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Autor: anton 28 May 2011
Words: 1944 | Pages: 8
FdA Business & Management Degree
Marketing and Brand Management
For the purposes of this report the UK consumer retail sales of dry-cell battery market has been has been selected with focus on two major players; Duracell and Energizer.
Contents Task 1:
Appendix A Ð’â€“ Market Drivers
Appendix B Ð’â€“ DVD Players
Appendix C Ð’â€“ Repertoire Analysis
Appendix D Ð’â€“ Seasonality
Appendix E Ð’â€“ Retail Sales by Manufacturer
The UK battery market is reliant upon the success of battery-powered products. Traditionally the battery market has been a stable lucrative market, as there has been huge increase in both ownership and number of battery-powered items [Appendix A]. However there has more recently been a surge in the use of electronic products containing integral rechargeable batteries, which is having a negative effect on sales, such as DVD players up 75.3% 2000-05 [Appendix B]. The other main impact on values is the heavy price promotions (nearly 1/3rd batteries being given in promotions), which plays an annual part of the seasonal effect of the battery market .
The value of the UK consumer dry-cell battery market exceeded Ð’Ðˆ382m 2001 and was worth around Ð’Ðˆ426m by 2005 . Volume sales have remained at a growth of around 2% year, except for 03/04 which achieved a growth of 5% owing to a surge in MP3 ownership . Values were expected to completely stagnate however the popularity of digital cameras and MP3 players have improved sales of batteries. In 2005 Ð’â€˜The Grocer' reported slow growth and in 2006 , reported steady growth with alkaline batteries continuing to dominate the market, taking 89% share of the product category market. Duracell holds the brand lead in the alkaline batteries market.
● ALKALINE (long-life) for high-drain appliances i.e. MP3 players.
● ZINCÐ’â€“ zinc carbon best : for low-drain appliances i.e. torches
● BUTTON Ð’â€“ can be silver oxide, alkaline, lithium or zinc-air suitable for watches, calculators and hearing aids.
● Ni-Cd (rechargeable) used as regular battery
● Ni-MH (rechargeable) for digital devices and traditional cameras.
According to figures taken from a TGI survey, around 79% adults purchased batteries within the last 12 months with approximately 43% [Appendix C] purchasing only one brand. The demographic profile of battery purchasers is most likely to be:
Male; Aged 35-44; Family-lifestage; AB
This is reflective of the male interest in battery-powered gadgets, supported by higher levels of disposable income. According to Duracell , even young boys have been shown to prefer battery-powered toys. At the family lifestage, consumers are more likely to have extra TVs and battery-powered toys.
Non-buyers are more likely to be female and from either the 15-24 or over-65 age groups and do not have children; hence no toys or extra TVs etc or they are more likely to own the latest gadgets with integral rechargeable batteries. The over-65s are less likely to own much electronic equipment.
Spending is strongly affected by seasonality thanks to the influx in battery-hungry purchases, with the highest period (34%) falling in the Christmas season [Appendix D].
Most purchases are made through grocery outlets, which account for 56% of battery sales.
The battery market is an oligopoly with Duracell continuing to dominate, accounting for over a third of volume sales in the market. Energizer is the next major player, with just under a quarter of the market, while the next-largest branded player, Panasonic, accounts for slightly less than 10% of market volumes. Own-label brands take just over 10% of the market. Leaving the balance of just less than 20% of the market to the remaining brands [Appendix E]. The battery market shows strong brand loyalty; newcomers and own-label brands have not been able to develop a stronghold on the market. The strength of branding and economies of scale allowing fierce price competition, has built up a strong barrier for entry into the market.
Task 3 Evaluate the importance of branding in this market.
Market: Household Commercial non-rechargeable batteries
Brands: Duracell & Energizer
Contents Task 3:
Appendix F Ð’â€“ Repertoire Analysis
Appendix G Ð’â€“ Brand Equity & Market Share
Appendix H Ð’â€“ Promotions eat away value
Appendix I Ð’â€“ Battery sales, by season, 2004
Appendix J.1 Ð’â€“ Boston Consulting Group Matrix
Appendix J.2 Ð’â€“ Brands of battery purchased in past six months: 2004/6
Appendix K Ð’â€“ Ansoff Matrix
According to Webster's dictionary , brand is defined as "a means of identification"; identifying products and services but is more than a brand name or logo. Over recent years branding has become a major contributor to the success of a company and brand management is built around developing in the customer's minds, a set of perceptions and attitudes relating to the brand. Branding now offers Ð’â€˜a promise' e.g. Stradivari offering Ð’â€˜Perfection' . The two leading brands in the battery market are; Duracell and Energizer:
Duracell (derived from "durable cell") is one of the best-known battery brands globally and is an UK Gillette-owned company, which was bought by Proctor & Gamble in 2005.
