Kingsford Case

Kingsford Case

Situation Analysis

At the moment, Kingsford Charcoal is experiencing a downward trend characterized by reduced sales. According to Narayandas and Wagonfeld, the business had enjoyed steady, moderate growth since the 1980s of up to 3 % revenues annually (1). However, the trend was different in the summer of 2000 when sales significantly declined. Marcilie Smith and Alison Warren, the firm’s brand managers, have been tasked to determine the causes of the downward trend as well as come up with practical recommendations for reviving the business. The two have to analyze various issues relating to competition, promotion, pricing, and advertising to ascertain, where the company was going wrong.

Based on their analysis charcoal market in the United States was promising due to people’s grilling habits. As Narayandas and Wagonfeld indicate, three out of four American citizens, especially the younger generation, owned a barbecue grill (2). Most barbecue owners grill meat on various occasions, such as Memorial Day, Labor Day, and other special events. Also, the majority of Americans prefer grilling meat using charcoal due to its great flavor and desire to hang with friends outdoors. Various foods, including hot dogs, hamburgers, chicken breasts, sausages, and pork, are among the ones that most people grill. Although charcoal was previously preferred for grilling, there was a drastic change due to pollution issues associated with it. Moreover, it took longer to set up and grill using charcoal compared to gas (Narayandas and Wagonfeld 2). The change in preferences could have substantially affected Kingsford’s sales.

For many years, Kingsford Charcoal had been one of the most successful charcoal dealers in the United States. However, the firm has not changed most of its traditional strategies to cope with market dynamics. For example, it has not reviewed its prices for some time and has not advertised in any significant way since 1998 (Narayandas and Wagonfeld 1). Since 2000, gas grill shipments had rapidly grown (Narayandas and Wagonfeld 5), an indication that most people were no longer using charcoal. According to Smith Boyle and Warren, a change in business strategy was inevitable. To them, Kingsford needed to rethink its pricing, advertising, promotion, and production strategies.

Alternative Courses of Action

The company should revive its marketing strategies. As Smith Boyle and Warren observe, the 1998 marketing was a success as it led to a significant increase in sales (Narayandas and Wagonfeld 8). Unlike the 1998 case, when other charcoal brands were the biggest competitors, the firm was currently dealing with natural gas suppliers as competitors. Hence, the business needs to initiate an advertising campaign that tells people why charcoal grilling beats any other form of grilling. Specifically, the drive should illustrate how charcoal grills give meat and other foods a tender, smokey taste. Also, the advert should emphasize other benefits of charcoal grilling, including greater control, low price, easy transportation, and hotter grilling compared to gas.

Since times have changed, Kingsford Charcoal should embrace 21^st-century advertising strategies. For example, it should consider using social media and Google adverts to increase its online presence. According to Hanaysha, effective social media advertisements play a significant role in helping organizations to develop their perceived favorable image (5). This image is fundamental in improving perceived customer value. By growing its online presence, Kingsford would generate an overwhelming brand awareness, which would lead to increased sales. An online presence will not only expand the company’s market base but will grow its exposure in America and beyond. Thus, the business should first create strong social media profiles and a website that highlights all its business activities. Then, it should focus on expanding online following, which will substantially drive growth.

Secondly, Kingsford should reconsider its pricing strategy. Although the company has not increased its prices for the last few years, it has not reviewed its pricing model either. As Narayandas and Wagonfeld state, a price increase is not an option as retailers will inevitably resist it (7). According to Smith Boyle and Warren, an increase in price will lower the merchandising momentum gained over the years. In the current case, Kingsford should embrace competitive pricing rather than cost-plus pricing. Competitive pricing ensures that all prices are set, bearing in mind the prices of the competitors {}. In Kingsford’s case, the pricing strategy adopted should consider the prices of liquefied gas. The final price, thus, should give customers a good reason to buy charcoal over gas for grilling purposes. However, the pricing should also consider production costs to ensure profitability. The firm needs to lower its production cost so that its final selling price competes with liquefied gas while still ensuring profitability.

Finally, Kingsford should offer a new product variation. There are various reasons why most people are turning to gas over charcoal during grilling, especially the pollution factor and the inability to regulate temperatures. Due to smoke associated with charcoal, it becomes hard for people to use charcoal grills indoors. However, the company should give its customers a new experience by focusing more on smokeless charcoal. At a time when smokeless charcoal grills are becoming increasingly popular, a more in-depth focus on smokeless charcoal will ensure that the company is not wiped out of the market. It will be able to set itself apart from other charcoal sellers while giving customers a good reason to continue using charcoal over gas. Customers will be assured of the great taste of grilled foods without worrying about pollution.

The Best Alternative among the Three

The best alternative among the three is new product variation. In this variation, Kingsford will alter the physical characteristics of its traditional charcoal to make it smokeless. At the moment, Kingsford’s charcoal is not any different from what the competitors sell. Moreover, it is considered more of a pollutant compared to gas. Even if the company decides to raise the price, the quality of its charcoal will justify it. In this case, the company should focus on vertical differentiation. Typically, vertical differentiation works in instances where consumers demand goods based on perceived quality. In case a market has multiple products that serve the same purpose, consumers compare the prices of each product version with their marginal utility (Picard and Tampieri 3). Then, one good is selected over the other.

If Kingsford embarks on new product variation, it will gradually reverse the downward trend witnessed in the last few years. In any business, customer loyalty is closely linked to satisfaction. The fact that most customers are turning to liquefied gas for grilling is an indication that they are not satisfied with charcoal. Making its charcoal smokeless is one way of enhancing quality, which will then increase sales. In Kingsford’s case, quality characteristics should be defined in its ability to meet customers’ needs without having adverse environmental impacts. Hence, the new specifications in the smokeless charcoal will create customer value, which is essential in building loyalty.