Rayovac will spend $35 mil to reinforce value position

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In a battery market dominated by claims of power and performance, Rayovac Corp. continues to tout packaging and price.

The No. 3 battery company, behind Duracell and Eveready Battery Co., is maintaining its value proposition with a $35 million marketing budget (including media and promotional spending), the bulk of which will be spent in the second half of this year, said Bruce Kramer, category business manager-general batteries at Rayovac.

He said the company will spend about $15 million on measured media this year, up from $11.8 million in 1999, according to Competitive Media Reporting.

A new print ad from Y&R Advertising, Chicago, will break this fall in consumer magazines such as Better Homes & Gardens, Family Circle and Redbook; it highlights the convenience of Rayovac's reclosable plastic multipacks. "They've always been long-lasting," reads the ad copy, over a photo showing contents of a messy junk drawer. "Now your search for them won't be."


The print campaign will complement a TV spot featuring Rayovac spokesman Michael Jordan that broke last fall and will air again in the fourth quarter.

Rayovac has a 12.8% share of the total market, trailing Duracell and Energizer, which have 44.4% and 30.8%, respectively. Despite its competitors' commitment to batteries in the premium category, Rayovac has no plans to enter the premium sector, Mr. Kramer said. "We're not sure it's a real benefit to consumers," he said, referring to products like Duracell Ultra, designed for high-drain consumer electronic devices.

Instead, Rayovac plans to maintain its value position in a new TV ad with Mr. Jordan to break this fall. The ad will feature an animated boom box with the message, "Your devices don't just eat your batteries; they eat your money, too," Mr. Kramer said.

Although Mr. Jordan said in March he would end commercial endorsements, Rayovac Director of Marketing Services John Daggett said at the time the company would feature him in ads for several years under his current contract. Footage for the TV spots was shot before the Screen Actors Guild strike.


"The Rayovac story has always been `Lasts as long as the other guys for less,' " Mr. Kramer said. He credited new management under Thomas Lee Co., which acquired Rayovac in 1997, with making it a player in the category once dominated by Duracell and Energizer. "They really reinvigorated the brand with all new graphics and new packaging, and really helped us focus and go after the competition with our value positioning," he said.

But competitors are pushing premium batteries. Duracell, leader in sales and ad spending, dedicated nearly all of its $52.5 million measured media budget to Duracell Ultra in 1999, according to Competitive Media Reporting. BBDO Worldwide, New York, handles Duracell.

No. 2 Energizer plans to spend an unprecedented $100 million to launch its new, premium e2 titanium battery this summer with a global campaign through DDB Worldwide, Chicago.

"For Duracell and Ultra, it's rather obvious from their commercials that they're starting to promote their premium batteries," said Farah Saeed, an analyst at Frost & Sullivan. "I think there is still a place for Rayovac batteries, especially in the low-end, low-drain market, where consumers are more concerned with price than with density or durability," she added.

But premium batteries do not prevail in the industry in which standard alkaline batteries made up 75.6% of the $2.58 billion category for the 52 weeks ended April 23, according to Information Resources Inc. In the non-premium category, Duracell led with a 37% share; Energizer had 29.4%; Rayovac, 9.2%.


Rayovac delivers on its lower-price promise. "Rayovac typically sells at a 10% to 15% discount to base Duracell and Energizer," said Kathy Reed, an analyst at Merrill Lynch & Co.

"We stand behind our claim," Mr. Kramer said. "We'll continue to shout that we last as long as standard Duracell and Energizer for less."

Analyst Jay Van Cleave of Robert W. Baird & Co. said Duracell and Energizer dominated the category for years before Rayovac began marketing itself as a more affordable alternative. "By repositioning as this value brand, they came in under the umbrella that Duracell and Energizer had built up."

"[Lower prices] give us a competitive advantage," Mr. Kramer said.

Rayovac's value strategy "makes a lot of sense," Mr. Van Cleave said, given that consumers make battery-buying decisions on impulse. "To a certain extent, I think the consumer has been confused with the claims of `I'm better. No, I am,' " he said.

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