Kingsford: To Grill or Not to Grill?
That’s not even a question.

While certainly not politically correct by modern standards, this photo-illustration reflects the pervasive presence grilling has held in the United States since the 1950s when the Weber Kettle Grill and increasing suburbanization made it a defacto standard of American living. Then again, our modern American stereotype would have a man holding tongs in one hand and a beer in another standing at the grill, which is also not only incorrect, but not fully reflective of modern grilling. But yes, that is a real Kingsford bag.
(Photo Illustration by Sandy Kreps)

Team 3 Marketing Case Analysis

Executive Summary The Kingsford brand of charcoal has found success through favorable conditions in its market traditionally, however conditions are now less favorable. A reduction in the charcoal market is affecting Kingsford even though its charcoal market share has increased. The consumer shifting trend from charcoal to gas grilling is now the primary threat to Kingsford and the charcoal market, and to combat this an action plan includes tight control on pricing, new pro-charcoal advertizing campaigns, and increased partnership with retailers and distributes. Conditions appear favorable for resurgence for Kingsford through these strategies.
Introduction
Clorox is a well known and historic house-hold brand, known primarily for home cleaning products. Founded in 1913, the company initially serviced the business market with industrial strength bleach. An attempted merger with Procter & Gamble was blocked by the U.S. Supreme Court and Clorox as an autonomous company listed on the NY Stock Exchange in 1969. Clorox began an aggressive growth strategy driven by acquisition and internal research and development. This included developing and acquiring new product lines such as Glad, Brita, Formula 409, Pine Sol, Soft Scrub, Liquid Plummer, Tilex, and Ready Mop. They also developed products outside of their traditional cleaning lines such as products for pets, auto care, food dressings and sauces. To enter the grilling market they acquired Kingsford charcoal in 1973. The Kingsford brand was started in the 1920s as an off-shoot of one of the legendary American industrialist Henry Ford’s ventures. Since its acquisition Kingsford has become one of the largest product groups within Clorox’s portfolio, and in 2000 represented approximately 9% of Clorox’s revenue. Since the 1980s Kingsford has enjoyed steady growth in revenues each year and success of the Kingsford brand is significantly tied to the success of Clorox financials. In 2000, Clorox had annual sales of $4.1 billion and net earnings of $394 million. Clorox sold the majority of its products to grocery retailers and distributors, and relied on its own sales force as well as a combination of brokers along with distributors.
The situation as of 2001 for Clorox and the Kingsford brand is less positive as the market for Kingsford began to soften in 2000 for the first time in years. Kingsford has a long track record of heavy driven sales and merchandising activities and consumer price increases had not been required in some time. Three out of four U.S. households owned a barbeque grill, with this number of average annual house-hold barbeque events trend increasing up from 1.4 billion in 1987, to over 3 billion in 2000. Barbeque events are seasonal and extremely weather driven with colder and wetter weather in 1999-2000 negatively affecting the number of domestic grilling events. The charcoal market was slowing from 4% growth in 1998 to just 2% growth in 1999 and trending additional declines in 2000. Charcoal grilling equipment sales was dropping 3% year-over-year over the same period with gas grilling equipment showing growth of 8%. For the first time more than 50% of house-holds in the U.S. owned a gas grill and competition had become a major factor in Kingsford’s decline in the early 2000s. Competition came from other charcoal brands but the larger threat was presented by gas as an alternative method for grilling.
Among other Charcoal brands Kingsford was well positioned. Royal Oak was the only other widely available domestic brand but testing showed Kingsford had superior performance which was a perceived benefit for consumers. While Royal Oak had raised prices in recent years, Clorox had not really taken notice and kept Kingsford prices steady which allowed for an increase of the charcoal market-share for Kingsford. While the overall charcoal market volume was dropping, in part due to gas, Kingsford’s charcoal market share increased from 56.1% to 59.5% in 2000. Analysis showed that “the price increase drove more consumers to Kingsford.” Other charcoal competition came from private labels brands.
