The A1 Steak Sauce Case Analysis Marketing Essay

Chef Brookes of England originally created A1 Steak Sauce in 1824. He was chef to King George IV of England with his spouse Chef Henderson Brand. Legend has it the male monarch was so delighted with the sauce that he declared it “ A1 ” and therefore the name was born ( Kerin & A ; Peterson, 2010 ) . In 1830, Chef Brand stole the formula from Chef Brookes and began commercial production under the Brand & amp ; Co. label in 1831 ( Wikipedia, 2011 ) .

Today, A1 Steak Sauce is owned and manufactured by Kraft Foods ( Kerin & A ; Peterson ) . It is the leader in the steak sauce class with a 54 per centum dollar portion and 46 per centum volume portion ( Kerin & A ; Peterson, 2010 ) . It has high trade name consciousness and asserts, “ Nine out of 10 steak houses serve A1 ” ( Kerin & A ; Peterson, 2010 ) . This instance will supply a drumhead and analysis of A1 Steak Sauce with an accent on pricing schemes every bit good as an appraisal of the company ‘s strengths, failings, chances, and menaces.

Problem Designation

Summer vacations such as Memorial Day and Forth of July are indispensable for steak sauce trade names because this is when a important per centum of merchandises are sold. Approximately 10 per centum of A1 Steak Sauce volume is sold during each vacation hebdomad ( Kein & A ; Peterson, 2010 ) . During these vacations, publicizing competition is intense because retail merchants support merely one trade name in a peculiar class during a promotional hebdomad ( Kerin & A ; Peterson, 2010 ) .

Lawry ‘s, a direct rival to A1, is advancing a new steak sauce merchandise get downing April 2003 ( Kerin & A ; Peterson, 2010 ) . They want to sharply publicize the new merchandise with Publix on Memorial Day ( Kerin & A ; Peterson, 2010 ) . Publix is the largest food market shop concatenation in the United States ( Kerin & A ; Peterson, 2010 ) . A1 normally advertises with Publix on Memorial Day because this consequences in a bulk of merchandise sale. If Lawry ‘s is allowed to publicize with Publix, so A1 will non run into its 2003 financial net income mark.

Chuck Smith, senior trade name director for A1, scheduled a meeting with his concern squad to measure the state of affairs and explicate a program ( Kerin & A ; Peterson, 2010 ) . They will discourse selling and pricing schemes in response to Lawry ‘s new merchandise debut. A1 wants to retain place as market leader in the steak sauce class.

Case Analysis

Kraft Foods is the largest nutrient company in the United States and the 2nd largest nutrient company in the universe ( Kerin & A ; Peterson, 2010 ) . Kraft Foods has a portfolio of 67 major trade names, each with over $ 100 million in one-year gross revenues ( Kerin & A ; Peterson ) . Their portfolio includes classs such as java, frozen pizza, cheese, confect, cereal, mayonnaise, and barbeque sauce ( Kerin & A ; Peterson, 2010 ) .

Kraft Foods direct rivals include Unilever, General Mills, PepsiCo, and Nestle ( Kerin & A ; Peterson, 2010 ) . Unilever is the largest consumer merchandise company in the universe, which owns and manufactures Lawry ‘s ( Kerin & A ; Peterson, 2010 ) . Kraft Foods and Unilever sharply compete in several nutrient classs such as salad dressings, mayonnaise, and marinades ( Kerin & A ; Peterson, 2010 ) .

Unilever has $ 50 billion in gross revenues yearly ( Kerin & A ; Peterson, 2010 ) . The company portfolio includes merchandises such as Dove, Slim-Fast, Vaseline, Close-Up, Breyers, and Axe ( Unilever, 2011 ) . The company ‘s fiscal end is for 200 of their trade names to hold $ 1 billion in one-year gross revenues ( Kerin & A ; Peterson, 2010 ) . Although Unilever ‘s gross is $ 18,547 million more than Kraft Foods, their income after revenue enhancements is $ 957 million less than Kraft Foods ( Kerin & A ; Peterson, 2010 ) .

