Kingsford Charcoal Case Study
MSCM 3332 - Fall 2012 Amanda Brodzik Allison LeFevre Christy Marion Halley White

Table of Contents

Background………………………………………………………………………………………………………1 Problem…………………………………………………………………………………………………………..1 Critical Factors…………………………………………………………………………………………………...1 Alternatives………………………………………………………………………………………………………3 Solution…………………………………………………………………………………………………………..3 Conclusion……………………………………………………………………………………………………….6 Appendix…………………………………………………………………………………………………………7 Sources Cited…………………………………………………………………………………………………...14

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Background
Kingsford Charcoal was founded in the 1920s when Henry Ford developed a way to turn wood scraps into charcoal briquettes that burned longer and hotter than regular wood. E.G. Kingsford, a lumberman and family relative of Ford’s, helped to build the first Kingsford Plant and commercialize the business. In 1973, Kingsford was purchased by The Clorox Company. In 2000, Kingsford Charcoal was one of the leading brands in the charcoal industry and represented nine percent of Clorox’s revenues (Narayandas, D., et al., 2006). Since the 1980s, Kingsford had a steady growth of one to three percent in revenues each year (Narayandas, D., et al., 2006). However, in July 2000, the first decrease in several years in the overall charcoal category took place. A team was put together to help determine the causes of the softening of sales and propose recommendations. They researched different areas in competition, pricing, advertising and promotion. Since 1998, Kingsford had not significantly advertised (Narayandas, D., et al., 2006). They also hadn’t raised prices for several years. The team now had to start considering these things in order to come up with solutions.

Problem
Consumers have developed a lack of interest in charcoal grilling. The overall sales in the industry have decreased (see Exhibit 1), so Kingsford needs to come up with a plan to fuel the interest in charcoal grilling, and thus, Kingsford Charcoal itself.

Critical Factors
The decrease in consumer interest in charcoal was a result of multiple critical factors. Some of these critical factors include: an absence of media advertising, a narrowing of the price gap across various charcoal brands, an increase in popularity of gas grilling and seasonal purchasing by consumers. Each of these factors is an important thing to consider when coming up with a solution to Kingford’s problem.
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When examining each critical factor, we believe that the absence of advertising across all charcoal brands is the main critical factor that contributed to Kingsford’s problem. Without any form of charcoal advertising on the air, regardless of the brand, there is no message being relayed to consumers. According to Advertising Media Planning, advertising media are critical to advertising success, which brings along the achievement of the marketing goals (Kelley, L.D., et al., 2004). Thus, if there is no charcoal messaging in the media, consumers are not likely to associate charcoal with grilling, let along Kingsford Charcoal. In addition, while Kingsford reduced their media spending in 2000, gas grilling had increased their media spending at the same time (Narayandas, D., et al., 2006). This resulted in an increase in popularity of gas grilling because they were disseminating their messages to the public via advertising. The narrowing of the price gap across various charcoal brands stood out as the next critical factor to address. This is where consumers’ loss of interest in charcoal first began. Private label bags were increasing their prices by nearly 10 percent at the end of 2000 (Narayandas, D., et al., 2006). Because there was a price increase, consumers were losing interest in charcoal and choosing to spend their money on other things. In the years past, price increases never really moved over five percent throughout the course of the year (see Exhibit 2). While Kingsford was keeping their prices constant, other private label brands were increasing their prices. Kingsford was surprised to see this narrowing of the price gap across the various charcoal brands. Because of the increase in prices of charcoal, we believe that consumers were then swayed towards gas grilling. Gas grill shipments increased eight percent over the course of the year 2000 while charcoal grill shipments dropped (Narayandas, D., et al., 2006). Gas grilling then became more popular than charcoal grilling (see Exhibit 1). It was even found that there was an increase in gas grill ownership versus charcoal grills during that year. In 2000, approximately 54 percent of U.S. households owned a gas grill, while 49 percent owned a charcoal grill (Narayandas, D., et al., 2006). The final critical factor that we came across was the seasonal purchasing by consumers. Kingsford found that their business was mainly seasonal, with almost 60 percent of purchases happening between May 1 and September 1 (see Exhibit 3). Holidays like Memorial Day and July 4th also contributed greatly to Kingsford’s annual sales (Narayandas, D., et al., 2006). Although these holidays have brought on great sales
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for Kingsford, we believe that the company needs to try and extend these buying periods to push consumers to purchase charcoal throughout the year.

