Lawry's Steak Sauce between A.1. Steak Sauce
From: Chuck Smith
Date: July 1, 2014
Subject: Lawry’s Steak Sauce
Situation
On April 1, 2003 Unilever will begin distributing Lawry’s Steak Sauce. Unilever chose April 1 to gain full distribution before the peak summer grilling season. Lawry’s has aggressively planned to promote their product through advertising, low pricing, and sampling. Lawry’s steak sauce will have a two-for-$5 promotional price point and are asking for the Memorial Day in store promotion at Publix. Ten percent of our annual sales occur during each holiday week of Memorial Day and Fourth of July. Resulting in $30 million of our $150 million in annual sales. (See Appendix A) We have the highest brand awareness and customer loyalty for steak sauce and strongly believe our customers will not buy a cheap imitation steak sauce. My recommendations are that we should not lower our prices or compete with Lawry’s steak sauce. Although we may lose a small percent of our current 54% market share and initially lose 10 percent of our gross sales; with proper focus on our advertising strategies and re-evaluate our in-store promotional expenses; we can actually increase our operating profit. Analysis
Publix a major national public grocery store is threatening to remove A.1. Steak Sauce from its Memorial Day in-store flier if it does not match Lawry’s 2-for-$5 promotion. Memorial Day and Fourth of July are essential for steak sauce brands because a substantial amount of products are sold. Lawry’s is a direct competitor for A.1. Steak Sauce.
Option 1
We could match Lawry’s Steak Sauce promotion
If we decided to match Lawry’s Steak Sauce promotion we would be able to retain the Publix Memorial Day in-store promotion. This could potentially allow us to keep our current sales volume and market share during the holiday season. However, this would be a very expensive approach that would negatively impact our bottom line. It is standard practice that manufacturers
Date: July 1, 2014
Subject: Lawry’s Steak Sauce
Situation
On April 1, 2003 Unilever will begin distributing Lawry’s Steak Sauce. Unilever chose April 1 to gain full distribution before the peak summer grilling season. Lawry’s has aggressively planned to promote their product through advertising, low pricing, and sampling. Lawry’s steak sauce will have a two-for-$5 promotional price point and are asking for the Memorial Day in store promotion at Publix. Ten percent of our annual sales occur during each holiday week of Memorial Day and Fourth of July. Resulting in $30 million of our $150 million in annual sales. (See Appendix A) We have the highest brand awareness and customer loyalty for steak sauce and strongly believe our customers will not buy a cheap imitation steak sauce. My recommendations are that we should not lower our prices or compete with Lawry’s steak sauce. Although we may lose a small percent of our current 54% market share and initially lose 10 percent of our gross sales; with proper focus on our advertising strategies and re-evaluate our in-store promotional expenses; we can actually increase our operating profit. Analysis
Publix a major national public grocery store is threatening to remove A.1. Steak Sauce from its Memorial Day in-store flier if it does not match Lawry’s 2-for-$5 promotion. Memorial Day and Fourth of July are essential for steak sauce brands because a substantial amount of products are sold. Lawry’s is a direct competitor for A.1. Steak Sauce.
Option 1
We could match Lawry’s Steak Sauce promotion
If we decided to match Lawry’s Steak Sauce promotion we would be able to retain the Publix Memorial Day in-store promotion. This could potentially allow us to keep our current sales volume and market share during the holiday season. However, this would be a very expensive approach that would negatively impact our bottom line. It is standard practice that manufacturers
References: Calkins, T. (2010, June 14). A.1. Steak Sauce: Lawry’s Defense. Kellogg School of Management. Chernev, A. (2012). . In Strategic marketing management (7 ed.). : Cerebellum Press. Srinivasan, S. S., Leone, R. P., & Mulhern, F. J. (1995). The advertising exposure effect of free standing inserts. Journal of Advertising, 26, 29-40. Retrieved from www.ebcsohost.com