Kraft Foods spends 15 per centum of operating gross on advertisement ( Kerin & A ; Peterson, 2010 ) . A1 advertisement focuses on telecasting musca volitanss running throughout the twelvemonth ( Kerin & A ; Peterson, 2010 ) . Customer publicities make up five per centum of operating gross ( Kerin & A ; Peterson, 2010 ) . In add-on, A1 supports a partnership with beef manufacturers ( Kerin & A ; Peterson, 2010 ) .

Retail borders are 30 per centum for all A1 spirits ( Kerin & A ; Peterson, 2010 ) . A1 has increased its monetary value over the old ages and has a gross net income border of 83 per centum ( Kerin & A ; Peterson, 2010 ) . Ten per centum of gross goes towards in-store promotional attempts and trade publicities ( Kerin & A ; Peterson, 2010 ) .

The retail monetary value for A1 Steak Sauce is $ 4.99 for a 10-ounce bottle ( Kerin & A ; Peterson, 2010 ) . The A1 line includes a figure of spirits, which are original, sweet & A ; tangy, bold & A ; spicy, midst & A ; hearty, and smoky mesquite ( Kerin & A ; Peterson, 2010 ) . The bulk of gross revenues are made of A1 original spirit ( Kerin & A ; Peterson, 2010 ) .

The retail monetary value for Lawry ‘s Steak Sauce is $ 3.99 for an 11-ounce bottle ( Kerin & A ; Peterson, 2010 ) . However, Lawry ‘s is non A1 ‘s biggest rival. The retail monetary value for A1 ‘s biggest rival, Heinz 57, is $ 4.79 for a 10-ounce bottle but the merchandise is different in gustatory sensation and visual aspect ( Appendix A ) . Heinz does non market straight against A1 ; alternatively, they advertise a many-sided trade name message ( Kerin & A ; Peterson, 2010 ) .

Lawry ‘s Steak Sauce will put tremendous selling weight to advance its new merchandise ( Kerin & A ; Peterson, 2010 ) . The company will apportion $ 20 million on advertisement during the summer months ( Kerin & A ; Peterson, 2010 ) . Although Lawry ‘s shelf pricing is significantly lower than A1 and Heinz, trueness in steak sauce trade name is high with limited competition ( Kerin & A ; Peterson, 2010 ) .

Identifying the Root Problem Components

A1 Steak Sauce has several issues that will impact selling and pricing schemes. The issues are trade name consciousness, pricing schemes, merchandise publicities, fiscal allotment for advertisement, and financial net income borders.

First, A1 Steak Sauce is the best merchandising trade name in the class. It is the original steak sauce in the industry, which is dominated by a few rivals. The company holds 54 per centum of the steak sauce in dollars ( Kerin & A ; Peterson, 2010 ) . The staying rivals make up 46 per centum of steak sauce dollars divided between them. Introduction of Lawry ‘s may cut down A1 ‘s per centum alternatively of the staying rival ‘s per centum.

Second, Publix may allow Lawry ‘s advertise on Memorial Day. Lawry ‘s will offer a two-for- $ 5 promotional monetary value point ( Kerin & A ; Peterson, 2010 ) . If Lawry ‘s enters into an confederation with Publix, so gross of A1 Steak sauce will significantly diminish. A1 sells about 10 per centum of volume on Memorial Day weekend ( Kerin & A ; Peterson, 2010 ) .

Third, it is standard pattern that makers cover the cost of in-store monetary value decreases in order for retail merchants to maintain their borders constant on a per centum footing ( Kerin & A ; Peterson, 2010 ) . Price matching is an option but will significantly diminish net income borders. In add-on, bing clients may keep out buying A1 until the monetary value beads once more.

Evaluation of Options

A1 Steak Sauce has several options to measure, which are categorized as violative or defensive schemes. Offensive schemes include encirclement, flanking manoeuvre, or frontal assault. Defensive schemes include diminishing the inducement for onslaught or increasing structural barriers. In add-on, the company can explicate a fresh selling construct in answer to Lawry ‘s.

First, blockade may plunge Lawry ‘s with merchandise handiness, strategic pricing, and assortment of spirits. Second, a flanking manoeuvre will assail Lawry ‘s weakest country and capitalize from the scheme. Third, a frontal assault will do A1 to monetary value lucifer and copy the publicities of Lawry ‘s.

