To:| Smith, Chuck |
Re:| Lawry's Defense|
Comments:| Issue Lawry is attempting to release a new steak sauce that should penetrate the market by early April. Obviously a new player in the market is not a major concern to A1/Kraft, having over 50 percent of the market share. The best case scenario for Lawry is that they will only gain ten percent of the market share. The direct threat for A1 lies with Lawry’s marketing tactics. Lawry is attempting to launch a Memorial Day advertisement with Publix, offering a two-for $5 promotion. The issue is that retailers generally support only one brand in a particular category in a given week. In recent years A1 has always locked in that spot. Aside from Lawry’s promotion dates, their promotion price is also a major concern. A1 sells over ten percent of their yearly volume each promotion during the summer holiday promotion weeks of Memorial Day and the Fourth of July. Generally A1 would run a fifty cent off promotion with the unit sale price lowered to $4.49. As the category leader in the steak sauce, A1 has been able to continually increase sales revenue by relying on price increases. The price increase is the primary way that A1 is able to increase revenue since volume has been stagnant the past few years. [Appendix A is a SWOT analysis displaying the internal and external factors that contributes to A1’s current dilemma] Evaluating Alternatives A1 Steak Sauce has several alternatives to evaluate. A1 can be proactive or reactive.By taking the proactive approach, A1 can beat Lawry at its own game of strategic pricing. Option 1: A1 can directly price match and copy the promotions of Lawry. A1 Steak Sauce will considerably drop its prices, which will clutch all of Lawry’s forecasted sales. However, it will not only affect Lawry but it will decrease A1’s potential of future revenue too. Option 2: A1 can do a similar price match of a...