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Kingsford Charcoal

In: Business and Management

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Kingsford Charcoal ande Kunal P kunalpande@hotmail.com Prof-­‐ Bob Carroll MKM805ms

The Charcoal category has seen a loss of 2% from 4% between 1998 -­‐2000, this can affect Clorox’s business growth if Kingsford sales and revenue takes a hit.

• The unanticipated weather conditions in the United States added to the softening of Sales in charcoal category between 1998-2000. • The Convenience of using a gas grill increased causing consumers shifting from charcoal grilling to Gas grilling • Kingsford curtailed its advertising budget excessively from $6m in 1997 to $1m in 2000 • Promotional activities were cut back which were one of the key drivers of Kingsford’s Sales.

Kingsford market share leveraged from the increase in prices from royal oak and private label

Year 1999 2000 Kinsgford 54.2 57.7 Private label 33.3 33.9 Private label 13.7 7.1

Kingsford is a brand with superior quality compared to royal oak and private label and is proven in lab tests.

Quality

royal oak private label

Kingsford

Price

Price

Quality Kingsford being the most superior in quality in the charcoal category is facing decline in sales.

Threat of new entrance: relatively low as market is highly saturated.

Bargaining power of suppliers: Considerable low as main inputs of lumber an energy can be source globally from a huge number of suppliers.

Rivalry among exis7ng companies: Moderate or low, as price increase of compe7tors indicate low internal pressure on margins in the industry

Bargaining power of buyers: Moderate as Kingsford’s sales rely on performance of the sales team at big account e.g. supermarket chains

Threat of substitutes: Grilling with gas becomes increasingly popular.

Swot analysis on kingsford comparing internal and external factors affecting its sales
Internal factors Favorable
Strength
1.Positive brand image as market leader with market share of 59% and leader in quality 2.Experienced promotion team 3.Good Relationship with key accounts. 3.Relative Price Advantage due to unchanged prices for ‘several years’.

Unfavorable
Weaknesses
1.Low spending on advertising since 1998. 2.Unattractive Website with no specific targeting the end-consumer. 3.Heavy reliance on sales and merchandising activities.

External factors Favorable
Opportunities
1.Marketing Spending up and more than 1998 levels to put an emphasis on the end-consumer. 2.Increased collaboration with suppliers of up to 30% more. 3.Emphasising the advantages of charcoals compared to gas-grilling such as flavor and the ritual -the true grilling experience.

Unfavorable
Threats
1.Further increase in gas grilling, as it provide an almost perfect substitute 2.Changing life style emphasizing convenience, 3.Raising Price of competitors could make even more people to the gas grill for price reasons. The complementary good charcoal go down in demand.

complementary products, as Kingsford buyers buy health and cleanliness.

Gas Grilling Vs Charcoal Grilling

Convenient cooking Easy to Clean Precise grilling (temperature check) Smokey Flavor True grilling experience Quality Yme with family

Kingsford can retain its customers and also a;ract new customers by leveraging with the key a;ributes of charcoal grilling and can compete against gas grilling

RecommendaYon

• Changing the 2p’s from the markeYng mix will give us the soluYon. 1. Price – Kingsford should increase the price of total line by 2.5% as customer may switch to compeYYon if the price is increased to a higher rate.

Customers may not have any issues accepYng a small increase in the price as according to smith Boyle “ charcoal is considered a ‘happy product’ and is associated with family and fun hence adjusYng to a 2.5% increase in price should not make customers deviate to gas grill.

As Kingsford has kept their price constant for a long Yme, jusYfying their stand of increasing the price to their distribuYon channel partner should not be a hassle.

• PromoYon – Kingsford should use a pull strategy to get customers by creaYng demand for its charcoal. An aggressive campaign in the gas grill markets (Areas) to convert those customers towards Kingsford.

PromoYon Methods 1. AdverYsing 2. Sales promoYon

• 1. AdverYsing – Kingsford should increase their adverYsing budget to $5 million as it has not adverYsed since 98 and it has the opportunity to adverYse and this is the right Yme. • Kinnggsford adverYsing should focus of naYonal holidays like labour day or 4th of july as these are the peak season for outdoor grilling. • Increased frequency of tv ads before a week of these holiday • The theme of the Ad should be Fun and Family oriented with appealing to the males mostly and their old slogans i.e” ready in 15 minutes” or “lights faster , burns longer” shloud be used as people will be more familiar with it as it had already been done in the past

• Sales PromoYon -­‐ Kingsford should consider point of purchase promoYon and coupons to increase in store promoYon and try to pull customers by giving them coupons addons.

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