Holy Angel University Graduate School of Business

KINGS HOT N HANDY CASE

In partial fulfillment of the requirements in Marketing Management (GSMARKMA)

GROUP 3 Ruby Lyn S. del Mando Marie Francoise Therese M. Kho Ma. Shiela Lauren L. Lapid Richard Y. Samia

Prof. Segismundo M. Gonzales

Kings Hot n Handy

September 25, 2010

Kings Hot n Handy

I.

ABOUT KINGS HOT N HANDY Kings has been a brand name of Goodfoods, Inc. since the 1920s.

Goodfoods started in the United States and is popular in 87 countries worldwide, especially in Europe. It is globally known, aside from Kings

products, for its mayonnaise, cooking oil and peanut butter spread brands. In the Philippines, Goodfoods locally produce mayonnaise, sandwich spreads, peanut butter spreads, instant gelatin, cooking oil, and of course, Kings products. The company has successfully maintained the good

image of the brand and has earned loyal consumers throughout the years. Kings has been a household brand in the Philippines since 1969, with its broth cubes, liquid seasonings and packed soups. In fact, it is ranked the third most popular brand in the United States. Before launching Kings Hot N Handy (KHH), Kings came up with a market research to find out peoples opinion on why they would buy an instant snack. The results were: Taste Convenience (speed & ease 75% of 22% 20%

preparation) Economy (filling)

In 1998, Kings entered the Soupy Snack Market with its Kings Hot N Handy, starting with the Arroz Caldo variant. The product was positioned as your deliciously filling snacking solution to hunger. TV ads carried the tagline Bigat ng Dating Hindi Bitin (Filling and Satisfying). 3

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Kings Hot N Handy is an instant rice porridge snack, instant singleserve cup rice, and only needs boiling water to be added to serve. Its flavors are Filipino traditional snacks, such as Arroz Caldo, Goto, Guinataang Mais, Champorado and Chicken Sopas. Beef Goto and Champorado were launched in 1999. Guinataang Mais and Chicken Sopas were introduced in 2000. KHHs number one competitor is Penny which has been in the Philippine market since 1979. In the year 2000, two other competitors, Chow Break and Quick Eat, enter the market. This decreased KHHs market share. Kings came up with a research team last September 2000 to find out again the factors which affect consumers purchase of instant food products. After two months, they came up with these results: Taste Price Known Brand Filling 2% 61% 39% 27%

In January 2001, a large multinational company bought Goodfoods, Inc. This purchase will make Kings the largest brand of that company since Kings uses the same brand name all over the world. It is the #1 advertiser in the Philippines. network. It also has stable and large distribution

Kings Hot n Handy

Kings Hot n Handy

Mission and Vision Mission: Brands to be the first choice for consumers everywhere. Quality is a priority, not just functional quality, but food taste, nutrition and ease of use should increase enjoyment. Vision: They call themselves truly a multi-local multinational because their local companies are predominantly run by local people in tune with their communities and who understand their needs and values.

II.

IDENTIFICATION OF THE PROBLEMS Kings saw the potential of the growing soupy snack in the market,

thus introducing Kings Hot n Handy. However, recent sales reports are not overwhelming. It seems that the market for the cup rice is quite small compared to the cup noodle market plus its competitor (which is Penny) is eating the market. Ms. Clarisse Villa, the Product Manager, is worried if the market will still grow, and how Kings Hot N Handy (KHH) can race with Penny. Based on the given information and facts in the case, this study will specifically answer the following questions: 1. What are the factors that affects the sales of Kings Hot n Handy and the recommended possible solutions?

Kings Hot n Handy

2. How Kings Hot n Handy brand be identified and differentiate compare to Penny and other competitors brand? 3. What are the things should be considered in building Kings Hot n Handy a strong brand? III. SWOT ANALYSIS

STRENGTHS Easy to prepare and convenient Better taste Larger capital due to company acquisition Market dominance in packed soups, liquid seasonings & broth cubes. With variety of products Internationally known company OPPORTUNITIES Media Exposure Consumer change in trends: instant lifestyle New market segments

WEAKNESSES Limited budget for advertising Limited distribution networks Poor trend spotting Untimely market research Price is high compare to competitors Wrong product positioning Low market and low profitability THREATS Small market that may eventually die Increase competition due to emerging competitors from new and existing players Brand loyalty to competitors

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IV.

ALTERNATIVE STRATEGIES Below are the selected strategies in each factor that will help the

company achieve its target sales and strong brand. i. TARGET MARKET broaden target market a. Differentiating the target market and promoting it as a breakfast food, instead of a snack. This requires new set of market studies. b. Stick with the original target market and focusing on a new segment: students and working mothers. c. Sticking with the original target market and focusing on a new segment: children. ii. PRODUCT a. Dropping the product line since it has low market share and low profitability. b. Discontinue Goto, Guinataang Mais and Chicken Sopas flavors. Then further positioning the two remaining flavors: Arroz Caldo as merienda snack and; Champorado as breakfast meal. c. Reformulating the product (based on the recent market research about factors affecting consumers purchase of instant food products): improve the taste, repackage and highlighting Kings Brand. iii.PACKAGING a. Removing the free spoon. b. Do not remove the spoon because there is a psychological effect to consumers when they see an added item in a product

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iv. ADVERTISING a. Increasing media advertisements highlighting the taste and not the filling advantage, unless market is differentiated. b. If the company opt to focus on a new segment, then advertising efforts to the mothers. v. DISTRIBUTION NETWORK a. Do an extra effort for Kings to place KHH in sari-sari stores and

convenience stores as their main product distributors. vi. SOURCE OF RAW MATERIALS . . Company produce its own rice Hiring a local supplier to produce the rice. . Import rice.

