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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.


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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

‰
è
    

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

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? 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.
? Instant acceptors are users that are comfortable with
both charcoal and gas, but they want the fire to last
longer and get started faster
? 60% of customer perceive -ingsford as a µhigh
quality brand¶ relative to 13% for private label
? 1/3 of charcoal purchases are ³impulse´ purchases
? Charcoal grilling has been referenced as providing
better flavor than realized through gas grilling
$!+ |'
? Food stores represent 66%, the most important
channel
? Sales through the food channel decreased by 1.9%
vs. sales through the merchandise one increased by
3.5%, resulting in a spread between the two of 5.4%
? Main reason for the above shift could be:
Changes in customer behavior pattern
Failure to achieve ideal exhibition in food
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.
Clorox financial situation does not permit the
deployment of new financial resources to
invest in advertising and expensive
campaigning
? -ingsford should maintain its current
premium position, which in the past has
enabled it to successfully charge a 25-30%
premium
? Confront the overall competition from gas
grills through an advertising campaign
focused on driving grillers toward charcoal,
and leveraging relationships with the food
store channel and opportunities for in-store
advertisement
? Increase frequency of grilling occasions
throughout the whole year, especially in areas
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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