The increase in pricing by the competition and market-share increase for Kingsford may have seemed to Clorox to be the emergence of a cash-cow for them, in that advertizing expenditure was reduced from $6 million in 1998 to as little as $1 million in 2000. To drive sales instead Clorox focused on strong partnerships with retailers and distributors to flood display space with bags of Kingsford during key seasons such as Super Bowl weekend, spring events like Easter, and the all-to-important summer months up through Labor Day. Royal Oak and private label brands did not notably advertize either, however Kingsford was able to take advantage of the Clorox large sales force’s know-how and experience. The sales teams worked with retailers to make sure there were always a few thousand pounds on the sales floor during the key grilling months allowing the customer to be aware of the product for an easy purchase even if they hadn’t come in to buy grilling supplies. The thinking being “why not go home and grill tonight?” should be the mental model afforded to the grocery store customer.
The perceived superior quality of Kingsford over both Royal Oak and private label brands paired with price increases by the competition but not Kingsford made this strategy quite effective. Kingsford also provided a unique variety on its own between the regular bags and those treated with Kingsford lighter fluid for an easier light at a modest price increase. Bags were also offered in 10 lb, 20 lb, and 48 lb options for regular, and 8 lb, 15 lb, and 30 lb for instant.
Production of Kingsford occurred at one of five domestic plants where wood, minerals, starch, borax, sodium nitrate and sawdust were converted into charcoal. These facilities were expensive at $30-50 million to build over five years and currently running at 80% of production. Considering the cost to increase production Clorox was cautious in forecasting brand growth and the expense of further investment. Just as they were cautious with advertizing and “tinkering” with the brand which in their experience had led other companies into trouble as they caused confusion among consumers in attempts to re-energize the public around an establish brand. The same mind-set to reduce advertizing may have occurred in the Royal Oak brand as their advertizing activities also declined in retailers, giving retailers less emphasis to promote charcoal as a whole, or at least more effort required to promote just Kingsford alone.
The true competition for Clorox’s Kingsford brand as mentioned was not coming from other Charcoal but from the increasing trend for gas grilling. There were several factors for this. For one was convenience for the consumer as gas grilling required less clean-up afterwards, and less preparation before hand, including a faster time to desired cooking temperature and faster overall cooking. Charcoal was the favored method for those who wanted that unique taste cooking with charcoal provided. Also the experience of grilling outdoors in nice weather as a task not to be rushed but rather enjoyed, slowly “with a cold drink in one hand” was a known concept, but again not advertised much if at all by the charcoal industry.

Why People Grill
President Dwight D. Eisenhower was reputed to be quite a cook. His method of grilling: knock the ashes off the coals and throw the steaks right on top! (Wright, 2010)
Grilling is an iconic activity in modern American living. Whereas centuries ago cooking over an open fire was a matter of survival, today grilling is one of many cooking methods, most of which are easier, cleaner and more readily available. Yet, when compared with the convenience of a microwave, gas range, convection oven and many other choices, grilling is the inevitable winner when cooking hamburgers, steaks, chicken or hot dogs at a social gathering.
The reasons grilling holds such a strong affection in the hearts of Americans are certainly varied. There is a surprising lack of academic research into this unique phenomenon. We must instead use more reliable sources of information, namely the Internet, Jeff Foxworthy and fictional character Hank Hill.
1. It’s a man thing.
Grilling is, for better or worse, a man’s domain. We recognize this is not politically correct, nor even true since a growing number of women are active and excellent grillers, yet the perception remains. It is the man who lights the fire and wields the tongs. As Forbes Woman puts it, “the ‘women cook, men grill‘ attitude somehow seems as American as apple pie, and strangely one of the most widely accepted gender distinctions in our culture. Even in my own experience as an empowered woman of can-do Generation Y, the part of grill master has been played almost exclusively by boyfriends and brothers.” (Casserly, 2010)
The same article attributes a number of factors behind why men in particular grill, also cited elsewhere. For instance, comedian Jeff Foxworthy intones, “Men love grilling for the sheer danger of it. You got a breeze, you got a flame, you’ve got lighter fluid and a miniature pitchfork. You got people imbibing alcohol. What could possibly go wrong here?” (Foxworthy)
Finally, among many potential reasons for a male’s attraction to grilling, grills are easy to clean as compared to the traditional kitchen. Again, Jeff Foxworthy, “Men who’d never cook or help in the kitchen will cook on the grill. The great thing about a grill is that you can clean it with a leaf blower and a garden hose. We’d do more housework if women would let us clean the house that way.” (Foxworthy)
While certainly tongue-in-cheek, these references are based in part on the factual reasons men love to grill and consider it a regular and highly rewarding activity.
