Management Policy - Group Project - Final Version2

Running Head: SRATEGIC PLAN
Dena Ebanks-Iqbal, Opal Ruiz and Terryann Bodden-Bravo
Management Policy
International College of the Cayman Islands
Professor Dr. Alicia Law
September 12th 2017

STRATEGIC PLAN: KRAFT HEINZ 2
Strategic Plan Template for Management Policy Team Report
Section 1: Executive Summary
The Kraft Heinz company is one of the largest food and beverage producers in the world;
producing great products, having iconic brands, and providing these items in over 190 countries
worldwide. The companys history, focus on quality, embracing innovation and technology, and
remaining competitive, has been factors which has contributed to its success. The companys
objectives include improving both local and global health and the well-being of people,
improved sustainability, optimal food safety and quality, enhanced workplace culture, and
compliance with government regulations.
In utilizing Porters Five Forces Model, The Kraft Heinz Companys competitiveness
within the food and beverage industry remains high. Large food companies such as The Kraft
Heinz Company, have an extensive geographic presence, and new entrants may not be in a
position to compete with larger companies from a geographical perspective (Key, 2015).
According to Market Realist (2015), threats of new entrants is low, while threats of substitute
products is low to medium compared to the Kraft Heinz Company. Hence, new entrants can
enter the food and beverage industry, however, such new entrants will require strong band equity
as well as a robust distribution network for long run survival in the industry (Key, 2015). Thus,
the advantage of The Kraft Heinz Company products is their high quality and brand name in the
food and beverage industry. As a result, substitute products which are of lower quality may not
be appealing enough to entice customers to change from Kraft Heinz products to other generic
products (Key, 2015).
The Kraft Heinz Company has several opportunities consisting of the growing demand
for health and wellness products and services and the growing food service market. The US
foodservice industry is expected to continue its steady growth in the next few years. More so,
markets outside of North America present an opportunity for The Kraft Heinz Company to
design strategies to capitalize on its market share in these markets. The Nutrition Business
Journal reported that during the last few years, natural and organic food and beverage sales in the
U.S alone have increased at a compound annual growth rate of 15% (CAGR), increasing to $80
billion in 2015 (Key, 2015).
Though there has been some success, the Kraft Heinz Company, like any other company
has had its share of weaknesses. As mentioned by Key (2015), one such weakness is in relation
to product recalls. In the past few years, The Kraft Heinz company has been impacted by
frequent product recalls (Key, 2015). According to Key (2015), frequent product recalls not only
increases costs and reduces profitability, it also adversely impacts the image of the brand as well
the consumer satisfaction. In addition, the Kraft Heinz Company is challenged by the increase
cost to obtain raw materials to produce their products.
A significant part to the success of the Kraft Heinz Company, its the human capital of
the company. The company relies on the skills, working relationships, and consistent services of
key staff, which also encompasses their experienced team of managers. Furthermore, their
capability to attain operational objectives depends on their ability to find, hire, train and retain
qualified people. The company is in competition with other companies for talented personnel
(The Kraft Heinz Company, 2017). Persons will be hired in accordance with stipulated company
goals within the next year and into the future.

The Kraft Heinz company today reported second quarter 2017 financial results that
reflected significant gains; with $6.7 billion in net sales, from cost savings initiatives and
benefits (The Kraft Heinz Company, 2017). This momentum is expected to continue as the aim
of the company is to drive strong cost savings to fuel investments in people, capabilities and
brands that can lead to sustainable, profitable growth. (The Kraft Heinz Company, 2017).
Section 2: Elevator Pitch
The Kraft Heinz Company is one of the largest food and beverage businesses in the
world. Even more impressive, is that they are a globally trusted producer of delicious foods
(Kraft Heinz, 2012). The Kraft Heinz Company provides an array of food and beverage products,
that are nutritious; consisting of condiments and sauces, cheese and dairy, meals, meats,
refreshment beverages, coffee, and other grocery products, throughout the world (Kraft Heinz,
2012). The companys iconic brands include Kraft, Heinz, ABC, Capri Sun, Classico, Jell-O,
Kool Aid, Lunchables, Maxwell House, Ore-Ida, Oscar Mayer, Philadelphia, Planters, Plasman,
Quero, Smart Ones and Velveeta (Kraft Heinz, 2012). As a global snacks powerhouse, the Kraft
Heinz Company has continued to be a world leader in the food industry, providing a range of
products in approximately 190 countries, with over 40 countries with dedicated employees (Kraft
Heinz, 2012).
The Kraft Heinz Company today is as a result of a history of superior quality, safety and
service, beginning over a century ago (David, 2011). A key to the success of Kraft Heinz
Company was its founder James Krafts commitment to developing new products and using
innovative advertising methods (David, 2011). In 2010, Kraft acquired the esteemed U. K
chocolate company Cadbury, and according to Forbes, became a confectionary powerhouse, thus
opening up new sustainability avenues for the U. S company (Kruschwitz, (2012). With the
merger of Kraft and Heinz in 2015, this created a superpower in the food industry; as both
companies have had over a century each of success (Kraft Heinz, 2017). The company became
the market share leader in a number of brands and in some cases its market share was twice as
large as that of its nearest competitor (Pai & Subramanian, 2014). Most notably, is for the year
ending December 2016, the Kraft Heinz company reported earnings of 26.5 billion US dollars in
net sales; with eight of its brands earning over one billion US dollars each in retail and food
service sales (Kraft Heinz, 2017).
Though the Kraft Heinz Company continues to be successful in the food and beverage
industry, their philanthropy efforts are aimed at the sustainable health of people, the planet and
the company (Key, 2015). These efforts are focused on addressing hunger and promoting healthy
lifestyles in the United States and countries around the world where the corporation has a
business presence (Key, 2015). To date, the Kraft Heinz Company has provided over two billion
meals to hungry children; with the aim of fighting global hunger (Key, 2015).
Furthermore, the Kraft Heinz Company remains committed to corporate social
responsibility in its business. The company remains committed to the reduction in greenhouse
gas emissions, energy and water usage and waste (Kraft Heinz, 2017). They are also dedicated to
a supply chain reflective of ethical sourcing practices, policies, and instilling a lifelong
commitment to its communities (Kraft Heinz, 2017). Thus, the Kraft Heinz Company
distinguishes itself as a leader in the food industry in their focus on innovation and market
efficiencies, a culture of ownership of meritocracy, a world class board of directors, and
progressive business practices (Kraft Heinz, 2017).
Section 3: Company Mission Statement

