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Holy Angel UniversityGraduate School of Business
K INGS H OT N’ H ANDY CASE
In partial fulfillmentof the requirements inMarketing Management
(GSMARKMA)
GROUP 3Ruby Lyn S. del Mando
Marie Francoise Therese M. KhoMa. Shiela Lauren L. Lapid
Richard Y. Samia
Prof. Segismundo M. Gonzales
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Kings Hot n’ Handy
September 25, 2010
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Kings Hot n’ Handy
I. ABOUT KINGS HOT N’ HANDY
Kings has been a brand name of Goodfoods, Inc. since the 1920s.
Goodfoods started in the United States and is popular in 87 countries
worldwide, especially in Europe. It is globally known, aside from Kings
products, for its mayonnaise, cooking oil and peanut butter spread
brands.
In the Philippines, Goodfoods locally produce mayonnaise, sandwich
spreads, peanut butter spreads, instant gelatin, cooking oil, and of course,
Kings products. The company has successfully maintained the good
image of the brand and has earned loyal consumers throughout the years.
Kings has been a household brand in the Philippines since 1969,
with its broth cubes, liquid seasonings and packed soups. In fact, it is
ranked the third most popular brand in the United States.
Before launching Kings Hot N Handy (KHH), Kings came up with a
market research to find out people’s opinion on why they would buy an
instant snack. The results were:
Taste 75%Convenience (speed & ease of
preparation)
22%
Economy (filling) 20%
In 1998, Kings entered the Soupy Snack Market with its Kings Hot N
Handy, starting with the Arroz Caldo variant. The product was positioned
as “your deliciously filling snacking solution to hunger” . TV ads carried the
tagline “ Bigat ng Dating Hindi Bitin ” (Filling and Satisfying).
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Kings Hot n’ Handy
Kings Hot N Handy is an instant rice porridge snack, instant single-
serve cup rice, and only needs boiling water to be added to serve. Its
flavors are Filipino traditional snacks, such as Arroz Caldo, Goto,
Guinataang Mais, Champorado and Chicken Sopas. Beef Goto and
Champorado were launched in 1999. Guinataang Mais and Chicken Sopas
were introduced in 2000.
KHH’s number one competitor is Penny which has been in the
Philippine market since 1979. In the year 2000, two other competitors,
Chow Break and Quick Eat, enter the market. This decreased KHH’s
market share.
Kings came up with a research team last September 2000 to find
out again the factors which affect consumers’ purchase of instant food
products. After two months, they came up with these results:
Taste 61%
Price 39%
Known Brand 27%
Filling 2%
In January 2001, a large multinational company bought Goodfoods,
Inc. This purchase will make Kings the largest brand of that company
since Kings uses the same brand name all over the world. It is the #1
advertiser in the Philippines. It also has stable and large distribution
network.
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Kings Hot n’ Handy
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Kings Hot n’ Handy
Mission and Vision
Mission:
“Brands to be the first choice for consumers everywhere. Quality is a
priority, not just functional quality, but food taste, nutrition and ease of
use should increase enjoyment.”
Vision:
They call themselves truly “a multi-local multinational” because their
“local companies are predominantly run by local people in tune with their
communities and who understand their needs and values.”
II. IDENTIFICATION OF THE PROBLEMS
Kings saw the potential of the growing soupy snack in the market,
thus introducing Kings Hot n’ Handy. However, recent sales reports are
not overwhelming. It seems that the market for the cup rice is quite small
compared to the cup noodle market plus its competitor (which is Penny) is
eating the market.
Ms. Clarisse Villa, the Product Manager, is worried if the market will
still grow, and how Kings Hot N Handy (KHH) can race with Penny.
Based on the given information and facts in the case, this study will
specifically answer the following questions:
1. What are the factors that affects the sales of Kings Hot n’ Handy
and the recommended possible solutions?
