Rayovac Corporation Battery Market Strategies

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Questions and Answers

What is the average annual spending on batteries for heavy users?

$250 (correct)

$500

$100

$25

Which of the following groups are considered heavy users of batteries?

Light users

Families with children (correct)

Techies (correct)

All of the above

What is the approximate market size of the family segment in Canada?

$100 million

$75 million

$25 million

$200 million (correct)

What is a key characteristic of the family segment in terms of their battery purchasing habits?

They prioritize price and value. (A) Signup and view all the answers

Which of the following is NOT a typical device that families would buy batteries for?

MP3 players (B) Signup and view all the answers

What is the average income range for techies?

$20,000 - $40,000 (C) Signup and view all the answers

What is a key characteristic of techies in terms of their battery purchasing habits?

They tend to be impulsive buyers. (A) Signup and view all the answers

Compared to families, techies tend to have

Fewer batteries in use at any given time. (A) Signup and view all the answers

What percentage of Rayovac's sales are distributed in North America?

44% (D) Signup and view all the answers

What is the combined market share of Duracell and Energizer in the global market?

74% (D) Signup and view all the answers

What percentage of the Canadian market is held by Rayovac?

20% (A) Signup and view all the answers

Which of the following best represents the global market share held by "Other" battery manufacturers?

8% (A) Signup and view all the answers

What is the approximate share of the global battery market captured by Rayovac?

20% (B) Signup and view all the answers

Which geographic region, according to Exhibit 3, generates the largest portion of Rayovac's sales?

North America (D) Signup and view all the answers

Based on Exhibit 4, what is the market share difference between Duracell and Energizer in the Canadian market?

11% (B) Signup and view all the answers

What is the combined market share of Rayovac and "Other" players in the global battery market?

28% (D) Signup and view all the answers

What was the market share of companies like Panasonic, Sony, Sanyo, and Kodak in the global battery market?

Less than 10% (B) Signup and view all the answers

Which of these factors contributed to the reluctance of North American consumers to purchase rechargeable batteries?

All of the above (D) Signup and view all the answers

What was the main reason for the lack of growth in the rechargeable battery market?

Reluctance of market leaders to promote rechargeable batteries due to potential cannibalization of the alkaline battery market (B) Signup and view all the answers

Why did the market leaders, Duracell and Energizer, not promote rechargeable batteries?

They believed that promoting rechargeable batteries would reduce their sales of alkaline batteries (C) Signup and view all the answers

What was the approximate profit margin on a single rechargeable battery?

$2 (D) Signup and view all the answers

What percentage of the North American battery market did rechargeable batteries represent in 2004?

5% (C) Signup and view all the answers

What core competency did the market leaders lack in the rechargeable battery sector?

Manufacturing (B) Signup and view all the answers

In 2004, how much did the market leaders approximately make in profit from selling one alkaline battery?

$0.50 (C) Signup and view all the answers

What was Rayovac Corporation's net sales for the year ended September 30, 2002?

$572,736,000 (D) Signup and view all the answers

What was the amount of Rayovac Corporation's restructuring and related charges for the year ended September 30, 2003?

$21,065,000 (D) Signup and view all the answers

What percentage of Rayovac Corporation's net sales in 2004 was attributable to cost of goods sold?

57.3% (B) Signup and view all the answers

What is the change in operating income from 2002 to 2003?

A decrease of $3,979,000 (A) Signup and view all the answers

What was Rayovac Corporation's income from continuing operations before taxes in 2003?

$23,035,000 (D) Signup and view all the answers

What was the total amount of operating expenses for Rayovac Corporation in 2004?

$449,853,000 (C) Signup and view all the answers

What was Rayovac Corporation's gross profit margin in 2003?

38.0% (B) Signup and view all the answers

What was Rayovac Corporation's net income for the year ended September 30, 2002?

$29,237,000 (B) Signup and view all the answers

What was the impact of discontinued operations on Rayovac Corporation's net income for the year ended September 30, 2004?

A decrease of $380,000 (D) Signup and view all the answers

During which year did Rayovac Corporation experience the highest operating income?

2004 (A) Signup and view all the answers

What is the amount of cash and cash equivalents held by Rayovac Corporation at the end of 2003?

$107,774,000 (C) Signup and view all the answers

What is the total amount of "Deferred charges and other" reported on the balance sheet for both 2003 and 2004?

$75,239,000 (B) Signup and view all the answers

What is the percentage change in total assets from 2003 to 2004?

5.7% (D) Signup and view all the answers

What is the amount of "Other" current liabilities reported for the year 2004?

$60,094,000 (D) Signup and view all the answers

What is the difference in 'Long-term debt, net of current maturities' between 2003 and 2004?