The Kraft Heinz Company is committed to investing in world-class brands and long-term value
creation (David, 2011). In the focus of transforming business, growing a better world and promoting
ownership, the company in considered as a leader in the food and beverage industry (David, 2011). In
these efforts, the Kraft Heinz Company focuses on consumers in everything that they do (David, 2011).
The mission is to inspire trust, act as owners, keep it simple, be open and inclusive, lead by the heart and
head and provide results (David, 2011).
Section 4: SWOT Analysis
Kraft Heinz Foods manufactures and markets food and beverage products and has a
diversified product offering complemented by a strong brand portfolio (Key, 2015). An extensive
range of products enables the company to cater to a wide variety of customers which helps it to
enhance its market penetration (Key, 2015). However, intense competition could affect the
companys overall business performance (Key, 2015).
Strengths
Kraft Heinz Company has several strengths; in its diversified product offering
complemented by a strong brand portfolio, robust manufacturing and distribution capabilities,
and substantial cash reserves (Key, 2015).
Kraft Heinz offers a broad product portfolio encompassing five consumer sectors:
beverages, cheese, refrigerated meals, snacks and desserts, and enhancers and snack nuts (Key,
2015). The company markets highly recognized brands in several of these categories; including
well-known brands as Kraft and Oscar Mayer (Key, 2015). Each of these brands generates
annual net revenues of more than $1 billion US dollars. In the US, the company holds the highest
branded market share in 16 of its 17 product categories (Key, 2015). This broad product portfolio
reduces the dependence of the business on a particular product category for revenues, and thus
enables the company to further broaden its customer base and enhance its market penetration
(Kraft Heinz, 2017).
Regarding manufacturing and distribution, Kraft Heinz operates a robust network. They
manufacture their broad range of products at various facilities, and each location can store
refrigerated, dry and frozen goods (Market line, 2014). The company also uses common carriers
and its private fleet to transport products from manufacturing and processing facilities to
distribution facilities and to deliver them to customers (Market line, 2014). The in-house
manufacturing and distribution capabilities enable Kraft Heinz to exercise greater control and
flexibility over it business process (Market line, 2014). Furthermore, having more direct control
over the back end operations allows for changes in products according to market demand (Lee &
Engelman, 2012)). The U.S. market for packaged and processed foods has seen massive profits
in retail sales, and this number is expected to steady grow (Lee & Engelman, 2012). Worldwide,
demand is also on the rise for this type of food as more people adopt a lifestyle that includes less
time for the preparation of food (Market line, 2014).
In Kraft Heinz having substantial cash reserves due to their level of generated revenue,
this enables the company to maintain its credit rating, pay dividends, and provide flexibility to
invest money back into the business (Market line, 2014). Therefore, these cash reserves ensure
the company has the flexibility and the resources to invest in growth even in the most
challenging environment (Market line, 2014).
Weaknesses
The Kraft Heinz Company has exhibited two deficiencies in their reliance on large retail
customers and product recalls. The company excessively depends on few customers for the
majority of its revenues (Market line, 2014). The five top customers of Kraft Heinz company
accounted for 43 percent of its net sales in the financial year ending 2013, of which Walmart
alone accounted for 26 percent of net sales (Market line, 2014). For retailers like Walmart,
private-label sales generate a higher profit margin than national brands; such as those produced
by Kraft Heinz company (Market line, 2014). The introduction of discounting and subsequent
pricing pressure on those supplying companies, including Kraft Heinz company will lead to
margin pressure on those companies (Market line, 2014). Since the Kraft Heinz company is
dependent on large retailers for its revenues, it could significantly affect its margins and limit it
bargaining power (Market line, 2014). Similarly, unilateral pricing decisions by its other big
clients could have a significant impact on the companys profitability (Market line, 2014). Thus,
under these circumstances, a higher reliance on larger retailer customers limits the companys
bargaining power as well as the pricing flexibility (Market line, 2014).
The company has been involved in product recalls in recent years. In June 2014, the
company voluntarily recalled 260 cases of Velveeta Original Pasteurized Recipe Cheese product
due to low levels of preservative ingredient (sorbic acid) (Market line, 2014). In October 2013,
the company voluntarily recalled cheese products due to premature spoilage (Market line, 2014).
In 2012, they voluntarily recalled the Jalapeno variety of Kraft String Cheese (Market line,
2014). This was a precautionary due to a thin layer of plastic film from the package could stick
to the cheese and cause a choking hazard (Market line, 2014). Also in 2012, Kraft foods
voluntarily recalled Planters Cocktail Peanuts sold in 12 oz. canisters (Market line, 2014). The
recall was as a result of the product was exposed to water not intended for use in food during the
production process (Market line, 2014). Therefore, such recalls of goods could affect consumer
confidence in the companys products and changed the brand image (Market line, 2014).
Opportunities
The Kraft Heinz Company has several opportunities consisting of the growing demand
for health and wellness products and services and the growing food service market. Consumers
are showing increased preference for fat-free and healthy products (Market line, 2014). This is
because customers are increasingly more health conscience, demanding products that are lower
in calories and have no trans-fat. Kraft Heinz company is increasingly expanding its food and
beverage items for those that more health conscious by improving the nutritional profile of its
portfolio (Market line, 2014). Since 2005, the company has reformulated or launched more than
1,800 better-for-you products in the US and Canada to meet the changing consumer needs
(Market line, 2014). Since 2010, the company has also reduced sodium, fat or calories, and
sugar-free beverage (Market line, 2014). Thus, with a high line of low fat and nutritional
products, the company is well positioned to capitalize on the rising demand for healthy food
(Market line, 2014). Related to the development of health foods is the concern of childhood
obesity, which has reached epidemic proportions; with rising rates in both the developed and
developing world (Market line, 2014).
The US foodservice industry is expected to continue its steady growth in the next few
years. The restaurant industry continues to grow in sales over the past few years (Market line,
2014). Kraft Foodservice, a division of the Kraft Heinz company, provides a broad portfolio of
brands, marketing and sales expertise and resources to the US and Canadian food service
industry (Market line, 2014). Thus, the growth in the foodservice market will support the
companys foodservice business as lead to increased revenues (Market line, 2014).
Threats
The food and beverage industry is a competitive market. Kraft Heinz company faces
competition from large national and international businesses and many of local and regional
companies (Market line, 2014). They also compete with generic products and retailer brand,
wholesalers, and cooperatives (Market line, 2014). Factors influencing its competitiveness
include price, product quality, and innovation. Brand recognition and loyalty, distribution
capacity, and the ability to identify and satisfy consumer preferences (Market line, 2014). The
key competitors of Kraft Foods in the North American food and beverage include PepsiCo,
Nestle, The Coca-Cola Company, General Mills, ConAgra Foods, and Kellogg Company
(Market line, 2014). Most of these companies have wider geographic presence and revenue base
as compared to the Kraft Heinz company. This intense competition poses a threat to the
enterprises overall business performance (Market line, 2014).
The Kraft Heinz Companys business operations are subject to regulation regarding
manufacturing, marketing and distribution of food products (Market line, 2014). In 2009, a new
legislation regarding more frequent inspections of processing plants and recalls was passed
(Market line, 2014). Therefore, with the increased food safety measure, although beneficial, will
increase the burden of specific compliances for the Kraft Heinz company and could increase the
related expenditure (Market line, 2014).
The rising costs of petroleum cause a twofold increase in cost for companies in the food
industry. There are higher costs in agriculture which increased the cost of raw materials for food
processors who also deal with increased production and transportation costs. As a result, to
competitiveness in the industry, its harder for these companies to raise their prices therefore,
ultimately limiting profit margins.

Section 5: Goals
1-3-year plan
Accelerate growth of brands
The Kraft Heinz Companys future growth will be driven by makings its people its competitive edge,
executing with excellence, turbocharging its iconic brands and redefining efficiency (Edie, 2017). The
company will do this by creating a less-layered organization and unleash the skills and creativity of its
people (Edie, 2017). The company will also pursue added resources to its brands and products,
execute with excellence by strategically allocating resources to best leverage the breadth of the
companys portfolio, and have an effective sales and warehouse distribution system (Edie, 2017). To
turbocharge its iconic brands so they can grow faster than the market and key competitors, the company
plans to deliver the right products at the right price points, and introduce new products, and investing in
world-class marketing. Also, the company will consistently aim to accomplish organic revenues growth
(Edie, 2017).
Supply Chain Sustainability
To establish responsible material-sourcing policies and practices, Kraft Heinz has
pledged to procure palm oil products in a sustainable manner, and will only purchase palm oil
and by-products 100% certified by the Roundtable on Sustainable Palm Oil (RSPO) (Edie,
2017). This product is a significant part in the process and preparation of many of the companys
products (Edie, 2017). The policy also reinforces and introduces several supplier guidelines for
the humane sourcing of animal products (Edie, 2017).

Kraft Heinz is also committed to humane treatment of animals and prioritizes continuous
improvement in animal welfare (Edie, 2017). The Companys policy is established by the Five
Freedoms of Animal Welfare, a set of core principles for animals under human care (Edies,
2017). Kraft Heinz has zero tolerance policy for willful acts of animal abuse and neglect (Edies,
2017). Kraft Heinz is also prioritizing continuous improvements in policies that violate labor
laws and affect the environment (Edie, 2017).
Long term (5-year plan)
End Hunger Worldwide
The Kraft Heinz Company goals and culture aims to help end hunger worldwide, set
environmental targets and reduce emissions by 15 percent by 2020 (Kraft Heinz, 2017). The food and
beverage firm is committed to donating one billion nutritious meals to people in need by 2021 in
the fight to eliminate global hunger and malnutrition (Kraft Heinz, 2017). The project will operate
in collaboration with the internal hunger relief organization Rise Against Hunger, which has
helped Kraft Heinz to provide micronutrient powders to fortify more than 167 million meals
across the globe since 2013 (Edie, 2017).
Reduce Emissions
Kraft Heinz is committed to reducing its environmental footprint by reducing greenhouse gas
emissions, energy, water and waste in its operations by 15 percent globally by 2020 (Kraft Heinz, 2017). The
emissions reduction goal, set against a 2015 baseline comes as part of the companys sustainability efforts.
These efforts are aimed at efficiency and the reduction of waste throughout the company.
Section 6: Key Performance Indicators (KPIs)