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Kings Hot n’ Handy
2. How Kings Hot n’ Handy brand be identified and differentiate
compare to Penny and other competitors’ brand?
3. What are the things should be considered in building Kings Hot n’
Handy a strong brand?
III. SWOT ANALYSIS
STRENGTHS WEAKNESSES
Easy to prepare andconvenientBetter tasteLarger capital due to
company acquisitionMarket dominance in
packed soups, liquidseasonings & broth cubes .
With variety of productsInternationally known
company
Limited budget foradvertisingLimited distribution
networksPoor trend spottingUntimely market researchPrice is high compare to
competitors’Wrong product positioningLow market and low
profitability
OPPORTUNITIES THREATS
Media ExposureConsumer change in trends:
“instant lifestyle”New market segments
Small market that mayeventually die
Increase competition due toemerging competitors fromnew and existing playersBrand loyalty to competitors
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Kings Hot n’ Handy
IV. ALTERNATIVE STRATEGIES
Below are the selected strategies in each factor that will help the
company achieve its target sales and strong brand.
i. TARGET MARKET – broaden target market
a. Differentiating the target market and promoting it as a breakfast
food, instead of a snack. This requires new set of market studies.
b. Stick with the original target market and focusing on a new
segment: students and working mothers.
c. Sticking with the original target market and focusing on a new
segment: children.
ii. PRODUCT
a. Dropping the product line since it has low market share and low
profitability.
b. Discontinue Goto, Guinataang Mais and Chicken Sopas flavors. Then
further positioning the two remaining flavors: Arroz Caldo as merienda
snack and; Champorado as breakfast meal.
c. Reformulating the product (based on the recent market research
about factors affecting consumers’ purchase of instant food products):
improve the taste, repackage and highlighting Kings Brand.
iii.PACKAGING
a. Removing the free spoon.
b. Do not remove the spoon because there is a psychological effect to
consumers when they see an added item in a product
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Kings Hot n’ Handy
iv.ADVERTISING
a. Increasing media advertisements highlighting the taste and not the
filling advantage, unless market is differentiated.
b. If the company opt to focus on a new segment, then advertising
efforts to the mothers.
v. DISTRIBUTION NETWORK
a. Do an extra effort for Kings to place KHH in sari-sari stores and
convenience stores as their main product distributors.
vi.SOURCE OF RAW MATERIALS
α. Company produce its own rice
β. Hiring a local supplier to produce the rice.
χ . Import rice.
V. RECOMMENDATION
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Kings Hot n’ Handy
The graph above shows the typical product life cycle of a firm when
they launch a product. It begins with product development, the time the
firm devises and creates a new product. The aim of this development
process is to have a profitable, well-performing product on the market;
this initial stage is characterized by zero sales, the firm bearing the costs
of such development, typically resulting in negative profitability. The
introduction stage is the period of slow sales growth as the product is
introduced to the market. The growth stage is the acceptance in the
market and will have substantial profit improvements. During the maturity
stage, there is a slowdown in sales growth because the product achieved
acceptance by buyers. Profits stabilize or decline because of increased
competition. Lastly, sales show a downdraft drift and profit erode.
All products undergo a typical product life cycle, including Kings Hot
n’ Handy. However, not all products vanished in the market. It will be
dependent on how management would handle the crucial period, which is
at the start of the decline stage. This is where reinvention of the product
takes place. Management must make sure that KHH product will not end
in declining stage.
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Kings Hot n’ Handy
Product reinvention is one of the most complex, costly, and risky
endeavors that a company will face. With competition fierce and
consumer understanding illusive, product failure rates are notoriously
high. It’s either you just let your product come to an end or take all the
risks for the product to survive. Kings Hot n Handy has to take risk of re-
launching the product to increase the sales and profitability.
As we synthesize all the information and fact with its alternative
strategies, we recommended that the company should continue
producing the Kings Hot n Handy. It was not mentioned in the case that
the product line incurs losses. It only has a small and decreasing market
share. So we suggest improving and relaunching the product first before
dropping it.
