[Solved] renova case portugal

The Renova Case Team 5, Section C Bernardino Colonna, Rishi Shroff, Gianfranco Capobianco, Melissa Barnett &ShuLiYeh 1) Which are the key factors that consumers consider when purchasing toilet paper? The key factors considered by consumers when purchasing toilet paper are quality and price. In fact, the toilet paper industry in Western Europe is segmented based on these two key factors. In the Portuguese toilet paper market, 60% of customers find price the most important attribute when buying toilet paper, 30% find quality the most important determinant, while 8% mentioned the brand and 2% the format.

For those who viewed quality as the most important characteristic; the three most important attributes of the product are softness, strength and absorbency. 55% of Portuguese customers mentionedchecking the price of the toilet paper on the shelves before purchasing, while 35% said they do not check the price beforehand. 2) Analyze key competitors in this industry. Renova operates in the disposable paper products industry of which it occupies 1% share of the Western European market and a 17% share of the Portuguese market.

This industry is broken into the disposable tissue and hygiene products categories. Renova is a player only in the $13b disposable tissue sector, which includes toilet paper, kitchen towel rolls, facial and pocket tissues and napkins. The tissue market has been suffering from anemic growth of 2. 4% per year for the last three years in Western Europe and even slower in Renova’s home market of Portugal. The sluggish sales across Western Europe and Portugal are directly related to stagnant customer population growth and market saturation.

The toilet paper market in Western Europe is highly commoditized, has sluggish growth and generally lacks innovation. Renova is in direct competition with large consumer goods companies, multi-national paper companies and major retailers both across Western Europe and within Portugal. Its major competitors in Western Europe are behemoths P&G and Kimberley Clark who constantly pose a major threat due to their size, global reach and ability to invest money in marketing their international brands. Also present are giant paper companies Georgia

Pacific and SCA. The third major competitors are major retailers such as Carrefour, Lidl and Tesco, who were once just customers of Renova are now also competition due to the growth in the private label portion of the disposable tissue market; this ads a further twist to the structure of Renova’s market as retailers are virtually their sole customers. In Portugal,where toilet paper growth has been 1. 5% per year over the past three years and is expected to grow at the same pace for the foreseeable future.

Renova, who hold a 35% share of the disposable tissue market and a 34% share of the toilet paper market,faces a different set of retail competitors than it does in the rest of the European market. SonaeDistribucao and GrupoJeronimo Martins are two of the biggest retailers in Portugal. Another relatively new competitive threat comes from hard discounters whom are present and gaining share in the Portuguese disposable tissue paper market as well.

Retailers and their private label make up 33% of the Portuguese toilet paper market while Renova maintains a similar market share. Retailers that sell private label tissue products pose a significant risk to Renova. Not only due to the fact that they are a customer of Renova but they maintain complete control of how they sell their own products to retail customers. This could put Renova at a big disadvantage when trying to sell their product through these channels.

Private labels are the fastest growing segment in this market thanks to their superior quality/price ratio. The threat of new entrants in the Portuguese market are looming with companies such as Sofidel and Tronchettti, two medium sized European paper producers who are rapidly expanding in Spain and other neighboring countries. 3) Which options has Renova to stay relevant? Which would you recommend? Renova is considering the following five strategic decisions to stay relevant: • • • •

The first is to fight private labels directly by reducing the price of its entry level paper. This avenue would clearly reduce profits. Based on the fact that COGS is 70%, the company is making a 30% gross margin on its products and therefore could only afford to reduce prices by this much (all costs remaining equal) to break even. Given the retailer’s 20%margins, this would still put the cost of the product at . 134 (working with the current average retail price of . 20) which would still be undercut by retailers at the lowest end selling for . 10.

Even if the company were able to viably reduce prices enough to be the price leader, the retailer’s control the retail space and also pricing to retail customers and could manipulate both in favour of their owned private label brands. The second is to partner with some of the retailers to produce private labels. In this case, Renova could bring to the table product and production know how as well as brand equity (especially in the Portuguese market) if the product is co-branded. This could however erode the brand identity and equity and the perceived prestige that is associated with the brand.

The nature of this partnership, for the production of lower cost private labels, also does not foster the level of innovation that has become a part of the company’s culture and may not sit well with stakeholders. Further to this, the decision on which retailers to partner with may also pose a problem as all major retailers are important channels of distribution that may be dangerous to the rest of the portfolio to alienate one or the other. This option also does not address or facilitate the goal of opening new markets.

The third is to accelerate Renova’s recent efforts to differentiate its toilet paper through functional innovation, improving its existing features or adding new ones. Renova has a strong culture and history of innovation, such as with moist toilet paper and with the more successful Renova Fraicheur, which was instrumental in helping the brand penetrate the French market. In the ongoing game of staying relevant, continuing to invest in these innovations, which is a core strength of the company, will be beneficial.

The fourth option is to explore the black toilet paper idea but as a limited public relations coup to raise the awareness and image of the Renova Brand. Renova is operating in a highly commoditized category with almost universal market penetration in Portugal and limited growth. In order to grow and • expand, it is important for Renova to enter new markets/new segments. Though the brand has very strong brand awareness and image in its home market its share of the western European market is limited and the brand is unknown in the international market.

The black toilet paper idea is novel and has great potential for creating an international impact, but at this stage needs to be executed carefully, awareness, image and presence need to be built before attempting to go straight to market (new and unknown markets) with an influx of product. Renova has been successful at differentiating both from a marketing and design perspective and has been successful in positioning themselves as a superior quality brand as well as communicating an identity associated with well being and a perceived image of prestige.

As the premium segment of the market is growing rapidly, this product would be a good fit in that segment. This new product could benefit from the awareness and image already crafted by Renova and also serve to further differentiate the brand and the intangible elements associated with it while opening the doors for extending the Renova brand into new geographical markets (international markets), and extending market share in the premium segment and opening up new channels of distribution (hospitality industry etc. ). This new black toilet papper can essential be used as a means of communicating the brand value internationally.

Launching the product through a limited PR coup to raise awareness and image is genius because it allows the company control over how the product is positioned in the media and therefore in the mind of consumers as well as it allows the product and the brand to have an air of exclusivity, being available only through select and strategically chosen mediums and channels during the limited PR campaign. It allows for a buzz to be created around the product and the category without heavy financial investment in advertising and maybe even more importantly it allows for the product to be tested in carefully selected channels and target segments efore a massive product launch is carried out. The company should ideally use this marketing strategy to create a competitive advantage for the Renova Brand on the international scale, as it has previously done especially in its home market with its well-being campaign. The fifth option is to launch black toilet paper as a fully-fledged new product line and to try to make it immediately available for purchase to the biggest number.

While there may be potential for launching the black toilet paper as a fully-fledged new product line, the aim of the company is to grow the business in its current markets as well as to expand into new markets. Currently, the home market is saturated and the brand is not very well known in outside markets. Further to this, the case presents no evidence of research carried out regarding how the market will respond to this new product or if current channels are a good fit for the value created by this new product.

Considering these factors, it would be advisable to first raise the awareness and image of the brand in new markets and adequately test the idea and the concept before going to market in such a big way. After the product is used to raise the awareness and image of the brand and a buzz and demand is created then the product can be launched targeting the relevant segments and using the relevant channels to engage these segments. When the black toilet paper gains popularity and acceptance it would be a natural move to expand the colored product to napkins, tissues, etc.

[opskill_register_order]

"Looking for a Similar Assignment? Order now and Get a Discount!

Hey, wait!You Don't want to miss this offer!

Before you go, let us offer you a 20% discount coupon for your next purchase.