Energizer is an American company and one of the world's leading brands, which also operate the Eveready brand in the UK.
Branding is a strong feature of the battery market with a high degree of loyalty to the leading brands with 43% of consumers purchasing only one brand and 30% purchasing just two brands [Appendix A]. This is further demonstrated by the domination of Duracell accounting for over a third of volume sales in the market, with Energizer following with just under a quarter of the market. The strength of branding is maintained with strong marketing and fierce promotional competition. The nearest competitor, Panasonic taking just 10% of the market, leaving just under 20% to the rest of the brands and just over 10% to the own-label brands8. In 2006, 92% of adults claimed to have purchased either of the two main brands showing an upward trend of 5% [Appendix B] towards the branding stronghold.
Appendix C outlines the brand equity/market share relationship for purposes of brand development. Duracell being placed in the top-right as it has a strong brand equity and high market share. Panasonic would be placed top-left with high brand equity and low market share.
Marketing is a process of combining the needs of the organisation with external demands. All factors of the marketing mix play a role in achieving a high market share; good advertising, effective point of sale, good packaging, effective price structure but branding is at fundamental to the marketing strategy. Branding can be seen as the key differentiator Ð’â€“ by differentiating its product and giving the company unique values, a company effectively narrows the choice to the consumer in a wide marketplace.
In the battery market, the USP for Duracell was Ð’â€˜lasts longer' and for Energizer was Ð’â€˜longer lasting power'. As the message was not dissimilar, the marketing mix was key to supporting the branding message of value and reliability.
The two companies have held a long running battle over Ð’â€˜mascot' branding. The Duracell bunny predates the Ð’â€˜Energizer Bunny', which began as a parody of the Ð’â€˜collectible' Duracell bunny toys. The Energizer bunny has been appearing in television commercials since 1989 and is a single rabbit whereas the Duracell bunnies are a species.
The Duracell bunny was originally trademarked for use in the US and other countries but Duracell failed to renew its US trademark of the bunny and lost it. Energizer seeing an opportunity trademarked a new bunny for its use.
The Energizer Bunny however only appears in the U.S. as Duracell holds the rights for Europe.
DURACELL BUNNY ENERGIZER BUNNY
Advertising is heavily seasonal to match the market with over 60% of expenditure falling in the last quarter. The top two companies set trends in advertising/promotions however since 2005 spending is in decline as manufacturers are now targeting the premium purchaser.
Duracell was the first to move into the metallic look with their copper-top batteries with Energizer following with their less successful metallic Silver/black look.
The battery industry has become a victim of its own success in that, fierce price promotions have meant that although battery sales keep rising, reported spend has stayed relatively static. With the UK average price per unit of dry-cell batteries being 67p 2001 compared with just 65p 2006; demonstrating the significant effect the price-war has had on this market [appendix D].
Batteries are in most instances an impulse purchase. One of the key factors in selling batteries is therefore availability. Panasonic's third position in the market place is based on the well-established convenience sector . Convenience stores with long hours traditionally catered for the distress purchasers however supermarkets now lead sales in both the advance and distress sales having increased opening hours.
The market has enjoyed stability derived from the rise in the growth of consumer electronics, battery-powered toys and digital equipment. The environmentalists have also seen the increase in demand for rechargeable batteries and consequently development into premiumisation and focus on rechargeables with differentiated product marketing is now seen as the key target for growth. The major brands offer sub-brands to identify their specialist product range whilst retaining the concepts of the Ð’â€˜umbrella brand' such as DuracellSupreme; Duracell Powerpix and Energizer Ulitimate; Energizer Lithium.
Despite appealing to the mass market, it is evident when applying the BCG Matrix marketing tool (Appendix E) to plot the position of the major players, that no companies are enjoying major growth in the current stagnant market. It is for this reason that they are looking to move into specialised areas, utilising their existing brand recognition and potential growth development area.
This follows the guidelines laid down by Ansoff (Appendix F) which companies should first look for growth opportunities within market penetration and then either additional markets or produce new/adapted products to satisfy existing customers. This is the preferred route of the two main players in retaining the existing line to satisfy the existing penetration and in product development for the new high-power specialised market.
The battery market has seen a fierce battle over sovereignty of brand leadership with Duracell taking the clear lead. Although Energizer were the original leaders in the marketplace in the form of Ð’â€˜Eveready', as the market moved into new lithium technology, they were slow to react and Duracell were a strong marketing force. The Ð’â€˜bunny' fight was instrumental in the war and so was the choice of colour-coding in the packaging. As both companies have now chosen to focus on a specialised market, Duracell electing the music industry and Energizer focussing on the gadget-world, it is yet to see which will emerge victorious.
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