A.1 Steak Sauce

A.1. Steak SauceLawry’s Defense

V.SPREPARED FOR: PROF. MADYA DR. FAIZAH ABDUL RAHIM

MKT 750_STRATEGIC MARKETING MANAGEMENT

PRESENTERAMIRAH BINTI HILMI

2011228928

IZREEN FARA BINTI MD RAZALI2011286488

NORHASLINDA BINTI MOHD ROSLIN2011404692

WAN MAISARAH BINTI WAN MUSTAFA2011418356

PRESENTATION OUTLINE

INTRODUCTION

STEP 4IDENTIFY THE BEST

ALTERNATIVE STEP 5DEVELOP A PLAN FOR IMPLEMENTING THE

CHOSEN ALTERNATIVESTEP 6EVALUATE THE

DECISION AND THE DECISION PROCESS

STEP 1DEFINE THE PROBLEM

STEP 2ENUMERATE THE

DECISION FACTOR STEP 3CONSIDER THE

RELEVANT INFORMATION

ABOUT A.1 STEAK SAUCE

A.1 first developed in about 1830 by Henderson William Brand, chef to England’s King George.

The king was so delighted with the sauce that he proclaimed it to be “A1”.

The product first sold in North America in the early 1900s.

Kraft Foods acquire A.1 in 2000 as part of its acquisition of Nabisco.

ABOUT KRAFT FOODS

Kraft Foods was the second largest food company in the world and the largest in US.

Product categories range from coffee, salad dressing, barbecue sauce, cheese, candy, cookies, cereal, etc.

Goals: to create sustainable & profitable growth.

Kraft Foods is owned by Altria Group, formerly known as Philip Morris.

SCENARIO

Date Day OccasionFeb 14, 2003 Friday Chuck Smith, senior brand manager of A.1 Steak

Sauce & Marinades received an email from Susan Connor, Kraft’s sales manager for Publix. She stated that Lawry’s is launching a new steak sauce product & asking for the Memorial Day advertisement at Publix.

Feb 17, 2003 Monday Meeting with the division general manager.

Feb 18, 2003 Tuesday Susan Connor meeting with Publix representative.

Apr 1, 2003 Tuesday National launching of Lawry’s steak sauce.May 24, 2003 Saturday Expected in-store promotion started.May 30,2003 Friday Memorial Day.June 28, 2003 Saturday Expected in-store promotion started.

July 4, 2003 Friday Independence Day.

DEFINE THE PROBLEM

PROBLEM DEFINITION

ObjectiveTo sustain A.1 position as

market leader in steak sauce segment

To achieve target annual profit

ConstraintLawry’s aggressive

promotional pricing strategy

Success MeasureBecome the most preferred brand

Problem StatementHow to sustain A.1 position as market leader in steak

sauce segment and achieving target annual profit against Lawry’s aggressive promotional pricing strategy

in order to become the most preferred brand?

1.

ENUMERATE THE DECISION FACTOR

2.

Alternative Courses of Action

Controllable factors (4P’s): Price: adjust price Promotion: develop strategy Place : strategic alliance

Uncertainties

ConsumerBehaviors -lifestyle

Aggressive Promotional Price by

other competitors

CONSIDER THE RELEVANT INFORMATION

3.

INDUSTRY•Industry: steak sauce category

•Trend:

•A1 Steak Sauce was a clear leader with a dollar category share of more than 50%

•peak season for grilling (May, June and July) and holiday week

•Beef consumption trends in the U.S had stabilize in recent years

•It was standard practice in the industry that manufacturer covered cost of in store price reduction, retailers kept their margins constant on a percentage basis.

