Case Study Analysis: Kingsford Charcoal
MGMT 563 Marketing Management September 18, 2012
Cheryl Banks, Jacqueline Robinson, Mabel Tsahey, Stephanie White
Charcoal grilling is an American tradition that brings communities together through a shared celebration of food. An important aspect of grilling is food preparation and charcoal is used to heat and cook food. Established in the 1920’s by Henry Ford and his relative E.G. Kingsford, the purpose of charcoal briquettes was to burn longer and hotter than regular wood. Through the years, the firm was purchased by an investment group and later acquired by Clorox in 1973, which owns 50 other products that it distributes. Kingsford had one of the largest products groups within Clorox’s portfolio and in 2000; Kingsford represented 9% of Clorox’s annual revenue and a larger percentage of their net income. In 2000, Kingsford had five facilities which housed both plants which produced regular charcoal (the blue bag) and instant charcoal (the red bag). Problem
Due to slow growth in the charcoal industry and projected decline in sales, Kingsford managers are posed with rejuvenating the brand during an industry shift, which should account for the impact of Kingsford advertising, pricing, promotion and production in regards to increasing the capital investment and new income of the Clorox Company. SWOT
Strengths Kingsford is considered the top brand in charcoal and consumer studies show that Kingsford is perceived as a better product (60%) whereas only 13% for private labels. This is a benefit to Kingsford in value building of the organization and beneficial information that can be used to increase their value communication in advertisements, prices, promotion and production. With the largest market share in charcoal sales, Kingsford’s market share in the first half of 2000 was 56.1% and in the second half of 2000 market share was 59.1% due in part to price increases by its competitors Royal Oak and private label brand charcoal manufactures. The promotion of “better taste” is also a benefit to the Kingsford Brand, as there is intensive growth in the gas grilling market. The production of the regular charcoal (blue bag) and match light instant charcoal (red bag), keeps Kingsford distinguished as a brand and will continue the growth of product distinction. Weaknesses Since 1998, Kingsford has not adjusted their prices while competitors have raised their prices and have also allowed their advertising budget to decrease over a span of 5 years to about $1 million per year. Kingsford is also not taking their association to Clorox Company to their advantage by partnering with other sub-brands, and has not effectively responded to the increase of gas grill customers. The lack of control of vendor and retail pricing is also a weakness for Kingsford sales are less predictable for their various markets. Opportunities Kingsford has many opportunities to increase its market share in the charcoal and gas grilling industries through a strategic marketing strategy that will connect gas grill consumers to the Kingsford brand. Through the use of marketing information systems, information can be provided to show how advertising can be effective for targeted, available and potential markets. The information gathered would also provide measures that would determine market demand and give insight into how Kingsford should price their products to appeal to each market group to develop customer relationships through promotional events, brand placement advertisements and the production of new products. Finally, Kingsford can tap into global markets to expand their market demand. Threats Kingsford’s lack of advertising within the industry while gas grill advertising has increased is a detriment to their brand recognition. Kingsford also has limited production capacity and affect its supply of charcoal if demand increases by 5%, so it is important to monitor production to avoid...
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