Kitchenware Analysis MKT 356 FINAL PDF

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California State University, Northridge

Kitchenware Analysis

Prof. Huang Dongling December 5, 2017 MKT 356

Table of Contents Executive Summary…………………………………………………………………………….. 2

Introduction…………………………………………………………………………………..…..3 Method…………………………………………………………………………………………....5 Results…………………………………………………………………………………………….6 Market Analysis……………………………………………………………………………………..6 Top 3 Analysis……………………………………………………………………………………….8 Customer Analysis……………………………………………………………………………..….11 Conclusion……………………………………………………………………………………....15 Appendix…………………………………………………………………………………...........16

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Executive Summary Our team conducted background research in the kitchenware market. Companies began using new materials like silicone, bamboo, tin, and aluminum which helped the kitchenware market increase sales. Our analysis shows that kitchenware sales doubled in 2005 and generated $4.07 billion dollars in the United States. Our firm has analyzed kitchenware data in order to determine if Company 54 should decide on competing in channels such as Internet and Catalog. In our analysis, we compare the Top 3 firms: Company 54, 770, and 798. Within those firms, we researched their sales, pricing, channels, and customer information. The results are divided into three sections which consists of Market Analysis, Top 3 Analysis, and Customer Analysis. Market Analysis shows the seasonality and market trends of the company’s sales/prices by year and channel. The past three years, sales have consistently peaked during the months of November and December. But prices have increased during those years as well. By comparing the Top 3 firms, Company 798’s sales is the highest among the three companies and also has the highest peak of sales during the end of the year. Also, the Top 3 firms all compete by using different customers. Even though the companies are rivals, they do not target the same customers. We have concluded that Company 54 should not compete in different channels. Company 54’s sales numbers were 2.8 million for 2005-2007 in the “Other” channel. We recommend the firm to continue to focus on “Other” channel, as opposed to going into Catalog and Internet because it’s bringing in the most revenue.

Introduction

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The product category my team and I are investigating is Kitchenware. The publishing The Kitchen Report, issued by Home Furnishing News, stated that kitchenware sales had almost doubled in 2005. This then resulted in “$4.07 billion” in annual sales in the United States. The reason they believe this happened was because “kitchenware designers [were] now embracing new materials like silicone, neoprene, bamboo, tin and aluminum.” Since then kitchenware has been on the rise in the United States. In another article, Rising expectations: cookware and bakeware take off as all aspects of dining become more popular, written by Andrea Lillo, it is stated that in 2005 many vendors began the adoption of silicone into their product lines. These vendors included many well-known brands such as Breville, Kaiser Bakeware, and Sterilite. These top three companies began combining silicone with their tried and true sterling silver and created the perfect combination. Their average unit price per item was increased by almost 16% throughout the years, from 2005 to 2007. This was because it was “easier to cook, easier to clean up, easier to store,” said Robin Farrell, the marketing representative for Kaiser Bakeware. However, this new innovation was not the only contributor to the company's increase in both unit price and in sales. The company that was leading in kitchenware sales was focused not so heavily on catalog sales or internet sales, but retail sales and televised home shopping, which fell in the “Other” category. As the year 2006 progressed, so did the nation's outlook on kitchenware aesthetics. According to Time magazine writer, Anita Hamilton, cooking gadgets in bright colors and sleek shapes garnered the most attention.” The summer of 2006 was filled with bright colors, new shapes, and redefining what everyday kitchenware looked like. Suzy Payne, a buyer for Crate & Barrel, revealed that the industry was “[taking their] cues from fashion," which at the time focused on clean cut looks and colors that stood out. For example, the top companies began

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implementing the use of non-corroding ceramic blades in kitchenware items such as potato peelers. This added to the sleek and clean-cut image that fashion was also portraying at the time. In addition, home goods companies, like Black & Decker, began adopting colors such as yellow, into their kitchenware items. For example, they began creating rice cookers in the shade yellow because it reminded them of the spice saffron, and saffron is quite often used in rice dishes. Bright colors color such as yellow, smarter and stronger materials such as silicone and stainless steel, and innovative designs were on the rise in kitchenware in mid-2006. The channels that these top companies were focusing for their kitchenware sales was really working for them. From the year 2005 to 2007 they contributed to over 46% of the total sales accumulated from every firm.

