ANALYSIS: Corporate Case Study

Heinz brings new products and PR efforts to the table - En route to $10 billion in sales, Heinz has always sought innovative ways to expand market share. And as it keeps pouring out new products, PR has become increasingly prominent.

Heinz brings new products and PR efforts to the table - En route to $10 billion in sales, Heinz has always sought innovative ways to expand market share. And as it keeps pouring out new products, PR has become increasingly prominent.

Ted Smyth likes to joke that he only eats at restaurants with ketchup bottles on the tables. And the ketchup has to be Heinz, of course.

As SVP of corporate communications and government affairs for H.J. Heinz, Smyth doesn't waver in his ketchup preferences, and he doesn't miss a chance to promote the Heinz brand.

While other companies in the food business have pursued mega-mergers to fuel growth, $10 billion-in-sales Heinz is committed to expanding its market share through new product introductions. Rolling out new products, like its green and purple ketchups and its colored Funky Fries lines, means big marketing and PR support.

Indeed, when the company recently reported fiscal third-quarter earnings of $201.7 million, in line with analysts' expectations, it noted that marketing costs had risen 23% in the quarter.

Smyth won't discuss his PR budget. But Heinz spent $404.4 million on advertising in its fiscal 2001, so it's safe to assume that PR spending is in the $4 million-$8 million range.

PR is an important ingredient

Heinz sees PR as a tool to capture media and consumer attention to drive sales and ultimately enhance the value of the brand, says Smyth. A Heinz veteran since 1988, Smyth makes sure the entire company is on the same PR page through his global communications committee, known internally as G-com. This group of 30 senior communications managers around the Heinz system meets in person annually and has conference calls at least once a month. As earnings season approaches, Smyth seeks input from committee members on such issues as product innovations and market share. "I try to get the PR managers behaving as if they are internal agencies,

he says. "They're very much integrated into the business."

Externally, Heinz uses a stable of agencies rather than relying on an agency of record. Heinz seeks out agencies it believes can grab media attention for its new products.

"We look for people who are highly creative, highly motivated, very quick in responding to change, and good with the media,

says Debbie Foster, director of corporate communications. "We want great ideas, great service and great relations with the media."

A former member of the Irish diplomatic core, Smyth knows a thing or two about media relations. He once headed the Irish press office in London and was an advisor to the Irish government on Northern Ireland. "I had strong contact with journalists so I want people who know the media,

he says of his criteria for selecting agencies. "Smart companies are making sure they have senior people interfacing with the media."

Smyth also believes in using agencies that have local contacts in Heinz markets around the world. "All politics is local and so is PR. I'm a great believer in local and regional newspapers because they have the space, and people read them,

he says. Heinz routinely holds local product promotional events to grab local media attention and needs PR firms that know local media reporters, he says.

PR gets involved early in the Heinz product process, notes Melissa Murphy, VP and group manager for food and brand marketing with Ketchum. "PR has gotten moved up in the planning process,

she says, recalling that PR might have been brought in six or eight weeks before a new product introduction in the past, but it's now brought to the table months earlier as new product strategies are being formulated.

Smyth started Heinz on the road to PR proliferation when he joined the company 14 years ago. He wouldn't take the job until he got a change in reporting structure implemented that had him reporting to the chairman and CEO rather than to the general counsel. He felt PR needed to report to the top to become a valued part of the business.

Since then, he's been quick to point out opportunities where PR could have enhanced other Heinz marketing efforts. He recalls, for example, one instance where a product's advertising included an actor portraying a chef. He pointed out that if Heinz had used a real chef, PR could have put the chef on the road for a media tour and grabbed more attention for the product.

The company's attitude toward PR leapt ahead four years ago when Bill Johnson became CEO. "Bill Johnson is a big believer in PR, so I'm pushing an open door with him

says Smyth.

While Heinz believes in PR, its efforts are closely scrutinized to make sure they're producing results. Foster says Heinz found last year that it was getting $9 in ad-equivalency spending exposure for every $1 in PR spending.

A new marketing game plan

Enhancing brand and product image came into play when Heinz decided to sponsor the new home of the Pittsburgh Steelers last summer. The company is investing $57 million in the field naming rights over 20 years and wanted to make sure that investment paid off.

Stadiums sporting sponsor names are so common now, most fans don't pay much attention. Heinz decided to use its stadium naming deal as a way to promote a range of Heinz products. Working with Ketchum, it set up the Heinz Sports Marketing Bureau, and held such events as an SMT about tailgating parties. It sent customized Heinz ketchup bottles to Steeler players and sportscasters, getting airtime in the process. It put two 35-foot-high animated ketchup bottles in the stadium that pour out as teams move toward the goal lines.

"Our goal from a PR standpoint was to get people outside Pittsburgh talking about Heinz Field,

says Ketchum's Murphy. Research has shown Heinz Field garnered three billion impressions during the football season.

Another image campaign has also been producing results. Four years ago, Heinz began a campaign to alert consumers to the health benefits of lycopene, a substance in tomatoes. Heinz - being the largest producer of processed tomato products - sponsored studies on lycopene's role in preventing prostate cancer, and published a book last year that included recipes. Consumer awareness of lycopene has climbed from 6.5% in 1998 to 10.4% as a result, says Foster. "They aim incredibly high, and it's so exciting and energizing,

says Jack Horner, president of Jack Horner Communications, which worked on the lycopene campaign.

Smyth expects more PR efforts touting health benefits. "Reinforcing the disease fighting properties of food is only going to get bigger,

he says.

Heinz has used celebrities such as former NBA star Larry Bird and ice skater Kristi Yamaguchi to push products, and piggybacked PR onto those sponsorships to increase exposure. "Done right, PR can be a multiplier of your dollars

spent on celebrities and event sponsorships, says John Carroll, managing director of potatoes and snacks for Heinz Frozen Food, a division of Heinz. Heinz uses SMTs for its spokespeople, and tries to reach beyond the national press to the local papers that Smyth sees as key.

On the product PR side, Heinz worked with Ketchum in February to grab widespread media attention for its new Ore Ida Funky Fries line of mutli-flavored frozen fries by giving AP an exclusive. While the product won't be in stores until May, Heinz opted to start PR to help its sales force convince retailers to stock the line. Total number of impressions captured by the new fry line is reaching 400 million. "Clearly in the case of Funky Fries, PR was working overtime,

says Carroll.

That can be said for Heinz PR efforts in general. While Smyth and his team won't reveal specific PR plans for the busy summer selling season, it's fair to expect a flurry of Heinz activity in the months ahead. Heinz PR efforts will likely be as ubiquitous as those Heinz ketchup bottles in restaurants that Smyth goes looking for.

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