According to Muntean, Tarnaveanu, and Ion (2016), Key Performance Indicators (KPIs)
are beneficial in quantifying and measuring the attainment of organizational goals. Also, KPIs
also enables visibility towards the performance of employees, teams, departments and the
organization on the whole; thereby allowing key decision makers to make appropriate decisions
to attain the desired objective. As mentioned by Muntean et al. (2016), when determining the
appropriate KPI for an organization it is essential for strategic goals to be considered as it relates
to profit, turnover, costs, or extensive or intensive development approach. Additionally, an
appropriate time frame must also be determined, example, short-term or long term increase in
profits (Muntean et al., 2016). Also, the profile of the company concerning the type of industry it
is operating in should also be considered (i.e., distribution services, manufacturing) (Muntean et
al., 2016). Muntean et al. (2016), also advises to determine appropriate KPI's, the organization's
present situation concerning the firm's development of the growth curve must also be considered
(i.e., growth, maturity, decline). Lastly, the organization's management style should also be
considered when determining effective KPI's.
As stated by Muntean et al. (2016), Key Performance Indicators can be described as a
group of metrics or measurements that are utilized for evaluating and measuring particular areas
of an organization. Furthermore, KPIs should also demonstrate the firm's goals from the lowest
to the highest level, and presented as operational indicators at various levels including employee,
function, department, division, and the organization on the whole (Muntean et al., 2016).
Muntean et al. (2016), reports that firms increasingly realize the importance of evaluating
metrics on short, medium, and long-term objectives. According to David (2011), goals are
characteristically expressed regarding growth in sales, increase in assets, market share,
profitability, corporate social responsibility, earnings per share EPS, nature and degree of
diversification, as well as nature and extent of vertical integration (David, 2011). As mentioned
by Muntean et al. (2016), in many cases, individual business processes do not return the
forecasted earnings. Hence, monitoring particular business process indicators results in detecting
the fluctuations at the level of numerous processes themselves and determining the reason that
led to such fluctuations (Muntean et al., 2016).
According to Muntean et al. (2016), KPIs are commonly utilized by large organizations
to evaluate and monitor the performance of essential activities. Moreover, Key Performance
Indicators are a representation of a group of metrics which concentrates on vital organizational
performance factors that are most central to ensuring the current and future success of the firm
(Muntean et al., 2016). As mentioned by Muntean et al. (2016), once a firm has scrutinized its
mission, determined all stakeholders, and have identified its goals, the organizations need to be
able to measure and analyze its progress towards the attainment of its goals and KPIs are those
measurements. The chosen KPI's should be reflective of the organization's objectives and should
be the firms key to success, and they should be quantifiable (Muntean et al., 2016). As reported
by Muntean et al. (2016), KPI's are typically considered on a long-term basis. The definition and
method for measuring for KPI's don't change (Muntean et al., 2016). However, the goals of a
particular indicator can change, to be more aligned with changes in the objectives of the
organization (Muntean et al., 2016).
As mentioned, when a business is choosing the relevant KPIs it is important for certain
factors to be taken into account (Muntean et al., 2016). As mentioned by Muntean et al. (2016),
these factors include the organization's strategic objectives, the desired time frame, the
profile/industry of the organization, the organization's current situation (growth, maturity, or
decline) as well as the organization's management style. As indicated by Muntean et al. (2016),
KPIs, are indicators of a company's road to success, irrespective of the field or industry that the
firm is operating in. Furthermore, the initial step in choosing the correct indicators in
determining the company's objectives and having a comprehensive understanding of the business
processes that affect those targets (Muntean et al., 2016). Also, each goal should have different
indicators, regardless if the goal increase in profits, enhancing customer service, or improves the
marketing process (Muntean et al., 2016). In analyzing these goals/factors, the following
indicators can be utilized: increase in sales, reduced Customer Service related calls, and an
increase in visits to company website (Muntean et al., 2016).
Muntean et al. (2016), reports that performance management best practices recommend
that organizations should have between four to ten essential Key Performance Indicators. Based
on the information mentioned above, in regards to the significance of Key Performance
Indicators in strategic management and the attainment of organization goals/objectives; the
below Key Performance Indicators will be used to evaluate, monitor, and analyze the
organizational performance of the Kraft Heinz Company. The selected Key Performance
Indicators which will be used to evaluate the performance of the Kraft Heinz Company include:
the number of product recalls, brand awareness, customer satisfaction, Return on Marketing
Investment (ROMI), stock price, Net Income, Current Ratio, Total Assets Turnover, Return on
Total Assets (ROA), and Earning Per Share (EPS). The number of product recalls along with
brand awareness, customer satisfaction and Return on Marketing will be used to evaluate the
firm's performance from a customer perspective. In contrast, the company's stock price, along
with Net Income, Current Ratio, Total Assets Turnover, Return on Total Assets (ROA), and
Earning Per Share (EPS) will be used to evaluate the performance of the Kraft Heinz Company
from a financial perspective.

