A1 Steak Sauce

1. A.1. Steak Sauce: Lawry’s Defense
MKM805 – Strategic Marketing Management
To- Duncan Reith
From- Kush Rathod
Student ID -102108172
Email ID- Krathod2@MySeneca.ca
Date - 28Th March 2018
1

2. What measures should A.1. Steak Sauce take to increase dollar market share in long run while competing from
new entrant in category and maintain 20% of sales during promotional weeks ?
Challenges Assessment
A.1. Steak Sauce A.1. Steak Sauce faces challenge to increase consumption
of steak sauce per occasion
This problem can’t be dealt with on immediate basis
Competitors A.1. steak sauce doesn’t face any threat from existing
competitors as A.1. has been successful to establish itself
over years
Existing competitors are minimal threat to business as Heinz 57
is not a direct competitor and Private label products have
market share less than 20%
Promotions Promotional weeks is the time when A.1. spends most
revenue on its marketing and bears loss of reducing prices
during this weeks
Promotions are necessary to increase its sale in market and
maintain it’s brand awareness during promotional week. It can
not be changed and has to bear loss
Channels Retailers have power to dictate their margins.
Margins are same during the promotional week and
manufacturer covered cost for price reduction.
Manufacturers need to secure their position in flyers during
the promotional week as retailers tend to only have one
product per category
Channel margins cannot be negotiated and has highest shelf
facing which is in company’s interest to face to any new
competition
Lawry Lawry is a brand of Unilever which gives them strong recall
in the minds of consumers
Lawry is going to spend 20 million dollars for its advertising
while coming up with 2 for 5$ promotional offer to enter
into steak sauce market
Lawry’s Live is one the initiative to attract consumers and it
can lead to help them gain market share
Lawry’s launch will affect market share of A.1. steak sauce due
to Unilever’s strong brand presence.
Promotions offered by Lawry has potential to capture new
customers and needs to be looked after to sustain in market.
Consumers Consumers are highly brand conscious and they are more
likely to buy from premium brands during an occasion.
Lawry’s advertising and promotional efforts can change
behavior of an consumer to buy new product at cheaper
price
Consumers can be affected by heavy advertising and result into
trial purchase among consumers
Consumers may not change it’s brand preference but there are
high chances they might try Lawry’s steak sauce through Lawry’s
Live
2

3. A.1. Steak Sauce has a strong brand presence in market with minimum competition, it faces an immediate risk
from Lawry’s Steak who is set to launch on April 1 with its promotional offer of 2 for 5$ on memorial day
A.1 .Steak Sauce
• A.1. is the longest and well established player
in the steak sauce market with dollar share
more than 50%
• It has a high consumer value in steak sauce
market compared to other brands
• Expansion of A.1. failed while launching
“Poultry sauce
Competitors
• There was limited competition in steak sauce
market
• Heinz 57 was largest brand competitor in
market
• Private Label were sold at 3.49$ in retail stores
but were least famous in steak sauce category
• Lawry is one of the upcoming competitor with
an leading market share in Marinades
category
Channels
• Retailers had strong channel power with
commission of 30% for all items in category
• 9/10 steak houses served A.1. Steak sauce
which created high brand awareness among
consumers
• A.1.Steak sauce is available in all grocery
store, mass merchandisers stores and club
stores
• Retailers earn 123 million$ from all its brand
Consumers
• Volume sales has been flat in recent years
• Steak sauce was consumed in a lesser
quantity per occasion
• Consumers tend to buy more during holidays
like memorial day and fourth of July
• There is strong loyalty in steak sauce market
Lawry
• Lawry is owned by Unilever which has a
strong position in Marinades and seasoning
industry
• Lawry’s Marinades category is growing 15%
annually
• Considerably low pricing of Lawry’s steak
sauce compared to A.1. Steak sauce at 3.99$
• Lawry’s steak sauce is spending 20 million $
and dropped 5 FSI focusing on May, June and
July
Promotions
• 20% of A.1. steak sauce revenue come during
promotional week
• A.1. steak sauce had promotional price of
4.49$
• A.1. steak sauce uses 10% of revenue in in-
store promotion
• There is strong loyalty in steak sauce market
• FSI of 1 million dollar are dropped in each
quarter by A.1. Steak Sauce
A.1.has advantage of first mover in the market
thereby having power to dominate price in
market as it also matches perceived value of
consumers
Over years there are no new competitors in
industry as the growth of units and volume is
stagnant irrespective of price
Promotional week are most important as steak
sauce is an occasional product and it is the best
time to grab attention of consumers
Retailers have strong influence on brands as
their margins are hardly negotiable and only
support one product per category during
promotional week
Consumers can only be attracted during point of
purchase as it is more of an impulsive behavior
and prices of product are not much affected on
their purchasing decision as it’s occasional
product
Lawry being of the successful brand in
Marinade; it is trying to capture market and risk
entering steak sauce as it has financial power
3

