Essay Example on Kingsford Charcoal Since 1998 Clorox has seen a slowdown of Growth









Kingsford Charcoal Since 1998 Clorox has seen a slowdown of growth in their charcoal product Kingsford Charcoal represented a 9 of Clorox s revenues in 2000 and the charcoal market overall faced a major competitor eating its sales gas grills The goal is to increase market share in the charcoal segment profits and strengthen the brand Kingsford is a subdivision of Clorox a conglomerate of different brands divided in three categories U S Household Products and Canada 40 of sales U S Specialty Products 45 of sales and International 15 of sales Clorox has a compounded annual growth rate of 7 2 in net earnings making it a stable company in terms of growth Exhibit 1 Clorox s product portfolio shields it from any sudden changes in individual brands and the company can pull funds from cash cow products to invest in future growth products This makes Clorox and Kingsford a strong competitor in the charcoal industry especially with a market share of over 50 Another strength is Kingsford s strong relationship with its consumers and retailers 60 of consumers indicate it s a high quality brand compared to the competition and the company works closely with the retailers to ensure high sale volume Clorox s weakness is that it may not react as fast as it can to market changes because of its large and layered decision making process and not being able to capture customers from the gas segment 

The company's strengths are sustainable long term since there are multiple products under the Clorox brand that impact the bottom line The likelihood that Clorox loses money is very low The direct competitors in the charcoal industry are Royal Oak and private label brands More importantly the indirect competitor is gas Looking at Exhibit 6 gas is penetrating the marker at a faster rate than charcoal eating away at the current market size of charcoal The drivers of demand for this industry tend to be men 60 and specific events such as 4th of July and tailgates Also some key preferences to barbecue included easiness of clean up desire to be outdoors change of pace and hanging out with family and friends Lastly about one third of sales are from compulsive purchases Some context in the industry is the weather and seasonality Also barbecuing is a leisure activity that changes based on the number of events available in the year Looking at the overall market 80 of users are young and from larger high income families Also the number of barbecue events have gone up from 1 4 billion to 3 0 billion from 1987 to 2000 respectively About half of the consumers are heavy and medium users and drive 85 of barbecuing events These heavy consumers have a strong preference to use charcoal but not a strong brand loyalty exhibit 9 There is only one brand of charcoal that I would use The targeting should be focused on mass marketing segment 3 5 growth Exhibit 3 seasonal events and impulse purchasing 

Not enough is being spent on promotional activity in the industry since the competition expects Kingsford to lead the promotional activity in the charcoal segment exhibit 7 The positioning statement should be to offer a convenient higher quality product to attract the heavy medium users that are driving 85 of barbecuing events and differentiate the brand from the competition The value proposition has deteriorated since the competition has decreased the price gap between 10 and 12 Exhibit 4 Kingsford can reach its goal of increasing market share in the charcoal segment profits and strengthening the brand of its product by following these strategies increase the price extend the grilling season through promotions and make new partnerships to add alternative channels By increasing the total line pricing by 5 the expected profit for FY02 is 1 765 billion exhibit 10 accounting for loss in volume This action will help differentiate Kingsford s brand from the competition and reinforce the value proposition of higher quality

There is a risk of losing merchandising momentum by the price hike but this can be mitigated by clearly justifying the reason for the price increase Also the sales team will be affected negatively since they are compensated by volume a price increase will bring down volume as seen in exhibit 10 This can be lessened by restructuring the compensation of the sales force to be based on sale amounts and not volume Next to extend the grilling season promotions can be applied on a regional basis with an emphasis on warmer states or cities such as LA or Miami to keep volume moving during the off season months Keeping an open line of communication with the distributors is key to make this successful Finally creating new channels of distribution can help increase volume and exposure to the brand This can be done by making new contracts with commercial users such as restaurants hotels or outdoor companies This can reduce the seasonality effect and dependability on the weather Exhibit 1 Clorox Company Financials Exhibit 3 Volume Growth Exhibit 6 Grill Penetration Trends Exhibit 7 Category Merchandising in 2000 Exhibit 9 Exhibit 10 Price Elasticity Data

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