1.How would you characterize the A1 Steak Sauce business?
First I would like to mention little bit about history of A1 Steak Sauce which was developed by 1830 by Henderson William Brand, he was a chef to England’s King George IV. So, the name was given to the new sauce by the king who was so impressed and delighted with the taste of the sauce, and proclaimed it to be “A1”. In 1891 William Brand begin to manufacture meat extracts and essences and starts Brand and Co. Unfortunately, in 1950 great culinary master goes bankrupt and selling his business to his friend Withall who continues business under the Brand and Co. name. In 1862 A1 A 1 teak Sauce enters at the International Exposition in London, England and becomes very famous steak sauce in North America. A 1 Steak Sauce becomes leader by its key ingredients. Loyalty in steak sauce was high and competition was limited. The product is very popular and available in all stores in the United States. The Heinz was the A 1’s largest branded competitor. But the Heinz could be really good competitor to A1 because of quite different taste and appearance. Gross profit of A1 Steak Sauce was 83 percent and approximately 10% of A1’s full-year volume was sold on each holiday week. About 10 percent of the A1’s revenue was spent in-store promotional reports or trade promotions
2.Why Lawry’s launching a steak sauce product? Explain.
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Lawry’s is the USA’s famous and leading provider of the premium spice and seasoning blends, marinades and other flavorings. In 1938, Lawry’s brand was created and began marketing its seasoned salt in retail stores. The Lawry’s was owned by Unilever-British-Dutch Multinational Corporation, and was sold to McCormick & Company in July 2008. Unilever one of the biggest consumer products companies in the world, which has annual sales $ 50 billion. The company had challenged all of its brands to reach annual sales of at least one billion dollars. In 2003 Unilever decided to launch a Lawry’s Steak Sauce, for this plan company chose April 1 in order to gain good and full distribution before peak summer season. Lawry’s steak sauce was significantly lower in price than A1 steak sauce and was 11 ounce product was packaged in a plastic bottle, while A1 was 10 ounce size. Lawry’s planned to launch steak sauce to get more profit from market, creating quite similar product to A1. To reach this plan Lawry’s company decided to drop five FSIs in 2003 and spend $20million on advertising concentrating in the month of May, June, and July.
3.Should A1. Steak Sauce defend itself against the Lawry’s launch? If not why not? If yes why and how? Discuss.
I think A1 Steak Sauce should defend itself from Lawry’s launch because the main reason is that they get really good dollar category share of more than 50 percent, its gross profit margin was 83 percent. We know that A1 steak Sauce do approximately 10 percent of full year volume on each holiday week, and we can read from the text that Publix is ready to give Lawry’s the Memorial Day key promotion because of Lawry’s has lower price comparing to A1 Steak Sauce.
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