Cup Market is a relatively small market .Soupy Snack market is
composed of 92% of Pouch Soupy Snack and 8% Cup Soupy Snack;
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Kings Hot n’ Handy
wherein out of the 8% of the Cup Soupy Market, 17% of it is the Cup Rice
Market and remaining 83% is Cup Noodles Market. But there is a chance
of increasing growth in the market. KHH grabbed this opportunity. The
Cup Market has been growing significantly and the proportion of cup rice
is increasing by 28% in the year 1999 but decreased to 17% in the year
2000. However, the proportion of the cup non noodles to the total cup
market increased from 1999 to 2000 (3% to 10%).
It was noted by Ms. Villa that consumers nowadays like many
choices. This was supported by the survey made regarding sales of the
KHH with all the variants available. The graph showed almost equal sales
in all the variants. Thus, it will be good if the five variants (Arroz Caldo,Champorado, Goto, Chicken Sopas and Ginataang Mais) remain in the
market.
0
20
40
60
80
100120
140
9 4 9 5 9 6 9 7 9 8 9 9 ' 0 0
Cup/ Bowl Noodles Cup Bowl Non-Noodle
+12%
+14%
+17%
3%
+28%
10
%
+17%
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Kings Hot n’ Handy
0
250000
500000
750000
1000000
SO98 JF99
MJ99
SO99
JF00
MJ00
SO00
Chicken SopasGuinataang MaisChamporadoGotoArroz Caldo
We suggest for reformulating of the product based on the market
research about factors affecting consumers’ purchase of instant food
products. The product will improve its taste (market research based on
the Filipino palate), at affordable price, repackage the product that can
easily be identified and remembered by the consumer (packaging will
show what customer expect inside and with Filipino concept), packaging
will be convenient to eat even when you are traveling and highlighting
Kings Brand. We still include plastic spoon inside the cup as part of the
convenience of the product. As mentioned earlier, concept of the
packaging is Filipino, a way to distinguish KHH with Penny.
The old target market segment will be retained (office workers who
are too busy and have no time to eat heavy meals). However, we will
include a new segment which is composed of mothers (who are
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Kings Hot n’ Handy
persuaded by their children, whether students or not). It follows that
advertising efforts will then be designed to attract more mothers.
Since Goodfoods Inc. is acquired by a large multinational company,
budget is not a problem in increasing media advertisements.
Advertisements will focus on the Filipino taste that will delight every
people who will watch it and convince to buy for it. Because of the
improved taste of the products customers will be willing to buy again.
Continuous advertising will help the product be part of Filipino lifestyle
and stick in the mind of Filipinos.
Setting Unilever for an example, advertisements for their Clear
shampoo product helped a lot in increasing their market share. The
continuous advertisements help this product boom and can compete with
Head and Shoulders. With KHH, a distinguished and reputable endorser/s,
mothers and popular child stars, who can testify for the good taste and
convenience of the product, will help creating the image to customers. As
another way of advertisement also, KHH can sponsor feeding programs a
part of the Company’s Corporate Social Responsibility.
The acquisition of the company makes it possible not only to afford
sufficient media exposure, but also additional distribution networks. Place
KHH in more sari-sari stores, convenience stores and supermarkets.
Giving promotional discounts at first could help.
For the supply of raw materials, we recommend hiring a local
supplier rather importing rice but without sacrificing the quality and taste.
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Kings Hot n’ Handy
The above strategies will be observed for five years and evaluate if
it is effective and if it helped the company to generate more sales. If the
outcome doesn’t meet the target or the expected profit and sales, then
that is the time to discontinue the product. This is in connection in the
earlier data were Cup Rice is only 17% of the 8% Cup Soupy Snack. We
should also consider that market share of KHH changed because other
competitors came. It will then be better to focus on the other products of
the company.
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