A1 Case

In: Business and Management

Submitted By sarahdavis46
Words 1314
Pages 6
Case Recap A.1. is the leader in the steak sauce industry and is one of the premier brands in the Kraft Foods offerings. The steak sauce giant “has little competition, substantial sales, and excellent margins” (Kerin & Peterson, 2010). The customers of A.1. are loyal and the market share of over 50% shows this. The problem facing A.1. is that Lawry’s has decided to launch a new steak sauce during the Memorial Day Weekend which is one of the holidays for the steak sauce industry due to the increase in grilling activities that take place. Lawry’s is owned by Unilever and is known for its seasonings and marinades. Lawry’s will launch its new steak sauce which has similar characteristics to the A.l. steak sauce, in both taste and appearance, and charge less per bottle as well as try to take over A.1.’s Memorial Day sales by offering a two-for$5 promotion through the supermarket Publix. This creates a problem for A.1. because the holiday weekend earns approximately 10% of its annual revenue. The question that Kraft Foods faces is how should the company react to the launch of Lawry’s steak sauce?

Problem Identification The problem for Kraft Foods is figuring out how to react to the launch of the new Lawry’s steak sauce. The company has focused both time and resources on a marinade line for A.1, spending $10 million on advertising and $5 million on consumer promotion spending. “The marinade line was projected to lose about $7 million in operating profit in 2003, though this was an improvement from a $10 million loss in 2002. The total brand’s 2003 budget called for profit on the A.1. portfolio to increase 10 percent from the previous year” (Kerin & Peterson, 2010). The launch of the Lawry’s steak sauce comes at a peak time for A.1. sales and the company cannot afford to lose profits from the sales of the sauce during the holiday weekend.

Root Problem…...

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