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Case Analysis: Kingsford Charcoal
Kingsford charcoal is part of an industry that is in decline. Since the 1980s, Kingsford has enjoyed a 1-3% growth rate every year. Then in the year 2000, Kingsford and the category as a whole saw it’s first decline in many years. Even though they are in decline, Kingsford still holds 59.5% of the charcoal market. This means that the charcoal competition is not a serious problem for Kingsford. This decline is mainly due to the popularity of gas grills as opposed to charcoal grills. In 2000, gas grills had an increase of 8% with 9.3 million new grills shipped. Making up 54% of grills in peoples homes, gas grills are gaining popularity in the United States for many reasons. Another factor that is creating a decline in the charcoal industry as a whole is a lack of advertising. Kingsford spent $6 million on advertising in 1998, and in 2000 they only spent $1 million. None of the other companies in the charcoal industry (Royal Oak and third parties) spend any money on advertising. Due to this lack of advertising, less people are hearing about charcoal grilling, and more are hearing about gas grills.
The objective for Kingsford charcoal is to reignite the popularity of charcoal grills over gas grills. Kingsford has many options to choose from in this situation. They could choose to do nothing and rely on the strength of the brand and it’s history within the grilling market. Another option would be to revise their pricing strategy, and charge more for their products. Their last option would be to increase the amount of money they spend on media advertising by a significant amount. All of these options have various benefits and drawbacks and theses options need to be properly analyzed before making a decision.
If Kingsford decides to do nothing and rely on their strong brand name and their loyal customers, they will eventually lose significant profits and market share. They would be doing nothing to...