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The following presentation is focused on using Duracell Batteries as a subject for Business Transformation. More precisely, the alkaline primary consumer battery business of Duracell.
The work enclosed herewith is for Academic Purposes only. The data represented has been supported with necessary references wherever possible.
The presentation aims to the cover the four key aspects of Business Transformation.
1. Core reasons for choosing the said business and the need for change in the industry and business.
2. The areas of opportunities identified from changing market needs and digital development.
3. An idea concept that will allow the business to explore new opportunities for future sustenance.
And...
4. The impact of change on the business and the market.
Procter and Gamble cuts the arm
Category Declines and
Duracell Stagnates
Fall in sales of products that work
on batteries
Procter & Gamble recently sold the Duracell business to Warren Buffet’s Berkshire Hathaway. In 2014, according to a report by Financial Times, P&G reported net earnings of $2bn for the three months to the end of September that were down $1bn from a year ago, due largely to a Duracell-related non-cash charge.
In the United States, battery sales fell four per cent in the fifty-two-week period ending in late September, according to Nielsen data analyzed by Jefferies & Company and cited in the Wall Street Journal. Energizer Holdings CEO Ward Klein frankly told the Consumer Analyst Group of New York's conference last February he expects that the battery business will keep declining 2% to 3% annually as consumers shift toward smartphones and tablets, cited in Ad Age.
To further support the point by CEO Ward Klein, in a report, by Vauhini Vara in the New Yorker, we see a strong case on the effect of Smartphones on the primary battery industry.
She argues, since the smartphone débuted (not all that long ago, remember—Apple introduced the iPhone in 2007), it has displaced or considerably shrunk the market for alarm clocks, music players, torches, navigation devices, calculators, and even hotel key cards.
With the inseparable dependency of sale of batteries on primary products and the increasing capabilities of Smartphones, the need for change will only grow as the technology advances.
STRENGTHS
THREATS
WEAKNESSES
OPPORTUNITIES
Smart DevicesElectricity is a loose thread in a wireless
world
Green mindset
Portable ChargersChange in
management
Brand Credibility
Highest Market share
Disposable, environmental
concerns
Let’s start with looking at the Strengths & Weaknesses of Duracell. Though the category overall has been declining slowly the product has not yet turned obsolete. Additionally, Duracell has managed to stand the force of competition. As of 2013, Duracell's market share was as high as 46% of the alkaline-battery category. In an interview with Ad Age, Duracell MD Jeff Jarrett also mentioned about the increasing trust shown by retailers and the growing social media engagement with consumers.
However, from the point of view of ‘job to be done’ the product hasn’t changed. The disposable nature of the product makes it less attractive to consumers when they
are offered options that are direct power source or charge before use. The environmental hazards of battery production and disposal make it further unattractive to consumers in the future. In an article by Lynn Jefferys, on the Battery Company, 98% of batteries bought in the UK are not recycled and end up in landfills.When taken to landfills, most batteries release harmful metals into the environment causing soil contamination and water pollution. The Waste Batteries and Accumulators Regulations were introduced in 2009, setting the following targets for the recycling of disposable batteries; 25% recycling rate by 2012 and 45% by 2016. However, it continues to be a prevalent problem.
STRENGTHS
THREATS
WEAKNESSES
Smart devices
Brand Credibility
Highest Market share
Disposable, environmental
concerns
Electricity, rechargeable
Let’s move attention towards the threats, as the smartphone turns more multi-functional, the need for numerous products continues to decline. To cite an example in 2008, David Pogue raved in the Times about the Flip video camera (which ran on AA batteries) calling it “one of the most significant electronics products of the year” and “a mega-hit.” A year later, Cisco acquired the startup that made the Flip. But smartphones were starting to offer better and better video quality; by 2011, the Flip had been discontinued.
Manufacturing of more products that are rechargeable and depend on electricity as the primary power source are a threat to the Alkaline battery industry due to the convenience and the power capacity it can handle. On an average we use between 6000 to 10000 mAh per day to power our smart devices such as phones, tablets and wearables. For instance, the capacity of Apple supplied batteries is 1900mAh that often users charge twice everyday. This makes the strength of Alkaline Batteries seem weak in the digital age.
