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Kingsford Charcoal Case Analysis
Cloroxs Present Situation
The present situation of Clorox is financially sound and unpromising at the same time. Clorox recorded sales of around $4.1 billion and $394 million in net earnings in June 2000 (Narayandas and Wagonfeld 3). Ultimately, Kingsford represented a large product group within the portfolio of Clorox. Charcoal consisted of around 9% of Cloroxs revenues in 2000, and it comprised a substantial part of Cloroxs net income. In 2000, 66% of overall charcoal sales were sold in food stores, whereas Wal-Mart and merchandisers accounted for around 15% of Cloroxs charcoal sales (Narayandas and Wagonfeld 4). Drug stores represented 2% of Cloroxs charcoal sales, while non-tracked channels and club stores sold approximately 16% of Cloroxs charcoal sales (Narayandas and Wagonfeld 5). It is essential to discuss the success of Clorox in terms of sales and market share.
The key success drivers that led to the present situation of Clorox are varied. For example, the seasonal nature of Kingsfords business means that their consumer purchases are almost guaranteed to increase between May 1 and September 1 in 2000. In addition, July 4 and the Memorial Day holiday weekends accounted for about 35% of the Kingsford yearly sales in 2000 (Narayandas and Wagonfeld 5). The sales were facilitated by in-store promotions coordinated by the Kingsford brand team. The sales department of Clorox is a strength since it ensures a sufficient supply of charcoal grills is available during peak seasons. The company offers trade money to retailers to reduce product prices during holidays to increase sales (Narayandas and Wagonfeld 6). Focusing on excellent product quality and display made the Kingsford brand a success.
Trends To Watch For
The situation changed, and the Kingsford brand started recording low sales compared to previous years. The charcoal category slowed down by 2% in 2000s first half (Narayandas and Wagonfeld 7). The forecast for the next part of 2000 looked bleak, with an expected 5.7% decline in sales (Narayandas and Wagonfeld 7). There are several trends that brand managers of Kingsford should be conscious of. First, the price gap between various charcoal brands had narrowed due to price increases by private labels and other brands. Private label bags increased their prices by about 10%, making the Kingsford brand look similar to other products (Narayandas and Wagonfeld 7). In addition, Kingsford channel partners increased consumer prices since other similar brands implemented price increases.
Second, the exponential expansion of the market and demand for gas grilling is another significant concern for the Kingsford brand. More consumers started buying gas grilling due to the sharp increases in the price of charcoal grilling. Gas grill shipments increased by 8%, whereas charcoal grill shipments reduced by 3% (Narayandas and Wagonfeld 8). In addition, in 2000, around 54% of households in the U.S. had bought a gas grill, compared to 49% who owned charcoal grills (Narayandas and Wagonfeld 8). Third, the Kingsford brand lacked media advertising as the company had spent around $1 million on promotion while $10 million was spent on gas grilling by competitors (Narayandas and Wagonfeld 8). The trend of reducing promotional budgets was worsened by limiting promotional activities such as price reductions, displays, and features. Finally, weather patterns reflect a trend that brand managers should consider when making decisions (Narayandas and Wagonfeld 10). The overall weather conditions led to the emergence of multiple cod days, restricting the opportunities to grill.
Grilling and Comparison of Gas and Charcoal Barbecuing
Americans grill to get the experience of the outdoor environment while barbecuing. In addition, Americans perceive grilling as a vital culinary art of the U.S., considered a glorious birthright and practiced all over the country. Grilling is a passion and a party that most Americans do not feel tired of or view as a chore. Individuals grill because they can play with fire under open skies and find it interesting. In retrospect, people grill because of the sumptuous flavor, informality, desire to have outdoor experiences, and socializing with family and friends. Most people who use grill are men who love to barbecue for their family when they are free (Narayandas and Wagonfeld 1). Grilling can be a way to relax for experienced grillers who often believe perfecting life skills are essential.
In addition, experienecd grillers like spending time with friends or family and enjoy involving themselves in fun activities. Most Americans face a dilemma when evaluating whether to use charcoal or gas grills. Charcoal grills are preferred due to the hands-on experience as well as the smoky and authentic taste or flavor that is achieved only by using charcoal. The heat provided by charcoal grills effectively cooks rare steak and may cost less than gas grills (Narayandas and Wagonfeld 2). On the other hand, gas grilling offers more control of temperature while barbecuing.