4. Retailers play important role to steak sauce business and A.1. plays important part in retailers business
4
-Retailers earn $62,997,424
from A.1.Steak sauce overall
-A.1.Steak Sauce has highest
shelf spacing of 6 and
overall 14
-Retailers margin is as high
as 30% which remains to be
same during promotional
week
-Manufacturers are tend to
sponsor in-store promotions
during promotional week
-11.5 million $ is earned only
through one product during
2 weeks which shows high
demand of A.1. Steak sauce
among consumers

5. A.1. Steak Sauce has high perceived value compared to Lawry’s Steak Sauce due to it’s well established brand
image and can offer 3 pricing to compete with Lawry’s Steak Sauce during its promotional week
Perceived value by consumer based on
everyday pricing
Quality
Price
Brands Prices per Piece
A.1. Steak Sauce 4.99$
Heinz 57 4.79$
Private Label 3.49$
Lawry’s Steak Sauce 3.99$
A.1.Steak Sauce
Heinz 57
Lawry’s Steak
Sauce
Private Label
Products
Brands Prices
A.1. Steak Sauce 4.49$
A.1. Steak Sauce 4.00$
A.1. Steak Sauce 2 piece for 5$
Lawry’s Steak Sauce 2 pieces for 5$
Perceived value by consumer
based on promotional pricing after
launch of Lawry
Price
Quality
A.1. Steak Sauce’s
4.49$
A.1. Steak Sauce’s
4.00$
Lawry’s 2 for 5$
A.1.Steak Sauce’s
2 for 5$
A.1. Steak Sauce has 3 possible
pricing option to compete with
Lawry’s promotional price in
grocery stores
• A.1. Steak Sauce can sell it’s
product for 2 for 5$ which will
attract consumers who are
looking to buy more and might
change perception of quality of
its product
• A.1. Steak Sauce can sell it’s
product for 4.00$ and give
consumers a product which is
well established at all time low
price with highest perceived
quality in market
• A.1. Steak Sauce can sell it’s
product at it’s original
promotional price of 4.49$,
which will not hamper brand
reputation among consumers
thereby not changing it’s
perceived value
A.1. Steak Sauce has highest perceived quality of steak sauce among all of
its competitors in market 5