STRENGTHS
THREATS
WEAKNESSES
OPPORTUNITIES
Electricity is a loose thread in a wireless
world
Green mindset
Smart devices
Change in management
Brand Credibility
Highest Market share
Electricity, rechargeable
Disposable, environmental
concerns
To turn to the opportunities, the change in ownership should be viewed positively. As the company is already on it’s way to a management and functional change, the time is right to pave a new path for re-inventive thinking.
While the brand explores new routes to a sustained future there is one core value of batteries that already competes with electricity, that is the convenience of portability.
To add to the mix, there is also a wave of new consumer behaviour in the energy consumption category, a recent Nielsen global online study found that Millennials continue to be most willing to pay extra for sustainable offerings — almost 3/4 respondents in the latest findings, up from approximately half in 2014.
“Brands that establish a reputation for environmental stewardship among today’s youngest consumers have an opportunity to not only grow market share but build loyalty among the power-spending Millennials of tomorrow, too,” says Grace Farraj, SVP, Public Development & Sustainability, Nielsen.
For a change in business, especially the product it’s necessary to start with smaller steps.
Though the technology of Alkaline batteries is not entirely obsolete, yet it is time to start the change today while the company is still financially healthy to support the change.
As we have learned through the application of the BCG matrix, one needs to continue milking the Cash Cow to earn profits to enable funding or sustaining other premature businesses.
The Approach
Target the new
favourites Focus on sustained use not single-use
Invest in green
Power in the hands of the consumer
Combining all the insights from the previous two exploratory stages has led us to a ‘sweet-spot’ scenario. This will allow Duracell to stay ahead in the game, as the competitors are not only behind in the current game of Alkaline batteries, they have also not made announcements of any transformative plans.
Complementing the first mover’s advantage to the other variable - Targeting the new favourites, helps Duracell earn back its relevance, same as it enjoyed in parallel with the consumer goods market in the late 70s to the early 2000s.
As the consumer, grows more aware and environmentally concerned they look for investments and not for disposables plus they demand more convenience and control.
Cadex Electronics’ online Battery University questions, how much the battery has changed in the last 150 years? Compared to other advancements, the progress has only been moderate. A battery holds relatively little power, is bulky, heavy, and has a short life span. Battery power is also very expensive. The smaller the battery, the higher the cost-per-watt becomes.
Hence, the future consumer needs a solution which is an investment and that empowers the consumer to participate in the process.
Current and future
powering needs
Wireless Portable
Rechargeable, anywhere
Energy storage capability
Green
Duracell today
Duracell in future
While transforming a business that has a successful heritage, it’s necessary to capitalise on the core competencies of the brand. Duracell at its core is a company that has for years provided an energy solution that is simple to use, portable and based on storage.
In the future, Duracell can hold on to its core along with an added factor of future relevance to stay ahead in the game. According to an article recently published in the, Tech World powering smart gadgets with wireless technology is on its high road and expected to be a natural progression. Additionally, wireless products that will become available over the next six months will be more powerful, and versatile, offering an even better user experience.
The article elaborates, backwards compatibility is also a very important feature, and there are already lots of Qi enabled devices out there. That's why phone manufacturers are very likely to stick to the Qi charging standard with new devices, some may add AirFuel as well, but Qi is guaranteed. Which means the industry standardization of wireless compatibility in all smart devices has already begun, paving a smoother way to cater to the need.
The key differentiation for Duracell in the future will be the method of generating this power. Which aims to not only cater to the, ‘always connected, always on the go’, needs of consumers, but also the shifting interest in supporting and choosing brands that offer a green product.
DuraMo
100 % wirefree portable charger, that charges on kinetic energy.
Small as a coin
Can store up to 10000mAh power as backup
How to charge DuraMo?
Just carry it everywhere you go.
You can wear it around your neck or carry it in your pocket.
