The perception of gas grilling as easier, faster, and almost the same taste as charcoal grilling has hampered the charcoal category. With the emphasis on “green” living and environmental consciousness, charcoal and charcoal production and its negative effect on the environment, is another reason people are turning to gas grilling. Gas grill shipments grew 8 percent In 2000, while charcoal grill shipments dropped 3 percent over the same time period. Gas grill shipments have increased each year from 1997 through 2000.
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Charcoal grills only increased one of those years. It is very unlikely Kingstown can reverse this trend. They must strive to slow gas grill usage and remind the grilling public about the advantages of charcoal grilling; better taste, It Is a true grilling experience, and the fact that certain charcoal products Like Matching, are almost as quick as gas grilling. Kingstown has a unique advantage in the entire grilling population; name recognition. They need to parlay this name recognition Into the entire grilling population.
Kingstown needs to look at developing products that can be used for gas and charcoal grilling. Barbecue tools, aprons good similar to a bag of charcoal, grill covers, and even developing or branding gas grills are various options on working with the gas grill market. Much of this market penetration could be partnerships with other companies requiring minimal capital Investment. Even grilles who are using gas know the Kingstown name. Tastiness such as “If you’re forced to use gas to grill, at least use Kingstown grilling tools for a truer grilling experience” could be effective.
Development or partnerships with products that can be added to a gas grill to provide a “charcoal” taste; flavor bars or wood hips are different products that can enhance the taste of gas grilled food. Grilling spices or seasonings could be “branded” with the Kingstown logo and sold through partnerships with the manufacturer. Kingstown and Colors could partner and label “Kingstown Grill Cleaning” products, which utilize current Colors cleaning products. Kingstown must stress that the cleaner works on gas or charcoal grills. The worst scenario Is Kingstown Ignoring the gas grill market.
This market will not go away and Kingstown must be willing to work in all areas of the grilling market. 1 OFF crease in media advertising from both Kingstown and Royal Oak, Kingstown main competitor, over the past three to four years. Not only has the advertising in the charcoal category decrease significantly, advertising in the gas grill category has increased. Kingstown chose to emphasis in-store promotions, circulars, and worked extensively with various retailers to have Kingstown as the dominate charcoal in the displays.
This has allowed Kingstown to continue to grow slowly while the charcoal industry has declined as a whole. Point of purchase and impulse sales are very radical to Kingstown sales, and the in-store promotions are critical to the continued success of the product line. However, Kingstown must increase its media advertising to increase growth, develop new customers, and to attempt to slow additional gas grill growth. This is also the avenue to show any new products or innovations Kingstown can offer to the grilling population.
They will need to increase the media spend to at least the 1997 levels of $6 million and reduce the Sales Promotion at the $6 million level of 1997. This would only require an additional spend of $3 million between promotion and media www. Aromatherapies. Com/print/Kingstown- Charcoal-Marketing-Analysis/50563 1/3 expense from 2001. Although the sale of Kingstown has increased slightly even with the media expenses being cut, they need to protect the entire charcoal grilling market.
The market is losing share to gas grilling and Kingstown main competitor, Royal Oak is a non-factor in rebuilding the market category. This additional media expense should combine their two products, “Blue” and “Red”, and address the advantages of charcoal. Framing charcoal as a “Happy Product” and relating it to tailgating, picnics, family, ND other “happy’ activities will help reposition charcoal as the tasty, fun, and memorable grilling experience. Another issue is the seasonality and weather issues that prevent grilling in general.
Tying the Kingstown name with fall football, both college and Pro, can provide a natural extension of the grilling season (this is currently in place). Grilling all year long should be pushed as an “extension of summer” to the grilling population; Just because the leaves are falling doesn’t mean the grilling season is over. There are spikes of sales during major summer holidays ND these spikes could happen during all holidays, particular Easter (start of spring), Thanksgiving, Superpower, and New Year’s eve/day (tie in with football).
A good example is Thanksgiving and mimicking the success of the deep fryer for cooking the Thanksgiving turkey. Most people don’t have a deep fryer but they have a grill. Why buy a deep fryer that is used only once a year when you can cook the Thanksgiving turkey on a charcoal grill. Kingstown could partner with Butterball and develop ways to successfully grill turkeys on Thanksgiving and start a new holiday deed to utilize their brand name, customer loyalty, and their role as the market leader to grow the charcoal grilling category.
If they do not increase the charcoal industries profile the industry will continue to lose market share. There will always be people that are loyal to charcoal, but they need to convince others that charcoal grilling is still the best tasting way to grill. 3. Given that Kingstown is currently operating at 80% of total capacity, and that it is reported to be difficult and expensive to add capacity, what long term strategy(sis) do o recommend for Kingstown? Discuss at least two different major alternatives (pros and cons) and the support whatever recommendation you make.
Judging from the declined in the charcoal industry, a sustained growth of 5% over the next few years does sound difficult to fathom, however the capacity could become an issue as Kingstown tries to increase market share and redevelop the charcoal industry. As the “Custodians” of the charcoal category, Kingstown must make smart decisions in plant expansion and development. It would not be an easy process to build a new plant; even if could be done it could take $50 million and at least 5 years due to permitting and environmental issues.
Even expansion, if possible, will be questionable due to permitting and it would take at least two years. This doesn’t leave a lot of option for internal production growth in the United States. Out of country production should be looked at for future growth and as other potential markets. Charcoal grilling is not unique to the United States, and it is produced all over the world. Transportation is an issue due to the bulk and relative weight of the product; however, looking at reduction in Mexico or South America may be a viable option for additional capacity.
The permitting process would likely be significantly easier, construction costs lower, and labor would be cheaper. There are current charcoal plants in these countries that Kingstown could utilize for short-term supply needs or for permanent supply. Charcoal production is not looked at as environmentally friendly, however it does use scrap wood and recycling it into the actual charcoal product. Kingstown would have to make sure any production or purchases made in another country follow the same process used in the United States.
Scrap wood and sawdust from production of other products must be used; trees can’t be cut Just to be made into charcoal. This could create a marketing www. Treacherousness’s. Com/print/Kingstown-Charcoal- Marketing-Analysis/50563 nightmare for Kingstown and Colors. Kingstown must have a viable option to increase production in the future, if there are no viable plants to build or purchase in the United States, and they need additional production, they will have to add production in another country. Could have a positive impact on profit.
Kingstown hadn’t raised prices in a number of ears, while their competition, mainly the private labels, have increased prices. Kingstown could raise prices and still stay with in the 25-30 percent gap relative to the private label. The price elasticity data provides some interesting information on the pricing structure. A total line price increase of 5 percent will decrease volume but still increase profit even if the promotional activity is reduced. This is an excellent opportunity for Kingstown to increase profits, even at the expense of unit sales.
This will extend the production capacity for a few additional years as the media advertising and other category growing tools build in momentum. This extra revenue will provide an opportunity for additional advertising, product development, and development of additional production capabilities. Charcoal is a fairly inelastic product; there are few competitors and minimal other options. The increase in price will decrease volume but there is still enough sales to increase profit overall. Raising the pricing 5 percent on all products is a great way to increase profits, while maintaining capacity levels that are manageable.