Gillette's Acquisiton of Duracell

The purpose of this report is to first discuss the reasons why Duracell’s performance has been decreasing over the past four years, and then recommend some strategic actions Gillette should take to turn Duracell around. This report will begin by providing a brief introduction on the acquisition of Duracell by Gillette, followed by the reasons it lacked success, and finally end with the proposed recommendations for Duracell.

Currently, Gillette’s operating segments include personal grooming, small appliances, and oral care products, and the portable power segment. In the portable power segment, Duracell’s major competitors consist of Energizer and Rayovac while new and emerging ones included Sony, Kodak, Panasonic, and other private label brands. The collective entrance of these competitors in the 1990s is the primary reasons for Gillette’s lack of success in the battery industry, discussed below.

The key reason Gillette has been unable to achieve the same success in batteries that it has with shaving products is due to the competitive dynamics in the alkaline battery industry. The period of four years from 1997 to 2000 experienced rapid technological innovation in the alkaline battery industry by not only the major players but also from new and small entrants in the industry. Two of these small players were Sony and Panasonic. Sony introduced its “Stamina Line” of batteries in 1997, which was quickly followed by Panasonic’s “Panasonic Plus” to compete with Duracell’s “Copper top” line. Within the same year, the Rayovac Corporation replaced its existing battery with the Rayovac “Maximum” and priced the product at 20 per cent below the two industry giants – Duracell and Energizer. In the following year (1998), however, Gillette launched its first upgrade of Duracell’s offerings named the “Duracell Ultra”. This new line did not replace the original “Copper Top” line that was competing with the product of Sony and Panasonic in the previous year but rather,...