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Daniel Brockman
Breanne Klose
Elaine Ormonde-Hua
Gizem Ozdemir
http://kingsford.com
Quyen Tran
Kingsford's History
Ellsworth B. A. Zwoyer patented charcoal briquettes in 1897* Henry Ford made briquettes from wood scraps in 1920 Ford's relative E.G. Kingsford built a briquette plant and commercialized the business in 1920 Clorox bought Kingsford in 1973 Kingsford had 59% market share in 2000
Henry Ford, 1919 (Library of Congress, http://en.wikipedia.org/wiki/File:Henry_ford_1919.jpg) * http://inventors.about.com/od/inventionsalphabet/a/barbecue.htm
Kingsfords SWOT
1. 2. 3. 4. 5. 6. STRENGTHS Market leader with 59% market share 40% profit margin 60% of consumers consider Kingsford a quality product Strong brand recognition and recall Kingsford has influential relationship with retailers 2-to-1 consumers prefer the taste of charcoal-grilled food to gas-grilled food 1. 2. WEAKNESSES Dependent on positive relationship with retailers for generous store displays and promotions Dependent on weather to encourage impulse buys, which account for 30% of sales Majority of sales occur between May and September Longer cooking time and messier than gas grilling THREATS Gas grilling has become more popular due to faster cooking time and ease of cleanup Competitor price increases and lack of advertising have resulted in slower growth of charcoal sales Production issues may hurt availability if growth occurs Greater attention to human and environmental health
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3. 4.
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2. 3. 4.
OPPORTUNITIES Build brand equity by being the only active advertiser in the charcoal market Increase market size by expanding to untapped market segments Expand to markets outside of the U.S. Lead the market in product innovations with flavored and environmentallyfriendly lines
1. 2. 3.
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Kingsfords Questions
How do we increase overall charcoal use? How do we increase Kingsfords sales? Should we increase prices? Should we address production issues?
Alternatives/Potential Actions
Facilitate consumer interest in charcoal grilling Increase advertising Expand beyond U.S. Increase prices Expand current product line Do nothing
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http://kingsford.com
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Cons:
Will increased sales justify the cost?
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Pros: Consumers receive greater exposure to charcoal No active charcoal advertising competition Low risk of saturation Capture increased market share of targeted segments
http://kingsford.com
Cons: Stimulated demand may strain production capacity Internal Clorox budget Must take care to avoid alienating existing masculine clientele
Pros:
Increases size of Kingsford's market
Cons:
Production currently limited to 5 U.S.-based plants Environmental and health regulations www.bbqbrethren.com/forum/showthread.php?t=63394 of some regions Clorox lacks experience outside North America Insufficient information of international markets
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Pros: Allows Kingsford to lead industry in innovation Appeal to growing "green" and health conscious market segments Enhances brand cachet
_Grilled_Food_090515_main.jpg Cons: Increased costs Is there a demand for "green" or health conscious charcoal? Brings attention to environmental and health concerns of existing products Cannibalization of regular charcoal sales http://abcnews.go.com/images/Health/nm
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Analysis: Do Nothing
Leave prices unchanged while competitors' prices rise Maintain $1 million budget for advertising and promotion Do not expand into international markets or develop new product lines Pros: No production constraints Free and easy Cons: Position of charcoal remains stagnant in consumers' minds Slow growth of Kingsford sales Shrinkage of overall charcoal market size
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Recommendations
1. Focus on increasing overall charcoal market size o Strengthen link of grilling and charcoal in consumers' minds o What's good for charcoal is good for Kingsford 2. Increase advertising budget to $7 million o Use increased budget to advertise charcoal grilling during nontraditional occasions o Present charcoal grilling as femalehttp://img4.southernliving.com/i/2006/03/grillfriendly and essential for premium flavor with-the-girls/grilling-girls-l.jpg 3. Do not increase prices o Continue to reap benefit of increased competitor prices 4. Research international expansion opportunities o Explore viability of expansion
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Recommendations
5. In order to appropriately innovate, conduct market research to determine why consumers have switched from charcoal grilling to gas grilling o If research determines that environmental and health concerns were primary factors, initiate research and development into product lines to address these concerns 6. With production currently at 80% of capacity, forecast increased sales (given the success of each recommendation) and explore all possibilities for meeting demand o Keeping in mind that building a new production facility requires upwards of 5 years and $50 million
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http://www.masterbuilt.com/kingsford/images/kingsford_08.jpg
Sources
Except where noted, all information came from the case description, Narayandas and Wagonfeld, Kingsford Charcoal (2006), Boston, MA, USA: Harvard Business School Publishing.
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Questions?
http://kingsford.com/
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Recommendation:
Begin site selection and permitting Next year, reconsider whether to build
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Demand Curve
When prices of competitors rose in 2000, Kingsford gained market share
For 1% increase in price relative to competition, Kingsford will lose approximately 4%-points to 8%-points of market share.
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Epilogue
Market share: Kingsford sold 74% of charcoal in North America in 2009. (Clorox investors' overview (March 2010) Oakland, CA, USA: The Clorox Company.) Innovation: Kingsford introduced Surefire (R) Grooves enabling faster lighting, hotter and longer burning briquettes. (http://www.kingsford.com/faq/index.htm) Kingsford produces 8 varieties of charcoal o 2 "natural" o 2 instant o 2 regular o Specialty hickory and mesquite (http://www.thecloroxcompany.com/products/msds)
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