Case: Rayovac Corporation

The Rechargeable Battery Opportunity

Due on 14th October 2011

Student Name : Vinayak Bhat

Student ID : 201184108
Course Name : Business 8106 – Marketing
Semester : Fall 2011
Faculty : Thomas Clift
Marketing Analysis of Rayovac Corp.
 
Introduction
            The case study was about the inception of the Rayovac Corporation
to be part of providing innovative products like the rechargeable batteries to
be offered in the world market, specifically in North America. In this regard,
the marketing analysis needs to be conducted to see and validate all the
opportunities and strengths of this business in the market.
The main question is should Rayovac proceed with this idea or not,
and if they do what strategy should they choose for market entry. It is very
important that if Rayovac are to go ahead with pursuing the rechargeable
battery market, that the project does not generate any negative cash flows to
the business, as it is something the company simply can't support.
If Rayovac go ahead with this new business idea, what strategy would
be best for Rayovac to pursue? Should they become a niche or a volume
player in the market, or should they decide to run with this idea at all?
 
Industrial Analysis
The Rayovac Corp is known to be the largest manufacturer and
marketer of consumer battery in the world. The business is selling batteries
for different household as well as commercial uses. Furthermore, the product
lines of Rayovac consists alkaline batteries, in all standard sizes to be able to
effectively compete in the highly saturated but profitable household market.
Apart from dealing with the not so good Canadian consumer`s
perception about rechargeable batteries, there is an intensified competition
within North America and from outside countries as well and the vice
president is unsure of how and on what strategies should company spend the
marketing budget.
The aim of the company is to be the number one choice of the
customers in the battery and rechargeable battery market in the world. Their
purpose is to provide quality and standard batteries that would provide and
satisfy the needs of the market in terms of a new trend of energy from both
household and industrial use.
 

Environmental Analysis
 According to the case study, the major changes that is happening in
the global market is the existence of the context of rechargeable market to
meet the changing needs of the consumer from both household and
commercial uses. To be able to analyse the external and internal
environment of Rayovac, marketing tools like PEST Analysis and SWOT
Analysis can be used.

PEST Analysis
Political
            Firstly, the political environment concerns the role of the
government concerns the political and government role and its influence in a
business. It also includes the extent to which the government intervenes in
the economy. The North American government has been very supportive
with the rechargeable battery industry.
Since the government of the North America believes that these industries
will be beneficial for the region, the government of North America is also
open for other possibilities of considering the products of Rayovac that will
meet the needs of both the household and commercial clients.

Economical
            Secondly, the amount of economic activity in the economic
environment is extremely an important aspect.  Whilst assessing the
economic environment in which battery industry operates. The government
tries to terminate the level of economic activity to provide positive and
friendly environment for the battery industry like Rayovac. It can be said
that North American economic situation is strong and stable. With this,
North America is able to sustain good relation with battery industry. The
economic stability of the region has helped the battery industry to have a
good economic performance.

Socio-Cultural
            Social environment is of great importance when being applied to
different organisations, in case the battery industry. North America has been
considered as one of the regions in US which is considered to have a strong
market for rechargeable batteries, it can be said that the battery industry have
a greater opportunity to grow even more in North America. The
demographic changes and the psychographics of North American society
have open more chances for the battery industry like Rayovac to achieve its
goal and mission.

Technological
            Technological factor has helped in reducing the barriers of entry
for other battery industry. It has also supplemented in the cost of capital in
other areas, to enhance the products provided by battery industries. Through
the use of more advanced and efficient technology, battery industries have
been able to provide innovative products like rechargeable batteries to meet
the needs of their target market with lesser development time spans.
 
SWOT ANALYSIS

Strengths
One of its strength of Rayovac Corp is its being a very profitable
company, in both its domestic and international branches. In addition,
Rayovac is a global brand established upon a reputation of quality products
and services with branches in different regions. In addition, the key strength
of the company include their unique management style and technological
infrastructure. The strategies used by the Rayovac include intensive strategy,
which aims to competently position and promote their battery products in
North America and other parts of the region. To improve financial
performance, the company sees to it that they utilise all their resources in a
manner that will be beneficial to enhance the performance of the company. 

