding into the international markets would be easier, increasing sales and revenue collection.
Embracing Technology
Heinz Corporation needs to leverage technology in its operation, especially in product packaging, to meet its customers’ needs and preferences. As the world advances, innovations come by, and consumers always prefer modernly manufactured goods with visual attractions. One probable reason for Heinz Corporation’s failure in the United States market is poorly designed packages that could be more attractive or give customers the necessary conveniences. Therefore, the company needs to engage its customers to get their views on what they need to redesign in their current packaging system.
According to Jafari-Sadeghi et al. (2021), parents and daycares need a more innovative packaging system that is easily accessible. This would help parents to feed their children in the shortest time possible while rendering freedom to customers. Furthermore, the company needs to manufacture utensils so that children can hold and feed themselves, giving them a sense of self-independence. Heinz needs to manufacture utensils that are to be sold with the products. Parents, especially those who are employed, need more time to carry spoons and forks. Therefore, providing these extra utensils gives customers peace of mind, and customers would prefer Heinz products to other competitors.
Trends and Impacts
The above-proposed solutions depend on economic factors of supply and demand that drive the jarred baby food industry. It has been noted that Heinz is trying to topple Gerber Products Company instead of leveraging its strengths to acquire a customer base in the United States. In the given case study of Heinz, it is clear that the company has a lesser market share than the giant Gerber. According to Zhao et al. (2020), it is better for sales to dominate than to compete. Being more internationally recognized than Gerber, Heinz needs to explore international markets to increase its overall sales.
More specifically, Asia is the best market the company should consider because recent research shows a constant increase in population. Since it has been recommended that Heinz should use technology to advance its packaging plan, it is expected that the company shifts from glass bottles to jars and pouches convenient to many customers. Heinz Corporation will attract more customers in the United States and worldwide by incorporating a new packaging style.
Mislabeling and poor packaging are other issues that the Corporation needs to address if it needs to topple Gerber in the United States markets. According to Zhao et al. (2020), the new millennium generations are cautious about food packaging and labeling. Parents prefer organic foods with no additives such as preservatives, chemicals, or hormones. As such, Heinz corporation, through relevant departments, should ensure that they have the required nutrients per the labeling. With the production of natural products with no side effects, the company will be assured of a vast market share locally and internationally.
Accessibility
This is the first impact that Heinz would acquire if it implements the proposed recommendation. The company would leverage technology and modern production methods to improve packaging and branding. With improved packaging and branding, the Corporation is expected to attract more customers than it currently has. With advanced technology, the company may also include robots in its supply chain, further increasing customer service efficacy.
Incorporating technology into the production process would give the company the ability to operate at an efficient pace. For instance, 3D printing and AutoCAD would aid in more complex and colorful designs that customers prefer (Shahrubudin et al., 2019). The coloration will make the packages lovable and thus will be easily liked by babies and parents, thus improving Heinz product’s accessibility.
Healthy Lifestyle
The recommended production of organic foods with no chemical additives will enhance a healthy lifestyle for the world’s population. According to Ditlevsen et al. (2019), the organic food sector is experiencing rapid growth since customers across the globe are becoming aware of the side effects of genetically modified products. Therefore, parents are shifting to organic foods and disowning products that have chemicals.
As recommended for Heinz Corporation, it needs to manufacture foods free of additives and hence will attract more parents both at local and international levels. Heinz being a value brand company, leveraging technology will enhance organic food production while keeping the cost reasonable. Parents will also be willing to pay more when the products they get are free of chemicals because they know it benefits their kids’ lives.
Market Structure
The United States jarred baby food industry operates in an oligopoly market. According to Alothman & Alqahtani (2020), an oligopoly is a market structure that has a small number of firms. In an oligopoly market structure, none of the existing firms can prevent the others from influencing the said market. Heinz is operating in an oligopoly market structure, which means it can gain market dominance by implementing the proposed recommendations. For example, embracing technology in the packaging plan and considering trending customers’ preferences would be a deal for the company.
Today, customers are seeking value in the product they are paying for. Thus, Heinz will need to sell their products a few cents lower to register more sales in United States markets. Alothman & Alqahtani (2020) noted that the four products that have steadily grown in the last decade include vegetables, fruits, milk, and strained baby foods. With an oligopoly market structure, Heinz needs to implement innovation to overturn Gerber’s dominance in the United States market.
Risks and Uncertainties
Although it has been anticipated that Heinz Corporation could gain recognition in the jarred baby foods market in the United States by implementing the plan suggested, it is not a guarantee that it will turn the tables around. Therefore, it is a risk that the company can have the changes without winning customers in the said market. However, Heinz can leverage technology to reach and educate their customers to embrace their products as opposed to competitors.
Conclusion
In summary, Heinz Corporation being a value brand company does not need significant changes in its strategies to overturn Gerber’s dominance. This paper has acknowledged that the Corporation needs to concentrate on dominating the market through innovation rather than competing with Gerber. Moreover, Heinz could turn the table by producing a new line of products made of natural materials. International markets also present an opportunity for the company, and it should strive to venture into demanding markets like those in Asia.
Although implementing these recommendations does not guarantee customers for the company, it needs to leverage technology to aid its competitiveness in the local and international markets. To maximize its profits, the company must find new avenues to educate and take to its customers worldwide.
References
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