Section 7: Target Customers
According to Zandi, Tayana, and O'Connor (2012), market segmentation is vital to obtain
a competitive advantage and to target a core-segment of consumers efficiently. The segmentation
process enables firms to define markets and customers with comparable demands and
characteristics who most likely will demonstrate similar buying behavior, which in turn leads to
increased organizational performance and profitability (Zandi et al., 2012). As mentioned by
Filip (2012), market segmentation is an essential step in the strategic marketing process.
Additionally, the concept of market segmentation enables organizations to identify their target
customers by recognizing that there are significant differences among customers and the
prospects of the market hence not all segments may be the target of a company's marketing
efforts (Filip, 2012). As stated by Filip (2012), the market contains various customers who share
specific needs, requests, characteristics, and objectives. In effect, it is these differences that will
allow organizations to develop appropriate strategies to meet the needs and expectations of its
target customers (Filip, 2012). As explained by Filip (2012), differences in target customers can
enable firms to make the relevant changes to product specifications, sales and promotional
activities, channels of distribution, and prices utilized.
According to Key (2016), the Kraft Heinz Company aims to provide customers with
quality, great tasting, and nutritious foods for all eating occasions whether on the go, dining out,
or at home. The Kraft Heinz Company operates in various consumer segments which include
North American Consumer Products, Europe, Asia/Pacific US Foodservice, and Rest of the
World, which is segmented according to geographical area (Vault, n.d.). Additionally, the
company provides its products to various customer segments which include food service
providers, food retailers, and the US military (Vault, n.d.). According to the Kraft Heinz
Company (2017), the company also provides products via its sales organizations as well as via
independent brokers, distributors to chain, independent and cooperative supermarket accounts,
agents, wholesalers, and bakeries. Moreover, the company also distributes its products to drug
stores, mass merchants, convenience stores, pharmacies, value stores, foodservice distributors,
club stores, as well as institutions like restaurants, healthcare facilities, hotels, hospitals and
particular government agencies. The Kraft Heinz largest customer is Wal-Mart Stores Inc (The
Kraft Heinz Company, 2017). The company advised that purchases from Wal-Mart Stores Inc.
accounted for approximately 22% of the firm's net sales in 2016, roughly 20% in 2015, and 10%
of net sales in 2014 (The Kraft Heinz Company, 2017).
The Kraft Heinz Company (2017), also reports that it has substantial customers in various
geographic regions globally. However, individually this segment of customers is not
significantly material to the firms consolidated business (The Kraft Heinz Company, 2017).
According to The Kraft Heinz Company (2017), in respect to its U.S. segment, 49% of U.S. sales
were received from its five largest customers. Moreover, in its Canada segment, approximately
76% of Canada segment sales were received from its five largest customers, and likewise, in its
Europe segment, 31% of its sales were attributed to its five largest customers (The Kraft Heinz
Company, 2017). In addition, Key (2015), states that the Kraft Heinz Company has a widespread
network of processing and manufacturing facilities along with distribution centers and this
enables the company to provide quality/fresh food and beverage products to its customers.
A study conducted by WeiserMazars on the 2015 sales impact on the food and beverage
industry trends for companies with revenues greater than 50 million demonstrates that customers
are making healthier food choices (WeiserMazars, 2016). There was a total of 58 % sales impact
from a combination of healthy /nutritious foods (17%), locally grown/produced foods (17%),
organic foods (15%), non-GMO (7%), and allergen free /gluten free foods (2%) (WeiserMazars,
2016). The Kraft Heinz Company can utilize studies such as this to understand the needs and
wants of consumers. Hence, information on industry trends can enable the Kraft Heinz Company
to make strategic variations to its products lines by making products more nutritious and healthy
based on consumer wants. The Kraft Heinz company should, therefore, analyze its target market
to determine how to meet customer expectations, needs, and wants which ultimately enables the
company to increase performance and sales.
Section 8: Industry Analysis
As reported by Research and Markets, it is predicted that the global packed food market
will grow at a CAGR (compound annual growth rate) of 4.5% from 2015 to 2020,
totaling/increasing to approximately $3 trillion (Key, 2015). The predicted growth of the food
and beverage market demonstrates that the industry is which The Kraft Heinz Company is
operating is poised for growth and development. As mentioned by Key (2015), from a
geographic standpoint, North American is the largest market in the packed food industry,
following the European market, which is followed by the Asia-Pacific region, and lastly, the
LAMEA region which consists of Latin America, the Middle East, and Africa. There are some
trends that are impacting the food and beverage industry. According to Key (2015), such trends
include a shift from artificial flavors and colors to natural ingredients and increased acquisitions
and mergers by significant industry players (such as that of Kraft and Heinz). Additional trends
in the food and beverage market include changes in the industry regarding transparent and
accurate labeling (specifically with GMOs genetically modified organisms) (Key, 2015).
Furthermore, increased product recalls, due to increased health hazards awareness (for example
Kraft Heinz recalled more than two million pounds of bacon as a result of receiving spoilage
related consumer complaints) has also impacted the industry (Key, 2015). Key (2015), also
advises that additional consumer trends consist of increased demand for better-for-you snacks
due to health concerns as it relates to organic, non-GMO, and natural products.
As previously mentioned, healthy and nutritious foods is a significant trend in the food
and beverage industry (David, 2011). For example, there is increased demand for foods that
contain fewer calories, less trans fats, or foods that are made of only organic ingredients (David,
2011). Additionally, bottled water is well established within the industry and water which
contains supplements or vitamins is also increasing in popularity (David, 2011). According to
David (2011), one key concern which is related to the expansion of healthy foods is childhood
obesity as it has reached prevalent proportions and continues to be an increasing issue in both the
developed and the developing world. Due to the increased demand by consumers for healthy and
nutritious food and snacks, The Kraft Heinz Company could capitalize on this by increasing the
supply of such products. Many of the Kraft Heinz brands are targeted towards children including
Jell-O, Caparison, and Launchable (The Kraft Heinz Company, n.d.). Hence, as it relates to child
hood obesity, the company could create a new product line based on these existing brands and
market them to children as healthy food and snack options. Additionally, The Kraft Heinz
Company, could also create a strategy in which it uses less artificial flavoring and coloring in its
products and use more natural ingredients/products, where possible.
As mentioned, there are various consumer trends impacting the food and beverage
market. According to David (2011), food producers are dedicating more emphasis on products
which are designed for vending machines, restaurants, and other foodservice providers as more
consumers are dining out. Increased focus on producing food for food service providers is
another industry trend in which The Kraft Heinz Company should devote resources to be more
aligned with consumer eating preferences. As mentioned by David (2011), more firms are
increasing funding to research and understand consumer food preferences and habits in
restaurants as well as at home. While this is not positive for grocery retailers, food producers
acknowledge that food that is consumed outside the food is still food that they can provide, at a
higher margin, in most instances (David, 2011). Therefore, this is an additional segment of the
food and beverage industry can The Kraft Heinz Company can capitalize on via strategic
planning and ultimately strategic implementation which will improve its profitability.
According to David (2011), another issue that is impacting the food industry is the rising
cost of petroleum. As stated by David (2011), increased petroleum costs result in a double
increase for companies operating in the food industry. In particular, costs increase from the
agriculture aspect, and this increases the cost of raw materials for food producers who also face
increased transportation and production costs on their end of the process (David, 2011). As
mentioned by David (2011), due to the competitive nature of the food industry it is a challenge
for food companies to increase their price accordingly; hence profits have suffered as a result of
the increased cost of petroleum. However, significant gains in retail sales have been observed in
the market in the United States for processed and packaged foods, more importantly, it is
expected that this industry growth trend will progressively continue to increase (David, 2011).
Therefore, although there are some challenges in the food and beverage industry as it relates to
meeting consumer needs for healthy produced and increases costs due to rising petroleum prices,
the industry in which The Kraft Heinz Company is operating in is positioned for growth and
expansion. However, it is important to note that for The Kraft Heinz company to continue to
operate in the packed foods industry successfully, the company must utilize strategic
management regarding strategic planning and implementation according to trends within the
industry.
Section 9: Competitive Analysis & Advantage
The Kraft Heinz Company is the fifth-largest food and beverage company in the world
and is the third-largest in the North American region, and the company has eight (8) $1 billion
plus brands (The Kraft Heinz Company, n.d.). Moreover, the company is trusted globally as a
producer of delicious foods, and provides consumers with great tasting, high quality, nutritious
foods for all occasions whether on the go, in restaurants, or at home (The Kraft Heinz Company,
n.d.). As reported by The Kraft Heinz Company (2017), the food and beverage industry in which
it operates in is extremely competitive concerning all of its product offerings. The Kraft Heinz
Company competes with their competitors in respect to product innovation, product quality,
taste, price, brand recognition, convenience and service (The Kraft Heinz Company). Additional
competitive factors include loyalty, ability to identify and meet consumer trends and preferences,
as well as the efficient distribution of products and the efficacy of its marketing processes (The
Kraft Heinz Company, 2017).
According to the Kraft Heinz Company (2017), the company may need to decrease its
processes as a result of many competitive factors and customer pressures such as shifts in
consumer preferences which may negatively affect the market for the firm's products. These
external market factors may limit Kraft's ability to raise product prices due to increased costs
from commodity and other cost factors (The Kraft Heinz Company, 2017). As stated by The
Kraft Heinz Company (2017), the company may need to reallocate or increase spending in
relation retail trade incentives, marketing processes, advertising, materials, and new product
innovation to increase or maintain its market share within the food and beverage industry.
However, such expenditures are exposed to risks, such as uncertainties concerning consumer and
trade satisfaction of the company's efforts (The Kraft Heinz Company, 2017). More importantly,
The Kraft Heinz Company (2017), advises that if the company is not able to effectively compete
in the market, its financial condition, operating results, and ultimately its profitability will be
adversely impacted.
As previously stated, the Kraft Heinz Company is faced with competition in all aspects of
the business and industry that the firm is operating in (The Kraft Heinz Company, 2017).
According to the Kraft Heinz Company (2017), the firm faces competition from large national
and international food and beverage companies as well as various regional and local businesses.
Moreover, the firm competes with generic and branded products, in addition to wholesalers,
retailer brands, and cooperatives (The Kraft Heinz Company, 2017). The Kraft Heinz Company,
fundamentally competes based upon product innovation, brand recognition, loyalty, product
quality, service, price, shelf space, distribution, merchandising support, new product
development, ability to detect and meet consumer preferences, as well as the efficacy of the
firms marketing programs and advertising campaigns (The Kraft Heinz Company, 2017).
Furthermore, introducing a new product to the market or increasing its market share requires
significant promotional and advertising expenditures (The Kraft Heinz Company, 2017). Key
(2015) advises that some of The Kraft Heinz Company's primary competitors include General
Mills, ConAgra Foods, Nestle SA, and the Campbell Soup Company, among others.
One of The Kraft Heinz Company's major competitors is Nestle. As mentioned by David
(2011), one of Nestle's advantages is that it not only operates in the food and beverage industry,
it also manufactures pet care as well as beauty and health care products. Furthermore, while The
Kraft Heinz Company is predominantly a North American company, the majority of Nestle's
revenues are derived from international sales (David, 2011). Hence, this is an area in which The
Kraft Heinz Company can focus its strategic objectives on increasing its sales, marketing, and
advertising efforts in from an international perspective. In doing so, The Kraft Heinz Company
will be positioned to increase its profit margins. On the other hand, from a domestic perspective,
The Kraft Heinz Company competes with various other companies, some of which include Sara
Lee and ConAgra Foods (David, 2011). Also, apart from other packaged food firms, the
company also competes with cooperatives, retailer brands, wholesalers, and generic products
(David, 2011). As mentioned by David (2011), since these products are competing with Kraft
from a national perspective they are more than likely going to be the greatest competitive threat
to The Kraft Heinz Company. Further to this, many consumers are reducing their spending by
purchasing generic and store-brand products (David, 2011).
ConAgra Foods is another major competitor for The Kraft Heinz Company. As
mentioned by David (2011), ConAgra Foods is one of the largest publicly held firms that
compete with the Kraft Heinz Company in the U.S food and beverage industry. ConAgra Foods
is the reputable name behind leading brands such as PAM, Orville Redenbacher's, Egg Beaters,
Healthy Choice, Hunts, Hebrew National, and Chef Boyardee, among others (David, 2011).
According to David (2011), ConAgra's consumer brands can be located in 97% of households in
the U.S, and 26 of its brands are ranked highly as first or second in their respective categories.
Moreover, ConAgra Foods also has a substantial position in respect to commercial food products
as it is one of the leading providers of specialty potatoes to food service providers and restaurants
(David, 2011). As mentioned by David (2011), the vision statement of ConAgra Foods is "One
company growing by nourishing lives and finding a better way today one bite at a time,"
ConAgra is committed to offering its customers with food products that they can depend on in
terms of great taste and nutrition at a reasonable price.
The Porter's Five Forces Model can be utilized to evaluate the competitiveness of the
Kraft Heinz Company within the food and beverage industry. According to David (2011),
Porter's Five Forces Model of measuring industry competitiveness is a broadly used approach for
determining competition in numerous industries. As stated by David (2011), Porter's model of
competition within a specified industry is based on five factors. Such factors consist of rivalry
between competing firms, threats of new entrants, bargaining power of suppliers, bargaining
power of buyers, and threats from substitute products (David, 2011). Concerning competitive
rivalry, competitive moves by one company can have a substantial impact on its competitors
(Inubiwon, 2017). As mentioned by Inubiwon (2017), new entrants to the industry bring with
them new capacity as well as aspirations to obtain market share. Additionally, suppliers have
high bargaining power when there is a monopoly on the supply of goods or services in an
industry (Inubiwon, 2017). According to Inubiwon (2017), buyers are powerful when they have a
significant negotiating power within an industry. In addition, the availability of substitute
products is an external threat which can negatively impact a firm's profitability (Inubiwon,
2017).
In utilizing Porter's Five Forces Model, the following is an analysis of The Kraft Heinz
Company's competitiveness within the food and beverage industry. According to Market Realist
(2015), threats of new entrants is low, and threats of substitute products are low to medium to the
Kraft Heinz Company. As mentioned by Key (2015), The Kraft Heinz Company products have
an excellent and high-quality brand name in the food and beverage industry. As a result,
substitute products which are of lower quality may not be appealing enough to entice customers
to change from Kraft Heinz products to other generic products (Key, 2015). As stated by Key
(2015), raw materials that are needed to make products are easily accessible, and there are no
government policies which limit entrance to the industry. Hence, new entrants can enter the food
and beverage industry (Key, 2015). However, such new entrants will require high brand equity
as well as a robust distribution network for long-run survival in the industry (Key, 2015).
According to Key (2015), large food companies such as The Kraft Heinz Company, have an
extensive geographic presence, and new entrants may not be in a position to compete with the
largest companies from a geographical perspective (Key, 2015). Furthermore, barriers to exit the
industry are low, and as a result, companies are more likely to leave the industry, which
increases the market share for the enduring firms (Key, 2015).
Based on Porter's Five Forces Model, in the analysis the competitiveness of The
Kraft Heinz Company, the bargaining power of both suppliers and buyers is low (Key, 2015). As
mentioned by Key (2015), The Kraft Heinz Company has an extensive quantity of customer
bases. Additionally, the firm's products have a substantial geographic reach along with an equal
distribution among small distributors and major distribution players (Key, 2015). Therefore, the
bargaining power of customers is low. In respect to the low bargaining power of suppliers, Key
(2015), advises that The Kraft Heinz Company is not dependent on any particular supplier, in
fact, many suppliers depend upon Kraft's large volume purchases. As indicated by Key (2015),
the degree of rivalry among competitors within the food and beverage industry is medium to
high. According to Key (2015), the food and beverage industry is massive, and the international
packaged foods segment was recorded at $2.1 trillion in 2015. Moreover, The Kraft Heinz
Company is faced with competitive rivalry from major competitors in the food industry (Key,
2015). However, product differentiation is low among the firm's competitors (Key, 2015). As
mentioned by Key (2015), some of The Kraft Heinz Company's primary competitors in the food
and beverage market include The Celestial Group, Keurig Green Mountain, McCormick &
Company, and Mondelz International.
The Kraft Heinz Company is a major player in the in the food and beverage market, and
the company has competitive advantages in various aspects. According to Key (2015), The Kraft
Heinz Company has an extensive geographical presence around the world. In particular, the
company has a presence in the United States, Canada, Europe, the Asia-Pacific region, as well as
Latin America, and RIMA which includes Russia, India, the Middle East, and Africa (Key,
2015). However, one of its principal competitors, ConAgra Foods only has a presence in the US,
while another major competitor, Mondelz International does not have a presence in the U.S, but
has a presence in in Europe, North America, Latin America, the Asia-Pacific, the Middle East,
and Africa (Key, 2015). Therefore, Kraft Heinz has a competitive advantage regarding its global
presence. As indicated by Key (2015), the company has more than 200 different brand names
and operates in approximately 200 countries. The Kraft Heinz Company has eight signature
brands which individually generate more than $1 billion in sales revenues (Key, 2015). Further
to this, the company also has an additional five leading brands which individually produce
between $500 million and $1 billion of the firm's total sales revenue (Key, 2015). The Kraft
Heinz Company major brands consist of Maxwell House, Kool-Aid, Kraft, Classico, Heinz,
Lunchables, Jell-O, ABC, and Capri Sun (Key, 2015). Furthermore, Key (2015), advises that the
company's additional big-name brands consist of Oscar Mayer, Velveeta, Quero, Smart Ones,
Ore-Ida, Philadelphia, Plasmon, Planters, and Weight Watchers.
As mentioned by Key (2015), The Kraft Heinz Company has a competitive advantage as
it relates to the firm's diverse product portfolio, brand equity, solid distribution as well as strong
manufacturing. Additionally, as mentioned previously, the company has a brand portfolio which
is internationally recognized, of which eight brands contribute more than $1 billion sales per
brand (Key, 2015). Moreover, as stated by Key (2015), The Kraft Heinz Company has a
portfolio of diversified products including cheese and dairy, sauces, coffee, meal replacements,
condiments, meat, and replacement beverages. Key (2015), also reports that the company has a
broad network of processing and manufacturing facilities as well as distributions centers. This
extensive network enables the company to provide fresh and high-quality products to its
consumers (Key, 2015). The Kraft Heinz Company should continue to utilize its distinctive
competencies over its competitors to increase its market share and profitability. As mentioned by
David (2011), a firm's distinctive competencies are those that cannot be easily imitated or
matched by its competitors.
According to Key (2015), there are some opportunities within the market for The Kraft
Heinz Company, particularly as it relates to expansions into untapped markets. As indicated by
Key (2015), although Kraft has a global presence in various countries, the majority of its
revenues are derived from the U.S and Canada market, which was recorded at 79% of the firm's
total revenues in 2015. Key (2015), states that the food and beverage market in North American
is at its maturity, and opportunities exist for market expansion in emerging markets, which the
company can further develop its presence. Hence, markets outside of North American present an
opportunity for The Kraft Heinz Company to design strategies to capitalize on its market share in
these markets. Also, The Nutrition Business Journal reports that during the last few years, natural
and organic food and beverage sales in the U.S have increased at a compound annual growth rate
of 15% (CAGR), increasing to $80 billion in 2015 (Key, 2015). As a consequence, the growing
demand for healthy and nutritious products provides an opportunity for the Kraft Heinz
Company to increase its investments and funding into its better-for-you options (Key, 2015).
Therefore, the increased consumer demand for healthier food and drink options and untapped
markets outside of North America creates an opportunity for the Kraft Heinz Company to expand
and develop.
The Kraft Heinz Company, like any other company, has its share of weaknesses. As
mentioned by Key (2015), one such weakness is concerning product recalls. In the past, few,
years, The Kraft Heinz company has been impacted by frequent product recalls (Key, 2015). For
example, the Food and Drug Administration (FDA), reports that in September 2015, the
company issued a voluntary product recall of approximately 335,000 cases of Kraft Single
Cheese slices, after two additional complaints were made of it being a choking hazard (Key,
2015). In July 2015, the company had initialed removed 36,000 cases of the Single Cheese slices
of the same product (Key, 2015). Also, Key (2015), advises prior to its merger with Heinz, the
Kraft Foods Group issued a recall of approximately 242,000 cases of Kraft Macaroni & Cheese
due to the potential presence of metal particles. Similarly, one of its competitors, the Campbell
Soup Company also faced recalls in November 2015, of its SpagettiOs Original, as a result of
possible choking hazards from pieces of red plastic (Key, 2015). According to Key (2015),
frequent product recalls not only increases costs and reduce profitability but it also adversely
impacts the image of the brand as well the consumer satisfaction. Therefore, the Kraft Heinz
Company should strive to improve its operations by preventing or reducing the number of
product recalls as this adversely impacts the company in all respects.
According to Key (2015), the company is also exposed to threats as it relates to the
increased cost of raw materials as well as the rise in private labels. In respect to the rising costs
of raw materials, Key (2015), advises that during the last few years, raw materials for some of
the top revenue producing categories such as beans, meat, dairy, coffee, condiments, and sauces,
have substantially increased. The higher costs of raw materials pose a threat to the Kraft Heinz
Company as it means that the company will have to pay higher costs to obtain these raw
materials to produce their finished top contributing products. Also, due to the increased cost of
raw materials, there has also been an increase in private label products within the food and
beverage market (Key, 2015). According to Key (2015), from an international perspective
consumers have been leaning towards private label products which are the alternative lower cost
products to national and international brands. In 2013, private labels contributed appropriately
45% of retail sales in Switzerland, which was ranked higher than any other country (Key, 2015).
As mentioned by Key (2015), the United States placed 21st on the list with private label sales
accounting for 18% of total U.S. retail sales. According to Key (2015), increased prices by large
brand names due to the higher costs of raw materials may result in some consumers leaning
towards increased private label products, which are less expensive (Key, 2015).
Section 10: Marketing Plan
Unique Selling Proposition (USP)
The unique selling proposition of Kraft Heinz Company is the distinctness of its products
and based on that fact that it is one of the world's largest producers of food and beverages (The
Kraft Heinz Company, 2017). It is globally recognized for premium quality foods. Winer and
Dhar (2011), states that the differentiation approach is a method used in developing a
competitive advantage. Companies attain differentiation by capitalizing on noticeable differences
in value in which customers are willing to pay. Furthermore, Kraft Heinz Company has been in
existence for many years and has many loyal customers due to the quality and taste of its
products. Kraft Heinz Company positions itself in the market as a competent, innovative brand
that strives to please its customers. The company believes that the Kraft Heinz Company brand
attracts a variety of people over different classes. They market their products based on high
quality, great taste and nutrition for all eating occasions (Overview, n.d.). These factors have
earned Kraft Heinz Company a niche position in the market.
As mentioned, the Kraft Heinz Company seeks to use product differentiation as a unique
selling proposition/marketing strategy to assist with increasing product awareness, customer
loyalty, and increased sales. The unique factors of Kraft Heinz Company products allow them to
have a differential advantage in the market. Winer and Dhar (2011) describe a differential
advantage as one of the three factors of the core marketing strategy which has a statement of how
a particular product is different, unique, and superior to competitor's products. Therefore, the
unique selling proposition of Kraft Heinz Company is the high quality and great taste of its
products.
Pricing & Positioning Strategy
The pricing and position strategy is a key part of the marketing plan. Moreover, the price
of a product often makes or breaks a sale transaction. Therefore, the pricing and positioning
strategy must be properly aligned with customer expectations and the overall target market
(Winer & Dhar, 2011). The company sells brands including Kraft, Heinz, ABC, Capri Sun,
Classico, Jell-O, Kool-Aid, Lunchables, Maxwell House, Ore-Ida, Oscar Mayer, Philadelphia,
Planters, Plasmon, Quero, Weight Watchers Smart Ones and Velveeta (Overview, n.d.). The
majority of the products sold is appropriately priced and can be found on most supermarket
shelves. It is important to note that price is a unique aspect of the product which can influence a
customer to decide to purchase, and I the same breath, price is directly related to margin per units
sold (Winer and Dhar, 2011). The company intends to examine pricing on an annual basis to
determine whether increases are necessary. However, as much as possible the company plans to
meet its revenue goals through sales volume and not necessarily by raising prices. If customers
notice too many price increases, they may be turned off, and this may cause sales to decline.
Therefore, Kraft Heinz products must be appropriately priced and positioned with the target
market as well as customers perceived expectations.
Distribution Plan
Kraft Heinz Company has a well-structured website that allows customers to go online to
purchase its products. Kraft Heinz sells products through its own sales organizations and
independent brokers, agents, distribution chains, wholesalers, cooperative and independent
grocery and convenience stores. Additionally, other distributors include drug stores, value stores,
bakeries, pharmacies, mass merchants, club stores, foodservice distributors and institutions, such
as hotels, restaurants, hospitals, health care facilities, and particular government entities (The
Kraft Heinz Company, 2017). Incorporating these agencies into the Kraft Heinz Company
distribution plan maximizes the companys potential to reach a greater number of customers
within its target market.
Winer and Dhar (2011) support this notion as they state that channels of distribution are
valuable because they enable consumers to have more access to purchase a firms products or
services. The original company receives the benefit that distribution channels help to increase the
delivery and availability of products and hence are considered as value-added chains (Winer &
Dhar, 2011). Furthermore, the original company can be more confident that the distribution
center will invest time and money to influence higher quantities of end-consumers to purchase
goods or services (Winer & Dhar, 2011). Kraft Heinz already has a strong distribution channel.
However, any improvements or modifications to widen the channel would be consistent with the
push feature of channel management in that the company focuses on securing more
intermediaries or distribution channels to sell or carry its products (Winer & Dhar, 2011).
Your Offers
Kraft Heinz Company acknowledges that bonuses, discounts, and special offers are
useful tools to help keep current customers as well as attract new ones. The company has various
specials and discounts. As mentioned by Winer and Dhar (2011), relationship building
promotions including sweepstakes or games can be advantageous as they can help increase
consumer awareness of a product or service rather than just increasing short-term sales (Winer &
Dhar, 2011). This type of customer-oriented promotion can be effective in motivating a long-
term effect on consumers purchasing behavior (Winer & Dhar, 2011). Additionally, tie-in
promotions like offering a free movie ticket as a reward for purchasing a can advance the product
image thus developing a relationship with the customer. As such tie-in promotions can translate
to a long-term effect on buying behavior as well as customer loyalty (Winer & Dhar, 2011).
Marketing Materials
The marketing materials used by Kraft Heinz Company comprise of its website, printed
brochures, business cards, and advertisements in local magazines. Kraft Heinz Foods website is
an excellent platform to market its products. It is savvy and user-friendly and in line with other
companies with websites that sell or carry the same products. The website is very interactive and
well laid out. Digital marketing is believed to be one the largest shifts seen in traditional
marketing (Baltes, 2015). This change is epic and called for the re-evaluation of marketing
strategies if companies desired to retain competitiveness in a new digital environment (Baltes,
2015). Due to this, content marketing has become the major component of an effective online
marketing campaign and the primary tool of digital marketing (Baltes, 2015). As stated by Baltes
(2010), content marketing products may encompass different dimensions and marketing
mediums including online or print newsletters, custom magazines, electronic or digital content,
micro sites or websites. Content marketing also extends to webinars or webcasts, white papers,
podcasts, series or portals, videos, road shows, roundtable events, online interactive, events, or
email. Moreover, the objective of this information is to notify and boost brand awareness of the
companys products amongst the target market and potential new customers (Baltes, 2015).
Promotions Strategy
Numerous methods can be utilized to reach new customers including television ads, trade
show marketing, press releases, online advertising, event marketing, and word of mouth. The
company has invested in television advertisements as well as other mediums. In these modern
days if companies wish to remain competitive it is essential for them to have marketing content
that suits its target audience such as appropriate social networks (Baltes, 2015). Due to this, the
company will also focus efforts on online advertising through the use of its website and social
media sites. The company will also engage in event marketing at shows such as business and
trade expo or other shows where they can showcase products they sell. Additionally, since the
traditional marketing approach of word of mouth has worked for this company, they will
continue to utilize this. Word of mouth is a beneficial marketing strategy because when someone
purchases a product and can tell another person about their experience, this helps to attract more
people to buy the products.
Online Marketing Strategy
Kraft Foods Inc. was reintroduced in February 2009, and at this time they also set up a
new corporate website. People who visit the site can look at commercials from different parts of
a world and learn about new product innovations. The company has also launched several viral
web sites such as Oreo Double Stuff Racing League (DSRL). The company has made this site
very interactive as visitors can watch videos, play games and even join the league. The main
Kraft Foods web site has also had some changes. When surfing the website, visitors can enjoy
the same browsing experience. The web site features information about products and a Recipe
Box. Customers can go to the Recipe Box section of the web site and pull up personal recipe
favorites or recipes from Kraft. The overall browsing experience is considered as painless and
respectful. The fact that users are not asked to provide last names is in line with the general
functionality of the web site.
The four main parts of the Kraft Heinz Company online marketing strategy are keyword strategy,
search engine optimization, paid online advertisements, and social media strategy.
1. Keyword Strategy: identify what keywords you would like to optimize your website.
As part of Kraft Heinz Companys online marketing strategy, the company will highlight
the keywords it would like to optimize its website. Search engine optimization makes consumers
more aware of the companys website which allows marketing initiatives more effective
(Castronovo & Huang, 2012). Kraft Heinz Company can utilize online marketing in various
ways. First of all, companies pay search engines to have their websites pop up as an
advertisement when people search for a particular word (Castronovo et al., 2012). Additionally,
companies can intentionally get their website listed when users/consumers do specific searches
(Castronovo et al., 2012). For instance, the company can pay Google to ensure its website shows
up in available options when consumers search for the word "cheese." An advert will also
come up from Kraft Heinz Company featuring its products when people go online and search for
cheese.
2. Search Engine Optimization Strategy: The company should document updates it will make to
its website, so it appears more prominently for your top keywords.
There is an increasing trend that is causing consumers to shift to the internet to view
information about products. As a result, search engine optimization is starting to be even more
crucial to the marketing approach (Castronovo et al., 2012). In general, to make search engine
optimization effective, it should begin with an analysis of keywords as the company needs to
determine appropriate keywords to be used (Castronovo et al., 2012). After this stage, the
companys website requires formatting to feature the keywords in titles and other information
(Castronovo et al., 2012). Furthermore, as stated before companies can also utilize paid search
advertisements where they pay search engines such as Google to push out messages when
specific keywords are used to search for products or services on the internet (Castronovo et al.,
2012). To determine whether this strategy is effective, Kraft Heinz Company will evaluate how
its website ranks among its competitors as well as the frequency of visits, clicks, and referrals
(Castronovo & Huang, 2012). This information can be obtained freely from visiting the same
search engine that the company pays to advertise using keywords (Castronovo et al., 2012).
3. Paid Online Advertising Strategy: The company should document the online advertising
programs it will use to get to its target customers.
Because of the internet, potential customers now have more chances to build
relationships with each other (Castronovo & Huang, 2012). The availability of the web produces
a powerful mechanism that rapidly sends out product information that enables products to be
more readily taken on by the market at a cheaper cost (Castronovo et al., 2012). Companies can
use online networks and communities to enhance product awareness through search engine
optimization which is just like an electronic form of word-of-mouth (Castronovo et al., 2012).
4. Social Media Strategy: document how you will use social media websites to attract customers.
Social media plays a paramount part in a companys communication program. When it is
used properly, social media can generate incredible benefits for business (Castronovo & et al.).
Various tools can be used in developing a social media strategy. The company will need to carry
out some research to distinguish the social media sites that are used by the target audience to
decide the best balance (Castronovo et al., 2012). According to Castronovo et al. (2012), social
media is usually utilized to attain particular business objectives such as boosting product
awareness, increasing sales and or customer loyalty (Castronovo et al., 2012). None the less, it
is essential to measure if a social media program is effective. To determine the effectiveness of
its social media strategy, Kraft Heinz Company should continually assess the level of
interactions and attention among the major stakeholders (Castronovo et al., 2012). Relationships
and content are two factors that can be derived from using social media (Castronovo et al.,
2012). The company can decide if the social media marketing program is effective by examining
its capability to generate positive chatter regarding its business, products, and services. Social
media marketing can create outcomes that the company can measure via heightened awareness,
increased sales and customer loyalty (Castronovo et al., 2012).
The Kraft Heinz Company believes that its capability to adjust to an evolving media
environment will add to its success in maintaining and expanding its brand image. They
regularly depend on social media and online advertising distribution as a means to feature its
products (The Kraft Heinz Company, 2017). The company recognizes that the increasing
utilization of social and digital media also increases the chances, rate, and magnitude to which
good or negative information can be shared. Any negative posts about the company, its brands,
products or suppliers could cause severe damage to its reputation (The Kraft Heinz Company,
2017). All of these factors point to the importance of social media and its potential impacts on
an organization.
Conversion Strategy
If Kraft Heinz Company wishes to boost the conversion of prospective customers into
paying customers, the company should improve customer experiences. This strategy will also
be enhanced if the company performs well in other areas such as the referrals. The conversion
strategy can be initiated when a customer purchases a product and tells his or her friends or
family about their experience. Chances are at least one of the people that hear about Kraft Heinz
products will go into a store to buy something. As part of the conversion strategy, the company
has devised a customer comment card that customers can fill out online.
The questions are as follows:
1) Are you are returning customer or is this the first time you are buying from us?
2) Where do you live?
3) What is your favorite Kraft Heinz product?
4) Can you list particular areas that you want to see us improve?
5) How is our customer service?
6) Can you imagine any other products you would like us to introduce?
7) Can you think of any other way that we can use the recipes (i.e., Cupcakes)?
8) What do you think about our prices?

