A1 Steak Sauce Lawny's Defense Case

Ricardo Saldana

Situational Analysis

1. Industry

• Beef consumption in the early 2000’s proved to be more stabilized than in the 1990’s where it was mainly declining. (Calkins 509)
• Heinz 57 was A1’s largest competitor (Calkins 509)

• Different from A1 in taste and appearance
• Marketing efforts focused on showing how the brands products were versatile
• 16%-dollar share and 13% volume share in lbs. in 2002

• Private label products had a 14%-dollar share and a 19% volume share in lbs. in 2002 (Calkins 509).
• Other products had a 16%-dollar share with a 22% volume share in lbs. (Calkins 509)

1. Company

• A1 is the leader in the steak sauce category with a dollar share of 54% (Calkins 509)
• Leads the volume share in lbs. at 46% (Calkins 509)
• Retail price for a 10 oz. bottle was $4.99 (Calkins 509)
• Consistent price increases with a gross profit margin of 83% (Calkins 509)
• 10% of A1’s revenue spent on in store or trade promotional efforts (Calkins 509)
• In 2001, launched a line of marinades to enter in the marinade category. (Calkins 511)
• End of 2002, A1’s revenue in the marinade category was $15 million with a 10% share (Calkins 511)
• Revenue in 2002 was about $150 million with a $60 million operating profit (Calkins 511)
• Receive 10% of their profit from memorial day sales from grocery stores (Calkins 511)

1. Trends

• A1 receives 10% of their profit from memorial day sales from grocery stores (Calkins 511)
• On memorial day and the 4th of July, A1 would secure a promotional ad in the store flyer, in store display, and a $4.49 promoted price. (Calkins 509)
• Consumers use a small amount of steak sauce on special occasions, using a serving size of one tablespoon (Calkins 509)
• Retailers traditionally support one brand in a particular category during a promotional week during the holidays (Calkins 509)

Problem Definition

        Mr. Smith who is a senior brand manager for A1 steak sauce and marinades needs to advise a plan to counter Lawry’s new promotional offer that is scheduled to be put into the memorial day ad at Publix. This will cause A1 steak sauce to be at risk of losing 10% of their annual sales on memorial week due to Lawry’s promotion to Publix offering a better price than A1. During this time period A1 would lower the price of their 10 oz. bottle from $4.99 to $4.49, which is a 50 cent difference. Lawry’s steak sauce is priced currently priced at $3.99 for a 11 oz., which adds an extra oz. for $1.00 less than A1’s. Lawry’s has also asked Publix to promote their two for $5 promotional price point in the memorial day ad, which puts A1 at risk of getting lower than their expected 10% annual sales on Memorial Day week.