Weaknesses
According to the given case, one of the perceived weaknesses of
Rayovac is their inability to outgrow their competitors like Duracell and
Energizer which dominates the market, especially North American market in
terms of prices. In addition, one of the weaknesses of the Rayovac is their
inability to market efficiently their new battery products in the market.

Opportunities
With the management system of the Rayovac, the company has bigger
opportunities to enter and lead the North American market in terms of
providing battery and rechargeable batteries to its residents, commercial and
industrial clients or even have an opportunity to be the number one battery
company in the whole region. With the continuous innovation of the
company, the company can gain loyalty from their customers to make them
more competitive in the marketplace.  The continuous initiatives of the
company in diversification of its products also open new opportunities to
make the business become stronger to outgrow all its rival companies. 
 

Threats
 Fast paced technological advancement may be a threat to Rayovac
Corporation as a whole.  In terms of the competitors, the company should be
able to provide unique and more technologically advanced products and
services to be able to survive in the stiff competition in the battery industry.
 
Product Life Cycle
As an innovative and unique product, the life cycle of the
rechargeable battery is expected to be extensive. With the current interest of
the consumers for innovative battery products and their increasing openness
towards technology, the rechargeable battery is expected to go through years
of strong market impact. However, this product life cycle can be affected by
several factors. For instance, considering that competitors are also equipped
with innovative skills and technologies, it is likely that similar products will
be manufactured in the future in North America or Asian countries. This
could possibly shorten the product’s life cycle.
 
Market Challenger Strategies
In this case, it can be said that in order for Rayovac to compete well in
the North American market, they must use a market challenger strategy. In
the case of Rayovac, they have been able to use the guerrilla tactic, in terms
of providing cheaper prices and quality products. Since, the North American
market has price-conscious clients, Rayovac as the challenger, offer a low
price for their batteries and rechargeable battery products than what the
Rayovac competitors (Duracell, Energizer and other industry in North
America). Although this guerrilla tactic is regarded as more harassing than
other strategies, Rayovac will be assured that they would have small
increments of share in the market or they can force their competitor to spend
additional cost for promotional activities.

Defensive Strategies
To be able to compete well in the North American market, the
Rayovac Corp has been able to use defensive strategies like counter
offensive. In terms of counter offensive, they used their core competencies
to position the rechargeable battery products in North America and in line
with their counter offensive strategy; the company has been able to use
strategic marketing approach to outgrow their rival companies and to gain
competitive advantage.

Marketing Mix
Products
The main products of the Rayovac Corp. which will be available for
the target market both for households and commercial used will be the
rechargeable batteries.  The product will be different in other competition in
a way that the company will maximize quality but minimize the cost to be
affordable for all types of consumers.  Through the use of demographics and
psychographics, all needs and demands of target market will be known by
the company in order to provide the customers in the utmost time.
Due to the existing relationships between manufacturers and retailers
best channels and retailers for the brand needs to be finalised.

Niche Strategy:
At the moment most rechargeable batteries are sold through niche retailers.
The positives of this are that it would allow Rayovac to charge a higher
price, and obtain a margin of around 60% of retail price. Also there would
be less variable costs like advertising and promotion. This would be due to
the fact that niche-market shops employ knowledgeable staff who will help
the consumer, and this will help promote the product when you compare it
with the sales staff of the mass-merchandiser.
However the downside is that niche retailers represent a much smaller
portion of sales, and also distribution would be lower, and therefore lower
possible sales volume. Also, it is unlikely that the mass-merchandisers will
ignore this technology if it becomes popular, so would Rayovac be as well
off to get in there first?
It is certain that Rayovac will not make enough profit to cover costs unless
they charge a higher than average market price.
Therefore a niche strategy is not effective for them, and they would be better
off to not pursue the idea at all then to use a niche strategy.

