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8/10/2019 Gardena US Entry Strategy
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Portfolio Planning Garden Hose Reel Line
Market Entry Investigation for the Americas
FY 2012
Scott Massing | Product Planning [Matt Mayfield] | Institute of Design | Fall 2011
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Scott Massing | Product Planning | Fall 2011 | Portfolio
Company BackgroundGardena founded in Germany in 1961 - 50 years ago
Innovative Brand with household recognitionin Germany/EU - #1 Watering brand in EU
Top EU brand garden tools, ponds, pumps, products
Discipline of focus is to be Product Leader
Value proposition - to make gardening easy by sellinga garden system that ts any need
Part of Husqvarna since 2007
Acquired to compliment Husqvarnas powered con-sumer garden products
2010 restructured 2 business segments (consumerproducts and professional products) to 3: EU/Asia,
Americas, and Construction.
Sales up 5%, but prot down 30%, need higher mar-gin products to correct this trend, Gardena can help
Gardena to become global brandfor Husqvarna
GARDENA Live your gardenSince its foundation in 1961, GARDE-NA has developed from a small tradingcompany for garden tools into a world-wide recognized manufacturer of intel-ligent products and systems for gardencare within a few decades. Te secretof success is based on the high innova-tion strength of the brand as well as aconsistent sales and marketing policy.
Strengths: Innovative Company Trusted Brand in EU Husqvarna has extensive
sustainability resourcesWeaknesses: Husqvarnas broad product
line may dilute Gardena R&D Weak US presence and brand
recognition Few US distribution channelsOpportunities: Use innovative staff to create
unique product lines for USA
Use Husqvarna distribution toenter US
Husq. reducing brands, turn-ing Gardena into global brand
Threats: Weak global economy Suncast beginning to inno-
vate and do M&A Toro researching sustainable
watering technology
Watering regulations emerg-ing due to frequent droughts
Product Categories
Water management
Lawn Care
Tree and shrub care
Garden care tools
Product Categories
Ride on
Walk behind
Handheld
Watering
Accessory / Garden
Construction
Sources:DataMonitor, Husqvarna Jan11; Pack-aged Facts, Lawn and Garden Edition, Jul09;Husqvarna Annual Report 2010
Husqvarna GoalGardena to be global brand
Bring back high margins
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INDUSTRY CONTEXT
Intra-Category Rivalry Crowded eld of 10+ brands Flat growth but recent innovations
are increasing the competition US market has been focused on
price, and not innovative product Competitors have recently been
liquidated or acquired (Nelson) Acquisitions diluting margins
Threats of Substitutes High - upscale users move to lawn
care services, low-end users skiplawn care chores or scale back
Urban migration reducing the market Water regulation may require drip
irrigation in place of hose watering
Threat of New Entrants
High threat - low barrier to entry/exit Asian suppliers compete with cheap
labor, and often knock-off designs
Bargaining Power of Suppliers Low - standard manufacturing
processes are utilized Low - Vertically integrated manu-
facturing
Bargaining Power of Buyers High - many suppliers Big box retailers drive prot-
abilty down Online comparison shopping
and reviews on the rise Brand reputation only as
good as your latest onlinereview
Introduction Growth Maturity Decline
EU market capped
Regulation limitingMatures aging
Ace (1)Akro-Mils (1)AM Leonard (1)Ames (17)Bosmere (1)CC Home (8)Claber (8)Colorite (2)
Delta (1)
Emsco (4)Gardena (15)Gilmour (1)Imperial (1)Jackson (2)Legacy (1)Liberty (1)Mintcraft (1)
Nelson (1)
Plow&Hearth (1)Reel (1)Reelcraft (2)Suncast (44)Tahoe (1)Vulcan (1)Whitehall (6)Yard Butler (2)
Hose Reel Competitors
* from Amazon.com, with (#) of reels represented
L&G Industry Life CycleNational Gardening Survey
70% all household participate in activity 81 million households do L&G activity Total L&G sales stagnant over 5 years Averge household spend = $444 Total spend in N.A. of $36 billion (+3%)
Competitive Innovation Rising
Water powered, auto-matic rewind reel $89
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Current Portfolio Accessible to N.America
Portable
Wall Mount
Trolleys
2647$130
2656$200
2600$72
2650$83
756$98
2674$219
2634$162
2684$147
