“RAYOVAC CORPORATION”

DECIDE frame work has been used to analyze the case.

Key Problem Definition

To enter Canada in the business of rechargeable battery market or not.

NATURE OF THE INDUSTRY MARKET AND BUYER BEHAVIOUR

Battery Industry Overview

Competitors

Duracell- Comprises of 35% of the total market in Canada. Being a part of P&G portfolio had provided
Duracell a tremendous advantage over competitors when it came to maintain strong relationship with
retailers and distributors.

Energizer- Comprises of 35% of the total market in Canada. The Energizer bunny has already created a
positive attitude and brand image in customers mind like Nike ‘Swoosh’ in sports arena. Energizer
holdings acquired the Schick-Wilkinson sword blade and razor business has allowed the company for a
better distribution.

Competition in Non-Rechargeable Battery

In 2005, the Non-Rechargeable battery segment was estimated to$ 210 million .All the players in this
category are organized, & the market for this category is mature .With the growth of large in retail
chains, the balance of power shifter away from manufacturers. Strong relationship with these retailers
has become very important element to occupy shelf space. Duracell and Energizers continued to
dominate the market due to Brand recognition and their relationship with distributers and retailers, and
their established category in alkaline category. (35% Market share each in Canada)

An additional benefit of these Merger, Duracell and Energizer has benefited by balancing out the sales
cycle.(the market for household batteries is highly seasonal with the large majority sales occurring
during the Christmas holiday season. Merging with brands that had a different sales cycle allowed for
more efficient use of the sales force and a steady revenue stream.)

Competition in Rechargeable batteries

Rechargeable battery market is small and highly fragmented. In 2005, the rechargeable battery segment
was estimated to 30 million $. There is no dominant leader. The majority of rechargeable batteries are
sold through niche retailers’ viz. electronic store & Photo/Camera stores, where high-drain devices were
typically sold. It is also projected that these retailers would continue to account for the majority of
rechargeable battery cells until large mass merchandisers began to pick up the product lines. The lack of
growth in this market didn’t seem lucrative to market leaders to promote their product line. And also
the profit margin compared to Non-Rechargeable battery is low.
The new Nickel Metal Hydride (NiMH) rechargeable technology performed very well in high-drain
devices with 3 times more longevity than alkaline batteries and also can be recharged 500 times, which
was cost savvy in long run.

Channels

Majority of the house hold batteries are sold through traditional retail channels like drug store,
hardware retailers, mass merchandiser and niche stores. Mass merchandisers generated the largest
volume of Sales within the battery market (Alkaline Category)

CHANNELS % OF MARKET
MASS MERCHANDISERS(FAMILY) 34
TRADITIONAL GROCERY(FAMILY) 23
MEMBERSHIP CLUBS 15
HARDWARE/AUTOMOTIVE(DIY CUSTOMERS) 10
DRUG STORE(SENIORS & TWEEN) 10
ALL OTHERS 6
*Techies shop across retailers

CONSUMER BEHAVIOUR IN CANADA for RECHARGEABLE BATTERIES

Canadians are very similar to Europeans in their attitude towards environmental factor and cost
concerns. But on the contrast to Europeans, Canadians have been slow to adopt technology which could
be due lack of awareness.

Family

Market potential of a family segment form upto $ 200 million of the $ 300 million of the total market.
Family comprised of couples with one or more children, typically living in urban areas with a household
income of $ 60,000.

Behaviour

Lower level of disposable income because of higher level of home ownership and meeting the needs of
dependents. Price and value sensitive. Majority of the devices weren’t consuming high-drain. (Batteries
purchased for devices such as Garage door openers, smoke alarms, tooth brushes, electronic games,
Children toys etc.)

Techies

The techy segment represents approx $ 75 million in sales, i.e 25% of the total sales(300 million)

*techies age group - 15 to 30 years

* techies average income- 20,000 to 40,000 $

Behavior

Innovators and early adopters.

Heavy use of high-drain devices like mp3 players, digi-cam, palm-pilots etc.

Prefers to carry fewer batteries on the go, but would replace them more frequently.

Live in urban areas and are either at schools or just above to starting their careers.

Highly impulsive & gravitated towards stores with unique product assortments.

High disposal income (due to lack of dependents)

PLAN OF ACTION for CANADA MARKET

To be the market leader in rechargeable, Rayovac should adopt following strategies

1. To Capitalize on Nickel Metal Hydrate Technology (NiMH)

2. Stick on the value segment proposition and after capturing some part of the market share, Rayovac
Corp should come up with a new product line for premium customers, so as to bracket the competitors,
if they try to promote this segment.

3. For Volume Approach

Because, i) More Revenue will come through family as mentioned in the “Consumers in Canada
section”

 Should lobby with the mass merchandise officers like wall mart head quatered in US, because
states have influence over the Canadian operation when it comes to relationship with large retail
chains.
 Promotion : should invest heavily in initial years to create awareness about he environment effect,
about the existing latent and incipient benefits through TV commercials and sponsoring events
were endurance matters like relay race etc.
 Rayovac Corp should also follow the same strategies by P&G and Energizers group of Merger and
Acquisition of related and closely related companies to avoid the risk of sales cyclicity
 Sales team could be organized as below.