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Eminent Domain

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KINGSFORD CHARCOAL ASSIGNMENT (10 Points)

1. The Kingsford Charcoal case takes place in July 2001.

2. Kingsford’s primary competitor is gas grills. Most people do not want or have the time to spend on getting charcoal ready for grilling; therefore, the concept of convenience, greater control over cooking temperature, shorter cooking times, and ease of clean-up makes the selling points for gas grilling.

3. The two ways for Kingsford to determine variables that segment the market, they are heavy Kingsford users and gas grill users. The “heavy” Kingsford users can be segmented into “Regular Exclusive”, “Instant Acceptor”, and “Instant Exclusive” (Exhibit 9). Gas grillers can be segmented into “own gas only grills” or “owns both”.

4. SWOT Analysis example for Kingsford would looks like:
a. Strength: Established brand
b. Weakness: Advertising budget
c. Opportunity: Number of US grilling events have more than doubled since 1987
d. Threat: Increasing trend of gas grills shipments (Exhibit 5).

5. Use Exhibit #10 and compare the 4 scenarios below:
a. The pricing scenario that resulted in the smallest reduction in dollar sales is the “Minimum (2.5%) Blue Bag Pricing Increase” (#2).
b. The amount of the smallest decrease in dollar sales is $1,110.
c. The pricing scenario that resulted in the greatest increase in profits is the “Total Line pricing (5%) Increase”.
d. The amount of the greatest increase in profits is $1,870.

6. Kingsford should choose heavy/medium grill users as their target market. This market is ½ the grill owners and they do 85% of all grilling. The first reason this market makes sense is because it does contain current Kingsford customers. Kingsford needs to reinforce the charcoal experience to these serious users, doing so by applying the “market penetration strategy” (Existing Product/Existing Market). The second reason is this market contains new grill owners where a “market development” strategy can apply (Existing Product/New Market).

7. Kingsford should “position” their product by heavy advertising toward the heavy Kingsford users and a push toward gas grillers to own both. Advertising the “real barbeque flavor” can be effective toward all three groups within the “heavy Kingsford user” category by focusing directly on to their grilling attitudes survey. I believe a competition with gas grills is a ‘loser”, most people will not leave the very quick cooking time gas offers. Advertising can focus on Kingsford’s understanding on the customer’s hectic time frame when gas grilling is needed (i.e. after work during the week, etc.). However; Kingsford can position them in this market using the “real barbeque flavor” slogan by advertising toward family, friends, and fun. The ads can feature to promote family weekends like a poolside party or the friends and family picnic, showcasing the fun and “ease of transport” of charcoal to parks that mostly have “charcoal” grills already stage throughout (showing a family bringing 1 bag of charcoal and lighter fluid in comparison to loading the large gas grill).

8. The one specific action Kingsford should take under each area of the marketing mix are:
a. Product: Innovation for the gas grilling enthusiasts. Briquettes or strips that lay on the gas grill to provide the smell and taste as close to charcoal grilling as possible.
b. Price: Kingsford should implement up to 5% increase in their product lines. This increase should occur intermittently (no sharp 5% increase), perhaps starting with a 2% increase. The impact in loss of sales is offset by the profit impact (Exhibit 10).
c. Promotion: Kingsford should increasing their advertising on TV with a focus on sports and tailgaters (heavier during peak season) to promote their brand and product awareness, as suggested by Smith Boyle and Warren. They need to start with what they were doing pre-1997, to see if there is a correlation or coincidence between decrease in advertising budget and decrease sales.
d. Place: Kingsford should start pilot markets where they test different strategies with regards to their retailers. They could test sales at recreation retailers such as REI, specialty shops such as Cabelas and Bass Pro Shop. They need to find an additional channel to reach their target market. Pilot markets could provide valuable information.

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