Marketing Objectives
Kingsford charcoal sales were reduced due to competition from gas grilling, lack of advertising, and weather unpredictability. The definition of the Kingsford brand to consumers and retailers is an important category to focus on. Kingsford can focus on a significant marketing objective: increasing the brands market share by around 4%. The emphasis should prioritize increasing the sales of different seasons in a year, expanding the customer base, especially instant acceptors who comprise more than 60% of total Kingsford sales (Narayandas and Wagonfeld 11). Consumers consider charcoal or gas grillers while shopping for their barbecuing needs. Thus, it is essential to emphasize the advantage of charcoal grillers over gas grillers. The authentic and smoky favor of charcoal-grilled meat should be emphasized in marketing communications.
In addition, the marketing communication should be focused on dining in with family and friends to socialize. The brand can educate consumers on using charcoal grills in barbecue restaurants while dining out. Another effective marketing objective for the Kingsford brand is increasing its brand awareness by arousing the consciousness of consumers. The overall goal of the objective is to ensure customers are aware of the competitive differentiators of the brand (Narayandas and Wagonfeld 12). As a result, the brand can achieve sustainable competitiveness and ensure long-term existence.
Emphasizing the distinction between cooking out and dining in is essential in promoting the product and increasing its popularity among the target audience. The brand focuses on cooking out, and this process is associated with the positive experience connected with socializing, communicating with family and friends, healthy eating habits and hedonism. It is the activity that is the descent hobby for adult people that is pleasant and useful for health and communication. Dining in, in its turn, is the passive process where the person does not intervene in food preparation. Even though dining has a positive connotation connected with communication and pleasure, it is impossible to compare it with the active food preparation process (Namin et al. 1). Therefore, the person who cooks out is the target audience for the discussed brand. It is critical to emphasize positive connotations with this image in promotion campaigns to increase the brands popularity.
Action Plan
The action plan would involve several strategies to increase sales and improve Kingsfords brand value. First, the prices for Kingsford products should be raised by 2% or 3% only (Kupfer et al. 27). The slight price increases will not adversely affect sales since customers consider Kingsfords charcoal grill a happy product synonymous with high quality. On the other hand, sharp price increases can result in the loss of customers since Private Label and Royal Oak lost market share due to increased prices. The price increase of about 3% can secure funds for reinvestment in the Kingsford business, helping realize the two marketing objectives for the brand (Kupfer et al. 28). The focus is on popularizing the brand name and increasing the sales level of the product.
The promotional mix of various firms includes direct marketing, sales promotions, and advertising. Kingsford should focus on raising brand awareness for grilling products, leading to an increased customer base. The advertising budget is too low; thus, the allocation money should be raised to no less than $7 million (Kupfer et al. 28). It should be done through digital media channels such as social media, the internet, and traditional media marketing such as newspapers and television. The action plan should actively promote the Kingsford value proposition, which suggests that the brand offers the highest quality of charcoal grill for incredible experiences. In addition, Kingsford can focus on hosting on-site grilling events to increase brand equity and awareness among its consumers.
Regarding promotion, the brand managers should propose hosting trade promotions for resellers who perform well. High-performing retailers should be provided with incentives to celebrate their surpassing sales targets. Using prime and strategic positions with a large customer base can increase store sales. Furthermore, offering price discounts on specific days may increase the daily sales of a particular month. Finally, improving the overall product experience through effective packaging.
Brand Managers Recommendations and Business Success
The brand managers should propose increasing prices marginally by 2 or 3 % to maintain brand superiority and avoid adversely affecting existing consumers. Furthermore, they should propose an increase in the advertising budget to $7 million to reach new customers and increase consumer awareness (Kupfer et al., 26). The action plan proposed in the previous question benefits Kingsford in terms of brand equity, profit, and market share. It would ensure the deficit for the 2000-2001 financial period is managed, creating sustainable profits for the future. In addition, setting competitive prices and improving the overall customer experience would ensure Kingsfords market share is increased. The action plan would help manage resources efficiently, increase sales, and build relationships with suppliers and distributors. Increased marketing efforts align with the goals of improving the brands equity and market share since they can reach new markets and increase the total sales of charcoal grills.
Work Cited
Kupfer, Ann-Kristin, et al. The Role of the Partner Brands Social Media Power in Brand Alliances. Journal of Marketing, vol. 82, no. 3, 2018, pp. 2544.
Namin, Aidin, et al. Dine-in or Take-out: Modeling Millennials Cooking Motivation and Choice. Journal of Retailing and Consumer Services, vol. 53, 2020, pp. 1-11.
Narayandas, Das, and Alison Berkley Wagonfeld. Kingsford Charcoal. Harvard Business Publishing, 2005.
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