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Method The software Tableau and Excel and the methods used were: market analysis, Top 3 company comparison, customer analysis, partial RFM analysis to reach the results.Using the data provided from the excel file, we were able to conduct a market analysis using the program Tableau. Within Tableau, we were able to create market analysis by creating charts that show seasonality, market share and sales. We separated the Top 3 firms and compared them to one another with sales in the channels they operate in along with price differences. We conducted a customer analysis on company 54 by conducting a RFM analysis from the excel file provided on company 54, but only focused on the monetary variable (M) from RFM. In excel we isolated company 54’s data in 2005 in a different sheet. Then sorted all their customers into 3 groups by highest sales to lowest sales. The following is how the groups are labeled: 1 being the customers who spent the least, 2 customers who bought the second most, 3 customer who bought the most. Using vlookup function we transfer the group numbers into the sheet with all the data by matching the customer names in the different sheets. Using this M-code, we analyzed if these customers were retained in later years, left to the other Top 3 competitors, or disappeared from the Top 3 companies sales. Another customer analysis that was conducted on the Top 3 firms was the analysis on the top 3 firms’ customers’ median income. From another excel file provided, we were able to use the vlookup function to transfer median income data by matching the zipcode from the file to the kitchenware data provided by matching the exact zip codes between the two different files. Using the median income, we compared the top 3 firms customers against one another and also used the Mcode groups to further analyze the difference between the groups using the median income. Results

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Market Analysis When analyzing the market trends within the past three years, we can see that there is a peak in sales during the months of November and December (Exhibit 1). We can also notice that the average price has increased from 2005 to 2007. In December of 2005, the average price was $22.61 and in December 2007 the average price increased to $26.16 (Exhibit 2). By observing Company 54’s channel and seeing how it competes among the other channels, the sales for other channels are $3,125,354 which is lower than the other channels. Other channel’s average price is $45.41 which is higher than the other channels like catalog with an average price of $20.71 (Exhibit 3). In Exhibit 4, we can see that despite catalog channel having the most sales each year, their sales have declined a total of -15.11% from 2005 to 2007. While the other channel has increased their total sales every year and has a total increase in sales by 97.24% from 2005 to 2007. Also in Exhibit 4, we can see that the catalog pricing has remained very constant throughout the years by only changing slightly. In contrast, the “Other” and “Internet” categories every year has been an increase in the average price. From Exhibit 5, we can tell that the kitchenware market from the data we have is dominated by the Top 3 firms: 54, 770, 798 making the market an oligopoly, meaning the market is shared by a small number of producers or sellers. Between the years given in the data, 2005-2007, the Top 3 firms contributed $10,044,128, which is 46.40% of the total sales accumulated from every firm.

Exhibit 1

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Exhibit 2

Exhibit 3

Exhibit 4

Exhibit 5

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Top 3 Analysis By taking a closer look into the Top 3 companies, we can compare their differences in sales among the three. By comparing Company 54 sales, we can see that they have $2,809,480 sales. This puts Company 54 in second as Company 798 is in first with $5,338,009 (Exhibit 6). Another observation is that Company 54 has been having an increase in sales for the past three years. By looking at Exhibit 8, Company 54’s sales in 2005 were $540,183 and in 2007 they increased their sales by 42% with it being $1,283,056. The last observation that we can make by looking at sales for the Top 3 is sales each month. In Exhibit 10, Company 798 has a huge spike during the months of November and December. However, Company 54 and 770 have a small increase on November but a decrease in December. In addition to looking at the difference in sales, we can also compare the Top 3 average pricing. Among the Top 3, both Company 54 and 798 have a similar average pricing in

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comparison to Company 770 (Exhibit 7). Company 798 has an average price of $57.00 and Company 54 has an average price of $52.58. By looking at Exhibit 9, we can see that Company 798’s average price is not constant the months before April, with an average price that was lower than Company 54. The months after April, average price increased, declined and increased again– having the highest price in December. Unlike Company 54, their average price ranges between $50 and $60 throughout the entire year. Exhibit 6

Exhibit 7

Exhibit 8 Exhibit 9

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Exhibit 10

Customer Analysis In Exhibit 11, the chart displays the average median income for the Top 3 companies for each year. Company 798 has the highest sales in the data and also has customers with the highest average median income each year being above ~$66,000 in 2005 to ~$67,000 average in 2007. 10

