Kingsford Charcoal

Market:

The charcoal industry is mature with minimal growth. Kingsford charcoal made up 9% of Clorox’s total revenues and needed to make their numbers in order for Clorox to make its overall numbers. Gas grill sales were up by 8% (9.3 million gas grills) while charcoal grills dropped 3% to 6 million grills. Charcoal sales were trending down. The grilling market is very seasonal with 60% of purchases made between May 1 and Sept 1. Kingsford strength is its quality product and brand name. Weakness: Lack of exposure. Opportunity: To gain more market share by appealing directly to what the customers want. Threats: Current capacity constraints.

Consumer:

The grilling consumer viewed grilling as an overall experience. 80% of grill ownership was made up of younger, larger, higher income families. They enjoyed spending time outside and saw grilling as an informal way to cook. Grill owners were divided by those who preferred gas grills and those that preferred charcoal. Gas grillers looked for convenience, temperature control, quick, and easy clean up. Charcoal grillers enjoyed the hands on experience and valued the taste of the food.

Competitors:

Kingsford has been in the charcoal business since 1920. The two main competitors were Royal Oak and private label. Private label sold for about 25-30% less than Kingsford and Royal Oak was priced a little less than Kingsford. Kingsford is viewed as a high quality product, especially when compared to private label.

Product and Price:

Kingsford focused on having less skus which is preferable for retail stores to manage. The Blug Bag was regular charcoal and came in 3 sizes. The 10 lb bag was $4.25 and the 20 lb bag was $6.78. The Blue Bag represented 75% of total shipments. The Red Bag was treated with lighter fluid and also came in three sizes. The 8 lb bags are $5.20 and the 15 lb bags are $8.07.

Distribution:

They currently sell to mass merchandisers, drugstores, walmart, and clubstores. Kingsford’s sales team ensured that the retail stores were fully stocked and also worked with the individual stores for promotions. Kingsford manufactures from 5 plants costing $30-$50 each.

Advertising:

The budget has been drastically reduced over the years. This has allowed gas grilling to enter the minds of consumers.

The goals of Kingsford are :

• Grow the total charcoal market

• Increase market share

• Increase profitability

• Strengthen the brand

• New products

• Improve effiecincy

A majority of the goals can be met with a successful advertising campaign. Kingsford is starting to feel the effects of the low amount of advertising over the years. MMA suggested investing $7 million. In 1998, TV advertising spend drove an incremental 7% increase. If Kingsford spent $7 million, they could expect at least a 7% increase leading to 5.25 million incremental sales.

$350 million sales * .07 (advertising growth)= $24.5 million. At a 50% contribution margin, this is $12.25 mil. Take out the advertising cost of $7 mil which leaves the company with $5.25 million incremental sales from investing in advertising. (This is assuming a 50% contribution margin similar to Clorox).

Advertising should focus on how Kingsford is a quality product and instill value to the customer. According to the Kingsford survey, heavy users can be segmented into Regular Exclusive, Instant Acceptors, and Instant Exclusive. Advertising can please each of these groups by focusing on the experience of grilling. Also note on how quickly the charcoal lights, and how even the temperature stays to attract concerned customers. The grilling experience starts even before one lights the match. If someone wants great food, it starts with what is in their grill. Customers need to think “why even bother to grill if you are not using charcoal?” Most people take their cooking very personally and want the best for their guest. Customers mainly value the taste. They want the smokey flavor that is only obtained from a charcoal grill.

The main target market is lower and middle income males. Home improvement stores and sporting events should be the primary focus. The company already mentioned NASCAR and should host outdoor