A1 Steak Sauce Essay

1258 Words Feb 1st, 2014 6 Pages
A.1. Steak Sauce is a premier brand of Kraft Foods Inc. It was developed in 1830 and has been a leader in the steak sauce market with over a 50% share. In 2002, A.1. captured $150 million in sales with a retail price of $4.99, produced in a 10-ounce bottle. A.1. Steak Sauce has been able to excel in their market position by maintaining a superior brand image with strong brand loyalty, substantial sales, excellent margins and low competitor rivalry. A.1.’s main competitor is Heinz 57 which holds 16% of the market but did not compete with A.1.’s strong appeal and flavorful taste.
In its current situation, A.1. Steak Sauce must defend its product against Lawry’s new steak sauce that it decides to launch in April. Lawry’s retail price will
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Implement a 2 for $5/2 for $4 promotion
The first option to analyze is to match Lawry’s promotion with the implementation of a 2 for $5 promo. Lawry plans to attract the market with it’s lower cost steak sauce in a 11-ounce bottle. Lawry will be able to steer customers to their product through this promotion because consumers will more than likely buy the cheapest steak sauce for the upcoming holiday. Along with this low price, Lawry will have similar packaging and taste with heavy advertising backing. With the implementation of their 2 for $5 promo, they plan to obtain 10% of the market share which would cause a loss to A.1.’s profit. If A.1. plans to match Lawry’s promotion, they would be able to maintain their market share and compete with Lawry’s competitive pricing. This tactic could also cause a loss of potential sales for Lawry’s steak sauce because consumer trial and repeat purchases would be minimal since buyers would go for the brand and product that has been around longer with a stronger appeal.
Matching Lawry’s promotion could also end in a loss to A.1. steak sauce’s brand as well. Cutting prices could be detrimental to A.1.’s brand loyalty as well as hurt their financial stance in the market. A.1. is able to have high levels of brand loyalty with higher prices and a quality product that consumers don’t mind paying for. A price cut can make the product lose it’s value and customer perception which would not be beneficial to the brand. By

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