rayovac corporation - the rechargeable battery opportunity
TRANSCRIPT
•Your own teams
Think Tanks
•2 minutes
Discussion Time
•Each group contributes 2 points
•New speaker from the group every time
Discussion Format
•Contextual concerns shall be entertained
•Provide evidence from the case study
Criticism & Debate
Before we begin …
MORE FOR YOUR !
POWER
MONEY
The Rechargeable Battery Opportunity
APSC 598X – Case Study PresentationThe University of British Columbia, Vancouver BC
SAQUEIB KHAN ~ NASIR ALI KHAN ~ PULKIT SHARMA ~ DEEPANSH CHAUDHARY
Powers Your Fun!Outline
• Introduce the case study
• Framework of analysis
–Market Background and Analysis
–Market Strategy Identification and Analysis
– Sales Strategy Analysis
• Conclusion
Powers Your Fun!Introduction
Underlying Forces
• Demand Increasing energy consumption
– Household batteries: exponential growth
– Increased popularity of high-drain devices
• Supply Firms seeking to meet the
demand
– Innovation
– Technology Push
Powers Your Fun!Introduction
Market Opportunity
• Alkaline Batteries
– 70% of total battery market in Canada
– Relatively flat growth
– Focus of major competitors for next 5-10 years
• Rechargeable Batteries
– 10% of total battery market in Canada
– Minimal focus of major competitors
Powers Your Fun!Introduction
Rayovac Battery Division• A division of Spectrum Brands Canada– Spectrum Brands: a global consumer products
company owing a variety of brand name products
• Bob Falconi – VP of sales and marketing for Spectrum Brands– Duracell: worked for 16 years and became VP
of sales– Prior to Rayovac: worked for Pure Energy
Battery Corp which introduced a revolutionary rechargeable alkaline battery system
Powers Your Fun!Introduction
Create competitive advantage in alkaline segment
OR
Proceed with rechargeable batteries strategy
Falconi’s Ultimate Decision
Powers Your Fun!Introduction
Rayovac’s Goals
• Maintain positive return on investments
• Minimal cannibalization of existing
products
• Become market leader in proposed
segment
FRAMEWORK OF ANALYSIS
Powers Your Fun!Analysis Framework
Ultimate Decision
Marketing
Strategy
Market Analysis
Sales Strategy
MARKET BACKGROUND &
ANALYSIS
Powers Your Fun!Market Background
Battery Market• In 2005, the overall battery market in
Canada is approximately $300 million– Alkaline segment 70%
– Rechargeable segment 10%
– Other battery chemistries (including zinc) 20%
• Alkaline is the dominant household battery chemistry– Manufacturers need to be involved in the
alkaline segment in order to be an important player in this industry
Powers Your Fun!Market Background
Heavy Users
Description Families Techies
Estimated Total Sales $ 200 Million $ 75 Million
Disposable Income Low High
Type of Devices Not High-Drain High-Drain
Decision Factor Price and Value Impulsive
Quantity Many Few
Replacement Frequency Low High
Powers Your Fun!Market Background
Rayovac's Canadian Market Share
Powers Your Fun!Market Background
Gener
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20032004
Rayovac's Global Net Sales (Percentage)
(Exhibit 5)
Powers Your Fun!Market Background
Gener
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Hearin
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Prod
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onal
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e$0.00
$200,000.00
$400,000.00
$600,000.00
20032004
Rayovac's Global Net Sales (US$ 000s)(Exhibit 6 incorporated in Exhibit 5)
Powers Your Fun!Market Analysis
Objectives• Perform a structural analysis of the battery
industry• Assess and evaluate Rayovac’s
competitive position currently and in rechargeable battery market
• Identify competitive strategy to meet the opportunities and threats in Rayovac’s external environment
• Provide meaningful insight when performing SWOT and other applicable analysis
Powers Your Fun!Market Analysis
Power of Buyers
Competitive Rivalry
Power of Suppliers
Threat of New Entrants
Threat of Substitutes
Powers Your Fun!Market Analysis
Power of suppliers• How much power do suppliers hold?
– How many suppliers are there and what market share do the largest suppliers hold?
– How distinctive are each supplier’s products?
– How straightforward is it for the customer to switch to another supplier?
Discussion: In your groups, identify the factors which strengthen or weaken the dominance of suppliers in the rechargeable batteries market?
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Powers Your Fun!Market Analysis
Power of suppliers
Strong WeakTeam 1
Team 2
Team 3
Powers Your Fun!Market Analysis
Power of buyers• How much power is held by the customer?
– How many customers are there and how many customers does a typical player have?
– How much market share do the largest customers account for?
– What alternatives do customers have?
Discussion: In your groups, identify the factors which strengthen or weaken the power of buyers ?