A hazardous manoeuvre is to diminish the inducement for onslaught. A1 Steak Sauce will well drop its monetary values, which will cut down Lawry ‘s chances of future gross. However, it will diminish A1 ‘s chances of future gross every bit good.

Increasing structural barriers will retard Lawry ‘s selling and advertisement schemes. A1 Steak Sauce can come in into formal understandings with distributors and providers or be involved in rearward perpendicular integrating. A1 will seek to diminish costs by increasing scale economic systems. The company can present new merchandises into the market, which will collar entry by rivals.

A1 Steak Sauce can negociate ideal shelf arrangement and prolong a greater per centum of infinite in the steak sauce class. The company can secure stop cap shows, specifically near the meat and beef aisles. In add-on, the company can join forces with major eating house ironss to put A1 on every tabular array and include it in the ingredients list.

Consumers who are apathetic to steak sauce trade name may buy based on monetary value entirely. Geting new consumers will be financially advantageous because of trueness to their trade name. A1 Steak Sauce can offer samples of steak sauce in supermarket booths. Capturing the roof of the mouth of new consumers through samples can ensue in longitudinal gross revenues.

SWOT Analysis

Strengths

A1 Steak Sauce ‘s high quality and trade name consciousness distinguishes it from the competition, which is limited to Heinz 57, Lawry ‘s, and assorted private label trade names. The company enjoys the largest per centum of market portion in the steak sauce industry. A1 holds the rubric of being the original steak sauce in the industry. Consumers extremely associate A1 with barbeque nutrients such as steak. “ Nine out of 10 steak houses serve A1 ” ( Kerin & A ; Peterson, 2010 ) .

Failings

A1 Steak Sauce is strongly associated with steak and non other meats. This makes trade name extension hard. Past attempts in trade name extension were unsuccessful. A1 is used during repasts that include hamburger and steak, which is infrequent. Combined with a little helping size, a bottle of A1 will last a considerable sum of clip.

Opportunities

A1 Steak Sauce can strategically market and advertise during telecasting cookery plans. There are tonss of cookery shows in add-on to a telecasting web. Forming partnerships with telecasting shows will be paramount in successful trade name consciousness. A1 is available worldwide. The company can market and advertise in other states and linguistic communications. This will vouch trade name consciousness at an international degree.

Menaces

A1 Steak Sauce ‘s most immediate menace is the debut of Lawry ‘s. A1 does non desire to be runner-up on Memorial Day advertisement. Lawry ‘s offers an 11-ounce bottle of steak sauce for $ 3.99 compared to A1 ‘s 10-ounce bottle for $ 4.99. If beef monetary values continue to lift, consumers will be price-conscious on related condiments.

Recommendation

A1 Steak Sauce has a competitory advantage due to big net income borders, trade name consciousness, and handiness at retail shops and eating houses. The big net income border allows A1 to set their pricing schemes during the summer vacations. However, monetary value matching can be undermining because bing consumers may keep out to buy until the monetary values bead. Effective pricing schemes are indispensable for pulling new consumers to the A1 Steak Sauce trade name. The company should publicize to new consumers because these persons are more likely to buy other trade names. Offering a bundled bundle with meats will maintain net income borders high and add to the entreaty of a prime merchandise.

A nucleus competence is A1 ‘s ability to hold a recognized and distinguished trade name place. Existing consumers are non likely to exchange trade names on one of the biggest broil yearss of the twelvemonth. Existing consumers enjoy the spirit of A1 and, hence, will be disbelieving experimenting with other trade names. New consumers may buy a steak sauce trade name based entirely on the lowest monetary value. Capturing the roof of the mouth of new consumers will be possible by offering samples of A1 Steak Sauce prior to the summer vacations.

A1 has strong sustained relationships with retail shops and eating houses. This gives A1 precedence in advertisement during the summer vacations. In add-on, if Lawry ‘s advertises on Memorial Day but does non hold expected gross revenues, so retail shops will lose gross every bit good.

A1 Steak Sauce is the taking trade name in the industry. The company can monetary value it higher than its rivals due to its high quality and trade name consciousness. Decreasing the monetary value will cut down the perceptual experience of quality, which is paramount to the trade name.