Rayovac has been in business for over 100 years since it started the business back in the year 1906. The company is currently the third latest battery manufacturer in the world after Energizer and Duracell. The sales department’s Vice President, Bob Falconi, is considering maximizing the potential in the rechargeable battery market by increasing efforts and concentrating on that segment using the latest NIMH technology to respond to the current needs of the market. Consumers are becoming more aware of the need to use renewable sources of energy and the Canadian market forecasts that the Canadian market is expected to grow exponentially and hit the $ 100m dollars by the end of the year 2010. Competition has been quite stiff and therefore the company is using a backdoor approach to compete with more well-recognized brands such as Energizer and Duracell. This business plan is expected to shed more light on the situation and assist the management as to how to pursue or not pursue the business idea that has presented itself by taking a critical look at the company Strategic focus and plan Situation analysis, Swot Analysis, Industry analysis, Company analysis, Customer analysis, Product market focus, Marketing Program, Financial data and projections, Implementation plan, Evaluation and control as far as the rechargeable battery is concerned. It is therefore the data gathered in this document that is expected to assist the sales vice president to decide whether or not to pursue this business opportunity or dwell on their current business model.
Strategic focus plan
Rayovac has been in the Canadian market since 1906 and is a trusted and well-respected manufacturer of batteries. Rayovac aims to introduce rechargeable batteries in the market so that the millions of households in North America Europe and worldwide can be able to have a constant and reliable source of power supply that can be used day in day out to make day to day activities much easier within the households. Keeping in mind that many households and individuals require batteries to use on both low and high drainage electronics to lead comfortable lives daily, Rayovac aims to be the rechargeable battery manufacturer that will cater to the energy needs of individuals’ day in day out and make their lives comfortable.
Rayovac intends to build its brand name within the rechargeable battery market and become one of the most respected brands by outshining competitors such as Energizer and Duracell. Rayovac intends to carry out its strategic operations carefully so that the company can enter the market through the backdoor, and effectively compete with well-established rechargeables battery manufacturers such as energizer and Duracell and gain the position of market leader.
Goals financial and Nonfinancial
Rayovac’s battery division desires to introduce a rechargeable battery brand that will be quite popular and is expected to sell fast in order to gain market share and sustainable revenue streams that will enable the product to sustain itself. The management also hopes that the rechargeable batteries that will be introduced will not only have a good image and reputation but their presence in the market will also assist the company to improve its brand position and reputation in the Canadian market.
Core competencies and sustainable advantage
Rayovac boasts of an aggressive corporate strategy that has enabled it to acquire multiple companies and business ventures by the use of its vast base resources. Rayovac’s main core competency comes from the company’s ability to manufacture specialty and niche products that the company has gained by developing manufacturing capabilities that no other competitor can boast of. Rayovac manufactures batteries for specialized products such as hearing aid while other companies cannot do this.
As the sales in charge, Bob Falconi is pondering to gear efforts and fully concentrate efforts in the rechargeable battery market, the sales manager is faced with a dilemma as to how the company can create strategies that will sneak upon the current market leaders through maximizing the opportunity that has arisen out of the rechargeable market segment. The current global and Canadian battery markets are subject to a lot of competition with Duracell and Energizer being the dominant companies while Rayovac is third. Of all the categories of batteries, the Alkaline market is the most competitive segment occupying 70% of the market sales while the rechargeable section occupies 10% and 20% belongs to other batteries such as zinc batteries. Rayovac sales, the vice president believes that by using new technology then the rechargeable battery market can be a very good business opportunity. The rechargeable market is still growing and fragmented accounting only for about 5% and 10% of total battery sales in the North American and Canadian markets respectively.
The Canadian market alone generates close to $300 million with the market being divided into light users and heavy users who spend approximately $ 25 and $ 250 annually. Additionally, these segments are divided into households and Techies who are considered to be consumers with low-income disposal and high-income disposal respectively. The current market distribution structure is divided between mass merchandisers such as Wal-Mart who account for 34% of all sales, traditional groceries such as dominion who account for 23% of sales; others are membership clubs15%, Hardware and Automotive 10% and drug stores 10%.Rayovac’s sales are mainly concentrated in North America and Latin America where the company sales close to 44%&46% respectively. Rayovac’s position in the global market is minimal because the company generates only about 10% of total sales outside the Americas.
The market dominance of Energizer and Duracell cannot be ignored this is because their market dominance and marketing strategies are the only things standing between global success and local success of Rayovac. The two companies occupy 70% of the Canadian market and 78% of the global market. Rayovac’s sales manager believes that there is opportunity for the rechargeable market to grow steadily from 2005’s $40m to$100 million in 2010 and that it is up to the company to ensure they capitalize on this opportunity and beat other competitors to the chase by capitalizing heir current 20% market share in the Canadian rechargeable battery market, by implementing superior marketing strategies and the new NIMHH technology.