9) What do you think about our product packaging?
10) Would you recommend us to friends and family?
Joint Ventures & Partnerships
From time to time, Kraft Heinz Company examines acquisition candidates, alliances or
joint ventures that may be strategically in line with its business objectives. Furthermore, the
company may consider divesting businesses that do not meet its strategic objectives, growth or
profitability goals (The Kraft Heinz Company, 2017). The company has partnered with Oprah
Winfrey to offer a line of flavorful soups which they consider to be an interesting twist to
traditional comfort food (The Kraft Heinz Company, n.d.). Furthermore, Kraft Heinz Company
also aims to develop partnerships and joint ventures with other business officials and
organizations. This year, the company joined with members of Congress in a campaign to help
end world hunger (The Kraft Heinz Company, n.d.).
Section 12: Referral Strategy
A referral strategy is essential as the company has to seek out methods to keep customers
interested. Kraft Heinz Company wants its customers to go away saying positive things about
the company and share good experiences with friends and family. The company is hopeful that
its revenue streams will continue to flow and that giveaways/promotions will not affect hinder
profits but serve to increase them. According to Winer and Dhar (2011), satisfied customers will
talk with their friends and family regarding companies in which they purchase goods and
services from. Due to this practice, companies obtain extra sales from referrals or the word of
mouth of satisfied (Winer & Dhar, 2011). As such, utilizing this type of strategy is a good source
of new business
Strategy for Increasing Transaction Prices
Kraft Heinz Company feels that its products are fairly priced. There are many
competitors in the food industry. The top five competitors are Nestl, General Mills, Danone,
Unilever, and the Yeo Valley Group (Datafox, n.d.). Due to the many substitutes available for
products Kraft Heinz Company carries, the company has to follow prices as prescribed by the
market and industry in which they operate. As the company increases its sales, it would like to
be able to raise prices to some extent. The company acknowledges that to raise prices they need
to have consistent revenue streams that come from loyal as well as new customers. According to
Winer and Dhar (2011), transaction buyers are one-off customers who are only concerned about
the particular purchase at hand instead of creating an ongoing relationship with the company. It
is important for the company to be able to forecast sales and have steady revenue streams. The
company has to look at generating more repeat buys and converting one-off customers into loyal
customers to achieve sales targets. The company seeks to enhance transaction buyers through it
suppliers and large distribution channel.
Retention Strategy
The competition in the food industry is very rigid as there are many brands and
substitutes available. Customers may choose to buy cheaper brands and not necessarily Kraft
products. As such, the company has to find creative ways to retain customers and attract new
ones. Kraft Heinz Company has come up with several retention strategies. The company will
introduce a monthly newsletter and customer loyalty program to keep customers and further
build its market share. There will be giveaways such as those stated under The Offers section.
Additionally, the company will use an up to date customer relationship management (CRM)
system to organize information and manage the customers it serves.

