Free «Marketing Case Analysis: Clorox» Essay Paper

Case Overview

The brand managers of Clorox, Boyle and Warren have decided to discuss their future advertising and promotion strategies directed at reconsidering the current situation in the company. Specifically, the organization had been functioning successfully with the steady growth of revenues by 1-3 % until summer 2000, when the profits started declining. The brand managers searched for the opportunity to balance the consumer demand by investing more money in re-evaluating the clients’ interest in charcoal grilling. The background analysis of the consumer demand has shown that approximately 75 % of the Americans owned a barbecue grill in their households. Such trend had been pertinent for the 1990s. But the situation changed and there should be new methods for increasing the profits by rethinking the customer strategy and the promotion strategies. Certainly, rethinking of a firmly established strategy is a dangerous solution because the company’s police have not changed over years. Therefore, the shifts should be integrated gradually and with reference to all dimensions, such as customers, production process, advertising and pricing strategy. Boyle and Warren attracted the marketing director Derek Gordon to conduct an analysis and find out new alternatives for reaching success in the sphere.

 

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Problem Definition and Alternatives Courses of Action

Boyle and Warren are interested in a possibility to strike the balance between the pricing initiatives and rethinking of customers’ interest in the product because it can have evident consequences for the advertising message and the brand image. Additionally, they question the possibility of Clorox to invest in business to define whether the current capacity is sufficient for developing of new strategies. As a result, the major problem of the case study is that Kingsford Charcoal is not in demand anymore due to the absence of advertising strategy. Therefore, the question is whether the product could become successful by investing more in developing a new brand image for rekindling the customer demand, since previous company’s objectives lacked promotion policies.

Decision Theory Framework

The brand managers should work on total analysis and re-conceptualization of new advertising techniques. They should involve themselves into short-term and long-term objectives to provide a full picture of challenges and problems that might emerge. The previous policy conducted at the company showed that discipline and responsibility were the key factors in business that allowed the producers to deal with clients, distributors and other stakeholders successfully. They integrated discipline into different processes, including production, distribution, sales, promotion, communication, supply and delivery. However, the policy turned out to be less successful over time due to the emergence of other labels, such as Royal Oak, which could outstrip Kingsford’s performance due to the more effective promotion and pricing strategies. Therefore, Warren’s decision “to make the product visible” is a better solution that could be added to the discipline and organization accepted in the company. In order to display charcoal, the advertising strategy and ideology of the product integration and distribution should be changed. Investing into new commercials would allow clients to notice the evident advantages of Clorox’s product. For instance, the recent surveys and testing should be revealed to the clients in order for them to know the difference between Kingsford Charcoal and Royal Oak. Moreover, the testing should show that the charcoal is superior in quality as compared to any other barbecue grilling charcoal. Second, changing the product’s function and purpose can contribute to the increase in sales and revenues.

Analysis of Alternatives

As it has been briefly mentioned above, there are two possible alternatives which can be introduced to increase the sales. First, re-arranging the brand image requires total re-evaluation of the previous company’s missions, visions and overall course of production. Second, changing the product into non-seasonal, but the one which could be sold throughout the year, requires evaluation of the production process. To be more exact, the company should reconsider its financials and the amount of charcoal which should be produced in winter and autumn. Importantly, the production should also seek for new distributors which would resale the product. Additionally, there should be new customer segment, which would be interesting in buying the product during low season. Therefore, the two alternatives will be interconnected and there should be a specific plan that would predict all possible problems and challenges. In order to increase the prediction degree, it is highly essential to consider such alternatives in more detail.

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Re-arranging the brand image would imply the historical analysis of the company’s past activities, as well as success levels. Apparently, the decline in production was connected to the emergence of other competitors, which could also propose new products at an affordable price. However, such products were supported by a powerful advertising campaign. Therefore, the task of the company is to integrate a new branding policy that would make the product more visible and recognized for the clients. For instance, it is possible to introduce the advertisement at grocery retail stores that would attract clients to buy the product. Further, in order to attract the clients, the packaging should also be changed, promoting new materials as environmentally friendly. The company should ensure their environmentally friendly clients that the materials they use are ecologically clean and do not do harm to the environment.

Rebranding is a good option because the production can both change its functions and develop the new ones. As it has been seen from the investigations, barbecue events depend on weather and due to the rainfalls the frequency of charcoal use has decreased. Therefore, the company should integrate a differentiation strategy and present another type of coal which could be used for hearth or fireplaces in the houses. In such way, another advertising conception can be developed by the producers. For instance, the clients can be attracted by new slogans that would also consider weather as the starting point. However, the concept can be changed and any weather will be associated with the necessity to buy charcoal. When it is rainy, clients should purchase charcoal to make their houses warm and cozy. They should also buy the product when they plan to organize barbecue in spring, summer and early autumn. The accent should be made on holidays, such as the Independence Day or Thanksgiving Day, to make customer associate the vacations with buying Kingsford charcoal alongside with other products. Hence, as it can be seen, two possible alternatives are mutually related and can increase the sales as soon as the corresponding measures and plans are implemented.

Moreover, the pricing initiatives should be reconsidered for the purpose of increasing revenues. The company has not increased prices for over several decades. Although its competitors do not plan to increase prices, the managers should think about it because they have quality as another tangible advantage, which can outperform the lower prices proposed by Royal Oak. Therefore, the company should reconsider the sales rate and define further routes for development. The moderate price increase will not decrease the customer segment, but it can attract more clients for whom quality and brand loyalty are key determining factors that would introduce new advantages for the image of the product. In general, price augmentation is a necessary step; alternatively, the company will not be able to carry out such short-term goals as re-investment in advertising, promotion, differentiation and brand development.