Rayovac’s path towards dominating the global and Canadian battery market is a long one. Rayovac can boast of a strong R&D department that has assisted in developing the NIMH technology. The ability of Rayovac to use its R&D department to develop good specialty manufacturing capability is strength of the company that will probably assist the company to go far in with its business ambitions. Furthermore the company boasts of good leadership through its sales vice president Bob Falconi, who has vast experience in the manufacturing of batteries, Falconi’s experience from earlier companies such as Duracell will go a long way towards ensuring the company sustains its market growth.
Rayovac is a large company with multiple product lines. For large multinational companies like Rayovac with many product lines, it is necessary for the company to invest significantly in growth and development of their products which are in multiple product lines. Bob Falconi’s dilemma and fear are that there is a lot of risks involved if the company decides to pull funds from other product lines and invest them in the rechargeable battery product line. Unlike energizer and Duracell who boast of resources, Rayovac has limited resources and must therefore plan on how to use its available resources well.
Forecasts expect that the Canadian rechargeable battery market will grow to over $100m by the year 2010, while the global rechargeable market is expected to grow with the same measure. This offers a good business opportunity for Rayovac to use its manufacturing capability to expand its marketing share to 45%.The company also has a good chance to partner up with distributors accordingly to ensure that its business goals are met through strategic partnership agreements.
The biggest threat to Rayovac’s business ambitions is competition from Energizer and Duracell who have the ability and can easily imitate and duplicate Rayovac’s rechargeable battery business and use their favorable brand awareness to ensure that they maximize opportunities that exist in the market. Bob Falconi also fears that partnering up with rival companies from Asia especially China and Japan can make it quite hard to realize its business ambition because the habit of making business for them and depending on them to supply them with materials can easily collapse and endanger the business ambitions of Rayovac in the Rechargeable battery market.
The current battery market is very competitive with the main leading companies being Energizer and Duracell followed by Rayovac. The companies share approximately 39%,39% and 14% of the global battery market while other companies such as Panasonic and Sanyo share the remaining 8%. The industry is currently $ 131b in gross sales. Energizer and Duracell boast of good market share due to the good brand recognition and brand image associated with the brands making them very tough competitors. The same situation also applies in the Canadian market with is worth close to $ 300m.The rechargeable battery division contributes close to 10% of the Canadian market which accounts for close to $30m. Industry projections also indicate that the rechargeable market is rapidly growing and will therefore grow to $ 100m by the year 2010. The culture of the American customers and those in Europe and Canada also vary widely, therefore, suggesting that Americans are most likely to buy highly disposable products such as Alkaline batteries and therefore this is why rechargeable batteries account for 5% of gross sales of batteries in North America as compared to Canadians where rechargeable batteries account for close to 10% of total battery sales.
Rayovac was established back in 1906 and it concentrated its efforts in producing specialty products such as batteries for hearing Aid devices but as time and the business environment evolved the company later entered into the battery market selling batteries for high drain electronics such as flashlights, portable music devices and additionally also diversified its product and business portfolio by acquiring business in Brazil, Europe and China. The company is currently producing high-quality batteries and selling value to consumers at a low price, unlike its main competitors. The company is currently the third-largest manufacturer and seller of batteries and the largest manufacturer of hearing aid batteries. The company operates in almost every continent with most of its operations being in Latin America 46% of all total sales, North America 44% of all total sales and Europe 10% which contributed to gross sales of $ 1.4b in 2004. The company’s marketing strategy is to avoid confronting market leaders and use a target marketing approach that appeals to consumers who search for value and high performance.
The consumers of battery products are classified into two main categories which are light users and heavy users. Light users have low-frequency usage and low demand patterns of batteries as compared to heavy users. Light users are those individuals who spend an average of $25 while heavy users spend close to $250.These two classes of customers are further divided into families and techies families usually have a higher income but the amount of their income which is disposable is low as compared to techies who in turn have a lower income and a higher portion of their income which is disposal. Battery manufacturing companies deal with these consumers by strategically using the right distribution channels so that they can appeal to these consumers to purchase their products.
