Reference no: EM132296781

1. How profitable are the current items in the product line for both Heinz and for retailers? Consider the profitability of both regular and promotional prices on a dollar and percentage basis.

2. Why do manufacturers offer periodic trade deals to retailers, money that is sometimes not passed through to the end consumer?

3. What are the consumption-adjusted margins, both for Heinz and for retailers, of the items currently offered? Consider both regular and promotional prices. (Consumption-adjusted margins are dollar margins that reflect the fact that different package sizes of the same product may influence the rate at which customers consume the product. A natural question that arises from this phenomenon is how product managers should adjust their understanding of product profitability to reflect this possibility. Here is one simple way: Suppose a manufacturer makes $0.20 on a 10-oz. can of soup and $0.40 on a 20-oz. can of soup. In either case, the manufacturer makes $0.02 per ounce. But in this case, the larger size causes consumers to increase their consumption of soup by 30%, so the consumption-adjusted margins per ounce of the 20-oz. size can be calculated as ($0.40x1.3) ÷ 20 = $0.026, where the term in parentheses adjusts the dollar margin up to reflect the consumption expansion, and then that adjusted margin is divided by the number of ounces in the package size. This per-ounce margin is now directly comparable to the per-ounce margin of the 10-oz. size: $0.02. ( In this case, Heinz is making more money on the larger package size.)

4. How did the consideration of this consumption expansion inform your pricing and promotional plan? (A natural thing to do is to consider what we would need to do in terms of trade allowance to make customer purchases of larger sizes make sense for retailers and make sense for Heinz. Let’s consider the 46-oz. size. What level of trade allowance would be best given an analysis of the margins and consumption-adjusted margins for Heinz as well as for retailers?)

5. Are there other sizes we should consider promoting?

6. Are there items we should consider adding or removing from the current ketchup product line?

7. Beyond price promotions, how would you promote these new larger sizes to retailers and to consumers?

Can someome helps me to answer them? this is a Heinz Ketchup: Pricing the Product Line case.