2. Grilling is an embedded part of Americana.
Christopher Dummit, associate professor of Canadian History, is cited attributing the rise in grilling to increasing suburbanization beginning in the 1950s, “Before this, it was expected that men would spend the majority of their free time socializing with other men, in taverns and pubs. But parenting books began emphasizing the importance of family time, togetherness time, and this pressure led dads in the modern world to spend an increased amount of time at home with the family. But what was a suburban dad to do with all of this free time… in his backyard… with the wife and kids?” (Casserly, 2010)
The 1950s was also the genesis of the most popular barbeque grill design of all time, the Weber Kettle. This was originally fashioned from a metal buoy by George Stephen, an employee at Weber Brothers Metal Works. It was initially intended to allow barbeque when rain or wind made flat grills unusable, but the heat properties of the deep kettle quickly proved to be its primary benefit. (Steven Raichlen)

3. Grilling is a traditional and social event.
Grilling is deeply associated with group settings – family reunions, family camping, tailgating and national holidays. Grilling is also a traditional experience, whether related to the times people grill such as holiday, or the methods, such as propane or charcoal. Bill Amend, creator of the popular FoxTrot comic frequently plays off this recognized social norm with explosive results, often tying his cartoons to holiday events. As an example, see the illustration at right. (Amend, 2011)
4. Grilling = science + taste.
Grilling pits the grillmaster against a large chunk of dead flesh. The goal – a juicy steak or burger. The process – therein lies the challenge, and the addiction. On the grill, conditions are ideal for success. However, achieving these results is a matter of great practice, and great pride when achieved.
As explained by Hank Campbell of Science 2.0, “Meat proteins are made up of amino acids which may be charged and adding salt ions can increase the water-holding capacity of your non-vegetarian treats. The salt moves into the meat and extra water is also absorbed so on your grill the meat holds on to the moisture, which means you get juicier stuff. Yep, it's plain old osmosis, lower concentration to higher through a semipermeable membrane. In meat, this is the plasma membrane that surrounds the individual cells.” (Campbell, 2010) In layman’s terms, the grill is an ideal cooking method to lock in juicy flavor in a thick slab of meat.
Grilling with direct heat also enables the all important browning action on steaks and burgers. Turning to science 2.0 to demystify the process, “In science, it's the Maillard reaction, after the French physician and chemist Louis Camille Maillard, who discovered the link when he heated sugars and amino acids together and the mixture slowly turned brown. But it's just called browning to grillmasters. Chemically, the denatured proteins on the surface of the meat recombine with the sugars present during cooking. When you grill, the outside temperature is higher than the inside, triggering the Maillard reaction and creating stronger flavors on the surface.” (Campbell, 2010)
5. Grilling is a passion.
The grill is inexpensive and long lasting. This enables anyone, of any income, to partake in a piece of the American dream. Even more expensive gas grills, which are rising in market penetration per Kingsford’s data, remain relatively inexpensive given they will last many years with only modest upkeep efforts. In particular, the rise in gas grills on suburban patios may also fuel the mystique of grilling, as charcoal purists and gas devotees each claim superiority.
Perhaps the best known gas grilling advocate is TV’s Hank Hill, the ‘Hill’ in King of the Hill. Hank, an erstwhile salesman of propane and propane accessories is drawn to typify the socially perceived middle America – a working family man that can’t quite get ahead, but exhibits contentment in his daily life. Yet the opinions Hank Hill expresses – that gas grilling is the only acceptable method – increasingly reflect the penetration of gas grills in the market. As more consumers switch to gas, the demand for charcoal declines among new users, even if the charcoal purist remains dedicated to their craft. While this is an issue for charcoal and gas grill companies, the pure passion of the griller remains a driver of the activity.