Alternatives
To increase consumer interest and sales, Kingsford Charcoal can advertise in a number of ways. Because advertising has worked for Kingsford before, there is definitely an opportunity to advertise. One suggestion is to return to its 1998 campaign that focused on product quality when compared to other brands in the category. Positives about using this campaign include its previous success and that it is familiar to consumers. However, it has been done before and could be viewed as uncreative and outdated. Times have changed and gas grilling has gained popularity in recent years; therefore, presenting a large competition for Kingsford that did not previously exist. In more recent years, Kingsford has adopted the belief that advertising is a waste of company funds and its focus should be strictly on sales. Therefore, an alternative solution is for Kingsford to continue abstaining from advertising and simply raise the price of its products by five percent. However, according to the case study, Kingsford consumers are incredibly loyal and view Kingsford as a “better product”, so they will likely continue purchasing Kingsford Charcoal despite the minor change in price (Narayandas, D., et al., 2006). Kingsford’s profit could potentially increase without spending funds on an advertising campaign or having to persuade a new target audience to buy its brand. A negative of this idea is that consumers may be turned off by the price increase and may continue to lose interest in charcoal if advertising remains nonexistent. People need to be reminded that charcoal is still an option for grilling.

Solution
The best solution is for Kingsford to create a charcoal-centric advertising campaign. This would entail running advertisements that promote charcoal grilling rather than gas grilling. Previous consumers, such as ones who were persuaded to buy in 1998, will see charcoal commercials and relate charcoal to Kingsford. Although Kingsford would not be pushing its brand heavily, this campaign would increase awareness,
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popularity and, hopefully, the category development index of charcoal. If more people buy charcoal, more people see Kingsford in the aisles and choose between it and its competing brands. When considering its elite reputation as a “high quality brand”, consumers are bound to choose Kingsford (Narayandas, D., et al., 2006). The slogan for this campaign is “Fuel Food’s Flavor”, reinforcing the idea and majority opinion that charcoal grilled food tastes better than gas grilled food. The phrasing was strategically chosen to inform consumers that charcoal is not only literally a fuel that cooks food, but that it also the only form of cooking that adds additional flavor and depth to the natural flavors in food. In regards to the Think-Feel-Do model, this is a feel-based campaign that persuades consumers to act (do) based on their taste preferences. This solution was also determined based on the Hierarchy of Effects model, which explains where people are on the influential continuum (see Exhibit 4). The charcoal-centered advertising campaign will focus on creating awareness, interest, desire and action--in that order. First, consumers will become aware of charcoal’s existence, then they will become interested in the differences between charcoal and gas. Next, consumers will desire to grill with charcoal because advertisements state it improves the taste of food; and finally, they will take action by purchasing it. Another suggestion is that Kingsford run this campaign using an advertising method called flighting. This is when advertisements are scheduled to run during a certain timeframe that is between periods of time when no advertising is scheduled to occur (Kelley, L.D., et al., 2004). The advantage of the flighting technique is that it allows an advertiser who does not have funds for running spots continuously to conserve money and maximize the impact of the commercials by airing them at key strategic times, such as warmweather grilling months for Kingsford. For example, Kingsford should schedule charcoal advertising spots between April and September, or the second and third quarter, its busiest months for sales. However, it would be unnecessary for Kingsford to continue running advertisements during winter months because essentially no one is grilling then. Therefore, it should schedule advertisements to cease for that period of time. Flighting works to Kingsford’s advantage because it will save the brand’s advertising money and allow Kingsford to air its charcoal-centered advertisements at key times, thus leaving an impression on its public. During these advertising periods, it is suggested that Kingsford spend the bulk of its budget on
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television commercials. Out of the $7 million allotted for advertising, Kingsford would invest 60 percent of it in commercials. The main reason for this is because TV advertisements are more expensive to produce than advertisements through other media. Print advertisements would come in second with 25 percent of the budget, digital advertisements would receive 12 percent and out of home advertisements would be allotted 3 percent (see Exhibit 5). Due to the campaign’s heavy focus on charcoal’s involvement in food’s taste, Kingsford should purchase print advertisements in culinary magazines such as Ford Network Magazine, Bon Appetit, Food & Wine, Martha Stewart Living, Taste of Home and others. Secondary category magazines to consider would include ESPN Magazine and Sports Illustrated, in order to reach men during tailgating seasons. Suggestions for digital advertising include creating an iPhone app, a Pinterest account and online banner advertising. The iPhone app would have charcoal grilling recipes and instructions, tips and a timer to use while cooking (see Exhibit 6). The app will also appeal to those who may have been hesitant to participate to charcoal grilling in the past, due to lack of knowledge or fear of not using the proper technique. With the help of the apps tips, instructions and tools, these grillers will feel more comfortable about grilling with charcoal. Most of the charcoal consumer market is made up of men, but Kingsford should make an effort to reach out to women as they make most of the shopping and food purchasing choices for their families (Balik, 2011). A Pinterest board would be made to appeal to the female demographic, but it would have similar features to the iPhone app: recipes, instructions, entertaining ideas, grill safety tips and grilling products (see Exhibit 7). Again, focusing on the culinary aspect of charcoal grilling, Kingsford should concentrate its online advertising buys to food-based websites, such as the Food Network’s site, and even more specifically, the site’s tailgating subpage (see Exhibit 8). Out of home advertisements for this campaign would mostly include in-store displays. Kingsford Charcoal has an advantage when it comes to these because charcoal competitors, such as private label brands and Royal Oak, have stopped placing them in stores (Narayandas, D., et al., 2006) (see Exhibit 9). Although these displays still focus on charcoal verses gas, Kingsford is the obvious supplier of the display. This provides an opportunity for Kingsford to be the only brand investing in in-store displays, something that will make them stand out. Kingsford can go even further and give their displays an extra touch by including
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charcoal grills and grilling accessories to grab shoppers’ attention and spark their interest. These displays should be fully outfitted in Kingsford “Fuel Food’s Flavor” messaging and advertisements (see Exhibit 10). Kingsford can also invest in other forms of in-store advertising such as on meat trays, prepackaged vegetables and store carts (see Exhibits 11, 12 and 13, respectively). The goal behind this is to attract customers who are simply picking up items to cook, through some form of preparation other than grilling on a charcoal grill, and introduce them to or remind them of the fact that charcoal grilling adds flavor to and complements foods. Another out of home promotional idea is to partner with KC Masterpiece Barbecue Sauce, a product that is also owned by Clorox. Due to its association with Clorox, KC Masterpiece would be the ideal partnership with Kingsford because there will be not need to establish a new relationship with another company or turn a portion of the profits over. The idea is to place a promotional offer sticker on the bottles of barbecue sauce that will save customers money when they combine the purchase of KC Masterpiece and Kingsford Charcoal. This way, like the meat trays and vegetable packaging mentioned above, when consumers go to the store looking for barbecue sauce for their cookout, they will be reminded to pick up some charcoal along with it.

