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Heinz Ketchup couldnt catch up in Brazil22Despite good records of accomplishment inland and
overseas, the H.J. Heinz Company failed in Brazil, a market that seemed to be South Americas
biggest and most promising market. Heinz entered a joint venture with Citrosuco Paulista, a giant
orange juice exporter, because of the future possibility of buying the profitable company. Yet,
the sales of its products, including ketchup, did not take off. Where was the problem? A problem
audit revealed that the company lacked a strong local distribution system. Heinz lost control of
the distribution because it worked on consignment. Distribution could not reach 25% penetration.
The other related problem was that Heinz concentrated on neighborhood shops because this
strategy was successful in Mexico. The problem audit, however, revealed that 75% of the
grocery shopping in So Paulo is done in supermarkets and not the smaller shops. Although
Mexico and Brazil may appear to have similar cultural and demographic characteristics,
consumer behavior can vary greatly. A closer and intensive look at the Brazilian food
distribution system and the behavior of consumers could have averted this failure.
Unilever attempted to break into the Japanese detergent market with Surf Super concentrate. It
initially achieved 14.5% of the market share during test marketing but fell down to a shocking
2.8% when the product was introduced nationally. Where did they go wrong? Surf was designed
to have a distinctive pre-measured packet as in teabag-like sachets, joined in pairs because
convenience was an important attribute to Japanese consumers. It also had a fresh smell appeal.
Japanese consumers, however, noticed that the detergents did not dissolve in the wash, partly
because of weather conditions and because of the popularity of low-agitation washing machines.
Surf was not designed to work in the new washing machines. Unilever also found that the fresh
smell positioning of new Surf had little relevance since most consumers hang their wash out in
the fresh air. The research approach was certainly not without flaw, as Unilever failed to identify
critical attributes that are relevant in the Japanese detergent market. Furthermore, it identified
factors such as fresh smell that had no relevance in the Japanese context. Appropriate
qualitative research such as focus groups across samples from the target market could have
revealed the correct characteristics or factors leading to a suitable research design.