The assessment of pricing policy is beneficial for compensating the expenses for advertising. With the above-presented argumentation, the idea to try introducing a different message can allow the company to increase its competitiveness. They brand managers have debated on the possibility of Kingsford’s share in the charcoal category. Furthermore, the company’s promotional initiatives, which focus on merchandising, distribution, differentiation, pricing and shelving, can significantly increase sales, but there should be a logical sequence that would not affect customer demand negatively. The first stage should be immediate advertising and pricing change. The two alternatives should be presented simultaneously to gain additional financial support for the advertising campaign. In addition, shelving is an interesting opportunity as product location on the shelf will provide more benefits in terms of the sales rates.

The orientation on clients would also be a great advantage because it can both retain regular customers and compensate the loss of those who are not satisfied with the price increase. The search for new clients is possible through the offering new product functions, such as charcoal for fireplaces in winter. The product can also be oriented on respectable people of older age. As it has been mentioned previously, the survey revealed that 80 % of clients using charcoal are of predominantly younger age. Therefore, the new orientation can expand the customer base and promote new initiatives. Additionally, the attention should be placed on other stakeholders, such as retailers who can be resistant to the company’s decision to augment prices. The main approach to management can be divided into several techniques. First of all, the price augmentation should not be high to reduce the risk of customer’s dissatisfaction. Second, the price augmentation should be simultaneous with the advertising campaign.

Plan Development

The plan development will focus on two major shifts – advertising campaign and rebranding. The two goals will be carried out by pricing changes and promotion development. In this respect, the short-term goals be as follows:

1. Moderate price increase to receive immediate profits;
2. Developing a different message to search for new customer segment;
3. Investing in advertising;

The long-term objectives will concern other stakeholders, such as retailers, distributors and marketing. They will also introduce new production process and changes in the substances for producing charcoal for fireplaces. The investment in new packaging could also be beneficial to engage clients and persuade them that the holiday cannot be held without special products, such as Kingsford Charcoal. The latter could be used by regular customer and the ones who are interested in buying charcoal on New Year’s Eve. If the product is successful, the company can propose discounts for their regular customers, as well as for the new ones who have never used it before.

To carry out long-term objectives, the company should check whether the production has sufficient capacity for introducing a new kind of product, with new packaging. Redistribution of duties and responsibilities among the employees should be among the leading stages. Specifically, the company should introduce a training program for employees to inform them about changes and make them engage into the rebranding initiative. The new plan should be monitored by several managers who specialize in marketing and advertising. The regular meetings should be conducted to check the status of plan implementation.

It is highly important to introduce schedule and provide the time for each stage of plan accomplishment. As such, the short-term objectives could be carried out after the research is conducted. The research studies will be presented within one month. After that, two month will be given for redeveloping advertising campaign and introducing new pricing strategy. During a given period, the authorized manager would control the training process among the employees and monitor the external trends in charcoal demand and production. Analysis of competitors’ capacity is also essential and will be conducted simultaneously with the above-described processes.

In general, it should be stressed that the brand managers’ recommendations are viable and reliable because they are premised on strong theoretical conceptions. When it concerns advertising, the product should definitely change its message and purpose to attract the new customer segment and introduce new approaches to management. Regarding the growing competition, the analysis of new advertising and promotion techniques is the key to sustaining competition over other potential producers of charcoal. Additionally, the advertising could be premised on veritable facts and evidences regarding the higher quality of the product, which could be revealed to the clients. Further arrangement can enhance brand loyalty and provide clients with new opportunities to associate charcoals with holidays and special occasions. Moreover, the attention should be paid to the analysis of previous factors that caused decline in sales and revenues. The company did not fully realize the importance of advertising strategy until the emergence of new competitors. As a result, the company should introduce reforms and make the employee ready for the change. However, the changes should concern all stakeholders, including clients, suppliers, retailers and distributors.

Conclusion

In conclusion, the case under analysis focuses on the plan implementation for increasing sales and revenues at Kingsford Charcoal. The brand managers have investigated the problems and challenges that Clorox currently face to find out the reason for the decline in revenues. They have argued that the major problem considered in lack of advertising and absence of pricing policy. Further evaluation has discovered that the company should change its advertising and promotion policies to be able to compete with the newly emerging and old competitors. The advertising has been premised on developing a different message that would focus on weather concerns. Second, introducing the new functions and differentiation of the product can also contribute to the revenue rates throughout the year. The product cannot remain seasonal and should be sold in winter and autumn as a product for fireplaces. The advertising was directed at creating the new image that would attract different customer segment. The problem was that the major buyers of the product were young families who are fond of organizing barbecue parties. However, the shift in target buyers can expand the market segment and create a new potential market with buyers of older age and introduce the corresponding advertising for such category.

The plan is composed of both long-term and short-term goals. The latter involve the price augmentation for the product to compensate advertising. At the same time, the advertising campaign should reduce any declines in sales due to the attraction of new customers, as well as due to the brand commitment of regular customers to the product. Additionally, the long-term goals involve the analysis of different approaches that can prepare employee for the shifts in production, marketing and advertising. The plan, therefore, should involve the training program for the employees to be ready for changes and to implement the accepted reforms. Boyle and Warren made the right decision by engaging the marketing director and proposing changes in the sphere of promotion and advertising. However, their intentions should be more consistent to define the sequence of action and analyze which departments should be engaged to reach all the purposes.