Page 1: Introduction
Food manufacturing is becoming increasingly competitive. Consumers can now choose from a wide variety of products. Choice and price competition means that manufacturers can no longer rely on customer loyalty. Moreover, consumers are now more experimental in their eating habits and, therefore, less predictable. Even a household name as well known as Heinz is subject to the same market conditions as lesser known manufacturers.
Heinz Salad Cream, one of the company’s best known brands, was showing signs of losing its previously high market share. The salad cream sector as a whole was in decline. Competition from new, or substitute products, particularly mayonnaise, had over-taken Heinz Salad Cream’s position as the number one choice for salads.
Heinz Salad Cream is made from a recipe wholly developed in the UK and was first launched in 1914. Until the 1940s it was the only salad cream on the market. The 1950s and 1960s saw the Salad Cream sales peak. However, by 1990 Salad Cream and mayonnaise shared the market equally. By 1996, mayonnaise was in the lead, and by 1998 Salad Cream sales stood at £40 million compared to £72 million for mayonnaise.
The market for salad dressings is worth approximately £129 million and is growing at around 9% per annum. This growth has been fuelled by healthy eating trends. Heinz has consistently held over 50% of the market for salad cream. As of 1998 the figure for Heinz was 59%, whilst its nearest rival held only a 20% share.
Salad cream is eaten by a broad spectrum of consumers, but is readily substituted by other salad dressings such as mayonnaise. The number and growing popularity of food dressings in general were undermining the market for salad creams in particular. The drift away from salad cream towards dressings caused Heinz to examine its Salad Cream’s future. One option was to discontinue the product altogether; the other was to invest significantly in Salad Cream to give it a new lease of life. Consumer research favoured the latter. Consumers enjoyed the taste of Salad Cream, but needed to be made more aware of it.
This case examines how Heinz created a marketing campaign for its salad cream which focused on winning new customers and increasing demand within the salad cream sector as a whole.
To help explain the success of the campaign two key marketing concepts will be used: the marketing mix, and product life cycles. These will be covered once the market conditions and campaign details have been examined.