8000$125
2681$122
2613$102
2690$63
2683$129
$50 $100 $150 $200 $250
Characteristics
High Quality, 5 star Amazon reviewsInnovative features
User centric design executionForm follows function
DurabilityHigh pricing
Common design languageMobile
Theme
Bright (blue and orange color scheme)Fun
Efcienciency in use
SmartOriginal and unique
Summer
Product Line Features
$250$200$150$100$50
2602$98
Thin out,Clarify
Noted problems
Lack of decorative optionsfor US
No Green products
Trolley line confusing
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Current and Potential Users and Channels
Current Channel Type Share
Home Centers 70%
Discount Chains/ Mass Market 15%
Garden Centers/Nursuries 5%
Power Equipment Dealers 5%
Other 5%
Channels to Develop
Online +20%Lawn Service +10%
Current LineMatchup
L&G Market Size (2014Estimate)$19 Billion
Potential LineMatchup
Consumer71%
Commercial29%
Product
Lines
Matures
52% of Consumer
Boomers
32%
X&Y
16%
Lawn Service
76%
Municipal
24%
Trolley
Wall Mount
Portable
Green
Water Service
Car Kit
Golf Course
MaturesDemographic
1909 - 1945Rural and SuburbanUpper Income
BoomersDemographic
1946 - 1964Rural and SuburbanUpper to Middle Income
Gen X & YDemographic
1965 - 1978Suburban to UrbanMiddle Income
ServicesDemographic
Men 30 - 50sRural and SuburbanLocal small operators
MunicipalDemographic
Men 20s to 60sRural and SuburbanLower Income
Psychographic
Erognomically focusedFret about needing elder-careDIYs turning into DIFMsWant assistive products
BehavioralStruggling with usual tasksYard work is their exerciseExtreme cocooningShops at garden centersRelys on store specialist
Psychographic
Erognomically focusedYard work relaxes themLike the exercise of yard workFeel good if yard looks good
Psychographic
Environmentally focusedImmaculate yards seems sillyWater bill double in tough tmesEnjoy yard tasks with kids
Psychographic
Economy reducing customersLooking to new services to sellBuilding trust with customersCustomers like eco-friendly
Psychographic
Results focusedTime efciency is huge
Frustrated by hoses for greensCost not an issue - club pays
BehavioralPlants owers/garden annually
Does all yard work challengesDoing more cocooningShops at Home CentersLike browsing new products
BehavioralFood garden to save moneyFew owers to reduce watering
Likely to shop onlineInterested in non-yard, like car
Always making garage space
BehavioralStarted snow plow service tooLike commissions to sell reelsInvestigating watering servicesNeed quality productNeed intro to new customers
BehavioralStruggling to cart hosesWheels cant gouge greensCareful not to hurt my back
By 2014 the Matures are declining, andBoomers replacing them. But who will re-place Boomers? Research shows Greengrowing X&Y, and Servicesbeing adoptedby aging Matures no longer as capable.
Watering regulationsare transforming theindustry, with rain col-lection systems beinga neccessity ratherthan a niche. To hedgeagainst hose wateringbeing rationed, rain col-
lection features need tobe incorporated
Current in black Potential in Orange
Sources:Packaged Facts, Lawn and Garden Edition, Jul09
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Competitive Landscape
Form Category Generic BudgetHose Reel Watering/Spraying Lawn and Garden ~$150 Home Products
Claber Pronto$90
Suncast$50
Rapid Reel$165
Gardena$72.00 Cordless Shears
$114
Water Timer$84
Leaf Blower$70
Wet Dry Vac$140
Weed Wacker$140
Mower$155
Patio Set$153
Pressure Washer$150
Grill$120
Patio Heater$150
Fireplace$150
Greenhouse$147
Sprinkler System$138
Rain Barrel$120
Watering Can$113
Water Scarecrow$154
Commercial Hose$130
Sprinkler$89
Drill$138
Faucet$111
Gardena Full Kit
$97.00
Ladder$160
Suncast -rapidly innovat-ing or perform-ing acquisitions
into new cate-gories. Recent-ly purchasedwater winding technology, andcommerciallized it. By far thelargest portfolio of products inthe category. Concentrate onless costly products, but alsorelegate themselves to poor userperception because of it. Have
extensive decorative line.
Yard Butler$89
Toro - researching complexground moisture characteristicsand investing heavily in waterconservations and precisionor smart irrigation technology.Recently made two strategic
acquisitions to buy Main Masterand Turf Guard. While this Intel-lectual Property applies primarilyto the prfessional sector, itwill provide competi-tive advantage acrosstheir entireWater-ing and
Spraying line.
