LETTER OF SUBMISSION

2nd April , 2012 Abul Khair Jyote, Lecturer, Marketing Dept. School of Business. Independent University, Bangladesh. Subject: Submission of the report on Value addition. Sir, With due respect and honor, we the students of your respective subject Advanced Marketing Management ( MKT 302 ) and the members of group Black Hawk, made a report on Value addition to Heinz Ketchup with some information and necessary records. In this report the data and information we collected, we tried our best to make it meaningful and clear. In this report, whatever we experienced, we believe that it will help us in future. We are very happy to submit this report to you successfully. We therefore pray and hope that you will be kind enough to receive our report and hope it will satisfy you. Thank you Sir.

Yours sincerely,

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NAME

ID

SIGNATURE

1. Tawsif Bin Maksud. 2. Kaptia Mumtahana.

0910374 0910330

1. Executive Summary:

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To do a common thing uncommonly well brings success. Henry J. Heinz.

The H.J. Heinz Company, headquartered in Pittsburgh, Pennsylvania, is the most global of all U.S.-based food companies. Famous for our iconic brands on six continents, Heinz provides delicious, nutritious and convenient foods for families in 200 countries around the world. In more than 50 of those countries, we enjoy the number-one or number-two market position.

PICTURE: PITTSBURG

HEINZ HEADQAUTER AND PLANTAND GENERAL OFFICE IN

Key Heinz markets are segmented as North American Consumer Products, U.S. Foodservice, Europe, Asia Pacific and Rest of World. Our commitment to providing a variety of wholesome foods with an unwavering emphasis on health and wellness makes Heinz like no other company on earth. Throughout the world, Heinz is synonymous with ketchup. We sell 650 million bottles of Heinz ketchup every year and approximately two single-serve packets of ketchup for every man, woman and child on the planet. For millions of families the world over- if it isnt Heinz, it isnt ketchup. Beyond ketchup, Heinz also markets an ever-expanding selection of other great tasting foods. Our core products include ketchup, sauces, meals, snacks, and infant/nutrition. Among them are our 15 Power Brands, which comprise approximately 70% of our global sales.

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In short, Heinz is committed to enriching your familys eating experience, whether youre at home, dining out, or on the go! At any given moment, on any given continent, the 35,000 employees of Heinz are hard at work, creating new products, perfecting fresh ideas, and developing nutritious and innovative foods for today's families. Heinz is a trusted name for consumers, a valued partner in the community, and a great investment with tremendous growth potential.

Henry John Heinz: A Man of Uncommon Vision:

PICTURE: HENRY JOHN HEINZ THE FOUNDER OF HEINZ COMPANY.

Henry John Heinz was the founder of HEINZ Company. Heinz launched its first Tomato Ketchup in 1876. Heinz was at the forefront of exploring natural preservation, and in 1906 was first to launch a Ketchup free from artificial preservatives.

He was very much the product of his parents, and the lessons he learned from them echo down into the character of the H.J. Heinz Company today.

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Henrys parents taught him thrift rather than greed. He knew nothing of get rich quick business schemes and couldnt bear the thought of ill-gotten gain. Many of his business ideals and principles, almost unheard of at the time, remain progressive to this day. For example, Henry Heinz did business based on the simple idea that every profit should be fairly earned. One of his mottos still guides Heinzs purchasing practices today: Deal with the seller so justly that he will want to sell to you again. Another driving principle of Henry Heinzs that resonates in todays resource-conscious world was his hatred of waste of any kind. Leading by example, he inspired each of his employees to avoid even the slightest waste of material, time or opportunity. Finally, Henry Heinz learned from his mother a genuine and enduring concern and respect for every person, rich or poor, and always tried to practice her favorite rule for living: Always remember to place you in the other persons shoes. Individually, the principles Henry Heinz instilled in his company can seem simple and almost quaint. Taken together though, theyre an all-too-rare combination in todays business world. Fortunately, Henry Heinz himself showed that common sense, decency and social justice is a proven recipe for enduring business success.

