Kingsford is a brand of charcoal used for grilling, owned by The Clorox Company. Amongst the large variety of brands under Clorox`s umbrella, Kingsford has a special spot, as 9% of Clorox`s revenues were owed to charcoal. Thus, they were highly dependent on Kingsford`s operations as those would be reflected in Clorox`s financial results.
Kingsford did not have many competitors on the charcoal market, them being the leaders. The competition for charcoal grilling came from the substitute product (1997), gas grilling, which began to gain popularity, customers and steal market share. Instead of an emphasis on marketing to compensate for the downward trend, Kingsford made the mistake of reducing their media spending from $6 million to $1 million, while the substitute product company boosted their advertising efforts from $4 million to $10 million, making the situation even worse. Clorox`s mistake, on the other hand, was that they did not have any products to compete with the substitute product, and, in addition, they neglected to help Kingsford with advertising charcoal.
These mistakes, although critical, could have been easily counteracted by a significant emphasis on advertising. The decision should have been easy, as they had the historical numbers to substantiate the impact that advertising would have on their revenues (7% increase in the same year and 3-4% additional increase in