Conclusion
Although Kingsford is faced with the daunting task of correcting the fact that consumers have developed a lack of interest in charcoal grilling, following the strategies outlined above will result in success. By addressing the lack of advertising in the charcoal category, narrowing of the price gap, rise in gas grill popularity and seasonal purchasing through the solid “Fuel Food’s Flavor” campaign, Kingsford is sure to recapture their audience and spark consumer interest within the category and the brand itself.

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Appendix
Exhibit 1— Grill Shipments in 1996-2000—Charcoal and Gas (in ‘000s)

Exhibit 2— Charcoal Category Pricing Trends

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Exhibit 3— Sales by Week in 2000

Exhibit 4— Hierarchy of Effects

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Exhibit 5— Fuel Food’s Flavor Budget

Exhibit 6— Fuel Food’s Flavor Application

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Exhibit 6— Fuel Food’s Flavor Application (cont’d)

Exhibit 7— Fuel Food’s Flavor Pinterest Account

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Exhibit 7— Fuel Food’s Flavor Pinterest Account (cont’d)

Exhibit 8— Fuel Food’s Flavor Online Advertisement

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Exhibit 9— Category Merchandising in 2000

Exhibit 10— Fuel Food’s Flavor In-Store Display Sign

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Exhibit 11— Fuel Food’s Flavor In-Store Meat Trays

Exhibit 12— Fuel Food’s Flavor In-Store Prepackaged Vegetables

Exhibit 13— Fuel Food’s Flavor In-Store Cart

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Sources Cited
Advertising Budget. (n.d.). Small Business Ideas and Resources for Entrepreneurs. Balik, C. (2011, April 22). Do women really control 80% of household spending?. Wall Street Journal. Grilling 101: Charcoal vs. Gas. (n.d.). Allrecipes - Recipes and cooking confidence for home cooks everywhere. Hierarchy of Effects Model « MECCA. (2011, July 25). MECCA. Kelley, L. D., & Jugenheimer, D. W. (2004). Advertising media planning: A brand management approach (3rd ed.). Armonk, N.Y: M.E. Sharpe. Narayandas, D., & Wagonfeld, A. B. (2006). Kingsford Charcoal. Harvard Business School Publishing, 506 (020), 1-19.

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