Grilling is an American pastime. It's an essential part of the American culinary experience and the center of outdoor celebrations during American Independence Day, 4th of July for instance. By the late 1990s, three out of four U.S. households owned a barbecue grill with over 80 percent of grill ownership being among younger, larger, higher income families. The number of barbequing events increased from 1.4 billion in 1987 to 2.7 billion in 1995 and over 3 billion in 2000. This shows an upward trend in the industry. Over half of grill owners described themselves as heavy to moderate grillers. Most grillers were also men.
Common reasons for barbequing are holidays and special events such as 4th of July, Memorial Day, Labor Day, birthdays, and tailgating. Reasons people like to barbeque include great flavor, desire to be outdoors, spending quality time with friends and family, change of pace, easy clean up, and informality. The most popular foods for barbequing include hamburgers, steak, hot dogs, chicken breasts, pork chops, ribs, and sausages. Roasted potatoes, steamed vegetables, and marinated vegetables are commonly used as side dishes.
The two most commonly used grilling methods are charcoal and gas grilling. Gas grilling is a simpler process. It's easier to clean up, enables greater control of cooking temperature, and is more convenient to set up. However, most experienced grillers prefer using charcoal because of the more favorable taste associated with it. So that is charcoals unique selling point, it's the unique flavor that it brings grilled food that is commonly associated with barbequing. If it's not grilled with charcoals it is not a barbeque.
2. Kingsford Charcoal
Kingsford Charcoal is owned by the Clorox Company. The Clorox company began in 1913 as the Electro-Alkaline Company. Its first product was industrial strength liquid bleach that is still sold today under the recognizable name associated with bleach, Clorox. Procter & Gamble tried to acquire the Clorox Company in 1957 but was denied by the U.S. Supreme Court because it would cause a monopoly in household liquid bleach. By 2000, the company had over 50 products that were marketed to consumers around the world.
Charcoal began in the 1920s when Henry Ford developed a process to turn wood scraps into charcoal that burned longer and hotter than regular wood. This plan developed by Henry Ford and E.G. Kingsford, a lumberman and relative of Fords was later purchased by Clorox in 1973. Kingsford Charcoal represented one of Clorox Company's largest product groups within the company's portfolio. In 2000, charcoal represented about 9% of Clorox's revenues, and a higher net income. In fact, Kingsford is such a large part of Clorox that according to Smith Boyle, a brand manager for Clorox, "when Kingsford misses its numbers there's a good chance that Clorox will miss".
In 2000, food stores accounted for 66 percent of total charcoal sales; mass merchandisers and Wal-Mart accounted for 15 percent; drug stores for 2 percent and club stores for the remaining 16 percent. 75 percent of total shipments were regular charcoal, with 20-pound bags accounting for about 60 percent of sales. In 2001 the average price to consumers for the regular 10-pound bag was $4.25 and the regular 20-pound bag was $6.78. The instant bags went for $5.20 for an 8-pound bag and $8.07 for the 5-pound bag. Kingsford most commonly competed with Royal Oak and private label brands. The private label bags also manufactured and distributed by Royal Oak sold at a significantly lower price point, about 25-30 percent discount.
However, Kingsford branded charcoal was perceived as a better product with approximately 60 percent of surveyed consumers indicating that Kingsford has a higher quality over other brands. Lab test also proved this notion. Lab test showed that Kingsford had a superior quality compared to Royal Oak and private label brands.
3. The Problem
The charcoal category has slowed growth from 4 percent growth in 1998 to 1999 to a 2 percent growth from the first half of 1999 to the first half of 2000. The forecasted growth for the second half of 2000 seemed to be even worse. After assessing the issue and researching what could account for the decline in growth the analysis revealed a few factors. First, there was a narrowing in price gap between Kingsford and the private labels. By the end of 2000 the private label bags were about 10 percent higher than they were in 1999 due to manufactures passing price increases to the consumers.
Clorox branding team theorizes that gas grilling could have gained some market share from consumers turned off by the price jump. In 2000, gas grills grew 8 percent relative to 1999 meaning 9.3 million new gas grills. Charcoal grills on the other hand dropped 3 percent consecutively for a few years with only 6 million new charcoal grills being shipped. In 2000 54 percent of U.S. households owned gas grills and 49 percent owned charcoal grills and about 20 percent owned both grill types.
Another factor was due to the lack of advertising. Kingsford was the only brand of charcoal advertising across media channels so when they stopped traditional media advertisements there were no messages regarding charcoal and charcoal grills reaching consumers. There was also a slight increase in rainfall in 2000 compared to 1999 and average temperatures were 10 degrees lower in 2000. Finally, although the overall category sales dropped Kingsford received an increase in market share due to the price increase from competitors, consumers opted to purchase Kingsford instead. Kingsford accounted for 59.5 percent of the market while Royal Oak dropped to 6.4 percent and private labels shifted to 32.7 percent.