Clifford Wright captures the sentiment of grilling in his essay ‘Fire up the Grill’ where he writes, “The big debate about fuel for grill fires is between gas, lump hardwood charcoal and charcoal briquettes. In my mind, the debate is spurious for several reasons. The key to good grilled food will always remain with the expertise and imagination of the cook, the love they have for shopping for, preparing and cooking good food, and the quality of the ingredients they use. There are differences, of course, between gas and charcoal, and someone will prefer one over the other, but in the end, the equipment and fuel is not as important as the food being grilled with the love of the cook.” (Wright, 2010) But a debate it is and one that fuels passion for the grill.

Positioning
Kingsford Charcoal is currently positioned as the premium charcoal name brand, with 60% of surveyed consumers indicating that Kingsford is “a high quality brand” relative to 13% of private label. The current positioning is advantageous because it solidifies Kingsford as the market leader in charcoal and because of a 25-30% price premium over private label brands. Therefore, we do not believe that there is any compelling reason to change the positioning at this time. As for positioning Kingsford Charcoal separately from Kingsford Match Light, we also do not feel that this is necessary as the goal of this action plan is to promote charcoal as a whole and specifically Kingsford products. The demand for Kingsford Charcoal and Kingsford Match Light is based on consumer preference. However it is general brand awareness and therefore it is not necessary to differentiate between regular Kingsford Charcoal and Kingsford Match Light.

Pricing
In the past year, Royal Oak and private brands have had their prices jump 10%, the biggest increase in years. This price increase lead to a decrease in Royal Oak sales from 7.7% to 6.4% of market share, and a decrease in private label sales from 34.9% to 32.7% of market share. Kingsford’s market share during the same year rose from 56.1% to 59.5%, and we feel that we stand to lose these gains by raising prices. We agree with the recommendation posed by Sales Director Nick Vlahos, who said “We’ve been working with our retail partners over the last several years to increase promotion of Kingsford, particularly at the expense of Royal Oak. If we hold off on any price increase for another year, we might be able to convince more chains to focus distribution and merchandising support on Kingsford and private label. “We think that by coupling the trade promotions that is discussed in the recommendation with a hold on prices, we can see serious gains in charcoal market share. It is also important to remember that any price increase by Kingsford could drive consumers to gas grilling, which undermines our Action Plan and specifically our Advertising strategy. Therefore, we recommend that we do not change prices for any Kingsford Charcoal products. Rather, Kingsford should support its premium position through other means, namely direct consumer awareness education.
Advertising: Spending, Message
Between 1998 and 2000, Kingsford has decreased its advertising spending from $6 million to $1 million. During the same three year period, gas grilling has increased its media spending from less than $4 million to over $10 million. This compelled Warren to provide a grim prognosis: “The charcoal category is now paying the price for several years of reduced advertising”. It is time for Kingsford to take the offensive again against gas grilling. Smith Boyle and Warren should use this rationale to convince Clorox to give them the $5 million to $7 million they need to execute this advertising campaign. Especially since Kingsford is so important to the Clorox portfolio that if Kingsford has a bad quarter that Clorox will have a bad quarter.
Kingsford has already determined from their market research that over half of charcoal users do the vast majority of barbecuing, over 85% of all occasions. It is important to target these users, especially because these users are more likely to grill for taste. Charcoal grilling has been frequently referenced as providing better flavor for grilling than gas grilling. This is a key advantage of charcoal grilling over gas grilling that Kingsford needs to capitalize on through its ad campaign. Kingsford can strike a chord with taste-conscious heavy and moderate grill users by advertising the higher flavor and taste of charcoal grilling. This is how Kingsford can take the offensive against gas grilling and help build the charcoal market.
