A1 Steak Sauce Harvard Case Solution & Analysis

Why Lawry is launching a steak sauce product?

Lawry is a sauce, seasoning and marinades brand that is owned by Unilever and have sales of more than $100 million. The company was started in 1938 by marketing its salt for seasoning in different markets and retail stores. The company is owned by Unilever that is known to be the biggest fast moving consumer goods company in the world. The company has annual sales of more than $50 billion. The business and products of the company are highly widespread and diversified. Furthermore, the company has planned and challenged all its brands to reach annual sales of at least one billion dollar. In order to achieve that challenge, the company has decided to launch Lawry’s steak sauce. The company sets relatively lower price than A1 steak sauce and increases the size of the bottle by one ounce. To make this launch successful, the company has decided to drop five FSIs instead of 4 to beat A1 steak house.

A1’s position in the industry and its strengths versus competition:

A1 steak sauce is known to be one of the most premier brands in the Kraft foods portfolio. The brand was initially launched by William Brand, who was King George’s chef in England. Once the chef tried this sauce and was pleased with the chef for his creation. Later he named the sauce as A1. The brand later went for expansion and became a major seasoning brand in North America. Soon after the launch, the brand gained attention from the consumers and became a leader in the market. In addition to that, the product soon got famous was available at all the major grocery stores in England and in North America.

As far as the competition is a concern, Heinz is known to be the biggest competitor of A1 steak house. Other competitors of the company include Lawry steak sauce and other private label brands.

Quantitative Analysis

Kraft's income on A1 Steak Sauce was about $150 million in 2002 with more or less $60 million of operating profit. A1 had attempted to expand the brand more than just steak sauce. The brand propelled a line of marinades in 2001; keeping in mind the end goal to enter the quickly developing category. By 2002, Kraft's income on the A1 line was $15 million, and the line had a 10% offer of the marinades classification. Budget by A1's in 2003 called for $10 million of spending on advertising promoting using on the marinade category and consumer promotion spending of $5 million. In 2003, the marinade line was anticipated to lose about $7 million in terms of operating profit from a loss of $10 million in 2002. In spite of the 2000 aggressive and fast promotion of marinades line by Clorox and Kraft, Lawry's kept on leading the marinades by achieving 50% share in the market along with 15% annual marinades growth.

At the beginning of 2003, Unilever declared arrangements to dispatch a Lawry's steak sauce. The Lawry's steak sauce line included only one thing that was an 11-ounce item bundled in a plastic container with a two-for-$5 limited time value point contrasted with A1's. 10-ounce bottle was with a normal value $4.99 and a special cost that was set for promotion of $4.49.  Unilever picked April 1st for Lawry and sent the first ship to increase full appropriation before crest summer barbecuing season including the Memorial Day and the fourth of July, that were key weeks for advancement. Besides, Lawry's likewise wanted to put impressive advertising weight behind its new steak sauce by using $20 million on promoting, hence, it amassed in the months of May, June, and July.

Alternatives Available

The product A1 steak sauces can go for various alternatives to react and to counter Lawry’s launch. The company can either react offensively by being aggressive and harsh or the company can go for defensive methods for countering the Lawry’s launch. Further, the company can go for developing and broadening its distribution channels or the company can go for a complete new strategy to counter Lawry’s launch.

Offensive alternative

A company may choose to make a direct attack to the offer by Lawry by matching the pricing and promotional activities with them. A1 steak sauce needs to imitate the advertising, distribution and promotional strategies by its competitor to make a frontal attack. Further, it needs to lower down its prices as Lawry is making a promotion of two-for-$5..........................................

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