Heinz Ketchup: Pricing the Product Line
Heinz ketchup is a classic American brand, which has been a staple on store shelves for generations. Despite being the market leader in ketchup sales, Heinz still faces many problems in today’s retail world as the brand tries to maintain an advantage over its competitors. The main problem Heinz faces is finding a way to increase sales in order to maximize profitability, with reduced shelf space and similar private-label ketchup products playing a major role. Since finding the necessary shelf space for the larger packages of ketchup has become a problem in retail, one solution would be to just market the 24-ounce, 36-ounce, and 46-ounce packages; and to stock them exclusively in the stores. In the last few years of the seven-year annual promotions window, these were the three packages that emerged as the best sellers in that time frame. Another solution would be to keep the 64-ounce packages and any twin packages in production, but not to sell them in small retail spaces. Instead, they should market and sell these larger packages at large retail outlets, such as Sam’s Club and CostCo; where customers are looking to purchase larger portions in bulk. There are a lot of advantages and opportunities that go along with limiting production to the smaller packages. Mainly, there would no longer be the need for Heinz to make deals with retailers for more shelf space. In the past, larger packages would come at the cost of slotting allowances, which were expensive for Heinz. Another advantage would be the opportunity to start promoting the 46-ounce package in a similar way to other smaller bottles. The 24-ounce bottle (sold at $0.99) and the 36-ounce bottle (sold at $1.50) were both very successful in retail stores. Since the 46-ounce bottle is the most similar package in terms of unit sales, perhaps offering a promotional price of around two dollars would benefit Heinz greatly. However, there would be a few...
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