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Renova Toilet Paper: Avant-garde Marketing in a Commoditized Category Case Solution

Solution Id Length Case Author Case Publisher
1380 2025 Words (10 Pages) Yakov Bart, Raquel Seabra de Sousa, Pierre Chandon INSEAD : INS131
This solution includes: A Word File A Word File

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

  1. Introduction

  2. Ansoff Matrix

  3. SWOT Matrix

  4. Porter’s Five Forces Model

  5. Competitive Positioning

  6. Recommendations

  7. Conclusion

Case Analysis for Renova Toilet Paper: Avant-garde Marketing in a Commoditized Category Case Solution

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).

 

Existing Product

New Product

Existing Market

Market Penetration
Renova has the option of reducing the price of the product initially in order to penetrate the market and gain market share. This could have adverse implications of the profit margins, therefore, the profitability of the company

Product Development
Renova has developed a product idea of black toilet paper in order to differentiate in the existing market. However, one critical analysis is that the black toilet paper is not value adding for the customer

New Market

Market Development
Renova has the option of partnering with the retailers in the industry to produce private labels. The product would be the same, but would cater to a new market that opts for private labels

Diversification
Renova also has the option of improving the functions of the product to develop a new product for a new market. This development of functional innovation would mean defining new uses for a traditional product

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

 

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
No power resulting in vulnerability because of variable prices of raw materials

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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