Kingsford Charcoal Case Study Essay Example
In 2000, the Kingsford charcoal brand was facing revenues below forecasted levels, while the charcoal category as a whole was slowing. During this time, Kingsford actually increased its market share in the charcoal category, however it faced burgeoning competition in the gas grill market. Consequently, brand managers Marcilie Smith Boyle and Allison Warren must form a plan involving pricing, advertising, promotion, and production to generate further sales growth
Kingsford should not immediately raise prices, as its competitors’ previous price raises led to consumers shifting either to Kingsford charcoal or to gas grills. Kingsford should invest heavily into advertising its product, as research suggests that Kingsford’s ’98 advertising campaign led to a 7% sales increase, along with a 3-4% volume increase the following year. However, since that time Kingsford has only further cemented its role as market leader, while the market has continued to shrink as the sale of gas grills increases. Accordingly, the 2000 advertising campaign should focus less on the quality of the brand relative to its charcoal competitors; but rather, the firm should emphasize the advantages of charcoal grilling instead of using gas (exhibit 1). Regarding promotion, the brand must maintain a strong presence on the selling floor to facilitate the significant portion of purchases that are made on impulse. Furthermore, Kingsford should continue to influence customers to use its product more often in the fall and winter months by promoting increased tailgating primarily for sporting events to increase the number of occasions in which their product is used. Finally, Kingsford must closely monitor the plant production level, as the plant is currently operating at 80%, and it is extremely costly to expand production capacity. Therefore, if the proposed plan successfully leads to 3-5% sales growth per year, then Kingsford must be prepared to raise prices as the plant nears capacity in five years,
Kingsford should not immediately raise prices, as its competitors’ previous price raises led to consumers shifting either to Kingsford charcoal or to gas grills. Kingsford should invest heavily into advertising its product, as research suggests that Kingsford’s ’98 advertising campaign led to a 7% sales increase, along with a 3-4% volume increase the following year. However, since that time Kingsford has only further cemented its role as market leader, while the market has continued to shrink as the sale of gas grills increases. Accordingly, the 2000 advertising campaign should focus less on the quality of the brand relative to its charcoal competitors; but rather, the firm should emphasize the advantages of charcoal grilling instead of using gas (exhibit 1). Regarding promotion, the brand must maintain a strong presence on the selling floor to facilitate the significant portion of purchases that are made on impulse. Furthermore, Kingsford should continue to influence customers to use its product more often in the fall and winter months by promoting increased tailgating primarily for sporting events to increase the number of occasions in which their product is used. Finally, Kingsford must closely monitor the plant production level, as the plant is currently operating at 80%, and it is extremely costly to expand production capacity. Therefore, if the proposed plan successfully leads to 3-5% sales growth per year, then Kingsford must be prepared to raise prices as the plant nears capacity in five years,