Custom «Renova Toilet Paper Case Study» Essay Paper Sample
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Renova is a private Portuguese-owned company that manufactures disposable tissues and hygiene products under the brand name Renova. The tissue industry in Portugal is controlled by giant companies such as Sonae Distribucao, Grupo Jeronimo Martins, Auchan Group and other hard discounters. In Western Europe, Renova controlled less than 1% of the market in 2005, with Procter & Gamble and Kimberly-Clark controlling the largest market share. Renova is a small company in comparison to other industry players and it is struggling to grow its market share to compete effectively with the main players. Renova also faces stiff competition from retailers who stock up other brands, as well as their own private brands which are relatively cheap in the market.
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At the moment, the most fundamental goal for Renova is to grow its market share in the region because doing so will generate higher sales and subsequently, higher revenue for the company. Retailers form a significant market for toilet papers, evidenced by the fact that they helped Georgia Pacific grow its market share and sales volume when the company launched its premium brand in France. In order to increase their market share, our marketing strategy will strive to persuade retailers to price Renova toilet paper at a competitive price to attract the 60% of Portuguese customers who consider price as the most valuable attribute of toilet paper. The main impediment to achieving this goal is that retailers, who form the biggest proportion of Renova customers, have their own private brands, which are cheaper than the national brands, therefore, making national brands such as Renova less competitive.
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The best solution for overcoming the impediment and achieving the goal is to market the Black toilet paper aggressively, and incorporate retailers in the distribution channel to ensure a steady supply in the market.
Introducing the Black toilet paper into the market is the most appropriate bottom line goal because it will generate additional sales, hence growing Renova’s market share in the competitive tissue industry. The Black tissue is a differentiated product which will enable Renova to demand a premium for it, as opposed to jointly producing a private label with a retailer. The differentiated black tissue is expected to grow the company’s revenue following an increase in sales. Focusing our marketing effort on the customers to identify with the Renova brand for value rather than the price is the best way to achieve our bottom line goal because marketing the Renova brand through differentiated products enables the company to demand a premium, consequently increasing its revenue. This alternative will generate higher sales than simply differentiating existing products, assuming that customers are from a particular group. However, success of differentiation largely depends on how well a company understands its target customers and designs a product that will appeal to the market (customer-oriented marketing) rather than designing a product and pushing it to the market (product-oriented marketing). The third alternative would be to launch the Black toilet paper on a limited edition to increase awareness of the Renova Brand, but it would only increase sales in the short-run rather than the long-run.
The Black toilet paper may not receive positive reception from the customers considering they rejected coloured toilet papers in the 1970s, claiming they were not environmental friendly and they also raised some health concerns. The issue of coloured toilet paper might override all other issues such as price because the world is consciously going green despite the associated costs. In addition, customers are increasingly cautious about their health habits and they tend to shun unhealthy products. In general, price is not a significant impediment because a majority of customers are usually ready to pay a premium for differentiated products.
Solution Analysis Outline of Solution
We propose the following brand positioning statement: “The Black tissue gives you the pleasure of being clean with a twist of black. It combines the prestige associated with the Revona Brand with the uniqueness of black colour to bring life and art into an otherwise monotonous experience.” The rationale used to choose this positioning statement is the fact that the Revona Brand is associated with prestigious and well differentiated products. In order to maintain its status, the brand must continue developing super brands and effectively communicating the information to their customers. We understand that communication plays a crucial role in marketing activities, which is another reason for choosing the words we did when formulating our brand positioning statement.
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The company can use the photography to increase awareness of the brand because the marketing strategy has been successful in increasing the brand awareness to 87%, ahead of other brands such as L’Oreal. Furthermore, the marketing executives should liaise with retailers to secure a favourable shelf placement, which will catch the eye leading to higher sales. Thirdly, they could use in-store marketing activities such as using a mystery shopper to reward a shopper of choice. Additionally, the company could post its brand positioning statement on social media to increase awareness and remain competitive.
The use of brand positioning statement is necessary because this is a new product in the market. Therefore, the company could use this information to ascertain the benefits of the black tissue paper to the market. This education of customers is precisely what is needed to convince them to take into account other factors such as brand power, when making their selection of tissue paper. In general, the brand positioning statement tells the target market of the benefits of the product, the additional value it projects and how different it is from the rest of the products in the market.
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It can be argued, however, that our solution suffers from the following drawbacks: our photography marketing strategy employs some rather explicit connotations, which have elicited some negative sentiments especially in France and Spain4. For example, the playful, sexual games used in the 2003 French photography campaign and the offensive Beatitudes campaign that was banned from outdoor display in France. Furthermore, the liaising with the retailers would only be effective, if the company gave them incentives to give their products high in-store visibility. Clearly, high visibility is vital, as it was the main reason why Georgia-Pacific’s premium segment in France was so successful. The use of in-store marketing activities lacks sustainability and cannot be used for the long term. The use of social media will only reach out to a limited audience in comparison with other media such as radio and television.
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Our solution has taken this argument into account as follows. The photography strategy has been creative albeit it has some implicit imagery. This strategy can be toned down a bit to suit different markets with respect to culture as some audience is more conservative than other. With regard to the retailers, persuasion tactic can be employed. They can be convinced how they stand to benefit in terms of profitability should the product receive positive customer response. To make the mystery man shopping promotion effective, promotions will be held quarterly in all the countries, making it even bigger and better every year. Such rewards make customers feel appreciated making them even more loyal to the brand. The use of social media will be a hugely ideal strategy as it reaches the target market, in this case, the younger generation from the higher social classes. This segment of Renova’s market perceives it to be a prestige brand and is willing to pay a premium for its products.
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Renova is a global brand specializing in the manufacture of disposable tissues and hygiene products in Europe. The tissue industry is commoditized making it difficult for the players to remain competitive especially in a saturated market. As a result, companies ought to be creative and innovative to sustain their competitive advantage, which is why some players are continuously differentiating their products. Renova has been at the forefront of such differentiated products giving it a rating of 7.5 on a scale rating of 1 to10.
The stiff competition among industry players has forced them to come up with unique marketing strategies to build brand loyalty and customer delight. The brand loyalty has boosted the uptake of new products that the players have been introducing in order to widen their income net considering that the market has limited growth - 1.5% per year for the last three years.
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In conclusion, Renova has applied differentiation strategy and combined it with effective marketing strategies to be among the leading local market players. These strategies have paid off in the domestic market, though the company’s market share in the International Market in Western Europe has remained sluggish. In light of this, the company might have to formulate better pricing, packaging, communication and distribution decisions in order to increase their competitive advantage in the region.