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Renova Toilet Paper: Avant-garde Marketing in a Commoditized Category Case Solution
This case is based on the company Renova that manufactures tissue papers. The company is a market leader in the Portugal market. However, it plans to expand to Western Europe. The industry is different in both the markets. Portugal is a market in which there is low competition. However, the Western Europe market has been characterized by high levels of competition and rivalry among them.
This case analysis will make use of several marketing models to make recommendations for the company. These recommendations will be based on the company’s plans to expand and gain position in such a competitive market. This case analysis will include the Ansoff matrix SWOT analysis, the Porter’s five forces model, competitive positioning. The recommendations will be based on an analysis of strategic options available to the company and the marking mix. The marketing mix will make specific recommendations to the company regarding elements such as product and packaging.
Following questions are answered in this case study solution
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Introduction
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Ansoff Matrix
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SWOT Matrix
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Porter’s Five Forces Model
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Competitive Positioning
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Recommendations
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Conclusion
Case Analysis for Renova Toilet Paper: Avant-garde Marketing in a Commoditized Category
2. Ansoff Matrix
The Ansoff matrix presents growth opportunities for companies. This model presents four directions in which the company can grow. This tool is used for determining the strategy of growth to be adopted. The proposed strategies are then analyzed logically and selected on the basis of the most viable strategy for growth for the company (Stone, 2001).
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Existing Product |
New Product |
Existing Market |
Market Penetration |
Product Development |
New Market |
Market Development |
Diversification |
3. SWOT Matrix
SWOT analysis is a tool that helps in the formulation of strategy. It helps the company to objectify and assess its strengths, weaknesses, opportunities, and threats. The company then develops its strategies based on these factors by maximizing the opportunities and strengths and minimizing the weaknesses and threats. The strengths and weaknesses are internal, and opportunities and threats emerge from the external environment (Dyson, 2004).
• Analysis of Strengths and Weaknesses
Strengths
Renova has a major strength and standing in the Portuguese market. Furthermore, the company has, in the past inculcated ideas such as moist tissue papers as its signature move to capture the French market. The company has successful in the same that shows the strength of its innovativeness.
Weaknesses
The tissue paper industry is characterized by low profit margins. Also, the price of raw materials in this industry is vulnerable that results in a variability of the profits earned. Furthermore, even though Renova holds a significant market of 35% in Portugal, it has no share in the Western Europe market.
• Analysis of Opportunities and Threats
Opportunities
The major opportunities for the company is to differentiate the brand based on certain product attributes. This would allow the company to highlight itself from the competition. Even though the idea of a black tissue paper is innovative, but it does not offer additional value to the customer.
Threats
The Portugal industry in which Ronova was a significant layer consisted of a few players in the market. Also, the Portugal industry offered greater profit margins on each product. The buyer power was low. The threat is that in the new market, the company would not be able to gather much volume for an initial period of operations to result in a breakeven or profit.
4. Porter’s Five Forces Model
The five forces model proposed by Porter includes the assessment of the industry. It assesses the industry based on power basis of buyer and suppliers, and threats of substitutes and new entrants. It also considers the industry rivalry. These five factors together determine the attractiveness of the industry and help the investor to decide whether or not to invest (Dulčić, et al., 2012).
• Bargaining Power of Buyers
The bargaining power of buyers is high in the industry because of a lot of options available to buyers. This has resulted in the prices of the product being low and the profit margins on each product being very low. This requires that huge volumes is sold to attain significant profits.
• Bargaining Power of Suppliers
The suppliers or retailers in this segment have a high bargaining power. This is because of a large number of almost same tissue paper brands. The retailers have significant power because they demand large sales margins from the companies. As a result, companies have to use sales promotion offers to boost sales and achieve the targets and volume.
• Threat of Substitutes
The threat of substitutes is high. This is because there are a variety of products available that substitute specific tissue product segments. This shows that the industry, as well as the company, produces substitute products as well to gather a greater share of the market.
• Threat of New Entrants
The threat of new entrants in the industry is high if assessed based on market entry barriers. However, the threat of new entrants in the industry is low considering the low growth of 1.5% per year. This growth is not predicted to increase. Also, there are a large number of competitors in the industry that makes the industry low in attractiveness.
• Industry Rivalry
In Western Europe, the tissues industry has high competition with several brands co-existing in the same market. These brands earn huge revenues from the tissue paper industry. Also, companies use promotion activities and promotional offers very heavily to boost sales. This includes price reductions and premium product offerings with the purchase of a single product. This shows that the rivalry in the industry to increase sales and gain a market share is very strong.
5. Competitive Positioning
• Points of Difference
The points of difference will be the inculcation of innovation in product design. The functional attributes of the product will also be enhanced by this differentiating factor which will allow the product to be appealing to the audience.
• Points of Parity
The points of parity are low price, basic functional attributes, and efficient distribution system (Kotler, 2007).
6. Recommendations
• Analysis of Strategic Options
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External Opportunities Differentiate using functional innovations Differentiate by introducing black toilet paper |
External Threats Low profit margin in Western Europe market Inability to gain market share because of tough competition and established market players |
Internal Strengths Innovative ideas that made it successful in the French market |
Maxi-Maxi Strategy The recommended strategy is to develop innovative ideas and to apply them to increase and enhance functional features that the product offers. These innovations should be value adding to the customer and not only a factor of attracting customer attention. |
Maxi-Mini Strategy Innovative ideas developed should be used to develop a position in the market. The innovative ideas would allow the company to differentiate in the competitive market and gain market share. This would result in high volumes of sales leading to the elimination of the threat of low profit margins |
Internal Weaknesses Not established position compared to the already established players in the Western Europe market |
Mini-Maxi Strategy Functional innovations would result in the company developing a differentiated position in the market. it will decrease the power of suppliers and compel them to stock Renova products because of the demand for the differentiated product |
Mini-Mini Strategy The low profit margin in Western Europe should be used to develop a position and market share in the company. This means that the product offering should be low price to penetrate the market and gain market share |
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