1. Situation Analysis:
H.J. Heinz Company makes processed food products like condiments, sauces, and frozen foods. The company is best known for its namesake brand, Heinz ketchup, which has 60% market share in the US, 70% in Canada, and 78% in the U.K Heinz' other product lines include condiments and sauces such as salad dressing and soy sauce, frozen food, soups, beans and pasta meals, and infant food. The company's 15 top brands, including the flagship Heinz brand, make up over 70% of total sales. In FY 2010, Heinz had sales of nearly $10.5 billion with a net income of $864.9 million.

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Heinz has spent a good part of the last decade restructuring its business, shedding less profitable brands and instead focusing more cash on marketing and product development. The firm's renewed efficiency has recently been tested by rising commodities prices, which are driving up the costs of making and packaging food - high fructose corn syrup is a key ingredient in almost all Heinz products and oil is refined to make plastic bottles for sauces and condiments.

2.1 Customers:
Heinz is one of the worlds most iconic brand names. Look no further than Heinz Ketchup The Worlds Favorite Ketchup of which 650 million bottles are sold each year. The company behind that success, the US-based H. J. Heinz Company, operates across five continents. It is a market leader in over 50 countries through 150 powerful brands. Fifteen of those brands account for 70 per cent of Heinz sales including Heinz, Weight Watchers, and TGI Fridays. Heinz employs 35,000 people worldwide, with global sales in excess of US$10 billion. It is also the largest food manufacturer in Europe, where the Heinz Wigan-based food-processing factory in the UK provides employment for over 1,200 people.

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Segment Information
North American Consumer Products includes operations in the United States in Canada, specifically the manufacturing, marketing, and sale of ketchup, condiments, sauces, pasta meals, entrees, and snacks to grocery stores. Other popular company owned brands include Classico, Jack Daniels, Bella Rosa, Weight Watchers, Bagel Bites, Boston Market, T.G.I. Fridays, Lea & Perrins, and HP. Heinz owns the food and licensing rights for these various brands. Wal-Mart is the company's largest customer, accounting for roughly a tenth of sales. U.S. Foodservice similar to the North American Consumer Products segment, but deals with commercial (bars, restaurants, travel/leisure places, vending machines, take-out) and noncommercial (schools, hospitals, prisons, military) food outlets and distributors. Europe includes the operations in Europe of products in all categories. Other popular company owned brands include: Orlando, Karvan Cevitam, Weight Watchers, Brinta, Nipiol, and Plasmon. Asia/Pacific includes the operations in New Zealand, Australia, Japan, China, South Korea, Indonesia, and Singapore of products in all categories. Other popular company owned brands include: Tim Piper, Watties, ABC, Bruno, and Winna. The company plans to begin producing baby food at plants in China and Russia and to grow its child nutrition business in India. Baby food is the company's highest margin product, yet only accounts for 11% of revenue ($1.1 billion); the company is the world fifth largest company in total baby food. China's infant formula market is estimated to be worth $2-$3.7 billion and Heinz already has 3.1% market share (includes 48% share of prepared baby food market). A couple of competitors in China's baby food market may be potential takeover targets, especially as Heinz continues the worldwide trend of consolidation in the baby food market, following Nestle's acquisition of Gerber and Danone's purchase of Numico. Rest of World includes operations in Africa, India, and Latin America of products in all categories. Other popular company brands include: Wellingtons Complan, Glucon D, John West, and Banquete.

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1.2 Competitors:
Because Heinz makes a wide range of products selling in different markets, the company faces competition from both big companies with a diversified line of products and smaller companies with a narrower focus. In the market for canned goods and soups, Campbell Soup Company (CPB) and ConAgra Foods (CAG) is Heinz direct competitors.

In the Major Diversified Food industry, Heinz competes with Archer-Daniels-Midland Company (ADM), Kraft Foods (KFT) and Tyson Foods (TSN).

