Kingsford Charcoal Business Case

Topics: Charcoal, Brand, Private label Pages: 14 (4531 words) Published: October 19, 2012
Graduate Marketing Management
Fall 2011 - Final Exam

Kingsford Charcoal represents one of the largest product groups within The Clorox Company, approximately 9% of its revenue. The business which started in the 1920’s when Henry Ford developed a process to turn wood scraps into charcoal briquettes was commercialized by E.G. Kingsford and bought by Clorox in 1973. Kingsford has a healthy market share and since 1980 had continued to grow at a moderate rate of 1-3 percent in revenues each year. During the summer of 2000 two brand managers were tasked with determining the cause of the softening in the overall charcoal category market and to provide recommendations that would change that.

The Clorox Company was founded in 1913, its first product being the industrial strength liquid bleach made from a combination of chlorine and hydroxide. By 1957, Clorox was the leading producer of bleach in the US and was purchased by Procter and Gamble. Although the sale was completed, the US Federal Trade challenged the acquisition and thus P&G was forced to divest Clorox in 1969. Since then Clorox has aggressively pursued a growth strategy driven by acquisition and internal research and development. By 2000, the company had over 50 products that were market to consumer all over the world and nearly all of its products were among the leaders in their respective categories.

The Clorox Company Financials (Exhibit 1) shows net sales and net earnings slight up as compared to prior years; however the quarterly and six month consolidated statement show a decrease in the last two quarters more significant in the last quarter of the year. This coincides with a decline in the volume growth for Kingsford (Exhibit 3) during the last two quarters as well as the grill penetrations and grill shipment trends both showing a decrease in the year 2000, thus, the importance of understanding, serving and growing the market for Kingsford’s product category. Part A.

1. Given your analysis of the Kingsford case, what are (or reasonably could be) the key drivers impacting the observed trend towards declining growth rates in recent years? Make sure that you include your rationale in your answer?

As we reviewed the case and the data available we found that various factors could have reasonably impacted the observed trends towards the decline in recent years. Some of these drivers had a stronger, more significant impact than others.

A. Increase In Price
The analysis completed by Smith Boyle and Warren shows that both the private label and Kingsford competitor had increase their price significantly over the last year, and that this increase in price may have led consumers to shift to other alternatives for grilling, such as gas grilling. We agree that this may have impacted some of the decline, although we do believe the impact was small compared to other drivers.

The price increase between competitors and private labels reduced the gap that existed between these brands and Kingsford approximately to 13.9%-15% on regular charcoal and by approx. 7% in the instant # 8 bag. Although Kingsford kept their prices steady, some partners slightly increased the price for Kingsford charcoal as well.

One of the reason we believe the impact was small is that although the overall charcoal market volume was dropping Kingsford market share increased from 51.6% to 59% in 2000. Price increase in other brands, perceived to be of a lesser quality than Kingsford, drove those shares into Kingsford. Among other Charcoal brands Kingsford is well positioned, of superior performance and perceived superior quality over its competitors. It also provides unique variety between its regular bags and those treated with liquid fluid as well as convenience of use with the various sizes of bags. With this in mind we want to continue to have a healthy gap in price between the private labels, competitors and Kingsford.

Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • kingsford case Essay
  • Kingsford Charcoal Case Essay
  • Kingsford Charcoal Case Essay
  • Kingsford Charcoal Case Essay
  • Kingsford Charcoal Essay
  • Kingsford Case Essay
  • Kingsford Charcoal Case Essay
  • Kingsford Charcoal Essay

Become a StudyMode Member

Sign Up - It's Free