Kingsford Charcoal Essay

Submitted By max100500
Words: 626
Pages: 3

1. What is happening in the market?
* In 1980s, kingsford had moderate growth of 1-3%; however in summer of 2000 it started to decline. * Kingsford had kept their prices the same for several years, and had not advertised their product since 1998 * Kingsford had a track record of being heavily driven by sales and merchandising activities. * They tried to find out the reason why charcoal was starting to decline, and analysed different trends such as competition, pricing, advertising, promotion and production * 3 out of 4 US households owned a barbecue grill – 80% ownership were from younger, larger, higher income families * 60% of barbecuers were men and they were mainly used at popular occasions such as July 4th, Labour Day, Memorial Day * charcoal category had slowed from 4% growth from 1998 to 1999 to 2 % growth from first half of 1999to the first half of 2000 * they found a narrowing of the price gap across various charcoal brands as result of series of private label price increases * approaches – analysis tools used * competitor analysis – analyse pricing and the product * micro and macro environmental factors * SWOT analysis (micro) * PESTEL analysis (macro) * key issues * charcoal vs gas * kingsford vs royal oak (and other competitive brands) * if weather is not as hot as previous years then people will not be using their barbecues very often * people only use the barbecue on certain events such as 4th of July, Labour Day, etc… * very expensive to build additional capacity – new plant can cost 30-50 million to build and could take at least 5 years – they are losing their sales volume, and therefore need to advertise more * how much they should increase the price by

2. Strengths/ Weaknesses of Kingsford * They are able to sell their market shares as that has increased * Good brand image * They are becoming cheaper relatively – constant prices throughout the years (very efficient) * Relationship with the distributors * They were pioneers of the industry

* They haven't advertised in any significant way since 1998

* They couldn't be complacent

* They are running at 80% capacity, which means they won't be able to meet demands as their product will run out

* Charcoal industry has lost momentum so it is now declining

* Gas is doing well because it is more convenient, greater control of the cooking temperature, shorter cooking time, easier to clean up after the barbecue

* The discovery of the price gap was too late ( if they had