V.

S
A.1. Steak Sauce
Lawrys Defense
PREPARED FOR: PROF. MADYA DR. FAIZAH ABDUL RAHIM MKT 750_STRATEGIC MARKETING MANAGEMENT

PRESENTER
AMIRAH BINTI HILMI 2011228928

WAN MAISARAH BINTI WAN MUSTAFA 2011418356

NORHASLINDA BINTI MOHD ROSLIN 2011404692

IZREEN FARA BINTI MD RAZALI 2011286488

PRESENTATION OUTLINE
INTRODUCTION

STEP 2 ENUMERATE THE DECISION FACTOR

STEP 1 DEFINE THE PROBLEM

STEP 3 CONSIDER THE RELEVANT INFORMATION STEP 5 DEVELOP A PLAN FOR IMPLEMENTING THE CHOSEN ALTERNATIVE

STEP 4 IDENTIFY THE BEST ALTERNATIVE

STEP 6 EVALUATE THE DECISION AND THE DECISION PROCESS

ABOUT A.1 STEAK SAUCE

A.1 first developed in about 1830 by Henderson William Brand, chef to Englands 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
Feb 14, 2003

Day
Friday

Occasion
Chuck Smith, senior brand manager of A.1 Steak Sauce & Marinades received an email from Susan Connor, Krafts sales manager for Publix. She stated that Lawrys is launching a new steak sauce product & asking for the Memorial Day advertisement at Publix. Meeting with the division general manager. Susan Connor meeting with Publix representative. National launching of Lawrys steak sauce. Memorial Day. Independence Day.

Feb 17, 2003 Feb 18, 2003 Apr 1, 2003 May 24, 2003 May 30,2003 July 4, 2003

Monday Tuesday Tuesday Friday Friday

Saturday Expected in-store promotion started.

June 28, 2003 Saturday Expected in-store promotion started.

1.
Objective

DEFINE THE PROBLEM

PROBLEM DEFINITION

To sustain A.1 position as market leader in steak sauce segment To achieve target annual profit

Constraint Lawrys aggressive promotional pricing strategy

Success Measure Become the most preferred brand

Problem Statement How to sustain A.1 position as market leader in steak sauce segment and achieving target annual profit against Lawrys aggressive promotional pricing strategy in order to become the most preferred brand?

2.

ENUMERATE THE DECISION FACTOR

Alternative Courses of Action
Uncertainties

Controllable factors (4Ps): Price: adjust price Promotion: develop strategy Place : strategic alliance

Consumer Behaviors -lifestyle

Aggressive Promotional Price by other competitors

3.

CONSIDER THE RELEVANT INFORMATION

Steak Sauce Market Shares, 2002
INDUSTRY
Industry: steak sauce category Trend:

16% 14% 54% 16%

A.1

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

Heinz 57
Private Label Others

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.

3.

CONSIDER THE RELEVANT INFORMATION

3. + -

CONSIDER THE RELEVANT INFORMATION

INTERNAL
STRENGTHS
Excellent margin STRENGTH

EXTERNAL
OPPORTUNITIES
Stable beef consumption trends in US Partnership with beef producers 10% of sales contributed during the Holiday weeks

(54% of total dollar share in 2002)

High brand awareness High loyalty customers Strong brand equity Dominate shelves in grocery stores

Environmental friendly packaging

SWOT
THREATS Lawrys new steak sauce product launched Lawrys sauce similar in taste and texture Lawrys aggressive promotion pricing strategies (2-for-$5) Lower Lawrys retail price per ounce

WEAKNESSES Heavy glass bottle Unsuccessful poultry salt Loss incurred on marinade line

Volume sales flat

4.

IDENTIFY THE BEST ALTERNATIVE

Alternative 1

Defend A.1 position for Memorial Day ad at Publix against Lawrys launched by matching the price that Lawrys offered

Alternative 2

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

4.

IDENTIFY THE BEST ALTERNATIVE

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.

IDENTIFY THE BEST ALTERNATIVE

DISADVANTAGES 1. Effect relationship with Publix store 2. Lawrys may able to dominate steak sauce market during holiday weeks in the future 3. May not achieve 10% from total annual sales

Alternative 2 ADVANTAGES 1. Retain target profit in 2003 2. Maintain image and position as high quality product and premier market leader

5.

DEVELOP A PLAN FOR IMPLEMENTING THE CHOSEN ALTERNATIVES

RECIPES AT THE BACK OF
BOTTLE

Aggressive Promotional Activities

FREEBIES (GRILL-SEASON
RELATED)

IN-STORE SIGNAGE AT
LIMITED PERIOD: 2 WEEKS PRIOR MEMORIAL DAY HOLIDAY

SHELF LEVEL

COMMUNICATE AGGRESSIVE PROMOTIONS THROUGH TV

ADVERTISEMENT & A.1 STEAKSAUCE WEBSITE

5.

DEVELOP A PLAN FOR IMPLEMENTING THE CHOSEN ALTERNATIVES

Differentiation as competitive generic strategy

Offering high quality ingredients Offering convenience locations Packaging: More environmental friendly than plastics (Lawrys)

5.

DEVELOP A PLAN FOR IMPLEMENTING THE CHOSEN ALTERNATIVES

Strengthen Strategic Alliances & Expand Marketing Channel

STEAK HOUSE
BEEF PRODUCERS MASS MERCHANDISER

CLUB STORES
GROCERY STORES

5.

DEVELOP A PLAN FOR IMPLEMENTING THE CHOSEN ALTERNATIVES Loyalty programs Customer relationship management programs Sponsorship

Strengthen consumer exit barrier

6.
BUT

EVALUATE THE DECISION & THE DECISION PROCESS

Decision made: Not to defend A1 position for Memorial Day ads in Publix come out with strategies to encounter Lawrys 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 Lawrys WILL: - Pose threat to A.1 Steak Sauce profit - Jeopardize A.1 High Quality, High Brand Awareness image to loyal customers