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1.3 Company:
The H.J. Heinz Company is one of the worlds leading marketers and producers ofnutritious foods in three core categories: Ketchup and Sauces; Meals and Snacks; andInfant/Nutrition. Heinz provides superior quality, taste and nutrition to people eatingat home, at restaurants, at the office and on-the-go. The Company has a world-classportfolio of powerful brands with 150 brands holding number-one and number-twopositions across five continents and in more than 50 countries, showcased by Heinz Ketchup, The Worlds Favorite Ketchup. Many of Heinzs products are prepared from recipes developed in their own research laboratories and experimental kitchens. After the ingredients are selected, they are shipped off to one of the companys 68 owned factories or 9 leased factories to be processed. Methods of processing include sterilization, homogenization, chilling, freezing, pickling, drying, freeze drying, baking, and extruding.

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In order to obtain a portion of certain raw products such as tomatoes, cucumbers, potatoes, and some other fruits and vegetables, the company makes pre-season futures contracts with farmers, which provides some protection against volatile commodity prices for example, if the price of tomatoes suddenly skyrockets, Heinz is able to still buy them at the low price agreed upon in the contract. Other products such as dairy, meat, sugar, sweeteners, spices, flour, and other fruits and vegetables are purchased on the open market . The company's core 15 brands accounted for 70% of total sales. Emerging markets currently generate 15% of the company's total sales, however Heinz's goal is to have them generate 25% of earnings by 2016 and up to 40% in the long term.

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1.4 Context:
Sales for the Rest of World segment more than doubled (112.4%) to $242 million on a reported basis. Organic sales increased 30.2%. The Quero acquisition in Brazil, which was completed at the end of Fiscal 2011, increased sales 86.6%. Higher pricing across the region increased sales by 20.1%, primarily due to price increases in Latin America taken to offset inflation. Volume increased 10.1%, driven by increases in Heinz Ketchup and sauces in Latin America and numerous products in the Middle East. Foreign exchange translation rates decreased sales 4.4%. Operating income increased 129.5% to $18 million, resulting from higher pricing and the Quero acquisition. This type of growth is not traditional for companies the size of HNZ. This illustrates the company's opportunity to expand in emerging markets like Brazil, Russia, Indonesia, and China where its products are not as wide known. Though currency growth is expected to rise to 6% to 7%, causing the company to lower its forecasts slightly for FY12, HNZ is in a position to continue to grow incremental sales and profit through its ongoing strategy of emerging market expansion. This has the potential to provide investors with continued growth in share price and dividend income.

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3. Marketing Oppertunities and Issues:

One of the major characteristics in Heinz's strategy is the fact that this company is quite mature. It has operated in the food manufacturing sector for over a century. Consequently, the brand has an advantage in terms of experience. Brand maturity also encourages loyalty among consumers. It usually discourages other players from attempting to eliminate that respective company because of its years in service. Another characteristic lies in its diverse product offerings. Through such an approach, products that fail to do well can be eliminated in order for the company to concentrate on those ones that are performing adequately.

Heinz marketing strategies have displayed some weaknesses in terms of choosing to air controversial advertisements. (The Times, 2008) Additionally, the company has been handling decreased sales though cost cutting rather than product innovation. In line with the latter argument is the fact that there are certain opportunities that present themselves to this particular company. Instead of dwelling on categories that are already performing poorly, the company could offer a totally different range of commodities. This would allow the company to enter into a new market segment that would neutralise some of the saturation in their current product ranges.

Heinz should be prepared to tackle some threats inherent in this industry. For instance, the industry leader Unilever has managed to out-compete Heinz owing to the fact that the latter company is fond of making totally different varieties of products that keep boosting their sales. Additionally, the company has huge turnover of managers who may not share the passion and vision that other managers had.

SWOT Analysis: H.J. Heinz Company:

Strengths:
Years of experience.

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Strong brand portfolio. Strong financial performance of business segments. Diversified operations. Research and Development.

Weaknesses:

Low inventory turnover. Ratings downgraded. Manufacturing plants in the US dependent on economic environment . Decreased sales though cost cutting rather than product innovation.

Opportunities:
Growing baby food market. New product launches Changing consumer habits Further international expansion Growth of Emerging Markets

Threats:
Private label growth. Increasing competition and industry consolidation. FDA regulations.

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Losing business to other suppliers.