Section 11: Team
The Kraft Heinz Company has a team of diverse, talented and hard working individuals.
As stated by The Kraft Heinz Company (n.d), to be the best, they need the best which includes
the best brands, processes, and most notably, the best people. Kraft Heinz is changing the food
industry with courageous thinking and outstanding results. They seek out motivated, innovative
talent to join their company/team (The Kraft Heinz Company, n.d.). At its year end, December
31, 2016, the company had 41,000 employees (The Kraft Heinz Company, 2017). The company
relies on the skills, working relationships, and consistent services of key staff, which also
encompasses their experienced team of managers. Furthermore, their capability to attain
operational objectives depends on their ability to find, hire, train and retain qualified people. The
company is in competition with other companies for talented personnel (The Kraft Heinz
Company, 2017). Kraft Heinz Company hires staff following stipulated company goals set for
the next year and into the future.
Section 12: Operations Plan
The success of Kraft Heinz Company is dependent on its aptitude to retain its brand
image for existing product lines, branch out to new levels or niches in the market, and improve
brand image with new offerings (The Kraft Heinz Company, 2017). The company is intent on
maintaining, extending and expanding its brand persona through the use of marketing,
investments, such as advertising and campaigns for consumers and innovation of products (The
Kraft Heinz Company, 2017).
Before the Merger in 2015, the company carried out various restructuring projects. These
projects were in line with the company's cost cutting initiatives and overall efficiency goals that
mainly focused on the reduction of personnel, factory closures, and combination, however, these
were mostly completed by the end of 2016 (The Kraft Heinz Company, 2017). These initiatives
as well as others cause 8,350 staff to be released and $589 million to be paid out in severance
pay and benefits, $360 million non-cash asset-related costs, and $413 million other exit costs. In
regards to these activities, Kraft Heinz spent $125 million in 2016, $194 million in 2015, and
$637 million in 2014 (The Kraft Heinz Company, 2017). After the merger, the company
commenced research into a new product development project. This project commenced on
August 1, 2015 and concluded on January 1, 2017 when the product was placed on the
supermarket shelves (Appendix 1). The stages that ensued included research and development,
marketing as well as a pilot testing program all of which are illustrated on a Gantt Chart.
Section 13: Financial Projections
On July 2, 2015, through a series of transactions, Kraft Foods Group, Inc. merged with
and into H.J. Heinz Holding Corporation (The Kraft Heinz Company, 2017). At the merger date,
Heinz was renamed The Kraft Heinz Company and H. J. Heinz Company changed its name to
Kraft Heinz Foods Company. Kraft and Heinz have been pioneers as both have been in the food
industry for over 100 years. For 2016, Operating income increased 132.7% to $6.1 billion when
compared to $2.6 billion in 2015 (The Kraft Heinz Company, 2017). The 2015 Merger, as well
as a few other factors, caused this increase. The company had savings from the Integration
Program and additional restructuring activities and efficient pricing above the cost of
commodities in the United States and Canada. Furthermore, non-cash costs of $347 million
concerning the fair value modification of Krafts inventory in purchase accounting in the
previous period (The Kraft Heinz Company, 2017).