00:0100:0200:0300:0400:0500:0600:0700:0800:0900:1000:1100:1200:1300:1400:1500:1600:1700:1800:1900:2000:2100:2200:2300:2400:2500:2600:2700:2800:2900:3000:3100:3200:3300:3400:3500:3600:3700:3800:3900:4000:4100:4200:4300:4400:4500:4600:4700:4800:4900:5000:5100:5200:5300:5400:5500:5600:5700:5800:5901:0001:0101:0201:0301:0401:0501:0601:0701:0801:0901:1001:1101:1201:1301:1401:1501:1601:1701:1801:1901:2001:2101:2201:2301:2401:2501:2601:2701:2801:2901:3001:3101:3201:3301:3401:3501:3601:3701:3801:3901:4001:4101:4201:4301:4401:4501:4601:4701:4801:4901:5001:5101:5201:5301:5401:5501:5601:5701:5801:5902:00
Powers Your Fun!Market Analysis
Power of buyers
Increase DecreaseTeam 1
Team 2
Team 3
Powers Your Fun!Market Analysis
Threat of new entrant(s)• How likely is it that competition will increase with
new entrants?
– What are the barriers to entry? Knowledge, technology, distribution network, brand?
– How much would it cost a new entrant to enter market and how quickly would this investment pay back?
Discussion: In your groups, identify the factors which increase or decrease the threat of new entrants in the rechargeable battery market?
00:0100:0200:0300:0400:0500:0600:0700:0800:0900:1000:1100:1200:1300:1400:1500:1600:1700:1800:1900:2000:2100:2200:2300:2400:2500:2600:2700:2800:2900:3000:3100:3200:3300:3400:3500:3600:3700:3800:3900:4000:4100:4200:4300:4400:4500:4600:4700:4800:4900:5000:5100:5200:5300:5400:5500:5600:5700:5800:5901:0001:0101:0201:0301:0401:0501:0601:0701:0801:0901:1001:1101:1201:1301:1401:1501:1601:1701:1801:1901:2001:2101:2201:2301:2401:2501:2601:2701:2801:2901:3001:3101:3201:3301:3401:3501:3601:3701:3801:3901:4001:4101:4201:4301:4401:4501:4601:4701:4801:4901:5001:5101:5201:5301:5401:5501:5601:5701:5801:5902:00
Powers Your Fun!Market Analysis
Threat of new entrant(s)
Increase DecreaseTeam 1
Team 2
Team 3
Powers Your Fun!Market Analysis
Threat of substitute(s)• What is threat that customers will switch to
different products?
– What are substitute products and how effective are they?
– How straightforward is it for customers to switch products?
Discussion: In your groups, identify how a substitute for a presently existing rechargeable battery brand, pose a threat.
00:0100:0200:0300:0400:0500:0600:0700:0800:0900:1000:1100:1200:1300:1400:1500:1600:1700:1800:1900:2000:2100:2200:2300:2400:2500:2600:2700:2800:2900:3000:3100:3200:3300:3400:3500:3600:3700:3800:3900:4000:4100:4200:4300:4400:4500:4600:4700:4800:4900:5000:5100:5200:5300:5400:5500:5600:5700:5800:5901:0001:0101:0201:0301:0401:0501:0601:0701:0801:0901:1001:1101:1201:1301:1401:1501:1601:1701:1801:1901:2001:2101:2201:2301:2401:2501:2601:2701:2801:2901:3001:3101:3201:3301:3401:3501:3601:3701:3801:3901:4001:4101:4201:4301:4401:4501:4601:4701:4801:4901:5001:5101:5201:5301:5401:5501:5601:5701:5801:5902:00
Powers Your Fun!Market Analysis
Threat of substitute(s)
Team 1
Team 2
Team 3
Powers Your Fun!Market Analysis
Competitive Rivalry• How much competition is there in the market?
– How many competitors are there?
– How much market share does each competitor hold and how strong are competitor brands?
– How easy is it to win new customers?
Discussion: In your groups, identify the factors which affect the competitiveness of the rechargeable battery market
00:0100:0200:0300:0400:0500:0600:0700:0800:0900:1000:1100:1200:1300:1400:1500:1600:1700:1800:1900:2000:2100:2200:2300:2400:2500:2600:2700:2800:2900:3000:3100:3200:3300:3400:3500:3600:3700:3800:3900:4000:4100:4200:4300:4400:4500:4600:4700:4800:4900:5000:5100:5200:5300:5400:5500:5600:5700:5800:5901:0001:0101:0201:0301:0401:0501:0601:0701:0801:0901:1001:1101:1201:1301:1401:1501:1601:1701:1801:1901:2001:2101:2201:2301:2401:2501:2601:2701:2801:2901:3001:3101:3201:3301:3401:3501:3601:3701:3801:3901:4001:4101:4201:4301:4401:4501:4601:4701:4801:4901:5001:5101:5201:5301:5401:5501:5601:5701:5801:5902:00
Powers Your Fun!Market Analysis
Competitive Rivalry
Team 1
Team 2
Team 3
MARKETING STRATEGY
IDENTIFICATION&
ANALYSIS
Powers Your Fun!Marketing Strategy Identification
Formation of Generic Marketing Strategy
• Sources of competitive advantage
– Product differentiation
– Lowest cost producer
• Competitive scope of the market
– Target a wide market
– Focus on a very narrow market
Powers Your Fun!Marketing Strategy Analysis
Should Rayovac focus on cost leadership or product differentiation? Why?