Company 54 which has the second highest sales, also has the lowest customer average median income compared to the other Top 3 competitors with an average declining from ~$47,000 in 2005 to ~$45,000 in 2007. Company 770 is the bottom of the Top 3 in sales and has the second highest average median income from their customers with ~$56,000 in 2005 and declining each year to ~$55,000 in 2007. Company 54’s customers have an average median income of ~$46,000 while only utilizing the “Other” channel compared to the other Top 3 companies. Using Exhibit 12, Company 54’s best customers in 2005 also had the lowest income compared to the second best and worst customers. Their best customers also had the lowest average median income in 2006 and 2007 compared to the other groups of customers from 2005 and the new customers they acquired in 2007. In Exhibit 13, it seems that since Company 54 is only selling in the “Other” channel that they target specific customers that fall between a range of ~$45,000 and ~$47,000 in median income, which is is smaller than their competitor’s target customers median income. Exhibit 14 shows that each of the Top 3 focus their attention to certain customers between a close range in median income. Top 3 all compete using different customers, which could explain why when Company 54 lost their best customers in the year 2005 they did not show up in the other Top 3 firms sales. Exhibit 11

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Exhibit 12

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Exhibit 13

Exhibit 14

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Conclusion We have concluded that Company 54 should not compete in different channels. We recommend the firm to continue to focus on “Other” channel, as opposed to going into Catalog and Internet. A weakness we encountered was that Company 54 was the only major competitor in the other channel making the information skewed. A limitation we came across was that we weren't informed of any data of other competitors in the “Other” channel. Since Company 798 is top in internet and catalog, Company 54 should stay and keep its competitive advantage in “Other” channel. All tho the top 3 competitors are competing against each other they target different customers groups. Company 54 targets lowest median income group compared to the other 2 companies. We recommend to focus all their research on the current channel, because it’s bringing in the most money. Company 54’s sales numbers were 2.8 million for 2005-2007 in the “Other” channel. Company 770 made 1.8 million in all 3 channels but they did poorly in the “Other” channel. Company 798 made 5.3 million in 2 channels but they did not compete with 54 in the other. From the data we have calculated Company 54 has 90% of total sales in the “Other” channel. Therefore our firm suggests Company 54 should stay in “other” channel.

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Appendix "THE KITCHENWARE REPORT." HFN The Weekly Newspaper for the Home Furnishing Network, 9 May 2005, p. 44. General OneFile, libproxy.csun.edu/login? url=http://go.galegroup.com/ps/i.do?p=ITOF&sw=w&u=csunorthridge&v=2.1&id=GALE %7CA132303000&it=r&asid=41d1bf8a5aaa5a8d9fa85dc73b910d6e. Accessed 7 Oct. 2017. Hamilton, Anita. "Cooking up Color." Time, vol. 169, Summer 2007 Style & Design, pp. 40-41. EBSCOhost, libproxy.csun.edu/login?url=http://search.ebscohost.com/login.aspx? direct=true&db=aph&AN=24742915&site=ehost-live. Lillo, Andrea. "Rising expectations: cookware and bakeware take off as all aspects of dining become more popular." HFN The Weekly Newspaper for the Home Furnishing Network, 16 Apr. 2007, p. 30+. General OneFile, libproxy.csun.edu/login?url=http://go.galegroup.com/ps/i.do? p=ITOF&sw=w&u=csunorthridge&v=2.1&id=GALE %7CA198545272&it=r&asid=abdb6a5db5a7ca56fdb3da9d73137d70. Accessed 7 Oct. 2017. Moran, Michelle. "Category complements: increasing kitchenware sales." Gourmet Retailer, Dec. 2006, p. 30+. General OneFile, libproxy.csun.edu%2Flogin%3Furl%3Dhttp%3A%2F %2Fgo.galegroup.com%2Fps%2Fi.do%3Fp%3DITOF%26sw%3Dw%26u%3Dcsunorthridge %26v%3D2.1%26id%3DGALE%257CA155567788%26it%3Dr%26asid %3De8ee845b145f1aaa62c117c73d40a895. Accessed 9 Oct. 2017.

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