The financial projections of Kraft Heinz Company are reliant on specific underlying
assumptions. Firstly, the company presumes that the economy will continue to grow at the same
pace as in previous years and that it will not experience any significant recessions. The company
does not anticipate any unforeseen changes in technology which will critically affect its
operations. Moreover, it is assumed that Kraft Heinz Company will have access to and be able
to obtain capital to finance its operations and ongoing developments to its various product lines.
Kraft Heinz Companys financial year is the same as the calendar year which is January
to December. The companies cost of sales consists of the average cost of raw materials used in
each of their products. Sales forecasts incorporate costs and they are taken away from any
expected sales figures. Based on its target market and its sales over the last five years, Kraft
Heinz Company foresees receiving roughly a three percent sales growth in the subsequent
financial period. The profitability of Kraft Heinz Company is dependent on maintaining low
operational costs and simultaneously increasing sales. The last five years have been good for the
company as it has received steady sales and the merger also stimulated sales growth.
Appendix 1
References
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David, F. R. (2011). Strategic management: concepts (13th ed.). New Jersey: Prentice Hall.
Edie's, (2017, March 22). Kraft Heinz enhances sustainability goals as part of 'continued growth
strategy'. Retrieved August 21, 2017, from https://www.edie.net/news/7/Kraft-Heinz-
enhances-sustainability-goals-as-part-of--continued-growth-strategy-/
Filip, A. (2012). Market segmentation - fundamental process in business to business
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https://datafox.com/competitors/the-kraft-heinz-company
http://ir.kraftheinzcompany.com/overview.cfm
new corporate Web site: http://www.newkraft.com
The new site address is http://www.kraftfoods.com
http://www.dsrl.com
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Running Head: SRATEGIC PLAN

