A.1. steak sauce is the leader in the steak sauce industry and is also one of Kraft Foods premiere brand offerings. Developed in 1830, the product has a long history and extremely high brand awareness with a dollar share of more than 50%. Kraft Foods has focused both time and resources on the A.1. line, spending $10 million on advertising and $5 million on consumer promotion. This steak sauce giant has had little competition, substantial sales, and excellent profit margins until now. Lawry’s, a company who has a strong position in the market of seasonings and marinades, has decided to launch a new steak sauce which has similar characteristics to A.1 in taste but is lower in price. The company has planned to put a heavy amount of marketing behind its new steak sauce by hosting a live interactive cooking show that will be reaching 17 popular fairs and festivals across the nation featuring the Lawry’s marinades and spice blend and the NEW Lawry’s steak sauce. Lawry’s is also spending millions in advertising concentrated in the months of May, June, and July, the prime grilling season. This creates a problem for A.1 because the holiday weekends of Memorial Day and Fourth of July earns 10% of annual revenue. The launch of Lawry’s steak sauce came at a peak time for A.1. Sales and the company cannot afford the lose profits for the sales of the competition during the holiday weekend. The question that A.1. faces is how should the company react to the launch of Lawry’s steak sauce?
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