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-ingsford parent, Clorox, is suffering declining sales and needs
-ingsford to grow earnings. Meanwhile, the charcoal market itself
is contracting while -ingsford has increased its market share.

 
ë    

   
 

Pricing 5% price increase across ?  


   
all products and channels  

  



  
 

 

 

 

 
Advertising  
Increase advertising spending to $7m
?  


 
   


Promotion ?   
 
 
Increase promotion spending to $10m 
 
 
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In 2000, for the first time, the charcoal market experienced a volume
decrease of approximately 1.00%

    


? In 2000 charcoal grill penetration dropped to below 50%, at 49%, as compared
to gas grills which grew to 54% and dual charcoal / gas grill ownership at
20%.
Gas grill penetration
? Main factors:
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? In 2000 private labels increased their price point, thus reducing the price gap
with -ingsford by 10 %
Price increase of
? Which higher charcoal prices, consumers trended from charcoal to gas
competition
? Potential customers owning both grill types will pay more attention in
choosing gas or charcoal each time they have a barbeque

? In 2000, October ± December have been characterized by lower temperatures


Weather
and higher precipitation across the United States

The overall market, and -ingsford by extension, face substitution-based


competition from gas grills whilst competition from Royal Oak and private labels
characterise the internal market competition

‰
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Charcoal customers view barbequing as an experience, ease and
quickness are central to their decision making process

è   è 


? In 2000, sales were divided as follows:
? Based on an internal study of 300 -ingsford clients,
consumers can be segmented as follow:
I Sem. II Sem. Tot. Yr.
N. Vol. Channel %
Type of user Growth Growth growth
Clients Consumed
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? Regular exclusive customers believe in a ³right way´
to grill, thus they use only charcoal and pay more
attention to quality. ? Food stores represent 66%, the most important
channel
? Instant acceptors are users that are comfortable with
both charcoal and gas, but they want the fire to last ? Sales through the food channel decreased by 1.9%
longer and get started faster vs. sales through the merchandise one increased by
3.5%, resulting in a spread between the two of 5.4%
? 60% of customer perceive -ingsford as a µhigh
quality brand¶ relative to 13% for private label ? Main reason for the above shift could be:

? 1/3 of charcoal purchases are ³impulse´ purchases Changes in customer behavior pattern

? Charcoal grilling has been referenced as providing Failure to achieve ideal exhibition in food
better flavor than realized through gas grilling stores


 
-ingsford must increase profit and reinforce the concept of
barbequing as an experience inextricably linked to charcoal

SHORT TERM: INCREASE PROFIT LONG TERM: DRIVE THE MAR-ET

? Maximize profit at the extent of volume. ? Confront the overall competition from gas
Clorox financial situation does not permit the grills through an advertising campaign
deployment of new financial resources to focused on driving grillers toward charcoal,
invest in advertising and expensive and leveraging relationships with the food
campaigning store channel and opportunities for in-store
advertisement
? -ingsford should maintain its current
premium position, which in the past has ? Increase frequency of grilling occasions
enabled it to successfully charge a 25-30% throughout the whole year, especially in areas
premium where weather allows it

-
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ßby raising prices across all channels by 5% while
simultaneously strengthening advertisement and promotion

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No capacity expansion should be planned at this point, given the current


level of expected sales volume increases for the next year


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A price increase of 5% across all products and all channels will
yield profit growth of $1.8m in 2002, a 5% increase

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The advertisement budget should be increased in order to boost
future growth of the overall charcoal market against gas

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The optimization of promotional efforts is crucial to maintaining
shelve-space and boosting promotions at the Point of Sale level
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