Volume Strategy:
Rather the outcomes of Rayovac Corporations’ decision to take a
volume approach to selling its rechargeable batteries in Canada would be
more profitable. The rechargeable battery is a product that Bob Falconi feels
could be very successful if it was marketed effectively. It could be also used
as a competitive advantage to gain an increased presence in shops and
increase brand awareness, rather than competing directly with the existing
manufacturers of ordinary alkaline, un-rechargeable batteries.
As of 2005, the rechargeable segment of Canada’s battery market is 10% of
total sales, which in total is worth $300 million. But Falconi believes that
given the success of rechargeable batteries in Europe (as a result of their
concerns for the environment and cost), they could be successful in Canada
also.
Although the advertising expense would be 10% of the estimated
contribution as against 7% for Niche strategy, Volume strategy would still
serve better fruits down the line.
While competitors also offered rechargeable batteries, they were
backed by very little advertising or didn’t provide the consumer with many
options in terms of size. Consumers are beginning to realize the benefits
associated with recharging batteries, as one-use batteries are becoming more
expensive, consumers are demanding greater performance, and growing
environmental concerns.
Rechargeable batteries perform very well in high-drain devices, they last 3
times longer, are non-toxic and help to save consumers money in the long-
run. It is also likely that technology would improve to develop this
technology even further.
Given all the benefits associated with rechargeable batteries, it would seem
logical to take a volume approach to production. In 2005, the Canadian
rechargeable battery market is worth $40 million, however it is expected to
be worth $100 million by 2010, which is a huge amount of growth in a
relatively short period of time, Rayovac have an opportunity to capitalize on
this growth by increasing their presence in the market. Using their volume
strategy, Rayovac could obtain 45% of this market.
In terms of distribution, Rayovac would need to ensure that their
products were available in the mass-merchandisers’ and traditional grocery
stores, as this is where 57% of the market buys their batteries. Rayovac
could position themselves as leaders in technology of the industry given that
they would be one of the first major players in that industry, and could bring
their prices closer in line to Duracell and Energizer if they were to compete
with them.

Price
In terms of pricing, the company must be able to use an effective
pricing strategy to ensure that they will meet the demands of their consumers
of having a cheaper and affordable rechargeable battery products. Because
of the strategic pricing of the product the consumer might be able to decide
in availing the product rather than buying other products.  The company is
also suggested to use perceived-value pricing as their pricing strategy to
ensure that the cost of the product will meet the demands of the target
market.
 
Promotion/Communication
In order for the company to promote their rechargeable batteries in
North America, the most successful advertising will be banner ads, and TV
ads with information regarding the performance of their rechargeable
batteries. In the given case, the strategy of the company in launching and
promoting the products might be able to attract the attention of the consumer
like their strategy in buying it with a lower price than other competitors. 
Communication activities will also be done by the company so as to market
its Rechargeable batteries effectively.
 
Distribution
Rechargeable batteries of Rayovac will be distributed through retail
and wholesale stores and supermarkets where customers (household and
commercial) can easily avail these products.

Market Segmentation
As mentioned above, the rechargeable batteries of the Rayovac target
both the commercial and household markets in North America.
 
Plan the Implementation, Activities and Programmes Offerings
The company can use new marketing strategy to offer their products
in the market. The rechargeable batteries are considered as a new technology
or new products in the market and only few believe in this product. In this
regard, Rayovac should be able to use effective marketing strategy to offer
and provide their products in the market.
People
The company should be able to recruit efficient human resources
through their new leader Bob Falconi. With these effective human resources,
the company must implement new marketing strategy to meet the objectives
and goals of Rayovac.
Systems
In terms of systems, the company must determine which marketing
and management systems should be implemented. For Rayovac, the
company should use a diversification strategy and information technology to
ensure that all their operations will run smoothly and effectively. The
company may also use focus strategy. Focus strategy is aimed at a segment
of the market from a product rather than at the whole market or many
markets. The successful way using focus strategy is to tailor a broad of
product development strengths to a relatively narrow market segment that
they know very well.
 
Conclusion
            All in all, it can be said that in order for Rayovac to conquer the
North American market, they must be able to consider a new marketing and
management strategy to ensure competitive position and long-term
sustainable advantage in the market. In addition, it can also be concluded
that Rayovac Corp is in need of a strategic market entry plan to ensure
success in North American market.