rayovac corporation - the rechargeable battery opportunity

•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


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


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


Create competitive advantage in alkaline segment

OR

Proceed with rechargeable batteries strategy

Falconi’s Ultimate Decision


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


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


Rayovac's Canadian Market Share


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40%

60%

20032004

Rayovac's Global Net Sales (Percentage)

(Exhibit 5)


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$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


Power of Buyers

Competitive Rivalry

Power of Suppliers

Threat of New Entrants

Threat of Substitutes


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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Power of suppliers

Strong WeakTeam 1

Team 2

Team 3


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 ?

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Power of buyers

Increase DecreaseTeam 1

Team 2

Team 3


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?

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Threat of new entrant(s)

Increase DecreaseTeam 1

Team 2

Team 3


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.

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Threat of substitute(s)

Team 1

Team 2

Team 3


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


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?

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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?



batteries?

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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 ??????

rayovac corporation - the rechargeable battery opportunity

Business

total battery market

pure energy battery

alkaline segmentorproceed

market leader

spectrum brandsduracell

vancouver bcsaqueib

nasir ali khan

variety of brand