Any moment is stored in DuraMo as power you can use to
charge your devices.
Comes with an Android & iOS app that records your daily movement and displays the
energy you generate.
+ =
How to use DuraMo?
Micro-rubber suction layer helps you stick it on to any of your devices you want to charge.
Can be used to charge any smart devices with wireless charging
capabilities - Smartphones, Smartwatches, Fitness bands, Headsets, Speakers and more.
Track your energy generation and fitness levels.
Works in all weathers.
Value PropositionDuracell Alkaline Battery
PRODUCT
BenefitsPortable
100 % WirefreeGreen Energy
FeaturesSupported by a motion tracker app
Works in all weathers
ExperienceNon-intrusive
Complete, in itself - Generates, Stores and Charges
CUSTOMER
WantsTo be connected always,
anytime, anywhere
FearsAbout harming the environment any further
NeedsTo always have his smart devices charged
SUBSTITUTESSolar chargers - dependent on weather, not wireless.
Portable Power banks - Use electricity to recharge, limited life when outside
Year 1
Wireless + Green producer of power
Future Product
development
Year 2 -3
Research on contactless power transmission
Year 4
Launch contactless power sharing through mobile app
There is already a lot of research and successful trial being conducted in the area for wireless energy transmission.
In fact, in 2014, Dr Hall, now Chief Technology Officer at WiTricity, a startup developing wireless "resonance" technology, said “We're going to transfer power without any kind of wires,""But, we're not actually putting electricity in the air. What we're doing is putting a magnetic field in the air." "The challenge now is increasing the distance that power can be transferred efficiently. This distance, Hall explains, is linked to the size of the coil, and WiTricity wants to perfect the same long-distance transfers to today's small-scale devices."
Hence for the recommended Year 4 product development plan of energy sharing with friends via a mobile app, there is going to a need for additional research and testing effort from Duracell’s innovations team.
10 Steps of InnovationBy Doblin
CONFIGURATION
Profit Model Network Structure Process
Shift from volume of sales to value of purchase.
Materials Supplier network will change. But the Distribution
network can remain the same.
Addition to existing structure, a business that sits outside the
main hierarchy, in an incubator.
Consumer feedback will play a vital role in product testing and
enhancement.
EXPERIENCE
Service Channel Brand Customer Engagement
With the change in length of relation and the complexity of the product, the
customer service standards will have to match that of the overall digital industry.
Addition of new channel - Mobile
Application to support the device.
The existing identity should be capitalised with the added badge
of ‘Green Energy’.
Higher involvement product requires higher quality of conversation. Data
collected through App should be used to personalise engagement.
OFFERING
Product Performance Product System
Change from Single usage to long term usage.
Change from Alkaline to kinetic energy generation.
There are two major ethical concerns that are possible to arise in a case of Business Transformation of the magnitude proposed for Duracell’s Primary Battery business.
1. The employment security of the current staff: There will be a need for potential downsizing and replacement of staff members due to need for different skillsets and knowledge.
However, the same can be addressed with long term planning. As the mentioned earlier, the new business in the start will not affect the existing functions and products of Duracell. In future, there will be gradual movement but the planned transition will allow the employees time and opportunities to learn or switch.
2. Privacy of data: Data collected through the app will contain behavioural insights about a consumer’s energy consumption as well their fitness routines and levels.
This data can be useful to Duracell and other brands to offer users personalised products / services, the same can be carefully managed through opt-in / opt-out procedures at the time of set-up so users can decide the level of privacy.
“Affordable renewables are set to dominate the emerging power systems of the world,” Dr. Birol said.
IEA, 2015
Energy Harvesting System Market Worth $974.4 Million by 2022.Arch News, 2016
Potential
Conclusion
The enclosed case of Business Transformation has been proposed keeping in mind the the changing market and consumer needs. For a product that is dependent on the success of other product categories needs to keep an agile foot in the market to stay relevant. The impact on the business can be managed if the steps towards change are taken in time!
BibliographyArticles
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BibliographyVideos,
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