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…. Kingsford Charcoal. Daniel Brockman Breanne Klose Elaine Ormonde-Hua Gizem Ozdemir Quyen Tran. http://kingsford.com. Ellsworth B. A. Zwoyer patented charcoal briquettes in 1897* Henry Ford made briquettes from wood scraps in 1920

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kingsford charcoal

Kingsford Charcoal

Daniel Brockman

Breanne Klose

Elaine Ormonde-Hua

Gizem Ozdemir

Quyen Tran

http://kingsford.com

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

Kingsford\'s History

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

2

kingsford s swot

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
  • 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

Kingsford’s SWOT

  • 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 environmentally-friendly lines
  • 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

3

kingsford s questions

How do we increase overall charcoal use?

  • How do we increase Kingsford’s sales?
  • Should we increase prices?
  • Should we address production issues?

Kingsford’s Questions

4

BBQ Sweet Potatoes, John Dawson, http://www.patiodaddiobbq.com/2009/11/barbecued-sweet-potatoes.html

alternatives potential actions

Alternatives/Potential Actions

Facilitate consumer interest in charcoal grilling

Increase advertising

Expand beyond U.S.

Increase prices

Expand current product line

Do nothing

http://instoresnow.walmart.com/uploadedImages/AmericanSummer/Articles/5051AAP_AS_art_pov_briquet.jpg

5

criteria for evaluating alternatives

Sales of charcoal

  • Sales of Kingsford
  • Brand cachet
  • Profitability

Criteria for Evaluating Alternatives

Tasmanian Salmon, http://www.huonaqua.com.au/grilling.php

6

analysis facilitate consumer interest in charcoal grilling

Collaborate with grill manufacturers

  • Partner with retailers to offer point of purchase
  • discounts on meat purchase with charcoal purchase
  • Sponsor events where grilled foods
  • are for sale
  • Feature charcoal grilling recipes and
  • barbecue party ideas in lifestyle/cooking magazines and television shows
  • Promote charcoal use outside of
  • traditional grilling holidays and occasions

Analysis: Facilitate Consumer Interest in Charcoal Grilling

http://kingsford.com

7

slide9

Analysis: Facilitate Consumer Interest in Charcoal Grilling

  • Pros:
    • Emulates Gillette\'s successful model: Give away the razor and sell the blades
    • Addresses threat of gas grilling by strengthening awareness of charcoal grilling in minds of consumers
    • Fosters positive associations of charcoal grilling
    • Attracts new charcoal users who don\'t have a grill
  • Cons:
    • Will increased sales justify the cost?

http://cdn.sheknows.com/articles/grilled-corn.jpg

8

analysis increase advertising

Increase volume and frequency of ads

      • $7 million budget recommended during peak season
    • Leverage consumer associations of charcoal grilling as an American pastime
    • Celebrity endorsement
    • Target new segments: women and foodies
  • Pros:
    • Consumers receive greater exposure to charcoal
    • No active charcoal advertising competition
    • Low risk of saturation 
    • Capture increased market share of targeted segments
  • Cons:
    • Stimulated demand may strain production capacity
    • Internal Clorox budget
    • Must take care to avoid alienating existing masculine clientele

Analysis: Increase Advertising

http://kingsford.com

9

analysis expand beyond the u s

Analysis: Expand Beyond the U.S.

Target customers outside of the U.S.

Position product to correspond with local culture in new markets

Pros:

 Increases size of Kingsford\'s market

Cons:

Production currently limited to 5 U.S.-based plants

Environmental and health regulations

of some regions

Clorox lacks experience outside North America

Insufficient information of international markets

www.bbqbrethren.com/forum/showthread.php?t=63394

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analysis increase prices

Maintain 25% to 30% price differential

  • Pros:
    • Higher prices improve profits per
    • unit sold
    • Consistent with charcoal competitors\'
    • price increases
    • Enhances brand cachet
  • Cons:
    • When competitors raised prices and Kingsford\'s prices remained static, sales of Kingsford increased  
    • Competitive advantage of discount brands is weakened when their prices are closer to Kingsford\'s
    • Retailer might respond negatively and decrease Kingsford promotions 

Analysis: Increase Prices

http://dianasneighborhood.files.wordpress.com/

2009/09/grilling-coals-robert-s-donovan-booleansplit.jpg

11

analysis expand current product line

Create flavored and environmentally friendly/healthier

  • lines of charcoal
  • Pros:
    • Allows Kingsford to lead industry
    • in innovation
    • Appeal to growing "green" and
    • health conscious market segments
    • Enhances brand cachet
  • 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

Analysis: Expand Current Product Line

http://abcnews.go.com/images/Health/nm

_Grilled_Food_090515_main.jpg

12

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

Analysis: Do Nothing

http://farm3.static.flickr.com/2187/2512252584

_e2d9036049.jpg

13

recommendations

Focus on increasing overall charcoal market size

    • Strengthen link of grilling and charcoal in consumers\' minds
    • What\'s good for charcoal is good for Kingsford
  • Increase advertising budget to $7 million
    • Use increased budget to advertise charcoal grilling during nontraditional occasions
    • Present charcoal grilling as female-friendly and essential for premium flavor
  • Do not increase prices
    • Continue to reap benefit of increased competitor prices
  • Research international expansion opportunities
    • Explore viability of expansion

Recommendations

http://img4.southernliving.com/i/2006/03/grill-

with-the-girls/grilling-girls-l.jpg

14

recommendations1

5. In order to appropriately innovate, conduct market research to determine why consumers have switched from charcoal grilling to gas grilling

    • 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
    • Keeping in mind that building a new production facility requires upwards of 5 years and $50 million

Recommendations

15

http://www.masterbuilt.com/kingsford/images/kingsford_08.jpg

sources

Sources

Except where noted, all information came from the case description, Narayandas and Wagonfeld, Kingsford Charcoal (2006), Boston, MA, USA: Harvard Business School Publishing. 

http://www.soudersstudios.com/photos/22_1.jpg

16

slide18

Questions?

http://kingsford.com/

17

production constraints in 2000

Production constraints in 2000

Current production from 5 U.S. plants

Kingsford\'s plants operate at 80% of capacity

Kingsford\'s market share is 60%

100% = 80% * 1.25Current plants could supply a 25% increase in Kingsford sales

Production manager estimates:

New plant costs $50M

Permitting takes 3 years

Recommendation:

Begin site selection and permitting

Next year, reconsider whether to build

http://s.fatwallet.com/static/attachments/11967_0001_st070209_aap1_img_538277363.jpg

18

bbq grill shipments north america

BBQ Grill Shipments, North America

19

Hearth, Patio and Barbeque Association (HPBA), https//www.hpba.org/statistics/barbecue-statistics/bbq-grill-shipments

demand curve

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.

20

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
    • 2 "natural"
    • 2 instant
    • 2 regular
    • Specialty hickory and mesquite (http://www.thecloroxcompany.com/products/msds)

Epilogue

21

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