4. SWOT Analysis
- Superior quality
- Market leader
- Regular and Instant product offering
- Strong distribution channels
- Support from parent company Clorox Weaknesses:
- No recent advertising
- Seasonal sales
- Exasperated product development
- Bad for the environment
- Associate nostalgia and patriotism to Barbequing
- Bring back barbequing culture to Americans
- Grow awareness in Latin community Threats:
- Gas grills
- The next generation of grillers prefer convenience and instantons results
- Increase in charcoal prices
5. Evaluation of Alternatives
Taking into consideration the SWOT analysis there are several alternatives Kingsford Charcoal should consider when strategizing ways to reach their objective of increasing sales.
Currently Kingsford's major weakness is the fact that it has not had any recent advertising. Kingsford should consider increasing advertising that will focus on brand quality, affordability, and flavor adding benefits, as a way to counter the growth of gas grilling. Integrated marketing plan that includes partnerships with other brands to increase brand association in other industries could be employed such as working with Pepsi or Oscar Mayer to cross promote in ads as well as packaging. Another brand partnership may include cause marketing like working with the Wounded Warrior Project, a nonprofit organization that provides services to wounded soldiers. An experiential marketing campaign that including barbequing with wounded soldiers with the WWP on Veterans Day would bring awareness to the brand and cause. Kingsford can promote on packaging the association to the organization and donate a portion of the proceeds to the WWP.
One of Kingsford Charcoal's strength is that it offers both instant and regular charcoal to consumers. In hopes to grow intrigue in the Charcoal industry Kingsford can find innovative ways to expand their product line with products that will excite their target consumer. Because gas grills have a smaller carbon footprint than charcoal grills, Kingsford can look into making an eco-friendlier product one that has lower carbon emissions and is derived from renewable resources. Similarly, to what Arm & Hammer did for baking soda, Kingsford can develop, and market alternative uses for charcoal. This can potentially help with the fluctuation in sales Kingsford see's due to their current weakness of being a seasonal product. Some alternative uses include, banishing odors and keeping air fresh, keeping water fresh for flowers to last longer, and keeping soil moist to suppress weeds. Educating consumers of these alternative uses will increase demand year-round.
Due to the price increase of private label brands there is a smaller price difference between Kingsford Charcoal and those of less quality. This smaller price gap can lead some consumers to believe that Kingsford charcoal is not that much better in quality than its competitors and because most charcoal purchases are impulse buys there needs to be a clear distinction of quality. Kingsford Charcoal may decide to increase their prices to better portray their superior quality to that of competitors. However, this alternative may lead to Kingsford Charcoal losing the significant amount of market share they gained when private labels increased their prices.
My first recommendation would be to take advantage of the increase in market share, utilize this momentum to establish Kingsford as the top of mind brand in the charcoal category. Next would be increase advertising budget to capture attention from those not actively seeking charcoal. Advertisements should focus on the traditional American backyard feel good family fun that barbequing ignites. Having a campaign that centers around the sense, the smell of the charcoal and food, the sounds of the kids in the family laughing as they run around the griller, the touch of the wife giving her husband a hug as he grills. As mentioned in the alternatives these ads can be done in conjunction with a brand that wants to reach the same consumers such as Pepsi and Oscar Meyer.
The case study did not mention a huge segment that is seemingly untapped in this industry, the Latin-American community. Hispanic people love a good back yard celebration. Celebrations like birthdays, first communions, baptisms, Cinco de Mayo are a big part of the Latin culture. According to Weber Hispanic Grill Watch Survey 76% of Hispanics surveyed said they prefer charcoal over gas grills. Taking this into consideration Kingsford should definitely invest in incorporating the Hispanic consumer segment in their advertisements. The campaign should remain consistent with the focuses around the senses but with a Hispanic family. The ad can run on Spanish networks like Univision and Telemundo.
Another advertising campaign would be a Kingsford food truck that travels across country. The food truck will feature all American food like hamburgers. It will attend events like little league games and tailgating college games. The food truck will ask people to participate in a blindfold taste tester. This taste tester will be filmed and used across Kingsford online and social medias. The taste test will consist of charcoal cooked hamburgers vs. gas highlighting the superior quality grillers can look forward to only when using charcoal. As mentioned in the alternatives Kingsford can incorporate cause marketing with their food truck if it teams up with the Wounded Warriors Project for a cross promotional campaign.
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