How to Use Necessity and Innovation to Increase Sales

There’s a limit to how much and for how long a company or a market can grow. Sooner or later, an industry will hit a ceiling in terms of sales. While you cannot think that you can possibly sell to more people, innovation and product development comes into play and creates new opportunities. This is exactly what Heinz has been doing. Heinz has expanded its company and increased sales by becoming a leading product innovator. These new products have led to increased sales, as well as new markets.

Necessity is the mother of invention, and in the business world of today you either keep up or you lose the game. Over the past year Heinz has proved itself to be an emerging product innovator. With innovations such as lighter containers and new caps, Heinz has created a competitive advantage in its market allowing the company to turn from a “sluggish underperformer” to outperforming its leading rivals. Heinz has also expanded its line of products and created many new ones. This gives Heinz a fresh new feel and appeal to customers. By giving customers more choices, as well as new choices they might not have had before, Heinz is changing the way we look at our condiments.

Not only has Heinz expanded its line of products, it has expanded its market as well. Heinz’s traditional customer base was Americans, or consumers of traditional American food. Heinz has now branched out into the Asian market and has made many innovations to target them. The creation of new lighter poaches of soy sauce has appealed to many customers in Indonesia who have to carry their groceries home. With the expansion of new markets Heinz has also been able to introduce old products to new customers introducing ketchup into many homes that had never even heard of the product before. By understanding the wants and needs of its customers, Heinz has been able to be successful not only in a business sense, but also by providing their customers with products that they need AND products they want and would buy again and again.

These new innovations clearly foster increased sales, prices which eventually will be expressed in its stock price and overall shareholder value. The Schumpeter-Smith Wealth Creation Feedback Effect takes place here, where wealth and capital is beginning to build-up and present better opportunities. However, while launching newer brand extensions, Heinz is in fact showing more strength in product development. Brand extensions are an application of an established brand name to new product offerings. As we all know, Heinz is beyond a doubt closing the gap with competitors such as Kraft Foods, Kellogg, and Campbell Soup. Recent examples are Smart Ones breakfast sandwiches and Ore-Ida microwaveable mashed potatoes; Heinz consistently expands its product lines into new markets.

By starting a new line of soy sauces, called ABC, they have segmented the market for Asian consumers. These Asian consumers can be from any life cycle stage, because most households in Asia are likely to cook at home… They targeted customers by including other sauces in the Asian culture in an easy-to-carry and convenient pouch. As opposed to the United States, most Indonesians carry their groceries home. They do not use a car to drive them home. Heinz analyzed this and created an easy to carry pouch for them. Not only is this pouch useful for busy lifestyles, but also the sauce itself is targeting Asian culture because that is their main sauce; like ketchup is ours. In order to meet the needs of the segment, Heinz customized the product’s packaging to include nostalgic elements. Heinz customized the sauce, the packaging, advertised it massively in Asia, and made the product available in local stores… The bottle does not look like an ordinary American ketchup bottle; it is shaped like its competition, Kikkoman. The packaging even includes symbols and language for their market. Basically by redesigning our American ketchup bottle and filling it with a product native to another segment, Heinz was able to make massive profits and almost dominate the market. In soy sauce alone, Heinz is now the world’s second largest soy sauce. Heinz’s idea to market even further by offering ABC flavor syrups for non-alcoholic drinks for Ramadan, a Muslim celebration, was genius. This is pushing American ideas and customs into Asian homes.

Another example was Heinz’s campaign to introduce ketchup into Indonesian homes. Heinz was able to examine product usage by gathering information about demographic, geographic, and lifestyles. These aspects of product usage were that the Asian culture, mostly from Indonesia, and the products are targeted toward their religion but very busy lifestyles. An example of a religious product would be the non-alcoholic drink syrup for Ramadan… Using this information, they determined that Asia was the perfect place to push forth new products.

Companies have endless opportunities in expanding to newer markets and segments. Research, the right process, and approach will make these opportunities a reality.

Duran Inci

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