4.0 Objectives:
Heinz offers is to have a bottle of ketchup on every table.' This vision reinforces the notion that Heinz only produces ketchup. It is unnecessary for Heinz to further identify them with ketchup. The ketchup market is not going to continue to expand much more than it has already. Since Heinz is synonymous with ketchup already, and customers are aware of this high quality product, they should make consumers aware of the other products they offer. Those who feel Heinz ketchup is of the highest quality would be eager to buy other products produced by Heinz believing they too would be of the highest quality. They do need a mission statement. One that identifies them with the wide variety of products they produce. Perhaps a vision statement is not as important since Heinz's customers are not really looking for any kind of break-through products in the food industry. As the trusted leader in nutrition and wellness, Heinz the original Pure Food Company is dedicated to the sustainable health of people, the planet and the Company.

Some Basics of Heinz:

Reach more customers.

Increase sales without increasing cost.

Business to grow faster.

Respect the cultural, ethnic, religious, political, and philosophical differences of people around the world

Heinz Company wants to hold themselves as one of the worlds premier food companies

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Dedicated of providing superior food products and to the sustainable health of people

Committed to providing high quality, safe, and pure food products

Value the environment and are dedicated to protecting it.

Heinz aims to be efficient in the use of energy, raw materials, water, and packaging.

Heinz Values:

Team Building & Collaboration - We embrace great ideas from everywhere and everyone and respect all individuals. Innovation - We spot consumer and customer needs and meet them with simple, creative solutions.

Vision - We define a compelling, sustainable future and create the path to achieve it. Results - We deliver on commitments, take accountability and balance the short- and long-term.

Integrity - We always tell the truth, act with the highest ethical standards and ensure that our products are of the highest quality.

Heinz Commitment to Health and Wellness:

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Heinz is committed to being the worlds trusted source for good tasting, nutritious foods everyday. Heinz upholds this commitment through:

Delivering products with both superior taste and enhanced Health & Wellness benefits Providing nutritionally balanced food choices for adults and children Advocating Health & Wellness through consumer education, community support and messaging

Enabling a healthier, more productive workforce through employee education, benefits design and other programs .

5.0 Marketing Strategy:

The overall strategy in this company revolves around brand loyalty. The latter company is adamant to accept new product offerings. One if its managers asserted that the marketing team may work so hard to come up with a new strategy, however, because of disapproval from the company's boards, the new idea has to be revised. By the time, the idea is finally accepted; it is already too late to change anything. Consequently, the company would be much better off if they were more flexible in their marketing approach. Heinz frequently uses the strategy of taking successful products and exporting them into markets where there is a vacancy. This is especially true in the European market. For example, Pudliszki is one of Poland's largest producers of ketchup and it is now offered in the United Kingdom. Also, Italys Plasmon baby food brand has become the gold standard for infant-nutrition products. It has dominated the marketplace due to the all-natural recipes as well as expanded lines of Baby Specials that parents seek. The Baby Specials line promotes easier digestion and contains hypoallergenic nutrients. Heinz also positioned this line in Russia and has experienced increased adaptation in this market as well (H.J. Heinz Inc. 2010). Transferring successful products into different markets is a common Heinz business technique.

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6.0 Target Marketing:

Heinz mostly targets new clientele for their product offerings. Usually, this is done by placing more emphasis on the first transaction rather than on relationship marketing. Most of their clientele are single mothers who may be too busy to cook and are in need of some of their convenience foods. Additionally, they target bachelors and college students who are fond of taking fast foods that need some of their additions such as ketchup. On top of the latter, the company also targets markets because of their bay food offerings. Other smaller segments such as young women are also being targeted due to the diet watchers offers that this company had on offer. The Heinz Company sales extend across the globe and generated about $10.5 billion internationally in the last year (Heinz 10K Annual Report). Heinz divides its markets into the five regions of North America, U.S. Foodservice, Europe, Asia/Pacific and Rest of World. The Asia/Pacific region includes Australia, New Zealand, India, Japan, China, South Korea, Indonesia, and Singapore. The Rest of World region includes Africa, Latin America, and the Middle East. The $10.5 billion earned in the last year was the sum of North Americas $3,192, 219,000, U.S Food Services $1,429,511,000, Europes $3,332,619,000, Asia/Pacifics $2,007,252,000, and Rest of Worlds $533,382,000 revenues (H.J. Heinz Annual Report and 10k, 2010). These totals indicate that North America is Heinzs strongest market, closely followed by the European region. The Rest of World region includes many developing nations thus generated significantly lower revenue. A future agenda is the expansion of Heinz products in developing nations through the creation of useful, economical products and targeted marketing.