Dena Ebanks-Iqbal, Opal Ruiz and Terryann Bodden-Bravo

International College of the Cayman Islands

Professor Dr. Alicia Law

September 12th 2017

Strategic Plan Template for Management Policy Team Report

Section 1: Executive Summary

compliance with government regulations.

products (Key, 2015).

billion in 2015 (Key, 2015).

cost to obtain raw materials to produce their products.

goals within the next year and into the future.

Section 2: Elevator Pitch

service sales (Kraft Heinz, 2017).

Furthermore, the Kraft Heinz Company remains committed to corporate social

efficiencies, a culture of ownership of meritocracy, a world class board of directors, and

progressive business practices (Kraft Heinz, 2017).

Section 3: Company Mission Statement

head and provide results (David, 2011).

Section 4: SWOT Analysis

companys overall business performance (Key, 2015).

complemented by a strong brand portfolio, robust manufacturing and distribution capabilities,

and substantial cash reserves (Key, 2015).

(Kraft Heinz, 2017).

time for the preparation of food (Market line, 2014).

challenging environment (Market line, 2014).

bargaining power as well as the pricing flexibility (Market line, 2014).

developing world (Market line, 2014).

companys foodservice business as lead to increased revenues (Market line, 2014).

enterprises overall business performance (Market line, 2014).

related expenditure (Market line, 2014).

ultimately limiting profit margins.

Accelerate growth of brands

Supply Chain Sustainability

To establish responsible material-sourcing policies and practices, Kraft Heinz has

the humane sourcing of animal products (Edie, 2017).

laws and affect the environment (Edie, 2017).

Long term (5-year plan)

End Hunger Worldwide

across the globe since 2013 (Edie, 2017).

Section 6: Key Performance Indicators (KPIs)

to profit, turnover, costs, or extensive or intensive development approach. Additionally, an

is operating in should also be considered (i.e., distribution services, manufacturing) (Muntean et

considered when determining effective KPI's.

As stated by Muntean et al. (2016), Key Performance Indicators can be described as a

characteristically expressed regarding growth in sales, increase in assets, market share,

led to such fluctuations (Muntean et al., 2016).

Indicators are a representation of a group of metrics which concentrates on vital organizational

organization (Muntean et al., 2016).

profile/industry of the organization, the organization's current situation (growth, maturity, or

increase in visits to company website (Muntean et al., 2016).

on the information mentioned above, in regards to the significance of Key Performance

Indicators in strategic management and the attainment of organization goals/objectives; the

from a financial perspective.

Section 7: Target Customers

a competitive advantage and to target a core-segment of consumers efficiently. The segmentation

increased organizational performance and profitability (Zandi et al., 2012). As mentioned by

activities, channels of distribution, and prices utilized.