Question

What is the pricing strategy of the heinz ketup and justify why the company is using that particular pricing strategy?

Answer 1

The pricing strategy of a product defines how the product will be perceived and received by the consumers. Each product within a brand might have different pricing strategies to suit the specific requirements. There are multiple strategies that can be used for a product such as:

• Premium pricing
• Economy pricing
• Competitive pricing
• Bundle pricing etc.

In the case of Heinz ketchup, they use competitive pricing strategy. Competitive pricing strategy means the firm will change the prices based on the competition in the market. It is often used in FCMG market where multiple options are present for the consumers with additional benefits for all. For Heinz ketchup, there are multiple competitors across the globe and so as to increase the market share and retain them the existing customers they provide competitive pricing for individual products.

Every organization will have multiple options when launching a product in the market. They can either set it as a premium product as use premium pricing strategies, or else they can undercut the market prices and put lower prices that the mean price in market or else they could provide offers and promotions based on other products to ensure the price is close to other rival products. At Heinz, the pricing is done based on the changing consumer needs, market supply conditions, and the consumer habits. When Heinz was launched initially, they had a good market share which has gradually reduced over time. This has forced them to make changes to their pricing model so as to ensure maximum consumers can be obtained. They also do analysis on the prices and offers provided by other brands. If they consumers find other products more attractive, they would opt for them. So Heinz has adopted the competitive pricing mechanism which will ensure that they are flexible with the prices as long as it does not lead to loss of revenue.