Sources:Amazon.com, Packaged Facts, Lawnand Garden Edition, Jul09
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Husqvarna/Gardena Market Comparison
Americas
EU and Asia
Market Comparison
Watering is 15% of EU sales Watering is 0% of American sales Huge opportunity for growth
America is largest global marketat SEK75 billion, with the UScomprising 85% of that
Sources:Husqvarna Annual Report 2010
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Portfolio Objectives and Strategy
Husqvarna Objective Grow Gardena into global brand
Gardena Objective Enter American market, sustain EU market
Portfolio Objective Thin out Trolleys, Invent Green, Invent Services and Municipal
Customer Strategy Expand in Americas (lacking quality product), Extend into Green and Services
Competitor Targets Suncast (capture share), Toro (develop comparable IP)
Product Strategy Leverage EU brand and Husvarnas US channels/manufacturing
Product Positioning As the high quality, easy to use, well designed, top end of the line
Brand Strategy A quality German brand that is now available through Husqvarna in the US
Distribution Channels Current Husqvarna outlets, develop Home Centers, and online
New Business Model Leverage Lawn Care Operators (LCOs) as direct marketing experts
I purchased this for the deck (12 high) so my wife could water her plants
on the deck and below. It does not take up any room and it does not leak
at the connections - we keep the water on constantly b/c the spigot is at
ground level. When winter comes, it will be a simple matter to keep it in
the laundry room where I can take it out to wash the cars - no stiff fro-
zen hoses. I cant say enough about the quality of the materials and the
design. Never thought such an ordinary device could be improved uponlike Gardena has done with their hose reel.
I lived in Germany for app. 19 years,so Ive learned to appreciate good
quality German products! And Gardena products are just awesome!!!
I was really surprised to see that Amazon carries Gardena, because I
dont think anyone else does!!
It was easy for me to pull being elderly and love the snap on connections.
User Comments
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Portfolio Options
Markets
New
NewExisting Products
MarketAttractiveness
High
HighCompetitive Advanctage
Expansion
Penetration Extension
Innovation
1 Piece Hose HangerTo introduce the brand to the entrylevel consumer in the US, as Gar-dena has no low end offering
A
Decorative LineThe US consumer likes to hide theirhoses, and Gardena only offers Ger-
man form follows function reels
B
Integrated Miracle Grow PortPartnering with a well known USfertilizer brand will help introduce theGardena brand and build condence
C
US Market Color StudyThe blue and orange color schemeis well known in the US, but may not
appeal to US decorative preferences
D
Car Wask KitGen X&Y is more urbanized thanBoomers, and less garden prone;with afnity to cars, and little space
E
Green - Integrated Rain BarrelSustainability is an X&Y require-ment, not just a preference; Garde-
na can leverage Husqvarna here
F
Golf CourseGreens keepers require a portableyet robust hose carrier to reachspots the sprinklers cant
G
Lawn Care Pro Distribution ModelLCOs can reach the aging Matures,and will need new products to begin
handling their daily watering needs
H
Low
A 3 5 5 5 9 6 33 4
B 5 5 5 4 7 5 31 6
C 7 7 8 9 6 7 44 2
D 4 4 3 4 9 5 29 8
E 5 5 6 7 8 4 35 3
F 7 8 9 9 7 7 47 1G 4 4 5 7 7 4 31 6
H 5 5 5 7 7 3 32 5
Dynamic RankOrder
F
C E
A
G E
C F
H
BD
Ansoff Risk Reward
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Recommendations and Options
Required Actions Clarify the existing product in the Trolley line, as they are
very close in price, but with many different feature sets. Itis difcult to comprehend what is being purchased, and the
average consumer will skip over this decision not buyinganything from the line.
Focus on growth by Expanding into America - predominantlythe US as that is where most potential buyers with dispos-able income are concentrated
Study the US consumer and adjust non-functional features totailor the product to American preferences (Decorative Line).
Build presence at Home Centers as that is where 70% ofBoomers and Gen X&Y shop. To attract Matures to yourinnovation product line of Trolleys, garden centers will need
to be targeted. This will require a technical sales force toeducate that group as to the benets and ergonomic trolley
features
Options Option 1: Use the Dynamic Rank Ordering and Risk Reward
method to sort all 8 projects and then lter any that are not
above average for market attractiveness. This woudl pro-mote Concepts F and C. This will work to Extend, Expand,and ensure new product for our existing EU market (Penetra-tion).
Option 2:Use the Strategic Buckets Method to ensure abalanced portfolio of projects across all 4 Ansoff quadrants.This method may reduce the budget for concepts F and C inOption 1, but it will help ensure future growth through Busi-ness Model Innovation (concept H Lawn Care Distributionand Services), and add 3 additional projects to the slate,thereby reducing risk through a more balanced and diver-sied product portfolio (E attracting X&Y car guys and A
appealing to the entry level buyer, or cash strapped homeowner).
Markets
New
NewExistingProducts
Expansion40%
Penetration20%
Extension25%
Innovation15%
Strategic Bucket Method(Using Ansoff 2x2)
C 2
E 3
F 1
A 4
H 5