6. Possible alternative options affects retailers profit as 20% number of steak sauce is sold in 2 promotional weeks
Customer wants and needs Customers are more likely to buy products during
weeks of Memorial day and 4th of July
Customers are willing to pay price but are looking for
products which tastes good and can’t ruin their day
by having imperfect meal
Customers consume steak sauce in less quantity as
low as one tablespoon per serving
Companies like Heinz 57 distinguish themselves by its
taste and appearance
Channel Capabilities and cost A.1. steak sauce is available in most of the groceries ,
mass merchandisers and club stores
Retailers have a margin of 30% which is to be
changed rarely
Channel power and influence Retailers only run one promotion per product per
category during promotional week
Retailers margin doesn’t change during promotional
week
Competitive postures and actions A.1. has most amount of shelf spacing compared to
other brands
A.1. has been market leader and there are no new
entrants in market
Forces affecting channel 11.5 million $ is earned in promotional week by
retailers by selling A.1. Steak Sauce at 4.49$
Alternatives Effects on Retailers
A.1. Steak Sauce 2 for 5$ Retailers tend to make earnings of
6.4 million $ which is a huge loss
of 5.1 million dollars compared to
its original promotional price
As Steak sauce is consumed in
less quantity it is more likely
people are looking to buy one
product irrespective of price
which completely fails motive of
promotional price
A.1. Steak Sauce 1 for 4$ Retailers earn around 10
million$ which has a bearable
loss of 1 million$ compared to
its original promotional price.
Selling it for 4$ taps into the
wants of consumers which
might increase sales
A.1. Steak Sauce selling at
original promotional price of
4.49$ for 1 piece
A.1. Steak sauce selling at
original promotional price
might affect its market share
due to new entry from Lawry
Retailers play important role during promotional week as they have power to
support one brand and consumers tend to buy more through retailers during this
weeks
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7. Price Sensitivity helps us to evaluate buying behavior of consumer during promotional week and their motive
towards buying steak sauce
Consumer economics • Steak Sauce bought during all year round is tend to be
used by consumer itself , on other hand , Steak sauce
bought during holiday weeks are tend to be used
during feasts and social gatherings
• Higher price doesn’t necessarily indicate higher
quality but the quality of brand plays an important
role while buying this product as customers are
looking for good experience of meal during holidays
and won’t think much about prices during this period
• Price of the steak sauce is minimal compared to the
earnings of a consumer and can be afforded by
consumers
Customer Search and Usage • Buyers doesn’t have to pay much while switching
brands
• Consumers can easily compare prices with other
competitors as most the products are available in
same location
• Consumers can taste other steak sauces only after
buying them. Lawry’s Live can be possible factor to
attract consumers by trying them taste the product
• Time of purchase play vital role as consumers tend to
buy products during holidays of memorial day and 4th
of July
Competition • Steak sauce offering by Heinz 57 is considered to be
different in taste and appearance compared to others
• Product testing showed us that Lawry’s product isn’t
good as compared to A.1. original
• A.1. Steak Sauce matches value as perceived by the
consumers
• A.1. is one of the long established brand which brings
trust among consumers
• Lawry’ Steak sauce can leverage it’s brand image as it is
globally known for many of its product
Alternatives Price sensitivity affecting
during promotional week
A.1. Steak Sauce 2 for 5$ Price is not an important
consideration during
holiday period as they are
looking for taste and
reliable brand
2for 5S might dilute quality
of product
A.1. Steak Sauce 1 for 4$ 4$ for 1 during promotional
week can attract consumers
while maintaining the
perception of quality of
product and has less impact
on brand equity in long run
A.1. Steak Sauce selling at
original promotional price
of 4.49$ for 1 piece
Stable prices over years
during promotion doesn’t
hamper brand equity and
this deal is less attractive
than 4 $ as people are
looking to spend less while
getting higher quality of
product
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Consumers are not price conscious but
looking for quality of products

8. A.1. Steak Sauce can sell 2 pieces for $5 during promotional week and price match with its competition Lawry’s
steak sauce
Evaluating Criteria Assessment
Consumer’s purchasing behavior Consumer tend to buy same amount product as their
consumption per occasion is less
Effect on competitor It might help us to gain more market share dollars by
competing at price of private labels
Long term effect This might destroy our brand equity in market
thereby giving Lawry a chance to capture market by
leveraging it’s parent brand
Short term effect This will help A.1. Steak sauce increase market share
while taking a hit in operating revenue
Effects on channel Retailers may demand higher margin due loss of 5.1
million dollars
Brand Perception In long run it brand perception might be hampered
regarding quality of product
Change in Operating Revenue A.1. Steak sauce has to make additional promotional
cost of 12 million dollar to compete with Lawry’s
promotion activities
Insights
• Discounting products will not
lead to more consumption as
required quantity is low per
serving
• A.1. Steak Sauce is considered a
good quality of brand which is
generally perceived as high
prices but due to this pricing it
can be perceived as a brand
having reduced brand quality
• 12 million dollar loss will only
help to tackle competition in
short run while hampering
brand’s overall image
• This move indicates that we are
the follower of price according
to competition which will
tarnish brand image which are
established over long time
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9. A.1. Steak Sauce can continue its original promotional strategy by selling one piece for $4.49 during promotional
week and not be bothered by new entrant in the market because of it’s brand equity
Evaluating Criteria Assessment
Consumer’s purchasing behavior Consumer tend to opt for same brand as they tend to be
highly brand loyal and same prices increases brand recall
about the product
Effect on competitor A.1. Steak Sauce might lose dollar share to Lawry’s Steak
sauce due to its derived brand value and high promotion
which might just motivate consumers to try new
products
Long term effect Selling at original promotional price helps to withstand
its brand equity in long run
Short term effect A.1. Steak sauce has a loss of 2.5% market share which
gives them a loss of 4.3 million dollars
Effects on channel Retailers earn most revenue in all 3 possible scenarios of
11.5 million dollars.
Brand Perception Brand perception will remain same and will be stagnant
due to its long presence in market with no sudden price
changes
Change in Operating Revenue Operating revenue drops to 55.6 million dollars due to
Lawry Steak sauce’s entry in market
Insights
• A.1. Steak sauce is well
established and long
established brand which gives
them first movers advantage of
being judged upon
• Over years A.1.steak sauce has
created brand image with its
unique taste which gives them
satisfaction during special
occasions
• A.1. Steak sauce is considered
to be good quality brand
compared to any Lawry’s steak
sauce
• A.1. Steak Sauce provides good
amount of earnings to channel
through its business which
gives us some power to
leverage channel
9

