Answer ALL questions based on the case provided below:

In 1869, Henry John Heinz founded H.-J. Heinz Company to sell food sauces. Its flagship product, Heinz Ketchup, has since evolved into one of the world's most valuable brands today, and its products also include Classico pasta sauce and Lea & Perrins cooking sauce.

The company has expanded across 200 countries and has an extensive range that focuses on ketchup and sauces, frozen food, and infant nutrition.

In 2015, Heinz merged with Kraft to become Kraft Heinz, making it the third-largest food-and-beverage company in North America. Prior to the merger, Heinz knew that growth in developed countries was slowing, and to expand, it needed to venture more actively outside Western countries.

It saw the potential of Indonesia, an emerging market, and was eager to tap into it though the country was then just recovering from the Asian financial crisis. Indonesia has a population of over 250 million, and with a population growth rate of 1.49 percent, Indonesia's population is expected to surpass that of the United States by 2043, making it the world's most populous country after China and India.

In 1999, Heinz announced it had made its first investment in Indonesia by acquiring a majority stake in a joint venture with the country's largest producer of sauces and condiments, the ABC Group. The rest, as they say, is history.

The success of Heinz in Indonesia owed in part to its recognition that it is not possible to have one global product, it needed to assimilate into Indonesia's culture. Heinz had to thoroughly understand the likes and dislikes of Indonesian consumers. The strategy behind Heinz's global expansion programs is simple; it does so by buying a local company that has done well. All Heinz needed was to continue with the local company's practices rather than reinvent the wheel.

And that's how PT Heinz ABC was born. The acquired company, ABC Group, was a large but low-profile company. It was Indonesia's market leader in kecap manis (a thick, sweet soy sauce consumed with virtually every meal as a condiment or ingredient). It also produced Indonesia's top brand of sambal (a hot chili sauce), kecap asin (a salty soy sauce), ABC tomato ketchup, and fruit drink concentrates. Under PT Heinz ABC, the condiments and sauces are sold under their original name, ABC.

Soy sauce, the main product line in the company, is commonplace in Indonesian cuisine and appears in most local dishes. In Indonesia, soy sauce is usually made with fermented soybeans and an assortment of various spices and sugar. More importantly, different Indonesian cities and towns have their own local recipes for soy sauce. Hence, one of the biggest challenges in the soy sauce industry is understanding local behavior. Here are the two key issues:

1.CultureDifferent regions of Indonesia have different tastes and preferences with regard to their sauces, and local recipes for sauces have been passed down for centuries ever since soy sauce was introduced to Indonesia by the Chinese. Unlike Chinese soy sauce, which is thin and salty, Indonesian soy sauce is thick and can be salty, sweet, or a blend of the two.

2.SocialIndonesians tend to prefer sauces that originate in their own region. This may be a result of them having consumed local flavors for a prolonged period of time. This means that within one region, preferences will gravitate towards one predominant taste. For instance, Indonesians living closer to central Java prefer sweeter tastes than those living further away.

PT Heinz ABC was successful in identifying the personal characteristics of Indonesians that played a key role in their food consumption. It studied their demographic and lifestyle characteristics. It understood that most Indonesians were not as well-to-do as Westerners and did not have refrigerators to store huge bottles of soy sauce. Adaptation was thus necessary. Instead of the typical huge glass bottle Heinz ketchup or ABC sauce is served in, it adapted and repackaged them into lower-priced plastic bottles and in small, single-use sachets to reach a wider market, including rural working-class Indonesians.

PT Heinz ABC conducted studies with Indonesian housewives to improve the formula of their soy sauce. When studies showed that their sauces were too salty, the recipe was tweaked to reduce the salt levels and increase the levels of other spices. These studies help PT Heinz ABC to keep in touch with the tastes and preferences of their consumers and ensure that they were always able to satisfy consumer needs.

PT Heinz ABC also took into account the geographic nature of Indonesiaspreading 5,120 kilometers from east to west and 1,760 kilometers from north to south, mountainous in terrain with a string of volcanoes, and, with 6,000 of the 17,508 islands inhabitable. The distribution of food products across the country in a cost-effective manner can be daunting. PT Heinz ABC took the initiative to use ABC's existing motorbike distribution fleet. By keeping distribution costs low through such innovative distribution methods, PT Heinz ABC was able to meet the affordability needs of Indonesians.

PT Heinz ABC has also been using social marketing. It hosts a variety of cooking and recipe competitions, each involving their sauces. These include the ABC Culinary Academy, where chefs come up with new recipes involving ABC's products. ABC also has a video series on YouTube titled "Heinz ABC Culinary Challenge," in which guest chefs from various hotels and restaurants are invited to showcase their recipes using ABC products. This helps them to set up a group of opinion leaders to promote their sauces, which in turn encourages the audience following these competitions and videos to use their sauces when cooking; by doing so, it helps them get used to the taste of their sauce.

However, the road to success is not always smooth sailing. The Indonesian soy sauce market consists of 15 major producers, each with a market share of at least 1 percent. This means that competition is stiff within this market. PT Heinz ABC faces strong competition from Unilever. As an Anglo-Dutch food company in a former Dutch colony, Unilever Indonesia has been in the country since 1933. Hence, it is a popular and well-recognized company among Indonesians.

To battle PT Heinz ABC in the sauce market, Unilever bought Bango, Indonesia's number two soy-sauce maker, in 2001. This purchase started to make inroads into PT Heinz ABC's strong hold on the sauce market. At one point, ABC's sweet sauce market share shrank from 40 percent to 33 percent, while in that same period, Bango's market share tripled to 32 percent. A reason for this was that Indonesian housewives found

ABC's sauce too salty compared with Bango's. Indonesian taste had shifted towards sauces that are more blended and not too salty or sweet.

In response to rising competition, PT Heinz ABC took on a more societal approach with its annual ABC Care Kitchen Program, which provides food to the needy. This helps with their brand image as a socially responsible company and at the same time helps to get their sauces out to a wider market through free samples. In 2014, PT Heinz ABC distributed over 100,000 meals. Together with its single-use sachets that cost a mere few cents, PT Heinz ABC was able to aptly demonstrate how its products can be easily used when cooking without having to pay a hefty price tag.

Through these initiatives, PT Heinz ABC grew its market share to 22.44 percent by 2014almost twice as much of its nearest competitor Masako, which has a 12.03 percent market share.

Question 1

Discuss TWO (2) market segmentation strategies you think PT Heinz ABC should adopt in Indonesia. Justify your selection by making comparison to other market segmentation strategies.[Total: 25 Marks]

Question 2

Critically explain the positioning of PT Heinz ABC in Indonesia. Suggest how emotional branding could help to improve the brand positioning of PTHeinzABC.

[Total: 25 Marks]

Question 3

Suggest FIVE (5) recommendations for PT Heinz ABC to improve its current positioning. Your FIVE (5) recommendations must include (1) a product strategy, (2) a pricing strategy, (3) a distribution strategy and (4) a marketing communications strategy, and (5) a global marketing strategy. Each recommendation should be clearly justified by making comparison to other alternative strategies. Please use relevant marketing theories and concepts you have learnt from this course.

[Total: 50 Marks]