A.1. Analysis    

A.1. Situation Analysis

Walter Auclair

University of Phoenix

MKT/551

February 5, 2009


A.1. Steak Sauce is a division of Kraft Foods Incorporation, acquired in 2000 from Nabisco (Kerin and Peterson p.630).  A.1. Steak Sauce, founded by King George’s Chef, Henderson William Brand, in England in the year 1830, was introduced into the North American market in the early 1900s (Kerin and Peterson p.630).  A.1. Steak Sauce is the leader in its industry; however, the firm is facing a challenge from Lawry’s, an organization that traditionally dominates the spice and seasoning industry, who announced the launch of its new steak sauce in April of 2003.  A.1. should determine the organization’s potential reactions to this new threat and follow up by selecting the alternatives that would produce the greatest benefit with the least disadvantages.

Situation

        Lawry’s, a branch of Unilever, is known in the United States as “the leading provider of marinades, premium spice and seasoning blends, and other flavorings” is launching a new steak sauce with a similar taste and appearance to A.1.’s product (Kerin and Peterson p.634).  Lawry’s is looking to charge $3.99 per 11-ounce bottle, which is in direct competition with A.1.’s price of $4.99 for a 10-ounce bottle (Kerin and Peterson p.635).  Additionally, Lawry has formed an alliance with the supermarket Publix to run an exclusive Memorial Day advertisement with a two-for-$5 promotional price point (Kerin and Peterson p.630).  Holidays sales, such as those on Memorial Day, are extremely significant sources of revenue for A.1. comprising 10 percent of the company’s full-year volume (Kerin and Peterson p.631).  The introduction of Lawry’s Steak Sauce into the market is creating new issues forcing the firm to determine which competitive techniques are most suitable in reaction to Lawry’s attack.

Industry Analysis

        A.1. Steak Sauce performs business in a mature industry, dominated by a few large competitors.  For A.1. it is important to avoid complacency, slow response time, and to remain knowledgeable in regard to current competitors and market analyses in a mature industry.  The company is accountable for 54 percent of the steak sauce sales in dollars with the largest branded competitor, based upon revenue, being Heinz 57 (Kerin and Peterson p.634).  Heinz 57, however, only generates 16 percent of the steak sauce sales in dollars (Kerin and Peterson p.631).

Steak Sauce Market Shares, 2002

                                                           Dollar Share          Volume Share (lbs)

 A.1.                                            54%                           46%                                      

Heinz 57                                            16%                           13%                

 Private Label                                           14%                               19%                  

Others                                                   16%                               22%

Total                                                     100%                               100%

Retail Shelf Pricing 2003

                                                        Retail Shelf size/ oz       Retail shelf price(oz)

A.1. Steak Sauce                          $4.99/ 10oz                                 $0.50

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Heinz 57                                $4.79/ 10oz                                 $0.48

Private Label Steak Sauce                $3.49/ 10oz                        $0.35

Lawry’s Steak Sauce                        $3.99/ 11oz                        $0.36

        The previous graphs display the main steak sauce competitors present in 2003, categorized on market share and price.  A.1. is of the highest quality is priced as the most expensive steak sauce.  Heinz 57, which offers similar qualities, is priced more evenly with A.1. than Lowry’s, which also offers similar qualities  The private label steak sauces are generally the lowest quality and price.  A.1. Steak Sauce has been able to maintain customer loyalty due to strong brand equity for ...

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