7.0 Positioning:
Heinz has positioned itself as a respectful brand in the food manufacturing industry, this is especially in terms of convenience foods such as baked beans and baby food. The company

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heavily relies on their name to lure clients. This is because many people have associated themselves with this company's offerings since their childhood days and thus the reason behind their brand loyalty. Understanding Heinzs positioning market strategy is exemplified in the establishment of business in India. India has become one of the leading positioning markets for numerous industries due to its large population (1,173,108,018 people in July 2010), and advancements in technology, transportation, education, and government . Since the culture and cuisine are exponentially different than Heinzs home country, the Company has had to invest in products which will meet the preferences of the Indian consumer. In India, Heinz offers a variety of food products such as Indian chutneys, energy drinks, instant meals, and most importantly nutritional beverage mixes that enhance child growth and development. The Indian consumer is health conscious thus one of the main sources of revenue for Heinz is its nutritional beverages.

In order to manage its Indian market Heinz must have locations for offices, factories, and distribution in India. Heinz currently has a head office in Mumbai, in addition to four branch offices, two factories in Sitarganj and Aligarh, and 119 distributors dispersed throughout India. This complex system of management is necessary in order to be successful in a foreign market. This allows Heinz to decrease communication time between distributors and management, which could prove to be essential in problem solving. The dispersed web of Heinz factories and distributors decreases costs because it reduces shipping expenses. Having in country sites allows them to distribute their product with minimal shipping and transportation costs and it also greatly shortens the distribution time.

8.0 Marketing Mix:

Heinz Tomato Ketchup - A classic brand

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Tomato Ketchup has been a part of Heinzs product portfolio since 1876; just seven years after Henry J Heinz started the company. The famous Heinz label is instantly recognizable the world over and product quality is central to the continued success of the company. The sales revenue of Heinz Tomato Ketchup is huge: the Heinz website tells us that we use enough tomatoes to fill an Olympic-size swimming pool everyday to make enough ketchup for all our fans. Nonetheless, it is constantly seeking ways to maintain its prominent position through market research and market segmentation always looking to add variation ketchup.

8.1 Product:
Available different flavors of Heinz:
-Classic Tomato ketchup. - Heinz Hot Ketchup. - Heinz Curry Ketchup. - Heinz Tomato Ketchup LIGHT. - Heinz Tomato Ketchup BIO. - Heinz Barbecue Sauce . - Heinz Hot Chili Sauce . - Heinz Tomaten Oliven Sauce . - Heinz Schaschlik Sauce . - Heinz Balsamic vinegar. - Heinz Sweet Relish. - Heinz Yellow Mustard. 26

- Heinz Mint. - Heinz Garlic Onion. -Heinz carrot ketchup. For kids: -Heinz Ez Squirt.

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VALUE ADDITION:
Value addition is a sales approach that involves not only selling goods and services based on the qualities of the products themselves but also the additional benefits that customers receive as a result of making that purchase. The goal is often to attract the attention of a consumer by noting the basic benefits of the products under consideration and then moving on to identify additional benefits that may be especially helpful to that customer. Value added selling involves making ancillary products available at discounted prices when the main product is purchased, or offering some type of other incentives that the consumer can take advantage of at a later point in time. One of the more common approaches to value added selling is to make note of a feature that comes with the product other than the features that the consumer 26

was initially attracted to. Value added selling can also be in the form of offering discounts on related products not directly produced by the seller, usually in the form of a discount coupon or a voucher code. In order to achieve the desired result, value added selling must offer the customer something above and beyond what they expected to get, and that extra something must also meet a need or want that brings the client additional satisfaction.