Product market focus
Marketing and product objectives
Rayovac’s management and sales department are aware that it cannot tackle its competitors head to head, and therefore it has decided to use a more backdoor approach whereby the company decides to sell the concept of delivering high quality and value to its consumers at a cheaper price which is basically a situation whereby consumers get more for less. The introduction of Rechargeable batteries product in the market by Rayovac is intended to appeal to consumers who especially prefer to use environmentally friendly renewal, reliable, affordable and high-performance sources of energy. Rechargeable batteries may be expensive upon acquisition but are cheap in the long run. The marketing department therefore expects to occupy 45% of the market share of rechargeable batteries in Canada and also do well in the global market. The department intends to use NIMH technology to anchor itself as the leading rechargeable battery manufacturer and seller.
The Europen and Canadian market consists of consumers who are considered green consumers who dislike disposing of batteries due to the negative impact which this practice has on the environment. The use of environmentally friendly practices and sources of energy is becoming a global trend and therefore Rayovac intends to capitalize on this trend and tap into the opportunity by targeting consumers who need a reliable high-quality source of renewable batteries.
Customer value proposition
The total sum of benefits that the consumer expects to receive from Rayovac’, Rayovac promises to deliver the highest quality of rechargeable NIHM technology at the lowest prices to the market. Rayovac’s rechargeable batteries will therefore guarantee convenience, reliability, quality and value to all that purchase them. This means that once consumers purchase Rayovac’s rechargeable batteries they will expect to have a complete consumer experience by experiencing premium quality at a low price.
What makes Rayovac different from its rivals?
- High/premium quality
Technology and manufacturing capabilities to make rechargeable batteries.
The marketing program that will be used by Rayovac will assist the company create a very unique rechargeable battery brand that will enable the company to distinguish and position itself.
Rayovac intends to package its product in different shapes and sizes of AA, AAA, C, D, 9V. The company will therefore use its latest NIMH technology in all of its products. Additionally, the company will outsource the design of packaging to the most reputable marketing agencies in Canada in order to make sure that the design of product can appeal to the targeted consumers upon first sight.
Since Rayovac intends to gain market share and initiate switching from the various competitors such as Energizer and Duracell Rayovac’s intention is to use a low pricing model which is also known as a penetrative price approach which allows a company to price its high-quality products at a lower price to narrow the market share gap amongst it and its competitors. Rayovac thus will use a low pricing strategy to create a competitive advantage for itself over other industry participants.
In order to maximize sales, the company intends to use direct marketing and personal to sell its products to the largest distributors and stockists together with clientele who purchase their products. A direct selling technique will enable the company to successfully maintain a close relationship with its largest customers. Upon the launch of the product the company will also make use of sales promotions which will involve selling at lower profit margins to create awareness of the product within the market. The company also plans to make use of advertisements and public relations in various media channels in order to increase awareness of their brands.
Rayovac intends to use well-established channels to distribute its rechargeable batteries this includes merchandisers, traditional groceries, membership clubs, hardware’s and drug stores which are known as the mainstream avenues of distributing batteries in Canada and around the Globe.
Financial data and projections
Past sales revenues
In the year 2004, the rechargeable market in Canada accounts for close to 10% of total battery sales which is close to $ 30 million. While 20% of the Canadian rechargeable battery market belongs to Rayovac this translates to gross revenue of $ 6m.
2 to 5-year projections
If the rechargeable battery market is expected to grow exponentially to reach $ 100m in 2010 and Rayovac intends to occupy 45% of the market by then assuming the market share will also increase gradually before becoming 45% in2010
|year||Market share||Total revenue|
The projections above suggest that if Rayovac decides to invest in this rechargeable batter product their market share will increase this may help their brand get the deserved publicity and image which is good for brand association.
The business decision to start fully venture into the can be fully implemented within the Q1, Q2, and Q3 of the next financial period. The company should therefore put in place the necessary manufacturing facilities and proceed to implement the marketing strategy in order to ensure that the product is in the market. Q4 can be used as the time whereby the company can start preliminary evaluation and ensure that the company’s preliminary plan and calendar are being followed by those departments which are responsible for implementing the project. The management should therefore avail all resources and enough staff to make sure that the rechargeable battery division runs at full capacity.
Evaluation and Control
The evaluation process will involve measuring results and applying controls in order to rectify any superfluous deviations and to pinpoint areas that are exceptional. Evaluation control will be done promptly, both long-term and short-term. The sales and implementation experts will use key performance indicators to set targets which will be compared to the actual results to measure performance and carry out any desired corrections. Key performance indicators can include quarterly/annual revenue reports, gross sales per region, consumer loyalty reports, and many customer complaints, market share gain, competitor actions and the overall image of the company. If any of the forecasted key performance indicators deviate negatively if compared to the actual performance then marketing communication executives will be required to carry out adjustments after their audits. Rayovac should therefore use the correct milestone and a strict timeline to ensure that the performance of the rechargeable battery department performs according to expectation and that any deviations can be carried out as soon as they are realized.