Key Issues:
o Healthy Foods, Inc. is a 127-year-old food processing company
o 2004 showed a severe decline in profits
o Sales volume has not increased much from the 1987 level
o "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."
o "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:
o 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.
o 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 food stores because these consumers are typically more concerned with the product.
o Promotion
? New packaging to emphasize brand, long successful company track record and the healthy, natural, and fresh product within.
? Offer coupons and discounts t ...