Case Study: Kingsford Charcoal

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Problem Statement: Kingsford Charcoal (hereinafter “Kingsford”) has enjoyed steady moderate revenue growth of one to three percent since the 1980s. However the summer of 2000 presented a decline in revenue for the highly seasonal product, which has persisted into 2001. Kingsford’s parent company, The Clorox Company (hereinafter “Clorox”), experienced a six percent (6%) decline in sales for 2001 second quarter earnings and its December 2000 stock price had hit a three year low. Clorox relies on Kingsford to improve sales and profits. Kingsford has not raised prices in several years, nor has it advertised in any significant way since 1998. Profitability and continued growth are essential. Kingsford is currently faced with several critical…show more content…
Kingsford is the charcoal industry – it cannot afford to not advertise, both during prime grilling season and in the currently non-cultivated “off-season.” There is a direct correlation between advertising dollars and sales volume, as demonstrated by the 7% incremental volume increase due to advertising in targeted markets in 1998. That strategic advertising also resulted in residual accrued benefits in 1999 with an estimated 3-4% volume increase. Specifically, Kingsford must increase advertising to targeted markets during non-traditional grilling times such as fall tailgating season and NASCAR in the spring. Such targeted markets include key NFL cities and college football towns. As discussed further below, Kingsford should also introduce a new line of organic “gourmet” charcoal. Certainly advertising funds will need to be devoted to the new gourmet line, but the bulk of advertising funds need to be spent on Kingsford bread-and-butter Regular and Instant briquettes. Increased targeted advertising of Kingsford’s core products will elevate overall consumption to counteract any potential cannibalization of its current brand

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