Kingsford Charcoal Case Study

|Recommendation |

In terms of a future action plan, we feel Kingsford Charcoal should target the market segment identified as Regular Exclusive, and select the pricing scenario labeled total line pricing increase. To balance advertising and promotions, we propose that Kingsford maintain the forecasted advertising budget, while implementing a promotional strategy focused on co-marketing, cross-promotions and retailer enticement. Additionally, we recommend Kingsford explore offshore options for production (Exhibit A).
|Rationalization
|

Based on market research data, we believe the Regular Exclusive users should be the target segment. This group identified grilling with real charcoal as a satisfying skill that is worth doing right, and view making a fire with charcoal as an easy task. Also, this segment is most comfortable with charcoal grilling, has more time to grill, is less nervous when grilling for groups, and does not see charcoal grilling as a hassle. With such attitudes characterizing the Regular Exclusive users, it is unlikely that they will be attracted to gas grilling as an alternative. After calculating the expected monetary value (EMV) of each pricing scenario total line pricing increase is the best choice, as implementing this strategy has the greatest profit potential.
With this decision, we increase both regular bag and instant bag by 5 percent across all channels. This is an appropriate change because both private label and Royal Oak have increased prices. There is never a good time to raise prices, but this adjustment can be justified with the EMV data. Plus, charcoal is an item characterized by pricing flexibility since it is a ‘happy product’ associated with family and fun, and consumers will not see a drastic price increase. (Exhibit
B) To balance advertising and promotion, the allotted $1 million will enable Kingsford to get adequate exposure through print media without tapping into the promotion budget. According to Marketing Management Analytic, Kingsford’s base volume will continue to erode without advertisements. An advertising plan needs to enable Kingsford to leverage charcoal grilling. In terms of a promotional strategy, co-marketing and cross-promotion will allow Kingsford to capitalize on other brand names and expand seasonality. Informing retailers of the research findings that customers spend 30 percent more while shopping if they purchase Kingsford charcoal will lead to better display opportunities and increase impulse purchases. Given that growth is likely to result from this action plan, Kingsford should explore offshore options for production. This enables capacity consideration without unnecessary risk.
|Alternatives and Validation |

Market research identified two other charcoal user segments: Instant Exclusive, and Instant Acceptors.
Instant Exclusive users want hassle free grilling that is easy and flexible. Instant Acceptors want speed, prefer hassle free grilling, and are more nervous grilling for groups. In terms of price, the other pricing scenarios did not yield high profit potential and there is no strong justification for maintaining current prices. For advertising and promotion, reducing the advertising budget is not acceptable because research shows Kingsford needs exposure, but increasing the budget is costly and there are efficient ways to match the exposure of gas grilling. Production does not have evidence to support that Kingsford will require a new plant and it is too expensive at this time. Approaching competitors is risky and unnecessarily exposes
technology.
|Detailed Recommendation |

Kingsford should advertise in outdoor and sports magazines. Taste and flavor must be stressed, while attracting men and families. For incentives, provide a coupon for Kingsford on the packaging of Pepsi and Bud products. Join with Pepsi and Bud to create retail displays encouraging charcoal grilling during tailgating, and holiday events. Create a cardboard insert of charcoal with the Kingsford name that fits into charcoal grills for sale in retail outlets. Offshore production options should be kept in close vicinity to the US to ensure fast lead time. (Exhibit C)
|Appendix |

Exhibit A: Future Action Plan Recommendation Summary

| | |
|Target Market |Target Regular Exclusive segment |
| | |
|Positioning |“Take time to capture the flavor with Kingsford Charcoal” |
| | |
|Pricing |Select pricing scenario labeled total line pricing increase |
| | |
|Advertising |Maintain forecasted advertising budget of $1 million |
| | |
|Promotion |Focus on co-marketing, cross-promotions, and retailer enticement |
| | |
|Production |Explore offshore options in close vicinity to the United States |

Exhibit B: Pricing Strategy Based on Profitability [pic]
Exhibit C: Potential Advertising