A1 Steak Sauce Case Study

Case Recap

A.1. Steak Sauce, part of Kraft Foods, the leading food company in the United States, is the leading brand in the steak sauce industry. They have established brand superiority over the last 100 years and have faced little competition over that time. Their senior brand manager, Chuck Smith, is faced with the task of determining how to handle an aggressive attempt by Lawry’s, a leading brand in the marinades and seasonings market, to enter the steak sauce market. Smith and his associates must decide how to defend against the aggressive advertising and marketing campaign of Lawry’s new steak sauce which is looking to launch on April 1st (Kerin and Peterson, 2010).

Problem Identification

The problem that A.1. faces is that Lawry’s two-for-five dollar price promotion of their new steak sauce is expected to run in the Memorial Day ad for national grocery store chain Publix. Even though A.1. is by far the most distinguished and recognizable brand in the steak sauce market, this is especially concerning to A.1. because they typically run key price promotions on Memorial Day week. Their promotion typically consisted of an ad in the store flyer, an in-store display, and a discounted price of $4.49 for their standard 10 ounce bottle (down from the usual $4.99 retail price). Most stores would only recognize one brand per specific category for promotional weeks, so with Lawry’s promotion being priced so favorably for consumers, A.1. must decide if their brand loyalty is strong enough to survive Lawry’s promotion or if they should defend aggressively against Lawry’s (Kerin and Peterson, 2010).

Identifying the Root Problem Components

There are two key issues that are at the root of A.1.’s problem. First, A.1. does 10% of its sales on each holiday week of Memorial Day and Fourth of July. With Lawry’s running such an aggressive pricing promotion, A.1. is in jeopardy of falling well below its 10% average sales for Memorial Day week. This could jeopardize A.1. reaching its 2003 profit target, especially with them sinking millions of dollars into promoting their marinade brand this year.

A.1.’s decision to broaden their brand into the marinades market is also at the root of the problem. While their marinade line’s expected operating profit loss of seven million dollars is an improvement on the previous year, the money spent to promote the marinade takes away from potential advertising dollars for the steak sauce (Kerin and Peterson, 2010). This hurts the steak sauce line in this case as it limits A.1.’s options when needing to defend against Lawry’s.

S.W.O.T. Analysis

Strengths:

- Top recognizable brand name in the steak sauce industry with over 50% of the market share.

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