Case 2. Healthy Foods, Inc.
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Case 2. Healthy Foods, Inc.
Healthy Foods, Inc. situation is a tough one. Profits, along with morale, are down. They have just recently broken off from their parent company and gotten a new president. Some of the policies and business practices they have in place aren’t working for them anymore.
Healthy Foods has a line-forcing policy, which requires that any store wanting to carry its brand name must be willing to carry most of the 65 items in the Healthy Foods line. This policy, along with their growth of product lines, makes it hard for smaller stores to carry any of their products. Frederico Montegro, production manager for Healthy Foods, agrees with the multi-product line policy. He acknowledges that smaller stores have this problem with the policy due to the fact they can’t afford to stock all of these items. He dismisses them because he believes the big stores are where the volume and money lies. Even though small retailers have complained about this problem, nothing has been done to consider them. The company must consider place utility–having the product available where the customer wants it. Marketing should try to anticipate needs and has customer satisfaction as its primary goal. Customer satisfaction, giving the customers what they need, is sometimes hard to do. Don Warren, new elected president, is puzzled about why his competitors are introducing products that seem to have a low potential sales volume. He can’t see that if you grab a few customers in one niche, get them to try the product they may be satisfied with it. Subsequently, these customers may trust the brand for purchases for other family members. He believes in taking advantage of mass production with its economies of scale–production in larger numbers of a particular product make the cost of each of these products go down. Most consumers only want to buy a small quantity. This creates discrepancies of quantity. The marketing concept means that an organization aims all its efforts at satisfying its customers–at a profit. While Healthy Foods doesn’t seem to see the potential that lies with small retailers, obviously their only high volume strategy doesn’t seem to be helping them much. If they changed some of their policies regarding line forcing they could include smaller retailers and possibly get a larger customer base. It may help to change their target market. Sometimes people only shop at these small stores and may have never heard of the Healthy Food brand of products.
Healthy Foods managers still have a production orientation. Healthy Foods’ last president recently said: “As long as new products look like they will increase the company’s sales volume, they are introduced. Traditionally, there has been little, if any, attention paid to margins. We are well aware that profits will come through good products produced in a large volume.” While products being produced in large volume may yield high profits sometime, it does no good