10. A.1. Steak Sauce can sell one for 4$ while maintaining its brand equity for longer term while minimizing it’s losses
in short term
Evaluating Criteria Assessment
Consumer’s purchasing behavior Selling at 4$ will have no effect on its brand value
while attracting consumers to buy product with
highest quality at least cost available
Effect on competitor Selling at 4$ will nullify effect of the trade promotions
by Lawry’s steak sauce and might be able to capture
market share from other competitors
Long term effect Selling at 4$ will have to protect its market share in
long term while maintaining its brand equity
Short term effect Selling at 4$ will create tough competition to capture
market share during its promotional week.
Effects on channel Channels has to bear minimum loss of 1 million dollars
compared to alternative of 2 for 5$ which is
negotiable due to its relation with retailer over years
Brand Perception Brand perception will remain same as it can be
considered as one of the possible perceived price to
sell high quality of product
Change in Operating Revenue A.1. Steak Sauce has to bear loss of 3 million dollars
which help to compete and survive in market
Insights
• Selling one bottle for 4$ will
help to achieve its long term
and short term goal while
giving a signal to new entrant in
market
• As there are no new
competitors in market and with
perception of high price for
high quality is being developed
in minds of consumers over
year.
• Selling one bottle for 4$ will be
considered as one of the brand
which is willing to give cheaper
price for high quality products
• Due to high loyalty in steak
sauce category consumers are
less likely to change their brand
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11. 4.49$ - Original promotional price
• Not changing price during promotional week
effects its volume market share with a decline of
2.5%
• Due to loss of market share A.1. Steak Units sold
has to face drop of 466,772 units
• A.1. face loss of 4.3 million dollars while taking no
action against its brand competitor
2 for 5$
• Price matching with competitor will lead to
increase in promotion efforts by 12 million $
• Increase in promotional efforts leads to loss in
operating revenue
• Decrease in consumers cuts affects channel
behavior in longer run
Selling one for 4$
• Promotional cost has to be increase by 2% to
match Lawry’s competition.
• A.1. has to bear loss of 3 million dollars
compared to 2002
• With decent cut of 1.2$ per unit retailers are to
be satisfied by A.1.’s offering
Financial analysis of each possible options helps us to understand loss of company and if it is investing it’s money in precise channel to
select an alternative
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In worst case scenario A.1. steak sauce can loose market share
of 10% but due to its high brand presence it is difficult to loose
its to entire share to one category. Therefore, 10% is divided
among A.1., Heinz 57 , Private label and other products

12. A.1. Steak Sauce should price itself at 4$ per bottle during promotional week while Lawry is trying to target it’s
consumer at 2 for 5$
• By selling at price of 4$ per bottle A.1. Steak sauce can achieve it’s objective of tackling threat from Lawry’s pricing during
promotional week and maintain it’s brand value in long term
• Selling at 4$ per bottle will give them loss of 3 million $ which can be covered in future years
• Consumers are looking for high quality products and by maintaining reputation of being premium, it will help us to target consumers
• Retailers are being one of the channels having power, during the promotional week of 4$ for 1 they earn 10 million dollars 1 million
less than usual.
• Price doesn’t play important role in purchase decision of Steak sauce during promotional week on other hand quality matters which
is offered by A.1. Steak sauce
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Fulfilling needs of consumers, providing good percent of margin and offering better perceived value than Lawry’s
Steak sauce during promotion puts us in win win win situation
• As Lawry is being launched on first week of April , A.1. can only play on its pricing tactics which leaves out of option to put
Lawry
• Lawry’s sole motivation is to enter market as it is doing good in marinades line which gives them some room enter other
category
• A.1. being of one well established brand created high brand loyalty among consumers over years which has created
perceived perfect blend taste and quality of sauce in the eyes of consumers