Healthy Foods
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Key Issues:
Healthy Foods, Inc. is a 127-year-old food processing company
2004 showed a severe decline in profits
Sales volume has not increased much from the 1987 level
“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.”
“In the past 13 years, Healthy Foods’ closest competitors had an average profit return on shareholders’ investment of 5 to 9 percent, while healthy foods averaged only 1.5 percent.”
Recommendation:
Place
Do away with the line-forcing policy and focus on where specific items sell best.
For example, sell condiments and canned foods in supermarkets and frozen fruits and vegetables in specialty health food stores.
Place products in key places in stores (front of aisle or in a special display) in order to grab the consumers attention and maximize sales.
Price
Keep prices within the lower range for the processed food market.
Competitive pricing in supermarkets is crucial because the consumers in supermarkets are typically conscious of price.
Slightly higher pricing could be possible in higher-end health