CASE ANALYSIS

RAYOVAC CORPORATION - THE RECHARGEABLE BATTERY OPPORTUNITY

INTRODUCTION
Rayovac Battery Division of Spectrum Brands Canada Inc. Bob Falconi Vice president of sales and marketing for Spectrum, a global consumer products company owning a variety of brand name products Falconi knows that, with effective marketing, the rechargeable battery market could likely grow within North America as it had in Europe Major competitors are not focusing on this product category, fearful that it would cannibalize sales of their existing products Rayovac could use this opportunity to increase its presence and brand name recognition by entering the back door instead of competing head-to-head against the wellestablished, non-rechargeable products of the market leaders. However, the consumers perception of rechargeable batteries in Canada has not been positive. Question: Is this a business worth pursuing? How?

THE HOUSEHOLD BATTERY MARKET

Consumers: Light Users vs. Heavy Users Light users spend an average $25 or less annually Heavy users spend an average $250 annually on batteries Heavy users can be further broken into: families with children and techies Channels Mass Merchandisers (34% of Market) Traditional Grocery (23% of Market) Membership Clubs (15% of Market) Hardware/Automotive (10% of Market) Drug Stores (10% of Market) All others (6% of Market)

RAYOVAC CORPORATION
The company began operations in 1906 and introduced the Rayovac name in the 1930s. It entered the competitive household battery market long after Duracell and Energizer were well established within this market. Acquisitions were made to access international markets including Europe, China, and Brazil. Rayovac has targeted the value-conscious price-shoppers looking for high-quality products at a lower price. Duracell and Energizer are premium brand. It also outsourced production of its more complex product lines to international manufacturers with stronger capabilities in places such as Japan and China. The company continues to be involved in the large alkaline segment, but competing head-to-head has been only modestly successful. It is looking for a new way to compete and grow.

THE COMPETITIVE LANDSCAPE

Duracell and Energizer dominate the American Market due to their brand recognition. Duracell owned by P&G Energizer owned by Energizing Holdings Inc. Other competitors have attempted to gain market share but have not been successful. To gain market share, Rayovac introduced its Renewal alkaline rechargeable battery in 1993 with Michael Jordan as its spokesperson Outside North America, Rayovac was a leader in the rechargeable battery market.

THE OPPORTUNITY
Should Rayovac use the recent introduction of NiHM rechargeable technology as a way to establish itself as a large player in the industry? Within Canada the rechargeable category would represent $40 million in annual sales at retail by year-end 2005 The Canadian market represents 20% of North American sales The Canadian rechargeable market is expected to grow to $100 million in annual sales at retail by year-end 2010 Rayovac would be risking their current relationship with international partners such as Sony, Panasonic, etc. - they could be laying the groundwork for one of these companies to step in and take over.

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 includes 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. 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.

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, offers 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.

RECOMMENDATIONS
Recently Rayovacs main competitors Duracell and Energizer have made big moves in an attempt to expand their market reach. Rayovac has chosen to market itself as the value brand Their objective is to attract lower to middle income families which is also the largest market for batteries. Rayovac can be successful and conquer the North American market if the company has an aggressive new marketing and management strategy. This will help Rayovac gain competitive position and an advantage in the market. A company with a competitive advantage will have long term sustainable success in the market their products are offered in. Product: In order to gain a competitive advantage Rayovac must enter the rechargeable battery market now. Pricing: 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. Place: Rechargeable batteries of Rayovac can be distributed through retail and wholesale stores and supermarkets where customers (household and commercial) can easily avail these products. Promotion: The most successful advertising would be banner and TV ads aimed at the commercial and household markets. Rayovac can have success and conquer the North American market if their advertising and marketing properly conveys to the customers and makes them realize the benefits of the rechargeable batteries. In order to move forward more quickly Rayovac must convince the public of the benefits of rechargeable battery use. 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.