A.1 Steak Sauce Defense

Low product differentiation and economies of scale: There isn’t much product differentiation at play in the retail industry as there are well known manufacturers whose products are offered for sale, which leaves price to compete on. Current well established retailers with thousands of stores enjoy the economies of scale to control their cost that a new entrant might not be able to replicate after immediately entering the industry.

Lastly, the company suggest to expand their current inventory through increasing production and capacity. With the increase in production rate the company can gain more consumers as a whole through supply and demand. Doing this would give the company an opportunity for more exposure and perhaps better brand recognition.

* Increase in sales and decrease in promotional costs for the introduction of the new product

(-- removed HTML --) Steak 44 is operated by Jeffery Mastro, Micheal Mastro, Dennis Mastro and Scott Troilo, who have extensive experience in running classic and innovative American steakhouses. They current opperate Dominick's Steakhouse in Scottsdale, and Steak 48 in Houston, TX, and Chicago, Il. (-- removed HTML --)

* Become more interactive with the consumer on their website; showcase the diverse ways to utilize A1 sauce on different meat products.

Executives have noted that beef consumption in the US is declining and this explains why volume sales have remained stagnant over the past few years. On the other hand, consumption of chicken and turkey has doubled since the 1970s (AMI, 2009). Considering this information, one recommendation is to offer a sale “Buy one A.1. Steak Sauce, get one A.1. Marinade free”. This type of sale will appeal to customers who plan on grilling both steak and chicken during Memorial Day weekend. Because of the small amount of steak sauce used at one time some consumers do not find it necessary, nor are they interested, in buying 2 bottles of steak sauce for $5. This promotion would also help increase brand awareness for A.1. marinades without spending a lot of money on outside advertising.

A.1. Steak Sauce is a brand of Kraft Foods with little competition in the steak sauce market. The product currently has the majority dollar and volume market shares in the steak sauce market. However, unit and volume sales have remained flat. In February of 2003, A.1. becomes aware of new competition entering the steak sauce market. Lawry’s, which is owned by Unilever, has announced an April 1 launch of its own steak sauce. Lawry’s has approached Publix and requesting the Memorial Day ad with a two-for-$5 price. Publix is requesting that A.1. match Lawry’s pricing or A.1. will lose its place in the ad.

A.1. is a household name for steak sauce; nevertheless, if Lawry’s secures the ad at Publix with better promotional rates than Kraft, they could drastically lose a small portion of their customer base if the quality of the sauce is in any way comparable to that of A.1. (Kerin & Peterson, 2010).

In addition to launching a product that was able to company with A1 Steak Sauce, Lawry formed an alliance with the supermarket Publix to launch a Memorial Day advertising campaign offering two bottles of Lawry Steak Sauce for five dollars as a promotional price. (Kerin & Peterson, 2011, 630). By using this

| Issue Lawry is attempting to release a new steak sauce that should penetrate the market by early April. Obviously a new player in the market is not a major concern to A1/Kraft, having over 50 percent of the market share. The best case scenario for Lawry is that they will only gain ten percent of the market share. The direct threat for A1 lies with Lawry’s marketing tactics. Lawry is attempting to launch a Memorial Day advertisement with Publix, offering a two-for $5 promotion. The issue is that retailers generally support only one brand in a particular category in a given week. In recent years A1 has

Implementing newer strategies could result in possibly more confusion for customers---which could lead to a future decrease in sales; changing the management could affect the company financially as well. I’ve listed the SWOT Analysis of JC Penney below:

However we feel that this strategy also has several weaknesses. Compared to the first option presented by the VP of Advertising, we would still need to advertise that our product is coming down in price. If we don’t advertise, the consumer is still going to be drawn to our competitors because they will remain unaware of the new parity in pricing. Also, if we

Kraft is clearly a strong competitor, as they remain one of the top contenders in each of their industries. They are able to strongly differentiate their products from those of other companies to capture a large share of the markets they participate in. They have a wide array of products that can serve as subsituties for each other to keep consumers within their brands, but give them options on which products to consume.

Consumer-oriented promotions can help a company both short and long term. “The goal of consumer-oriented sales promotion is to get new and existing customers to try or buy products.”4 (Boone/Kurtz, 2013, p.404) Many companies use

At this point, new groups of consumers might be targeted. By doing this, the brand value is increased and maximum competitive advantage could be gained.