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By: Abinesh Manoharan, Aditi Jagdish, Meryem Bektas, Sabari Ram & Swetha Vasu

Kingsford Charcoal case


1 EXECUTIVE SUMMARY
Kingsford Charcoal company has two choices- short term profits vs. long term
growth, and we strongly recommend the latter.
In this regard, we suggest strategies to tilt the behavioral patterns of the customers
through sensory branding, creative advertising techniques and optimal pricing- all
of which will contribute towards increasing the companys customer base while also
strengthening its brand equity.

2 INTRODUCTION & GRILLING TRENDS


Kingsford Charcoal is responsible for about 9% of Cloroxs revenue and a higher
percentage of its net income. Any negative trend in charcoal sale will therefore
affect Cloroxs bottom line. Some recent trends in the industry are as follows:
1. Although the number of grilling occasions have increased from 1.4B in 1987
to over 3B in the year 2000, the overall market growth of the charcoal
category has decreased from 4% to 2% in 2000
2. More people have started using gas grills. This has likely been influenced by
increased ad spending on promoting the sale of gas grills
3. In addition, the retailers have increased the price of charcoal for Royal Oak
and other private label brands. While before the increase, there was a price
gap of 25-30% between the private label products and Kingsford (with
Kingsford being the higher priced product), it has now significantly decreased.
This has likely diminished Kingsfords differentiation factor as a premium label
4. Also, Kingsford, which has the biggest share of the charcoal market with close
to 60%, has not increased its budget for media spending. In contrary, it has
rather decreased the ad spending over the years.

3 FREQUENT GRILLER PROFILE


A frequent griller is typically a man (60%) who likes to spend time outdoors with his
family and friends in an informal setting. Although charcoal grilling can take longer
to set up and to clean, it is a ritual he enjoys, often more so than the resulting meal.
It is a fun and easy way to prepare food that tastes better than with gas grilling.
Especially, holidays such as Memorial Day and 4 th of July are important days to set
up the charcoal grill and create memories with his loved ones. It brings back
memories from his own childhood1. He wants to pass on this tradition of grilling on
holidays one day to his own kids. While gathering around the grill with his friends,
he enjoys his beer and does not have to worry about making a mess in the kitchen.
Grilling is all about meat, such as steaks, hamburgers and hot dogs 2. In recent
years, healthy eating trends have more and more incorporated grilling, not only
meat but also vegetables and fish, as the grilling process is perceived much
1 Grilling and Barbecuing US March 2015, Mintel Report

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

3 Healthier Cooking Methods: Grilling versus frying, ww.fitday.com/fitnessarticles/nutrition/healthy-eating/healthier-cooking-methods-grilling-versus-frying

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)

6 MULTI-SENSORY BRANDING APPROACH


To truly engage with customers on a primal level, Kingsford needs to adopt methods
to strongly imprint the brands identity on the consumers subconscious psyche
without being overly aggressive. This greatly enhances the chances of a successful
brand recall by forming the necessary Pavlovian associations. Some brands opt to
use subliminal messaging to achieve this desired effect but Kingsford would benefit
by opting to engage the customers through multiple sensory outlets. In this case
the sense of smell would be an ideal channel since according to Marcel Proust, the
effect of scent can unleash a flood of memories thus holding the key to long lasting
impressions4. Kingsford can work with retail stores to infuse the charcoal aisles with
the scent of grilled meat & vegetables and also line the walkways and parking lots
with images of burning coals and succulent grilled food (Exhibit 6) thus ensuring the
formation of a strong emotional connection between the brand and the consumer.

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

Exhibit 2: BBQ Cook-offs

By: Abinesh Manoharan, Aditi Jagdish, Meryem Bektas, Sabari Ram & Swetha Vasu

Exhibit 3: Mobile Food trucks showcasing Kingsfords association with


grilled food

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

Exhibit 6: Images to be used in retail shopping areas to trigger impulses


associated with grilling

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

300 MSC loss at COSTCO


-1000 MSC loss at
COSTCO

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

Higher (5%)Blue Bag


Pricing Increase

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

Total Line Pricing


(5%)Increase

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