Value addition to Heinz existing ketchups:

1. There are already existing classic tomato ketchup available in the market. If we change the flavor of the tomato ketchup by adding other ingredients, it would make a difference. Such as if we add tamarind with tomato ketchup, it will give a different sour taste including a new variety in ketchup product line.

2. There is another product in Heinz ketchup product line and that is Mint ketchup. But that is not that available in the market. It is found only in some specific US reigns available in sachet and in Heinz dip pots. We can make it available in the market by renovating the product more such as using garlic pest with Indian spices to flourish market for this product in Asia side. As it is only available in small packets, so Heinz should produce this new item in plastic and squeeze bottles.

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3. Heinz has recently launched a new ketchup variety that blends its omnipresent classic tomato ketchup with balsamic vinegar. This is the first new Heinz ketchup flavor variation in nearly a decade. This ketchup was launched in limited addition in the market for a trial but it has got a massive market in the first round so Heinz can make the product as a regular product.

4. Heinz has also launched ketchup for kids. They launched the ketchup in the market in such a way so that the kids are interested on it.

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Value added new products:

1. Heinz can make exceptional ketchup with their existing product and that is tomato with their produced sweet relish and garlic with green chili. The ketchup have not got a good market in western countries but got a huge market in south Asia especially in India as they have a religious view on garlic and onions.

Heinz relish garlic ketchup

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2. There are lots of ketchup flavors in Heinz ketchup product line but Heinz can create variations in ketchup flavors using yogurt instead of tomato. Moreover Heinz can stretch their product line producing different flavored ketchup. To make it more exceptional, they can use blend vegetables like carrots, cabbage, sweet corn, lettuce etc.

Packaging:
To make the product more attractive, marketers change the shape of the bottle and the labels to expand the customer purchase. They even make sachet packed ketchup for the go- eaters and squeeze bottles for easy use of pouring the ketchup. They also keep the classic glass bottles for the customers who always like the old 80s version. Even Heinz has made some variation in their ketchup. The variation including different shaped bottles pictures are given below.

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8.2 Price:

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8.3 Place/ Distribution:

The Company owns a total of 67 factories and leases eight across the globe (H.J. Heinz Annual Report and 10k, 2010). In North America, 20 factories are owned and four are leased, in Europe 21 are owned and none are leased, in the Asia-Pacific region 20 are owned and two are leased, and in the Rest of World six factories are owned and two are leased. Heinzs intricate supply chain enables its products to command vast global coverage and accessibility. The products are sold through Heinzs own sales organizations, through H.J. independent brokers, and agents and distributors of chains, wholesalers, cooperative and independent grocery accounts, convenience stores, bakeries, pharmacies, mass merchants, club stores, foodservice distributors and institutions including hotels, restaurants, hospitals, healthcare facilities, and certain government agencies. The Company has set a goal of delivering more

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than $1 billion in cost savings over the next five years through global supply chain initiatives designed to achieve economies of scale and reduce costs by leveraging people, process, and technology.

8.4 Promotion:
To promote their product, Heinz takes lot of steps to expand their brand recognisation. Some of the major activities are given below: Heinz has launched a cooking book for the ketchup lovers which are full of recipe based on ketchup.

Other promotional activities:

Donation for the war heroes

TV commercial

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T-shirts, cookware, sportswear, toys

9.0 Conclusion:
HNZ reported that it might be closing up to 8 production facilities and cutting 1,000 workers from its payroll. From the outside this has the potential to be viewed as a negative thing for the company, but HNZ is outlining a plan to cut costs and make its supply chain as efficient as possible. Heinz has been focused this year on reducing fixed costs by increasing manufacturing efficiency, reducing overcapacity and streamlining our operations. Through Project Keystone and the creation of our first centralized European supply chain hub, we are establishing the foundation for long-term productivity across the supply chain while also enabling better leverage of our global scale. Heinz is one of the most well known food brands in the world. They have made a name for themselves due to their intense numbers of years, however, this company needs to be less rigid in marketing in order to stay ahead of their competition.

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