A1 Steak Sauce – The King’s Choice
King George’s adoration of his chef Henderson William Brand steak sauce’s recipe in 1830 led to the creation of A1 Steak Sauce. Today, A1 Sauce is one of the major brands in Kraft Food’s portfolio, after being acquired in 2000. Over the years, A1 has established itself as the leader in the steak sauce industry being the sauce of choice for 90% of the country’s steak houses.
Chuck Smith’s Quandary
Chuck Smith, A1 Steak Sauce’s senior brand manager has been informed that one of their main competitors, Lawry, a brand of the Unilever Group, is set to introduce a similar range of sauces. They will be introduced during the Memorial Day break, which is one of the main sales spells for A1.
Lawry is well recognized
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In addition it enjoys a high brand equity and loyal customer base that distinguishes it from other rival brands. The products benefit from prominent shelving and are available across all grocery stores in the United States due to A1’s extensive distribution network. However, though the brand has carved out a solid position for itself in the steak niche it has not been particularly successful in categories of meat. In the past, A1’s poultry sauce had been a huge failure in the market. The steak sauce market has matured and A1 has been relying on price increases to drive growth.
Lawry’s sauce poses a serious threat to A1. Both firms have great brand awareness and unique value propositions. Though they have unique value propositions both the products are positioned close by regards to their offerings (Exhibit 3). Provided that Lawry is successful with its marketing campaign the launch threatens to cannibalize A1’s market share resulting in a hit in its profit. Nevertheless, A1 can leverage its strong market presence to ward off Lawry’s threat whilst at the same time it can also establish itself as a prominent player in the growing marinades market, already having 10% of the existing
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However, this promotion should be done in April, a month prior to Memorial Day. This would also bring A1’s price at par with Lawry’s $4 per bottle price when Lawry launches its product line. During the Memorial Day period A1 should revert to its regular price and employ other promotional techniques.
During the Memorial Day period Smith should bundle A1 steak sauces with A1 marinades. The bundle should still be sold at the $4.99 retail price and the cost of marinades should be allocated from the $15 million advertising budget allocated for marinades. This ensures that A1 meets its projected profit goals while allowing A1 to utilize its brand awareness of steak sauces to build awareness for its marinades line.
The promotional campaigns, both in store and advertisements, should reinforce A1’s history and premium quality in its messages. This would strengthen A1’s position as a premium, high quality brand in the minds of its consumers. In addition during Memorial Day weekend, a FSI promotion should be launched for the marinades line, which offers discount coupons for the marinades range (instead of the initially planned steak sauce range) to encourage consumers to try the new products.
Feasibility and
Nevertheless, it must “defend” its current market share if not increase it, by maintaining premium quality and develop innovative products. The marketing mix strategies will effectively achieve targeted revenue and profitability in the near future.
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