54%16%

14%16%

Steak Sauce Market Shares, 2002

A.1Heinz 57Private LabelOthers

CONSUMERS

• High brand awareness

• (e.g.: 9 0ut of 10 steak

houses serve A1)

• Loyalty in steak sauce was

high

• Consumers used a small

amount of steak sauce per

occasion

COMPETITORS• Kraft most direct competitors:

General Mills, Unilever, Pepsi Co, And Nestle

• A1 sauce has limited competitors.• Heinz 57 –most of marketing effort focused on communicating a versatility message for the brand and it is not directly competing A1• Lawry’s has a strong position in

seasoning and marinades and Lawry’s chose 1st April for the first step date in order to gain full distribution before the peak summer grilling season.

• Private label products had less than 20% of the steak category.

3.


STRENGTH

STRENGTHSExcellent margin (54% of total dollar share in 2002)High brand awarenessHigh loyalty customersStrong brand equityDominate shelves in grocery storesEnvironmental friendly packaging

OPPORTUNITIESStable beef consumption trends in USPartnership with beef producers10% of sales contributed during the Holiday weeks

WEAKNESSESHeavy glass bottleUnsuccessful poultry saltLoss incurred on marinade lineVolume sales flat

THREATSLawry’s new steak sauce product launchedLawry’s sauce similar in taste and textureLawry’s aggressive promotion pricing strategies (2-for-$5)Lower Lawry’s retail price per ounce

SWOT

3.


+

-

INTERNAL EXTERNAL

• Defend A.1 position for Memorial Day ad at Publix against Lawry’s launched by matching the price that Lawry’s offered

Alternative 1

• Not to defend the position for Memorial Day ad at Publix but provide other promotional strategies as to respond to the lunchedAlternative 2

IDENTIFY THE BEST ALTERNATIVE

4.

ALTERNATIVE (1)

ADVANTAGES

1. Secure strategic alliance with the Publix stores

2. Secure 10% sales during the holiday weeks

3. Maintain repudiation as no 1 steak house preferred by Publix

DISADVANTAGES

1. Incurred loss during the holiday weeks (approximate $3.3M)

2. Cant’ achieved target profit of $62M in 2003

3. A.1 image as high quality product affected


4.


ADVANTAGES1. Retain target profit

in 20032. Maintain image and

position as high quality product and premier market leader

• Alternative 2DISADVANTAGES1. Effect relationship

with Publix store2. Lawry’s may able to

dominate steak sauce market during holiday weeks in the future

3. May not achieve 10% from total annual sales

4.

DEVELOP A PLAN FOR IMPLEMENTING THE CHOSEN ALTERNATIVES

5.

Aggressive Promotional Activities

LIMITED PERIOD:2 WEEKS PRIOR MEMORIAL DAY HOLIDAY

• RECIPES AT THE BACK OF BOTTLE

• FREEBIES (GRILL-SEASON RELATED)

• IN-STORE SIGNAGE AT SHELF LEVEL

• COMMUNICATE AGGRESSIVE PROMOTIONS THROUGH TV ADVERTISEMENT & A.1 STEAKSAUCE WEBSITE


5.

Differentiation as competitive generic strategy

• Offering high qualityingredients

• Offering convenience locations

• Packaging: More environmental friendly than plastics (Lawry’s)


5.

Strengthen Strategic Alliances & Expand Marketing Channel

GROCERY STORES MASS

MERCHANDISER

BEEF PRODUCERS

CLUB STORES

STEAK HOUSE


5.Strengthen consumer exit

barrier • Loyalty programs• Customer

relationship management programs

• Sponsorship

EVALUATE THE DECISION & THE DECISION PROCESS

• Decision made: Not to defend A1 position for Memorial Day ads in Publix

BUT come out with strategies to encounter Lawry’s aggressive pricing promotion

BY implementing aggressive promotional strategies

differentiation managing strategic alliances strengthen consumer exit barrier

6.

EVALUATE THE DECISION & THE DECISION PROCESS

• Appropriate OR Not?APPROPRIATE.Matching price with Lawry’s WILL:

- Pose threat to A.1 Steak Sauce profit

- Jeopardize A.1 High Quality, High Brand Awareness image to loyal customers

6.

A.1 Steak Sauce

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