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Heinz - Standardized Marketing

1.   Introduction

Heinz is divided into eight core businesses with a mix of acquired brands and products manufactured in different countries.  They are lagged behind in the globalisation race from their competitors like Procter & Gamble, who have successfully by focusing on global brands.  Hence, Heinz aims to develop a standardised approach to the marketing of its brands.  Blumenthal (2001) also argues that .a strong global brand is a powerful weapon to deliver a profit・ with the acceleration and fierce competition of globalisation. 

2.   Discussion

Blumenthal (2001) and Joachimsthalar (Southwestern University, 2001) states that global brands have a consistent name or identity, whose positioning, advertising strategy, personality, look and feel are in most respects the same from one country to another.  Put it simply, they are perceived to reflect the same set of values around the world such as McDonald・s, Microsoft and Ikea.  Dignam (Blumenthal, 2001) calls global brands as belief brands because .they carry specific meanings to consumer and they are respected or rejected based on how well they keep their promise・.  Hence, global brand is important to improve Heinz・s image, which can accelerate new products marketed globally, increases market shares and financial gains.

However, building recognition on global brand requires an advertising and marketing plan that stresses consistency and standardisation.  Standardisation involves treating the world as one market, ignoring any apparent regional, cultural or national differences, and promoting the firm・s output in exactly the same way in the world (Bennett in Southwestern Universty, 2001).  Nelson (Hilderbrand, 1998) argues that this can .open a whole can of worms of different pressures, legal issue and cultures・.  Therefore, it is essential for Heinz to evaluate the advantages and disadvantages of the standardisation approach to the marketing of its brand.

2.1  Advantages of standardisation approach to the marketing

The advantages of the standardisation approach to the marketing of Heinz・s brands are discussed as following sections.

Brand awareness and competitive advantages

Brand identification and awareness is important to build market share.  Hills (2001) states that .Kawareness is even more impression when you realise that it has been developed without significant advertising dollars・.  When there is brand awareness, it is easy to gain additional market share or enter new market without too much advertising efforts.

In addition to saving advertising costs, successful brand awareness can also achieve trade leverage in bargaining with distributors and retailers since customers expect them to carry the brands.  For example, Panadol is successful in building brand awareness and almost every supermarkets, drug stores and convenient stores carry their products.

Brand awareness is also an advantage to consumer mobility.  There is an increasing number of people travel widely and thus more products to be marketed to them on a global basis.  For example, Lancôme and Estee Lauder have targeted this group of consumers and offer skincare travel kits, which can be bought at international airports of almost all countries. 

Finally, successful global brand is associated with status and prestige, for example, Rolls Royce and Mercedes Benz is perceived as high prestige.  When the brand commands a high degree of brand loyalty, high brand equity is possible and provides competitive advantages that can help to seek global opportunities (Kotler et al, 1999).

Economies of scale

Economies of scale can be derived from bulk purchases and/or sharing R&D, marketing, production and managerial resources among different markets (Kotler et al, 1999).  For example, bulk purchase can be achieved from standard packaging and labels, or raw materials for the products.  Lancôme features same packaging for its skincare business and uses different languages on same instruction paper to facilitate consumer uses from different countries.  A standardised marketing program can reduce costs further such as standard promotion and advertisement such as Nike and Coca-Cola.

Technological transfer

With the advances of technology, it is feasible to standardise technology for similar products.  For example, Heinz can use the best formula from one pet-food brand and transfer the technology to other pet-food brands.  This technology transfer can be done through different countries with the same formula.  For example, Coca-Cola is tasted about the same around the world with the basic formula.

Consistent values

The standardisation of brands allows consistent values from standard marketing mix to certain extent and provides the ability to attract common, cross-national market segments.  A McDonald・s commercial from the United States, Germany, Brazil or Japan is readily recognised as a McDonald・s commercial, even though it may have been produced locally, and by a different advertisement agency.  It will consistently convey some or all of the values such as service, friendliness, understanding of family life, etc which are attached to the company.

2.2  Disadvantages of standardisation approach to the marketing

The disadvantages of the standardisation approach to the marketing of Heinz・s brands are discussed as following sections.

Product preference

The standardisation of the brands may be disadvantaged when there is popular preference for local products.  For example, the Japanese has a strong cultural influence and most prefer to use domestic products.

Consumer issues

Consumer issues such as the needs, perception and attitude; income level and spending power; as well as skills and education may disadvantage the standardisation of the brands.

For example, Wendy・s Burgers failed to enter the Hong Kong market as it was perceived as cheap and low value fast food when comparing with McDonald・s.  Some customary habits cannot be changed such as degree of sweetness and the Japanese consumers demand higher level of packaging.

Foreign brands may be perceived as high price in some developing countries or poor countries such as Philippines.  Consumers in these countries have low level of income and spending power so tend to use local brands rather than global brands.

Education is also a key factor.  For example, the Japanese may only recognise a local brand and have difficulty in recognising foreign brands because most of them can only master Japanese language from their education background.  This also happens the same in China where the consumers may buy a local beer rather than a foreign brand.

Laws and regulations

Some countries impose strong penalty for antitrust and competition law such as the Microsoft case in the United States.  There is also possibility that other local companies have registered the favourite name so it may need substantial time and cost to settle such kind of disputes.

Competitive conditions

Competitive conditions like industry standard is usually diverse in different countries.  It may require producing variants for different national standards.  Furthermore, there may be high barrier to global brand from some countries, for example, Japan.

Advertising laws and media availability

Different countries may have different advertising laws so standardisation may not be feasible.  Media availability is also a concern here.  Many global companies are using Internet to portray brand personality on a global scale as well as disseminate information.  This can improve and strengthen brand image.  However, many countries are still under developing so many consumers do not have computer at home.  For example, many net surfers in China use the computers at somewhere offering the service.  Television is another media availability concern for countries where people live in the poverty level.

3.   Conclusion

As a conclusion, there are a number of advantages and disadvantages facing Heinz in its aim to develop a standardised approach to the marketing of its brands.  In order to adopt an appropriate strategy to sustain its edge in the competition, Heinz is required to carry out a substantial market research on the above factors, to analyse carefully the cross-cultural issues, and the customer values for any actions.

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