ABSTRACT
Heinz, which reigns as U.S. market share leader and low-cost producer among branded makers of ketchup, french fries, vinegar, and cat food, has raised its standards of cost containment to an even higher level than ever before.1 The company is intent on raising its overall operating margin by 2 percentage points to 13.5 percent of sales in two years. To accomplish this, Heinz will deepen its commitment to cost cutting with factory automaO tion, new manufacturing cost saving processes, and streamlined product offerings in some brand categories. The company will also take action to control marketing expenditures now rising at 20 percent per year, much faster than profits. Heavy marketing outlays are being scrutinized as never before in efforts to approach such spending on a zero budgeting basis. In CEO Anthony O’Reilly’s words, marketing must approach its task of cost cutting by assuming that “ everything goes out the
window.” He challenges his marketers to ask themselves, “ If you were going to start a ketchup business today, precisely how would you go about doing it? What would your costs be?”
