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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

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Kingsford charcoal


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


Kingsford charcoal

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

    10


    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


    Kingsford charcoal

    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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