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Kraft Heinz takes long-term view

News, 20 August 2015
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CHICAGO: Marketers in the consumer packaged goods category must move from short-term thinking to a longer-term perspective, a leading executive from Kraft Heinz has warned.

Tim Burke, director/category leadership at Kraft Heinz – the organisation formed this year by a merger of Kraft Foods and the HJ Heinz Company – discussed this subject at the Advertising Research Foundation's (ARF) Shopper Insights Forum in Chicago.

And he argued the emphasis on quarterly or annual targets – resulting, in part, from the fact senior marketers often handle a specific brand for two years at most – encourages a mind-set largely focused on the near future.

This, in turn, leads practitioners to prioritise either developing brand extensions or boosting distribution, which represent two of the simplest paths towards quickly driving growth.

"We have a number to meet," said Burke. (For more, including insights into the future of retail, read Warc's exclusive report: Kraft Heinz addresses the future of retail.)

"And what has happened? Our stores have got bigger, our aisles have got more confusing, there are more products than ever on the shelf."

Elaborating on this theme, he suggested that bricks-and-mortar stores frequently contain around 30,000 items, but customers typically buy only 300 offerings.

"Just think about that. That's what we've done. We've confused the situation, because we're all tackling and trying to go after a number," said Burke.

"And I get that, trust me. I have a number I have to obtain as well. But this is what has happened to us. We're all in it for the short term, so none of us are really stewards of what the growth is for the future. I think that has to stop."

In building on this idea, Burke drew attention to organisations such as Blockbuster, the former video retail giant, which focused on incremental improvements to its service and failed to respond to wider digital shifts reshaping the entertainment industry.

Companies like Kraft Heinz must, therefore, proactively react to trends including ecommerce and evolving retail preferences if they are to remain relevant.

"The industry has been built on need for a long time. And that's been great. We'd tick up 2% every year on inflation and maybe get some more shoppers in the door because of population growth," said Burke.

"But no longer can we do that. There are so many more choices; there are so many more ways to get at things that we need to right change now, or we could follow the same path."

Data sourced from Warc

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