Kings Hot n Handy Case

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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



Kings Hot n’ Handy

September 25, 2010

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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 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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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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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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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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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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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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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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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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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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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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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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Kings Hot n Handy Case

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