Heinz Ketchup: Pricing the Product Line

Abstract

An iconic American brand must determine how to maximize net profit by increasing the sales of its highest-margin items in the face of constant retailer pushback including reduced shelf space and promotional support of those same products. This case is suitable for required MBA marketing courses as well as pricing and brand management electives at both the undergraduate and MBA levels. The analytics of the case assume that students can calculate both dollar and percentage margins.

Excerpt

UVA-M-0777

Rev. May 10, 2019

Heinz Ketchup: Pricing the Product Line

An Iconic Brand

Heinz Ketchup had long been a nostalgic piece of Americana. Millions of consumers in 140 countries from all walks of life had purchased and used what has become a symbol of American innovation and prosperity. In the United States, ketchup was ubiquitous, always served with American favorites such as hot dogs, hamburgers, and french fries. Its presence graced the tables of outdoor barbecues, church festivals, truck stops, and countless restaurants across the United States and around the world. It was distributed by all major grocery retailers in the United States and many outside the United States. At any given point in time, 95% of US households had some ketchup in their pantries or refrigerators, and over half those households chose Heinz. In 1964, Andy Warhol immortalized the humble Heinz Ketchup case with his sculpture “Heinz Tomato Ketchup Box” (Figure 1).

Figure 1. Andy Warhol's “Heinz Tomato Ketchup Box [Prototype].”

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Keywords: branding strategy marketing competition