Kingsford Charcoal (“Kingsford”) is the leading brand of charcoal in the United States, and one of the largest product groups in the Clorox portfolio. Three out of four households in the U.S. owns a barbecue, and grilling has grown in popularity year after year. Kingsford’s revenues grew 1 to 3% annually in the 1980’s and 1990’s. However, the summer results in July 2000 were below forecast. The drop in charcoal demand coincided with an increase in demand for gas grills, due to the convenience of faster cooking and easier cleanup as compared to charcoal grills. Charcoal grilling beats gas grilling in taste tests 2-to-1, but there may not be enough knowledge among consumers of this fact. Kingsford had dropped its advertising budget 83% from 1998 to 2000, with the belief that the products would sell themselves as long as they were displayed prominently in stores. In this paper, we will develop a marketing plan for Kingsford to renew consumer interest and increase profitability and market share. Strategy:
75% of American households own grills, and men are the primary operators of grills (Exhibit 1). Kingsford should recognize American men who barbecue frequently as the target market. Gas grilling accounts for 61% of the grilling market share (Exhibit 2 & 4). To encourage people who use gas grills to use charcoal grills, Kingsford should advertise the taste benefits, as proven in taste tests, of charcoal grilling. People who use gas grills prefer the convenience, so Kingsford should emphasize its “instant” charcoal, as it is more convenient than “regular”. Table 1. Situation Analysis
Customer American men who barbecue frequently (Exhibit 3)
Context People moving towards gas grilling for its convenience (Exhibit 1). Decreasing growth in charcoal sales (Exhibit 2 & 4).
Company Premium Charcoal Brand offering the highest quality and easiest-to-use charcoal (SWOT Analysis on Exhibit 2) Collaborators Channel Partners: Food Stores, Club Stores, Mass Merchandisers, Drugstores (Exhibit 5) Competition Major Threat: Gas (61% of grilling market share - see Exhibit 4 for details). Other charcoal competitors: Royal Oak, Private Label Value Proposition:
For American men who barbecue frequently, Clorox offers Kingsford Charcoal, which unlike other barbecuing options, provides the owner with a faster-lighting charcoal that has the highest lab-tested quality, and imparts a real, authentic flavor to the food that is preferred to gas 2-to-1 in taste tests. Recommendations:
Table 2. Marketing Mix
Product Quality premium Charcoal. Two types of products: “blue bag” or regular, and “red bag” or charcoal treated with lighter fluid, which was advertised as instant start. (Exhibit 6) Price Total Line Pricing Increase of 5% because of the inelastic market. (See Exhibit 7 for detail explanations of the inelastic market) Place Current Channel Partners (Exhibit 5)
Promotion Use $7 million advertising budget to target seasonal jumps in sales (summer months) and compensate drop in sales due to price increase Because of the inelastic market and price increases by Royal Oak and Private Labels, Kingsford should implement a total line pricing increase of 5%. Based on price elasticity data, there is a 70% probability that the profit impact would be $1,720,000. This number accounts for the estimated decline in retail merchandising support for features and displays. This would increase profits in the short-run, allowing for greater investment in advertising. Kingsford should run an advertising campaign focused on touting the benefits of charcoal grilling versus gas grilling. 60% of sales occur between May 1 and September 1, so the bulk of advertising should occur during the summer season. Memorial Day and July 4th weekends make up 35% of Kingsford’s sales, so advertising should run at full force prior to those dates. To target men, advertisements should run during sporting events....
References: Narayandas, D & Wagonfeld, A (2006) .Kingsford Charcoal. Harvard Business Review
Infoplease. U.S. Households, Families, and Married Couples, 1890–2007. http://www.infoplease.com/ipa/A0005055.htmlHearth, Patio, Barbecue Association (HPBA) (2011). 2011 State of the Barbecue Industry Report.http://www.hpba.org/media/barbecue-industry/2011-state-of-the-barbecue-industry-reportBarbecue on the Internet. Survey Results & Barbecue Trends. http://www.barbecuen.com/bbqstats.htm#axzz3Fu5EAy6EBarbecue Grill Industry facts. http://answers.google.com/answers/threadview?id=218241
Please join StudyMode to read the full document