Rayovac’s growth and success can be attributed to a well-defined and executed strategic plan. First, as the third largest battery maker, Rayovac’s alkaline battery strategy is to compete on price. They price their alkaline batteries below Duracell and Energizer to gain market share. Rayovac has made significant progress in establishing partnerships with low-cost mass merchandisers to distribute its products. Giants, such as Wal-Mart, Lowes, and BJ’s Warehouses have teamed with Rayovac to market its batteries. Currently, Rayovac batteries can be found in over 100,000 stores in North America, tripling its distribution points in just four years.
Second, Rayovac has had significant global expansion. They have concentrated on the Latin America market and have copied its North American strategic and marketing plan and implemented throughout Latin America. To continue to grow the 24% market share in Latin America, Rayovac will continue to expand distribution outlets with mass merchandisers. In addition, Rayovac will expand its product offering by introducing the successful North American products. Rayovac has plans to further expand its European market. With a foothold in the UK, Rayovac again will leverage its North American distribution strategy by partnering with mass merchandisers. Rayovac’s key relationship with Wal-Mart in the U.S. will help further expand its operations in continental Europe. Additionally, Rayovac will continue to expand.
For the most part, Rayovac has implemented a very successful strategic platform evidenced by their consistent financial performance and record earnings in 2000 and 2001. The company should maintain its focus as the low cost provider of consumer batteries offering a full range of battery solutions. Rayovac needs to continue to expand its alkaline business (accounts for nearly 50% of sales) and increase its retail outlets in North America. They have increased their number of retail outlets threefold since 1996, but are still only sold in half of their targeted retail distribution channels. The company also plans to increase their penetration in Latin America, a market they have identified to have the highest growth potential. The area where we see Rayovac with a potential strategic problem is in the Hearing Aid Battery market. The company is currently the worldwide leader with a 62% market share, however sales have fallen 5-10% over the past two years, the only segment in their product line with declining sales. Besides increased competition from the other major battery manufacturers (Duracell & Energizer), Rayovac is faced with the threat of forward integration by leading
US Census Bureau. (2001). Population Growth. Retrieved November 27, 2001 from www.census.gov16 hearing aid manufacturers. Companies such as Siemens and Beltone already produce their own hearing aid batteries and there is potential for others to follow suit. Many opportunities exist in this market for Rayovac to capitalize on and extend their worldwide market leadership position. Hearing aids are an underdeveloped market, as only a small percentage of those requiring them actually wear them. As mentioned earlier, the Baby Boomer generation is entering their golden years, which will provide tremendous growth in the Hearing Aid market over the next ten years. Technology continues to improve. Manufactures are designing smaller in-the-ear and canal devices. Many of the larger, international manufacturers such as Telex and Widex are developing digitally enhanced hearing aids. With this new technology comes the need for configuring battery solutions. We recommend Rayovac forming several strategic alliances with some of the top international OEMs such as Widex, Starkey or Unitron. Rayovac must focus on their core competency, making batteries. A strategic alliance would allow both partners to branch out...
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