King Charcoal Marketing Analysis

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Category: Business and Industry

Date Submitted: 11/18/2012 07:34 PM

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American Barbeque is part of the culture; people associate barbeques with family, outdoors and in some places like the south it’s also part of their identity. Kingsford is positioned as one of the leading premium quality brands of charcoal; holding 59.5% of market share in the charcoal category. They have been in business since 1920 and offer a variety of products, the most popular being “Regular” and “Match Light”, distributed mainly in food stores (66%). Kingsford direct competition is Royal Oak which manufactures almost all private label charcoal brands.

The biggest problem that Kingsford is currently facing is a decrease in their sales growth, 2% lower than in 1998. This is due to several reasons; the grilling market segment is moving from charcoal grills to gas grills. In year 2000 gas grill shipments grew 8% while charcoal grills reduced sales to 3%; 54% of homes own a gas grill and 49% own a charcoal grill. The shift on consumer preference can be attributed to some inherent characteristics of charcoal grilling; first set up and cooking takes longer than gas grilling, second there is no control over temperature, third clean up. Another factor that is adding to reduced sales is weather. This is a seasonal business and temperatures have not been helping; in the year 2000 temperature was 10 degrees lower than in 1999, rain patterns increased between the months of October through December of 2000. These weather conditions have reduced the grilling periods.

Kingsford strategy has been focused more on price reductions than investing in advertising. Their advertising expenditure decreased from 6 million in 1998 to 1 million in 2000. The results of this tight budget trend gave room for the gas grilling advertisement to position itself as an important option in the grilling market dynamic. Pricing across the industry has increased; in the case of private labels it’s 10% higher than it was in 1999 across all channels. This narrowed the gap between quality...