V.

RECOMMENDATION

Kings Hot n Handy

The graph above shows the typical product life cycle of a firm when they launch a product. It begins with product development, the time the firm devises and creates a new product. The aim of this development process is to have a profitable, well-performing product on the market; this initial stage is characterized by zero sales, the firm bearing the costs of such development, typically resulting in negative profitability. The introduction stage is the period of slow sales growth as the product is introduced to the market. The growth stage is the acceptance in the market and will have substantial profit improvements. During the maturity stage, there is a slowdown in sales growth because the product achieved acceptance by buyers. Profits stabilize or decline because of increased competition. Lastly, sales show a downdraft drift and profit erode. All products undergo a typical product life cycle, including Kings Hot n Handy. However, not all products vanished in the market. It will be dependent on how management would handle the crucial period, which is at the start of the decline stage. This is where reinvention of the product takes place. Management must make sure that KHH product will not end in declining stage.

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Product reinvention is one of the most complex, costly, and risky endeavors that a company will face. With competition fierce and consumer understanding illusive, product failure rates are notoriously high. Its either you just let your product come to an end or take all the risks for the product to survive. Kings Hot n Handy has to take risk of relaunching the product to increase the sales and profitability. As we synthesize all the information and fact with its alternative strategies, we recommended that the company should continue

producing the Kings Hot n Handy. It was not mentioned in the case that the product line incurs losses. It only has a small and decreasing market share. So we suggest improving and relaunching the product first before dropping it. Cup Market is a relatively small market .Soupy Snack market is composed of 92% of Pouch Soupy Snack and 8% Cup Soupy Snack;

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wherein out of the 8% of the Cup Soupy Market, 17% of it is the Cup Rice Market and remaining 83% is Cup Noodles Market. But there is a chance of increasing growth in the market. KHH grabbed this opportunity. The Cup Market has been growing significantly and the proportion of cup rice is increasing by 28% in the year 1999 but decreased to 17% in the year 2000. However, the proportion of the cup non noodles to the total cup market increased from 1999 to 2000 (3% to 10%).

140 120 100 80 60 40 20 0

94 95

3 %

10 %

+12 +14 +17 % % %

96 97 98

+28 +17 % %
'0 0 99

Cup/ Bowl Noodle s Cup Bowl Non-Noodles

It was noted by Ms. Villa that consumers nowadays like many choices. This was supported by the survey made regarding sales of the KHH with all the variants available. The graph showed almost equal sales in all the variants. Thus, it will be good if the five variants (Arroz Caldo, Champorado, Goto, Chicken Sopas and Ginataang Mais) remain in the market.

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Kings Hot n Handy

1000000

750000

500000

250000

Chicken Sopas Guinataang Mais Champorado Goto Arroz Caldo

JF 99 MJ 99 SO 99 JF 00 MJ 00 SO 00

0 SO98

We suggest for reformulating of the product based on the market research about factors affecting consumers purchase of instant food products. The product will improve its taste (market research based on the Filipino palate), at affordable price, repackage the product that can easily be identified and remembered by the consumer (packaging will show what customer expect inside and with Filipino concept), packaging will be convenient to eat even when you are traveling and highlighting Kings Brand. We still include plastic spoon inside the cup as part of the convenience of the product. As mentioned earlier, concept of the packaging is Filipino, a way to distinguish KHH with Penny. The old target market segment will be retained (office workers who are too busy and have no time to eat heavy meals). However, we will include a new segment which is composed of mothers (who are

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persuaded by their children, whether students or not). It follows that advertising efforts will then be designed to attract more mothers. Since Goodfoods Inc. is acquired by a large multinational company, budget is not a problem in increasing media advertisements.

Advertisements will focus on the Filipino taste that will delight every people who will watch it and convince to buy for it. Because of the improved taste of the products customers will be willing to buy again. Continuous advertising will help the product be part of Filipino lifestyle and stick in the mind of Filipinos. Setting Unilever for an example, advertisements for their Clear shampoo product helped a lot in increasing their market share. The continuous advertisements help this product boom and can compete with Head and Shoulders. With KHH, a distinguished and reputable endorser/s, mothers and popular child stars, who can testify for the good taste and convenience of the product, will help creating the image to customers. As another way of advertisement also, KHH can sponsor feeding programs a part of the Companys Corporate Social Responsibility. The acquisition of the company makes it possible not only to afford sufficient media exposure, but also additional distribution networks. Place KHH in more sari-sari stores, convenience stores and supermarkets. Giving promotional discounts at first could help. For the supply of raw materials, we recommend hiring a local supplier rather importing rice but without sacrificing the quality and taste.

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The above strategies will be observed for five years and evaluate if it is effective and if it helped the company to generate more sales. If the outcome doesnt meet the target or the expected profit and sales, then that is the time to discontinue the product. This is in connection in the earlier data were Cup Rice is only 17% of the 8% Cup Soupy Snack. We should also consider that market share of KHH changed because other competitors came. It will then be better to focus on the other products of the company.

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