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A1 Steak Sauce Essay

1547 Words7 Pages

A1 Steak Sauce Strategic Issues and Problems A1 steak sauce has been a Kraft product since 2000. A1 is the largest steak sauce supplier in 2002 by sales and has extremely high brand awareness. The steaks sauce industry is worth about $300 million. Dollar sales have grown in recent years, but unit and volume sales have fallen flat. A1 currently holds 54% dollar sales and 46% of volume share, with revenue of $150 million in 2002 and operating profit of approximately $60 million. The most popular time for pushing steak sauce products is during Memorial Day and July 4th, A1 steak sauce receives about 10% of their total profit from that period. A1 had also come out with a failed marinades line causing them to relaunch it in 2002. Since then their …show more content…

The effectiveness of their suggestions is determined in the section below: 1. No Defense: The order of entry model states that Lawry’s steak sauce will achieve a 10% share in volume within the steak sauce category which will translate into a possible 8-9% in total market dollar share. Lawry’s entry into the steak sauce category should be considered a threat to A1’s operating profits especially because Lawry’s is moving aggressively to promote their new line for Memorial Day weekend. If Lawry’s were to steal 2% share of total market dollars that could turn into a $3.3 million dollar loss. Using 2% is very conservative and analysis shows the actual potential loss of revenue to reach 5%. Calculations for a no defense strategy can be found in the …show more content…

However, A1 is currently under pressure to increase its operating revenue by 10% in 2003. Therefore, a loss in operating revenue for their steak sauce will be harmful to their new profit goal when factoring in the loss from A1’s marinate line. In order for their marinate line to continue their steak sauce must yield a profit of $62 million in operating profits, offsetting the $7 million in losses. The potential loss of 5% in market dollars will lead to an overall loss of about $7.6 million for the steak sauce line. Due to these factors, A1 should definitely take any potential losses to their steak sauce line from the new entry of Lawry’s

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