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Case Analysis-Kingsford Charcoal Essay

Executive Summary

     As a result of the case analysis, it has been determined that Kingsford has seen diminishing sales from 1996 to 2000 due to several factors, including a shrinking charcoal grilling industry, competition on the part of major rivals like Royal Oak and private label brands, insufficient price increases in comparison to competitors, increasing popularity of gas grilling as opposed to charcoal and a lack of advertising on the part of Kingsford.

Therefore, what is recommended is a campaign to promote charcoal grilling overall, with Kingsford as the sponsor of the message, increased advertising specifically for Kingsford, and a 10% price increase to finance these efforts.  The following analysis provides detailed reinforcement for these findings.

Problem Definition

     For Kingsford Charcoal, the problem is multi-faceted.  As a brand, Kingsford has enjoyed, since its foundation in 1913, a healthy share of what is today a $350 million industry.  However, as of 2000, the Kingsford brand began to lose a fair amount of traction in the home grilling market. The reasons for this slippage are as follows:

A SHRINKING INDUSTRY- It needs to be understood that the problems that Kingsford is experiencing are symptomatic of the overall charcoal industry.  From 1998 to 2000, Kingsford saw a steady decline in growth, ranging from a 2% growth in the first half of 1999 to a loss of 5.7% during the second half of 2000. This type of problem is something that was likewise seen by other competing brands, showing an industry-wide problem.

COMPETITION- Kingsford, and indeed the entire charcoal grilling industry, has been affected negatively by an increase in the shipment of gas powered grills, which of course do not utilize charcoal as the fuel for the grills themselves.  Additionally, major competitors like Royal Oak, as well as private label brands have been emerging more strongly over the recent years.  What this means for Kingsford is quite literally a scenario of rivals on all sides, with little means of overcoming all of them at the same time.

PRICING- The problem for Kingsford is not that the parent company itself has raised prices, but rather that brand name and private label competitors have increased their prices themselves, and in response, the retailers of Kingsford have taken it upon themselves to raise Kingsford prices, from which Kingsford has derived no additional benefit, as evidenced by the fact that sales have been going down, showing that this price increase has not helped, and probably hurt, sales volume over the past few years.

ADVERTISING-   In the beginning of this section of the analysis, the point was made that the charcoal grilling industry overall had seen a significant amount of recession in recent times.  Subsequent sections also showed that this is not exclusive to Kingsford, but it common in the case of name brand and private label competitors.   When talking about the advertising issue, there are nuances of this issue that encompass Kingsford as well as the competition, and relate directly to the industry recession.  Kingsford has not done any significant level of advertising or promotion recently and likely due to this, nor have any of the competitors.  Because of this, it is fair to assume that only those who are loyal charcoal buyers, and would use it whether it was advertised or not, are those who are contributing to the level of sales that still exists.  The lack of advertising has in fact led not only to lower sales, but also a watering-down of the entire message of charcoal grilling.  Because of the lack of advertising, and the absence of the charcoal grilling message on the airwaves, new customers are not being enticed to try charcoal grilling, those who are indifferent to the use of charcoal are not making a conscious, reliable decision to use charcoal, and the loyalists are most likely not using as much charcoal as they could, or should be using.

WEATHER PATTERNS- Although the weather is not something that anyone can control, it is worthy of note when looking at the factors which have adversely affected the progress that Kingsford is making.  From 1999 to 2000, an examination of weather patterns shows that 2000 exhibited lower temperatures overall, as well as more rainfall, than took place in 1999.  Therefore, even those who would charcoal grill aside from the traditional summer season actually grilled less because of the weather conditions which prohibited them from doing so, even if they desired to do so.

     While all of these factors, when looked at together seem to be too much of a challenge to tackle, on the positive side, this abundance of data which shows the various causes for the problems that Kingsford faces in fact make it possible for the alternatives to be identified and presented here.

Analysis of Alternatives

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The alternatives which are available to Kingsford correspond to the identification of the problems in the previous section of this study.  Each alternative is likewise accompanied by an analysis of the alternative and in-depth data which will discuss how that alternative could be put into action:

PROMOTION OF THE CHARCOAL GRILLING CONCEPT- From 1996 to 2000, an analysis of  grill shipments, both charcoal and gas, can be graphically represented as follows:

       What is seen in the graphic is a consistent outpacing of charcoal grills by gas grills,    even in years when overall shipments were down in quantity.  Therefore, what is seen is a need to promote the merits of charcoal grilling, thereby increasing the potential customers for Kingsford and reviving the entire industry.

PRICING INCREASES- In most cases, the increase of pricing would be ill-advised, but when examining the pricing trends of charcoal for grilling in terms of Kingsford as compared to its competitors, both brand name and private brand, shows that a price increase is virtually demanded by the pace that the industry itself is keeping with price increases.  The following shows the price increase percentages for Kingsford as compared to its competition:

PRICE INCREASES FOR CHARCOAL BRANDS, 1999-2000

BRAND
UNIT PRICING ‘00
UNIT PRICING ‘99
% CHANGE
Kingsford
$4.11
$4.03
2.0
Royal Oak
$3.71
$3.59
3.5
Private Label
$2.85
$2.62
8.5
Even taking into account the fact that Kingsford is the higher priced alternative, the increases in pricing by competitors have in fact almost doubled those of Kingsford in the case of Royal Oak and quadrupled in the case of Private Label.  The point to be made is that price increases can in fact be more substantial and still remain transparent to the buyer, especially given the very real possibility of new customers coming forward if overall promotion of charcoal grilling takes place.

Plan Development

     The plan that Kingsford will need to undertake in order to solve the problems that it is facing at the current time, as well as the rationale and expected outcomes for each plan, are represented in the following chart for ease of illustration and reference:

 Plan development-Kingsford Charcoal

ACTION
RATIONALE
EXPECTED OUTCOME
Promotion of charcoal grilling overall, with a subtle acknowledgement that Kingsford is the sponsor of the messages. This should be done in print media, radio, television and online.
Evidence shows an absence of promotion of the attributes of charcoal grilling.
A renaissance of interest in charcoal grilling, with a subconscious association to Kingsford because of the subtle reference to Kingsford in the advertisements.
Increased brand promotion of Kingsford itself.
With the expected interest in charcoal grilling, Kingsford needs to remind the public that they are the oldest and highest quality brand available.
Regain of lost market share from competition and alternative grilling methods such as gas.
10% price increase for Kingsford prices

Kingsford has been outpaced by competition in recent price increases; moreover, Kingsford should command a higher price in the market as a premium brand.  Quality should be more important than price to these potential customers.

The revenue from the increases will help to finance the new plans being rolled out at the current time.
Finally, what has been put forth in this case study is a comprehensive, budget sensitive, realistic plan for Kingsford to pursue.  This plan will lead to a resurgence of charcoal grilling, with Kingsford regaining its status as a leader in the product line

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