The merger between Heinz and Beech-Nut blocked by the FTC believes that the structure would violate the federal antitrust laws by reducing the number of competitors in the baby food market from three to two and creating a duopoly. Gerber is the number one trusted brand and highly preferred by the customer in the baby food market. Due to the fact that Gerber has brand loyalty and number one choice has about a 70 percent share of the baby food market, followed by Beech-Nut and Heinz.
Heinz and Bench-Nut had to compete for each other to hold the “second shelf” space in the market. The second shelf product also preferred by the consumer due to the lowest price Baye & Scholten (2001). Even if, Heinz has the large volume of overall products sales volume in the U.S. market, but baby food market.
Since two merge blocks by FTC block, the Heinz-Beech Nut would not exist. Heinz should focus to find the solution for the current problems.
The Heinz CEO focus on an economic factor such as consumer preferences, shifts in demand and use advanced technology in a baby food market. By adopting that macroeconomic factors mentioned on above, without the merger between Heinz and Beech-Nut, the Heinz could be able to solve the existing problem to increase the market share and maximize the revenue.
The best result to set apart Heinz from Gerber and Beech-Nut has introduced the new product line that is 100% organic baby foods. This new product line not only to be 100% organic food but by using technology the company modified the usual packaging system such as pouches instead of plastic or glass jar.
And to become more unique these organic baby food products label the ingredients with no sugar or dyes, and different kind flavors (vegetables, fruits, meats, oats, and grains) to create they own specific tastes and satisfies the ever-changing ethnic makeup.
The pouch packaging is a unique idea for the company. The main purpose of new package is very simple and easy for the infant or toddler to feed themselves, they simply just have to hold the pouch and squeeze then suck the food out of the spout, in this case as we know at the age of toddler or less the bay they couldn’t help them self they required the mother help, Heinz’s unique new package pouch would minimize load or stress off of the mom.
The second important thing about the pouch is, the baby food package comes with a spoon that attached to the package. This idea is very important for travel the parent or guardian they don’t need to pack the bowl or spoon they can carry on going the pouch and feed the baby directly from the pouch with the attached spoon, the spoon comes with three different colors and machine washable to reuse. All this never seen covenant unique package idea plus the health foods that are 100% organic foods with different variety flavor healthy foods would increase the value to the consumer and make Heinz the number one choice in the baby food market.
The ideas Heinz used the solution all motion on the top of multiple aforementioned economic factors, but also focused on the following trend and changes in the high comitative baby food market. I believe that Heinz will be able to attract newer customers as well keep the old customers by developing a new idea and focuses on balance the need and want of the consumer Heinz will potentially increase keep up brand loyalty, increase the revenue, and would have mostly market share.
According to Baardsen & Hargrove (2017), There is disadvantage about the pouches that are too expensive, full of filler, and damaged packed. The idea of convincing would weight all the negatives. According to Nielsen, “the popularity of pouches is largely driven by their and flexibility” (Nielsen, 2015). The pouch package is easy to portable, can keep it at room temperature, convenient, easily fit the consumer’s on to go case., and encourage the babies or toddlers to feed themselves (Nielsen, 2015). According to the data, in the past 50 years is the increased number of women in the workforce (Fromm, 2015). In this very busy world the idea of Heinz come up with the new package which offers a huge sense of convenience prepared foods, could stay at room temperature, and portable would make a big difference for mom, and parents easy for them on the go.
Diet and lifestyle changes. In the food industry, the organic food choice continues growth. In the year 2013 and 2014, the growth rate of organic food reaches 26%. The USA is the large amount organic food consumption in the world due to the fact that increase the health conscious (Nielsen) that the consumer wants to consume healthy foods. This lifestyle chooses the organic and healthy foods to eat spills over on the babies’ food industry. The parent they are seeking best health for the kids they transit to organic foods. In fact, the organic food is often times more expensive than that the adult foods, but the parents are even more important baby’s organic food than the same options for themselves, they are ready to pay a higher price in order to give their children a better option and healthier lifestyle.
Changes in ethnic makeup. Since people come to United States of America across from different part of the world, diversity becomes increases quickly and frequently. The different culture and ethnic groups they have they own food test and preferences. This verity food preferences would be stimulating the market produce different food options that are offered in-store and within the food industry. In the baby food industry market, the parents who feed their child baby foods limited ethnic/multicultural option available. Adding multicultural food option will be able to attract new customers that do not identify with that particular ethnicity.
Oligopoly is one of the market structure that only a few industries could control the market. The U.S. baby food market in oligopoly, since there are few numbers of firms they easily know their competitor success and they might adopt the same procedure or they follow to become successful too. As Heinz launched the new organic baby food product with new packaging idea pouches
It is almost guaranteed that the competitor companies Gerber and Beech-Nut will follow the same path as Heinz. The new product idea by Heinz has mutual benefit to the company Heinz itself and it will also change the market structure of the baby food industry as a whole. Since Heinz is considered the ‘value brand’ and Gerber also the first customer choice brand considers as ‘trusted’.
Once Gerber follows Heinz new product idea and introduces the baby organic food in pouch package it could be actual benefit Heinz. Heinz introduces the organic pouch product the price will be higher than the regular baby food because it’s new healthy idea and the package also very convenience. As Gerber introduce the same organic pouch product the company will most likely price theirs higher than Heinz in order to compete and stay ahead of Heinz. This will benefit Heinz to stay in the market as ‘value brand’ to the customers. In the long run, this will continue to keep the price conscious consumer and increase their market share.
Since all three-competitor companies are in the oligopolistic market structure they will produce organic pouch baby foods, they will keep they eyes open to monitor each other for if there is any new in the market and to find a better way to attract more customers.
Since the merger between Heinz and Beech=Nut would have violated anti-trust laws and locked by FTC, Heinz as a company need to introduce new product line to be able to compute against Gerber and Beech-Nut. The recommendation that advised Heinz to introduce the new product in to the baby food market will make able to the company control large market share, maximizing the profit by increasing sell more baby food, it will also allow the company to be innovative which lead to the company in ahead of both Gerber and Beech-Nut in the market share and have more customers and brand loyalty.
If Heinz doesn’t want to follow the recommendation that adopting the new product line, the company will continue to be the same status in the market they already stay for long in “second shelf” baby food marked preference among the customer. Once the merger with Beech-Nut would not work Heinz need to find the baste way to have a large market share and consumer preference.
If Heinz applies these recommendations by budgeting for a new product, there is no reason the company to set themselves apart and become successful in providing convenience, healthy options and innovative ideas to new and older customers.