Kingsford has also already determined through its research that the most popular occasions for grilling are the 4th of July, Labor Day, and Memorial Day. These holidays also correspond with the three major spikes in charcoal purchases every year. Therefore, Kingsford’s advertising campaign should target frequent grillers on these three holidays. Kingsford should put together a separate ad campaign for each holiday and run the campaign two weeks prior to each holiday. This would give Kingsford the most bang for their advertising buck and also help drive the impulse purchases that make up over 30% of their sales. Can also invent reasons for people to cook, with an ad for “make your day, a Kingsford day” even if there is no holiday or Superbowl. Also during summer months people go camping, and would you rather take a bag of Kingsford instant with you, or lug a gas tank around? Promoting sales by taking appropriate campaign measures during key months would increase revenue.
Of note, increasing advertising does not necessarily have to increase expenses. Examining Exhibit 11, Kingsford has shifted its promotion mix away from advertising and toward reduced revenue. The store partnerships are attractive, but one must wonder if the side effect is a lack of driving factors reaching consumers. Kingsford is now depending on walk through traffic in the store, rather than generating consumer desire to grill with charcoal. Kingsford should look to shift its total merchandising spend back toward the 1999 levels to increase its advertising effort without materially shifting the budget. | FY97 | FY98 | FY99 | FY00 | FY01E | Volume (MSC) | 16,000 | 17,000 | 18,000 | 19,000 | 20,000 | Media Expense ($MM)
($ per Sc) | $6.00
$0.38 | $6.00
$0.35 | $5.00
$0.28 | $4.00
$0.21 | $1.00
$0.05 | Reduced Revenue ($MM)
($ per Sc) | $25.00
$1.56 | $26.00
$1.53 | $27.00
$1.50 | $29.00
$1.53 | $31.00
$1.55 | Sales Promotion ($MM)
($ per Sc) | $6.00
$0.38 | $6.00
$0.35 | $8.00
$0.44 | $9.00
$0.47 | $8.00
$0.40 | Total Promotion ($MM)
Total $ Per Sc | $37.00
$2.32 | $38.00
$2.23 | $41.00
$2.22 | $42.00
2.21 | $40.00
$2.00 |
The most significant benefit of increased advertising is the increased exposure to charcoal grilling and to Kingsford as the best choice. Increased advertising has a low risk of reaching the saturation point and has the potential to capture the dominant market share for segments that have been overlooked in Kingsford’s previous campaigns. Also, stimulated demand for Kingsford may strain the ability to fulfill orders. Most importantly, with the intention of targeting some of the new advertisements to women, Kingsford must take care to avoid alienating their existing masculine customer base.
Promotion: Trade & Consumer
It is important for Kingsford to use trade and consumer promotions to drive sales. Furthermore, it will be most effective to use these promotions in tandem with the proposed advertising plan. Trade promotions are important because large displays during holiday sale periods account for a large portion of Kingsford’s total sales. Luckily, the retailers also benefit from charcoal sales, with the average charcoal purchasing customer spending 30% more during their store visit. Kingsford must use this fact to convince stores to have large charcoal displays that will help boost its holiday profits. That said, Kingsford can also use trade promotions to further this goal, and also push its two-brand strategy on retailers. Combined with the proposed pricing and advertising strategy of this plan, Kingsford can use trade promotions to help push Royal Oak out of stores in favor of Kingsford and private labels. Consumer promotions, again used in tandem with the holiday advertising campaigns, will also help drive customers to the retailers, furthering both Kingsford’s objectives and also bringing customers to Kingsford’s distributors. This will improve Kingsford’s relations with its retailers and also increase sales during the holiday period that this Action Plan focuses on. Features and Audiences
Kingsford could target promotion toward unique features and audiences. For instance, the quick starting product is ideal for those seeking convenience, especially as compared to gas grills, which are ready to cook in a matter of minutes. Charcoal offers mobile grillers – tailgaters, campers and other event driven users – the ability to easily pack up the grill and grab a bag of charcoal and head for their event or destination of choice as compared to heavy and bulky gas grills.
In addition, Kingsford should target audiences aside from the dominant male stereotype. Women are increasingly using grills and represent an ideal opportunity for Kingsford to promote taste, authenticity and versatility to grow adoption within this segment. Given that women remain the dominant shoppers in grocery and household goods, a female customer has the unique opportunity to dictate the choice of cooking style even if she does not hold the tongs.