00:0100:0200:0300:0400:0500:0600:0700:0800:0900:1000:1100:1200:1300:1400:1500:1600:1700:1800:1900:2000:2100:2200:2300:2400:2500:2600:2700:2800:2900:3000:3100:3200:3300:3400:3500:3600:3700:3800:3900:4000:4100:4200:4300:4400:4500:4600:4700:4800:4900:5000:5100:5200:5300:5400:5500:5600:5700:5800:5901:0001:0101:0201:0301:0401:0501:0601:0701:0801:0901:1001:1101:1201:1301:1401:1501:1601:1701:1801:1901:2001:2101:2201:2301:2401:2501:2601:2701:2801:2901:3001:3101:3201:3301:3401:3501:3601:3701:3801:3901:4001:4101:4201:4301:4401:4501:4601:4701:4801:4901:5001:5101:5201:5301:5401:5501:5601:5701:5801:5902:00
Powers Your Fun!Marketing Strategy Analysis
Advertising and promotion projections
2006 2007 2008 2009 2010
“Volume” strategy 10% 9% 7.5% 6% 6%
“Niche” strategy 7% 7% 6% 6% 5%
Rayovac Canada Rechargeable Battery Market Share projections
2006 2007 2008 2009 2010
“Volume” strategy 25% 30% 35% 40% 45%
“Niche” strategy 20% 20% 20% 20% 20%
What are the advantages of Niche & Volume strategies with respect to rechargeable
batteries?
Powers Your Fun!Marketing Strategy Analysis
What are the advantages of Niche & Volume strategies with respect to rechargeable
batteries?
00:0100:0200:0300:0400:0500:0600:0700:0800:0900:1000:1100:1200:1300:1400:1500:1600:1700:1800:1900:2000:2100:2200:2300:2400:2500:2600:2700:2800:2900:3000:3100:3200:3300:3400:3500:3600:3700:3800:3900:4000:4100:4200:4300:4400:4500:4600:4700:4800:4900:5000:5100:5200:5300:5400:5500:5600:5700:5800:5901:0001:0101:0201:0301:0401:0501:0601:0701:0801:0901:1001:1101:1201:1301:1401:1501:1601:1701:1801:1901:2001:2101:2201:2301:2401:2501:2601:2701:2801:2901:3001:3101:3201:3301:3401:3501:3601:3701:3801:3901:4001:4101:4201:4301:4401:4501:4601:4701:4801:4901:5001:5101:5201:5301:5401:5501:5601:5701:5801:5902:00
Powers Your Fun!Marketing Strategy Analysis
What are the advantages of Niche & Volume strategies with respect to rechargeable
batteries?Niche VolumeTeam 1
Team 2
Team 3
Powers Your Fun!Marketing Strategy
Competitive Advantage
Competitive Scope
Low Cost Higher Cost
Broad Overall Cost Leadership
Differentiation
Narrow
Cost Focus Differentiation Focus
SALES STRATEGY ANALYSIS
Powers Your Fun!Sales Strategy Discussion
What could be the potential obstacle(s) towards our distribution strategy through these
channels?
00:0100:0200:0300:0400:0500:0600:0700:0800:0900:1000:1100:1200:1300:1400:1500:1600:1700:1800:1900:2000:2100:2200:2300:2400:2500:2600:2700:2800:2900:3000:3100:3200:3300:3400:3500:3600:3700:3800:3900:4000:4100:4200:4300:4400:4500:4600:4700:4800:4900:5000:5100:5200:5300:5400:5500:5600:5700:5800:5901:0001:0101:0201:0301:0401:0501:0601:0701:0801:0901:1001:1101:1201:1301:1401:1501:1601:1701:1801:1901:2001:2101:2201:2301:2401:2501:2601:2701:2801:2901:3001:3101:3201:3301:3401:3501:3601:3701:3801:3901:4001:4101:4201:4301:4401:4501:4601:4701:4801:4901:5001:5101:5201:5301:5401:5501:5601:5701:5801:5902:00
Powers Your Fun!Sales Strategy Discussion
Obstacles
Mass Merchandis
ers
Traditional Grocery
Hardware/automotive
/drug
CONCLUSION
Powers Your Fun!Last BUT not the least …
Ron,
What do you recommend
as another set of
criteria, if any, applicable
to decision making
towards Rayovac’s entry
in rechargeable battery
market?
Powers Your Fun!Conclusion
1. Conduct a benchmarking study of the market hold of current product line.
2. Think of ways in which our competitors can outperform us
3. Explore ways of promotion.
4. Technological / competitive edge
Powers Your Fun!Questions ??????