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Kingsford Charcoal Case Solution

Solution Id Length Case Author Case Publisher
814 1251 Words (4 Pages) Das Narayandas, Alison Berkley Wagonfeld Harvard Business School : 506020
This solution includes: A Word File A Word File

Kingsford Charcoal is a dominant player of the charcoal industry, but due to certain trends of the company and management decisions, the company was unable to focus on its target goals resulting in a loss of market share and company growth. Management of the company appointed two brand managers, Boyle and Warren, in order to study the issues and find solutions to the problems faced by the company. Brand managers focused their attention to the four P’s of marketing to find the answers underlying. They also needed to take in view the company’s past pricing and advertisement trends in order to make recommendations. It was suggested that the company would retain its position by increasing their investment in advertisement. A positive change in the pricing structure would retain the growth rate of the company as suggested by the brand managers.

Following questions are answered in this case study solution:

  1. What is your action plan? What should brand managers Marcilie Smith Boyle and Allison Warren propose to their managers, Gordon and LaMontagne?

  2.  How did Clorox get itself into its present situation? Of what relevant trends should Kingsford brand managers be aware?

  3. Why do people grill? Profile a frequent griller. Why do people use charcoal versus gas when grilling?

  4. How does your action plan affect Kingsford"s business objectives including market share, profit and franchise?

  5.  What is the relevant category definition here? What marketing objectives do you recommend for the Kingsford brand?

Kingsford Charcoal Case Analysis

1. What is your action plan? What should brand managers Marcilie Smith Boyle and Allison Warren propose to their managers, Gordon and LaMontagne?

The suggested action plan to tackle the low growth rate of the company includes a change in price, increased focus on advertisement, increased promotion of products and an increase in the capacity of the company. Brand managers Boyle and Warren should propose a price increase of 2.5 percent (lowest) to 5 percent (highest) depending upon the approval of the managers above them. A price increase will help the company to enjoy short term growth and an opportunity to re invest the profit in the company’s projects. An increase in the price would still result in a price lower than that of its competitors. Kingsford Charcoal has to increase its advertising budget from $1 million to $7million in order to cope up with the change in market conditions and to maintain its market share. It would protect the base volume of the company from erosion. Promotional techniques such as placing product banners at the start of a particular aisle in the shopping mall will increase customer attraction towards the product. Finally, the suggested action plan includes an increase in the supply of products in order to maintain an adequate capacity for the customers.

2. How did Clorox get itself into its present situation? Of what relevant trends should Kingsford brand managers be aware?

Clorox had been enjoying a stable growth in the Kingsford Charcoal project, but in 2000, the profits started to decrease due to a decrease in the demand of charcoal in the market. It was then decided to appoint the task of research and suggestions to two of the prominent brand managers. The managers needed to know about the relevant trends of the company to fully understand the situation and take all possible factors in consideration. The company had a policy of price stickiness; i.e. retained its price level and tends to avoid price changes to maintain market share and the level of sales. On the other hand, there was a limited focus on promotional activities such as an advertisement and the company did not invest a large amount of time and effort in the advertisement of Kingsford Charcoal. To study the decline in growth of the company, the managers had to look up all the past trends which were still going on in the company. Clorox was facing production issues because of the change in focus of the company from production to sales and trading. Investing in a business where promotion and marketing played a vital role was a question to be studied by the managers appointed for the job.

3. Why do people grill? Profile a frequent griller. Why do people use charcoal versus gas when grilling?

Grilling is a cooking technique, in which the food is prepared through the application of dry heat from above or below the surface of the food. Grilled food is usually known as Bar be que. Grilling is in the heart of American people, and they do it out of passion and enjoyment. A frequent griller would be the one who likes to spend his time with his family and friends. He would celebrate each event by involving fun filled activities and a feeling of togetherness among friends and family. Grilling can be done in two ways, Charcoal grilling and gas grilling. Charcoal grilling is preferred by people who are used to the taste and aroma of charcoal in their grilled food. On the other hand, gas grilling is preferred due to its convenience and safety during the grilling process. People have different reasons to opt for the type of grilling they choose. Charcoal grilling provides an authentic taste and smoky flavor keeping the cost of grilling low, whereas gas grilling provides greater control over cooking i.e. temperature and the time limit can be easily managed in gas grilling. Gas grilling can cost relatively higher than charcoal grilling, but in the latter case, more wastage is expected which might increase the cost of grilling in the longer run.

4. How does your action plan affect Kingsford"s business objectives including market share, profit and franchise?

The main issue of Kingsford Charcoal is that gas grilling is becoming popular among the customers, due to an increase in the demand of gas grill related products in the market. Competition and change in market conditions are also affecting the company’s performance. The suggested action plan included increased advertisement of the company’s products, increase in the price of products, implementation of promotional techniques and an increase in the product range and capacity.

The suggested action plan will result in a change in the company’s perspective as the management tries to fit the future growth objectives according to the growth targets of the company. Advertisement will help KC to increase its market share by focusing on the specific taste of charcoal grilling as compared to the gas grilling. Increase in the prices by the suggested percentage would help the company to increase its profit margin resulting in the reinvestment of profit in the expansion of Kingsford Charcoal. Its growth will not only attract the customers, but will also attract investors to invest in the franchising opportunity offered by the company. Hence, Kingsford Charcoal will achieve the target goals, or at least arrive close to them by implementing the suggested action plan.

5. What is the relevant category definition here? What marketing objectives do you recommend for the Kingsford brand?

Kingsford is known for its high quality products in the category of charcoal. The company relishes a relatively larger market share than its competitors in the charcoal category. However, there are some of the marketing objectives which can make the company sustainable in the longer run and maintain or increase its market share. Kingsford has followed the trend of avoiding price increases and a decreased investment in advertisement of the products offered by the company. There has been a decrease of 83 percent in advertisement budget from 1998 till 2000. The consequences of these trends can result in a deviation from originally perceived company’s objectives and it can lose its market share due the popularity of gas grilling among the customers.

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