Expand Product Line
Kingsford could create flavored and environmentally friendly/healthier varieties of charcoal. Kingsford makes conventional charcoal from wood scraps, limestone and sawdust. A “natural” charcoal could be made without limestone. Kingsford could use hickory, mesquite, maple or other woods to impart their distinct flavors. Some customers or potential customers do have a perception that charcoal isn’t healthy, though in fact burning conventional charcoal releases no extraordinary toxins, and it is more environmentally benign than petroleum products such as gas.
Advantages for Kingsford would include leading the charcoal market in innovation. “Natural” varieties would appeal to growing "green" and health conscious market segments. Kingsford could position these new products to enhance the cachet of the Kingsford brand. But there are some risks. We are uncertain, in year 2000, whether there is significant demand for "green" or health conscious charcoal. Flavored and “green” charcoals would have somewhat increased costs for Kingsford and introducing “natural” charcoal could bring undesirable attention to perceived environmental and health concerns of existing products. Along these lines, new varieties could also cannibalize regular charcoal sales.
Production
Monitor the capacity of all Kingsford plants to avoid manufacturing issues in the future. With the R&D, price, promotional, and other considerable changes that are going to be started, Kingsford needs to make sure they are staying on track with their facilities. Since all of the plants are at 80 percent capacity, Kingsford may want to start considering options to grow manufacturing. After reviewing the production data Kingsford can determine whether the existing plants are meeting the growing market demand., or does the company needs to plan for additional shifts, overtime, or that a new plant will need to be build. Without careful planning, Kingsford could run into serious capacity issues.

Kingsford and Kingsford Brand; Final Recommendations In conclusion, we recommend for Kingsford Charcoal a two-step approach against competition; advertising against gas grilling as a whole, and use trade and consumer permeations to attack Royal Oak. The pricing structure should not be altered as competition has already done so to cause loss in their market share, and any increase would be counter to an anti-gas campaign. Kingsford as the premium charcoal brand should impress to the consumer they are the only alternative to gas grilling, and the owner of the advantages over gas. In this way a definite increase in advertising is warranted, to prevent/slow the decline of the charcoal market and to promote the Kingsford brand. Clorox shall be requested to provide the short-term funding for the necessary campaigns as financial risks to Clorox due to any decline in Kingsford revenues are significant. Longer term the marketing mix must shift back to the more efficient 1999 budget allocation. Advertising shall focus on the numerous advantages of Kingsford and charcoal in general, such as product quality, taste, and tradition, referring to the iconic experience of grilling. Continuing to targeting the key months of the grilling season is paramount, as well as establishing new mental models for grilling such as for camping, or to spice up any evening at home rather than cooking in the kitchen. This includes marketing more charcoal grilling to women through “natural” varieties for a more health conscious consumer, without alienating the traditional male base. Trade promotions will further this goal as well as consumer promotions, as mentioned in concert with identifying key times and reasons why the end user will enjoy grilling with Kingsford.

Bibliography
Amend, B. (2011, 07 13). Narnes & Noble.com. Retrieved 07 13, 2011, from http://www.barnesandnoble.com/w/my-hot-dog-went-out-can-i-have-another-bill-amend/1007351725
Campbell, H. (2010, May 30). The Science of Grilling. Retrieved July 9, 2011, from Science20.com: http://www.science20.com/science_20/science_grilling
Casserly, M. (2010, July 1). Grilling, Guys And The Great Gender Divide. Retrieved July 8, 2011, from Forbes.com: http://www.forbes.com/2010/07/01/grilling-men-women-barbecue-forbes-woman-time-cooking.html
Foxworthy, J. (n.d.). Jeff Foxworthy: Why Real Men Grill. Retrieved July 8, 2011, from Parade.com: http://www.parade.com/articles/editions/2007/edition_05-20-2007/Foxworthy
Steven Raichlen, B. F. (n.d.). The Barbecue! Bible.
Wright, C. A. (2010, July 10). Grilling with Gas or Charcoal - Zester Daily. Retrieved July 13, 2011, from Zester Daily: http://www.zesterdaily.com/cooking/570-choosing-and-using-grills