Kingsford Charcoal: Overcoming The Softening In The Charcoal Category

Kingsford Charcoal: Overcoming the Softening in the Charcoal Category

PROBLEM STATEMENT

Taking into account the slowdown in the overall charcoal category, the main problem of Kingsford Charcoal (KC) is how to determine the right strategy in order to improve its sales and profits and ensure future growth of the company. This strategy has the following issues:

1. How to overcome the penetration of gas grill usage?

2. Increasing advertising - will it help the company to improve the sales?

3. How to extend the seasonality of business?

4. How to choose the right pricing strategy?

RECOMMENDATIONS:

• In order to overcome gas grill penetration, the KC should organize an advertising campaign on and emphasis on charcoal market advantages versus gas market with an aim to increase total charcoal grill market, using results of blind taste test of food grilled on charcoal comparing to grilled on gas.

• The holiday weekends, e.g. the 4th of July celebration should be specially marketed, using media advertising, including different store promotional activities with an aim to increase higher percentage of Kingsford’s annual sales.

• To extend the seasonality span of charcoal business, on which KC success is based on, the company would need to organize campaigns with emphasis on family values, friendship, free time spending and most importantly stimulate early spring and late fall open-door barbecue events, like concerts, sports events and other leisure activities both in local neighborhood and in other states. Compared to previous years, such outdoors events are becoming more and more popular and they have a tendency to grow.

Pros. (1) By increasing the total coal-grilling category, the sales and profits of Kingston Charcoal will increase too, as at the present it has the largest market share. By addressing current category ad vacuum KC will more appropriately counter gas grilling which has been heavily advertised. (2) The cooperation with grocery, mass retailers, and distributors as the sales on charcoals increases growth of not only Kingsford’s, but also private label brands. That – on the other hand – gives bargaining power for KC on display placements, promotions and other retail-oriented issues.

Cons. (1) Expenses will definitely increase and will extend the budget. (2) Competitors will benefit from the campaigns too, especially cheaper private label brands. There is a risk that competitor’s market share may grow on KC expense in both – financial and market share terms.

ALTERNATIVES

1.To increase prices according to 4th scenario (total line price increase by 5%) and from short-term revenues income use resources for advertising.