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By: Abinesh Manoharan, Aditi Jagdish, Meryem Bektas, Sabari Ram & Swetha Vasu
healthier than pan fried food 3. Nevertheless, grilling with its elements of fire, hence
danger and sharp tools is generally left to men and they in turn consider it their
territory2.
4 MARKETING STRATEGY
The brand management team of Kingsford charcoal has two choices - focus on
increasing the profit numbers for the brand or to keep the price constant and focus
on increasing the overall charcoal category, thus enabling long-term success for the
brand.
The charcoal category slowdown was caused by various reasons such as increased
retailer pricing fueled by price increases among the private brands and Royal Oak,
increase in penetration of gas grills, the absence of media advertising, lack of
promotional activity and increasingly unfavorable weather conditions for grilling
occasions. Although the price increases among other brands increased Kingsfords
sales volume, the long-term success of Kingsford was tied closely to the overall
success of the charcoal category. Hence, we recommend that the brand
management team should focus on increasing the size of the pie rather than
maximizing the brands profit, which would rather be a short-term strategy.
The key to increasing the overall charcoal category would be to focus on the two
factors under control focus on promotional activity and increasing the frequency of
charcoal purchases by Kingsfords customers. We recommend that Kingsford should
focus its promotional efforts towards the Instant Acceptors customer segment
because it is the largest segment (60%) and are more acceptable to use charcoal as
the grilling fuel. On the contrary, the segment is the least brand loyal, however, we
strongly believe that the segment would value the promotional offers such as
discount coupons that Kingsford would offer. To increase the frequency of charcoal
purchases, the brand management team should aim at driving behavioral changes
such as making grilling a regular day activity rather than a special occasion
activity.
5 BRAND ADVERTISING
In the past Kingsford had used their advertising campaigns in a purely utilitarian
and functional manner by attempting to communicate their product features and
product superiority. But that is a very underwhelming approach and instead they
should look to tap into the power of advertising by creating a stronger emotional
resonance among the target audience, which helps foster powerful associations
2 Grilling, Guys and the Great Gender Divide, http://www.forbes.com/2010/07/01/grillingmen-women-barbecue-forbes-woman-time-cooking.html
By: Abinesh Manoharan, Aditi Jagdish, Meryem Bektas, Sabari Ram & Swetha Vasu
between memorable grilling experiences and the Kingsford brand. This has the dual
advantage of increasing brand awareness and raising brand equity.
The 2 specific objectives that the brand managers need to achieve with this
advertising strategy would be to help America rediscover its passion for grilling and
also to increase the number of casual grilling occasions among their target
customers. This ensures that the brand is associated with a wholesome family
experience as well as culinary delights instead of being relegated to just specific
holiday occasions. Some of the specific tactics they can use include:
1. Using creative and suggestive billboards to convey brand meaning (Exhibit 1)
2. Involving customers by engaging them in BBQ cook-offs thus putting the brand
front and center of communal cooking experiences (Exhibit 2)
3. Organizing food truck events around the country to showcase charcoal grilled
delicacies (Exhibit 3)
4. Starting a strong social media campaign by inviting users to submit their favorite
charcoal grilled innovations in Pinterest and Instagram (Exhibit 4)
5. Choosing a celebrity spokesperson who embodies the desirable attributes such
as the authenticity associated with charcoal grilling (Exhibit 5)
7 PRICING
We analyzed the impact of increasing the prices on the sales volume as well as
profits based on the data provided in Exhibit 10 in the case and have tabulated the
results in Appendix- exhibit 7. Keeping in mind that our brand strategy would be
focused on popularizing grilling in the long run and thereby improving sales
volumes, we eliminated the options that would be most detrimental in terms of
reduced sales volume. Given that 66% of total charcoal sales are achieved at food
stores we also selected the option that would help us effect an across-the-channel
price increase ( as opposed to specific club centers and chains).We thus zeroed in
4 http://www.specialtyprintcomm.com/news/july-2010-pioa/july-2010-pioa.pdf
By: Abinesh Manoharan, Aditi Jagdish, Meryem Bektas, Sabari Ram & Swetha Vasu
on Option 2 which would result in a decline of sales volume by 445 MSC units and
result in profits of US $218,000.We believe this would be the optimum level of price
increase that would help us improve short term profits as well as tie in with our long
term growth strategy. It would be in line with our strategy of improving our brand
equity by differentiating our brand with a slightly higher price but at the same time
not making it extremely pricey so as to alienate existing as well as prospective
customers.
We understand that this strategy would result in the retailers pulling back on the
merchandising support (10% merchandising loss on 10 & 20 lb bags to be precise).
Hence Kingsford would have to supplement the promotional activities with efforts
from its side. We believe this is still achievable since the increased revenues will
help to maintain a positive bottom line. Also since the ultimate aim is to be able to
increase the brand equity in the long run, we would urge the management to look
beyond the immediate short term impact on profits.
8 APPENDIX
Exhibit 1: Billboard campaigns
By: Abinesh Manoharan, Aditi Jagdish, Meryem Bektas, Sabari Ram & Swetha Vasu
By: Abinesh Manoharan, Aditi Jagdish, Meryem Bektas, Sabari Ram & Swetha Vasu
By: Abinesh Manoharan, Aditi Jagdish, Meryem Bektas, Sabari Ram & Swetha Vasu
Exhibit 4: User generated Instagram pictures of their favorite grilling
moments
By: Abinesh Manoharan, Aditi Jagdish, Meryem Bektas, Sabari Ram & Swetha Vasu
Exhibit 5: Guy Fieri as a spokesperson for Kingsford charcoal
By: Abinesh Manoharan, Aditi Jagdish, Meryem Bektas, Sabari Ram & Swetha Vasu
Exhibit 7: Calculations to determine pricing strategy
Sl
No
Estim
ated
Proba
bility
of
Outco
me
Estimat
ed
FY02
Volume
(MSC)I
mpact
Estimat
ed FY02
Sales
($000)I
mpact
Estimat
ed FY02
Profit
($000)I
mpact
Estimat
ed
Effectiv
e
Volume(
MSC)
Estima
ted
Effecti
ve
Sales(
$000)
Estima
ted
Effecti
ve
Profit($
000)
Pricing Scenarios
Club/Home Center, 4%
Price Increase
No merchandising loss
60%
1300
1080
780
648
25%
-300
-1110
40
-75
-277.5
10
15%
-1000
-7200
-2500
-150
-1080
-375
-225
-578
283
Minimum (2.5%)Blue
Bag Pricing Increase
Total
A
B
No merchandising loss
10% merch loss in 10
lbs,20 lbs bag
75%
-400
-1200
560
-300
-900
420
25%
-580
-3090
-810
-145
-772.5
-202.5
-445
-1673
218
Total
A
B
No merchandising loss
7% merch loss in 10 lbs
& 20 lbs bag
50%
-550
-1900
1060
-275
-950
530
50%
-740
-4140
-110
-370
-2070
-55
-645
-3020
475
Total
4
No merchandising loss
Combination of :
7% merch loss in blue 10
lbs 20 lbs bag
3% merchandising loss
in 8# matchlight
5% merchandising loss
in 15# matchlight
30%
-790
-2820
1870
-237
-846
561
70%
-830
-4020
1720
-581
-2814
1204
-818
-3660
1765
Total