Healthy Foods

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