$64,538,000 (A) Signup and view all the answers

What is the total amount of 'Employee benefit obligations, net of current portion' reported for the year 2003?

$63,044,000 (A) Signup and view all the answers

What is the amount of 'Debt issuance costs' reported on the balance sheet for the year 2004?

$25,299,000 (B) Signup and view all the answers

What is the difference in total shareholder's equity between 2003 and 2004?

$124,042,000 (D) Signup and view all the answers

What is the total amount of "Receivables" at the end of 2004?

$289,632,000 (D) Signup and view all the answers

What is the difference in the amount of "Goodwill" between 2003 and 2004?

$77,803,000 (B) Signup and view all the answers

Which of these options are correct about the total amount of "deferred income taxes" held by Rayovac Corporation at the end of 2003 and 2004? (Select all that apply.)

The total amount of deferred income taxes at the end of 2003 is more than 2004. (A), The deferred income taxes at the end of 2004 is less than the deferred income taxes at the end of 2003. (B) Signup and view all the answers

What is the total amount of "Intangible assets, net" reported on the balance sheet at the end of 2003?

$252,870,000 (A) Signup and view all the answers

What is the percentage change in total liabilities between 2003 and 2004?

-1.8% (A) Signup and view all the answers

What is the total amount of current liabilities at the end of 2004?

$398,658,000 (A) Signup and view all the answers

Which of these options are correct about the total amount of "Minority Interest" held by Rayovac Corporation? (Select all that apply.)

The Minority Interest for 2004 is higher than in 2003. (A), Minority Interest is only reported on the balance sheet for 2004. (D) Signup and view all the answers

What was the percentage growth in global battery sales for Duracell in 2004?

5% (B) Signup and view all the answers

What was the approximate global profit for Energizer in 2004?

$446 million (A) Signup and view all the answers

Which of the following statements accurately describes the North American battery sales of Duracell and Energizer in 2004?

Duracell had higher North American battery sales than Energizer. (D) Signup and view all the answers

What was the difference between Duracell's and Energizer's global battery sales in 2004?

$290 million (C) Signup and view all the answers

Which company had a higher percentage growth in global battery sales in 2004?

Energizer (D) Signup and view all the answers

Study Notes

Rayovac Corporation - Rechargeable Battery Opportunity

Rayovac, a division of Spectrum Brands, was facing challenges in growing its battery division in 2005.
The household battery market was experiencing growth, driven by high-drain devices like digital cameras.
Rechargeable batteries were gaining popularity in Europe, but not in Canada, due to consumer perception concerns.
Rayovac could either compete directly with established brands or target the market from a niche perspective.

Household Battery Market

The household battery market included standard sizes like AAA, AA, C, D, and 9-volt.
Sales of these batteries grew globally due to the increasing use of electronic devices.
The majority of household batteries were alkaline chemistry.
Heavy users spent significantly more annually on batteries compared to light users.

Consumer Segments

Light users typically spend less than $25 annually on batteries, mostly for low-drain devices.
Heavy users spend over $250 annually, mostly for high-drain electronic devices.
The techie segment includes younger, technology-oriented consumers who often prefer to purchase a new battery or charger more frequently due to high drain devices and needs.

Rayovac

Rayovac, founded in 1906, was a significant player in the global market for consumer batteries, especially in hearing aid batteries.
Its product line comprised alkaline batteries for the household segment.
Rayovac had attained a 14% global market share and a 20% Canadian market share in 2005.
The company acquired other brands or companies to strengthen its presence and offer a broader range of products.

Competitive Landscape

Duracell and Energizer dominated the market due to brand recognition, relationships with distributors, and broad portfolio.
These companies had significant market share (39% and 35% worldwide respectively).
Both companies used various marketing strategies, including large advertising budgets

Rechargeable Batteries

The rechargeable battery market was small and fragmented in 2004, representing just 5% of the North American market and 10% of the Canadian market.
Several factors hindered consumer adoption of rechargeables, including initial cost, inconvenience of recharging, and lack of knowledge.
NiMH rechargeable technology was improving, offering performance advantages over alkaline batteries.

Opportunity

Rayovac needed a strategy to compete with market leaders.
The rechargeable segment offered a possible niche market for Rayovac.
Bob Falconi needed to quickly form a decision on how to proceed with either a "volume" or a niche "strategy" focusing on a targeted approach.

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Description

Explore the challenges and opportunities faced by Rayovac Corporation in the rechargeable battery market in 2005. This quiz examines the household battery landscape, key consumer segments, and the competition with established brands. Test your knowledge on the evolution of the battery industry and consumer behaviors.